Good day and thank you for standing by and welcome to Kiniksa Pharmaceuticals First Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rachel Frank, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone and thank you for joining Kiniksa's call to discuss our first quarter 2024 financial results and recent portfolio execution. A press release highlighting these results can be found on our website under the Investors section. As for the agenda, our Chief Executive Officer, Sanj K. Patel, will start with the introduction. Ross Moat, our Chief Commercial Officer will provide an update on our ARCALYST commercial execution. John Paolini, our Chief Medical Officer, will provide the Abiprubart program review, then Mark Ragosa, our Chief Financial Officer will review our first quarter 2024 financial results. And finally, Sanj will return for closing remarks and to kick off the Q&A session, for which Eben Tessari, 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. 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. 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 Sanj.

Thanks, Rachel, and good morning, everyone. We are very encouraged with the ARCALYST commercial progress we continued to build upon the ARCALYST performance this quarter, marked by reaching an increasing number of recurrent pericarditis patients and growing to a net product revenue of $78.9 million. We continue to see strength across key commercial drivers including growing prescriber adoption and high physician and patient satisfaction, which has been supported by our focus on frequent engagement with the existing and potential prescribers. Importantly, we are also seeing an expanding utilization of ARCALYST as a steroid-sparing therapy for patients suffering from recurrent pericarditis. Looking to the year ahead, we now expect ARCALYST full year sales to be between $370 million to $390 million and this would represent 63% year-over-year growth at the midpoint. In terms of our pipeline, we recently announced plans to initiate a Phase 2b trial with Abiprubart in Sjögren’s Disease. This is a debilitating disorder with no current FDA approved therapies and we believe Abiprubart has the potential to provide meaningful benefit to patients. Dr. John Paolini, our Chief Medical Officer will provide additional details about our planned Phase 2b trial, which is expected to initiate in the second half of this year. And with that, I'll now turn it over to Ross to review our commercial execution.

Thank you, Sanj. I want to start by highlighting that the end of Q1 marks the third anniversary of the approval of ARCALYST in recurrent pericarditis and we continue to deliver robust growth and are excited by the future of this franchise. In Q1, ARCALYST net revenue was $78.9 million, which is an 85% growth versus Q1 of 2023. This revenue growth also represents strong quarter-on-quarter growth especially against the backdrop of Q1 specialty industry headwinds and a gross to net of 13.5%, which was predominantly due to co-pay resets. The net revenue growth was in part due to an acceleration in the number of prescribers. Total prescribers of ARCALYST since launch grew to approximately 2,000 at the end of Q1 making it the largest quarter-on-quarter growth since launch. Additionally, we continued to observe robust underlying fundamentals across our commercialization including greater than 90% payer approval of completed cases, a total average duration of therapy of 23 months and high physician and patient satisfaction with ARCALYST. Recurrent pericarditis is a debilitating rare flaring disease where patients are widely dispersed across the country. Since ARCALYST approval as the first and only FDA approved drug for the disease, we've been making robust inroads through our field teams and our marketing strategy to educate both physicians and patients on the disease. We've seen increasing acknowledgement that interleukin-1 Alpha and Beta are the underlying drivers of the disease. And once patients become recurrent, they require a targeted treatment to address the disease directly. As a result, the total prescriber base has continued to grow every quarter since launch and as physicians gain positive prescribing experience, and witness the impact ARCALYST can have on their patients, more and more physicians are becoming repeat prescribers. In fact, in Q1, greater than 40% of all new prescriptions were written by healthcare professionals who are repeat prescribers. We are making solid progress towards our ambition of ARCALYST becoming the standard of care in recurrent pericarditis. For the next slide, I’ll hand the call over to Dr. John Paolini, our Chief Medical Officer to share some of the latest information coming from our RESONANCE Registry, describing the evolution in recurrent pericarditis management since launch.

Thanks, Ross. We're very excited to share some insights we’ve gained from our RESONANCE Registry and that we've recently shared at the American College of Cardiology. The data show a paradigm shift in RP management amongst cardiologists at the 21 participating centers in the US, away from the steroid-based 2015 European Society of Cardiology guidelines and towards a steroid-sparing approach using IL-1 pathway inhibition. Amongst these registry patients with a median three-year RP disease duration, IL-1 pathway inhibition use increased to 25% of medication patient years in 2023 with ARCALYST use driving this pattern. Also, amongst patients who had failed Aspirin, NSAIDs and Colchicine and intensified treatment, the proportion of patients who transitioned to ARCALYST has increased year-on-year with commensurately fewer patients transitioning to corticosteroids such that by 2023, 65% of transitions were made to ARCALYST with a two to one preference over corticosteroids. These data affirm the evidence-based adoption and growth of the steroid-sparing paradigm by RP-focused cardiologists. Back to you, Ross.

