All right. Great. Well, thanks everyone for joining us. I'm Andrea Tan, analyst at Goldman Sachs. Super pleased to be joined by Krish Krishnan, Chairman and CEO of Krystal. Krish, maybe we can start here. You've just passed the one-year mark of being a commercial company. What has surprised you most during this transition?
Having me. From my perspective, I think the fact that compliance continues to be high has surprised me, higher than what we expected at the time of launch. Access has been relatively easy to date, both on the commercial side and on the government side. The ease with which we got all access has been surprising. I've also been surprised at how many patients with DEB have either never been sequenced or have lost the sequencing genetic report, which maybe they got done a while ago. Right? I would say those are three things that have been a bit surprising.
Great. Well, maybe we can dig into some of those components here. On the TAM , I think maybe pre-launch analysis identified 1,200 patients. On a previous call, you've noted 35% penetration into that population across both RDEB as well as DDEB. What needs to be done now to capture the remaining patients?
Yeah. If you look at some of the really good launches that have happened in the past, they have often gotten to about 60% penetration two years from launch. And when we started, we had that as a base goal for us with respect to the launch. And I'm pleased to report that to date, we're tracking positively towards achievement of that goal, at the very least the goal.
Do you believe that, I guess, maybe when you say that you're tracking towards that, is that over the similar two-year time frame, or could you reach 60% sooner than that?
Right now, we're not commenting. We're still holding on to the two-year. If it happens sooner, it's great for the patient, great for us. But I will say the launch has been progressing, at the very least, the best of our expectations. It's been going well.
Great. And the compliance that you've mentioned being surprised by, how much of that is a function of this at-home dosing? And maybe help us or remind us where that stands in terms of the utilization right now.
We'll report on compliance at the Q2. We reported at Q1. We'll report it when we report Q2. Patients with DEB have a difficult time going from place to place. And so home dosing is such a positive convenience on the patient that it would be difficult to say that it has no impact on compliance. But you also have to think about, we're talking primarily about severe patients with a lot of wounds in the body. And it takes a certain amount of time to treat all the wounds given the weekly dose. And so it's a combination of severity of the disease and, to some extent, home dosing.
Are you surprised to see, I guess, maybe such a high compliance rate? I think maybe the last reported was over 90%.
Yeah. I open with that. It's high. Right? But our expectation always has been to have high compliance for the first 15-18 months post-launch and then settle into a more reasonable—and when I say maybe compliance is not the right word. If the utilization is four vials a month right now, maybe settle into two vials a month, 15-18 months post-launch.
Got it. Okay. And maybe on those prior expectations that you've just kind of alluded to there, the 45 vials a year or roughly four per month and then incorporating some skipped doses, 26 vials over the maintenance period, how has the launch been progressing thus far to maybe influence how you think about those numbers? Is there scope for those numbers to shift at all or to the best of your knowledge?
Andrea, for now, we're going to hold to our original assertion that expect high compliance for the first 15-18 months. We haven't had the—we're getting to the cusp of 15-18 months. We don't have a full 18 months behind us. I think we would have a much better answer by the end of this year. Right now, compliance continues to be high as we expected. And we're hoping maybe in 2025 it starts to settle into a—but we haven't seen any evidence of that yet. So it's very difficult between our theoretical modeling and what's happening in reality.
Now that patients have been on treatment for quite a number of months now, what are you seeing or what are you hearing in terms of wound closure, the experience, how long patients are staying on drug? Obviously, your compliance number incorporates that to some extent, but maybe help us understand some of the dynamics there.
No, patient experience has been really good on the drug. I'm not talking just about small wounds. Wounds of all sizes, small, medium, large have all had great reports of efficacy. Different types of wounds, recurring versus chronic. We see no difference in the, maybe chronic takes a bit longer to close, but we see good efficacy. Durability. Our expectation on durability continues to be that the half-life of collagen is 30 days, and you should expect collagen to persist for 90 days or so in an area in the basement membrane zone. After which, you would have to redose that area to continue providing collagen to the wound.
Is that what underpins your belief that there will be a long tail here? Is that durability, the need to continually over a long period of time essentially be re-treating these patients?
Yeah. Look, skin cells turnover, half-life of collagen is 30 days. Unless you find a stem cell in every wound or a group of stem cells, there is no one-and-done in this indication no matter how you approach this problem. So one of the reasons we believe the tail on Vyjuvek could be good is based on the fact that if the wounds are healing and they stay closed for 90 days, they are going to get disrupted. It's not always exactly at the 90-day mark. We have seen wounds that have been closed for 4 months, wounds that have been closed for 2.5 months. It's a bit dispersed. But on average, every 90 days, you should expect a replenished collagen cell.
