Kiniksa Pharmaceuticals, Ltd.

Good day, and thank you for standing by. Welcome to Conninsuff Pharmaceuticals' fourth quarter, 2024 earnings conference call. At this time, all participants in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Also, please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Jonathan Kirschenbaum, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining ConiXA's call to discuss our fourth quarter and full year 2024 financial results and recent portfolio execution. A press release highlighting these results can be found on our website under the Investors section. For the agenda today, our Chief Executive Officer, Sanj K. Patel, will start with an introduction. Dr. John Paolini, our Chief Medical Officer, will review our recently announced KPL 387 development program. From there, Ross Mote, our Chief Commercial Officer, will provide an update on our ongoing commercial execution with Arculus. Then, Mark Ragosa, our Chief Financial Officer, will review our fourth quarter and full year 2024 financial results. And finally, Sanj will return for closing remarks and to kick off the Q&A session, for which Eben Tesari, 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, Jonathan, and good morning, everyone. Thank you for joining our fourth quarter and full year 2024 earnings call. as you know we reported our preliminary oculus revenue and cash balance earlier this year strong execution drove continued growth in 2024 and we're incredibly excited about the opportunities ahead of us today i'm going to focus on the exciting program announcement we made earlier this morning we are advancing our newly announced kpl 387 program which is an independently developed monoclonal antibody IL-1 receptor antagonists with the potential to enable monthly sub-Q dosing in recurrent pericarditis. We are incredibly excited about this program and the opportunity to extend our leadership of the recurrent pericarditis market and to potentially expand the treatment options available to patients. KPL-387 is an IL-1 pathway inhibitor. which we understand very well from our work and experience with Arclist, the first and only FDA-approved therapy for recurrent pericarditis. Dr. John Paolini, our chief medical officer, will share additional details about the mechanism of action and data we've generated to date. But our deep familiarity with this pathway provides us with added confidence as we advance KPL387 through clinical development. In addition to the ongoing Phase 1 study, we've interacted with the FDA and plan to start a Phase 2 slash Phase 3 trial in recurrent pericarditis patients in the middle of this year, with data from the Phase 2 portion expected in the second half of 2026. We plan to move as fast as humanly possible, and our goal is to have this treatment option available to patients by the 28-29 time frame. Moving to our Q4 and full year 2024 performance and future growth. On the commercial front, we continue to grow Arculus revenue and collaboration profitability with fourth quarter net product revenue of $122.5 million and full year 2024 net revenue of $417 million. Ross will review the commercial highlights in a moment, But overall, we believe there is substantial opportunity for us to continue to grow the recurrent pericarditis market with Arclist in the years ahead. Our full year 2025 Arclist net revenue guidance is between $560 and $580 million. As you can see on our pipeline slide, we remain focused on developing novel therapies for diseases with unmet need, prioritizing cardiovascular indications. In addition to KPL387, we're advancing KPL1161, which is an FC-modified IL-1 receptor antagonist with a target profile of quarterly sub-Q dosing. We are currently conducting IND-enabling activities with this molecule. Based on these opportunities, we plan to discontinue development of abiprobar in Sjogren's disease. Through phase two studies, abiprobar has been well tolerated, and we look forward to evaluating strategic alternatives for this asset. I want to extend our sincere gratitude to the patients, caregivers, and investigators who contributed to our Sjogren's disease study. Moving forward, In addition to prioritizing our portfolio development strategy, we have a robust balance sheet, and we are cash flow positive on an annual basis. Together, we expect these to provide additional capacity to continue investing in value-creating opportunities across our business. The bottom line is that we've made tremendous progress with Arculus, and we think there is substantial opportunity still ahead with that first product. As the market leader, we are committed to exploring additional treatment options for patients. And with that, I'll turn it over to John to review KPL387 and our development program in recurrent pericarditis.

Thank you, Sanj.