Thanks, John. These compelling new data from pericarditis-focused cardiologists mirror our promotional messaging that recurrent pericarditis is an Interleukin-1 Alpha and Beta-driven disease. ARCALYST addresses the root cause of the disease and should be utilized prior to corticosteroids. Our Q1 net revenue growth signifies strong underlying business fundamentals and with only 9% of the target population addressed as of the end of 2023, we have a significant opportunity ahead. In Q1, we delivered robust growth that broke through the typical Q1 industry headwinds. As such, we're pleased to increase our revenue guidance for 2024 from $360 million to $380 million to $370 million to $390 million. And with that, I hand it back to John to discuss Abiprubart.

Thanks, Ross. As Sanj mentioned, and as we outlined in our previous announcement, several factors contributed to our decision to move forward with Abiprubart in Sjögren’s Disease. Importantly, Sjögren’s Disease is a debilitating disease currently with no FDA approved therapies. Second, there are substantial external proof-of-concepts that inhibition of the CD40-CD154 co-stimulatory interaction could be an efficacious therapeutic approach for Sjögren’s Disease. Additionally, the totality of the Phase 2 Abiprubart data we've generated including highly statistically significant reductions in rheumatoid factor of approximately 40% across all three dose regimens demonstrate clear biological activity of the molecule and thus bolster our confidence in the potential efficacy in Sjögren’s Disease in Phase 2b with either biweekly or monthly subcutaneous dosing. Understanding that there are other assets in development for Sjögren’s Disease, we believe Abiprubart has the potential to demonstrate comparable efficacy, but with a more convenient route of administration, a profile which could potentially represent a compelling and differentiated option for patients. With that in mind, we are planning to initiate in the second half of 2024, a randomized double-blind placebo-controlled Phase 2b trial designed to evaluate the treatment response of chronic subcutaneous administration of Abiprubart in patients with Sjögren’s Disease. The intended trial design begins with a placebo-controlled portion that will randomize approximately 201 patients in a one-to-one-to-one ratio to receive Abiprubart 400 milligrams subcutaneously biweekly, 400 milligrams subcutaneously monthly, or placebo over a period of 24 weeks. The primary efficacy endpoint will be changed from baseline versus placebo in EULAR Disease Activity Index called ESSDAI at week 24. Subsequently, we plan for patients to enter a long-term extension in which all participants will receive active treatment for an additional 24 weeks. I will now turn the call over to Mark to discuss the first quarter financials.

Thanks, John. Our detailed first quarter 2024 financial results can be found in the press release we issued earlier this morning. Over the next couple of minutes, I'd like to call your attention to a few items on this slide. First, total revenue in the first quarter of 2024 was $79.9 million, driven by ARCALYST net product revenue, which grew 85% year-over-year to $78.9 million. Second, ARCALYST collaboration operating profit in the first quarter grew 142% year-over-year to $40.2 million and primarily drove collaboration expenses of $20.8 million. Third, higher cost of goods sold and collaboration expenses, both of which are largely driven by ARCALYST revenue growth, as well as the advancement of Abiprubart development and investment related to ARCALYST commercialization drove year-over-year operating expense growth in the first quarter. Fourth, net loss in the first quarter was $17.7 million, compared to $12.3 million in the first quarter of last year. And lastly, our cash balance at the end of the first quarter was $213.6 million. This balance reflects net cash flow of $7.2 million, inclusive of the $10 million development milestone received from Genentech in the first quarter that was previously recognized as revenue in the fourth quarter of 2023. We continue to expect cash reserves, as well as strong commercial execution and financial discipline to support our current operating plan, which we expect to remain cash flow positive on an annual basis. And with that, I'll turn the call back to Sanj for closing remarks.

