Krystal Biotech, Inc. (KRYS) May 13, 2026 Conference Transcript

Okay.

I guess we can get going here. Thanks for joining this session with Crystal Biotech. My name is Alex Stranahan. I'm SMID Biotech Analyst at Bank of America covering Crystal, and it's my pleasure to introduce Krish Krishnan, Chief Executive Officer, and Summa Krishnan, President and Head of Research and Development at Crystal. Thanks for being here, guys. Thanks for having us, Alec. Yeah.

Good to see you again.

You know, maybe at a high level, just, you know, taking a flyover of the company in its current state, you know, you've delivered 11 consecutive quarters, maybe 12 of positive EPS, I've lost count, gross margins consistently in the 90, 95% range. So you've really built a good, sustainable business model and a strong foundation for the company, which is, you know, this kind of financial profile is pretty unusual within biotech. I guess when you think about the Vyjuvic launch, this is your main asset. You know, how is this launch going? You're expanding XUS. Where do you sort of see the top line growth going? And, you know, how does that flow down in terms of your cost structure to the bottom line?

Thanks, Alec. appreciate those comments the global launch which is XUS launch has exceeded our expectations today as you saw from the 1Q we've been able to make the drug and the team have been able to make a compelling value proposition both in France and in Germany and in Japan and were actually a bit ahead of schedule working to launch in Italy and Spain in the second half of this year. While there are nuances to every country, overall we expect ex-US launch to be very positive over the next year and a few years going forward. In the US, we're still in a growth mode as evidenced by the reimbursement approvals that we report every quarter. And reimbursement approvals are a proxy for patients on drug. And if you look at it that way, every quarter, somewhere between 40 and 50 reimbursement approvals show that U.S. continues to grow. So overall, we're very pleased with the way the Waijuwek launch is progressing. In terms of the impact of the cost structure, the teams in these different countries tend to be small, less than 10 per country, and so we don't see a big impact of the global launch on the cost structure, and so we expect the financials to look like they have been over the last 11, 12 quarters moving forward. And we do guide on the 2026 operating expense, which has not been that much higher than it was last year.

And that's with putting new assets into the clinic, which is how you're reinvesting the Vajubec revenues. Maybe we can talk a little bit about the U.S. revenue trajectory for Vajubec, and then we can get into the ex-US launches, which are a growth driver we're seeing this year. How farly penetrated are you into the U.S. population at this point? You know, is new patient identification kind of the primary growth lever here? Is it, you know, maintaining the compliance rate with patients?

Yeah, so if you look at reimbursement approvals, we're roughly at the 60 percent share of the identified patients. The U.S. has about 1,200 identified patients, and we expect to continue to head towards that number over time. Definitely, as you go beyond the 60% market share, the probability of new patients coming on drug tend to be moderate and mild as opposed to severe. But that said, we feel very confident about the 1200 number and we're progressing towards that target as first step. And then once we get there, we still do believe the prevalence is 3000. So incrementally, we're going to go try and go beyond the 1200 once we get to that point or close to that point. um in terms of compliance look the drug has been launched for three years now the drug has worked really well uh the patient experience on the drug has been really positive the physicians have been very happy with the way that patients are responding to the drug and so a lot of the patients who started early on to some extent on the moderate and the mild patients are starting to heal. We feel the stop and start in the U.S. is what keeps the patient on drug and is the tail on the drug for the long term. So we try to make sure that when a patient's ready to come back on drug, that coming back on drug is easy, simple, convenient, and fast for the patient. So that trend, the stops and starts, will stay in place in the U.S. going forward. But please do bear in mind, in terms of number of patients being added in the U.S., that number continues to grow up. And so if you look not at a quarter level, but if you look out 12, 15 months, we do expect that revenue to be growing, not just in ROW, but in the U.S. too.

And obviously having the ex-US contribution this year should help smooth over that growth profile largely.

I think if you look at global launch of Vajjuvic, there should be no turbulence. The stop and start, the nuances by every European country, but they all smooth out. Overall, the growth trajectory looks pretty positive at the moment.

Yeah. And Krish, I know when Vajjuvic was first approved, there was a 900K cap sort of in agreement with payers, because honestly, they probably didn't know how much they were going to have to actually pay with a novel drug like this for a rare skin condition like DEB. Is that cap going away? How are your recent payer conversations kind of around the reimbursement piece?

Yeah, with the exception of a very small number, most of the renewals have been without the cap. So it was a good starting point to give payers reassurance on their contribution to Vajravec. But now with the renewals, I think there may be one or two still remaining, but the cap story in the U.S. is pretty much going away.

Okay. Okay. And maybe thinking about the ex-US launches, I guess Japan's kind of the first stop, Germany, France coming online. Maybe just walk us through how those launches are going. And we've gotten some questions around the pricing dynamics in the early launch as well, if you want to speak to that.

