Kiniksa Pharmaceuticals International, plc (KNSA) Q2 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Kiniksa Pharmaceuticals Second Quarter 2026 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. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to the Kiniksa Pharmaceuticals Second Quarter 2026 Earnings Call. A press release highlighting our financial results and recent portfolio execution 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 that will be followed by Mark Ragosa, our Chief Operating Officer, who will provide an update on ARCALYST commercial execution. From there, Kiniksa Chief Medical Officer, Dr. John Paolini, will review our KPL-387 development program and the ongoing Phase II/III clinical trial in recurrent pericarditis. After that, Mark Ragosa, our Chief Financial Officer, will review our second quarter 2026 financial results. And finally, Sanj will share closing remarks and kick off the Q&A session. 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 at 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 or good afternoon, everyone. Kiniksa is in a strong position more than halfway through 2026 as we continue to execute across our portfolio. We continue to make excellent progress with ARCALYST and have advanced the [ KPL-387 ] program into the pivotal stage with the initiation of the Phase III trial, which we have named PASTORALE. Additionally, KPL-1161, which is our Fc modified IL-1 alpha and beta inhibitor with a target profile of quarterly dosing, is progressing well and the program remains on track to initiate a Phase I study by the end of this year. Importantly, we continue to maintain a robust financial position, which together with strong commercial momentum and key advancements in our development pipeline positions the company with multiple value-creating drivers in both the near and long term. Our ongoing execution of the ARCALYST commercial strategy resulted in a meaningful increase in the number of patients on therapy. Robust revenue growth of more than $29 million over the previous quarter drove sales of $243.6 million in the second quarter. And we continue to build on our strong commercial momentum, and we've raised our full year 2026 revenue guidance from $930 million to $945 million to between $980 million and $995 million. On the clinical side, just this morning, we announced data from the dose-focusing portion of the KPL-387 Phase II/Phase III study in recurrent pericarditis. On the basis of the Phase II data, I'm happy to report that we are moving forward with the target profile of a monthly dose into the pivotal Phase III portion of the trial. Today, we also announced that this Phase III study has already started and is now enrolling and dosing patients. The ongoing Phase III study [indiscernible] marks a key milestone in bringing additional treatment options to patients suffering from recurrent pericarditis. This trial follows RHAPSODY. The successful Phase III program with ARCALYST, with both trials having the same registrational endpoint of reduction in the risk of pericarditis recurrence. John will share additional details about the Phase II data in a moment as well as provide an overview of the design of this Phase III study. We anticipate a potential commercial launch of [ KPL-387 ] in the 2028 and 2029 time frame, extending our leadership in the recurring pericarditis market so it can help many more patients. And with that, I'll turn it over to Ross to review our commercial execution. Ross?

Thank you, Sanj. In Q2, the Kiniksa commercial team continued to drive strong growth with ARCALYST. Our net revenue was $243.6 million, which is more than $85 million growth versus Q2 of 2025 and more than $29 million growth compared to Q1 2026. This represents the largest quarterly net revenue increase since our launch more than 5 years ago and is a direct result of the execution of the strategy that we laid out at the beginning of this year. Our commercial approach has helped to change the treatment paradigm for recurrent pericarditis, and we are focused on continuing to unlock future growth for ARCALYST. Over time, we have made disciplined value-driven investments across our sales infrastructure as well as innovative strategies that have enabled us to reach more patients. Firstly, we've been diligently ensuring that prescribers have a positive prescribing experience, which encourages deeper prescribing as well as peer-to-peer education to other health care professionals. Additionally, we've been investing in machine learning and the use of AI to provide our sales team with insights on not just who to target but importantly, when to visit and what messages should be delivered. Secondly, in April of this year, we launched our targeted DTC campaign called Heart's Home. This campaign is aimed at educating and empowering patients who are suffering from recurrent pericarditis to visit their health care professional and ask for ARCALYST. So far, the campaign has reached thousands of patients who are suffering from recurrent pericarditis. While it's still in the early stages, we are starting to see encouraging signs of engagement with our campaign and patients visit in their health care professional to discuss ARCALYST. Thirdly, our teams have been highly focused on disseminating the 2025 ACC concise clinical guidance for recovered pericolitis. The understanding of this guidance and the recommendation of moving ARCALYST earlier in line after NSAIDs and colchicine and ahead of corticosteroids has helped to expand the utilization of ARCALYST. Since our focus on disseminating this publication, we've seen an increase in doctors who have changed their treatment approach and are now using ARCALYST earlier in the disease course. Finally, the commercialization is underpinned by ARCALYST's highly efficacious and well-tolerated profile, along with robust compliance, growing persistence and an excellent payer approval rate. As of the end of Q2, our penetration into the multiple recurrence population had grown to approximately 21% compared to around 18% at the end of 2025. This demonstrates both strong growth as well as the substantial opportunity ahead. As mentioned on the last slide, we are seeing continued momentum in the breadth and depth of ARCALYST prescribing, which in Q2 led to a significantly higher number of new patient enrollment compared to any quarter since our launch. Approximately 450 additional health care professionals wrote their first ARCALYST prescription in the second quarter, bringing the total prescriber base to more than 5,000 launch to date. As a reminder, there are more than 25,000 health care professionals across the country who manage recurrent pericarditis patients. Therefore, the opportunity for continued growth is evident. Additionally, the number of health care professionals who have written multiple prescriptions increased by approximately 150 compared to Q1 of 2026, meaning that around 29% on of the prescriber base have written ARCALYST for 2 or more patients. The dual acceleration in both new and repeat prescribing led to an increase in patient enrollments, which resulted in a substantial increase to the number of patients on therapy and illustrates the demand for a highly efficacious treatment that protects patients from suffering unnecessary additional flares. As you can hear, we are pleased with the Q2 performance. But we continue to be even more excited by the opportunity that's ahead. And with that, I'll turn the call over to Dr. John Paolini to share more information on our KPL-387 program in recovering pericarditis. John?

