Kiniksa Pharmaceuticals International, plc

Good day and thank you for standing by. Welcome to the Connexa Pharmaceuticals first quarter 2026 earnings conference call. At this time, all participants are in 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised, today's conference is being recorded. I would now like to end the conference over to your speaker today. Jonathan Kirshenbaum, Investor Relations, please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining Connexa's call to discuss our first quarter 2026 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. From there, Ross Mote, our Chief Operating Officer, will provide an update on ARC List commercial execution. Then, Connexa's Chief Medical Officer, Dr. John Paolini, will review our KPL 387 development program and the ongoing Phase 2-3 clinical trial in recurrent pericarditis. After that, Mark Rogozin, our Chief Financial Officer, will review our first quarter of 2026 financial results. And finally, Sanj will share closing remarks and kick off the Q&A session, for which Evan Tesari, our Chief Strategy 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 such statements. A review of these 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 the date of this presentation, and we undertake no obligation to update such statements except as required by law. I'll turn it over to Simon.

Thanks, Jonathan, and good day, everyone. ConiXa continues to build spread across the business, which is driven by both our commercial progress with Arclist and the advancement of our pipeline programs, including KPL 387 and KPL 1161. On the commercial side, the end of the first quarter marks the fifth anniversary of the FDA approval for Arclist in recurrent pericarditis. Through our consistent and effective execution over those past five years, we've established and developed the market for this debilitating disease. This has enabled a fundamental shift in the treatment paradigm for patients and led to significant growth for the ARCA strength choice. Within our clinical portfolio, we continue to advance the APL387 Phase II, Phase III study in recurrent eryconitis. Data from the Phase II dose focusing portion of the study are on track for the second half of this year. We also expect to start the Phase III portion of the program by the end of this year. In addition, we are advancing KPL1161 closer to the clinic. This is our SC-modified IL-1 alpha and beta inhibitor with a target profile of quarterly dosing And as we've previously shared, we plan to start a phase one study by the end of this year. Our robust financial position, together with profitable Arculus revenue growth, gives us the ability to invest in value creation across the business. Commercially, Arculus continues to be on a robust trajectory five years from launch. And we intend to capture the additional opportunity that remains across the recurrent pericarditis market. Adoption of long-term IL-1 alpha and beta inhibition with Arclist is expanding in the approximately 40,000 patients each year in the United States who experience recurrent pericarditis flares. In the first quarter of this year, this expanding adoption contributed to Arclist sales growing to $214.3 million. Looking to the rest of the year, the marked increase in both the breadth and depth of prescribing we observed in the first quarter provide momentum going forward. As a result, we've now raised our full year 2026 revenue guidance to $930 to $945 million from our previous guidance of $900 to $920 million. In summary, Kinexa is a well-capitalized, growth-orientated company that is well-positioned to maximize the substantial artless commercial opportunity that is available to us. The company's portfolio programs have numerous milestones throughout the rest of the year that also have the potential to create meaningful value. And now, Ross Moss.

