Thank you everyone for joining us. I with the Krystal Biotech Fireside Chat here at the TD Cowen 46th Annual Healthcare Conference. I'm covering analyst Ritu Baral. Joining us we have on the far right, Suma Krishnan, our President of R&D, and to my right, Krish Krishnan, CEO. Thank you guys for joining us today. We will start with VYJUVEK, that is your base business, and everybody watches the quarters. It was encouraging to see VYJUVEK's return to growth in Q4. How meaningfully was this growth driven by the recent U.S. sales force expansion versus the label update allowing for at-home self-dosing, Krish?
Thanks, Ritu Baral. Thanks for having us. I think around Q1 of last year, we started on the sales force expansion, and that has meaningfully improved the number of reimbursement approvals we get every quarter. That's gone up. From a pure demand perspective, we're definitely doing really well, and it continues to grow up. I think we reported north of 660 or so reimbursement approvals. In terms of the label update, which is a tailwind in terms of patients being able to self-administer the drug, and not have to depend on a nurse or a HCP administration. Our view on that is it's definitely a tailwind, but it's a tailwind that's much more medium to long term.
not yet. Mm-hmm.
... than short. Over a period of 12- 18 months, you'll definitely see the impact of more and more patients choosing to self-administer in lieu of waiting for a nurse, making an appointment to apply, especially if you're an older patient, a older patient, 18 or older, and if your wounds tend to be moderate or mild.
What is the mechanism by which that label expansion is going to help? Is it going to help with compliance? Because you don't have to have somebody over to, like, you know, there's a lower barrier to dosing, or restarting dosing on a drug holiday, versus new patient ads.
The number one benefit is now you can travel with the drug. A lot of patients who were taking breaks from VYJUVEK, either visiting family or trips on vacation or having to, you know, vacation, anytime you're out of the house, you had to take a break in VYJUVEK previously. Now, if you're able to travel with the drug, the level of compliance over time definitely goes up. There are also in certain segments of the patient population, adults with moderate to mild wounds who were reluctant to have a nurse come home, especially they have lived with this moderate disease for a long time, reluctant to wait every week for a nurse to come in, are now eager to get on drug because of self-administration.
There is a improvement on both sides of the curve, both in terms of demand and compliance. The compliance side, as I mentioned earlier, in my mind, is much more medium to long term than short term.
Got it. What are the drivers, the growth dynamics for full year 2026 specifically that you're seeing right now? Is it like DEB patients? Are those the milder patients? More community derm uptake with that expanded sales force? New diagnosis, we haven't talked about that in a while, but you do have, I think, the ongoing, Krystal Connect.
Yeah
program. Which of those could you rank order those?
Yeah
... importance?
I mean, the one growth driver that does not have any kind of nuances to it is, of course, ROW, rest of the world sales of VYJUVEK.
Mm.
Because the launch is early, in its early stage, patients are on high compliance on the drug. Most of them are severe patients. Without question, we expect in 2026, if you ask me, what's an obvious growth driver? It's ROW sales, whether it be in Germany, Italy, France, Japan, et cetera.
Mm.
In the U.S., the addition of sales rep obviously is a big growth factor, but one has to look at that along with the start-stop regimen. Our patients have been on drug for three years now. A lot of them, even if they were super severe, are now mostly healed, if not fully healed. While it has exceeded our expectations in terms of how long it took for us to get to the start-stop paradigm, that's definitely an influencer in the story.
Mm
... for 2026. It's tough to predict the dynamics of the start-stop on a quarterly basis. But purely in terms of reimbursement approvals, look, we're at 660 or so, growing at 45+ a quarter. It's pretty obvious we're gonna get to 720 in the not so far future, which was our goal at the beginning of the launch. I would say ROW for sure.
Mm-hmm.
U.S., depending on what we see in the start-stop paradigm over the next three, four quarters.
It should stabilize over 2026, the start-stop.
It should, it should definitely. Yeah. Two factors. One is, yeah, you're right, it will stabilize. Also, as you get past patients, past the 720 mark, you're gonna see more moderate, mild patients getting on drug. They're not gonna take 18 months to completely heal. It could be quicker. Yeah.
