Kiniksa Pharmaceuticals (NASDAQ:KNSA) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Kiniksa Pharmaceuticals increased its full-year revenue guidance to $1.045 to $1.050 billion, driven by strong Arcalyst sales growth in recurrent pericarditis, reaching $286 million in Q3 2026.
The company is advancing clinical trials for KPL-387, with pivotal Phase 3 data expected in the second half of 2027, and plans to launch KPL-1161 into Phase 1 trials by the end of the year.
Kiniksa’s strategic initiatives, such as the AI-supported Heart’s Home campaign, have significantly increased awareness and adoption of Arcalyst, with 23% penetration in multiple-recurrence patients.
Operating income rose to $54.2 million, with net income at $47.3 million, highlighting disciplined commercial investment and strong financial performance.
Management expressed confidence in leveraging their cash position of $568.8 million for future strategic investments and maintaining a high bar for potential business development opportunities.
Full Transcript
OPERATOR
Thank you for standing by and welcome to the Kiniksa Pharmaceuticals third quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during this session, you’ll need to press star 11 on your telephone. If your question has been answered and you’d like to remove yourself from the queue, simply press star 11 again. As a reminder, today’s program is being recorded.
And now I’d like to introduce your host for today’s program, Jonathan Kushenbaum, Investor Relations. Please go ahead, sir.
Jonathan Kushenbaum (Investor Relations)
Thank you, operator. Good morning everyone and welcome to the Kiniksa Pharmaceuticals third 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. From there, Ross Moat, our Chief Operating Officer, will provide an update on Arcalyst commercial execution. After that, Mark Rugosa, our Chief Financial Officer, will review our third quarter 2026 financial results. And finally, Sanj will return at the end of the call to share closing remarks and kick off the Q&A session, for which John Paolini, Kiniksa’s Chief Medical 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 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.
Sanj K. Patel (Chief Executive Officer)
Thanks, Jonathan, and good morning or good afternoon everyone. Over the last 10–11 years we’ve built this company through multiple stages of growth, and today I’m as excited as ever about what the team and I can accomplish together in the years ahead. Kiniksa continues to build a leading IL-1 alpha and beta inhibition franchise driven by the commercialization of Arcalyst in recurrent pericarditis as well as our progress with KPL-387 and KPL-1161.
This morning we announced via a press release that we’ve raised our full-year revenue guidance to between $1.045 and $1.050 billion. We continue to see robust growth with Arcalyst in recurrent pericarditis driven by strong execution and strategic investments across the business. On the clinical side, we’re excited about the progress of KPL-387 and KPL-1161. The pivotal Phase 3 study with KPL-387 continues to enroll and dose patients. We announced today that we expect data from this trial in the second half of 2027.
The team and I are really looking forward to potentially launching this drug in the 2028–2029 time frame. In addition to providing an important treatment option for patients with recurrent pericarditis, we believe KPL-387 could help grow the market by enabling a once-monthly subcutaneous dosing. We’re also on track to have KPL-1161, our quarterly IL-1 alpha and beta inhibitor, in a Phase 1 clinical trial by the end of this year. Importantly, Kiniksa’s robust financial profile allows us to continue to invest in penetrating the recurrent pericarditis market and growing the IL-1 alpha and beta inhibition franchise whilst also pursuing additional value-creating opportunities.
In the third quarter we saw a continuation of strong Arcalyst momentum with Q3 revenue of $286 million. The penetration rate into the annual population of 14,000 multiple-recurrence patients increased to 23% as of the end of Q3 as shown by the increased breadth and depth of prescribing over time. Adoption of IL-1 alpha and beta inhibition continues to expand among the approximately 40,000 recurrent pericarditis patients each year. The underlying fundamentals that propelled our commercial success remain strong.
Since launch we’ve observed robust payer approval, strong patient compliance, and greater appreciation of the need to treat throughout the multi-year duration of the disease. Underpinning this growth is strong execution by our commercial organization and data-driven investments in Arcalyst. Our AI-supported patient identification initiatives and targeted direct-to-consumer campaign Heart’s Home have positively contributed to growing patient and physician awareness of recurrent pericarditis and the important role of IL-1 alpha and beta inhibition in controlling this debilitating disease. As you’ve heard, we now expect Arcalyst to achieve over $1 billion in revenue in 2026, and we look forward to continuing to bring this blockbuster drug to more patients suffering from this debilitating disease.
In order to grow the recurrent pericarditis market over the next several years, we plan to drive greater adoption in both the 14,000 multiple-recurrence patients annually and the additional 26,000 patients annually that are experiencing their first recurrence. Kiniksa is executing against its strategy to help more patients, drive more Arcalyst growth, and advance KPL-387 and KPL-1161. This trajectory will help put the company on a path to having multiple commercial products, continued strong and profitable growth, and the flexibility to invest in future value creation.
