Kiniksa Pharmaceuticals : 2022 Annual Report

2022

A N N U A L R E P O R T

Dear Fellow Shareholders,

In 2022, the relentless devotion of Kiniksa's employees drove execution across all stages of our business.

Kiniksa is an emerging leader in the development of immune- modulating therapies. Our portfolio consists of two main pillars: a cardiovascular franchise and an emerging autoimmune franchise. Within the cardiovascular franchise, we are focused on executing against our commercial strategy for ARCALYST® (rilonacept) and pursuing collaborative study agreements for mavrilimumab in rare cardiovascular diseases. In our emerging autoimmune franchise, we believe KPL-404 has significant potential for differentiation in targeting chronic autoimmune diseases. Additionally, business development is one of our core strategies, and we continue to evaluate opportunities to build upon our track record of innovative, value-creating transactions.

Consistent commercial and clinical execution across these franchises, combined with non-dilutive capital from strategic out-licensing transactions as well as financial discipline, drove success in 2022 and set the stage for continued advancement towards our goal of becoming a generational company.

CARDIOVASCULAR FRANCHISE

ARCALYST, an interleukin-1 alpha and interleukin-1 beta cytokine trap, became the first and only U.S. Food and Drug Administration- approved therapy to treat recurrent pericarditis and reduce the risk of recurrence in March 2021. The therapeutic became commercially available through Kiniksa in April 2021. ARCALYST is also approved for the treatment of cryopyrin-associated periodic syndromes and deficiency of interleukin-1 receptor antagonist.

We are making great progress in developing the recurrent pericarditis market, and ARCALYST is reshaping the treatment paradigm, enabling treatment throughout the course of a patient's disease. This marks an evolution from legacy treatments with limited duration, often due

to their tolerability profiles. In November 2022, at the American Heart Association Scientific Sessions, we presented data from the long-term extension portion of the pivotal Phase 3 RHAPSODY study demonstrating that continued treatment with rilonacept beyond 18 months resulted in continued treatment response.

In addition to driving prescriber uptake through our specialty cardiology salesforce, we are also investing in brand awareness and direct-to-consumer marketing, as well as collaborating with patient advocacy groups like the Pericarditis Alliance and the Myocarditis Foundation. We also see growing interest from healthcare institutions to improve patient care by building local referral networks to streamline patient access to pericardial disease specialists.

Our profitable ARCALYST collaboration has been characterized by continued growth in prescriber adoption, high patient satisfaction, and strong payer approval rates. As of the end of 2022, more than 800 healthcare professionals had prescribed ARCALYST for recurrent pericarditis, with approximately 22% of that group prescribing for multiple patients. At that time, we had penetrated approximately

5% of the target population of 14,000 multiple-recurrence pericarditis patients per year, illustrating the significant growth opportunity still available to reach. Additionally, payers continued to acknowledge the value proposition of ARCALYST, resulting in a greater than 90% approval rate for completed cases. This commercialization has generated steady, sequential growth in every quarter since launch, contributing to net sales of $122.5 million in 2022.

Looking ahead, it is our goal to help even more patients with recurrent pericarditis. We are pursuing dual strategies to broaden our prescriber base and drive further uptake with existing prescribers, and we expect continued success in 2023.

The second asset in our cardiovascular franchise, mavrilimumab, is a monoclonal antibody inhibitor targeting granulocyte macrophage colony stimulating factor receptor alpha (GM-CSFRα). We are highly encouraged by the broad potential utility of mavrilimumab, which has generated positive clinical data across multiple indications, including rheumatoid arthritis and giant cell arteritis. Currently, we are pursuing collaborative study agreements to evaluate the potential of mavrilimumab in rare cardiovascular diseases where the GM-CSF mechanism has been implicated.

AUTOIMMUNE FRANCHISE

Within our emerging autoimmune franchise, the potential for KPL-404 to treat a broad range of autoimmune diseases by inhibiting the CD40/CD154 interaction is a tremendous opportunity. Importantly, we own the vast majority of the economics for KPL-404.

External proof-of-concept data suggest the CD40/CD154 interaction is a highly attractive target for blocking T-cell dependent, B-cell mediated autoimmunity. Importantly, we believe our high-concentration liquid formulation could provide optionality in targeting a broad range of diseases by enabling chronic subcutaneous dosing. This would provide significant manufacturing and patient convenience advantages compared to other antagonists of the CD40/CD154 interaction.

Given its compelling mechanism of action and pipeline-in-a-product potential, we are highly encouraged by the prospective opportunity with KPL-404. Our Phase 2 proof-of-concept study evaluating KPL-404 in rheumatoid arthritis is ongoing, with data expected in the first half of 2024. In addition to generating pharmacokinetic data and initial efficacy data, we selected rheumatoid arthritis for the proof-of-concept study because it is a well-characterized autoimmune disease, allowing for objective evaluation of efficacy and dose response using established endpoints. As such, we expect the data we gather on subcutaneous dosing will provide maximum optionality for future evaluation in indications where we believe KPL-404 has best-in-class potential.

