On November 6, 2023 Krystal Biotech, Inc. (the "Company") (NASDAQ: KRYS), a commercial-stage biotechnology company focused on the discovery, development and commercialization of genetic medicines to treat diseases with high unmet medical needs, reported financial results and key business updates for the third quarter ended September 30, 2023 (Press release, Krystal Biotech, NOV 6, 2023, View Source [SID1234637066]).

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"The third quarter was highlighted by strong commercial execution of the VYJUVEK launch, advancement of the oncology program into the clinic and continued momentum in the CF program," said Krish S. Krishnan, Chairman and CEO of Krystal Biotech. "With respect to the VYJUVEK launch, our guiding vision is centered around optimizing the patient experience, and we have and will continue to work tirelessly to ensure that each patient’s journey, with respect to starting on VYJUVEK and staying on it, is smooth, timely and hassle free."

VYJUVEK
(beremagene geperpavec-svdt, or B-VEC)

For the treatment of Dystrophic Epidermolysis Bullosa (DEB)

The Company received 284 Patient Start Forms from 136 unique prescribers as of the end of the third quarter of 2023:

20% of the start forms were generated from patients with dominant DEB;

33% of the start forms were from patients 10 years of age or younger; and

Patient compliance on VYJUVEK is currently tracking at 96%.
The Company has received positive coverage determinations from all major commercial national health plans. Optional Medicaid fee-for-service states initiated coverage in July. The Company expects to receive positive coverage from most mandatory states in the fourth quarter of 2023 and the balance in the first quarter of 2024.

In October, the Company filed for a Marketing Authorization for B-VEC with the European Medical Agency and anticipates approval in the EU in the second half of 2024.

Following acceptance of the open label extension study of B-VEC by Japan’s Pharmaceuticals and Medical Devices Agency in July 2023, the Company initiated the extension study and dosed 5 patients. Following completion of the open label extension study, the Company intends to file a Japanese New Drug Application for B-VEC for DEB in the first half of 2024. Details of the trial can be found at View Source under JRCT ID jRCT2053230075.
Respiratory

KB407 for the treatment of Cystic Fibrosis (CF)

Cohort 1 of the Phase 1 (CORAL-1) study has been enrolled and completed. No severe or serious adverse events were observed in patients treated in Cohort 1 of the CORAL-1 study. We are working to initiate Cohort 2 of the CORAL-1 study following safety review by the Data Monitoring Committee. The CORAL-1 study is a multi-center, dose-escalation trial of KB407 in patients with CF, regardless of their underlying genotype. The Company anticipates announcing data from the Phase 1 study in 2024. Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT05504837.
KB408 for the treatment of Alpha-1 Antitrypsin Deficiency (AATD)

In September, the Company announced that the U.S. Food and Drug Administration (FDA) had cleared the Company’s Investigational New Drug (IND) application for KB408 for the treatment of AATD and granted KB408 Orphan Drug Designation. The Company expects to dose the first patient in a Phase 1 clinical trial (SERPINA-1) in the first quarter of 2024.
Oncology

KB707 for the treatment of solid tumors

In October, the first patient was dosed in the Phase 1 (OPAL-1) study to evaluate intratumoral KB707 in patients with locally advanced or metastatic solid tumor malignancies. Details of the study can be found at www.clinicaltrials.gov under NCT identifier NCT05970497.

The Company presented preclinical data in multiple oncology models at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)’s annual meeting on November 3 and 4, 2023. Combinatorial IL-2 and IL-12 expressed from the Company’s platform technology was shown in one presentation, to provide a synergistic effect in a melanoma model, suppressing treated and non-treated tumor outgrowth, enhancing survival, and eliciting a durable memory response sufficient for recurrent tumor control. Similarly, the Company presented that non-invasive inhalation of vector-encoded IL-2 and IL-12 was found to be both safe and effective in treating lung tumors in a metastasis model, resulting in long-term survival after single or repeated cancer cell challenge, suggestive of prolonged adaptive immunity.

The Company is on track to file an amendment to the existing KB707 IND in the fourth quarter of 2023 to allow the Company to evaluate inhaled KB707 in a clinical trial to treat tumors in a patient’s lungs. The Company expects to dose the first patient with inhaled KB707 in the first half of 2024.