Thank you, Ross. As Sanj mentioned, the pivotal Phase III trial of KPL-387 in recurring pericarditis has now been initiated and is already enrolling and dosing patients. Before that, I'll provide a brief overview of the Phase II dose focusing portion of the trial, data from which affirmed the dose level for Phase III. As a reminder, for the Phase II/III study, we have combined both portions into a single integrated protocol in order to maximize operational efficiency, thus allowing the Phase III portion to begin even while the Phase II trial is still ongoing. Phase II is designed to define the PK/PD relationship and provide information on the cadence and magnitude of initial response as well as the durability of effect of defined subcutaneously administered KPL-387 dose levels. Up to approximately 80 participants presenting at screening with a pericarditis recurrence despite treatment with NSAID and colchicine are randomized equally into 4 arms to receive subcutaneously administered KPL-387 at 100 milligrams or 300 milligrams dosed biweekly or once monthly. Concomitant treatment with conventional oral therapies is linked and discontinued within 2 weeks to attain KPL-387 monotherapy. The primary endpoint of the Phase II dose focusing study is time-to-treatment response through 24 weeks, defined as an NRS score of less than or equal to 2 on the 11-point daily pericarditis NRS pain scale and normalization of C-reactive protein, a marker of pericardial inflammation. The data we announced today show that the KPL-387 300-milligram monthly dose level demonstrated rapid and sustained onset of action with durable efficacy throughout the monthly dosing interval, affirming the 300-milligram monthly dose being evaluated in the Phase III study PASTORALE. Specifically, in this analysis, median time to treatment response was 4 days with a 95% confidence interval of 3 to 6 days. Median time to pain response was 4 days with a confidence interval of 3 to 6 days. And median time to CRP normalization was 8 days with a confidence interval of 7 to 9 days. The cadence and magnitude of these reductions in pain and inflammation are consistent with prior studies, which supported ARCALYST approval in recurrent pericarditis. KPL-387 was generally well tolerated, consistent with the well-known safety profile of IL-1 pathway inhibition. Regarding the other dose levels in the study not selected for Phase III, the 100-milligram subcutaneous biweekly and monthly dose levels showed some effect but not at the level to support further study. The KPL-387 300-milligram biweekly dose level was efficacious without incremental benefit above the monthly dose level. The totality of data available supported the initiation of PASTORALE with the 300-milligram subcutaneous monthly dose level. The PASTORALE design sugar familiar based upon our prior work in RHAPSODY. This pivotal Phase III trial is a placebo-controlled and event-driven randomized withdrawal study, designed to measure the reduction in risk of pericarditis recurrence as the primary demonstration of KPL-387 efficacy for the label. The primary efficacy endpoint is time to first adjudicated pericarditis recurrence during the randomized withdrawal period. The trial will enroll up to approximately 85 participants experiencing a pericarditis recurrence despite conventional oral therapies into a single-blind run-in period, during which KPL-387 is initiated and oral therapies are weaned and discontinued. Participants are blinded to the duration of the running period. Subsequently, participants who respond to KPL-387 in the running period then enter the randomized withdrawal period, in which they either continue receiving KPL-387 300 milligrams once monthly or switched to placebo. Upon closure of the randomized withdrawal period, participants may be eligible to continue into a long-term extension. As we have mentioned, our goal is to bring this potential new additional treatment option to patients in the 2028 to 2029 time frame. I will now turn the call over to Mark to cover our second quarter financials.

