Hello, everyone. Thanks for joining this session with Krystal Biotech, and welcome to day two of the 2025 Bank of America Healthcare Conference. My name is Alec Stranahan. I'm a senior biotech analyst covering Krystal at Bank of America, and I have the pleasure of being joined today by Krish Krishnan, Chief Executive Officer of Krystal. Thanks for being here, Krish.
Oh, thanks for having me.
Yeah. Yeah, great. We've got, you know, about 30 minutes to run through questions. I've got a bunch here. If you have any, just raise your hand and we'll bring you a mic. Krish, maybe just to set the stage, you know, provide an overview of where the company is today, your commercial stage company. You do have a pipeline of pretty interesting assets too. What are the focus points today?
Yes. Krystal Biotech, we develop and bring to market genetic medicines primarily for monogenic diseases. We're based in Pittsburgh. We have two manufacturing facilities in Pittsburgh. The reason I mention that is all of our manufacturing is done in the U.S. All the IP is housed in the U.S. Most of my employees now are in the U.S. from, and some of the noise you hear about ` or tariffs, we're really insulated from all of that. As Alex mentioned, we launched our drug, Vyjuvek, for the treatment of dystrophic EB about 18 or so months ago in the U.S. We just got approved in Europe, and we hope to launch in Europe and Japan later this year. We have a commercial drug and a pretty healthy pipeline targeting the lung as a tissue, which is a big focus this year.
We're trying to, we're getting into the eye as a tissue for next year. We're already trying to use an existing Vyjuvek for the eye. We're positioning for the eye next year and early entry in 4A into oncology with a very similar kind of approach. Yeah, big pipeline, but we've been cash flow positive for the last seven quarters. Balance sheet is pretty strong. We're not looking to do any kind of financing over the next few years, given our OpEx and the pipeline. All in all, from a company perspective, we're in a good place.
Great. Maybe we can first turn to Vyjuvek. Maybe walk us through, you know, the trends you were seeing in 1Q, new patient starts, and sort of the efforts being made to better penetrate the market.
Yeah. There were three drivers in 1Q. One, a lot of patients were getting completely healed, which is what, as a sponsor, you want when you develop a drug, is for patients to heal. A lot of patients took a break primarily because of complete wound healing and because the skin cells turn over. We're expecting them back over the next 60, 90, 120 days back into the drug. Pauses are a really positive feature for Vyjuvek because it is a chronic medication. Given the long tail on the drug, we want patients to be in a very comfortable place with respect to stops and starts as this continues for a long time. Pausing is not something we try and do anything with. We just let patients pause and come back on drug at the right time.
That caused a little bit of a reduction in what otherwise would have been net revenue. In the long term, it's actually a big positive because a lot of these patients could come back, and it's tough to predict its impact on net revenue. The other big driver is it's taking us, it's taking our reps a bit longer to pull through a prescription or a start form. You know, we have about 17 reps covering 52 states. As patients get more dispersed in the community, as physicians get more spread out in the community, the time to get a prescription, multiple conversations is taking longer.
What we announced in Q1 was we're trying to, we've already, Christine Wilson, who runs our sales and marketing, has started to strengthen the sales force in the company, meaning try and figure out a way where the reps can be much more efficient with the time as opposed to keep commuting into the community multiple times. The third factor, which happens to a lot of companies, is Q1 is a quarter where there are a lot of insurance changes. A lot of people shift insurance. When you shift insurance, we've got to go get approval in a new insurance company and that always, but that's a very temporary thing because all these patients catch up after a couple of weeks. The impact, that impact shows more in Q2 than in Q1 because they all come back. That was the situation.
I want to be clear that we are very confident about the total market opportunity of 1,200 or so identified patients and 3,000 in the US. This revenue impact in 1Q is more a tactical thing for us, not something bigger than what it appears to be.
Okay. So is it possible, you know, given the insurance changes that maybe brought numbers down slightly in 1Q, could that reverse here in 2Q? I guess my question is how many of the impacts that you saw were isolated to the quarter? And do you get maybe a swing in the other direction as we enter the second?
With respect to insurance pausing, that definitely is a swing in the positive direction. With respect to pauses, it's tough to predict because you could have a Q where a lot of people who paused come back on drug pretty quickly. You could also have incremental pauses. It depends on the durability and the type of patient. Definitely some of the efforts we're putting in on the commercial side with respect to getting more prescriptions, getting prescriptions faster should definitely have an impact through Q2 and Q3.
Okay. Is there, are there, have there been, obviously, you know, it's a new drug launch still. Have there been any patients that have benefited from the drug to the extent that they maybe haven't hit their annual cap, or is it just too early to say there?