Thank you, Sanch. Our continued commercial execution has driven strong revenue growth in Q1. leading to an ARCLIS net revenue of $214.3 million, which represents an increase of more than $76 million compared to the first quarter 2025 and approximately $12 million over Q4 of last year. This revenue growth was driven by strong underlying commercial metrics, which outpaced the Q1 industry-wide headwinds related to copay resets and changes in insurance plans. In particular, growth was achieved by two key commercial dynamics. Firstly, we saw an acceleration in the growth of new prescribers through the quarter, which resulted in the highest quarterly increase in new patient enrollments since launch. This bodes particularly well for the rest of the year as the new larger prescribing base along with the durability of average duration of therapy, has enabled us to increase our full-year revenue guidance from between $900 to $920 million to between $930 and $945 million. Secondly, in Q1, our gross net increased compared to the prior quarter as expected. However, it was lower than Q1 of 2025. This was mainly driven by changes to our co-pay support program, where we made enhancements to our assistance program design, which reduced the average co-pay payout per patient relative to prior Q1s. With the momentum created early in the year, combined with our strong underlying commercial foundation, we believe we are well positioned to continue driving Arculus growth through the rest of the year, and believe there is substantial opportunity ahead to support many more recurrent pericarditis patients. In Q1, thanks to the strong execution from our team, approximately 400 new prescribers wrote our list for the first time, representing the highest quarter-on-quarter increase launched to date. This brings the total number of prescribers to more than 4,550. As a reminder, with more than 25,000 healthcare professionals seeing recurrent pericarditis patients in a given year, there is substantial opportunity ahead. We also saw growth in the number of healthcare professionals who became repeat prescribers during Q1, resulting in approximately 1,320 prescribers in total who have now prescribed Arclist multiple times. The acceleration we've seen in both the breadth and the depth of prescribing reflects our continued commercial execution as well as the growing understanding and adoption of interleukin-1 alpha and beta inhibition as the treatment choice following the prior use of NSAIDs and colchicine, as recommended in the 2025 ACC Concise Clinical Guidance. Earlier this month, we announced the initiation of our highly targeted direct-to-consumer campaign, Heart's Home. This campaign is designed to identify and target patients who may be suffering with recurrent pericarditis and not currently taking Arclist, with the aim of empowering them to discuss Arclist with their healthcare provider. Through digital innovation, including the use of AI, we are able to deploy BTC in a way that's cost-effective, highly targeted, and ultimately applicable for a rare disease market. We have focused on utilizing our existing patient database and added search optimization and machine learning models informed by de-identified claims, demographics, and consumer market data to define an enriched population of potential recurrent pericarditis patients to deliver tailored content. opposed to a traditional DTC approach of broad scale and high cost marketing. The centerpiece of our campaign is a connected TV commercial that is directed to potential patients through their individual streaming accounts on platforms such as YouTube and Hulu, as well as across social media channels. This campaign is informed by our market research which demonstrated that when a recurrent pericarditis patient inquires about Arclist to their provider, the healthcare professional is receptive to the inquiry, and it results in Arclist being prescribed in around 80% of cases. As previously mentioned, our Arclist franchise is growing, is profitable, and has significant opportunity ahead. And this has allowed us to make disciplined investment decisions to expand our reach to capture the opportunity and help more patients. With that, I'll turn the call over to John to cover our KPL 387 development program.

Thank you, Ross. As a brief refresher, we leverage our extensive clinical experience with the IL-1 signaling pathway, when designing the integrated development program for KPL387 shown here, broken down by phase of development. The core component of the program is the phase three placebo-controlled event-driven randomized withdrawal study. Just as in Rapsody, the pivotal study which supported ARC-List approval in recurrent pericarditis, the primary efficacy endpoint for phase three will measure the reduction in risk of pericarditis recurrence as the primary demonstration of KPL387 efficacy for the label. We believe from our regulatory interactions that this study will be sufficient to support registration as a single pivotal study. As a reminder, to maximize operational efficiency, we combined the phase two dose focusing trial and the phase three pivotal trial into a single integrated phase two three protocol so that phase three could initiate independently of phase two execution, and we added long-term extensions to all trial activities. We previously guided that we expect data from the dose-focusing study outlined here in red in the second half of this year, and today we guided that we expect to initiate the phase three portion of the study by the end of this year. The Phase II dose-focusing study builds on insights from previous clinical trials with Rolanocept, and it is designed to define the KPL387-PK-PD relationship, as well as to support the data-driven approach for affirming the dose level for the Phase III pivotal trial. Looking at the Rolanocept Phase II precedent in the left panels, the single active arm study demonstrated that IL-1 pathway inhibition with once-weekly Rolanocept resulted in rapid and sustained reductions in reported pain and inflammation in patients with active recurrent pericarditis and elevated C-reactive protein over the initial six-week treatment period, as well as the subsequent long-term extension through 24 weeks. Now, looking forward, the KPL387 Phase II Dose Focusing Study which is assessing four dose levels in up to 20 patients per arm, mirrors the Rolanocept phase two study in terms of study population, number of patients per arm, and the primary endpoint, which is time to treatment response. The study framework has been adjusted for the specific attributes of the long-acting pharmacokinetics of KTL387. Thus, development stage appropriate data which are expected in the second half of this year, are designed to provide useful information on the cadence and magnitude of initial response, as well as the duration of action of KPL387 dose levels, affirming the dose level for phase three and informing phase three outcomes measures. I will now turn it over to our Chief Financial Officer, Mark.