Thanks, John. This morning, I'll walk through our second quarter 2026 financial performance and highlight the key drivers behind the results. As always, detailed financial information is available in today's press release. The quarter reflected strong execution with continued momentum across our commercial business, advancement of our development pipeline and further strengthening of our financial position. Starting on the left-hand side of this slide with the income statement, ARCALYST revenue grew 55% year-over-year to $243.6 million in the second quarter. As you've heard from Ross, this growth was driven by continued expansion in new and repeat prescribers as well as patient enrollments. Operating expense growth year-over-year was driven by several factors: Higher cost of goods sold due to ARCALYST revenue growth, increased collaboration expenses aligned with higher ARCALYST revenue and collaboration profit, higher R&D, primarily due to the increased KPL-387 clinical trial costs as well as manufacturing costs; and also increased preclinical development investment and lastly, additional SG&A, primarily driven by investment associated with the commercialization of ARCALYST. Together, these factors contributed to year-over-year increases in operating income and net income, which were $27.2 million and $25.4 million, respectively. The calculation for ARCALYST collaboration profit drives total collaboration expenses is on the right-hand side of the slide. Here, we continue to leverage disciplined commercial investment as ARCALYST's collaboration profit grew faster than sales on a year-over-year basis, increasing 68% to $176.1 million. Turning next to cash. At the bottom of the slide, we ended the second quarter with a $525.9 million cash balance, representing approximately $58 million of net cash generation for the period. Looking ahead, we believe our operating plan enables us to continue helping patients while creating additional value over both the near and longer term. With that, I'll turn the call back to Sanj for closing remarks.

Thanks, Mark. As you've heard, Kiniksa 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 ARCALYST and to advancing the development of our clinical portfolio in order to bring additional therapies to patients. With that, I'll now turn the call back to the operator for questions.

Our first question comes from the line of Nick Lorusso from TD Cowen.

Congrats on the very strong quarter, guys. So as you guys mentioned, this was the strongest quarter of ARCALYST absolute sales growth since launch. So just wanted to drive into what drove this growth specifically in Q2? And could this level of growth continue throughout the rest of the year and into next year?

Thanks, Nick. I'll say a few comments and I'm sure I'll move over to Ross to dive into some detail. But look, as always, it's continuing to execute across the entire commercial strategy and overall growing the adoption of IL-1 pathway inhibition as the preferred treatment for recurrent pericarditis. And that continues to happen every quarter. Certainly, this quarter, Ross will dive into the number of new unique prescribers we've had this quarter. as well as the number of new repeat prescribers and the new enrollments. But ultimately, it's a matter of just continuing to penetrate into the total population, which we're doing. And obviously, the total duration of therapy is very important. That's about in line really with the median duration of the disease, about 3 years, but ultimately penetrating into that. As we just reported, we're now around 21% penetrated into the multiple recurrence population. But that, to me, represents a meaningful opportunity ahead. And so that's what we're focused on. So very excited about it. Ross, why don't you dive into some of the drivers and the actual numbers across those metrics? But it's -- the special sauce is just continuing to execute.

Thanks for the question, Nick. And I think that's absolutely right. I mean this is culmination of a lot of work across all our commercial and cross-functional teams at this point and where we got to really understanding the recurrent pericarditis market and really just generally executing flawlessly across the board. So really kudos to all of the team that have been able to help so many patients throughout Q2. Ultimately, we've seen a substantial uplift in the number of both new prescribers and new repeat prescribers, as Sanj said, we have more than 450 new prescribers come into the total prescriber base more than 150 new repeat prescribers, meaning they've prescribed for 2 or more patients in the quarter. And ultimately, that's kind of grown the number of patients that are on therapy, which led to both the results in Q2 being the highest number of new revenue -- incremental revenue that we've had in any quarter since launch as well as the highest number of new prescribers. Ultimately, some of the driving factors underneath that as well as some of the actions that we put into place around investing in AI and machine learning, trying to make our field team even more effective than they historically have been, knowing just not only kind of who to call upon in a very traditional targeting approach, but more importantly now, seem when to call upon doctors and some of that through claims analysis alerts, but importantly, predictive alerts as well as when patients may be coming into flared visit in particular health care professionals. As you know, we've also invested in the DTC campaign, and that's starting to show some early signs of success driving patients into the clinic to ask specifically for ARCALYST. And I think the third point that's worth mentioning is around the dissemination of the ACC concise clinical guidance, which actually was published in August of last year. But generally speaking, because these recurrent pericolitis patients are very widely dispersed around the country, many of the general cardiologists are not familiar with the ACC concise clinical guidance for recurrent pericarditis. So our dissemination efforts in really explaining what that guidance document means and how IL-1 inhibition is now placed after NSAID and colchicine use and prior to corticosteroids has been a key part in the transformation of really changing the treatment paradigm and being able to help many more patients. So I think all said, it's really rolled up to just ongoing solid execution across the team and acknowledging that even now 5 years plus into the launch, there remains very significant opportunity for ARCALYST moving forward.