BUSINESS DEVELOPMENT

In 2022, we continued our track record of innovative business development with two value-generatingout-licensing transactions. In February 2022, we announced a strategic collaboration with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. to develop and commercialize ARCALYST and mavrilimumab in the Asia Pacific region, excluding Japan. In August 2022, we announced a license agreement with Genentech, a member of the Roche Group, for global rights to develop and commercialize vixarelimab. Together, these transactions brought in significant non-dilutive capital to the company, along with eligibility to receive tiered royalties and further downstream milestones. Looking towards 2023, business development remains a key part of our strategy, and we continue to evaluate strategically appropriate opportunities.

Through rigorous execution in 2022, we made important strides in our mission to help patients in need, create value, and make a generational impact. We have an exciting commercial growth opportunity and a profitable ARCALYST collaboration, as well as a pipeline with significant potential to impact patients' lives. We look forward to making additional progress in 2023 and beyond. Thank you for your ongoing support.

Every Second Counts!

Sincerely,

Sanj K. Patel

Chief Executive Officer and

Chairman of the Board

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2022
  OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from	to
Commission File Number: 001-38492

	Kiniksa Pharmaceuticals, Ltd.
	(Exact name of registrant as specified in its charter)
Bermuda	98-1327726
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification Number)
		Kiniksa Pharmaceuticals, Ltd.
		Clarendon House
		2 Church Street
		Hamilton HM11, Bermuda
	+ (44) 808-189-6257

(Address, zip code and telephone number, including area code of principal executive offices)

Kiniksa Pharmaceuticals Corp.

100 Hayden Avenue

Lexington, MA, 02421

[phone]

(Address, zip code and telephone number, including area code of agent for service)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Shares	KNSA	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the common shares on The Nasdaq Global Select Market on June 30, 2022, was approximately $346.7 million.

As of February 28, 2023, there were 69,753,123 common shares outstanding in aggregate, comprised of:

34,806,180 Class A common shares, par value $0.000273235 per share 1,813,457 Class B common shares, par value $0.000273235 per share

17,075,868 Class A1 common shares, par value $0.000273235 per share 16,057,618 Class B1 common shares, par value $0.000273235 per share

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2023 Annual Meeting of Shareholders, which the registrant intends to file with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the registrant's fiscal year ended December 31, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Kiniksa Pharmaceuticals, Ltd.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022
TABLE OF CONTENTS
PART I	Page
Item 1. Business	6
Item 1A. Risk Factors	44
Item 1B. Unresolved Staff Comments	123
Item 2. Properties	123
Item 3. Legal Proceedings	123
Item 4. Mine Safety Disclosures	123
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities	124
Item 6. Reserved	124
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	125
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	139
Item 8. Financial Statements and Supplementary Data	139
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	139
Item 9A. Controls and Procedures	139
Item 9B. Other Information	140
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	140
PART III
Item 10. Directors, Executive Officers and Corporate Governance	141
Item 11. Executive Compensation	141
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .	141
Item 13. Certain Relationships and Related Transactions, and Director Independence	141
Item 14. Principal Accounting Fees and Services	141
PART IV
Item 15. Exhibits and Financial Statement Schedules	142
Item 16. Form 10-K Summary	147
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this "Annual Report"), contains forward-looking statements. All statements other than statements of historical facts contained in this Annual Report including statements regarding our products' commercial sales, future results of anticipated products, future results of operations and financial position, expected timeline for our cash, cash equivalents and short-term investments, business strategy, product development, prospective products and product candidates, their expected properties, performance, market opportunity and competition, supply of drug products at acceptable cost and quality, collaborators, license and other strategic arrangements, the expected timeline for achievement of our clinical milestones, the timing of, and potential results from, clinical and other trials, potential marketing authorization from the FDA or regulatory authorities in other jurisdictions, potential and ongoing coverage and reimbursement for our products and product candidates, if approved, commercial strategy and pre- commercial activities, research and development costs, timing of regulatory filings and feedback, timing and likelihood of success and plans and objectives of management for future operations and funding requirements, are forward-looking statements.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "goal," "design," "target," "project," "contemplate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other similar expressions, although not all forward-looking statements contain these identifying words. The forward-looking statements in this Annual Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of risks, uncertainties and assumptions described under the sections in this Annual Report entitled "Summary Risk Factors", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Annual Report. These forward-looking statements are subject to numerous risks and uncertainties, including, without limitation, the following:

• our continued ability to commercialize ARCALYST (rilonacept) and to develop and commercialize our current and future product candidates, if approved;
• our status as a small commercial stage biopharmaceutical company and our expectation to incur losses for the foreseeable future;
• our future capital needs and our need to raise additional funds;
• our ability to manufacture sufficient quantities of our products and product candidates to meet patient and partner demand;
• the market acceptance of our products and product candidates;
• competitive and potentially competitive products and technologies;
• prescriber awareness and adoption of our products and product candidates, if approved;
• the size of the market for our products and product candidates, if approved;
• our ability to meet the quality expectations of prescribers or patients;

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