Q1 2025 Kiniksa Pharmaceuticals International PLC Earnings Call
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Good day, and thank you for standing by welcome.
Welcome to the mix of Pharmaceuticals first quarter 2025 earnings conference call.
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Speaker Change: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Jonathan person bomber investor relation.
Speaker Change: Please go ahead.
Speaker Change: Thank you operator, good morning, everyone and thank you for joining <unk> call to discuss our first quarter 2025 financial results and recent portfolio execution.
Speaker Change: Press release, highlighting these results can be found on our website under the investors section.
Speaker Change: As the agenda for today's call are Chief Executive Officer songs K Patel will begin with an introduction.
Speaker Change: <unk> Moore, our Chief commercial officer will provide an update on markwest commercial execution.
Speaker Change: <unk>, our Chief Financial Officer will review, our first quarter 2025 financial results. Finally songs warfare closing remarks, and kick off the Q&A session for which Doctor John Paolini, Our Chief Medical Officer, and I've been to start our Chief operating officer will also be on the line.
Speaker Change: 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 a review of such statements and risk factors can be found on this slide as well as under the caption risk factors contained in our SEC filings.
Speaker Change: 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.
Speaker Change: With that I will turn the call over to songs.
Speaker Change: Thanks, Jonathan and good morning, everyone.
Songs: <unk> is off to a great start in 2025.
Songs: We're well positioned to build on our strong performance throughout the rest of the.
Songs: Yes.
Songs: We've continued to make excellent progress with all cliffs now commercial franchise in recurrent pericarditis we.
Songs: An increasing number of patients and grow into a net product revenue.
Songs: <unk> hundred 37.8.
Songs: $8 million in the first quarter.
Ross: Ross will go into additional detail about our first quarter performance in a moment.
Speaker Change: Before he does of note the end of Q1 marks the fourth anniversary of the FDA approval of Barclays.
Ross: Current pericarditis.
Ross: The underlying fundamentals.
Ross: Our commercial success.
Ross: At this point remain strong.
Ross: Since launch we have continued to observe expanding adoption among new and repeat prescribers.
Ross: The appreciation for the multiyear duration of disease.
Speaker Change: And hi, payer approval rates.
Speaker Change: Through consistent unexpected execution, we have delivered this transformative therapy, which is the only FDA approved treatment for recurrent pericarditis.
Speaker Change: If patients establishing and extending our position as the market leader driving sustained revenue growth year over year.
Speaker Change: As a result of our strong Q1 performance, we are increasingly <unk> net sales guidance to between 590 and $605 million.
Speaker Change: From a previous range of between 560 and $580 million.
Speaker Change: In addition to <unk>, we've been hard at work advancing APL creates <unk> in recurrent pericarditis since announcing the program just a couple of months ago.
Speaker Change: We're on track to initiate the phase III slash phase III clinical trial in the middle of this year with data from the phase II portion expected in the second half of next year 2026.
Speaker Change: Additionally, we've maintained a robust financial position and expect to remain cash flow positive on an annual basis.
Speaker Change: Having the flexibility to continue investing in additional value creating opportunities across the business.
Speaker Change: With that I'll now turn it over to Ms.
Speaker Change: Thank you.
Speaker Change: We're delighted we've started off the year with such strength on the commercial funds haven't delivered 137 8 million in net revenues in the first quarter of 2025, which is a 75% year over year increase compared to Q1 of 2024.
Speaker Change: The fact that we continue to drive such growth after four years on the market speaks to both the effectiveness of our strategy and our team's robust execution serving patients with this debilitating disease.
Speaker Change: Most importantly, we continue to be excited about the substantial opportunity ahead to help many more patients suffering from recurrent pericarditis.
Speaker Change: Q1 is typically a very challenging quarter due to the specialty drug headwinds associated with payer plan changes and co pay resets.
Speaker Change: However, these were outweighed by three key drivers that led to a substantial increase in active commercial patients.
Speaker Change: Firstly, we saw robust growth in the number of prescribers with around 300, new prescribers in Q1, which is one of the highest quarterly increases we've had launch to date.