Thanks, Mark. As you’ve heard, we remain committed to advancing all areas of our business in the year ahead. Importantly, we expect our robust commercial performance to meaningfully contribute to our strong financial position and our ability to drive growth across the business. Based on the current operating plan, which includes advancing Abiprubart through Phase 2 development in Sjögren’s Disease, we expect to remain cash flow positive on an annual basis. We're excited by the opportunity to continue to provide life-changing medicines for patients and we believe we are in a strong position to deliver on our goals. I do want to thank all of you for your time today and I'll now hand it back to the operator for any questions.

One moment for our first question. And our first question comes from Anupam Rama from JP Morgan. Your line is now open.

Hi guys. Thanks so much for taking the question and congrats on the quarter. For ARCALYST, it seems like the physician prescribers continue to grow here. How much do you attribute this to the expanded sales force and getting to those kind of next tier of physicians versus deeper penetration into some of your top centers and existing academic center relationships? Thanks so much.

Yes, thanks, Anupam. This is Ross. Thank you very much for the question. So certainly we did go into 2024 with around 85 representatives, which gave us a boost in the coverage that we could achieve across the US. So we went from covering around 6,000 physicians up to 11,000. And so certainly some of it is done through the larger field team that we have been able to see certainly increase the breadth of how we could reach, but also within those top tier high-volume doctors that we really focus on having the highest group of recurrent pericarditis patients. And we are also increasing the frequency within those. So, we do think that’s an important element along with just continued execution that we've always been focused on and the message that we've got to deliver and the number of patients we've got to help out there and we still believe that there's a huge opportunity ahead of us. So, you see from the 11,000 doctors that we target, we’ve now got around 2,000 prescribers in total since launch. So that alone tells you we've got huge headroom ahead and certainly out of those 2,000 prescribers not all of them are within that target population of the 11,000 to 12,000. So we've got a long way to go to continue to grow the breadth of prescribers of the total prescriber base, as well as the repeat prescribing, which you can see has remained at 24% of an ever significantly increasing base of total prescribers. So, and the fact that they contributed around 40% of all the new enrollments that we had within Q1 also tells you that the repeat prescribers is growing nicely and contributing significantly to the business as well. So thanks for the question. We're very pleased with where we are and then the opportunity we have ahead.

Thanks so much for taking our question.

And thank you. And one moment for our next question. And our next question comes from Paul Choi from Goldman Sachs. Your line is now open.

Hi, thanks. Good morning and congratulations on the good start to the year. My first question is for Ross and just with regards to ARCALYST patient behavior. Can you just maybe comment on if you are seeing any trends in terms of patients who discontinued therapy coming back maybe a little faster versus prior quarters? And just sort of what the messaging on restarting and maintenance of therapy has been like and how that has resonated? And then I had an Abiprubart question for John afterwards as a follow-up.

Okay, Choi, I'll maybe start from the ARCALYST one and then hand back to John for the Abiprubart question. So, thank you for that. I think we haven't seen any significant changes in patient behavior from different cohorts that we're aware of different types of patients around either the ways in which they stopped therapy or indeed with the restart and the restart rate interestingly has remained consistent for quite some time now of about 45% of all those patients who stopped therapy come back to restart. And generally patients are able to restart if they suffer from ongoing symptoms or if the symptoms return. And very often they have pills left on their prescription. They have the title approval in place. Sometimes they have stock on hand still from where they wanted previously. So it's often very simple for patients to restart therapy if they do suffer from the disease continuously just acknowledging that this is a chronic disease for most patients and it lasts multiple years. So, for these patients who stopped too early it’s likely that the symptoms will indeed come back. We just continue to focus on our education with healthcare professionals about the natural history of the disease and thus the patients who suffer from two or more recurrences, they generally have three years' worth of median duration of therapy. One-third of the patients still suffer from the disease five years out. And you may remember from our clinical experience recently from our long-term extension portion of our study, the median was two years' worth of continual treatments up to three years. So, we've seen the total duration of therapy grow over time in the commercial setting most recently around 23 months. But we really continue to focus on the natural history and just want patients to stay on therapy, as well as the expected course of their disease is that they often require treatment for multiple years.

Okay. Great. Thanks for that Ross. And then for John, as you look at the prior RA data and the available preclinical data for Abiprubart, can you maybe just comment on as you think about your Phase 2 plan for Sjögren’s, just what areas do you think Abiprubart might be able to show evidence of differentiation or what, I guess, gives you the confidence for potential success here relative to some of the other assets in the class that may be further along in the clinic? Thank you.

