Thank you for standing by. Welcome to the Kiniksa Pharmaceuticals Third Quarter 2025 Earnings Conference Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jonathan Kirshenbaum, Investor Relations Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining Kiniksa's call to discuss our third quarter 2025 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 for today's call, our Chief Executive Officer, Sanj K. Patel, will start with an introduction and overview of our business. From there, Ross Moat, our Chief Corporate and Commercial Officer, will discuss our IL-1 inhibition franchise and provide an update on ARCALYST commercial execution. Then Kiniksa's Chief Financial Officer, Mark Ragosa, will review our third quarter 2025 financial results. And finally, Sanj will share closing remarks and kick off the Q&A session, for which Dr. John Paolini, our Chief Medical Officer; and 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'll turn it over to Sanj.

Thanks, Jonathan, and good morning, everyone. Year-to-date, in 2025, we've continued to execute and meaningfully advance our commercial business and clinical development portfolio. The use of IL-1 alpha and beta inhibition with ARCALYST has increasingly become the preferred treatment for recurrent pericarditis, driving significant ARCALYST revenue growth and positioning our franchise for long-term success, both with ARCALYST and KPL-387. We continue to be excited about the potential of our IL-1 inhibition franchise and fully intend to remain the market leader in recurrent pericarditis. Given the fact that as last reported, we were only 15% penetrated into the multiple recurrence patient population, we expect to continue to grow ARCALYST revenue. To this point, as announced this morning, we've raised our full year net sales guidance to between $670 million to $675 million from our previous guidance of $625 million and $640 million. We also believe KPL-387 could be an important advancement in the treatment options available for patients, potentially increasing penetration and growing the recurrent pericarditis market. We remain on track to report data from the Phase II dose focusing portion of the Phase II, Phase III trial in the second half of next year. Additionally, we are pleased to report that early this month, the FDA granted KPL-387 Orphan Drug Designation for the treatment of pericarditis, which includes recurrent pericarditis. Importantly, we have maintained a robust financial position while continuing to create value without relying on the capital markets. Turning to the growing adoption of IL-1 alpha and beta inhibition with ARCALYST, we've introduced and advanced a fundamental shift in the treatment paradigm for this disease. Ross will share more details about this in a moment. In the third quarter, ARCALYST revenue grew to $180.9 million, which represents a growth of approximately $24 million over the previous quarter and approximately $69 million compared to the third quarter of 2024. While we're pleased with this growth, we continue to believe in the significant opportunity for additional growth ahead. As of the end of the second quarter, we were only 15% penetrated into the multiple recurrence opportunity, and we continue to see ARCALYST utilized earlier in the course of the disease. As previously stated, approximately 20% of ARCALYST prescriptions have been written for patients following their first recurrence. For patients who failed NSAIDs and colchicine, physicians are more readily turning to targeted IL-1 alpha and beta inhibition with ARCALYST rather than risk an unnecessary flare by treating patients again with a previously unsuccessful treatment. Overall, the progress we've made reflects the medical community's growing adoption of IL-1 pathway inhibition and speaks to the future value creation of our IL-1 inhibition franchise. With that, I'll turn it over to Ross.