Got it. On the rest of world, what country should we be watching most closely for full year 2026? I mean, you've got, you've got Germany now, correct? You've got upcoming self launches, Italy, Spain, UK. How are pricing discussions going in these geographies? The UK and Spain are tough, and how, you know, what was behind the decision to sort of go it alone instead of just doing a, like a distribution deal or anything here? Was it MFN? Anything else?
I think if you look at the nature of the disease as an unmet medical need, if you look at the prevalence within a, one of these countries, if you look at the hurdle rates in terms of regulatory approval, we analyzed all that and early on in the life cycle of the company decided that we were gonna self-launch in EU for UK and Japan.
Mm-hmm
... and sign distribution agreements in the other countries outside of these 5. We are launched in Japan. We got a great price in Japan, as many of you know. That launch is starting to go on really well at the moment. In Germany, we have launched and the launch is, as you saw from the number of patients, both in Germany and France, the launch has been exceeding our expectations and in the long term, we actually believe that the ROW sales of VYJUVEK would be higher than US because just in Germany, France and Japan alone, the identified number of patients is greater than the US. The 1 question about these launches is what's the pricing? Japan, as I said, we got a good pricing.
Germany, we are in negotiations, and we expect to get a price in Q3 of this year. They continue to progress well, but until we see the outcome, it's tough to handicap where we're gonna end up. Based on Japan pricing, we feel our arguments and the validity of the drug presents itself well. France, I don't think we'll get an answer till next year. It's just how long the negotiations take. You're right about U.K. and Spain, they're both difficult, but we expect those negotiations to last well into next year at the moment, and depending on how we end up, we still have the opportunity to decide to launch or not launch.
Obviously, as sponsors of this disease and the company, we want every patient in this world to have VYJUVEK, hopefully, we're not limited by MFN or that prevents us from launching in these countries. That said, we feel really good about the way launches are going.
Let's move to your pipeline now and the ocular program.
Okay.
On your Q4 call, you announced that to support newly sanctioned at-home self-dosing, the dosing frequencies of both KB803 in ocular DEB and KB801 in NK were both increased. Importantly, both pivotal ocular trials need to be re-enrolled to accommodate the new pivotal dosing regimens. One, I guess we'll start with ocular DEB. When you sort of terminated weekly dosing, were you able to take a look at the patients enrolled and treated to date and their efficacy? And is that one of the reasons, one of the rationale behind the increase in treatment frequency, and therefore the total weekly dose by like three times?
Yeah, I can answer, take this question. When we designed the KB803 study, obviously we discussed with the agency, I mean, you know, we have a natural history study going because this is an indication for this subset of population was never studied or understood. What we discussed is collecting a natural history study. We embarked on that. Patients enrolled into the study, and then obviously we, you know, designed a clinical trial, and, you know, went back and forth with the FDA on the e-end point and the design of the study. At that time when we submitted the protocol, home dosing was not something that the agency cleared us for.
Mm-hmm.
We discussed with the agency, there were a few things that they needed to see before they could bring home dosing.
What were the few things?
That's exactly what we'll talk about.
Yeah.
In discussions with them, we went back and did some of the human factors study.
Mm-hmm
Some of the collection of safety data. Basically the first study was we were able to collect, you know, when if the patient doses at home, what happens if there is, you know, how do you clean it? How do you make sure there is no virus or vector left behind?
Clean the eye?
Yeah.
Clean okay.
Clean, like when you drop the eye-
Yeah
... you have some stuff leak out.
Yeah.
You use, we have cleaning procedures which we've implemented in the study.
Mm-hmm.
It's very simple, like use a wipe, particular kind of a wipe...
Mm-hmm
to make sure that particular wipe is taking all of the product.
Mm-hmm
You test it to make sure that vector that's left behind is not active.
Mm-hmm.
Because you're bringing this virus into the home setting.
Mm-hmm.
Very similar things that we had to do for VYJUVEK.
Mm-hmm.
