Krystal(KRYS) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Net product revenue for Q3 2023 was $8 6 million, representing approximately two full revenue months following the FDA approval of VYJUVEK in May 2023 [39] - The company reported a one-time gain of$ 100 million from the sale of its rare pediatric disease Priority Review Voucher, which was the primary driver of net income and positive EPS for the quarter [67] - Cash, cash equivalents, and investments totaled $598 6 million as of September 30, 2023, providing sufficient funding for planned activities for the next several quarters [47] Business Line Data and Key Metrics - VYJUVEK launch progress: 284 start forms received in Q3 2023, with an estimated 85% conversion rate to patients on drug, resulting in a 20% penetration of the identified patient base [35][36] - 45% of patient start forms were from commercial insurance plans, with over 80% already eligible for reimbursement, while 55% were from government insurance, with 74% eligible for reimbursement [37] - 33% of start forms were from patients aged 10 years or younger, indicating potential for longer induction phases and higher annual consumption of VYJUVEK [36] Market Data and Key Metrics - The company expects Medicaid coverage to increase starting October 2023, with the permanent J code becoming available in January 2024, which will further improve reimbursement eligibility [4][37] - The company has filed a marketing authorization application with the European Medicines Agency and anticipates EU approval in the second half of 2024, with a launch expected in 2025 [41] - In Japan, the company initiated an open-label extension study and dosed five patients, with plans to file a Japanese New Drug Application in the first half of 2024 [41] Company Strategy and Industry Competition - The company aims to reduce the conversion cycle from patient start forms to paid revenue to two to three weeks by early 2024, down from the initial six to seven weeks [12] - The company is focusing on home dosing, with 88% of patient start forms received by the end of September 2023 for home dosing, leading to a high adherence rate of 96% [59] - The company is advancing its pipeline, including KB407 for cystic fibrosis, KB408 for Alpha-1 Antitrypsin deficiency, and KB707 for oncology, with data expected in 2024 [42][43][64] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for VYJUVEK, with continued momentum expected into Q4 2023 and beyond [35][60] - The company is working to expand the number of patients treated with VYJUVEK globally, with a focus on the EU and Japan [41][60] - Management highlighted the importance of patient experience and adherence, with efforts to ensure smooth and timely access to VYJUVEK [38][58] Other Important Information - Research and Development expenses for Q3 2023 were$ 10 6 million, a decrease of $887,000 compared to Q3 2022, primarily due to costs related to VYJUVEK manufacturing being recorded to inventory post-FDA approval [46] - Selling, General, and Administrative expenses increased by$ 3 8 million in Q3 2023, largely due to costs incurred related to the VYJUVEK launch [67] Q&A Session Summary Question: Update on the progress of identifying patients outside the initial 1200 identified patients [30] - The company is in the process of identifying more patients and expects to have a new Chief Commercial Officer in place by early 2024 [31] Question: Reimbursement process and any surprises with insurance policies [18] - The reimbursement process has been smooth, with no unexpected issues, and the company expects the J code to be finalized in January 2024 [19] Question: Cadence of start forms and impact of the holiday season [23] - The pace of start forms has been good, but the impact of the holiday season is uncertain, with no guidance provided on potential slowdowns [24] Question: Conversion rate from start forms to patients on drug [85] - The company estimates an 85% conversion rate, with expectations for this to increase as insurance coverage improves [85] Question: Reasons for rejected start forms [96] - The most frequent reason for rejected start forms is genotyping issues [97] Question: Trends in buy-and-bill and clinic availability at Centers of Excellence [101] - Buy-and-bill has been minimal, with most patients being dosed at home, and Centers of Excellence are not adding clinic days or availability for appointments [102]