Conference Transcript - KNSA 2026-08-12

Edward Nash, Analyst — Canaccord Genuity

Hi, good morning everyone. My name is Edward Nash, Senior Biotech Analyst here at Canaccord Genuity and Equity Research. It is my pleasure to have with us today the management team from Connexia Pharmaceuticals. This is the name we currently cover with a buy rating. Joining us from the company is Ross Mote, the company's Chief Operating Officer, and John Paolini, the company's Chief Medical Officer. I want to thank you both for joining us today. So maybe to kick off things, could you maybe just give us a general 10,000-foot view, background on the company, just with your therapeutic focus from both the clinical and research standpoint?

Ross Moat, COO

Certainly will do. Thank you very much, Edward, and thank you to the Canaccord team for inviting us here It's a pleasure to be here, and thank you to everyone in the room as well as online that's listening. John and I will be making some forward-looking statements today, which are subject to risks and uncertainties, a copy of which can be found in our SEC filings. Also, Sanj Patel, our CEO, is not here today. Unfortunately, he could not be here as him and his wife, Kristen, welcomed a new baby into the world just a couple of days ago. So it's John and I today, and hopefully we can answer all the questions that you have. So thank you very much for having us. So many of you may be familiar with Commixer at this point. We've been on the market for the last five years or so with ArcList. The company is about 10 years old overall, and really it's been quite an interesting story over the last 10 years or so. We're an organization that likes to move rapidly, and we are very focused on growth and adding value across the years and the pipeline that we have. We are a well-capitalized organization that's been profitable, and we've said that we intend to be cash flow positive on an annual basis moving forward. We have ArcList on the market over the last five and a little bit years which has been growing very well and recurrent pericarditis and ArcList is an interleukin-1 alpha and beta inhibitor with quite you know impressive both efficacy and safety profile and that's been doing very well in the market since the time of launch with very significant opportunity ahead. In Q2, our earnings call just a couple of weeks ago, we announced that the net revenue for the quarter was around $243 million for Q2. That was a $29 million quarter on quarter growth, which was the largest quarter growth that we've had since the time of launch five years ago. And as I said, the opportunity is still very substantial for what we can achieve within that marketplace with ArcList. The pipeline is also very strong. At Kinexa, we have the KPL387, which is another interleukin-1 alpha and beta inhibitor. We announced some of the phase two results, which were the dose focusing portion of our overall studies in recurrent pericarditis just a few weeks ago. And we can go through that data throughout the meeting today. But we essentially announced that we were moving forward into the phase three development with the target product profile that we specified right up front, which is a monthly potentially auto injector formulation for an interleukin one alpha and beta. So we are now moving forward into the phase three. And in fact, we have started, initiated the phase three study and already dosing and enrolling patients. And we expect to be on the market data willing by the 2028, 2029 timeframe. We also have behind that KPL 1161, which is an FC modified interleukin one alpha and beta inhibitor with a potentially quarterly profile, which could have utility in multiple disease areas. So the company is well-funded, well-capitalized, and very focused on growth for the years ahead.

Edward Nash, Analyst — Canaccord Genuity

Thank you very much, Ellis. Great overview. Maybe for those who don't know about recurrent pericarditis, could you just briefly explain how patients are identified, diagnosed, and then their treatment journey for RP and kind of where Hinnick's drug fits in?

