Good day and thank you for standing by. Welcome to Kiniksa Pharmaceuticals Second Quarter 2024 Earnings Conference Call. At this time all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that this conference is being recorded. I will now hand the conference over to your speaker for 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 second 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 an introduction. Next, Ross Moat, our Chief Commercial Officer, will provide an update on the ARCALYST commercial execution. From there, Mark Ragosa, our Chief Financial Officer, will review our second 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; and John Paolini, our Chief Medical 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 hello to everyone listening in. In this second quarter of the year, we've continued to execute and make significant progress across our portfolio. We've driven strong commercial performance and advanced our clinical stage asset abiprubart into a Phase 2b study in Sjögren's Disease. The full clinical development plan for this program is fully funded within our current operating plan. We've also maintained a strong financial position, and we expect to be cash flow positive on an annual basis. All of this positions us for continued success in the second half of the year and beyond. Starting on the commercial side, since launching ARCALYST in recurrent pericarditis just over three years ago, Kiniksa has built an effective commercial operation, allowing us to reach an increasing number of recurrent pericarditis patients. We've introduced and advanced a fundamental shift in the treatment paradigm for this disease, and this has been pivotal in establishing ARCALYST as the standard of care for recurrent pericarditis. We've also consistently driven ARCALYST collaboration profitability. This allows us to invest in further commercialization, but also includes our recent sales force expansion, the American Heart Association initiative, and the Henrik Lundqvist partnership that we announced last month. In the second quarter, ARCALYST net product revenue grew to $103.4 million, which is a 90% year-over-year growth. This growth was supported by continued strength across several key commercial drivers, including increasing prescriber adoption, high physician and patient satisfaction, and over 90% payer approval of completed cases. The second quarter also benefited from higher compliance and lower gross to net, both of which we do not expect to improve at the same rate going forward. With regard to prescribers, the total number since launch has increased from approximately 2,000 in Q1 to approximately 2,300 in Q2. Importantly, these prescribers are demonstrating a growing appreciation of the need to treat to the duration of underlying disease, and that's reflected by the total average duration of therapy increasing from 23 months at the end of 2023 to approximately 26 months at the end of Q2. Additionally, at the end of the second quarter, approximately 11% of the 14,000 target population were actively on ARCALYST treatment. As we look to grow this penetration number and ultimately help more patients, we've continued to evolve our commercial efforts and initiatives, and we now expect 2024 full year ARCALYST net sales to be between $405 million and $415 million, and Ross will cover this in more detail in a moment. Ultimately, it's our commercial execution that's helping to drive our strong financial position and our ability to drive further growth across the Kiniksa business. With that in mind and looking to our pipeline, we're really excited about the potential of abiprubart to provide another growth opportunity for the company. We recently announced that we started enrollment in the Phase 2b study of abiprubart in Sjögren’s Disease. This is a debilitating chronic autoimmune disease that has no FDA-approved therapies. Based on the clear biological activity demonstrated by abiprubart, potential for convenient subcutaneous administration and the externally proof-of-concept of the inhibition of the CD40 and CD154 interaction, we believe that abiprubart has the potential to provide meaningful benefit to patients. I do want to mention that today is World Children’s Day. This is a day that's dedicated to raising awareness of this life-altering disease. We’re very excited to be working closely with both the Sjögren’s Foundation and Sjögren’s Europe to help raise awareness. With that, I’ll turn it over to Ross, who will provide an update on how we plan to continue driving patient and physician adoption.