Thank you, Sanj. The growing understanding of recurrent pericarditis being driven by the cytokines, interleukin-1 alpha and beta has been a key driver behind the growth we've seen in the adoption of ARCALYST. As an increasing number of health care professionals update their approach to how to treat recurrent pericarditis with targeted IL-1 immunomodulation, we've seen a substantial increase in the number of active commercial patients on ARCALYST. Specifically, this is a result of our team driving increases in two key areas. Firstly, in Q3, new patient enrollments grew by their highest level in a quarter since launch. This is represented in the growth of prescribers of more than 350 in the quarter, leading to a total prescriber count launched to date of more than 3,825, including around 28% or more than 1,000 prescribers who have written ARCALYST for two or more patients. Secondly, once on treatment, patients are staying on ARCALYST for longer, which speaks to both the duration of the disease and patient satisfaction on ARCALYST. At the end of Q3, the total average duration of therapy increased to approximately 32 months. These two levers increased the number of active commercial patients and contributed to our ability to raise our revenue guidance for the full year 2025. Our commercial organization has been highly focused on evolving the treatment landscape for patients suffering from this chronic, highly debilitating disease by increasing education and driving the utilization of interleukin-1 alpha and beta inhibition towards becoming the new standard of care for recurrent pericarditis. We have built a highly effective commercial infrastructure and built upon many years of established relationships with the recurrent pericarditis community to improve the care for patients. In the 4.5 years since the launch of ARCALYST, we've continued to hone our messaging, and we've improved our effectiveness through utilization of AI and digital marketing to inform which physicians to visit and importantly, when they're most likely to see a recurrent pericarditis patient. Thanks to the compelling clinical and real-world data generated in RHAPSODY and RESONANCE, our payer approval rate remains very high, and we continue to be focused on delivering excellent support to patients through Kiniksa OneConnect, our patient services program. This combination of robust data, access, and support enables health care professionals to feel confident that their patients will get on therapy, be well supported, and receive the type of efficacy we've seen in the published literature. As a result of the continued growth in patients on ARCALYST, today, we raised and tightened our full year 2025 ARCALYST net sales guidance from between $625 million to $640 million to now between $670 million and $675 million, which is a $40 million increase in guidance between the midpoints. Our increased guidance reflects the robust trajectory of ARCALYST revenue in 2025, while also accounting for typical year-end industry dynamics, which is consistent with our historical fourth quarter performance. As you've heard, we're pleased with our solid execution and progress and are incredibly excited about the opportunities we have ahead. As we continue to focus on maximizing the growth of ARCALYST, we are also excited about the opportunity to advance the care of recurrent pericarditis patients in the future with KPL-387, our development program. This is our fully owned monoclonal antibody antagonist targeting the IL-1 receptor to inhibit both IL-1 alpha and beta. The totality of data show that inhibiting the activity of both of these key cytokines is a core component of delivering a highly efficacious treatment for recurrent pericarditis. With this program, we're advancing a validated mechanism with the potential to address key patient needs and expand penetration into the addressable market by enabling a convenient monthly subcutaneous dose in an auto-injector. Surveyed patients and health care professionals have indicated a preference for a highly efficacious IL-1 alpha and beta inhibitor with this target profile. Specifically, approximately 75% of all surveyed recurrent pericarditis patients report that they would prefer the KPL-387 target profile over those of available commercial and current investigational therapies. On the physician side, more than 90% of health care professionals stated a high likelihood of prescribing KPL-387 for new patients as well as being receptive to switching current patients upon a patient's request. It's also worth noting that health care professionals broadly agree that the introduction of KPL-387 would expand the IL-1 alpha and beta inhibition market overall. As we've previously announced, the dose focusing portion of the Phase II/III development program of KPL-387 is currently underway, and we expect those data in the second half of 2026. With that, I'll turn the call over to Mark Ragosa to review our third quarter financials. Mark?

Thanks, Ross. This morning, I will cover our third quarter 2025 financial performance. Our detailed 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. Starting with our income statement on the left-hand side. First, ARCALYST revenue grew 61% year-over-year in the third quarter to $180.9 million, with adoption of IL-1 alpha and IL-1 beta inhibition for recurrent pericarditis continuing to drive significant gains in active commercial patients and duration of therapy. Second, operating expenses grew 29% year-over-year in the third quarter to $156.8 million, primarily due to collaboration expenses, which were driven by continued strong ARCALYST collaboration profit growth. And third, due to strong revenue growth against more moderate operating expense growth, net income was $18.4 million in the third quarter of 2025 compared to a net loss of $12.7 million a year ago. Next, the right-hand side of this slide provides the calculation of ARCALYST collaboration profit, which drives collaboration expenses. ARCALYST collaboration profit grew a significant 118% year-over-year to $126.6 million in the third quarter as profit split eligible COGS as well as commercial and marketing costs held steady against higher sales. Lastly, at the bottom of this slide, we continue to expect our current operating plan to remain cash flow positive on an annual basis. And in the third quarter, our cash balance increased by approximately $44 million to $352.1 million. As you've heard from Sanj and Ross, we further advanced our commercial business and clinical portfolio as well as maintained a strong balance sheet in the third quarter. As a result, Kiniksa added to its significant momentum and remains well positioned to continue to help patients as well as to create additional value in both the near and long term. With that, I'll turn the call back to Sanj for closing remarks.