I can tell you that the team and I won’t rest until we’ve helped many, many more patients. And now our President and COO, Ross Moat.
Ross Moat (Chief Operating Officer, Executive Vice President)
Thank you, Sanj. As you’ve heard, we’re pleased with the continued strength of our commercial performance with Arcalyst and we’re even more excited by the substantial growth opportunity ahead. We continue to be highly focused on further increasing the penetration rate into the many thousands of recurrent pericarditis patients and continuing to evolve the treatment paradigm towards interleukin-1 alpha and beta inhibition. As illustrated on the left side of this slide, physicians continue to report an increasing consideration of Arcalyst earlier in the disease course, including at the first recurrence. Additionally, we also see a growing appreciation for Arcalyst to be utilized earlier in the line of therapy, meaning after NSAIDs and colchicine and, importantly, prior to corticosteroids, as ratified in the 2025 American College of Cardiology Concise Clinical Guidance for Recurrent Pericarditis.
In fact, approximately 50% of physicians surveyed now support this treatment approach, representing a doubling from levels over the last three years prior to the publication of this independent guidance. As we continue to build and lead this market, our team are laser focused on value-driven investments that aim to increase market penetration and help many more patients. Increasing education and awareness on recurrent pericarditis, Arcalyst, and the new treatment paradigm remain critical components of our strategy, and we’ve enhanced our capabilities through the use of AI and machine learning to reach a larger audience. On the healthcare professional side, we’ve done this through improving our data sources to inform us not only which healthcare professionals we should be seeing, but importantly when we should be seeing them.
On the patient side, we’ve seen encouraging early indicators from our Heart’s Home direct-to-consumer campaign. Based on this initial traction, we plan to expand the campaign with additional content and outreach initiatives aimed at empowering more patients to engage with their healthcare professionals. About Arcalyst: As a reminder, Heart’s Home is a highly targeted DTC campaign where we’ve innovated from traditional DTC by using AI to produce and deliver a campaign that’s effective for a rare disease audience. This campaign is aimed at educating an enriched population of likely recurrent pericarditis patients who are currently not taking Arcalyst and empowering them to discuss Arcalyst with their healthcare provider. As an early indicator of the impact of this campaign, we’ve seen a 12-fold increase in the traffic to our Arcalyst website compared to baseline levels prior to the campaign.
Additionally, there’s been an eight-fold increase with engaged sessions, meaning visits where the individual spends meaningful time on the website or interacts with the content. More importantly, approximately 55% of patients who saw the ad strongly agreed that they are motivated to speak with their healthcare provider about Arcalyst. All of these indicators are strong signals that our digital strategy is reaching the right audience and is empowering action, as this disease has a very high annual incident rate of patients coming into the labeled indication. This DTC initiative is nicely supplementing our robust execution in the field and helps us to address the substantial opportunity that we have ahead to help many more patients. As previously mentioned, our interleukin-1 alpha and beta inhibition franchise is growing, is profitable, and has significant opportunity in the months and years ahead.
With that, I’ll turn the call over to Mark to review our financial results.
Mark Rugosa (Chief Financial Officer)
Thanks, Ross. Our third quarter delivered continued Arcalyst sales growth, advancement of KPL-387 and KPL-1161 development, and a solid financial position. This morning I’ll review our financial results and key performance drivers. Detailed financial information is available in today’s press release. Starting with the income statement, Arcalyst revenue grew 58% year over year to $286 million in the third quarter, driven by continued gains in patient and physician adoption. Operating expenses increased year over year driven by higher Arcalyst revenue, which resulted in additional cost of goods sold and collaboration expenses; advancement of KPL-387 development, which drove additional R&D investment; and support of Arcalyst commercialization to reach more patients, which led to additional SG&A investment.
Operating income rose to $54.2 million and net income to $47.3 million, both up significantly year over year. Turning to the calculation of Arcalyst collaboration profit, which drives total collaboration expenses on our income statement, Arcalyst collaboration profit increased 67% year over year to $211.6 million, outpacing sales growth and reflecting disciplined commercial investment. Next, we ended the third quarter with $568.8 million in cash, reflecting approximately $43 million in net cash generation during the quarter.
