Executive Summary

Q2 2025 delivered strong top-line growth: ARCALYST net product revenue reached $156.8M (+52% YoY), and full-year sales guidance was raised to $625–$640M, up from $590–$605M, reflecting sustained commercial momentum and deeper penetration in recurrent pericarditis .
Revenue beat Wall Street consensus by ~$10.4M (+7.1%), while diluted EPS of $0.23 was modestly below consensus of $0.26; management emphasized growth in active patients and prescriber base as key drivers behind the beat, with guidance increase a notable stock catalyst *.
Operating discipline supported improved profitability: net income was $17.8M vs. a loss of $3.9M last year; cash increased ~$39.4M sequentially to $307.8M with no debt, and collaboration profit rose sharply, underpinned by ARCALYST sales volume .
Pipeline execution advanced: KPL‑387 pivotal Phase 2/3 trial initiated for recurrent pericarditis; Phase 2 dose‑focusing data expected 2H 2026 with potential market entry in 2028/2029, reinforcing the medium‑term growth story .
Commercial strategy levers (AI‑driven targeting, earlier use in disease course, high payer approval rates >90%, compliance >85%) continue to expand breadth and depth of adoption, supporting multi‑year revenue durability .

What Went Well and What Went Wrong

What Went Well

Raised FY2025 ARCALYST guidance to $625–$640M on accelerating adoption; CEO: “This represents 52% year‑over‑year growth at the midpoint, highlighting the ongoing strength of the ARCALYST commercialization more than four years after launch.” .
Record commercial execution: highest quarterly new patient enrollments since launch; penetration of the 14,000 multiple‑recurrence population increased to ~15% from ~13% at YE2024; payer approvals >90%, compliance >85% .
Balance sheet strength and profitability: net income of $17.8M; cash of $307.8M, up ~$39.4M QoQ; continuing expectation to remain cash‑flow positive annually .

What Went Wrong

EPS modestly below consensus (actual $0.23 vs. $0.26*), despite revenue beat; mix of higher operating expenses (COGS, collaboration expenses, SG&A) offset part of the top‑line upside *.
License/collaboration revenue declined YoY to $0 vs. $5.2M a year ago, reducing non‑product contribution .
Management flagged that the one‑time Medicare Part D “bolus” that benefited Q1 would not repeat, implying less tailwind from that cohort going forward and highlighting focus on organic drivers (prescribers, duration, penetration) .

Financial Results

Summary (Revenue, EPS, Margins vs prior periods and estimates)

Metric	Q4 2024	Q1 2025	Q2 2025	Consensus (Q2 2025)	Surprise
Revenue ($USD Millions)	$122.536	$137.785	$156.797	$146.421*	+$10.376 (+7.1%)
Diluted EPS ($)	$(0.12)	$0.11	$0.23	$0.259*	$(0.029)

Values with asterisk (*) retrieved from S&P Global.

Margins

(Net Income Margin % and EBIT Margin % calculated from cited financial statements)

Metric	Q4 2024	Q1 2025	Q2 2025
Net Income Margin %	(8.9 / 122.536) = (7.3%)	(8.539 / 137.785) = 6.2%	(17.832 / 156.797) = 11.4%
EBIT Margin % (Income from Operations / Revenue)	(−19.299 / 122.536) = −15.8%	(13.272 / 137.785) = 9.6%	(20.160 / 156.797) = 12.9%
Gross Profit Margin % ((Revenue − COGS) / Revenue)	(122.536−17.896)/122.536 = 85.4%	(137.785−17.868)/137.785 = 87.0%	(156.797−18.603)/156.797 = 88.1%

Segment/Revenue Composition

Revenue Component	Q2 2024	Q1 2025	Q2 2025
Product Revenue, net ($USD Millions)	$103.394	$137.785	$156.797
License & Collaboration ($USD Millions)	$5.237	$0.973	$0.000
Total Revenue ($USD Millions)	$108.631	$137.785	$156.797

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025	Notes
Unique Prescribers since launch	>2,850	>3,150	>3,475	Quarterly adds remained strong
Penetration (14k multiple‑recurrence)	~13%	~13%	~15%	Trend improving QoQ
Avg Total Duration of Therapy	~27 months	~30 months	~30 months	Median initial duration ~17 months; restart ~45%
Payer Approval Rate	n/a	>90%	>90%	Sustained payer support
Patient Compliance	n/a	>85%	>85%	High adherence
Cash, Cash Equivalents & STI ($M)	$243.6	$268.3	$307.8	No debt

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ARCALYST Net Product Revenue ($USD Millions)	FY 2025	$590–$605	$625–$640	Raised
Cash Flow	FY 2025	Positive on annual basis	Positive on annual basis	Maintained

Management also noted monitoring potential tariff impacts on ARCALYST manufacturing transfer to Samsung Biologics; expected any impact to gross margin to be immaterial, limited to drug substance cost entering the U.S. .