Thanks, John. This morning I will cover our first quarter of 2026 financial performance. As always, you can find our detailed financial information in today's press release. In the first quarter of 2026, we continue to build strong momentum across the business, advancing ARCLIS, progressing our clinical portfolio, and maintaining a strong financial position. Starting on the left-hand side of this slide with our income statement, As you've heard from Sanj and Ross, ARCLIS revenue grew 56% year-over-year to $214.3 million in the first quarter. This growth was driven by strong expansion in new prescribers and new patient enrollments, which more than offset the impact of industry-wide seasonal headwinds. Operating expense growth year-over-year was driven by several factors. Higher costs of goods sold due to ARCLIS revenue growth, increased collaboration expenses aligned with higher ARCLIS revenue and collaboration profit, higher R&D primarily due to increased clinical and manufacturing costs associated with the development of KPL387, and additional SG&A primarily driven by investment associated with the commercialization of ARCLIS, including personnel and leveraging new technologies to enhance our targeting strategy and reach additional patients and HTPs. As a result of this strong revenue growth against more moderate expense growth, net income increased significantly to $22.6 million in the first quarter of 2026, compared to $8.5 million in the first quarter of 2025. Turning to the right-hand side of this slide, you'll find the calculation for ARCLOS collaboration profit, which drives total collaboration expenses. In the first quarter of 2026, Arculus collaboration profit continued to grow faster than sales on a year-over-year basis, up 73% to $151.2 million. Finally, at the bottom of this slide, we ended the first quarter with a $468.1 million cash balance, representing $54 million of net cash generation for the period. We expect to remain cash flow positive on an annual basis under our current operating plan, enabling us to continuing to help patients while creating additional value in both the near and long term. With that, I will turn the call back to Sanj for closing remarks.

Thanks, Mark. As you've heard, Conixta is well positioned to build significant future value as we grow our IL-1 Alpha and Beta inhibition franchise. We are dedicated to helping as many patients as possible with Arthritis and to advancing the development of our clinical portfolio in order to bring additional therapies to patients suffering from debilitating diseases. With that, I'll now turn the call back to the operator for questions. Operator?

Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Nick Lurso with TD Cowan. Your line is open.

Great. Thanks very much for taking our question, and congrats on the strong quarter. Can you discuss what you have seen in terms of increased demand from the early days of the DTC campaign, acknowledging that it is still pretty early on? And what other plans do you have to accelerate demand in the future, either via patients or prescriber targeting? Thanks very much.

Yeah. Hi, Nick. This is Ross. I'll take a pass on that. So thank you very much. Yeah, as you said, it's early on for the DTC campaign. We just announced it pretty recently that we're focusing on DTC in a very targeted way in order to go and try and reach patients who we believe are recurrent pericarditis patients. and in order to kind of inform them and educate them in how to go and speak with their healthcare providers about the potential of Arclist and recurrent pericarditis. So it's early days. One thing that I share with you is that while we also understand that when patients go in and speak to their healthcare professionals proactively about Arclist, the patients get prescribed Arclist in around 80% of the cases. It's also true that there's only around 14% of recurrent peritonitis patients who are actually unaided, aware of Arclist. So we know that there's a big awareness gap out there with patients. We know patients are very widely dispersed. across the country. So this is our approach of ours of going out, trying to identify those patients and serve up appropriate, very targeted, very tailored messages that can help appropriate patients to be empowered to go and speak to their healthcare professionals about ARC-List. So we're excited about the campaign, but as you said, it's early days. We are focused on many different initiatives to accelerate the growth. As a reminder, last announced we were around 18% penetrated into the 14,000 patient population, not accounting for patients that are even in their first recurrence. And as you know, we've seen a strong growth in patients on their first recurrence as well over time. So the opportunity is very significant. We're focused on continuing to execute incredibly well across our commercial organization. We're focused obviously on digital marketing of which the DTC campaign is a part of that, a much broader umbrella of digital marketing. And we also focus on peer-to-peer education and growing this new wave of how to treat recurrent pericarditis patients, which has been really transforming over the last five years of the availability of Arclist on the market. So we're very excited about the future. We have a multifaceted approach to how we're going to continue to grow the breadth and the depth of prescribing. and help more and more patients.