Ross Moat, COO

Thank you. So, Edward, maybe I'll make a start on that. And John, if you've got things to add, then you can. Maybe if I just kind of ground us all in the size of the population for recurrent pericarditis. This is really a very severe, very debilitating disease for many patients. There are around 160,000 patients in any given year that suffer from pericarditis. Many of those patients just suffer as kind of a once and done type of incidence of pericarditis, albeit very debilitating during the time of that initial flare. But unfortunately, a proportion of those patients go on and suffer from recurrences over time, and that's where recurrent pericarditis comes in, and that's around 40,000 patients in any given year. That can then also be further subdivided between the number of flares that patients suffer, but ultimately there's a 40,000 patient population in any given year that are suffering from recurrent pericarditis. Unfortunately, many of these patients, being a rare disease and a flaring disease, which is also very widely dispersed around the country, there's a lack of real senses of excellence, per se, across the country that are looking after this disease. So patients are very widely dispersed, being seen by many cardiologists, many rheumatologists. And unfortunately, what happens with many of these patients is that they get diagnosed later on in the disease, as well as going through misdiagnosis along the way as well. In fact, there's around 2.7 on average misdiagnoses before the patients get diagnosed with recurrent pericolitis. So increasing the education and awareness and how to identify this disease and obviously treat the disease now that there is an approved therapy on the market to specifically address the underlying mechanism of interleukin-1 alpha beta of the disease. It's obviously very important for these patients to get an earlier and a timely diagnosis. so that's generally the patient population and what you may know is the treatment paradigm has changed quite significantly over time whereas patients used to be treated often on the very first incidence actually with NSAIDs and colchizine and then after that moving forward to steroids ultimately corticosteroid use through having really a lack of other treatment options to try to control the disease that's been changing very substantially over the last five years or so since the introduction of ArcList as the first and only approved therapy. And we've seen, you know, lots of publications and guidance, for example, from the ACC that have also been affirming that change in treatment paradigm, which is ultimately to opt for an interleukin-1 alpha-beta inhibitor after NSAIDs and colchizine and prior to corticosteroid use.

Edward Nash, Analyst — Canaccord Genuity

Fantastic. Thank you. And then if we just focus now on the multiple recurrence patient population. You guys have stated that you've penetrated this group by about 21% to date. Is this the group that makes up the majority of the revenue right now of Archelist?

Ross Moat, COO

So it certainly makes up a sizable portion, Edward. What we have said previously is that we are focused on the entirety of the 40,000 patient population. That's where we have the broad label for Archelist. And the label is completely agnostic to the number of flares as a patient must have suffered before they get access to the only approved treatments. So the data that we have provided externally is the penetration rates, as you said, into the two plus recurrence group, which is a 14,000 patient group of the 40,000 overall. So clearly there are an even larger group of patients on the first recurrence, 26,000. So we've said that we've been growing over time and that we've been up to around 21% as of the end of Q2, penetration into the 14,000 patient group, those with two or more recurrences, but we also have seen growing utilization in the first recurrence as well, and physicians ultimately get much greater comfort of how to prescribe a biologic and how to manage patients when they're on ARC list, and ultimately, you know, taking the view that along with the ACC concise clinical guidance, as I mentioned as well, is ultimately Why allow patients to suffer for more flares throughout their disease when there is a treatment option there to help them? And the importance and what we learn a lot from patients is not only wanting to quickly, rapidly overcome the flare that they are often suffering at the time of prescription of ARCLIS, but the most important thing to patients is preventing future flares for the future. And ultimately, having the knowledge that this is, once a patient becomes recurrent pericolitis, this is usually a multi-year chronic disease for most patients. And ARCLIS has ultimately been designed to be utilized throughout the duration of the disease. So using it earlier on, I think, makes a lot of sense to help patients throughout the duration.

Edward Nash, Analyst — Canaccord Genuity

You know, I ask the question because it seems that most of the conversations we have with doctors and we're quizzing them on the IL-1 blockers, they're almost always unanimous about how effective they are and that the drug is really, you know, they see it as extremely effective with their patients. And I think one of the things I wanted to ask is, you know, you mentioned about the mean time that a patient's on drug now is three years, which is interesting because Because sometimes we get the question about the world from the KOLs is that it's an expensive drug, which I never like to take the opinion of doctors on paying. You're not paying for it, right? It's insurance that's paying for it. However, you're seeing three years, patients being on drug for three years. So you don't see any headwinds on the cost front, it seems, because your penetration has been increasing. And is that fair to say overall?