Speaker Change: The second driver was an increase to the overall duration of therapy, which has now increased to approximately 27 months to approximately 30 months on average this highlights the benefits of patients continue to achieve over longer periods of time as well as a growing appreciation from health care professionals that there.
Speaker Change: This is a multi year chronic disease for most patients.
Speaker Change: Finally, Q1 revenue also benefited from federal changes to the Medicare part D program, which improves patient affordability by lower in the maximum co pay as well as providing the potential to spread costs evenly through the year.
Speaker Change: One around 70% of the Oculus Payor mix is commercial these Medicare program changes led to a one time bolus of patients who converted to paid therapy at the start of Q1, which is testament to the value of these patients C band on August.
Speaker Change: Overall, we're delighted with our teams performance over the first quarter and the underlying commercial fundamentals, including higher approval rates and patient compliance remains strong.
Speaker Change: Our commercial and marketing strategies are built around continuing to switch on more prescribers to this new way of treating recurrent pericarditis by recognizing that the disease is driven by interleukin, one alpha and beta which requires a targeted immune modulating.
Speaker Change: Treatment approach to resolve pain, and inflammation and reduce future flash throughout the duration of their disease.
Speaker Change: As a result of this understanding we've seen substantial increases in both the breadth and the depth of all cliff prescribed each year that we've been on the market.
Speaker Change: In Q1, the total breadth of prescribing grew to more than 3150 unique prescribers since launch which is an increase of more than 1150 from the same period in 2024.
Speaker Change: Importantly, the depth of prescribing has also continued to increase with approximately 820 repeat prescribers, who have written arcalis for two or more patients.
Speaker Change: These repeat prescribers and now accounts for approximately half of all new <unk> prescriptions, which highlights the importance of ensuring physicians have a positive experience when prescribing <unk> for the first time.
Speaker Change: Alongside growing prescriber adoption, our patient service initiatives under <unk>, one connect continue to be well received by patients.
Speaker Change: <unk> is designed as a long term treatment option and as such we've seen growth in both the initial treatment period, which most recently grew from 16 to 17 months on average as wireless the total average duration of therapy, which increased from approximately 27 months to approximately 30 months. This on.
Speaker Change: The scores that recurrent pericarditis is a multiyear disease for most patients as well as highlights in patients willingness and desire to stay on a highly efficacious well tolerated treatments throughout the disease duration.
Speaker Change: <unk> continues to build a strong commercial franchise with ARCUS.
As a result of our excellent Q1 performance, we are increasing the 2025 net revenue guidance.
Speaker Change: $560 million to $580 million to $590 million to $605 million.
Speaker Change: We look forward to continuing to execute throughout this year growing the commercial business and improving the lives of many more patients with recurrent pericarditis with.
Speaker Change: I'll turn the call over to Mark to discuss the first quarter 2025 financial results.
Mark: Thanks, Ross strong commercial execution in the first quarter added to clinics are significant momentum with arc list and combined with financial discipline and a strong balance sheet leaves clinics are well positioned to continue to create value across our business in both the near and long term.
Mark: This morning, I will cover our first quarter 2025 financial performance you can find our detailed financial information in today's press release.
Mark: There are a few items to note.
Mark: First starting on the left hand side of the slide with our income statement as you've heard from songs and Ross Arcalis revenue grew 75% year over year in the first quarter to $137 8 million driven by a meaningful increase in active commercial patients on.
Mark: Operating expenses grew 29% year over year in the first quarter driven by cost of goods sold due to Arcalis revenue growth collaboration expenses with continued ARCUS collaboration profit growth in SG&A, it's supportive arcalis commercialization.
Mark: Lastly, with the strong <unk> revenue growth I guess more moderate operating expense growth net income was $8 5 million in the first quarter of 2025 compared to a net loss of $17 7 million a year ago.
Mark: Second the right hand side of this slide provides a calculation for ARCUS collaboration profit, which drives collaboration expense.
Mark: ARCUS collaboration profit grew a significant 118% year over year to $87 6 million in the first quarter as our commercial investment continues to be purposeful.
