Kiniksa Pharmaceuticals International, plc (KNSA) stock intrinsic value fair value estimate & owner earnings analysis

Kiniksa sells one commercial product, ARCALYST (rilonacept), a weekly injection approved in March 2021 for recurrent pericarditis, a painful, relapsing inflammation of the sac around the heart. Sales have grown every year since launch: $38.5M in 2021, $220M in 2022, $270M in 2023, $423M in 2024 and $678M in 2025. Kiniksa splits ARCALYST profits 50/50 with Regeneron, the drug's originator, and those economics are already reflected in the reported cash flows. How we measured earnings. We start from cash generated by operations, remove the swing from working capital (accrued liabilities rose about $37M in 2025 and receivables and inventory also moved), and deduct stock compensation ($37M in 2025) as a real cost. Capital spending is trivial. On that basis the company was loss-making until 2025, when it produced about $72M, or $0.91 per share. That single profitable year is the only one that describes the business as it exists today, so it is our starting point. The first quarter of 2026 is stronger (revenue $214M versus $138M a year earlier; operating cash flow $50M versus $22M), but one quarter is not enough to move our baseline, so we credit only the part of it that is already a run-rate: first-quarter revenue annualizes to about $857M against $678M for 2025. Assuming operating leverage on that increment, we estimate about $115M of annual earnings, and we trim about 10% for taxes we expect to become heavier as the company matures. We do not credit further sales growth: new patients, share gains, the pipeline (KPL-387, abiprubart) and price increases are not secured and are excluded. Base case: about $105M a year (roughly $1.30 per share) through 2038, when the U.S. method-of-use patents on ARCALYST for recurrent pericarditis expire, then fading to zero over about five years, because nothing we can point to replaces the product after that. Value about $12.30 per share. Bear case: the U.S. exclusivity granted with the March 2021 approval ends in March 2028. The chemical patent on ARCALYST expired in 2020 and the non-U.S. ones in 2023, so protection after 2028 rests on method-of-use patents that a competitor could try to design around. In this case a rival IL-1 product or biosimilar arrives, earnings dip to about $95M then $85M in 2026-27 as taxes normalize, and then fall from $60M in 2028 to zero by 2032. Value about $3.50 per share. Note the company has no debt to worsen this case, and about $414M of cash and investments (whose interest income is inside our earnings) provides cushion that we do not add on top. Bull case: the higher first-quarter run-rate holds for the full year and the business earns about $140M a year through 2038, then fades to zero. Value about $16.50 per share. We did not include any value from pipeline drugs or from extended patent protection. What would make this wrong: a biosimilar or new competitor cleared right after March 2028, pricing pressure from government drug-price programs (the company notes the orphan-drug exclusion from Medicare negotiation, which currently helps), a Regeneron termination (permitted only if Kiniksa stops developing or selling the drug), or a much heavier tax bill than assumed. Upside not in our numbers: pipeline success and further patient growth. Pre-2025 figures reflect a company still building its launch, and the large 2022 net income included a one-time non-cash tax benefit that we ignore. The margin-of-safety price of $6.00 reflects a single-product, exclusivity-exposed company with a visible 2028 cliff in the downside case, requiring roughly half of base value as margin of safety.