Very helpful. Thank you very much. One moment for our next question. Our next question comes from Anupam Rama with JP Morgan. Your line is open.

Hey, guys. Thanks so much for taking the question, and congrats on a strong quarter here. For KPL387 and the second half dose focus update, John, I was wondering if you could comment a little bit as when you look at the totality of the range of endpoints and assessments that you're gonna be looking at in phase two, how do you think about which ones are most important in sort of the ultimate dose selection moving to phase three? Thanks so much.

Good morning, Adipam, and thank you for that question. Yes, so with regard to the phase two trial, which is currently ongoing, the value, I think, of slide 13 is that it shows you what kind of data we had generated in the past in the Phase II program with Rolanocept in terms of three critical elements, which is, of course, what we call the cadence and magnitude, which is basically the time of onset of action and the degree of suppression of pain and the inflammation with C-reactive protein, and then the additional element of durability of response. And that's what we showed previously with Rolanocept, and so carrying that forward to the KPL387 program. Again, with that initial dose of KPL387, what we've shown in our models, regardless of the dose level selected, we expect to see high drug levels, which would be modeled to have a rapid cadence in terms of onset of action and magnitude of effect. in suppressing the initial inflammatory response. And then the additional scientific question that we intend to glean by looking at the different dose levels is that duration of action of the four different dose levels that we take forward, that we look at in trial. And then from that we integrate all three of those elements to build the PK-PD relationship and affirm what we believe to be the therapeutic concentration, as well as the dose level that we would carry forward into phase three. So it's really the integration of those three critical elements.

Thanks so much for taking the question. One moment for our next question. Our next question comes from David Newyorkarten with Bush Securities. Your line is open.

Hey, thanks for taking the question. Just a couple quick ones from me. First off, on the DTC ad, is it fair to model in the incremental spend year-over-year on marketing as the DTC component, or is there some additional sales guys or other folks that you hired or other expenses going in there? And then the second one on 387. On the transition study, the treatment duration is 16 weeks, you know, which is different than the 12 or 24 weeks, you know, that you've looked at in the phase one or phase two. Is there any reason you picked 16 weeks versus, you know, having a little bit more apples to apples duration comparison, at least for patients who are moving from Arculus to 387? Thanks.

I mean, David, on the first one, I mean, I think as you heard us talk about on the call, you know, SG&A did go up as a result of sort of personnel-related expenses as well as sales and marketing issues, which Ross has sort of covered. I mean, I think we continue to invest responsibly in the commercialization of ARCLIS as shown by collaboration, profit continuing to grow faster than revenue. And so I think as we, you know, we haven't really guided to spend But I think it's worth sort of noting that on a percentage of sales basis, SG&A has been fairly consistent over the last year.

And then with regard to your question, David, you know, thank you for that question about the transition to KPL387 monotherapy dosing and administration study. So, yes, the 16-week treatment duration for the posology portion of the study is, in fact, appropriate for this type of study. This study is really designed to look at well-controlled patients as they move from their prior therapies to KPL387. And in this study, patients are transitioning from regimens of NSAIDs and colchicine, from corticosteroids, and IL-1 pathway inhibitors, including anikimra and Rolanocep. And so what we had seen previously with regard to Rolanocep was a time-to-monotherapy of under eight weeks in the Rhapsody program. And so, you know, this program is designed to basically move patients off of those other therapies onto KPL387 and achieve monotherapy within that time window. And then, of course, there are additional doses that are administered to achieve steady state by the week 16 time point. But then, importantly, patients transition to a long-term extension where they can continue to receive KPL387 for up to two total years. So it's a well-designed study to inform that element of the label, if you will, clinical practice for transitioning patients to KPL387.