Ross Moat, COO

Yes, so penetration has been increasing, as we've said, access through to the drug is very, very strong. Generally, you know, patients' co-pays, particularly commercial patients, is generally $0, so the affordability to the patients is very good. What is very important to us and physicians and obviously to the patients is that when a physician identifies a patient as suffering from recurrent pericarditis and then they prescribe Arclist, that the patient gets access to therapy. So we see that generally across the board and patients get good access. Often the co-pay is zero, as I've said. And, you know, I think both payers and physicians now and patients to an extent understand that this is generally a long disease. And as I said, ArcList has been designed to be treated throughout the to be used as a treatment throughout the course of the disease. And that's been a substantial shift in the thinking of how to treat this disease, Because historically, before ArcList was available, I think physicians would try to treat for as short a time period as possible, treat through the flare and stop treatment and then treat again if they flare again and again. But that's often through not having better treatment options. And if you're using and having to opt for steroids, then it's very difficult keeping a patient on steroid for a long term with all the toxicity and all the different effects that that has on a patient. So the introduction of ArcList has now allowed for this treatment to actually be appropriate for treating throughout the disease, knowing that at some point the disease ceases in these patients and you can then, you know, adequately stop therapy. But up until that point, you know, we try not to kind of stop and start too much and allow for treatment throughout the course of the disease.

Edward Nash, Analyst — Canaccord Genuity

Well, since you have that three-year mean now of patients on drug, do you have any better idea of how long patients you think might need to be treated with Arculus before being able to come off?

Ross Moat, COO

Yeah, it's very difficult to say overall, but there are publications and literature there to try to guide and also looking at risk factors, which potentially could give some guidance at least to how long a patient may be suffering from the underlying disease. but ultimately when you look at some of the largest collections of data on this for patients that suffer two or more recurrences the average sorry the the median duration of the disease is around three years and as you mentioned in your your question as well that the average of treatments now is around three years but I just say it's the median of three years of the disease and that's because the largest publication trying to track the natural history of recurrent pericarditis and how long it lasts in patients for two or more episodes unfortunately goes through to around eight years and at the eight-year time point when that study stopped it was still around a quarter of the patients that were suffering from the disease so we don't actually know what the average duration of disease is we know that the median was around three years so the average is probably longer So ArcList has now been used for an average of around three years, and we'll see how that changes over time.

Edward Nash, Analyst — Canaccord Genuity

Yeah, so we'll ask the question again in another three or four years, and we'll have a better idea, right?

Ross Moat, COO

Certainly data built over time.

Edward Nash, Analyst — Canaccord Genuity

So I want to jump over to the commercial side now. Could you maybe just remind us of what your commercial infrastructure currently consists of and the number of sales reps you have out there? And given the fact that now you're seeing greater penetration into your target market, do you see any need in the near future that you'll need to upsize that?

Ross Moat, COO

So it's something we've been focused on a lot. You know, you've been following us for a little while, but you know that we are a very data driven organization. We take capital allocation incredibly seriously and focus on driving value across the business. So we don't share what the size of our sales team is. We haven't done that for many years. But yes, we're very focused on making sure we address the opportunity as best as we can. Clearly, our sales team are incredibly important to do that and to disseminate data, as is our medical affairs team in the field and to address the opportunity and increase awareness and knowledge on our list. So that is incredibly important, but we're also focused on other areas as well. You know, we've also recently launched a DTC campaign to patients trying to identify recurrent pericarditis patients and to encourage them and empower them to go and speak to their physician about ARCLIS. because one of the things that we learned is that actually around when you ask patients that are suffering from the disease whether they are you know unaidedly aware of Arculus only around 14 percent of the patients were aware of Arculus as a treatment for the disease that they're suffering from yet when they go and speak to their healthcare professional and inquire about Arculus it ends up in an Arculus prescription about 80 percent of the time so in order to educate and empower patients We thought that was something very important to do. We started doing that earlier this year with a very targeted DTC campaign appropriate for rare disease populations. And we do that a lot through AI and machine learning and other more innovative ways of being able to do that now rather than big pharma kind of commercial, you know, big expenditure type of DTC. So we focus on things like that, but also peer to peer education is incredibly important. And there are ultimately a multitude of ways of getting information out there to try and help this population. And we're focused on all of them.

Edward Nash, Analyst — Canaccord Genuity

And do they tend to be more centers of excellence when you're trying to detail that are out there that are treating RP? Or are you getting down to the secondary tertiary centers out there as well?