In October, the United States Patent & Trademark Office issued to the Company U.S. Patent No. 11,779,660 entitled Viral Vectors for Cancer Therapy.
Dermatology

The Company remains on track to commence the Phase 2 cohort of its KB105-02 (JADE-1) trial for the treatment of TGM1-ARCI in 2024 and plans to file an IND application with the FDA and to initiate a clinical trial of KB104 to treat patients with Netherton Syndrome in late 2024.
Aesthetics

KB301 for the treatment of aesthetic indications

In April, Jeune Aesthetics, Inc., a wholly-owned subsidiary of the Company, announced the dosing of the first subject in the Phase 1, Cohort 3 study of KB301 for the improvement of lateral canthal lines at rest. The study is on-going, and the Company plans to announce results from this study in the first half of 2024. Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT04540900.
Business

In August, the Company sold its Rare Pediatric Disease Priority Review Voucher (PRV) for $100 million. The Company was awarded the PRV in connection with the FDA’s accelerated approval of VYJUVEK for the treatment of DEB for patients 6 months of age and older.

In August, the Company began research and development operations in its second commercial scale CGMP biologics manufacturing facility, ASTRA, a 155,000 sq. ft. state-of-the-art CGMP facility with comprehensive end-to-end capabilities.

Financial results for the quarter ended September 30, 2023:

Cash, cash equivalents, and investments totaled $598.6 million on September 30, 2023.
The Company recorded its first sales for patients that began treatment in August 2023 and the resulting product revenues, net totaled $8.6 million for the quarter ended September 30, 2023.
Cost of goods sold totaled $223 thousand for the quarter ended September 30, 2023. Prior to receiving FDA approval for VYJUVEK in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense. As such, a portion of the cost of inventory sold during the period was expensed prior to FDA approval.
The Company recorded a gain of $100 million for the sale of the rare pediatric disease Priority Review Voucher.
Research and development expenses for the quarter ended September 30, 2023 were $10.6 million, inclusive of $2.3 million of stock-based compensation, compared to $11.5 million, inclusive of stock-based compensation of $2.2 million for the quarter ended September 30, 2022.
Selling, general, and administrative expenses for the quarter ended September 30, 2023 were $23.7 million, inclusive of stock-based compensation of $6.0 million, compared to $19.9 million, inclusive of stock-based compensation of $6.9 million, for the quarter ended September 30, 2022.
Net income (loss) for the quarters ended September 30, 2023 and 2022 was $80.7 million and $(29.9) million, or $2.88 and $(1.17), respectively, per common share (basic) and $2.79 and $(1.17), respectively per common share (diluted).
For additional information on the Company’s financial results for the quarter ended September 30, 2023, please refer to the Form 10-Q filed with the SEC.
Financial results for the nine months ended September 30, 2023:

The Company recorded its first sales for patients that began treatment in August 2023 and the resulting product revenues, net totaled $8.6 million for the nine months ended September 30, 2023.
Cost of goods sold totaled $223 thousand for the nine months ended September 30, 2023. Prior to receiving FDA approval for VYJUVEK in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense. As such, a portion of the cost of inventory sold during the period was expensed prior to FDA approval.
The Company recorded a gain of $100 million for the sale of the rare pediatric disease Priority Review Voucher.
Research and development expenses for the nine months ended September 30, 2023 were $35.1 million, inclusive of stock-based compensation of $7.7 million, compared to $31.7 million, inclusive of stock-based compensation of $5.5 million for the nine months ended September 30, 2022.
Selling, general, and administrative expenses for the nine months ended September 30, 2023 were $73.6 million, inclusive of stock-based compensation of $22.4 million, compared to $53.7 million, inclusive of stock-based compensation of $18.1 million for the nine months ended September 30, 2022.
Net income (loss) for the nine months ended September 30, 2023 and 2022 were $2.2 million and $(107.9) million, or $0.08 and $(4.24), respectively, per common share (basic) and $0.08 and $(4.24), respectively, per common share (diluted).
For additional information on the Company’s financial results for the nine months ended September 30, 2023, please refer to the Form 10-Q filed with the SEC.
Conference Call

Krystal Biotech will host a conference call to discuss its third quarter 2023 financial results and business highlights today, November 6, 2023, at 8:30 a.m. ET. To access the live call, please preregister: View Source;confId=57029.

A replay of the conference call will be available on the Investors section of the Company’s website at View Source for 30 days following the event.