Maybe a quick follow-up. Obviously, you look at the patients by prior treatment to determine if anyone has a new attack of pericarditis. Of course, you'll know which you know, prior treatment they were on and you'll stratify accordingly? Or, you know, how are you thinking about the differences in prior treatments for, you know, the transition?

So that's a very reasonable statement. And if you look at, for example, the ARCA list label, it covers all of the different therapies that patients can transition from. So it talks about NSAIDs and colchicine. It talks about corticosteroids. And then we didn't do this study specifically for recurrent pericarditis for anakinra because that had already been done for DERA. And so, you know, what we reported in that trial was, you know, how patients responded across the different treatments, you know, and the time to monotherapy. So similarly, In this trial, of course, you would look at each one of those different types of dosing regimens that patients came from and then look to make sure that the transition to KPL-387 is robust. It's important to point out that the onset, that the duration of action of KPL-387 with our anticipated phase three dose level is once monthly dosing, which covers, you know, most of that initial transition period depending on the therapies.

One moment for our next question. Our next question comes from Edward Nash with Canaccord Genuity. Your line is open.

Hi, good morning, guys, and really great quarter. Congratulations. So I wanted to ask, I know obviously the DTC program is relatively new, and I just wanted to kind of understand with regards to what's driving the biggest change in new patient starts. You said that on awareness, the awareness gap has shrunk and that you've seen increasing physician adoption. What effect has reimbursement or referral patterns had into this new patient starts?

Thanks, Ed. Appreciate your question. So, yeah, there are lots of different things driving the The increases that we've seen, not just in Q1, but, you know, over time as well. But of note, you know, Q1 was the highest ever quarter-on-quarter growth that we've had in terms of new prescribers. It was also the highest ever since the time of our launch five years ago, the highest ever number of new patient enrollments or new prescriptions coming in for ARCLIS. So clearly, you know, we're at a stage five years out from our launch where we're growing significantly. very nicely with a substantial opportunity ahead. The reimbursement continues to be very strong across all the different payer mixes, and that's both for new patients coming on as well as the revalidation of the script, usually after a one-year time period, so that continues to really be very positive. In terms of referrals, I think, you know, certainly there are some centers out there, around 18 centers that are centers of excellence, if you like, or whole pericardial disease-specific clinics. And they're acknowledged partially under one program, which is the AHA's Addressing Recurrent Pericarditis, of which, you know, we are a sponsor of. And that's, you know, that's been a helpful initiative, I think, to grow the expertise and share expertise in in how to diagnose and treat recurrent pericarditis over time among those 18 groups. But it also remains the case that recurrent pericarditis patients are, you know, broadly dispersed across the country. We have to touch, you know, many touch points across the country in order to educate physicians. We focus on peer-to-peer education to do that as well as, of course, our sales team, and the digital marketing initiatives such as the new DTC campaign, which we're excited about. But as I mentioned earlier, with only around 14% of patients that suffer recurrent pericarditis having an unaided awareness of Arclist, clearly putting the power in the hands of the patient and the knowledge in the hands of the patient of their disease, acknowledging the Many patients go through multiple physicians and multiple misdiagnoses before they get the recurrent pericarditis diagnosis. We think can play a substantial role in helping the awareness and empowering patients to go and ask their physicians about recurrent pericarditis, about Arcalist, and ultimately could play one of the roles amongst many things that we're doing in continuing to seize the opportunity that we have ahead.

It's very helpful. Thank you. Thank you. One moment for our next question. Our next question comes from Paul Choi with Goldman Sachs. Your line is open.