Looking ahead, in addition to our updated 2026 Arcalyst sales guidance of $1.045 to $1.050 billion, we are providing full-year R&D and SG&A expense guidance. We expect full-year R&D expenses of $160 to $170 million in 2026. This range includes continued development of KPL-387 and KPL-1161 as well as significant fourth-quarter KPL-387 pre-commercial manufacturing costs. We expect full-year SG&A expenses of $270 million to $280 million in 2026. This range supports continued Arcalyst commercialization, including additional personnel and promotional activities in the fourth quarter to further build disease awareness and enhance patient and physician targeting.
In closing, our third quarter results show the strength of our operating plan: a growing and profitable Arcalyst business funding the advancement of key development assets and positioning us to create value in the near and long term. With that, I’ll turn the call back to Sanj for closing remarks.
Sanj K. Patel (Chief Executive Officer)
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. The team and I are focused on helping as many patients as possible with Arcalyst and on advancing the development of our clinical portfolio in order to bring additional therapies to patients. With that, I’ll turn it back to the operator for questions.
OPERATOR
Thank you. Certainly. Thank you. And our first question for today comes from the line of Anupa Remo from J.P. Morgan, your question please.
Anupa Remo (Analyst at J.P. Morgan)
Hey guys, thanks so much for taking the question and congrats on the quarter. I just wanted to ask a quick KPL 387 question. I think the guidance for pivotal data in the second half of 2027 is new today. So can you tell us what you’re seeing in terms of enrollment dynamics and where you are on site initiation that give you confidence to laying out this timeline? Thanks so much.
Sanj K. Patel (Chief Executive Officer)
Thanks. I think I’ll have John Paolini answer that. Suffice to say that our execution costs not just commercial but also the clinical development organization. And as I’ve said before, we are enrolling and dosing patients to global clinical study with global sites and both myself, John and Ross take pride in meeting with investigators and just getting them excited about the future. So there’s been some massive momentum both internally and with our investigators and as with ever we go out things with full force and that’s what the guidance is, having results in the second half of next year.
John F. Paolini (Chief Medical Officer)
But John, I think that’s excellent guidance from Sanj. The only thing that I would add is that on ClinicalTrials.gov you can see the extent of the global nature of our program and so the sites that are involved in the program across the world are all listed there. And so you can see the scope of effort. And as Sanj mentioned, you know, we are on the ground and engaging with clinicians and we can feel the excitement, you know, about the program and so we continue forward.
Sanj K. Patel (Chief Executive Officer)
I’d also say we have a crack clinical operations team. You know, having run clinical operations for many years, Genzyme before I ran commercial, I’ve got a very high bar for clinical research and clinical operations. And you know, after many, many years, I feel like we’ve really got the best team to do the job.
Anupa Remo (Analyst at J.P. Morgan)
Thanks so much for taking our question and congrats again on the quarter. Thank you.
OPERATOR
And our next question comes from the line of Edward Nash from Canaccord Genuity. Your question please.
Edward Nash (Analyst at Canaccord Genuity)
Hey, good morning guys. Really, really excited to see that over 1 billion number now for the guidance. So congratulations. I just wanted to ask, now you’re at 23% active penetration. That’s 2% higher than last quarter, which is really, I think, impressive. Can you maybe give us an idea of how we should think about the shape of the penetration curve from here? Is there anything structurally different about the next quartile of patients versus the patients you’ve already converted?
You know, you’re going up on the SG&A number, which makes a lot of sense. And you’ve put a lot of focus in the DTC campaign, which clearly seems to be paying off. Just kind of curious as to how many extra dollars need to be put in to kind of achieve greater, greater uptake of scripts.
Ross Moat (Chief Operating Officer, Executive Vice President)
Thanks, Edward, this is Ross. So thanks very much for your comments. And yeah, we’re pleased to announce that we were around 23% at the end of the quarter in terms of penetration into the multiple recurrence group, which is the patients that have suffered for two or more recurrences. And that’s without allocating anything to the first recurrence group, which, you know, we’ve got about 20% of our prescriptions in the first recurrence group also. So the opportunity is very significant.
While on one hand, you know, we’re happy with the 23% and that’s obviously showing, you know, a couple of percent growth versus the end of Q2 number when we shared it the time before that. The last time we shared the penetration number I think was at the end of Q4, which was 18% at the end of last year. So that’s been grown relatively nicely. But I think more importantly is the opportunity that’s ahead. I mean, clearly there are a lot of patients in the two plus recurrence group that we’ve still got to help and not allocating for even those that are in the first recurrence.