Mark: Third at the bottom of the slide we continue to expect our current operating plan to remain cash flow positive on an annual basis.
Mark: To this point, we ended the first quarter with a cash balance of $268 3 million, representing approximately $25 million of net cash flow for the period.
Mark: Finally, a point on the expected impact of potential tariffs on <unk> cost of goods sold.
Mark: Importantly, <unk> is currently manufactured by Regeneron and the United States as.
Mark: As such if tariffs are extended to pharmaceuticals, they would not impact arcalis supply received from regeneron.
Mark: That said, we are in the process of transferring Arcalis manufacturing to Samsung Biologics and South Korea.
Mark: We expect any tariff on Samsung supply to be limited to the cost of drug substance entering the United States, which would have an immaterial impact on <unk> cost of goods sold and gross margin.
Mark: And with that I'll turn the call back to <unk> for closing remarks.
Speaker Change: Thanks Mark.
Speaker Change: Connect is well positioned to build tremendous more value.
Speaker Change: We are dedicated to helping as many patients as possible with our quest and advancing the development of our clinical portfolio, which includes <unk> <unk> seven our liquid formulation IL, one receptor antagonist with a target profile of monthly dosing.
Speaker Change: Our ultimate goal is to bring additional treatment options and therapies to patients suffering from debilitating diseases with unmet need and we won't rest until we do.
Speaker Change: With that I'll turn the call back to the operator for questions. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Tom We will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Geoff Meacham with Citi. Your line is now open.
Speaker Change: Good morning. This is Mary Kay on for Jeff. Thank you so much for taking our question and the details of the ongoing launch.
Speaker Change: You noted duration, increasing here could you comment on what could be driving that increased usage and then what feedback have you received some patient experience on treatment. Thank you.
Speaker Change: Yeah, Hi, there. Thank you very much for the questions. This is Ross, yes. So we're pleased with.
Speaker Change: The increases that we've seen to duration I think importantly, as a result of both the initial treatment period, which does increase to around 17 months now on average with a median of around 12 months, but importantly, the total.
Speaker Change: Ration of therapy as well now offer gen around 30 models switches around the three months' increase versus last reported in.
Speaker Change: In terms of the drivers of that.
Speaker Change: It's multiple items firstly on the healthcare professional side.
Speaker Change: Okay.
Speaker Change: An increasing understanding of the fact that this is a multi year disease for most patients suffering from the column pericarditis. If you focus on those two patients with two or more recurrences, we know from the natural history of the disease that meet again is around three years the patient suffer for it it's still around a third of the patients.
Speaker Change: Stuff around.
Speaker Change: Five years post the onset of the disease.
Quarter.
Speaker Change: Eight years beyond the disease. So we know this is a multi year disease and as time goes on.
Speaker Change: Healthcare professionals treating C that the duration of the disease, which is exactly outwork. This was designed and intended to be used then I think also on the patient side of things I think it really speaks to how well patients get on therapy. The fact that they get the payor approvals, which remain very high grade.
So that 90% of all completed cases in an approval.
Speaker Change: And patients continue to do well on therapy and that this is a drug which is designed to improve the pilot inflammation, but ultimately to reduce.
Speaker Change: The current <unk> throughout the duration and that's exactly what we saw in the trials and what patients.
Speaker Change: And in the real world, So the willingness and desire to stay on treatment on the patient side.
Speaker Change: This is incredibly high and I think that really speaks to the kind of the patient experience.
Speaker Change: Parts of your question as well, we do provide services around adherence and compliance through our patient services program.
Speaker Change: That supports patients throughout their entire duration.
Speaker Change: Of experience or the whole journey on our list and we continue to get very good feedback on that program and how patients I guess, an honest therapy.
Speaker Change: Alright, if there are no more questions.
Speaker Change: Next question. Thank you. Our next question comes from the line of Roger song.
Speaker Change: With Jefferies.
Speaker Change: Okay.
Speaker Change: Great Congrats for the strong performance for one care. Thank you for taking my question a couple of from US one is regarding the <unk>.
Speaker Change: Patient penetration can you comment on how many of those.