We'll see how this year goes. The way we think about accruing for cap is on a quarterly basis. We really thought we did a phenomenal job last year. There was hardly any fluctuation in net revenue. Because we do it every Q, we're able to come pretty close to the cap when compared to the accrual. Definitely, as more people pause, the probability of hitting the cap starts to go the other way.
Okay. I guess last question on just on the print, it looks like, you know, maybe new reimbursement approvals slowed down a little bit. Since the % of the access determinations appears to be stable, is this sort of a natural shrinking in the addressable population, or should we maybe expect some swings on this number as well?
No, no. I would not go towards the addressable population is and continues to be what we've always said it has been. The reason is simply so reimbursement approvals are basically a proxy for prescription. You get a prescription, it translates to reimbursement approval. As I mentioned, it's taking us a bit longer to get the prescription. That translated to it's taking us a bit longer to get reimbursement approval. Hopefully with some of the efforts, we're hoping this is transitory and we get back to a normal pace shortly.
Okay. Okay. That's encouraging. This year you also have the benefit of, you know, launching the EU and maybe Japan as well. I guess how are things going on those fronts? You know, when could we start to see an impact to the top line?
Yeah, EU, we were very happy with the full approval we got as opposed to conditional. The label is a bit broader than what it is in the U.S. in terms of allowing patients, based on their physician conversation, to self-administer, either by a caregiver or self-administer. Where the team in Germany and France is pretty well baked at the moment. We are hoping to launch in Q3. Germany and France will be the first two countries. We are also working in the background to get the drug approved, launched in some of the other EU countries. Germany, France, which I already mentioned, Switzerland, some of the adjoining countries. We are also working to put distributor agreements in place for MENA, which is the Middle East and Israel and some of the other countries.
In terms of any impact, I would not expect a big impact in Q3 given we are launching in Q3. I do believe in the long run, given how well patients are identified in Europe and how they are genetically confirmed and the value proposition of the drug, I will repeat, I do believe the market underestimates, underestimates Vyjuvek launch in EU. Japan, we are hoping to get approved in Q3. We have to go through pricing negotiations before we launch. Our expectation is to launch hopefully in Q4.
Okay. You know, obviously good to see the broad label treating patients from birth. That's different than the language on the U.S. label. How does the initial dose that patients receive differ between the U.S. and the EU? I think maybe a healthcare provider needs to provide the first Vyjuvek dose in the EU. Is that right? How are you sort of managing that from a rollout perspective?
Yeah. So the first, so in the U.S., just to level set, a patient could start day one dosing in a home setting. Does not really have to visit the physician office. A lot of them do, but it's not mandatory. If they got a prescription, we could send a nurse to the patient's home and they get going. In the EU, it is mandatory that the first time they get a prescription, it's in a physician office. One of the things we're trying to manage is how to work with the centers of excellence in Germany and France to enable them to get more patient visits early on. We were aware of this issue even well before the label officially came out. We're working with centers of excellence to ensure that they're able to manage a lot of patient appointments.
Hopefully it plays out well. That definitely is a time factor that someone has to account for in the launch. Once they have the first visit, then they can go back home and self-administer or caregiver administration. It gets really easy post the first visit.
Okay. Okay. Have you heard that patients maybe would prefer that initial high-touch introduction to the medicine from their provider, like to give them more confidence to self-administer?
Yeah, I think early on, and like what we saw in the U.S. is early on when you're talking about gene therapy and a viral vector-based, people want to talk to the centers of excellence. Over time with, like in the U.S., the Facebook community, people understand how simple and easy. I mean, at the end of the day, it's a gel that's put on a wound. Yeah. Right. I think, I mean, look, I think EU, we were even surprised we got home administration, let alone caregiver administration. We were very comfortable during negotiation having the first visit be in a physician office. It just sets the right tone and for the rest of the launch.
Yeah, that makes sense. I guess when you think about pricing dynamics, what should we sort of be thinking about as we model out pricing in the EU and then Japan?
It varies by country. Yeah, it varies by country. Usually companies do well in Germany, not so well in France. It all varies, but I will say this. It is an unmet medical need. It is a pretty debilitating disease. There is no corrective therapy in Europe. We have been fortunate to have a few patients on, have access to the drug as of late last year going into this year, and the feedback has been very positive. That all said, you know, our, we would accrue thinking we are going to end up at 50% of the US price, but our expectation is to end at like 70-75% of the US price. A conservative accrual, but a more optimistic view on where we would end up with pricing.
Okay. Obviously that gradually changes over the first year. It's not like the starting price is the final price. It depends on the geography.
Right. We wouldn't know. We got to like accrue in anticipation of a final price. Most companies err on the side of being conservative to avoid paying out of some kind of lump sum at the end of the 12 or 18-month period.
