Krystal(KRYS) - 2024 Q1 - Quarterly Results

First Quarter 2024 Highlights Krystal Biotech reported strong Q1 2024 net product revenue, initiated a key clinical study, received Fast Track Designations, and maintained a robust financial position - Krystal Biotech announced net product revenue of $45.3 million in Q1 2024, contributing to $95.9 million since August 2023[1] - The company initiated dosing for the first patient in the inhaled KB707 study for locally advanced or metastatic lung tumors[1] - Both inhaled and intratumoral KB707 programs received Fast Track Designations[1] - Krystal Biotech maintains a strong balance sheet with $622.3 million in cash and investments[1] Business and Pipeline Updates Krystal Biotech reported strong VYJUVEK revenue growth and accelerating clinical pipeline enrollment, focusing on global access and upcoming data readouts VYJUVEK for Dystrophic Epidermolysis Bullosa (DEB) VYJUVEK showed strong Q1 2024 commercial performance with high patient compliance and significant progress in international regulatory reviews Commercial Performance and Reimbursement Commercial Performance and Reimbursement Metrics | Metric | Value | | :---------------- | :------------ | | Net Product Revenue | $45.3 million | | Gross Margin | 95% | - As of April, over 330 reimbursement approvals for VYJUVEK have been secured in the U.S., achieving positive access for 96% of lives covered under commercial and Medicaid plans[3] - A permanent J-code for VYJUVEK was received in January, streamlining billing and reimbursement, including for U.S. Medicaid plans[3] - Patient compliance with once-weekly treatment remained high at 91% by the end of the quarter[3] International Regulatory Progress - The European Medicines Agency (EMA) completed manufacturing facility inspections in February for B-VEC's MAA review, with GMP certification and a decision anticipated in 2H 2024[3] - The company is on track to file a Japan New Drug Application (NDA) in 2H 2024, following efficacy study completion in April, with potential authorization in 2025[3] - B-VEC received Orphan Drug Designation (ODD) status for DEB from Japan's MHLW in December 2023, providing benefits like priority review and reduced development costs[3][4] Clinical Pipeline Progress Krystal Biotech is advancing multiple clinical programs across various therapeutic areas, with several interim data readouts expected in 2H 2024 Respiratory Programs (KB407, KB408) - For KB407 (cystic fibrosis), Cohort 2 dosing in the Phase 1 CORAL-1 study was completed in March, with Cohort 3 initiation planned for 2Q 2024[6] - For KB408 (alpha-1 antitrypsin deficiency), the first patient was dosed in the Phase 1 SERPENTINE-1 study in February, with interim data expected in 2H 2024[6] Ophthalmology Programs (B-VEC eyedrops) - Clinical data on the compassionate use of B-VEC eyedrops for ocular complications of DEB was published in the New England Journal of Medicine in February[8] - The company aligned with the FDA on a proposed single-arm, open-label study for B-VEC eyedrops to treat ocular complications of DEB, with study initiation planned for 2H 2024[8] - U.S. Patent No. 11,865,148 was issued in January, covering methods of delivering human transgenes to the eye using replication-incompetent HSV-1[8] Oncology Programs (KB707) - The first patient was dosed in April in the Phase 1 KYANITE-1 clinical study for inhaled KB707 in patients with locally advanced or metastatic solid tumors of the lung[12] - The FDA granted Fast Track Designation for inhaled KB707 in February, marking the second Fast Track Designation for the KB707 program[12] - Enrollment in Cohort 3 of the Phase 1 OPAL-1 clinical study for intratumoral KB707 was completed in April, with interim data expected in 2H 2024[12] Aesthetics Programs (KB301) - Jeune Aesthetics initiated Cohort 4 of the Phase 1 PEARL-1 study in January to evaluate KB301 for the improvement of dynamic wrinkles of the décolleté[10] - Results from both Cohort 3 (lateral canthal lines) and Cohort 4 are expected in mid-2024[10] Financial Performance and Outlook Krystal Biotech achieved Q1 2024 net income driven by VYJUVEK revenue, maintains a strong balance sheet, and provided non-GAAP expense guidance for FY2024 First Quarter 2024 Financial Results First Quarter 2024 Financial Results (in thousands of USD) | Metric | 2024 | 2023 | Change | | :----------------------------------------- | :-------- | :-------- | :-------- | | Product revenue, net | $45,250 | $0 | $45,250 | | Cost of goods sold | $2,419 | $0 | $2,419 | | Research and development | $10,957 | $12,288 | $(1,331) | | Selling, general, and administrative | $26,058 | $24,035 | $2,023 | | Litigation settlement | $12,500 | $12,500 | $0 | | Total operating expenses | $51,934 | $48,823 | $3,111 | | Loss from operations | $(6,684) | $(48,823) | $42,139 | | Interest and other income, net | $7,616 | $3,526 | $4,090 | | Net income (loss) | $932 | $(45,297) | $46,229 | | Net income (loss) per common share (Basic) | $0.03 | $(1.76) | | | Net income (loss) per common share (Diluted) | $0.03 | $(1.76) | | | Weighted-average common shares outstanding (Basic) | 28,295 | 25,712 | | | Weighted-average common shares outstanding (Diluted) | 29,291 | 25,712 | | - Net income for Q1 2024 was $0.9 million ($0.03 per common share), a significant improvement from a net loss of $45.3 million ($1.76 per