Speaker Change: Scrap is coming from the first recurrence because in the past are you talking about the 15% is coming from for us.
Speaker Change: Did that change.
Speaker Change: In the recent.
Speaker Change: And then also related to the.
Speaker Change: On the financials.
Speaker Change: You see our R&D cost is coming down a little bit from last quarter and the last year. So should we use this as the new baseline for the coming quarter years.
Speaker Change: Understanding you're expanding to the monthly and quarterly I'll why not at the pipeline. Thank you.
Speaker Change: Thanks, very much for the questions Roger Yes, maybe I'll start off on that one and then I'll hand over to Mark for your second question in terms of the recurrences that we see patients when they're treated on our place.
Speaker Change: It's about 15% of all of the patients that one hour class.
Speaker Change: Well, Matt first recurrent so have our plus prescribes while dialogue first recurrence at around 85% of our patients that one two recurrences or more.
Speaker Change: That's important, particularly the 15% side, which is really showing that physicians are utilizing the breadth of the label.
Speaker Change: His experience goes on and people become more familiar with the ease of prescribing arcalis delayed the high efficacious and well tolerated profile of the drug.
Speaker Change: It's moving more towards.
Speaker Change: Earlier line treatment, both in terms of treatment options as well as in the <unk> numbers. So we think there's a lot to be very positive about on that side and physicians utilizing the breadth of the label.
Speaker Change: For our case, which as you know is agnostic to the number of accounts is just approved for recurrent pericarditis overall.
Speaker Change: I'll hand answer Mark for the second question, Yes, great. Roger Thanks for the question I think it's important to keep in mind on R&D that fourth quarter 2000, and for R&D did include a $19 million charge related to abbvie prove our prepaid raw materials and so R&D did decline in the first quarter, but it's really on an apples to apples.
Speaker Change: Basis.
Speaker Change: Including <unk>.
Speaker Change: $2 $5 million Abbvie prove our manufacturing charges taken in the first quarter R&D essentially.
Speaker Change: It was flat in the $16 17 million dollar range and so going forward as far as the baseline is concerned it's important to note that the timing of our clinical trials.
Speaker Change: Manufacturing of clinical supply our key variables and as we mentioned we are planning to initiate a phase two three trial for <unk> 387 in RP in the Middle of 2025, and then we're also advancing our KPN $11 61 towards the clinic.
Speaker Change: Okay.
Speaker Change: Excellent. Thank you for the comment.
Speaker Change: Thank you so much for that.
Evo: Our next question comes from the line of Evo <unk> with Wells Fargo. Your line is now open.
Evo <unk>: Hi, good morning, congrats on the quarter and thanks for taking our questions. A couple from US first regarding the increase in the prescriber base and you discussed initiatives you are taking here to continue to increase the space.
Evo: Do you expect these numbers to change over this year and next.
Evo: And second question is can you discuss your gross to net for this quarter.
Speaker Change: Yes, hi, Thank you very much for the questions, maybe I'll take a positive bias adviser in the rest of the team can chime in if if if.
Speaker Change: I don't want to add anything additional in terms of the prescriber base. Yeah. We replace that was one of the key drivers of the performance of Q1, along with the increased duration and then also the Paradise alongside bolus of the Medicare patients transitioned across as a result of the changes in the federal program for Medicare part D, making it more affordable fast.
Speaker Change: For those patients with agents and that co pays.
Speaker Change: We had a growth of more than more than 300 in the last quarter, which was one of the highest that we've had.
Speaker Change: Launch to date, which is very positive, particularly at this stage of launch and I think goes to speak to the opportunity that we have ahead as well clearly we haven't guided see how received kind of future increases happening, but we do believe that there are there is substantial opportunity still left for us to continue to grow in this marketplace and I think.
Speaker Change: At the end of 2024, when we provided the penetration into the T plus with Cowen says, 13% OSA speaks to the opportunity still ahead.
Speaker Change: Order to drive that prescriber base. So we just continue to be focused on.
Speaker Change: Very targeted very clear execution in the field, we're happy and a remote office team.