Is that fairly consistent between RDEB and DDEB, or are there any differences between those patient populations?
Not particularly. In dominant patients, some of them already have nonfunctional collagen 7. So there is a certain displacement. They call them the parking lot, the displacement theory, where you need a high-producing system to displace existing collagen 7. But once in place, the half-life of functional collagen 7 is 30 days. And we don't expect that to change.
Okay. Maybe we can move over to access and reimbursement. You mentioned that also being another positive surprise here. Maybe remind us what you saw in 1Q and your level of confidence that that was truly a one-time headwind.
Yeah. What we saw, so prior to us getting the J-code, all our patients, commercial and government, were on interim J-code. And when we got the permanent J-code, our specialty pharmacy was reluctant to ship a vial with the new J-code unless they got confirmation of payment. And since it happened so quickly over a three-week period, which is the time it took for all systems to recognize the new J-code, we had to provide free vials. So it was a three-week issue. It's 100% behind us. And now when I talk about J-code being a tailwind, it means that reimbursement for Medicaid patients should go a lot faster than it did a few months ago.
Remind us where you stand in terms of covered lives?
Oh, we're close to 98%-99%. I forgot. I can't recall what we reported, but it's a very high number.
Got it. Okay. So no issues there.
No issues there.
Okay. And then as of your last reporting, 330 reimbursement approvals. But there has been some maybe hurdles in terms of the amount of time it takes. Right? Or maybe hurdles isn't the right word, but there's a lag between being able to fill the script. Where do you stand now in that?
There are three phases. First, you get a script. If a script has patient's genetic information, it instantly becomes a Start Form . If the patient does not have genetic sequencing, it takes about three weeks for a script to become an adjudicated Start Form . Once a Start Form is in place, as of today it's in such a good place that it's down to about a week or so to get reimbursement. Once reimbursement and genetic, all the other pieces are in place, then it's all about the patient finding the right nurse that they're comfortable with and scheduling the first visit. We've seen some variability in that. Some patients start pretty quickly. Some take a couple of weeks to find the right nurse.
Some adult dominant patients take a few extra weeks to even start the therapy because they have lived with somewhat of a milder condition for 10, 15, 20 years. It requires education on the part of our patient services, medical affairs team, our reps to some extent on the physician to the extent they can talk about the label to kind of emphasize that every wound matters. The sooner you start treatment, the better the long-term outcome. We are constantly trying to improve that. I would say right now, we're still under the two-month time window. But more and more are getting—I hope by the time the second half of 3 and 4 Q roll around, we hope to bring it down to under a month. That's the exact time.
I guess maybe when you think about all those moving parts that you just described, what component or what really underpins your confidence that you can bring it down from under two months to under one month?
I think it's, look, the genetic testing piece, if they don't have sequencing information, that's three weeks, and there's nothing we can do about the time it takes to turn that around. We can definitely help once all the pieces are in place. We can help with the scheduling part from trying to figure out what they're comfortable with and get the scheduling going, educate them on the importance of thinking ahead of scheduling if they have planning a vacation. Little things we can do to speed it up. But it's all about everything's in place. How quickly can we ship a vial to a patient?
Got it. Remind us how you're managing the accrual of patients on your commercial plan to be able to handle that price cap that you've set?
Yeah. So we made an estimate at the beginning of the year. The price cap only applies to commercial patients. And at the end of every quarter, we determine, "Do we have to adjust the accrual?" Right? It's important to realize a couple of things. That patients who start on drug after April will not have any impact on the price cap. And the second point to remember is price cap is not at a patient level but at a payer level. So our expectation is that this year, we were probably a bit too conservative given it's academic for us when we started in January. But 2024 will give us a good window into what a meaningful accrual should be going forward. But we do adjust it every quarter. And if you hold the stock for a year, you should barely see any impact.
Got it. One of the things that you've laid out here are expectations for $1 billion-plus in peak global sales. Maybe help us understand what are the underlying assumptions that go into that peak sales assumption and then also talk about that in the context of your strategy for longer-term growth.
So the first point I want to make clear is when we talked about $1 billion-plus for the B-VEC franchise, it's about the skin and not about the eye. We haven't thought about B-VEC for the eye, which affects about 50% of the RDEB population or 25% of the DEB population. Within the skin indication, the $1 billion-plus comes from the identified patients in the U.S., an estimate of what steady-state pricing should be. And we put that out on a slide and I believe in the Q4 report, an expectation of what price we could get in Europe against the higher prevalence of identified patients in Japan. So it's essentially our guess at we know the price in the U.S. Everything else is a bit up in the air.