Ross Moat, COO

Yeah, it's actually really across the board, across the whole spectrum of disease settings. And I think that's through, as I mentioned in my earlier comments, that, you know, this disease, this patient population are widely dispersed around the country and in terms of their health care settings, whether it's academic centers, rural centers and kind of everything in between. so there is a you know there are some centers of excellence where they're relatively many of them are kind of relatively embryonic but ultimately the patients are out there seeing a large number of healthcare professionals when you think about the 40,000 patient population that population is seeing about 25,000 healthcare professionals in the given year so you can see though actually we do have to go out and kind of educate a large number of physicians and over time as we increase that education and people get the experience of how to prescribe this drug and they see the type of impact it has on their patients, that obviously encourages future prescribing as well as peer-to-peer education, which is also incredibly important. So out of the 25,000 healthcare professional population that's looking after these patients, we now at the end of Q2 had around 5,000 of those healthcare professionals who have prescribed ARCLIS at any point over the last five years. So So, again, whether you look at the patient population or the prescriber population and how many are prescribed and how many are yet to be switched on, you can see that the opportunity ahead is pretty substantial.

Edward Nash, Analyst — Canaccord Genuity

So for those patients that are on the drug and they're clearly staying on the drug for a good period of time because it's working for them. But can you talk a little bit about the reasons why a patient tends to want to come off drug? You know, I used to say, well, if this was maybe five, ten years ago, I'd say it's because it's an injectable. But clearly the world of GLP-1s has shown us that injectables are not that big of a deal, right? So I just wanted to kind of understand what's the drive they are coming off of. It's just to see if potential disease has been eradicated or cured.

Ross Moat, COO

Yeah, maybe I'll just say, John, maybe I can ask you to answer the question. But maybe I'll just say that generally, as you've seen, like duration of treatment of Arculus has been growing over time. i've been in two years around three three years so clearly patients are getting on well on therapy the reports that we have from patients is the arc list is very substantially helping them and their disease and they they're very satisfied with being on arc list the compliance rate is very good the market access rate is very good and year on year as well so i think all of those things are going very well but john maybe you want to speak to when does a patient stop and how do they know how to trial a stop and go back on to treatment if needed yeah happy to go into that and actually extending a little bit from, you know, Ross's prior answer about the median duration of disease being about, you know, three years, what we know from the clinical trial

John Paolini

experience is that while patients are on therapy, you know, the IL-1 pathway is suppressed and so thus disease activity is suppressed and the patients do well. You know, what we also know just from the history of the disease, regardless of what entity they're being treated with, whether it's IL-1 pathway inhibition, steroids, or anything else, if the underlying disease is still present and you withdraw therapy, then, of course, the underlying disease, you know, will, in fact, come back. And so, you know, what we, you know, learned from our own experience, for example, is, you know, for these patients who had, you know, multiple recurrences who had been treated for, you know, up to three years in the clinical trials, you know, even at that point, you know, they still had extant disease as evidenced by the fact that the disease came back when the drug was withheld in the trial setting. But what's important to note is that it's a good barometer, meaning if the chest pain starts to return, it's not necessary to wait for a full-blown flare. And in fact, we have information from the trials, which is also part of the patient education materials, is that with Arkelyst, there's enough drug on board that after the drug is stopped and there's, let's say, a trial of cessation to see if the underlying disease is still present, It takes about six weeks for the drug to wash off. And then there's about a two-week prodrome while IL-1 pathway signaling resumes. And what you see is a gradual increase in chest pain. So if patients and their physicians are attuned to that concept, they realize, okay, the underlying disease must be present because IL-1 pathway signaling has resumed. And so the drug can then be reinitiated, and that was done in the clinical trials, and the disease is put back under control. And then they can stay on therapy, again, for an extended period of time until, you know, the patient and physician reach the decision to see if, you know, at a later date, perhaps a year or two later, the disease may have resolved on its own. Because in that sense, that's the one piece that we don't fully understand, which is what are the drivers of self-recognition and auto-inflammation. But we do have an understanding of those risk factors. And so physicians and patients can go through those risk factors and reach a decision about, you know, what is a mechanism, you know, how long they should treat for. You know, what is the mechanism for assaying for underlying disease? And then, again, resuming treatment if additional treatment is needed.

Edward Nash, Analyst — Canaccord Genuity

Great. So I wanted to jump over to your pipeline now because that's becoming a really important part of the focus of the story. So KPL-387 is your follow-on IL-1 blocker for recurrent pericarditis. It's the same target but a different mechanism. Can you talk about how 387 is differentiated from Archelist? And if approved, how is that going to be positioned in relation to ArcList? Is this something we expect to supplant ArcList altogether, or is there room for post-tropes?