Thank you, Sanj. As Sanj noted, Q2 represented a solid quarter of growth, which was marked by strength across a number of key revenue drivers. As of the end of the second quarter, the number of active commercial patients reached approximately 11% into the 14,000 multiple recurrence target population compared to around 9% as of the end of 2023. We are proud to be helping many recurrent pericarditis patients, and we believe there is a massive opportunity ahead if we continue to execute our strategy to further build the recurrent pericarditis market. A key component of continuing to build the market is disease awareness, which ultimately impacts all of the other underlying commercial growth drivers. As a rare, chronic, flaring disease, recurrent pericarditis is often misdiagnosed and undertreated due to a lack of access to expert care. In a Harris Poll survey, 96% of patients reported that they were incorrectly diagnosed with other conditions prior to their recurrent pericarditis diagnosis. In fact, they had an average of 2.7 misdiagnoses before their recurrent pericarditis diagnosis. Additionally, once the diagnosis is reached, our aim is to evolve the physicians’ mindsets to recognize interleukin-1 alpha and beta as the underlying driver of the disease and to be proactive in moving away from continued systemic treatment and utilize ARCALYST. Based on our learnings since launch, we’ve made a number of investments focused on improving the awareness and understanding of the disease. This includes evolving digital marketing materials and expanding our field force to approximately 85 representatives with the goal of achieving greater reach and frequency of engagements with health care professionals. Additionally, we recently announced two exciting initiatives. Firstly, we are sponsoring the American Heart Association’s Addressing Recurrent Pericarditis initiative, which is a multifaceted, national effort to improve the quality of care for recurrent pericarditis patients through building centers of excellence and disseminating best practices for the diagnosis and management of the disease. Under this initiative, the AHA has identified 15 champion sites that will establish a learning collaborative to improve referral pathways, identify gaps and develop solutions that can be shared with regional health care practices across the country. In addition to creating a scalable national model of care, this initiative will also develop educational materials and digital media for both patients and physician audiences. Finally, we also recently announced a partnership with Henrik Lundqvist, a National Hockey League Hall-of-Famer and former goalie of the New York Rangers, to raise awareness of the realities of suffering from recurrent pericarditis and the importance of proactive, early treatment to prevent future flares. We look forward to providing more details when the awareness campaign formally kicks off in September. In Q2, we saw a growth of around 300 new prescribers versus the prior quarter. This takes the total prescriber base to more than 2,300 since launch and demonstrated solid growth in the breadth of prescribing. Additionally, the depth of prescribing is growing with the number of repeat prescribers now reaching around 550. Looking year-over-year, we are seeing an acceleration in the step-up of both prescribers and repeat prescribers, which bodes well for the future as physicians continue to share their positive prescribing experiences and patients report the magnitude of effects from being treated with ARCALYST. Furthermore, with the growth in repeat prescribers over time, they are starting to account for a meaningful size of the new patients starting ARCALYST. Year-to-date, repeat prescribers accounted for greater than 40% of all new enrollments over the same time period. And we are still nascent in the overall recurrent pericarditis market opportunity for ARCALYST. One measure to demonstrate this is that our recently increased sales force targets around 11,000 prescribers, covering approximately 85% of the recurrent pericarditis patients nationally. Clearly, with around 2,300 prescribers launched to date and considering some of those doctors are not within our target base, we're only just getting going and we have a huge opportunity to further expand both the breadth and the depth of the prescriber base. Turning to the next slide. Our market research is also pointing to the opportunity ahead. When interviewing health care professionals, both current prescribers and those who haven't previously prescribed ARCALYST, both overwhelmingly expect the prescriber base of ARCALYST to grow with zero expecting a decrease. In addition, and unsurprisingly, given the positive experiences they're having, rheumatologists and cardiologists are considering the use of ARCALYST in patients earlier in their disease course than they were compared to a year ago. More broadly, this tells us that we're succeeding in our efforts to evolve physicians' mindsets to appreciate that recurrent pericarditis is a serious and debilitating disease that requires a proactive treatment with an interleukin-1 approach. This underscores that we are starting to establish a new standard of care for recurrent pericarditis with ARCALYST. Sanj mentioned earlier that Q2 was a particularly strong quarter, mainly driven by an increased number of patients on therapy due to an acceleration of patient starts and longer durations of therapy. A portion of the growth was also due to metrics that improved in Q2 compared to Q1, where we don't anticipate the same magnitude of growth in subsequent quarters. For example, higher compliance rates resulting from Q1 payer plan changes and a new compliance and adherence program that we launched to support patients even further on their journey on ARCALYST. Additionally, year-to-date gross-to-net decreased from 13.5% at the end of Q1 to 10.8% at the end of Q2 due to better-than-expected co-pay utilization with more patients reaching their out-of-pocket maximums earlier than forecast. As a result of the strong Q2 performance, we are delighted to increase the net revenue guidance for 2024 from $370 million to $390 million to $405 million to $415 million. I'll now turn it over to Mark to discuss the second quarter 2024 financial results.

Thanks, Ross. A detailed second quarter 2024 financial results can be found in the press release we issued earlier today. There are several items on this slide that I'd like to call your attention to this morning. First, total revenue in the second quarter of 2024 was $108.6 million, including ARCALYST net product revenue of $103.4 million, representing a 90% year-over-year growth and collaboration revenue of $5.2 million, representing the recognition of milestones earned under the Genentech License Agreement for vixarelimab, including a $5 million development milestone received this quarter related to a third indication. Second, ARCALYST collaboration operating profit in the second quarter grew 114% year-over-year to $59.9 million and drove collaboration expenses to $30 million. Third, higher cost of goods sold and collaboration expenses, both of which are largely driven by ARCALYST revenue growth as well as investment related to ARCALYST commercialization, drove year-over-year operating expense growth in the second quarter. Fourth, net loss in the second quarter was $3.9 million compared to net income of $15 million in the second quarter of last year, when we recognized a noncash tax benefit related to the treatment of our deferred tax assets. Lastly, net cash flow in the second quarter was $5.2 million, bringing our end-of-period cash balance to $218.8 million. We continue to expect our cash reserves as well as strong commercial execution and financial discipline to support our current operating plan and we expect to remain cash flow positive on an annual basis. With that, I'll turn the call back to Sanj for closing remarks.

