All right. Thanks for joining, everyone. Next up, we have the team from Krystal. So we have Krish Krishnan, Suma Krishnan. Thanks so much for joining. Let me just kick it over to you guys for a quick overview of the company, where things stand today. Then we'll get into it.
Thanks for having us, Gavin. Look, we're VYJUVEK. We got the first drug approved, the first genetic medicine that can be dosed at home, either by a patient or a caregiver. And that's just a remarkable outcome. We've been launched in the U.S. for two years almost, maybe if not, yeah, almost two years. We just launched in France, Germany, and Japan. We're signing some distribution agreements. The point I'm trying to make is our ability to bring VYJUVEK to patients around the world is in a really good place. And I believe the patient experience and physician experience to date has been remarkable in the U.S., both with respect to safety and efficacy.
One of the things we did along the way, Gavin, is we made sure that we had total control over the processes of manufacturing, shipping, packaging around VYJUVEK, which can be translated to our clinical pipeline at some time in the future. With the platform designation, a lot of the manufacturing efforts become a bit easier. What we're most excited about going into 2026 is the pipeline that we have, where we're able to apply the same technology to the lung in a couple of indications, to the eye in a couple of indications, and also using the same delivery approach to try and venture into oncology. The company is in a very good financial position. We've been positive EPS for the last eight, nine quarters. Balance sheet is strong. I think we're well positioned to take Krystal to the next level.
Awesome. All right. Let's start off on the U.S. VYJUVEK business briefly before going to the pipeline. On the compliance side, when do you think you're going to be at steady state from a compliance perspective?
I don't want to be wrong twice. We've expected it to be 18 months when we launched, and we're not there yet. The recent label change is actually a tailwind for compliance. But I will say, over time, we do expect to reach steady state. But definitely not, I don't think it's in over the next 12 months for sure.
Okay. I think I have steady state around the end of next year, give or take. It's just kind of a loose term to begin with, but maybe a little longer than that.
Maybe a little longer than that.
Okay. We will see. I guess maybe the compliance aside, right, once you kind of net out from a compliance perspective, from whatever that base is, whether it's 12, 24, whatever the months, how do we think about the go-forward growth there? There's new patient add perspective. There's a net price growth perspective. I don't know if there's a compliance tailwind that comes in with the self-administration or if that nets out. Really, what I'm trying to get at is how is growth going to happen over the next 10 years for the DEB population?
Yeah. Look, we're already starting to see an uptick in reimbursement approvals with the addition of new reps. To me, and since your question was post steady state, I look at steady state where across the patients on drug, the annual vial consumption is somewhere between 26 and 30 vials.
That's how I define steady state. And if you look at an equal split of commercial versus Medicaid, we think that the average price per patient should be about $450,000-$500,000. Our first goal is to target the 1,200 patients we've identified very definitively. We're on our way there. We're at like 615 as of the last. So we're almost at slightly north of 50% with respect to that population. And once you get to that 1,200, although it may take a bit longer to get patient ads, we do believe that the total prevalence is 3,000.
So if your question is very specific to the U.S., that's how I see steady state and beyond.
All right. That makes sense. Let's turn outside the U.S. If you look at a lot of different analogs, how do you think about the relative peak split between U.S., OUS?
Yeah. Look, our first point I'd like to make is we were very pleased with respect to the pricing we received in Japan, where the pricing is pretty close to U.S. net pricing, and it speaks to the value of the drug.
I think it was like a 23% WAC discount in Japan relative to the U.S., give or take.
Correct.
Yeah.
Correct. I think that's fair. Depending on the currency, it could be off a little bit. That does two things for us. It speaks to the value of the drug, and it provides, at least for us, a window into how we expect pricing to end up with respect to the European countries. I think we did a really good job of negotiating a good price in Japan. Our analogs are not gene therapy drugs, but replacement drugs. Replacement as an enzyme replacement, protein replacement drugs, which if you look at Alnylam and Spinraza and some of those drugs have traditionally done very well with respect to pricing. The one and done's, not so much. So if you put us in that bucket as analogs, look at what we were able to do in Japan.
I would say that if you had an optimistic and a pessimistic window in Europe, we could be leaning more towards the optimistic side. That's our belief at the moment.
Do you think cumulatively outside the U.S., the sales could be bigger than the U.S.?
I do believe that in general, people are underestimating ex-U.S. launch for VYJUVEK. I'll give you an example. There are publications that say typically a company gets 5% of its revenues in Japan compared to the U.S. potential. But if you look at 200 patients or so in Japan and the pricing we got, that's not 5%. That's a lot more, 10% or north of 10% if U.S. is $500 million. So I do believe that there are a lot of patients. And every country is a bit different. And this is a high-touch drug. It's almost white glove. So it takes a little bit of time to iron out the logistics of the process by country. But once we get through that, we really expect the launch in OUS, even with distributors, to go well.