But we feel good based on the prevalence, the compliance, the reimbursement, and some of the early conversations in Europe about putting up the dossier. We feel good about getting past the $1 billion on the skin alone.
Okay. To clarify, does that assume only penetration into the 1,200 patients, or you can then potentially explore and identify additional patients that are within that 3,000 that are estimated in the U.S.?
We modeled it on slightly north of 1,200 but not the extent of 3,000.
Got it. Okay. What's your understanding of the capacity to be able to identify more patients than the slightly north of 1,200?
Look, we've started—we hired Christine Wilson, who has prior experience in finding patients in rare diseases. We have a lot of—now that we're a year into launch, we've put in place the genetic testing is one source of finding patients to some extent, although it's convoluted given all we know is somebody tested positive for DEB. Family conversations are starting to happen. Every patient who is dominant probably has a relative who is recessive. Now that the first patient has been on drug and is happy, we're starting to have these—patient service is starting to have these conversations on family trees. A lot of data analytics. We're starting to use phenotypes to predict a patient who could have DEB for whom we could go get genetically tested to bring them in. But having said that, Andrea, we're still—our primary focus is we want to get—we have 1,200 identified patients.
We want to get them all into the system. We're starting efforts on finding patients, but it's much more meaningful. It'll become a much more meaningful effort in 2025.
Got it. And maybe speak to your efforts with physician education. If you were to characterize maybe the broad level of physicians that you interact with now, what is their awareness, their receptivity to prescribing B-VEC, and how do you anticipate that to change over the next couple of years?
Look, the receptivity has been high in case of some, primarily derms and ped derms. In some community, at the community physician level, we've had to educate some physicians on the vector, which is non-replicating and re-dosable. We had to educate them on home dosing and gene replacement, what we're doing. But by and large, the physician experience on B-VEC has been very positive to date, both at the COE level and at the community level.
Our physicians right now, are they prescribing to multiple patients at the same time, or do you see a scenario where they prescribe to maybe one, they follow them for a little bit of time to understand how it plays out before they prescribe to their second?
The majority are pretty quick to put their patients on drug. There have been physicians, a handful, who chose to start with the recessive. The more severe patients figure out reimbursement and efficacy of the drug and safety and then open the gates to their dominant patients. Not ideal, not something we think is the right way, but it's the physician's preference, and we try to make sure that they are comfortable, especially given that it's chronic and the tail on the drug. We believe it's good to have the patient be fully aware when they come on board and their experience is good. And we try to replicate that on the physician side without trying to be overly aggressive on the matter. But it's been very positive for us.
If you had to put a number on that, what proportion falls into that second bucket that is maybe a little slower to?
Oh, I would say less than 10%, maybe less than 5%. I've heard a few anecdotes of care while doing it, but by and large, it's been pretty quick.
Got it. And I think you'll have additional data in the second half of this year, your long-term extension data. To what extent will that maybe help the conversation with some of these physicians, particularly those that might be in that second bucket you described? How will that impact prescribing behavior?
Look, OLE data, you have to realize that the launch has gone for so long. We're one year into launch, and the OLE was a six-month study. It just reinforces the safety of the drug, reinforces that it works on dominant as well as recessive, reinforces it works on different types of wounds, and it has a certain level of durability. Right? So we don't expect it to be something so surprising that it changes any of the paradigms today, but to simply reinforce. And it provides a good document for us to, as we get into payer conversations in Europe and Japan, in terms of talking about durability and dominant and recessive patients. Because in the clinical trial, we had one dominant, and we've had plenty of dominant, not plenty, but a meaningful number of dominant patients in the OLE study.
Got it. Maybe that's a good segue to your ex-U.S. strategy here. What is your understanding then to the regulatory agencies? Are there any differences in terms of what dataset or level of evidence they're looking for relative to how the FDA approached this?
Not in the EU. We are well into conversations with the EMA. As we mentioned, they are amenable to home dosing. We're hoping to get approval, hopefully, by the end of the year. So all preparations for a launch in Europe are progressing. In Japan, they required us to do a clinical study on a handful of Japanese patients, which we did. We completed. That was the only additional requirement. We plan to file the JNDA second half of this year and hopefully get approved sometime next year. So things are going pretty well, both with respect to regulatory and filings in EU and Japan. We've also started building out management teams in these countries to get prepared for launch.
How do the dynamics differ in the U.S. versus Europe or Japan, whether in terms of the treatment paradigm, the receptivity to a gene therapy? Help us think through that.