Okay. That makes sense. Krish, you mentioned the relatively straightforward administration procedure. I mean, this is something a patient can do by themselves at home. There has been another appqroval in DEB in the U.S., definitely less straightforward. How do you view this in the context of Vyjuvek's growth, or is it kind of a wait and see?
I don't see having any impact on Vyjuvek growth. It's an autologous approach. Convenience is paramount to DEB patients. 98% of our patients choose to be dosed at home, don't even want to do the three or four-mile ride to the local physician office. In the case of this recently approved drug, there are a couple of centers in this country, and you have to go there to get the procedure. It just, on the face of it, it feels burdensome. I particularly don't see any meaningful, any impact to the Vyjuvek launch trajectory in the U.S. or in the rest of the world.
Has your conversation with payers in the U.S. changed at all after that approval?
It has been really good. It has been consistent. As we mentioned in the queue, we have not had any denials. I mean, we were able to convince them to get back on drug access. Honestly, Alex, it has been very good for Krystal since the beginning. We haven't had, I think we spent a lot of time developing a value proposition that was attractive to both sides.
Okay. Okay. That makes sense. Maybe shifting gears to the pipeline. You've got a number of readouts. You had a few first-in-human proof points end of last year and beginning of this year. Which pipeline assets are you most excited about? Obviously, you love all your kids, but you know, where would you sort of be focusing on for this year?
Look, this on the immediate excitement is on CF and alpha-1 antitrypsin because they're upcoming over the next few months. In CF, for a couple of reasons, I think we have a very strong value proposition in patients who have a null mutation where there is no medication. The second attractive value proposition for KB407 is the fact that it can be redosed. If we can establish a very meaningful beachhead in the first administration, and assuming safety continues to stay the way it has been, it can only get better from that point. Redosing with a simple nebulizer for less than 10 minutes to treat CF, maybe biweekly or monthly for null patients, potentially at home, is a huge, is a big change in terms of convenience and benefit to the patient.
On the heels of that is also alpha-1 antitrypsin, where we showed 30% or so transduction efficiency when we reported, which means we're able, and just to remind everyone, alpha-1 lungs also have mucus, maybe not to the extent of a CF lung, but it's a mucus-filled lung. The fact we were able to deliver to the lung, express meaningful levels of alpha-1 in the lung, have them go through the lobes into systemic circulation was a big positive for us. We also look forward to getting more patients on the cohort two that we showed early data on, moving them onto a redosing paradigm. This year, and with no regard, it's for us the year of the lung, and we're excited about both those announcements for the short term.
Okay. I think before we saw sort of those first in-human evidence of activity, it was not obviously clear that, you know, you could deliver your HSV vector to a pretty severely damaged lung, right? It is definitely higher hanging fruit than dripping it on an open wound.
Right.
Technologically speaking, I guess, how did those readouts sort of increase your confidence in the pipeline?
Yeah, a lot, because just to say, I can't say much about it, but we have a lung cancer announcement, NSCLC is an indication coming up at ASCO. In that case, we're delivering cytokines to the lung repeatedly, right? Patients have been on drug, some for a year, nine months. You know, we have different stages. It's not a big sample size, but that provides conviction that yes, we can go to a lung over and over again, safely and repeatedly. We showed alpha-1, which is a mucus-filled lung, and we were able to consistently deliver a single dose to that. The alpha-1 data definitely reinforced our excitement about the upcoming CF data. CF, we did not do any bronx. Still, we got into cohort three.
Especially if we're able to show expression in a null mutation patient, it would be really good for the company and the pipeline in the long term.
Okay. You know, looking forward to sort of the framing of the data from that study, should the editing piece or the expression piece be most important, or is there maybe a molecular bar that you could point folks to that you're hoping to clear to progress this route?
CF or in CF?
Yeah.
No, look, in CF, the bar for null mutation tends to be lower than the bar for a non-null mutation. In the non-null mutation, if your first gives you a mid to high teens type beachhead in terms of levels, then you can build upon it with redosing. And our belief, like if I remember listening to Vojtěch on the null mutation, the expectation is if you are in the mid single digit starting, that's a big, nice big bar for the null mutation, and you can build upon it with redosing. It remains to be seen how it evolves, but that would be an early read into what a threshold could potentially be for approval.
I guess on the redosing piece, I guess we'll get evidence of that at ASCO because it's a similar administration through the nebulizer. In CF specifically, would you expect a deepening of molecular change in the lung upon repeat dosing?
Yeah. I mean, you can imagine each time, every time we dose, the lung is in a better place than it was before. Right? That is the beauty of redosing. Depending on the state, our belief is that every repeat dose will have a bigger benefit than the early on dose as the lung clears. Yeah, I do believe what you just said.