Thanks, Mark. As you've heard, Kiniksa continues to execute both commercially and clinically, and we are well positioned to build significant future value as we grow our IL-1 alpha and beta inhibition franchise. As ever, we are committed to bringing additional treatment options to patients that are suffering from debilitating diseases with unmet need. I'll now turn the call back to the operator for questions.

And our first question comes from the line of Geoff Meacham from Citi.

This is Mary Kate on for Geoff. So you're seeing duration increase here for ARCALYST, which is encouraging. Could you comment on maybe the patient and physician feedback you're hearing from these longer users?

John, do you want to take that?

Sure. So in general, what we're seeing certainly in terms of the academic literature is an appreciation of the duration of disease and therefore, the necessity of treating to that duration of the disease in order to minimize the amount of recurrences that patients experience. So what we know from the literature is that the median duration of disease is 3 years, with 1/3 of patients still suffering disease at 5 years and 1/4 at 8 years. And so the other data that we have, in fact, which we recently showed at the European Society of Cardiology meetings is that continued treatment without interruption resulted in a 99.5% reduction in event rates post treatment compared or on treatment compared to pretreatment. So that creates a very powerful message, if you will, for clinicians that treating to the duration of the disease is the best way to manage the disease.

Thanks, John. I want to add that we've received very positive feedback from health care professionals regarding patients who have been on therapy for an average of 32 months. The high access rates mean that these professionals are able to get their patients on therapy quickly and easily, which gives them confidence in the process and encourages them to seek out more patients. For patients, having longer durations on therapy is a sign of success, and we consistently hear high satisfaction levels from them. This aligns with what we've observed in both clinical and real-world settings, demonstrating how effective and well-tolerated this drug is. It's designed for long-term use to align with the chronic nature of the disease, which is often highly debilitating for many patients. Overall, the feedback from both health care professionals and patients has been very positive.

And our next question comes from the line of Anupam Rama from JPMorgan.

Congratulations on the quarter. Can you discuss how you've integrated the updated ACC guidelines into your marketing efforts and what you have learned from the guideline update since it was released just a couple of months ago in August?

Anupam, thanks for the question. I'll start off with a brief summary of the concise clinical guidance and then hand it over to Ross regarding your question about incorporation of the guidance into the field work. So specifically to the concise clinical guidance, yes, this really came out in August and represents an affirmation of what we've seen from the literature and actually driven by the data that we've helped to generate, which is positioning IL-1 pathway inhibition as second line after NSAIDs and colchicine, which is a real advance in the treatment paradigm to be truly steroid-sparing. And so that was driven by the initial data from the RHAPSODY program, where half the patients were treated second line after NSAIDs and colchicine. And then that was then picked up from our RESONANCE registry showing year-on-year after the approval of ARCALYST a reduction in the use of corticosteroids and a rise in IL-1 pathway inhibition led by ARCALYST in the treatment of these patients. And so that was then picked up by JAK advances and JAK imaging in the thought leader literature. But then ultimately, it culminated, if you will, in the concise clinical guidance, which is a real affirmation from a practice entity to provide guidance to clinicians. So that creates that strong foundation that Ross and his team have been building on. So Ross, over to you.