Hi, thank you, good morning, and congratulations on the strong quarterly results. I was wondering first if you could maybe elaborate a little bit more on the co-payment commentary for the quarter. Is this going to be something just specific to this particular quarter, or could it be more potentially structurally favorable to growth to net over the long term? And my second question is on KPL 387. Just with regard to the transition, the switch study, that's ongoing. Can you comment if the implication here is that you have a fairly confident view on the dose going forward for the phase three, or are you still testing multiple doses there? Thank you very much.

I might take the first question on the gross net. So, you know, I think, Paul, you know, we haven't provided specific guidance on gross net. You know, so we still do not expect major fluctuations relative to 2025, but we do anticipate now that co-pay support will, you know, be favorable to gross net on an annual basis with the majority of the impact having taken place in the first quarter. And I think as we, you know, sort of take a look at gross net over the course of the year, you know, I'll kind of say what we've said before here, but we do expect to return to our historical pattern where, you know, absent any sort of prior period reserve adjustments, you know, we do expect gross net to be highest in the first quarter, to work lower in the second and the third quarter, and then begin to shift higher again in the fourth quarter due to industry dynamics as they begin to play a factor again. I don't know if there's components of the copay that you want to discuss further than that, but at least that's the impact on gross net.

Yeah, that's right. Mark, thank you for that. I'll just maybe add a little bit more flavor onto the co-pay dynamics, Paul. So we did make enhancements to our co-pay assistance program at the beginning of this year, which ultimately reduced the average co-pay payment per patient and subsequently had the knock-on effect to the more favorable gross to net versus Q1 of last year, albeit higher than Q4 of last year. And that's driven by a couple of things. Firstly, reducing the maximum amount of copay payments that we make per patient. And secondly, we also implemented machine learning solutions to proactively identify patients who are on non-traditional payment plans, such as maximizer plans, in order to kind of pick up those patients, which you may know a lot of these plans are designed to take the cost to the manufacturers all the way until funds are exhausted before the insurance companies pick up on it. So by lowering that copay amount for those non-traditional plans, it reduced the maximum amount that we paid per patient, but before the patient's got full coverage under their insurer. So that had to knock on, in fact, into the gross to net. So thank you for the question, Paul.

And good morning, Paul. Thank you for your question about the transition to monotherapy study. So the details of the study design that we've shared so far can be found in clinicaltrials.gov. And what you will see there is the overall architecture of the study. but the disclosure does not include specific information of the dose levels that are being, dose level or dose levels that would be studied. So we will have more to say at a later date about the design of the study.

Okay, great. Thank you. One moment for our next question. Our next question comes from Jeff Meacham with Citi. Your line is open.

Hey, guys. Good morning. Thanks for the question. Just had two quick ones. Ross, on the commercial side, is there a tipping point for adding more patients to the first recurrence segment? I wasn't sure. Maybe if you wanted to wait a little bit longer on the awareness and DTC visibility, do you feel like you have to navigate maybe reimbursement hurdles in that more upstream segment? And then the second one for Sanj, with the positive cash flow, you got consistent profitability. How do you think about maximizing value from here? Would you want to be in the phase three for 387 before you take another look at VD? I wasn't starting to think about it. Thank you.

Thanks very much, Jeff. I appreciate the question. So yeah, as mentioned earlier, the last reported, we were around 18% penetrated into the 2-plus recurrence group. About 20% of prescriptions that we have now are in the first recurrence group. That's grown over time. We think the 2025 ACC concise clinical guidance is also helpful towards that as it places the use of IL-1 inhibition prior to the use of corticosteroids. So you're moving alkalis further upstream, if you like, early on in the disease. So we think those things are all important and acknowledging that, you know, Arclas really has a very broad label, which is agnostic to the number of flares that a patient has suffered. And we have broad patient coverage really across the labeled indication for the majority of plans. So we're in a pretty good situation there, which is why we, you know, we feel that the the opportunity that we have ahead is still very significant when you take those metrics around the two plus recurrences and the first recurrence group.