Awesome. Last VYJUVEK question for now. What metrics are you planning to give us on the OUS side next year?
Yeah. Because of all the disclosure issues and compliance issues, we're expecting to simply break out U.S. sales and ex-U.S. sales when ex-U.S. sales become material. Until we get to that point, we're going to follow the same pattern we did in Q3, which is help investors understand directionally how patient ramp-up is going. It's difficult for us to get an exact patient count in these countries. By law, it is impossible to get that, and it varies by country.
All right. Perfect. Let's go over to the pipeline. Starting on the ocular DEB side of things, this is an open-label study. So I guess one of the questions, investors, it's not open-label?
No. It's blinded.
Blinded. Fully blinded. Okay. Are you able to see anything on a blinded safety database from the ongoing study that also makes you feel better, not just about ocular DEB, but also on the NK side?
From the safety perspective, I mean, pretty clean. We don't see anything, any new signal or any of that stuff. So it's pretty clean.
To date?
To date, I mean, the number of patients that we have dosed. I mean, this study is a controlled, blinded study. We have a natural history portion of the study where a lot of patients have been rolled into the natural history, and we have collected data over a period of time, and we have patients that have to qualify in the natural history study before they can roll over into our main study, and that is intentional because we do want to get severe patients in the study. This way, our chances of success increases. We have patients that have to meet minimum requirements of lesions or abrasions in the eye for a period of time, and those patients that qualify get into the placebo-controlled, blinded study.
It's an intrapatient study where the patient is treated with either placebo or drug for the first three months, and then if they get placebo, then they get the drug, and then end of the trial, you unblind it, and then it's a pretty, I mean, simple scale. I mean, we look at improvement in placebo versus treated, so number of incidences and occurrence are less, smaller in the treated versus placebo, then that meets it should be a win.
What's the criteria to enroll into this study from the natural history? You mentioned it was on symptom days. Is it also on symptom severity or anything like that?
I mean, both of them go hand in hand because number of days, events, severity. It's all the more events and more duration of occurrence means severity. So we pick the patients. We want to make sure. But now we have choices. We have over 100 patients that are enrolled into a natural history study. So now we can really pick the data and select those patients. From those 100 patients, we need 16 patients.
I think it was about six.
About six.
Yeah. We set that in the PR.
Okay. Okay.
But we have the patient profile that we can select that.
Okay. That makes sense. Could you remind us how you powered this study also, like how those discussions went with the FDA?
I mean, again, the basis of the powering was because we do know mechanistically that it's going to work. So we know if you are going to treat them with the drug in the eye, that you have collagen expression and that helps with wound healing and leaving the, I mean, keeping the wound closed for the duration. So we took some of it from our wound study to help us come up with the numbers or the effect size for the calculation for the powering because it's a very similar mechanism.
Okay. Is it one-to-one randomization? I actually forget.
Yes. I mean, it's intrapatient. So it's the same patient. It's just like VYJUVEK, the same B-VEC study. So it's an intrapatient study. The same patient gets drug or placebo.
Oh, that's right. Crossover.
Yeah. Crossover.
Okay. That makes sense. And what about thinking about the size of the ocular DEB population relative to the skin DEB population? I think I have about a quarter in my model.
Officially, 25% of the RDEB population is what the publications talk about. We've seen in a natural history study 10%-15% of dominant patients. We think the market is bigger than the 25%, but we're not ready to commit to how much bigger.
Okay.
I mean, the therapy is prophylactic, right? So you're preventing. So I think patients that feel like they, even if it's a small number, they want to be proactive. I mean, that's what I, I mean, based on patients that we speak in the natural history.
Is pricing aligned to the skin side? Or why is the pricing not higher?
We like to discuss pricing once we have an outcome of the pivotal study. Like VYJUVEK pricing, while we had all kinds of ideas going into the pivotal study, the differentiation and the safety was so strong. We were able to price it right. We do believe that pricing will reflect the value it brings. The only couple of things I'd like to remind you is, A, it's prophylactic, so there's no start and stop, and two, the second aspect would be dependent on the outcome of the pivotal study. So stay tuned.
All right. That makes sense. Let's go over to the NK side. What's your level of confidence on a single registrational study? That was something you discussed in the last earnings call.