And also making sure the competency of the patient to self-administer or for the caregiver to administer at home. These were the things we were ironing out, we let the study go. We didn't even let the existing, because we didn't wanna stop the study and patients who are continuing on the study because some are... We really were not, it was, you cannot analyze anything from that data. It was more like, okay, we have safety. We know the patients are safe and it's good.
What we realized from our human factors study or administer at those studies is now if you're gonna have enabled the patient to allow the patient to administer by themselves or by a caregiver at a home setting, it's not in a controlled setting where you can really ensure that the patient is, you know, administering the dose.
Yep.
We felt like increasing the frequency can address that concern.
Make it idiot-proof.
yeah. Make it like give them-
Make it idiot-proof.
Yeah. I mean, we give them a volume.
Mm-hmm.
We say, "Hey, this is your volume.
Mm-hmm.
Because this is something we learned even in VYJUVEK. Like, we now when we go back, the feedback we get is, "Oh, we have more wounds. I wish we had more drug." You know how the FDA is. Once whatever dose-
Mm-hmm
... whatever volume you pick in your pivotal clinical trial, you're limited by that.
Mm-hmm.
That's only thing that gets on the label. Now we said, "Okay, great. Now this is the volume. We know this is." We took that volume and told them and gave them flexibility because these patients to dose them and use that volume within that week. That's the difference that we did for KB803. Again, we restarted the protocol because again, it was a slight dosing frequency regimen design because it was and endpoints too.
Mm-hmm.
We had to get the endpoints agreed. It was a patient-reported outcome.
Mm-hmm.
We were very clear. If you look at.
This was the days of.
Yeah
Yes.
...of events.
Yeah.
Of a break. We had a scale.
Mm-hmm.
We had 5 different, you know, outcomes that we were measuring.
Mm-hmm.
We got those outcome scales discussed with the agency, agreed upon.
Mm-hmm.
We were also discussing the statistics and the plan because it was a crossover design. also to make the agency comfortable that this design and endpoint is going to be more of a prophylactic use of the drug rather than an outcome-driven regimen, right? You have an event, and you're treating that event.
Mm-hmm.
Obviously, in the original design, there were discussions on having the patient coming and seeing by an ophthalmologist, seeing the design. There was a little bit of education to the agency.
Mm-hmm.
Like this is going to be a prophylactic design where the patient, it's a patient-reported. You know, there is nothing.
Mm-hmm
... with the structural nature of the eye. I think there was back and forth, and once we got all of that agreed, made for us sense to start from scratch, a clean design with the right clinical endpoint agreed with the FDA and the right design. The first one I would use more for safety because all of those nuances.
Mm-hmm
... like clinical endpoint, outcomes, just statistics was not agreed upon or finalized with the agency.
How many of the previously enrolled, the once-weekly enrolled patients are eligible for washout and potential re-enrollment in the new dosing regimen?
Those patients went back into a natural history study.
Mm-hmm.
If they meet the criteria, then they get back into the study.
Back into it, yeah. How long is the washout? The natural history washout.
I mean, there's no particular washout.
Yeah.
It's basically we let them then get back into the natural history, so they have to be in the natural history study for at least two months.
Okay.
These patients already got off the study.
Yeah
many of them can now. If they still meet the criteria, they can roll into the study.
You've guided to phase III re-enrollment?
Mm-hmm
... completion by first half. Considering these are patients who are in the natural history, who then... Right?
Right.
Are there any factors that could delay this first half? I mean, I'm assuming that dropouts in the natural history portion.
No, I mean.
... relatively low.
we have visibility into natural history study.
Yeah.
We feel comfortable with the number of subjects.
Take a little pool of.
... from our natural history. Yeah.
Patients
We see their data live. This is a very controlled natural history. It's not random. They enroll into the natural history study. We have diaries. We monitor the studies. We make sure they fill the data. If they don't fill, we prompt them.
You can pick compliant patients too.
Correct. Exactly.
Right.
You got it.
Like the flaky ones.
Correct. Exactly.
Okay.
Exactly.
Um-
You got it.