Jeff, this is Dan. Thanks for the question as well. As you know, for many years, this team's very much focused on creating value. And we also know how to execute. So to your point on 387, there's a lot of focus right now on getting through this phase two study, you know, how you did from the second half of the year and starting that phase three study this year, I think is very exciting. You know, clearly we're very much focused on capturing further growth in our place. That's a very important, continued effort for us. But then, as we said, 1-1-6-1 also should enter the clinic this year. So a number of milestones for us. You know, we balance all that consistently looking at how there are other ways to create value. And as you said, we consistently look at BD opportunities. We have a very, very high bar, though, And so we try to stay as pragmatic as possible, looking at all the valuable internal creation from internal value drivers, but also looking at business development. So we're going to continue to do that. But capital allocation is very important to us. Being efficient is very important to us. We've done that very nicely, I think, through this digital DTC effort and looking at AI ways to really do it very efficiently. So trust us when we say that we'll continue to think about value creation over time.

and balance it well going forward.

Okay.

Thank you.

One moment for our next question. Our next question comes from Roger Song with Jefferies. Your line is open.

Hi. Good morning, team. This is Fiona Offa, Roger. Congrats on the strong quarter, and thanks for taking our question. Maybe just a quick one on KPL 387. Any meaningful difference in terms of formulation versus Archelix, and do you plan to use an autoinjector? And maybe just down the line, if 387 gets approved, how do you plan your commercial strategy around incorporating to potentially transition to 387? Thank you.

Yes, so thanks for that question. I'll handle some of the biophysical characteristics of the molecules. to maybe lay a little bit of groundwork and then turn it over to SANS with regard to next steps. So yeah, there is a difference with regard to KPL387 in that it is a liquid formulation. And so that liquid formulation, you know, allows for the total dose, if you will, of KPL387 to be delivered in a single syringe subcutaneously. And we anticipate that with the extended pharmacokinetics, which we've shown previously in phase one, that that would support once-monthly dosing. And so once you have that profile, it then does set up a situation, if you will, that is quite favorable for the development of an auto-injector. And we have not discussed that in detail at this time. But I'll turn it over to Sandra.

Yeah, and Dylan, nothing really to add. Obviously, we'll continue to execute on the ongoing clinical We talked about those today, phase two, phase three study, starting phase three this year, obviously entering more into SWAN, but nothing else to add. We plan to do them as fast as humanly possible and as well as humanly possible.

Thank you. One moment for our next question. Our next question comes from Eva Fortier with Wells Fargo. Your line is open.

Hey, good morning. Congrats on the quarter and thanks for taking our questions. Two quick ones from us. First, how should we be thinking about R&D expense for the rest of the year and into 2027 as 387 Phase 3 and 1161 Phase 1 are initiated? And the second question is, you've guided to initiating the Phase II pivotal portion for 387 by year end 26. Are there any key steps or milestones you need to clear to initiate the study, or is it just a matter of seeing the Phase II data before moving forward? Thanks.

Thanks, Eva, for the question. Maybe just to touch upon the R&D question first here, you know, similarly to an earlier question, we haven't provided explicit guidance But that being said, I think on a percentage of sales basis, R&D has been fairly consistent over the last year. And really with R&D, it's timing of our clinical trials and manufacturing of clinical supply that are the key variables. And so we've disclosed several ongoing investments that we plan to further advance in 2026, including the development of 387s. into phase three and KPL 1161 into phase one. And so, you know, obviously the longer trials go on, they tend to get a little bit more expensive. But I think keeping in the context of where sales growth has been and where we've been fairly consistent on R&D to sales over the last year is an important metric to keep in mind.

And then, Ava, thank you for your question with regard to the phase two, three transition. So with phase two data expected in the second half of 2026, we're on track for receiving dose level confirmation data in that time framework. And because the phase two dose focusing portion and the phase three pivotal portion have been integrated into a single phase two, three protocol, the phase three pivotal trial can begin independently of phase two execution.

Got it. Thanks.

And I'm not showing any further questions at this time. I turn the call back over to Saj for any further remarks.

Thanks, Operator. Thank you for all the questions and joining the call today. We look forward to the end of the year and, of course, providing additional updates in the future. Thank you.

Thank you, ladies and gentlemen. This does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.