And as we shared from some of the market research today, the propensity and the desire for physicians to look and treat patients with IL‑1 alpha/beta inhibition in the first group has also been growing quite substantially over time. So we think the future is very bright from that perspective. In terms of different patient groups, aside from the recurrence number, there’s really not much else to report. We’re not seeing significant change necessarily in the demographics of the patients or severity levels or anything else. It’s just that this is a rare flaring cardiovascular disease. There are a lot of patients out there relative to a rare disease. And, you know, we’re trying to get out and reach as many patients as possible. We know that they are widely dispersed around the country and that takes a certain effort, as you have alluded to, from our kind of our sales and marketing spend and so on.
But, you know, our efforts are ultimately on value-driven investments that can make sure we reach those physicians and switch more and more of them on to this new way of treating and ultimately get greater penetration into this opportunity to ultimately help more patients.
Edward Nash (Analyst at Canaccord Genuity)
Thanks a lot for that. I’m sorry, go ahead.
Ross Moat (Chief Operating Officer, Executive Vice President)
Yeah, yeah, no, Edward, maybe just to add the final part as well is that, you know, the DTC spend and field team spend that we have and we’ve announced it in our guidance looking forward as well, is ultimately very efficient. You know, we are very focused on this as a rare disease market and for the DTC side of things, this is not kind of broad spectrum massive spend. DTC is very efficient, very targeted type of expenditure to address appropriately the market that we have.
Edward Nash (Analyst at Canaccord Genuity)
Great, thanks for that additional color and really great quarter. Thanks again. Congratulations.
OPERATOR
Thank you. And our next question comes from the line of Paul Choi from Goldman Sachs. Your question please.
Paul Choi (Analyst at Goldman Sachs)
Hi everyone. Congratulations on the great quarter and congrats, Ross, as well on the new title. I want to ask on the 387 switch strategy and I was wondering if you could just sort of provide a little more color on where you are with progress on that, I guess what the ultimate data you’re looking for there to support 387 from an insurance perspective. And my second question is on 1161. Maybe, you know, just, you know, where are you thinking in terms of indication selection, I guess at this point and a little bit more on the criteria that you’re considering for the first indication there for 1161.
Thank you so much.
John F. Paolini (Chief Medical Officer)
Thank you, Paul. Appreciate your questions. This is John. So with regard to the KPL387 transition to monotherapy dosing and administration study, this study is designed primarily as what we call a posology study. So it covers dosing, administration specifically for informing the label. So it’s designed, as you can see in the slides, we’re looking at how patients are coming from stable therapies, whether they’re oral or biologic, and then transitioning to KPL387 monotherapy at the 300 milligram subcutaneous monthly dose level.
And so that’s really what that study is designed to do. It follows very similarly the precedent of what’s in the ARCALYST label, which similarly describes the transitions from NSAIDs, colchicine, corticosteroids and anakinra. So this is just really following in that tradition. So that’s how the study is designed and the data that will be generated. But I’ll turn it over to Ross to talk about ultimately other elements of transition.
Ross Moat (Chief Operating Officer, Executive Vice President)
Yeah, thanks very much, John. I mean, I guess just to say that obviously we’re very excited about the potential for KPL387, but everything’s kind of data dependent as we move forward. But when we tested the target product profile for KPL387 both with healthcare professionals and patients, we were really very encouraged by the feedback that we had back. And while we believe that ARCALYST has a lot of growth left in it to address the recurrent pericarditis opportunity, with KPL387 patients did tell us that around 75% of them would prefer the KPL387 type profile being a monthly liquid formulation, potentially auto-injector, over current commercial or other investigational therapies. They also reported a propensity for a greater number of patients to start on therapy with that target product profile as well as staying on therapy longer.
And then when you looked at the healthcare professional side, 92% of healthcare professionals indicated a high likelihood to prescribe KPL387 with that target product profile over available commercial or other investigational therapies. So, you know, that I think reads quite positively about the future, but ultimately we are focused on conducting the clinical research and awaiting the data. No, that’s great, Gil, thank you.
Paul Choi (Analyst at Goldman Sachs)
That’s great.
OPERATOR
Thank you. And our next question comes from the line of Roger Song from Jefferies. Your question please.
Peter (Analyst at Jefferies)
Morning. This is Peter calling in for Roger. Congrats on the quarter and thanks for taking our questions. Just a couple quick ones from us for third quarter. Can you tell us what share of the new patients came from first-time versus repeat prescribers? And can you also share whether or how much growth you’ve seen within the first recurrence patients as well for this quarter?
Ross Moat (Chief Operating Officer, Executive Vice President)
Yes, Peter, thanks very much for the questions. We don’t share some of that data directly externally, but of course it’s the type of thing that we look at a lot internally in the business. What we have shared is in Q3, clearly we’ve seen a substantial uplift in the number of patients representing the strong growth of 42, nearly 42 and a half million dollars quarter on quarter. And ultimately that’s driven by some strong prescriber growth. What we have said is that when you look at the total number of prescribers launched to date of ARCALYST for recurrent pericarditis in Q3, or I should say at the end of Q3, we had around 5,450 total prescribers.