Don't shake your head at me, Krish. You don't want flaky patients.
I mean, just the comment about flaky ones.
No, it is true because the. You know.
Yeah, you're missing data.
... you get a visibility-
We're gonna have to have an imputation discussion, and nobody wants an imputation discussion.
Correct. Yeah.
Agree.
You guided to top-line data in phase III by year-end. Will you release detailed natural history data prior to the top-line data?
I mean, we can all.
Mm-hmm
this is the. We are just so, This is the first time we're collecting-
Yeah
... prospectively. Yeah, of course, we love publications.
What does good data look like on this primary endpoint?
It's again, we have, it's the bar is pretty... it depend, right? Placebo. As long as we saw some improvement from placebo, the number of events.
Statistical significance?
Yeah.
That's basically statistical significance.
I know. Yeah. Again, remember, this is... FDA is not, I mean, opposed to... I mean, if we meet, and if you look good, and we are so separation-
Mm-hmm
... then-
I think if you look at the number of patients we're looking at, the effect size, I don't think it's that different.
From VYJUVEK.
From VYJUVEK.
From VYJUVEK itself.
Yeah. Yeah.
It's.
That's a good guiding post.
Yeah
... in terms of thinking about the study design and outcome, but not exactly. It's not the same manifestation.
Got it. All right, now we're gonna move to 801 in NK. My client's favorite program. Can you walk us through the rationale of increasing the treatment frequency and therefore the total weekly dose by 3x? I mean, you previously indicated you were confident twice weekly gave complete-
Right
coverage. It gave you sort of that maximum differential between the standard of care, right? Now you're going home dosing. You know, why do you need that extra, extra coverage?
It's same thing. It's the same logic, right? I mean, when we started the KB801 study, that we did not get home dosing. I mean, I know it was a smaller study. What we saw is as we're enrolling this patient, the burden of the patient coming into the clinic twice a week for eight weeks, this patient population, we already saw the challenges.
Mm-hmm.
Right? We were working with the agency. They did not give us the home dosing at the first setting. Again, same rationale. You know, we worked with them. Did the, you know.
Was this before or after VYJUVEK home dosing was in the label?
It was all on the same time.
It was around the same.
Yeah.
Okay. Okay.
On the same time.
It was very new, home dosing was very new.
Home dosing was very new.
Okay.
I mean, home dosing was already there in the VYJUVEK label.
Mm-hmm.
It was VYJUVEK, what we did is additional data to show self-administration, and we don't need an ATP to administer.
Mm-hmm.
Any caregiver, as long as we train them.
Yeah.
We had to generate all these, you know, show studies that if you train the patient, that they are able to follow the orders. That's what we got on the label. We have training manuals. We train them. We did very similar approach for KB801 and KB803.
Mm-hmm.
As we were doing for KB801, same thing. In these older population patients, we said, like, you know, it's random giving them, telling them dose every other second day or third day. Could be compliance could be a problem or issue.
Mm-hmm.
We found out that, you know, if you, from a controlled setting in a clinic where they're being administered by the physician or the nurse, they follow instructions. They're very good. Like, you give your administration manual, you tell them, "Put it in the eye," they will follow instructions. I mean, but if you take it to the home, then it becomes a little bit of uncontrolled settings.
Mm-hmm.
We felt that if you can give them just simple, make it clear, "Before you go to bed, put a drop or two into the eye, close your eye, go to bed," easy. That felt like patients will comply, and even if they put a drop and for any reason they have a runny eye and the drug gets washed off and doesn't get into the eye, By giving them every day, we can optimize the dose into the patient's eye.
Mm-hmm.
it was more of an operational-
Mm-hmm
... and taking it from a clinical setting into a home setting. These are some of the things we have learned on our platform-
Mm-hmm
... right, with VYJUVEK. Being in the commercial, now we're hearing feedback from physicians not just in the U.S., globally, what are the things that would have been... Now we can go back...
Which have
Fix those things, but we can fix those things in our future program.
When you, when you went to the daily dosing, again, were you able to look at the data from the three times weekly patients?