Yes. Thank you, John. So I think it was really much needed guidance that we were pleased to see given that this is really the first U.S.-focused guidance publication that's really out there. We're utilizing it certainly within a promotional perspective and incorporated it within promotional materials. And as John said, it's really an affirmation of the type of messaging that we've really been providing since launch, so it's wonderful to have further publications from experts in the field affirming the type of approach and a new approach to managing this disease compared to historic available drugs and in particular, around the utilization of corticosteroids, which we've always promoted ARCALYST as really a steroid-sparing agent and a drug which should be utilized ahead of corticosteroids. And having this type of publication out there, which we have incorporated within our materials now as well from a promotional perspective is a huge help, knowing that the use of corticosteroids is probably not the most advanced way of treating this condition now that there is a targeted immunomodulation approach, specifically looking at the key driver of this disease, which is interleukin-1 alpha and beta and being able to inhibit that, we really see as the modern way of treating this disease, and we hope will become the new standard of care.

And our next question comes from the line of Roger Song from Jefferies.

Great. Congrats for the quarter. My question is related to the first recurrence. It seems your revenue is driving very well, penetration continues to be very good. And then how should we think about the first recurrence if that's a population you will start to think more about it? And then what could drive further penetration into that population?

Yes. Thanks, Roger. This is Ross again. Yes, as you noted, we have seen an increase over time in how physicians are utilizing ARCALYST within the first recurrence of recurrent pericarditis. And as a reminder, that really is the breadth of the label. The label is completely agnostic to the number of flares a patient must have gone through and suffered from before they become eligible for this targeted immunomodulation therapy. So we have promoted it to recurrent pericarditis overall. But certainly, early on in the launch, we did see that physicians were utilizing it more within the 2-plus recurrence group, which is a 14,000 patient population in any given year. We've seen a lot of utilization there. But I think as physicians become more and more comfortable and familiar with how to prescribe the drug and then going back to the first question that the physicians and patients have a good experience when they're on the drug, despite they get access to therapy and see the type of results that we've seen in the clinical world, that provides greater confidence of using it earlier on in the disease. So we have seen now around 80% of our patients that have prescribed ARCALYST within the 2-plus recurrence group and around 20% of all of those that have prescribed ARCALYST within the first recurrence group. And obviously, that has grown in percentage terms over time. But as we said in the prepared remarks, we are incredibly excited about the future opportunity, knowing that we announced midway through this year that we were around 15% penetrated into the 2-plus recurrence group without even taking into account those patients in the first recurrence. So the opportunity ahead to serve many more patients while we're happy with our current commercialization, the future is certainly there for us to address and help many more patients in the future.

And our next question comes from the line of Eva Fortea-Verdejo from Wells Fargo.

Congratulations on the quarter. I have two questions. First, regarding ARCALYST, could you elaborate on the gross to net dynamics for the quarter? Second, concerning KPL-387, what factors will influence your decision on the Phase III dose, especially since the Phase II is designed to show a statistical difference?

Thanks. I guess first on the gross to net for the quarter year-to-date, it was 8.9%, down from 9.5% year-to-date in the second quarter. So lower and in line with our historical pattern where we see it highest in the first quarter due to industry dynamics such as benefit plan resets and co-pay support and then lower in the second and the third quarter and then moving slightly higher in the fourth quarter as industry dynamics begin to play a factor again.

And Eva, thanks for the question about KPL-387 dosing. So importantly, the Phase II portion of the study is a dose focusing type study rather than a formal dose-ranging type study. And that is because our modeling has shown that the 300-milligram subcutaneous dose, which in healthy volunteers lasts for almost 2 months, should provide sufficient coverage for monthly dosing. And so therefore, the Phase II study is designed really anchored on that 300 milligram subcutaneous every month dose and then looking to see that 300 milligram given every other week, so it does not provide additional efficacy and that lower doses exhibit weakness, which would then all affirm the use of the 300-milligram subcutaneous dose level. And so that's how we will look at that information and move forward into Phase III.

And our next question comes from the line of Nick Lorusso from TD Cowen.