Yeah. I mean, again, if you, I mean, it is a one-to-one randomized placebo-controlled study. If you meet the P less than 0.05, it's a win. So we know what the Oxervate is. We know the effect size from the Oxervate. I mean, and we know from our animal studies the PK profile of Oxervate six times a day versus administering us once on a weekly basis. So we know the PK profile of the expressed protein. So based on that, I mean, if the data that shows us based on the PK profile from the animal studies and looking at the effect size of Oxervate, then I think we feel pretty good. I mean.
I think Oxervate had two efficacy studies, if I'm not mistaken.
I mean, one pivotal efficacy study.
One pivotal. Okay.
Yeah. The other one was more of a dose ranging and a finding.
Yeah. And I will say, look, once you enroll the first batch of patients, it's an eight-week study. So while we are blinded, and as Suma said, it could potentially be a pivotal study, if we do have to make adjustments, it doesn't consume that much more time. So it's not like we're years behind. But like Suma runs all her proof of concept study, she runs them blinded because if the data were to pan out, with the safety being in place, it's a very strong argument to position it as a pivotal trial.
And especially since we got the platform technology on this, that made more sense for us. So we pivoted based on discussions with the agency and the platform technology because CMC takes the longest time in getting the product commercialized. So now we have a speedy path to making the product and getting that as a product that potentially could be approved.
Perfect. How big is the study right now?
Right now, the study is as big as what we said in the PR, which is about 30 patients, but we are thinking through. We've had a few patients on study, and so far, as Suma said, the safety profile has been good. We are discussing whether we should increase. We haven't made the decision yet, but once we do, we will communicate that in a very timely manner to the street.
It's also like, aside from an efficacy perspective, there's a safety database consideration with some of this?
Of course. Yeah.
Have you had any discussions with the FDA on that yet? Or have any experience from prior discussions too?
I mean, we haven't discussed any safety data, but I mean, obviously, I mean, the study is ongoing, and we are tracking safety.
The platform helps, right?
Yeah. The platform helps. I mean, of course. I mean, from a safety from the vector base, we don't have to show the extensive safety on the vector backbone. It's topical. It's an eye drop in the eye. It's considered similar to 803, the B-VEC in the eye. The safety can be bucketed with that. Now we have dosed quite a few patients on 803. The safety profile looks pretty clean. We don't anticipate.
Perfect. What are you doing to manage the placebo variability in this study also?
Look, we have a tight inclusion criteria. We wash them out. We wash them out. And Oxervate is six times a day. So the washout doesn't have to be too long. I think we have a two-week washout. So we spend a lot of time thinking about who we bring into the study, given how small these studies are. So we're not as concerned about.
Yeah. And again, we have very strict criteria. We review every patient that come in to make sure they qualify to get them into the trial because it can be very tricky, right? Because if you look at PCD, it's very general. So we want to make sure they're real lesions and they are of decent size that we know can be affected from the expression of NGF.
Somewhere in the stage three, four, or two, three, or whatever.
Yeah. Yeah. It's a similar population and inclusion criteria to Oxervate, right? Like very similar.
Yeah, but we are being very picky on the right patients, so.
Perfect. What's your confidence, I guess, both for KB103 and the NK side? What do you think about dose ranging? Because you're selecting one dose for each study respectively, and they're different doses. Do you think it makes sense to test different doses?
I mean, it's very no, we don't see any because we see, again, our animal studies have directed that, right? I mean, we did a PK study in the animal study. And that's how we justified the dose. We made that argument to the agency. The agency was completely fine and agreed. Again, we have safety. It's no different from the dose that we are in the skin or in the eye with the B-VEC. And I think from a safety, we could justify. And the FDA was fine with that.
Perfect. We have 30 seconds left. And I didn't hit on about four of the pipeline programs. Anything you want to flag between CF, AATD, oncology?
Look, we have an upcoming CF readout. The path for CF is once we read that out and if we find the data to be positive, we're quickly moving into a redosing study. We're working extremely closely with the TD and Oxervate, both in terms of study design, how to move forward, how to position to get approval. Alpha-1 is in the middle of a repeat dosing study, hoping to read out middle of next year. In oncology, we have a very clean path from the FDA in terms of 707 chemo versus chemo. It's over time, but it's got a good path towards that, and Hailey-Hailey, which is not that different from B-VEC in terms of mechanism of action and all that, is a huge undiagnosed indication.
I would encourage everybody to start learning about that indication because it's a skin disease and it affects a lot of populations.
There is no therapy. There's no competition. Nobody's in the space. There's a real unmet need.
I didn't mean to ignore Jeune and the little time we have. But Jeune is much more of a subsidiary. So we could save that.
Yeah. We'll save that for a future day.
Yeah.
Perfect. We'll wrap it up there. Thanks, Suma.
Thank you.
Thanks again.