Speaker Change: Failed for our sales representatives have done a great job educating physicians around the disease ensure that its really distinct from acute pericarditis and people are aware of how to prescribe <unk>.
Speaker Change: Suddenly continue to help in a substantial way so we continue with our tight execution.
Speaker Change: In the failed.
Speaker Change: But we also supplement that with a lot of digital initiatives on the marketing side as well of course, we take place we take.
Speaker Change: A significant share of voice in Congress is in conferences, but the digital marketing piece is very important to us and get a finding new channels to get information out there to the wide array of cardiologists Alidade rheumatologists.
Speaker Change: Around the country.
Speaker Change: We are optimistic that the feature on the growth potential that we have.
Speaker Change: In terms of the gross to nets.
Speaker Change: Q1, 2025 gross to net was 10, 7%.
Speaker Change: If you compare that to.
Speaker Change: The full year of 2024, which was nine 8%.
Speaker Change: Q1 of 2024, which was 13 and half percent clearly we've seen a drop versus the same time of last year and we continue to see a similar pattern in gross to nets in the historical performance as generally being higher on a question that basis in Q1, dropping in Q2 and.
Speaker Change: Q3, before increasing slightly in Q4, that's the historical pattern.
Speaker Change: And we haven't provided gross to net moving forward as guidance.
Speaker Change: We've been around 10% for the full year. The Q1, 2025 number which was a reduction versus Q1 of 2024.
Speaker Change: Was ultimately down to a bolus of Medicare part D patients, who moved from free goods to commercial therapy associated with those Medicare IRI related changes and that meant that we had a lower proportion of the total patients.
Speaker Change: In our patient mix that are eligible for co pay assistance. So this brought down the gross to net of Q1 this year versus Q1 last year.
Speaker Change: Yeah.
Speaker Change: Alright. Thanks.
Speaker Change: Thank you so much.
Speaker Change: Our next question comes from the line of <unk> Rama with JP Morgan. Your line is now open.
Speaker Change: Hey, guys. Thanks, so much for taking the question and congrats on the quarter.
Speaker Change: On the uptick.
Speaker Change: Our new unique prescribers I'm, assuming most of these are coming from the community setting and.
Speaker Change: Should we be thinking about this as sort of like the pull through from the.
Speaker Change: Sales force expansion. Thanks, so much.
Pam: Thanks Pam.
Pam: Again, so thank you very much for your comments.
Pam: So much from the community setting I mean, we're very focused on.
Pam: Cardiologists in the specialty et cetera, not climate can just to be clear.
Pam: We're really agnostic and actually always have been since launch to the settling of the cardiologists in particular that we that we focus on whether it's academic or more kind of cardiology offices. We've spent a huge amount of time prior to launch, but yet build in our understanding since launch as well.
Pam: The throughput of patients and really understanding the patient journey.
Pam: Suffering from multiple occurrences of Pericarditis say, we've done a lot of research and triangulation of data sources to try to make sure that we.
Pam: Send our sales representatives to areas that we believe have the <unk>.
Pam: Highest throughput itself recurrent pericarditis patients thats been very effective since launch, but it is a constant in our.
Pam: Updating of dynamics.
Pam: With that so we're kind of relatively agnostic with the actual setting of the cardiologists, we really follow the patient journey and making sure that were pushed.
Pam: Pushing our resources in the areas, where we think we can help.
Pam: The highest number of patients. So I think that's the type of work that's really gone into the increase of the of the prescriber base.
Pam: And we're pleased to be in a situation, where we've had constant increases on a quarterly basis. Since the time of launch with no signs up until the end of Q1 of slowing down, which I think speaks to the future opportunity.
Pam: Okay.
Pam: Yes.
Pam: Thanks, so much for taking my question.
Pam: Thank you good months.
Speaker Change: Our next question comes from the line of David Nearer Garten with Wedbush. Your line is now open.
Speaker Change: Hey, Thanks for taking my question I just had a quick one when you look forward on the development of 387 should we expect to see a trial.
Speaker Change: Resembles what are close.
Speaker Change: Pivotal study look like and also are you planning or assume so a switch.