common share) in Q1 2023[15][33] Balance Sheet Overview Balance Sheet Overview (in thousands of USD) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $359,006 | $358,328 | | Short-term investments | $179,253 | $173,850 | | Long-term investments | $83,996 | $61,954 | | Total assets | $853,296 | $818,355 | | Total liabilities | $54,054 | $39,714 | | Total stockholders' equity| $799,242 | $778,641 | - Cash, cash equivalents, and investments totaled $622.3 million on March 31, 2024[11] Financial Guidance - For the year ending December 31, 2024, the company anticipates approximately $150 million to $175 million in Non-GAAP Research and Development ("R&D") and Selling, General and Administrative ("SG&A") expense[13] - The Non-GAAP guidance excludes stock-based compensation due to the inability to confidently estimate the full-year expense, and no reconciliation to GAAP is provided[13] Product and Company Information This section details VYJUVEK's mechanism, indication, and safety, explains regulatory designations, and provides an overview of Krystal Biotech and Jeune Aesthetics About VYJUVEK VYJUVEK is a non-invasive, topical, redosable gene therapy for Dystrophic Epidermolysis Bullosa (DEB) in patients six months and older Product Description and Indication - VYJUVEK is a non-invasive, topical, redosable gene therapy designed to deliver two copies of the COL7A1 gene directly to DEB wounds, addressing the fundamental disease-causing mechanism[15][16] - It is a herpes-simplex virus type 1 (HSV-1) vector-based gene therapy indicated for the treatment of wounds in patients six months of age and older with dystrophic epidermolysis bullosa with mutation(s) in the collagen type VII alpha 1 chain (COL7A1) gene[17] Important Safety Information - The most common adverse drug reactions (incidence >5%) include itching, chills, redness, rash, cough, and runny nose[18] - There are no known contraindications for VYJUVEK[19] - VYJUVEK gel must be applied by a healthcare provider; patients and caregivers should avoid touching treated wounds and dressings for 24 hours after treatment[20] - Caregivers should wash hands, wear protective gloves when changing dressings, disinfect bandages from the first change with a virucidal agent, and dispose of disinfected bandages in a separate sealed plastic bag in household waste[21] Regulatory Designations Explained This section defines Orphan Drug Designation (ODD) in the U.S. and Japan, and FDA Fast Track Designation, highlighting their benefits for rare disease therapies Orphan Drug Designation - U.S. FDA Orphan Drug Designation is granted for therapies addressing rare conditions affecting fewer than 200,000 people, offering development assistance, tax credits, fee exemptions, and seven years of post-approval marketing exclusivity[23] - Japan's orphan drug designation system supports drugs for diseases affecting fewer than 50,000 patients with unmet medical needs, providing subsidies, prioritized consultation, tax incentives, priority review, and extended registration validity[24] Fast Track Designation - Fast Track Designation facilitates development and expedites review of drugs for serious conditions and unmet medical needs, enabling earlier patient access[25] - Clinical programs with Fast Track Designation may benefit from early and frequent communication with the FDA and eligibility for Accelerated Approval and Priority Review[25] About Krystal Biotech and Jeune Aesthetics - Krystal Biotech, Inc. (NASDAQ: KRYS) is a commercial-stage biotechnology company focused on genetic medicines for high unmet medical needs, headquartered in Pittsburgh, Pennsylvania[26] - VYJUVEK is the company's first commercial product, the first redosable gene therapy, and the first FDA-approved medicine for dystrophic epidermolysis bullosa[26] - Jeune Aesthetics, Inc., a wholly-owned subsidiary, leverages a clinically validated gene delivery platform to develop products addressing the biology of aging and/or damaged skin[27] Additional Information This section covers conference call logistics, forward-looking statement disclaimers, and definitions of non-GAAP financial measures Conference Call Details - The company hosted an investor webcast on May 6, 2024, at 8:30 am ET[14] - A replay of the conference call will be available for 30 days on the Investors section of the company's website[14] Forward-Looking Statements - Statements regarding future expectations, plans, and prospects are considered forward-looking statements under The Private Securities Litigation Reform Act of 1995[28] - Actual results may differ materially due to various important factors, including uncertainties associated with regulatory review, product availability, and sufficiency of cash resources[29] - The company disclaims any obligation to update these forward-looking statements, which represent its views as of the press release date[29] Non-GAAP Financial Measures - The press release includes forward-looking combined R&D and SG&A expense guidance not required by, or presented in accordance with, U.S. GAAP[30] - Non-GAAP combined R&D and SG&A expense is defined as GAAP combined R&D and SG&A expense excluding stock-based compensation[30] - A quantitative reconciliation of forecasted non-GAAP to GAAP combined R&D and SG&A expense is not provided due to inherent uncertainty in estimating stock-based compensation expenses[30][31]