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

Congrats on the quarter. Two quick ones from us. So on your prepared remarks, you mentioned a higher number of new patient enrollment for ARCALYST this quarter. Is there a specific patient profile that you're seeing coming at this stage of the launch? And the follow-up was, can you comment on the gross to net for the quarter?

Well, Ross, why don't you start with the bring part and Mark, if you can comment on the [ GTN ].

Yes, absolutely. Let's do -- thank you, Eva, for the question. We haven't really seen any changes in the actual patient profiles as such, whether that's through kind of demographics of the patients for what -- to what level we know about that all the type of institutions, the health care professionals that are prescribing is still really across the board kind of academic centers, more rural centers. The opportunity, I think, is still very, very broad across the country. So we haven't really seen a change in patient profile or phenotype to what we've seen. I think this is really more through just a greater understanding of recurrent pericarditis, greater efforts from the cardiology community to really differentiate between the first index pericarditis episode and actually when this becomes recovering pericarditis. As you know, historically, the misdiagnosis and underdiagnosis rate is pretty substantial and patients go through seeing many health care professionals before getting the recurrent pericarditis diagnosis. So we've seen that, I think, improve over time. And I think that's really everything. There's no major changes and just happy to see more patients getting the help that they really need and deserve.

I guess, Eva, to your second question regarding gross to net in the quarter, historically, gross net does move lower sequentially in the second quarter. That was the case again this year. Year-to-date. gross to net is 7.2%, down from 8.6% in the first quarter with the main driver being lower co-pay due to the changes that we made to our support program at the beginning of the year. . I think, as you look throughout the rest of the year here, we don't provide specific gross to net guidance, but we do anticipate a co-pay support to continue to be favorable to gross to net on an annual basis, with the majority of the impact having taken place in the first quarter. And additionally, we do expect sort of the normal pattern to hold here. So absent any prior-period reserve adjustments, our gross net historically has been highest in the first quarter, lower in Q2 and Q3 and then works a little bit higher in the fourth quarter as industry dynamics begin to play a factor to play a factor there. I'll leave it there.

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

Congrats on the data in the quarter. I just have a couple. So the first on 387, now that you have the Phase II data in hand and with commercial knowledge of the market, is there anything you guys have embedded in the Phase III, perhaps to further differentiate the profile of 387? And then second question, I know I usually ask, but wanted to check on demand trends from the first recurrence population for ARCALYST. Is there maybe some element of that driving this quarter?

Yes, I'm not sure if you want to come up on the Phase III study. But essentially, obviously, we're pretty excited about the Phase II results we've seen. We're obviously now moving into Phase III. As we've said, we're excited about the target profile of KPL-387, potential for monthly dosing liquid formulation. That, I think, is very exciting. But obviously, the data will be the data from the Phase III. So we're just focusing on really getting through the rest of the enrollment on the Phase III study and hopefully seeing the results and being on the market in the '28-'29 time frame. But John, any comments from the Phase III study?

No. I mean I would say that the profile, as Sanj mentioned, of KPL-387 that we're taking into the Phase III study is one that we're very excited about, rapid onset of action, durable efficacy throughout the monthly dosing interval that's being studied in Phase III in PASTORALE. So that sets us up in an excellent position for the pivotal Phase III trial. The design of the Phase II trial is one that we understand well and then as well understood they're in the scientific community is a rather withdrawal study design. And so we are prepared to execute on that and to bring the trial forward.

Thanks, Geoff. I appreciate your questions. I just answer your question on ARCALYST, thinking about the demand in the first recurrence population, and we've seen that physicians are continuing to utilize ARCALYST broadly across the very broad label that we have, which is, as you know, is agnostic to the number of recurrences that the patient has suffered from. There's around 40,000 patients in any given year that fit within the recurrent pericarditis label. When you break that down, we have about 80% or new patient prescribing happening in the 2-plus recurrence. So that's about 80% of new prescriptions that are coming in, in a quarter are for patients are on their second or more recurrence, and that's 14,000 patient population. And based upon that population, that's where we mentioned that we're now penetrated around 21% into that opportunity. And that's not accounting for the patients to your question directly that are on their first recurrence and again, fitting within the label. That's a larger patient group. It's around 26,000 of the 40,000 patients. And we see about 20% of the ARCALYST prescriptions in Q2 within that patient group. And that's been growing over time. And I think some of that reflects the acknowledgment of the board label, the increasing confidence of using ARCALYST and ultimately, the ongoing opportunity that is ahead.