As Sanj mentioned and is outlined in our press release this morning, Conixa has announced a development program for KPL387, an independently developed fully human IgG2 monoclonal antibody antagonist of the IL-1 receptor. Extending our leadership in recurrent pericarditis and IL-1 pathway inhibition, we are developing KPL387 as a potential additional therapeutic option for patients with a target profile of a monthly subcutaneous single injection in a liquid formulation. The mechanism of action of KPL387 is that it binds to the IL-1 receptor subunit called IL-1R1, and in this way it directly inhibits the signaling activity of the cytokines IL-1-alpha and IL-1-beta. This was demonstrated first in preclinical in vitro studies in which KPL-387 was shown to be a potent inhibitor of IL-1 receptor activation, as well as IL-6 production induced by IL-1-alpha or IL-1-beta. Subsequently, KPL387 was shown in in vivo pharmacokinetic studies in non-human primates to have favorable pharmacokinetics that supported advancement into the phase one first in human study. On this slide, you can see some of the top line data from the single-dose subcutaneous administration portion of the phase one first in human study. This is a randomized, double-blind, placebo-controlled study in approximately 112 healthy subjects. evaluating the safety, tolerability, pharmacokinetics, pharmacodynamics, and immunogenicity of KPL387 administered subcutaneously or intravenously as single ascending doses and as multiple ascending doses administered subcutaneously. These data show that the single-dose pharmacokinetics of KPL387 at the dose level shown in red demonstrated sustained serum concentrations above the target concentration supporting the profile for a monthly dosing paradigm. Data from the study were utilized to support the design of the upcoming phase two slash phase three trial. As Sanj mentioned, we have had interactions with the FDA regarding the next steps for the KPL387 program, and we expect to initiate a streamlined phase two slash three trial in recurrent pericarditis in the middle of this year that we believe may support approval. Details of that trial will be forthcoming at a future date. I will now turn it over to our Chief Commercial Officer, Ross.

Thanks, John. As you heard from Sanj, we are incredibly excited about KPL-387 and the opportunity to further expand the treatment options for patients with recurrent pericarditis. We also remain very excited about the substantial growth potential still ahead with Arculus. Having launched Arculus nearly four years ago and delivered continuous revenue growth, we have built a deep understanding of the market, and we plan to continue our Arculus growth by serving many more patients in the years ahead. After driving our net revenue in 2024 to $417 million, Our 2025 guidance is between $560 and $580 million. And there are a number of key initiatives that we are taking to continue to build the marketplace for Arclist. Firstly, disease education and awareness continue to be fundamental to our strategy. Initiatives such as our Life Disrupted Campaign and our sponsorship of the American Heart Association's Addressing Recurrent Pericarditis Initiative are raising disease awareness, helping doctors to identify more patients, and promoting a proactive approach to earlier diagnosis and treatment. Secondly, we continue to be focused on increasing the breadth and depth of prescribing, as evidenced by an increasing number of total and repeat prescribers every single quarter since launch. We believe the utilization of Arculus is growing as a result of the experience physicians and patients are having in terms of prescribing, gaining access, and witnessing the high efficacy of the drug. We are focused on promoting to the full scope of the Arculus labels. And we're seeing an increase in ARCLIS prescriptions being written across all recurrences, including for patients on their first recurrence, which highlights doctors are becoming increasingly confident in moving ARCLIS earlier in the disease course, given its targeted mechanism and robust efficacy. Additionally, as the leader with the only FDA-approved therapy for recurrent pericarditis, We remain committed to supporting the development of a more efficient network of care through supporting the establishment of regional centers of excellence. We believe this approach has the ability to streamline referral pathways, reduce the barriers to care, and in turn, enhance patient outcomes. Importantly, while we've made great progress since our launch, we believe there is a significant opportunity ahead for Arclist. as we continue to build the market and transform the treatment paradigm. With that, I'll turn it over to our CFO, Mark.