Sure. Thank you, Paul. I appreciate the question. Yes, we have confidence in the data that we've generated so far with Abiprubart. The data from Phase 1 show of course, important suppression of the mechanism as evidenced by suppression of antibody formation. And then we carry that forward into the Phase 2 program where we saw with all three dosing regimens, so with weekly, biweekly and even monthly dosing, suppression of rheumatoid factor by around 40% that was highly statistically significant. And then that translated into clinical outcomes using the DASH 1 to 8 CRP score. So that’s showing us that in a clinical setting, we have strong target engagement and that's with any of the three dosing regimens. What that means then translated forward is in terms of differentiation is that we've worked hard on making sure that we have a high concentration liquid formulation that supports chronic subcutaneous dosing. And so that ability to administer Abiprubart subcutaneously rather than intravenously in these rheumatologic diseases, and then to be able to spread out the dosing is crucial. We test not only biweekly dosing, which is pretty standard, but even to stretch it out to potentially monthly dosing, which would be relatively unique in this space to have monthly subcutaneous dosing, to us gives us confidence as we go forward into the Sjögren’s study that Abiprubart has the opportunity to show differentiation across other assets.

Great. Thank you.

And thank you. And one moment for our next question. And our next question comes from David Nierengarten from Wedbush Securities. Your line is now open.

Okay. Thanks for taking our question. I had two. So, maybe following up on the Sjögren’s competitive landscape, I was curious who you considered your main competitor and if as a sub part of that how predictive do you think the rheumatoid factor is reduction for symptom relief in Sjögren’s? And then a quick question on ARCALYST. I mean, it seems obvious, but just checking that the physician paradigm seems to be shifting to Aspirin maybe Colchicine in the frontline kind of recurrent pericarditis setting for the majority of patients and then ARCALYST, is that a fair characterization of the market shift? Thanks.

Yeah, hi, David. This is Ross. Maybe I’ll start with the ARCALYST one and then I could hand over to Eben on the COA for the Abiprubart question. So, yeah, just to summarize, I think that's a fair characterization. I think you said for patients that first of all suffer from pericarditis are generally treated with NSAIDs and not the Colchicine as well often when they come back. In recurrent cases, it's often the same treatment regimen, but for a longer duration. And then obviously we are focused on patients who enter their second recurrence or more and making sure that ARCALYST is really the standard of care of choice for those patients. At that time, they are clearly beyond the usual early therapy options and really require something that targets the recurrence of the disease. So, yes, we think that’s the way we're seeing it and as John shared with the RESONANCE Registry, we are certainly starting to see those key physicians focused on recurrences of the disease utilizing ARCALYST ahead of corticosteroids, which again is addressing the physicians that we are aiming for. Eben?

Yeah, hey David. Thanks for the question. So we often look at the competitive landscape with a broad lens and follow all of the programs currently in clinical studies and producing data. To answer your question more narrowly, looking at the CD40-CD154 antagonist class alone, there are three others that have either produced results or are studying their assets. Those are the Amgen molecule which is currently enrolling in a Phase 3 study with an IV formulation. There is Iscalimab from Novartis which has finished the Phase 2 program with five weekly subcutaneous dosing. Both of those programs have demonstrated significant efficacy in this population, showing us that we’re in the right patient population to potentially demonstrate an efficacy. The third program is a safety program called Iscalimab which has been studied in Sjögren’s suppressing with no results reported as of yet. Given the data we have generated today with our data, we’re pretty excited about our study and our ability to test not only an exclusive subcutaneous formulation, but also testing at biweekly and monthly dosing.

And thank you. And one moment for our next question. And our next question comes from Geoff Meacham from Bank of America. Your line is now open.

Morning guys. Thanks for the question and congrats on a good quarter. Ross, just on ARCALYST, you've had a successful launch so far, but obviously raising awareness I suspect will be key. So, are there plans to publish RESONANCE? And are there other studies that you guys were thinking about in terms of raising the profile? And then second question for Sanj, you'll obviously be investing in Abiprubart going forward, but you guess have committed to remaining cash flow positive. So I guess the question is how important is profitability or pipeline expansion from us on a strategic basis relative to your commercial investments in ARCALYST? Thanks guys.

Thanks, Geoff. John, do you want to start?