Yeah. So we expect the launch in EU to be a bit easier than the launch in the US, given a lot of patients are identified. They all have genetic information. We have taken the time to verify the identified patients. A lot of hospitals actually have nursing infrastructure to help with home dosing. So from logistics of commercial launch, it appears it could potentially be easier in EU than the US. However, access could be a bigger challenge in EU. And while DEB is—while the disease is debilitating or an unmet medical need and we have pretty convenient curative treatment, we still have to figure out where we end up on access. Japan is kind of somewhere in between the US and Europe, where access is and it could be in a good place at the end of the conversation. Patients are identified, concentrated in centers.
There's one provider, one payer you have to negotiate with in all these places. But that's how I see it playing out. In the U.S., the real tough difficulty of the launch has been beyond the 1,200. You've got to go knock door to door and find them, which is less of a challenge in Europe.
Got it. And you've referenced earlier an ophthalmic version of this drug. Maybe remind us where you stand with that and what is the incremental commercial opportunity? I think you've put out maybe guesses at $250 million-300 million, but any updated views on that?
Yeah. So about half the RDEB patients get lesions in the eye. So it's either 50% of the RDEB or 25% of the DDEB patient population. We've aligned with the agency on the pivotal trial. We plan to start the trial in the second half of this year. It's a study on about 10-11 patients at best, with a six-month endpoint of no lesions in the eye, as evidenced by fluorescein staining. We had really good success on that one patient, compassionate use patient that was published in NEJM. So our development idea is to complete the clinical study early next year, file the BLA. We are hoping it's just a six-month review and plan for a launch in 2026. The $250-300 million simply came from us taking one-fourth of our estimate on the EB market and applying it to the eye.
As we get closer to the launch, we'll get more granular in our estimates globally.
Got it. Okay. That makes sense. You obviously have a very large pipeline that we have not even touched on. Maybe I'll give you an opportunity to highlight some of your favorites from there. What are you most excited about? Obviously, we have the aesthetics program that still has data reading out in the near term. Maybe just some updates on those.
Yeah. So we have three clinical updates this year that we've guided to: aesthetic, alpha-1 antitrypsin, and solid tumors, which is oncology in the skin. And the ones next year we have B-VEC in the eye, hopefully lung cancer. I mean, or oncology in pulmonary in the lung and CF. Look, we are super excited about the CF program, although it's been so much slower than we expected it to be. Compare and contrast to A1AT, where we started the study early this year and we're guiding to data by the end of this year. That said, the excitement in CF comes from the following: that we are redosable. And so if there is a certain hurdle to be hit, whether it's a 10% improvement or a 20% improvement or a 40% improvement in FEV, we don't have to get to the answer on the first dose.
So if you get to the high single-digit number on the first dose, the lung gets that much more better, and we can chip away at the problem. So the redosability of the platform gets us excited about the pulmonary programs. But obviously, B-VEC in the eye, from a risk perspective, is, given we've seen what happened to one patient, has probably the highest POS of success. But no, we're excited about all of them. Oncology and any one of these positive data readouts could really put the company in a very different place than it is today, where the entire valuation is based on B-VEC.
Makes sense. Maybe in that context, and you touched on this, your platform, obviously across multiple areas, whether it's dermatology, respiratory, oncology, maybe help us understand that strategy to be so diversified versus maybe taking a more focused approach and specializing only in one therapeutic area?
Right. So if you think about the platform, the platform is about delivering any type of exogenous genetic material to an epithelial cell. And what we found, we were extremely focused on the first indication. For the first four and a half years, all we did was B-VEC. We got the drug approved. And now it's time to think about a broad application of the area, with the focus being that if it's a rare disease, we want to be fully integrated as a company. And if it's a larger indication, we are determined to find a partner to develop the indication. And so I think what it shows is the ability to have a few shots on goal to figure out where we're going to ideally see optimal benefit. Although at this point, we're pretty excited by both pulmonology.
I think in oncology, it's a very unique combination of IL-2, IL-12 that we're excited about. So we feel good about our pipeline. We are careful. If you look at our R&D on a Q-over-Q basis, we're very prudent about R&D spending and not rushing to expand without seeing proof of concept.
Maybe on that point, as you think about these different indications, is there one that mechanistically you would say there has a higher probability of success to see benefit from this platform?
I think, look, I will say rare skin has already been de-risked. We're hoping, we're actually hoping to finally get KB105 going, hopefully by the end of this year. Based on what we've seen in B-VEC, the risk on KB105 is significantly mitigated. So is B-VEC in the eye. Right? But put that aside for a second. If we see any positive impact in A1AT or CF, one has a read-through to all pulmonary programs. And so we'll see how it goes. But for now, we feel good about the skin indication.
Perfect. Well, looking forward to it. With that, Krish, thank you so much.
Thanks, Andrea.