Congrats on the great quarter. Can you discuss what drove the strong increase in the number of prescribers this quarter compared to last quarter and what the plan is to continue this uptake? Also, what proportion of recurrent pericarditis patients do the 3,800 current ARCALYST prescribers actually see?

Sorry, Nick, can you just repeat the last part of the last question? I just.

Yes. What proportion of recurrent pericarditis patients do the 3,800 prescribers see?

Thank you very much. Let me address the question, and please ask if it's not fully answered. We've observed a notable increase in the number of prescribers, with Q3 marking the highest quarterly increase since our launch. We added over 350 new prescribers who hadn't previously prescribed ARCALYST for recurrent pericarditis, bringing the total to over 3,825. About 28% of this group has treated two or more patients. The rise can be attributed to greater confidence and awareness of ARCALYST as a treatment option. The ACC guidance has likely contributed by providing validation for treatment approaches for this condition. Our sales team has strategically targeted healthcare professionals, working hard to identify where patients are being seen. It's important to note that the patient population is quite dispersed, allowing us to engage with many physicians. We're improving our messaging and understanding where patients are attending consultations, while also leveraging AI and digital technology to guide our field team. Additionally, we're focused on digital marketing to expand our outreach about ARCALYST and recurrent pericarditis beyond in-person efforts. We've experienced substantial growth, which is a significant factor in our Q3 results. However, we recognize there's still considerable opportunity ahead. We're committed to broadening our prescribing base and assisting those prescribers in identifying subsequent patients, as there remains a large population that suffers from high rates of underdiagnosis or misdiagnosis, as shown in our Harris poll, which revealed an average of 2.7 misdiagnoses before reaching the correct recurrent pericarditis diagnosis. Thus, we have substantial work ahead, but the potential to expand both breadth and depth is considerable.

And our next question comes from the line of Paul Choi from Goldman Sachs.

Congratulations on the quarter. I have a few questions. My first is for Ross, and thanks for all the details on the slides. For the 45% of patients who restart versus the other sort of half or 55% who don't, can you maybe walk us through why they're not restarting and just sort of what the commercial efforts are to chase these patients? My second question is for Mark. Both the collaboration expense and tax rate came in higher than I think the Street we were modeling. Can you maybe just remind us if there are any one-offs on both those line items for this quarter? And if that should be the sort of the run rate going forward in terms of our modeling? And my third, maybe for John is a competitor will have Phase II proof-of-concept data in RP in the not-too-distant future. Can you maybe just remind us of how you're thinking about this? Are you assuming clinical success and how you think the data might compare to RHAPSODY?

Thanks very much for those questions, Paul. I'll make a start on the first one then hand over to Mark and then to John for the final question. So thank you very much for that. So your initial question on ARCALYST is around the 45% restart rate in those patients that are not restarting and why is that? Actually, we have a slide that provides a bit of detail on the duration of therapy on our corporate deck as well. And this ultimately shows that the average time of the initial treatment is now around 17.5 months, up from 17 months at our last earnings call. The median is around 12 months. So the fact is that depending upon when a patient starts on therapy and how long they've suffered with the disease prior to the initiation of ARCALYST is one of the several factors that go into a health care professional's judgment call on how long a patient needs to be on therapy for. So when patients stop, as I say, on average initially of 17.5 months, there's around 45% of those patients that come back on to therapy. As a reminder, when patients do come back on to therapy, it's generally very quick in terms of around 8 weeks or within an 8-week time period for the vast majority of the patients that restart, which makes perfect sense when you think around the washout time and the tenacity of the underlying disease. For those patients that don't restart therapy, obviously, we don't collect very much data on that. So it's difficult to know precisely why patients don't come back on to therapy other than to make assumptions on that, which could be around the fact that they are just through the disease and they stop and don't suffer from symptomology again and don't come back on to therapy. But the good news is when patients do come back on to therapy, whether it's within the 8-week time period or indeed much longer, which is for a minority of patients. But when they do come back on to therapy, it's generally a very easy and quick process for them to do so. Generally, there's a payer approval already in place. It's quite easy to get the next shipment of ARCALYST ready. And we know that when patients go back on to therapy after suffering symptomology again, they come back under control very quickly with ARCALYST. So that's what we've seen around the initial and the restarts. And obviously, that's the totality of adding up the treatment periods, which for some patients is several stops and restarts over time. That's what takes us to the average total duration of therapy now of 32 months, up from 30 months last reported. Mark?