Earnings Call Themes & Trends

Topic	Q4 2024 (Prior-2)	Q1 2025 (Prior-1)	Q2 2025 (Current)	Trend
Commercial Execution & Penetration	13% penetration; duration ~27 months; prescribers >2,850	Duration increased to ~30 months; prescribers >3,150; Q1 bolus from Medicare Part D changes	Penetration ~15%; highest quarterly new enrollments; prescribers >3,475; payer approvals >90%; compliance >85%	Strengthening breadth/depth
AI/Digital Marketing	Not highlighted	Strategy emphasized; digital initiatives growing	Explicit use of AI‑driven targeting in digital environments	Increasing adoption of AI tools
Supply Chain/Tariffs	N/A	Monitoring potential tariffs; transfer to Samsung Biologics; immaterial impact expected	Not reiterated in detail on Q2 call	Stable/low risk currently
Pipeline (KPL‑387)	Announced program; Phase 2/3 mid‑2025 start; 2H 2026 Phase 2 data	On track; reiterated timelines	Phase 2/3 initiated; dose‑focusing data 2H 2026; potential market entry 2028/2029	Executing to plan
Regulatory/Clinical Design	RHAPSODY experience as precedent (Arc)	Clinical design details to follow; interactions with FDA	Detailed P2/3 design released (run‑in; randomized withdrawal); dosing arms	Clarity improved
Prescriber Mix/Setting	N/A	Focus on cardiology specialty; targeted territory analytics	Continued focus; expanding prescribers; more early‑line use	Broadened adoption

Management Commentary

CEO (Sanj K. Patel): “We’ve raised our ARCALYST net sales guidance to between $625 and $640 million… highlighting the ongoing strength of the ARCALYST commercialization more than four years after launch.” .
CCO (Ross Moat): “Our payer approval rates remained greater than 90%, total duration of therapy was approximately 30 months on average, patient compliance remained strong over 85%… our penetration… increased… to approximately 15% at the end of Q2.” .
CFO (Mark Ragosa): “ARCALYST's collaboration profit… grew 75% year over year… cash balance increased by approximately $40 million to $307.8 million… we continue to expect our current operating plan to remain cash flow positive on an annual basis.” .
CMO (John Paolini): “We leveraged our expertise… RHAPSODY… Phase 2/3… dose‑focusing portion… expect data in the second half of 2026… target profile of once‑monthly dosing.” .

Q&A Highlights

First‑recurrence vs. multiple‑recurrence dynamics: ~20% of ARCALYST patients are initiated at first recurrence; ~15% penetration in 2+ recurrence cohort (~14k patients annually), with growing early‑line use as physicians gain comfort with IL‑1α/β targeted therapy .
Dosing convenience and pipeline switching: Management underscored strong ARCALYST persistence (avg ~30 months; compliance >85%) and sees opportunity for KPL‑387’s monthly, liquid autoinjector profile subject to data; study design leverages RHAPSODY learnings .
Go‑to‑market investments: Sales force sizing remains analytical and dynamic (~prior disclosure ~85 reps); expanding digital marketing and AI‑driven targeting to improve physician/patient outreach .
Duration/Restart: No meaningful differences in duration across cohorts; median initial duration ~17 months; restart rates ~45%; ~10% of Q2 2021 initiators remain on therapy, evidencing durable benefit .
Competitive landscape: Team emphasized leadership in RP and mechanistic importance of dual IL‑1α/β inhibition; monitoring emerging (including oral) competitors, asserting need for complete cytokine control .

Estimates Context

Q2 2025: Revenue $146.421M* (consensus) vs. actual $156.797M; EPS $0.259* (consensus) vs. actual $0.23; revenue beat and EPS slight miss. Number of estimates: Revenue 6*, EPS 5*. Values retrieved from S&P Global.
Q1 2025: Revenue $131.709M* vs. actual $137.785M; EPS $0.283* vs. actual $0.11; revenue beat and EPS miss amid one‑time Medicare Part D cohort dynamics. Values retrieved from S&P Global.

Where estimates may need to adjust: The raised FY revenue guidance and Q2 revenue beat support upward revisions to forward revenue trajectories; EPS modeling may need to better reflect collaboration profit dynamics and SG&A/COGS trends tied to volume growth *.

Key Takeaways for Investors

Revenue momentum is durable and broad‑based; prescriber breadth, earlier‑line adoption, and high payer approvals underpin multi‑quarter growth trajectory; guidance raise is a clear positive catalyst .
The revenue beat vs. consensus coupled with an EPS slight miss suggests topline strength outpacing expense normalization; near‑term model updates should emphasize collaboration profit flow‑through and Opex cadence *.
High compliance (>85%) and multi‑year average duration (~30 months) create a long tail of revenue per patient, reinforcing ARCALYST’s defensibility and cash generation .
KPL‑387’s initiated pivotal program and clearer Phase 2/3 design (monthly dosing potential) add optionality for 2028/2029 entry; dosing convenience could support switching and incremental adoption if efficacy aligns with ARCALYST .
Balance sheet strength (cash $307.8M; no debt) enables continued commercial investment and pipeline advancement without capital markets reliance, lowering financing risk .
Monitoring points: emergence of oral competitors and any tariff developments tied to Samsung Biologics drug substance; management expects immaterial margin impact, but keep watching supply dynamics .
Near‑term trading setup: Focus on continued quarterly patient adds/prescribers, Q3 revenue trajectory vs. consensus, and any incremental KPL‑387 trial milestones; guidance raises and recurring beats are narrative drivers *.