Prepared remarks
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 a commercial update on ARCALYST. 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 as of the date of this presentation, and we undertake no obligation to update such statements, except as required by law. With that, I'll turn it over to Sanj.
Thanks, Jonathan, and good morning 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 now underway 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 to 2029 time frame, extending our leadership in the recurrent 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 five 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 visiting their health care professional to discuss ARCALYST. Thirdly, our teams have been highly focused on disseminating the 2025 ACC concise clinical guidance for recurrent pericarditis. 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 enrollments 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 since 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% of the prescriber base have written ARCALYST for two 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 recurrent pericarditis. John?
Thank you, Ross. As Sanj mentioned, the pivotal Phase III trial of KPL-387 in recurrent 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 four 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 weaned and discontinued within two 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 four days with a 95% confidence interval of three to six days. Median time to pain response was four days with a confidence interval of three to six days. And median time to CRP normalization was eight days with a confidence interval of seven to nine 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 is similar to 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 run-in period. Subsequently, participants who respond to KPL-387 in the run-in period then enter the randomized withdrawal period, in which they either continue receiving KPL-387 300 milligrams once monthly or are 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; increased preclinical development investment; and 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 and 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.
Questions and answers
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 then hand over to Ross to dive into some detail. 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. The total duration of therapy is also important; that's about in line really with the median duration of the disease, about three 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. So that's what we're focused on. Very excited about it. Ross, why don't you dive into some of the drivers and the actual numbers across those metrics?
Thanks for the question, Nick. I think that's absolutely right. This is the culmination of a lot of work across all our commercial and cross-functional teams and where we got to really understanding the recurrent pericarditis market and executing effectively. 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 and more than 150 new repeat prescribers, meaning they've prescribed for two or more patients in the quarter. Ultimately, that's grown the number of patients that are on therapy, which led to both the results in Q2 being the highest incremental revenue that we've had in any quarter since launch as well as the highest number of new prescribers. Some of the driving factors underneath that, and some of the actions that we put into place, include investing in AI and machine learning to make our field team more effective—knowing not only who to call upon in a very traditional targeting approach, but more importantly when to call upon doctors. Some of that comes through claims analysis alerts, predictive alerts as to when patients may be coming into a flare visit at particular health care professionals. 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. The third point worth mentioning is around dissemination of the ACC concise clinical guidance, which was published in August of last year. Because these recurrent pericarditis patients are very widely dispersed around the country, many general cardiologists were not familiar with that guidance. Our dissemination efforts in 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 transforming the treatment paradigm and being able to help many more patients. So all said, it's ongoing solid execution across the team and acknowledging that even now more than five years into the launch, there remains 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 enrollments 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?
Ross, why don't you start with the patient part and Mark, if you can comment on the gross-to-net.
Thank you, Eva, for the question. We haven't really seen any changes in the actual patient profiles as such, whether that's through demographics or the types of institutions. The health care professionals prescribing are still broadly distributed across academic centers and community centers. The opportunity is still very broad across the country, so we haven't really seen a change in patient phenotype from what we've seen historically. I think the increase is driven more by a greater understanding of recurrent pericarditis, and greater efforts from the cardiology community to differentiate between a first index pericarditis episode and recurrent pericarditis. Historically, misdiagnosis and underdiagnosis rates are substantial and patients go through seeing many health care professionals before getting the recurrent pericarditis diagnosis. We've seen that improve over time, and we're happy to see more patients getting the help they need and deserve.
Eva, to your second question regarding gross-to-net in the quarter: historically, gross-to-net moves 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 changes we made to our support program at the beginning of the year. As you look through the rest of the year, we don't provide specific gross-to-net guidance, but we do anticipate 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. Additionally, we expect the normal seasonal pattern to hold: historically highest in Q1, lower in Q2 and Q3, and then working a little higher in the fourth quarter as industry dynamics begin to play a factor. That's all I have on that.
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 KPL-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?
Geoff, we're excited about the Phase II results and moving into Phase III. We're focused on the target profile of KPL-387 with a potential monthly dosing liquid formulation, which we think is attractive. But obviously, the data will be the data from the Phase III. We're focusing on completing enrollment and executing PASTORALE and then getting results with the hope of being on the market in the 2028 to 2029 timeframe. John, any comments on the Phase III study?
I would say the profile of KPL-387 that we're taking into the Phase III study is one that we're very excited about: rapid onset of action and durable efficacy throughout the monthly dosing interval being studied in PASTORALE. That sets us up well for the pivotal Phase III trial. The trial design is a randomized withdrawal study design, which is well understood in the scientific community, and we are prepared to execute on that and to bring the trial forward.
Thanks, Geoff. On demand trends from the first recurrence population: physicians are continuing to utilize ARCALYST broadly across the label, which is agnostic to the number of recurrences a patient has suffered. There's about 40,000 patients in any given year that fit within the recurrent pericarditis label. When you break that down, roughly 14,000 are in the two-plus recurrence category; about 80% of new patient prescribing in a quarter occurs in the two-plus recurrence population. Based upon that population, we mentioned we're now penetrated around 21% into that opportunity. The first recurrence population is larger—about 26,000 of the 40,000 patients—and we see about 20% of ARCALYST prescriptions in Q2 within that patient group, which has been growing over time. So we are seeing broader usage across the label, and that contributes to the ongoing opportunity.
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 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 and then Ross can comment on the commercial perspective?
Thank you, Anupam. Yes, we would concur that the data from the Phase II trial in terms of time to treatment response, time to pain response and time to CRP normalization are robust and are consistent with what has been seen previously in trials that supported rilonacept approval in recurrent pericarditis, especially when one looks at the confidence intervals around the point estimates.
Thanks, Anupam. We previously shared market research around patient and health care professional perceptions of the KPL-387 target product profile. That research showed strong interest: around 75% of patients said they would prefer the KPL-387 target product profile over current commercial or investigational therapies, and around 92% of health care professionals indicated a high likelihood to prescribe for new patients in the context of that target profile. Additionally, the potential availability of another IL-1 therapy with a monthly profile could also expand the overall pool of patients for IL-1 inhibition.
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. I was just curious if you're thinking about adding incremental headcount to your sales force at this point, 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 what data are needed to support a potential switch strategy from ARCALYST down the road?
We're always evaluating sales force analytics and working out the best way to reach physicians and health care professionals. That's ongoing. We will continue to leverage AI and machine learning and digital marketing, which have been helpful, while also executing across other engagement channels. The 21% penetration so far indicates there is a lot more work to do, and we'll continue to execute across multiple approaches to continue penetrating the total population.
Thank you for the question. The KPL-387 transition to monotherapy dosing administration study is designed to provide supplemental information for the label and to assist clinicians as patients move across different therapies for recurrent pericarditis. The study will evaluate different dosing regimens to test efficacy and safety as patients transition from regimens of NSAIDs and colchicine or corticosteroids or other IL-1 pathway inhibitors, including anakinra and rilonacept. The results will inform the dosing and administration section of the label 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 KPL-387, maybe two. First, what was the median follow-up—was it the full six months for these patients or something else? And then did you see any recurrences in the population in the study, in the 300-milligram arms or any of the other ones actually?
Thank you, David. The data presented were from an interval analysis of the ongoing study, and as such disclosure is limited. What we can say is that we harvested this information to affirm the 300-milligram monthly dose and to demonstrate that at trough—i.e., at the end of the monthly dosing interval—the treatment effect is robust. Beyond that, the disclosure is limited. We also reported that the 300-milligram biweekly dose 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 and for 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.