Okay. Okay, great. On alpha-1, is 11 micromolars sort of the bar that's kind of the widely held one from physicians in the field? Is that the right way to be thinking about it? How would you sort of focus on functional versus total AT?
No. Eleven micromolar is the bar for systemic administration. The bar for delivering in the lung is about 5-10% of that number. If you notice, when we did the single administration alpha-1, we were at 0.75 micromolar. We are well within the therapeutic range. Our objective is to, with redosing, get that number up to a very meaningful level that would be beneficial. I want to clarify, eleven is for the augmentation therapy. It is for systemic. It is not for levels in the lung.
Okay. Okay. Do you think there's a way for you all to also treat the liver implications of one, or are you really just solely focused on the lung?
No, no, we're focused on the lung. I believe there are RNAi and other editing approaches targeting the liver. If you look at the data announcement, there was a small percentage of alpha-1 that permeated through the lung lobes and seeped into systemic circulation, but it wasn't a meaningful number to say, "Hey, we're going to have a big impact on the liver." We are hoping to be complementary with those targeting the liver.
Okay. Okay. I guess maybe just to frame, you know, sort of the duration of, you know, patients on the therapy, you know, what should we sort of be expecting in the next update?
For CF or alpha-1?
For alpha-1.
Yeah, for alpha-1, we announced early data from cohort two, which was the mid dose, which is a therapeutic dose. In our opinion, it was safe. We added more patients to that cohort just to get confirmation on the levels and the data. We're also working to enroll in cohort three, which is a higher dose. That's just as an alternative to see if it's meaningfully better, but we're already happy with cohort two, which is a therapeutic dose. As soon as we get done with the two patients, we're moving all of them into a redosing paradigm later this year. In terms of depending on when we choose to do the readout, you could either see single dose data on more patients or repeat dose data on all patients, depending on the timing of the data announcement.
Okay. Okay. You'll obviously update the markets when you think you've got a material update.
Correct. Yeah.
Got it. And then you've got ophthalmology as well, KB803. This is for the ocular complications of DEB phase three study, right? This would be a separate, I guess, label and submission. Maybe a little bit different pricing dynamic from Vyjuvek. I guess walk us through the market opportunity here and how you're sort of seeing the path forward to launch.
Yeah, about 50% of the RDEB population, RDEB population identified in the U.S., I mean, 50% of the RDEB population and about 10-15% of the dominants have lesions in the eye. We are going into a registrational study where we're hoping to dose the first patient in the upcoming weeks. We're pretty close. We will provide full information on study design endpoints, but I will say we expect the registrational trial to be blinded and placebo controlled. It's a six-month study following which, as you were mentioning, we'd file the BLA, which hopefully is a six-month review process. I hesitate because of some of the changes going on in the administration today, but we're hoping for it to be six months.
It would follow, and that's a great product for us because we have the sales team, we know the patients, they understand the drug. It is a quick drop-in into an existing market and should launch really well early on because we have all the pieces in place. The other eye program is a new indication called neurotrophic keratitis. Most people, if you dig into the market, it's supposed to be a blockbuster market. There is one private company in it. We're super excited. It's not a 2025 drug for us. I mean, we could complete phase one two before the end of the year, but we think about the eye as more like a 2026. If you think of this year as being the lung, next year, the focus will be on 801, 803 and how that's evolving. We are super excited by the opportunity.
The prevalence in the U.S., it's about 70,000-75,000 patients. There's one drug on the market, which has got some inconvenience with respect to dosing and AEs. We believe KB801 affords a terrific value proposition for patients with NK.
Okay, great. Maybe in the last minute or so, you know, you mentioned that you're in a great place cash-wise, maybe not needing to raise for the next few years. I guess what sort of contemplated within that runway assumption in terms of, you know, powering through the Vyjuvek launch, getting, you know, some of these assets into mid stage or potentially, you know, later stage for ophthalmology. Is that kind of all wrapped up into your runway assumptions?
Yeah, it is. We're, look, the one guiding principle of when we are faced with a large indication, when I say large indication, a high prevalence, not a rare disease like DEB, our objective at some point is to partner that drug with some strategic. Our niche is bringing rare drugs to market and launching them in the US. We are developing competencies in Europe and Japan with the launch. Yeah, when I say we're fine from a cash perspective, I'm including pretty much everything we're contemplating. In aesthetics, we already hired a couple of individuals to find a way to get June Aesthetics financed and spun out at the right time. Yeah.
Okay. Great. Looking forward to the updates that we outlined. I think with that, we are at time, so we'll have to leave it there. Please join me in thanking Krish for the great conversation and for being here at the conference.
Thank you. Thanks for having me.