Ross Moat, COO

Yeah, I think in this time point, a lot of that is kind of too early to say. It would be data-dependent, and obviously we're focusing on the data and the clinical trials very heavily right now. We started the phase three and enrolling dosing in the phase three, And we shared some of the phase two data a couple of weeks ago, which gave us the confidence of moving in with our target profile into the phase three. So I think time will tell, Edward. But I think one of the things that we have learned is that, you know, bringing additional treatment options to the market for recurrent pericarditis that are highly efficacious and well tolerated could expand the total IO1 inhibition market overall. we know this disease is mediated by io1 alpha and beta both of those two cytokines are incredibly important within the disease space and um you know the market research that we had from physicians if the kpl387 target product profile is is met and makes it to market um that the physicians and indeed patients believe that that would expand the utilization of of io1 alpha and beta overall But I think the rest of it is obviously there's a lot of time to go for us to kind of work through exactly what those details look like and when we have more insight into the data.

Edward Nash, Analyst — Canaccord Genuity

Got it. Maybe could you talk just a little bit about that, about the current phase two, three design?

John Paolini

Sure. So for operational efficiency, what we did was we combined the phase two and the phase three portions of the development program into a single program. single program. So the phase two program, as Ross mentioned, is a dose focusing portion in order to help us affirm, if you will, that KPL 387 could in fact meet its target product profile of once monthly dosing. And so those are the data that we recently shared, which showed that rapid onset of action. So despite the monthly duration of action and rapid in its onset, you know, with time to treatment response, which is the primary efficacy endpoint of four days. So that meant that the cadence and the magnitude, you know, of that onset of action is rapid, but also there's a durability of response, which lasted throughout the dosing interval, which gives us a lot of confidence, you know, in going forward into phase three, and what we've commented on is that, you know, that profile, if you will, in terms of, you know, the performance characteristics of KPL-387 are consistent with, you know, the clinical trials that we conducted with Rolanocept that led to approval. So now, as Ross mentioned, we're in the Phase 3 portion of the Phase 2-3 study. It's called PASTORAL, and that study is essentially a randomized withdrawal outcomes trial. And so that basically has a primary efficacy endpoint of time to first pericarditis recurrence and is designed to look at the reduction in risk of pericarditis recurrence when the drug is given in a long-term in a placebo-controlled setting. And so that study, we believe, is not only pivotal in nature but can support our registration we have other activities you know ongoing and other phase two study to help with dosing and administration but that's the and some long-term extension so that's the totality of the package but it really focuses on the phase three pastoral program just very quickly I know we just have a few seconds left but we saw Novonordis just recently announced their phase three results from the Zeus trial their IL-6 antibody and it did not show clinical benefit on MACE, but we did see the expected reductions, IL-6 and C-reactive protein.

Edward Nash, Analyst — Canaccord Genuity

Does this data have any implications at all with regards to a read-through into RP?

John Paolini

A read-through into RP, not necessarily, but what it does do is it focuses attention back on the IL-1 mechanism. As you know, statins reduce risk by a third, and there's been focus on the inflammatory mechanism as another way of, you know, addressing the residual risk. And the Cantos study, which blocked, which was with canakinumab that blocked IL-1 beta, you know, did show reductions in cardiovascular risk. And so then the question that the Zeus trial, which is, you know, very well designed, you know, was trying to look at was, you know, if you, you know, IL-1, of course, sets off a cascade of different activities, one of which is the increase of IL-6, and IL-6 goes to the liver, and it's the liver that makes the increase in C-reactive protein. So it's not surprising that C-reactive protein went down. But what that does tell us is that in that space between IL-1 and IL-6, that appears to be where the inflammation related to cardiovascular disease and atherosclerosis, perhaps in the innate immune system, seems to be targeted. So I guess in that sense, what it does is it focuses attention back on the importance of the IL-1 mechanism in terms of innate immunity in atherosclerosis.

Edward Nash, Analyst — Canaccord Genuity

Thank you very much. Well, you've got a great management team, strong balance sheet, a really commercial product that's on fire right now and growing significantly and a really strong pipeline. So great to have you guys here today to tell us about it. Thank you very much for your time.

John Paolini

Thanks, everyone.