Yeah. I mean, obviously, we have visibility into our data, and we feel comfortable with.
Mm-hmm
what we saw.
Mm-hmm.
I mean, the reason is that was a smaller patient study.
Mm-hmm
18-patient study, two to one randomization.
Mm-hmm.
We thought, you know, we can, you know, look for, what is the to calculate whatever if-.
Mm-hmm.
I think what really changed our direction into trying to move this into a pivotal trial was, obviously safety was clear.
Mm-hmm
unblinded the data. We got the platform technology.
Mm-hmm.
We I mean, if you map out the time...
Sorry. You didn't unblind the original patients, the original dosing?
Before we got the platform technology.
Oh, okay.
Yeah.
Got it.
Once we got the platform technology, when you map out the timelines, the rate limiting step for this program was CMC.
Mm-hmm.
Because, you know, if you don't have the platform technology, the burden, the timelines, what it takes to ... If you cannot, you know, rely on our previous assays because ... and validations of those assays, and we have to redo everything from scratch, the timeline would have come substantially pushed out.
Mm-hmm.
We had the luxury to finish this study and then do a full-blown study. Be CMC being the rate limiting step.
Mm-hmm.
The fact that we got, and we know from a platform technology what we can leverage, changed our timeline. CMC became no more the rate limiting step.
Mm-hmm.
We made a conscious decision internally that, you know, based on FDA giving us home dosing, being able to do all of that, we are going to just wrap up this study, and our human factors study. Because we were doing these studies and realized that Commercially, this is gonna be home dosed, and we need to frequent because of the, because of the nuances of.
Yeah
... administration and missing or, you know, not being able to hit the eye. Some of those, some of those nuances came light to us as we were doing this study.
Okay.
Said, "Okay, you know what? Because this study's meaningful, but this study is not. We're gonna change it anyways. We're gonna shift it to, you know, based on a human factor, because if you want." That's what.
Mm-hmm
... made. We made an internal decision to stop the study and start designing the full phase III study.
Are you going to be able to release that unblinded data at some point before pivotal?
I mean, honestly, we are not going to release, because again, we don't want people again dicing and slicing for no reason.
We would never do that.
Oh, sure, no. You may not, but somebody else will.
I honestly think it creates more noise than needed.
Yeah.
we were-
Leave a good place.
... pretty clear that the safety and what Sumita said, none of them were decisions going into-
Mm-hmm
... the change in the design of the pivotal study.
How is site activation going?
Pretty good.
Yeah.
I mean, we have over 30 sites, as I said, I mean, I'm pleased with.
Are most of those currently active?
Most of them are active.
Okay.
mostly academic sites.
Okay
we're getting them active. Now, Just getting active.
Got it.
... we're excited about them, because each one of them promises us 30 patients. We'll see.
Mm-hmm. We'll see.
If they can give me 5, I'm golden.
what are the chances that the data gets delayed into 2027?
I mean, we'll try our best from operational perspective. Things can happen, but even if the delays, it should not be... I wouldn't envision more than a month or two or whatever, right? We are shooting for-
We're not changing the timeline.
Yeah.
Okay.
Things can happen that's beyond our control.
Positive data, what does that look like? Do you have an internal bogey for the magnitude or rapidity of clinical benefit versus standard of care that you want to show?
I mean, obviously this is a placebo-controlled study. The statistical analysis and points is all fixed, and we have to hit that.
Mm-hmm
you know, prospectively based on all of that. That's.
Have you disclosed the powering?
Once we announce enrollment completion, we plan to talk about every detail of the study design and the stat analysis supporting the registration trial.
Okay.
We just didn't wanna get too far ahead of it.
Understood.
Yeah. We will do it. Yeah. On both KB801 and KB803.
Moving on to CF, promising discussion from our KOL conversation, KOL panel on CF where we discussed you guys.
Oh, yeah.
We didn't have a question. It was just ...
Yeah, yeah.
You haven't given us that much data yet.
We've given you the best data from molecular correction. Which no one has seen before.
We do have that high tissue transaction rate.
Yeah
from the first interim. When can we expect updates on your ongoing FDA conversations on that CORAL-3 design?