Absolutely. Thanks Geoff for the question. Yeah, we’re really excited about the RESONANCE Registry, because that's really an important tool by which we're learning about recurrent pericarditis epidemiology and disease management. Importantly, there are more than 20 centers across the US that are led by cardiologist investigators who have a focus on recurrent pericarditis and these are really the leading edge of managing the disease. So in that sense, the data serves as an example for other clinicians around the country who are seeking to grow their knowledge base. So, this is what we're looking to do and as we've done in the past, this is a five-year registry and we're kind of right in the middle of it right now. So about halfway enrolled, about halfway through the follow-up period adding patients all the time we’ve presented at prior scientific meetings and we just presented at the American College of Cardiology and there's a lot of information in this registry that we hope to harvest as we go forward, gaining a lot of insights about it. In this time around, the fact that we learned about the penetration of IL-1 pathway inhibition as a concept and then importantly that these evidence-based cardiologists are adopting a steroid-sparing paradigm in the treatment of the disease is driven by ARCALYST and is a growing trend year-on-year. To us, this is important exciting data that people are taking the evidence and using it to drive management of their patients. So we look forward to harvesting more information from these centers and from these cardiologists as we go forward. So more to come. Thanks so much for the question.

And Geoff, to your second part of the question. As you said, we disclosed in this quarter that we - based on our current operation plan, we do expect to remain cash flow positive on an annual basis. But that said, growth and creating value are certainly remain quite paramount and now while we're very excited about continuing the development that is through part as you've seen, we’ve shown this highly active molecule today with a compelling safety profile. We are very pleased with the ongoing commercial execution with ARCALYST. We continue actually to look very hard at business development opportunities across the whole range of areas. So all of that tells you that our first and primary goal is to create value. Certainly, the current operating plan means that we expect to remain cash flow positive on an annual basis. But ultimately, it's value creation that's important to us. So we're in a great position. Obviously, we are in a great financial position right now and obviously a lot of exciting development coming forward. So I think we are in a fantastic spot.

Hi, and just congrats on the quarter and great to see you being able to be sustainably cash flow positive. Just to drill down a little bit more on Abiprubart, can you maybe talk through some of the characteristics that make you feel like you'd be competitive? Maybe specifically some of the pharmacokinetic dynamics in Phase 2 data that lead you to believe that and just still kind of curious about any findings on kind of the treatments benefit over placebo in cohort 4 and kind of what that means from RAs as you think about transition to a different disease? And obviously there's kind of a bit more of a placebo response in the RA study, any implications to read through to what we might expect from the next phase of development. Thanks.

Hi Liisa. Thank you so much for that question. Yes, so with regards to the pharmacokinetics of Abiprubart, as you might remember, what we have shown previously is that the threshold for target engagement and suppression of antibody formation is that a plasma concentration of roughly two micrograms per ml. What we've shown in our pharmacokinetic curves and the modeling is that even with the monthly dose of Abiprubart, so 400 milligrams given every four weeks, the trough plasma concentrations are roughly around 20 to 30 micrograms per ml. So roughly an order of magnitude greater than the plasma concentration required to suppress antibody formation. And then the biweekly and the weekly dose levels are providing even higher plasma concentration. So in that sense, that's the reason why we have confidence in the rheumatoid factor data, which shows a 40% reduction across all three of those dosing regimens with highly statistically significant P values demonstrating really the strength of that finding. So that's kind of the fundamentals and the fact that this is all being done with a subcutaneous formulation really provides a lot of flexibility going forward for chronic dosing. And then in terms of how that translates forward into Sjögren’s Disease, as we mentioned, there's substantial external proof-of-concept that this mechanism has been implicated and is highly involved in the pathophysiology of the disease and that suppression of this mechanism could be an efficacious approach. So, by taking the biweekly and the monthly dosing into Sjögren’s Disease, we believe that we have a solid platform for delivering enough drug to suppress the mechanism and to do that in a manner that would be convenient for patients. The other part of that is that by following this out over a longer period, we get more experience with the chronic use of the drug. So there's a placebo-controlled portion upfront, and then that's followed by a longer-term extension where all the patients remain on active therapy so that we can understand the full magnitude of the effect of the drug over time. So thanks so much for the question.

And thank you. And I am showing no further questions. I would now like to turn the call over to Sanj Patel, Chief Executive Officer for closing remarks.

Thanks, operator. I appreciate all the questions and everyone joining the call today. Clearly got a very exciting year ahead of us and we're very much looking forward to continuing to execute and providing additional updates in the future. So with that, have a great day. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.