Now that’s an uplift of around 450 quarter on quarter. So again, really showing very strong growth. And now we have around 30% of that group who are repeat prescribers, which is up by around 170 prescribers. Historically we’ve said that the split between the first and second recurrence is about 80% of prescriptions in the second plus recurrence and 20% in the first. But we haven’t updated that data on a very frequent basis as a lot of it comes from kind of ad hoc market research that we do. But clearly we’re showing pretty strong growth in Q3 and a lot of that is down to the refined targeting that we have with our field team, the DTC campaign in a very targeted approach and also just broader dissemination of the ACC concise clinical guidance and really just empowering physicians on this new way of treating the disease.
Peter (Analyst at Jefferies)
Got it. Thanks so much for the additional color and congrats again on the quarter.
Ross Moat (Chief Operating Officer, Executive Vice President)
Thanks, Peter.
OPERATOR
Thank you. And our next question comes from the line of Jeff Meacham from Citi. Your question please.
Jeff Meacham (Analyst at Bank of America)
Hey guys, great job on the quarter. Thanks for the question. Just have a couple of quick ones. The first on 387, I know convenience angle obviously is a big differentiator, but beyond that, is there a patient maybe on ARCALYST today that you think is particularly suited to transition to 387? Just beyond convenience? I know clinically maybe those that live further away, or what are the attributes of the patients, I guess is the question, that would maybe more rapidly switch?
And then bigger picture question, just on the cash and the capital deployment. You guys have been consistently profitable. You’re building some cash on the balance sheet. I don’t know, just trying to think of ways to maximize value from a balance sheet cash flow context. What are you thinking about from a BD perspective? Where does this fall in your priorities? Thank you.
John F. Paolini (Chief Medical Officer)
Thank you, Jeff, for your question. I’ll tackle this first part. With regard to the transition, if you will, from ARCALYST to KPL-387, I think that our position with regard to the management of the disease is that blockade of IL-1 alpha and IL-1 beta is critical to maintaining disease control and to gaining the disease control as a monotherapy. And so in that sense, we’re particularly excited about the KPL-387 program because it adds to the optionality of what’s available to patients and physicians in terms of treating this disease.
And so, you know, that efficacy ultimately remains to be demonstrated in the phase 3 pivotal trial, which is ongoing. But importantly, what we have going on as well is the 212 study, or the KPL-387 transition and monotherapy dosing and administration study, which is really designed to look at the mechanics of how to transition from one existing therapy to KPL-387 monotherapy at the 300 milligram monthly dose level. And so that includes NSAIDs and colchicine, corticosteroids, or IL-1 pathway inhibitors, including anakinra and rilonacept.
And all of those different transition regimens are studied and are evaluated in the study and then go on to a 16-week primary endpoint period. So it’s really about that transition, and that then informs the label with regard to telling or informing physicians how they can make that transition. But in terms of the patient profile, it’s really about the optionality for the patient and the physician to choose which therapy, which effective therapy, is considered to be best for them.
Sanj K. Patel (Chief Executive Officer)
And Jeff, in regards to your question on maximizing value and cash position, I can tell you what drives us each and every day is the potential to increase that overall maximum value. There’s so much kinetic energy within the company focused on that. We talked about, obviously today, the growth with ARCALYST, and we continue to be very excited about the future potential there. We talked about the latest penetration rate of being in some ways only 23%, but equally, obviously across the development portfolio with KPL-387 and KPL-1161, as we’ve talked about really moving now into, obviously, the phase 3 pivotal study for 387, being very excited about being in the clinic with 1161 later this year.
But as you see, those latter two programs are homegrown. So we continue to look at other additional value-creating opportunities both internally but also externally. I think we’ve been very judicious and very thoughtful about capital allocation. We do look at BD opportunities, but you can imagine with our commercial products, with our pipeline, the bar is exceedingly high. That said, we’re a very pragmatic bunch, and we do look at where the value could come from all the time.
It’s what drives us, essentially. So rest assured we know how to capital allocate, we know how best to drive value, and we’ll continue doing that and ultimately keep executing.
OPERATOR
Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to Sanj K. Patel, CEO, for any further remarks.
Sanj K. Patel (Chief Executive Officer)
Thank you very much. Thanks, everybody, for dialing in today. Clearly a lot of excitement, ongoing execution, and very excited about the future. The team and I will keep driving for future success for patients and for creating that additional value. Thank you.
OPERATOR
Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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