Thanks, Ross. It is certainly an exciting time at Conixa. We are well positioned from a financial standpoint, and through continued commercial execution and financial discipline, we expect to continue to create value across our business. This morning, I will cover our fourth quarter and full year 2024 financial performance. You can find our detailed financial information in today's press release. There are a few items of note. First, starting on the left-hand side of this slide with our income statement, as you've heard from Sanj and Ross, strong commercial execution throughout 2024 drove continued ARCLIS product revenue growth. On a year-over-year basis, ARCLIS product revenue grew 72% to $122.5 million in the fourth quarter and 79% to $417 million for the full year of 2024. Second, operating expenses grew year over year in both the fourth quarter and full year of 2024, primarily driven by cost of goods sold due to ARCLIS revenue growth and tech transfer related expenses, collaboration expenses with continued ARCLIS collaboration profit growth, which I'll detail shortly, as well as R&D to support Abbey Proubart and KPL 387 development and SG&A to support ARCLIS commercialization. Third, net loss was $8.9 million in the fourth quarter and $43.2 million for the full year of 2024. Fourth, on the right-hand side of the slide, you'll see a calculation for ARCLIS collaboration profit, which largely drives collaboration expenses. On a year-over-year basis, ARCLIS collaboration profit grew 125% to $76.3 million in the fourth quarter and 108% to $234.7 million for the full year 2024. Of note, fourth quarter and full year 2024 collaboration expenses included a $10 million charge for Regeneron's share of a $20 million milestone from Wadong Medicine with the approval of Arclas in China. The cash from this milestone was received in January and will be captured in our first quarter 2025 cash balance. Lastly, regarding our balance sheet, At the bottom of this slide, we ended 2024 with an approximately $244 million cash balance, representing approximately $37 million of net cash flow for the year. And we expect our current operating plan to remain cash flow positive on an annual basis. With that, I'll turn the call back to Sanj for closing remarks.

Thanks, Mark. I hope you can all sense the excitement that we have about the future here at PNICSA. and we certainly plan to continue to execute across our clinical and commercial business. As shared this morning, we are eager to drive additional growth in our fourth year post-launch with Arculus, as well as extending and maintaining our leadership in recurrent pericarditis with Arculus and with the development of KPL387. There's a lot to look forward to as we continue to advance novel therapies for patients suffering from debilitating diseases and unmet need. With that, I'll turn the call back to the operator for the questions. Thanks very much.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You'll then hear the automatic message advising your hand is raised. To answer your question, press star 11 again. We also ask that you please wait for your name and company to be announced before you proceed with your question. One moment while we compile the Q&A roster. Our first question today will be coming from the line of Nanipan Rama of JMP. Your line is open.

Hey, guys. Thanks so much for taking the question, and thanks for the update here. Two quick ones from me. First, maybe, what does your market research suggest about what a monthly subcutaneous formulation such as KPL387 could mean for patients in the market overall versus the weekly regimen that you have with ARCLIT sub-Q. And then just quickly on slide 10, slide 10, I just wanted to confirm that that dose F, the red line, that's referring to a monthly subcutaneous dose, not an IV dose. Thanks so much.

Hi, Anupam. This is Ross. Hope you're well. Thank you very much for the questions. Maybe I'll answer your first question and then hand over to John for the second question. So, yes, a good question regarding market research and kind of patient acceptability and desire and preference. We believe that the compliance rate and the acceptance rate of Arclist is really very good. And we see that through the adherence and duration to the therapy. Having said that, moving potentially from a weekly to a potentially monthly therapy could be advantageous for many patients in terms of preference. Additionally, along with the drug itself, from a lyophilized powder to a liquid formulation, we think may also provide some advantages for patients. So just overall, we feel as the market leader within recurrent pericarditis, it's upon us to continue to look at the marketplace and really understand what patients need and require within this marketplace and support alternative treatment options for patients for the future.

And good morning, Annabelle. Thanks so much for your question, your second one. And yes, I can confirm that the dose that was administered and characterized in the red line was indeed subcutaneously administered. And you can see that it lasts above the target concentration for the time denoted, thus supporting moving forward with a monthly dosing paradigm subcutaneously.

Thanks so much for the questions, guys.