Thanks, Mark. As you've heard, we're focused on accelerating Kiniksa’s growth through our commercial execution with ARCALYST and by advancing our pipeline. Importantly, we expect to remain cash flow positive on an annual basis while continuing to invest in value-creating opportunities. I am truly excited about the strides we're making to provide life-changing medicines for patients and building sustainable value. With that, I'll now turn the call back to the operator for questions.

Now first question coming from the line of Anupam Rama with JPMorgan. Your line is open.

Hey guys. Congrats on the quarter. Just a quick one for me. As you're thinking about ARCALYST treatment duration now over two years, where would you say physician and payer understanding about ARCALYST being more of a chronic therapy versus a product used for sort of a defined treatment duration is currently? Thanks so much.

Thanks, Anupam. This is Sanj and I'm sure I'll hand it over to Ross or John. But certainly, we see recurrent pericarditis as a chronic flowing disease, and certainly our education to both payers and physicians has been very much along that line. I think there's a growing understanding that this is definitely a chronic disease, and you've seen the duration increase since the launch just over three years ago. But I'll maybe hand over to Ross, who's obviously in close contact with the payer community of our payer group.

Thanks, Sanj. Hi, Anupam. Thank you for the question. So I think you're absolutely right. We are starting to see somewhat of a shift, and that's been evolving since the time of launch, as Sanj outlined. Most recently, changing from a total average duration of around 23 months to now around 26 months. We're really focusing on making sure people understand the natural history of the disease, which is a median of around three years of disease and about a third of the patients are still suffering from the disease at five years out. So we're really trying to utilize that backdrop to treat with ARCALYST, and I think we're starting to see the food itself that people really understand it and treat into the natural history. Our clinical experience also mirrors some of that as well, where we have a median treatment duration of two years, with a maximum three-year treatment duration under the long-term extension. We obviously have a resonance registry ongoing as well to help collect that more long-term, longitudinal information from patients. So I guess I can say that we're starting to see it continue to evolve, and we'll see whether that continues along the trajectory for the future or not. But it's obviously a key focus for us to make sure the patients are treated appropriately throughout the course of the disease that they're suffering from rather than stopping too early, which we do see and then patients go and restart back on ARCALYST if symptomology comes back. On the payer side, generally, we see power approvals for 12 months duration and then an attestation from the physician that the patient needs to continue on therapy and is seeing good experience on therapy to just roll over and continue for the next year. So obviously, we've had many patients go through that re-approval process now as well.

Thanks so much for taking the question, and congrats again.

Thank you. And our next question coming from the line of Paul Choi with Goldman Sachs. Your line is open.

Hi everyone. Congrats on the quarter. This is Koala calling in for Paul. Thank you so much for taking our question. I guess a couple of quick ones from us. When you talked about the GTN decreasing this quarter, I was just wondering if you had any kind of color on what the steady state should be going forward and how we should think about that? And then secondly, we're wondering if you had any color on the cadence of enrollment in the abiprubart trial? Thank you so much.

Maybe Ross, why don't you start and then we will hand it over to John.

Yes. Sure. I'll take the question as part to begin with. So maybe just to orientate you to a point of reference, which is through 2023, where we saw the full year gross amount of 9.8% throughout the entire year. At the end of Q1, the year-to-date gross-to-net was 13.5%, and as we mentioned on the prepared remarks at the end of Q2, that was reduced quite substantially to 10.8% as the year-to-date number at the end of Q2. So many of that is coming from the co-pay dynamics in Q1. Obviously, there's a lot of industry headwinds associated with payer plan changes and co-pays. We saw that reverse quite substantially through Q2, which accounts for a meaningful amount of the growth that I think was important. But obviously, we have not provided a forward look into what we expect for the full year of 2024 to be from a gross-to-net perspective.

Got it.