Great. Yes. And thanks, Paul, for the question. As it relates to sort of your P&L questions, we don't provide specific guidance, but clearly, collaboration expense was up quarter-over-quarter and year-over-year, and largely due to ARCALYST sales growth. As we kind of detailed in the prepared comments, collaboration expenses are largely driven by continued ARCALYST sales growth, which is very strong in the quarter. I would say regarding tax, the drivers remain the same as they have in past quarters as well. So tax on income earned in the U.K., Switzerland, and the U.S., net of R&D and stock-based comp credits.

And Paul, this is John. Thanks for your question about the competitive landscape. So yes, the field is awaiting data from an inflammasome inhibitor Phase II data. And so in that sense, not so much RHAPSODY, but rather those data are structured in some way similar to the Phase II data that we had reported for rilonacept back in 2019 at the beginning of the program, which is relatively short-term therapy and mostly single active arm. And so in that sense, yes, you would expect with near-term short-term therapy, especially if you have an inflammasome inhibitor, and an inflammasome is, of course, the driver of IL-1 beta, which then causes IL-6 production, which goes to the liver, which is where the C-reactive protein comes from, you might expect to see a good inflammasome inhibitor, just like colchicine should bring C-reactive protein down. But the point is that the inflammasome is relatively downstream in the pathophysiology of recurrent pericarditis. So as you know, when the pericardiocyte is injured, IL-1 alpha is released as a preform cytokine as an alarming. And that sets off a localized inflammatory response, which itself causes pain and damage. It does then trigger the inflammasome, which then causes the recruitment of that broader inflammatory response. But that's why we're really focused on blocking both IL-1 alpha and IL-1 beta in order to control the disease. And that's what we showed in RHAPSODY in a longer Phase III program where you have continued treatment initially over 9 months, but ultimately over 18 months, and then ultimately out to 3 years, where we showed a 99.5% reduction in events once patients were on treatment. And the only events that occurred were during the setting of brief study drug interruptions. And so in that sense, a drug like ARCALYST is designed to be given long-term, and it remains to be seen whether other strategies could be successful. But that kind of sets the bar, if you will, for what effective therapy looks like.

And our next question comes from the line of David Nierengarten from Wedbush Securities.

I had one on the transition arm of the 387 study. And I was just wondering if you were biasing the study to different prior therapies. So are half the patients going to be previously treated with steroids? Or is it just an even split among prior therapies?

Thanks, David. I appreciate the question. So your question is about the transition to monotherapy dosing and administration study, which is a supplemental study as part of the total filing package. Yes, so this study is designed to help inform clinicians how to move patients on to KPL-387 from other prior therapies. And so that includes really the totality of therapies that are available, so NSAIDs and colchicine, corticosteroids, and other IL-1 pathway inhibitors. And it's a global study. So it covers those practice patterns across the world. And so how the study is designed is to capture that information and to test the efficacy and safety of those dosing paradigms that are used in order to make that transition to KPL-387 monotherapy and is designed to capture the necessary information for each one of those types of transitions in order to provide critical information, if you will, for the label to advise clinicians. But there is not necessarily nor does there need to be any type of prespecified hypothesis or specific population balance other than giving the necessary information to inform regulatory authorities, physicians on how that works.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Sanj Patel, Chairman and Chief Executive Officer, for any further remarks.

Thanks, operator. Thanks, everybody, for joining the call today and for the questions, of course. We look forward to the remainder of the year and providing additional updates in the future. And in the meantime, we will crack on. So thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.