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

Congrats on all the progress. Just wanted to follow up on Geoff Meacham's question here. On KPL-387 300-mg dose, when I look at sort of time to response, pain, CRP and compared to sort of the RHAPSODY New England paper, the run-in period for ARCALYST; it looks very in line-ish, plus or minus a day or so. Is that a fair assessment? And can you remind us what your market research suggests a monthly regimen could mean commercially?

John, why don't you start [indiscernible] you can jump in?

Sounds great. Thank you, Anupam, for the question. yes, we would concur that the data that we have shown from the Phase II trial in terms of time to treatment response, time to pain response and time to see normalization are very robust and are consistent with what has been seen previously in trials that supported rilonacept approval in recurring pericarditis, especially when one takes a confidence interval approach to looking at the numbers with your point estimates. Ross?

Yes. Thank you, Anupam. Yes, we did previously shared some market research around thoughts from patients and health care professionals on the target profile of KPL-387 versus kind of current commercial and other investigational therapies. And really, that showed both to a high degree for both the patients and the health care professionals, they were pretty excited about the KPL-387 target product profile with around 75% of patients saying that they would prefer the KPL-387 target product profile over current commercial or available -- or investigational therapies. And around 92% of health care professionals indicated a high likelihood to prescribe for new patients in the context of the target on our profile. Additionally, the potential availability of another IL-1 therapy could also expand the pool of patients for IL-1 inhibition overall with the monthly target product profile.

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

Congrats on the quarter and progress. My first question is on the commercial side. And I was just curious if you're thinking about adding incremental headcount to your sales force at this point, just given the commercial momentum? Or is the plan to continue to leverage AI and the advancement of the ACC clinical guidelines? My second question is on KPL-387, specifically the transition study for patients who are stable. Can you maybe highlight what you're trying to show there and how you think what data are needed to support a potential switch strategy from ARCALYST down the road?

Maybe I'll come in. John, if you can take the rest. Thanks, Paul. So look, we're always looking at our sales force analytics and working out the best way to reach these physicians and health care professionals. That's an ongoing basis for us. So I don't if there's anything to report really on that side. As Ross mentioned, we continue to leverage the AI and machine learning and digital marketing, which has been really helpful. But again, it's just really one part. There are a multitude of ways that we've got to continue to keep working to continue to penetrate into the total population, which we're doing. So it's really a matter of no one size fits all. You've got to continue to execute across all those functions. So we'll continue to crack on. Clearly, the 21% penetration so far tells you there's an awful lot more work to do, and that's what we're geared up to do. So we'll do it to the best where we can across all those different areas and hopefully continue to report information to you going forward.

Thank you, Paul, for your question. So yes, the KPL-387 transition to monotherapy dosing administration study, there was a Phase II study designed to provide supplemental information for the label and to assist and provide basically the information to assist clinicians as they move across different therapies, if you will, from recurrent pericarditis. And so that trial is designed to -- with different dosing regimens to test that efficacy and safety as patients move from regimens of NSAIDs and colchicine or corticosteroids or IL-1 pathway inhibitors, including anakinra and rilonacept. And so at the end of that study, with these different dosing paradigms having been tested, that enables the writing, if you will, the dosing administration section of the label in order to allow patients to move smoothly across therapeutic lines.

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

I had one on 387, maybe two. First, just what was the kind of median follow-up. Was it the full 6 months for these patients or something else? And then if you saw any recurrences in the population in the study, in the 300-milligram arms or any of the other ones actually?

Yes. Thank you, David, for the question. So the data that were obtained for this analysis, it was an interval analysis of the ongoing study. And as such, the disclosure is limited. And so what we can say is that we have harvested this information to affirm the 300-milligram monthly dose certainly beyond the monthly dosing for [indiscernible] an order to just show that at the trough, if you will, is the monthly dosing interval, the treatment effect is robust. And other than that, that is the limit of what we have said. What we have also said though, is that the 300-milligram biweekly dose level, which, of course, delivers more drug did not provide incremental benefit above the 300-milligram monthly dose.

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

Thank you, operator. Well, we better crack on. Thank you for the questions today joining the call. We look forward to the remainder of the year and providing additional updates in the future. 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.