Speaker Change: Component for that study so people switching off of <unk> in two weeks.
Speaker Change: Tying out through etcetera. Thanks.
Jon: Yeah, Hi, David. This is this is Jon <unk> and Chief Medical officer. Thanks. So much for your question. Yes, we're very excited about the development program of 387, and <unk> mentioned, we're getting the phase II III study off the ground in the middle of this year.
Jon: As far as the details of that at this point.
Jon: We're not sharing that information on what we can say is that at this time and what we can say is that we have had interactions with regulatory authorities about the basics of the plan.
Jon: We are moving forward with that plan, but more details to come as we go forward and there is always critical trials Dot Gov is a great place to look for updates on clinical trial designs. Thanks, so much.
Jon: Thanks.
Jon: Thank you.
Speaker Change: Our next question comes from the line of Paul Choi with Goldman Sachs. Your line is now open.
Speaker Change: Hi, everyone. This is <unk>, calling in for Paul. Thank you for taking my question and congrats on the quarter I guess I wanted to circle back to.
Speaker Change: Medicare part D. I know you mentioned earlier on the call that.
Speaker Change: You referenced the stock increase in the number of prescribers and then mentioned Medicare part D. We're wondering how many you think of those new Fisher physicians were driven by the increase in Medicare part D patients and whether you expect this benefit to continue going forward for the next quarter and the rest of the year. Thank you so much.
Speaker Change: Thanks, very much for that.
Speaker Change: <unk> sorry.
Speaker Change: So just to just to be clear the vast majority of the Medicare part D patients that came across the commercial therapy.
Speaker Change: Historic patient said paying on our pop program, our patient assistance program, historically say free free goods, but as a result of the federal changes under the <unk>, which improves the affordability by capping the co pays.
$2000 as well as introducing the ability to evenly spread.
Speaker Change: The payments kind of across the Medicare prescription payments plan evenly spread throughout the remaining months of the year.
Speaker Change: That led to many of those patients changing over historically from from free goods onto commercial therapy. So they're not part of the <unk> prescribing growth.
Speaker Change: If you like is really focused on new patients and new prescribers coming in as a result, we're having with the <unk>.
Speaker Change: Vast majority of these patients have kind of changed over plan, rather than receiving a new a new prescription.
Speaker Change: So maybe it's worthwhile just mentioned and Thats that Medicare part D. Patient group is really a onetime bolus of patients who switched over at the start of the year and there is some unknowns like how that population will continue.
Through the rest of the year of course patients may come in now that Thats greater affordability on the under Medicare part D.
Speaker Change: The prescription payments plant, but for the patients that switched over I think it's worth bearing in mind that is and this is a new.
Federal program.
Speaker Change: As a grace period of two months Grace period, when patients can be disallowed if they if they don't pay their premiums.
To the payers the Medicare payers.
Speaker Change: There's also the potential for these patients to opt out of the prescription planet payment plan at any time.
Speaker Change: And ultimately many of these patients are making payments under that type of pace for the first time. So I think there is some uncertainty on the future of those patients that <unk> xactly, what the dynamics would look like.
Speaker Change: Through the rest of the year, but overall.
Speaker Change: We're really pleased that there's been some changes to make greater affordability across Medicare part D for patients and thus increase the number of active patients alongside the increase in new prescribers for <unk> patients have come in in Q1, as well as patients staying on therapy for longer under the increased.
Speaker Change: Duration is.
Speaker Change: Three key dynamics that ultimately, we're very pleased with in Q1, and we'll see how they play out through the rest of the year.
Speaker Change: Got it thank you.
Speaker Change: Thank you very much.
Speaker Change: Thank you so much.
Patel: Im showing no further question at this time I would now like to turn it back to <unk> Patel for closing remarks.
Patel: Thank you operator, and thank you everybody for the questions and joining the call. This morning, we look forward to the remainder of the year to providing additional updates in the future when the crack down thank you.
Patel: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Patel: Okay.
Patel: Okay.
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Patel: Okay.
Patel: Okay.
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Patel: Uh huh.
Patel: Yes.
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