And then with regard to your second question regarding the Phase 2b study for abiprubart. Yes, we were pleased to announce at the earlier part of July that we had initiated enrollment in the Phase 2b Sjögren's trial. And today, of course, being International Sjögren’s Day, we really paused to reflect upon the importance of this debilitating disease and Kiniksa's contribution to trying to grow the science in this space with the development program in abiprubart. As was mentioned by Sanj, enrollment has initiated and at this point, further updates could be provided through the usual mechanisms, clinicaltrials.gov.

Got it. Thank you so much, and congrats again.

Thank you.

Thank you. And our next question coming from the line of Eva Fortea-Verdejo with Wells Fargo. Your line is open.

Hi guys, congrats on the quarter and thanks for taking my question. A few from us, so first on ARCALYST, you mentioned 11% of patients with multiple recurrences were on ARCALYST treatment. So for just 11%, can you provide a bit more color on how this is split between patients on the second and the recurrence and beyond? And also, does this include patients on first recurrence, or how should we be thinking about this patient and how much upside can we expect for the remainder of the year? And on abiprubart, how should we think about the cadence of new trials in new indications? Thanks.

Hi, Eva. This is Ross. So thanks very much for the question. I find it a little bit difficult to hear the second part. But if I don't answer it correctly, please let me know, and I’ll have another go. But regarding the 11% penetration into the 14,000 multiple recurrent patients, that's obviously the patient group that have suffered for two or more recurrences, and the 11% is a moment in time of how many active commercial patients we have on ARCALYST within that multiple recurrence number. So out of all the patients that are on ARCALYST, the vast majority are on two or more recurrences, but we certainly have some patients that are just on their first recurrence earlier in the disease as well. And as a reminder, we do have a very broad label that allows physicians to utilize it on the first recurrence. And the graph that I shared in the prepared remarks also shows physicians' future intent of when they consider prescribing ARCALYST, so you can see that growing as an intent to consider it within the first recurrence and obviously going up within each recurrence that the patients suffer from. So I think we're making good progress with that regard. And hopefully, that helps to answer your question.

Eva, could you repeat the second half of your question? It was very difficult to hear. We heard abiprubart and cadence, but was it the Phase 2b Sjögren’s trial or was it the potential new indications you're asking about?

That was yes, potential new indications, basically, how should we think about the cadence of the new indications for abiprubart?

Yes. I mean, obviously, we're looking very closely at the applicability for abiprubart. We're very excited about the mechanism. There has been proof-of-concept in a number of different areas, as you've probably understood. And so obviously, Sjögren’s is the first one that we've started with the Phase 2b. We've often said it isn't mutually exclusive that we would have to wait for that readout. We've had proof-of-concept from the rheumatoid arthritis trial. We're very pleased with that, particularly the RF factor data and the PD marker data, but time will tell. At this point, we've not disclosed what other indications we're considering or when we'll announce them. But we're certainly going to look very carefully and work very hard about thinking about what the next steps are in that program.

Okay. Thanks.

Thank you, Eva.

Thank you. And our next question coming from the line of Liisa Bayko with Evercore ISI. Your line is now open.

Hi, there. Thanks for taking the question. Congratulations on a strong quarter and the trajectory of rilonacept. I have a question for you just on – was there any inventory changes or just – I'm trying to reconcile kind of ending this quarter over the 11% of patients on therapy? And then just kind of how it close. I know your growth connects were a little bit different for this year. So any inventory changes or other things that could have sort of given a temporary boost to sales for this quarter? And then also, what is gross-to-net for the next two quarters, anticipate to be or overall for the year? Thanks.

Yes. I mean I can make some comments. I'm sure Ross will jump in. I mean there's nothing of repute as far as inventory changes. We also made some comments regarding getting the benefits developed in regards to some of the one-time growth that we've seen. We certainly haven't commented on our overall guidance for gross-to-net. But by all means, look at our 10-Q, you'll see some previous disclosures, and certainly, you'll see them from this current 10-Q, but nothing to report, nothing certainly unusual on the inventory side.

Okay. Maybe it’s just timing of ads or something. But okay. So there's no inventory changes or anything like that. I mean you might expect it if you're selling more...

There's no major unusual inventory changes.

All right, thanks.

Great. Sounds like you're riding in the Jetsons car, Liisa. So it's a bit of a noise coming through, but thank you for the question.

Oh, sorry. Okay. Bye.

Thank you. And I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Sanj Patel, Chief Executive Officer, for any closing remarks.

No. Thank you very much. Obviously, we're very pleased with the performance to date. We continue to execute both commercially and from the portfolio side. I appreciate everybody dialing in, and we look forward to providing additional updates in the future. So thank you very much.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. And you may now disconnect.