I mean, what I can tell you is we have ongoing discussions, very positive. The FDA, we have discussed the molecular correction data with the agency.
Mm-hmm.
Obviously, you know, we've been working with CFF and TDN Foundation for the past five, six years. I've never seen them so excited after this data came out.
Mm-hmm
Because they are scientific. They understand data. They do their own. They've looked at all the data. They acknowledge our data for the very, you know, unbiasedly because we have heard criticism from the. That this is amazing data because we've used TDN or CFF Foundation's reagents.
Mm-hmm
their antibodies, all of the procedures. We've added the protocol with them. Everything was gone through the system.
Mm-hmm.
In collaboration with them, this data was generated. The data was heavily looked at by the DEBRA and their scientists, and they all are very excited about the data. Now we have a complete 360 switch from the DEBRA.
Mm-hmm.
They think they wanna develop this product. I mean, they're as much as a partnership. They meet with us through all the things, protocol designs, and they participate with us in the agency meetings.
Mm-hmm.
We have had meetings with the FDA. come back to.
They've participated.
Yes
... in this.
Yes. With the FDA meeting, and where the FDA did acknowledge that the we see molecular corrections. It is the CFTR. It is functional. Obviously, the agency cannot discern.
Well, how can they tell it's functional without some sort of efficacy data?
No.
You show them-
Functional from a in vitro perspective because...
Okay
... we
Okay
... when you look at the reagent ... I mean, if you look at the antibodies, if you look at CFTR expression in these null patient cells, we produce full length glycosylated-
Yeah
... form of ... Then we show function in the organoid models.
Okay
... where it is. We have shown from in vitro models, and there are other models where we have shown not only that they express full length, CFTR protein, the CFTR protein from Western blot is the right glycosylated form and is functional for our organoid models and the ciliary models where we have shown in null patients where you have mucus-
Mm-hmm
You infect and the cilia moves. It's all in vitro models.
I-
We have been able to correlate that link between expression and function. We expect Obviously, we've not shown clinical function-.
That's where.
... clinical endpoint. The FDA acknowledges all of that, the FDA also acknowledges that we produce full length CFTR. I mean, the reason is they say there is no literature data or known data to show how much of the CFTR needs to translate into clinical-
Clinical, yeah.
biomarker or those approaches are a little too-.
They're not far.
... they're not comfortable with that approach.
They're a bridge too far.
Correct.
Right. I see.
We did discuss, but they seem that approach is not, you know. They don't know. They're very open to obviously, you know.
What we discussed, this flexible design-
Correct
adaptive design.
Correct.
Well, I will say-
Yeah
... we're in conversation.
Mm-hmm.
We expect conversation to complete shortly.
Mm-hmm.
We will announce the path forward once that conversation completes, and it's not too far out.
Is it-
We're encouraged by the conversations we have today.
Them willing to meet up with us, you know, frequently.
How long a treatment course do you think you need to move lung function? I mean, whatever the final design.
I mean, we're gonna do a six months then. This is a chronic administration.
It's a six months, yeah.
We know any chronic administration versus acute, the FDA requirement by regulation is six months.
Is the ICH, right?
Correct. You need six months.
So because of that-
We're gonna do six months.
You think six months would be sufficient?
Yeah, because.
Okay
... gonna measure them, you know, one month, two months, three months. This will address both for a chronic administration, both efficacy, safety. All of that'll be enough for them to, you know, justify.
Okay. Well, we are already over time, but I'm gonna make you pick one of these three programs to discuss for 30 seconds. 408 in AAT, 707 in non-small cell lung, and 111 in Hailey-
Haley
Hailey. You wanna pick Hailey?
Oh my God.
Okay. 30 seconds, go.
KB707 obviously we are excited.
No, no. You have to pick one.
Te-
You have to pick one.
Hailey. You said Hailey.
I would say for the fastest approval, Hailey-Hailey.
Okay. Most compelling?
KB707.
KB707. Okay. Great. Thank you. Thank you all.
Thanks, guys.
Thanks.