Thanks, Emma. Thank you. And one moment for the next question, please. And the next question will be coming from the line of Eva Forte Verger of Wells Fargo. Your line is open.

Hi, guys. Thanks for taking our question, and congrats on the progress. A couple from us. So first, how is KPL 387 differentiated from our colors? Is it only the dosing schedule, or are you expecting changes in the efficacy and safety profile? And then, you know, a quick follow-up, just do you own the full rights to KPL 387 and 1161? Thanks.

Good morning, Eva. I will take the first part of your question and then turn it over to Sanj. So, yes, regarding the mechanism of action of KPL387, it is mechanistically distinct by binding to the receptor subunit. But in that sense, it does block the signaling of both IL-1 alpha and IL-1 beta, and thus it shares a certain amount of, shall we say, mechanistic similarity. From there, in terms of how the drug is delivered, because of the fact that it's a monoclonal antibody, it's able to be stable in liquid formulation. And thus, a combination of that plus the fact that we can deliver enough drug to last for at least a month, as shown by the curve in red, that is what would enable us to support dosing in a liquid formulation at a monthly interval.

Thanks, Ava. The second part of your question, yes, this is an independently developed, wholly owned molecule.

We do own the rights, the full rights to both 3 and 7 and 1. Thank you. One moment for the next question.

And the next question will come from the line of Paul Choi of Goldman Sachs. Your line is open.

Hi. Good morning, everyone. Thanks for taking the questions and congrats on the progress. My first question is for John, and I was hoping maybe you could paint some broad strokes for how you're thinking about the 387 clinical development plan. Are you envisioning perhaps a switch study or non-inferiority study? Any sort of, you know, broad color there would be helpful. And then second, down the road, you know, post-approval and launch, Can you maybe just remind us of the terms with the Regeneron arrangement if you were to sort of, you know, focus on promoting 387 and just sort of what the terms of your arrangement sort of specify in terms of unwinding, you know, future promotion of ARCALYST. Any comments there would be helpful. Thank you very much.

Paul, good morning. Thanks for your question. So today, the announcement today is that we're pleased to talk about our Phase 1 profile and talking about the subcutaneously administered KPL387 supporting dosing for that monthly dosing interval. And that is supporting the design of the Phase 2-3 study. At this point in time, what we can say about that design is that we have engaged with the FDA. We've had interactions with the FDA regarding the design of that trial. with regard to the specific developments that we anticipate starting in the middle of this year. However, regarding the specifics of that trial, we'll have more to say about that at a later date. And of course, clinicaltrials.gov is also a great place to follow those updates. And over to Sam.

Yeah, thank you, Paul. I appreciate the second part of the question. So first and foremost, Regeneron has been a great partner, and we're really pleased with their commitment to patients as have we. We are fully committed to ARCLIS, and we believe there's an awful lot of opportunity ahead of us with ARCLIS. And we continue, as you've seen, to execute right since launch, and we believe there's substantial growth. We are only 13% penetrated into the target population, as you're aware. So we'll continue that. That said, of course, we're very excited about 387, the potential for monthly liquid formulation. subcutaneous dosing. And we do believe there's also need for that. And it's a very exciting potential treatment option for patients. We do not have a non-compete with our contract with Regeneron for our place. That said, we are committed to continuing the growth of the opportunity there. And obviously, we're committed to getting 387 available to patients as a very important treatment option for them as well. So very exciting times ahead. Looking forward to continuing to work with Regeneron, helping patients continuing to get 307 on the market as fast as humanly possible.

And that's what we're going to do. Great. Thank you.

Thank you. And that does conclude today's Q&A session. I would like to go ahead and turn the call back over to Sanj Patel, Chief Executive Officer, for closing remarks. Please go ahead.

Thank you, operator. Thank you, everybody, for the questions. Thanks for joining the call today. Clearly got a very exciting few years ahead. We're just going to keep on it, cracking away, and I look forward to talking to you again. Cheers.

This concludes today's program. Thank you all for joining today's conference call. You may now disconnect.