Yeah. So Japan launch has gone really well. That was the first outside country to launch. I mean, officially calling it like a commercial launch. In Japan, because of Cartagena, the only commercial requirement is the patient renew their prescription every two weeks for the first year of launch. So that's a, and it's a calendar year. It's not the first year of the patient on drug. It's the first year of launch. So that should iron itself out going forward. Pricing has been, pricing has exceeded, the pricing we got has been very positive and it reflects the value that drug brings, the value proposition that drug brings to the In Germany and France, there's also evidence in terms of patient numbers, they continue to go really well. and we expect that in Italy and Spain, too, which will happen second half of this year. In terms of pricing, we started accruing in Germany in the middle of February, and so that accrual will continue until we get a firm pricing in Germany, which should happen second half of this year. In France, we have been accruing since the beginning of launch, which is, I believe, in Q4 of last year, and that will continue until 2027. But outside of Germany and France, There are no accrual issues at the moment, because in all the other countries, we will have a price before we launch.

I've seen some investors trying to do some fancy arithmetic around the linking between the scripts or the prescriptions that in the ex-U.S. geographies with the revenues reported. I guess, how would you sort of help folks think through the accruals and the revenue recognition sort of as the negotiations get finalized?

You know, we started reporting out rough patient numbers because given the privacy issues in Europe, we're guessing based on vial distribution how many patients. So we don't have an exact number like we do in the U.S. And we were providing that as a proxy because there were a couple quarters where the revenue was just overall revenue and wanted to give a sense of what piece of that could have been Europe. Now that we're splitting out Europe and Japan from our global revenue line, then we don't want to be carrying around an approximation number for a very long time. We haven't yet decided when we would start or what, but the patient number is just a rough approximation. I think the way to think about global revenue is simply the revenue number itself, as opposed to try to make some kind of fancy arithmetic around an approximate number.

Okay. And I guess in terms of the pricing overall, how has that been playing out in Japan? And does that maybe set up expectations for what you expect in the rest of Europe, especially as you expand to Italy and Spain?

Japan pricing, we've been very happy with the outcome. We are in ongoing negotiations in Germany. We may have the pricing in Italy ahead of the final pricing in Germany. We don't know. We feel good going into these negotiations. It does vary by country.

Traditionally, Europe, you know, we expect to end up in a good place based on what we saw in japan but it's it's tough for me to think about it until we get to the end point because there are a lot of global issues going on but to date the conversations have been very positive on bajaba great um and you've accelerated the italy and spain um launches into i think potentially the second half of this year um How have you seen physician awareness overall, given the pretty established launch in the U.S. at this point? Has it made education faster or easily than it was domestically?

Much higher than it was in the U.S. It has a lot to do with a physician sharing the U.S. experiences in global setting, either in scientific conferences. We find that in all these countries, the physician awareness is high. They've been able to see what the drug can do. We were not expecting to launch in Spain this year, but there was a big, it came because of a demand from the Spanish authorities and the physicians in Spain that their patients need to be treated, that we had to quickly pivot and figure out how to launch in Spain in the second half of this year. So awareness is high.

Okay. Could you maybe walk us through, Chris, how the Italy and Spain launch model works? Is it accrual-based like Germany and France, or is it a pricing-first model? And I guess how large are the patient populations in each of these?

Yeah, between, you know, about, I would say in terms of prevalence, 275 to 350 is a good number to use in Italy, in Spain, at a prevalence level, in terms of prevalence. In terms of pricing, in both these countries, there are no accruals. We will negotiate a price before we launch in these countries.

Okay. Okay. And I guess, you know, when we think about kind of where the puck's going around most favored nations, and does that, you know, influence sort of your approach to the ex-U.S. launches and pricing, and is there maybe a lower bound for where you'd want to go?

No, we are very cognizant and aware and constantly thinking about MFN. There are some conversations that it may or may not apply to companies in the rare disease space, but we're proceeding with the view that it could someday come and have an impact on companies with rare diseases. So we do try and bring awareness in these countries where we negotiate about the impact MFN could have, not just on the company, but also on the patients. So it's definitely a conversation that we use. But if you look at our gross margins, so it's not a financial decision.

It's more like what could the long-term impact of the U.S. business be is the question we think about. and we fully intend to once we know where a country is going to land on price we'll definitely think about mfn before we decide to launch in that country okay okay um i want to shift gears here maybe in the the second half of our time to talk about the pipeline um and uh we can kind of go stepwise you've got a few exciting programs and ocular deb neurotrophic keratitis cystic fibrosis so maybe we can just go down the list um let's start with kb803 this is your corneal abrasions in deb it was nice to get the um i guess the the granularity around the the cadence of when we could see those updates in 4q it sounds like this one will maybe be first up in terms of updates later this year um the study's fully enrolled maybe you could walk us through sort of the powering in the study and, you know, how big of an issue this is for DEV patients.

Yeah. Thanks, Alex. I mean, again, as you said, the good news is we have enrolled all the patients. As you may be aware, we had a natural history study that we deployed a year and a half ago. So we have over 100 patients in this natural history study. So as we collected data in these patients. This is a prospectively designed study. It's just like the clinical study or in the protocol. They have weekly diaries. They fill in their symptoms in a weekly manner, and we've been able to collect very meaningful and very good quality data on these patients. And based on the, I mean, many of these patients had to be in the natural history study to enroll into the pivotal trial, and there was a rationale behind it because we wanted to enroll the very severe patients in the study because, as you know, in these rare diseases, it's very important to get the right patient population because you're looking at the effect in a very short period of time. So we wanted to make sure we had the severe patients into the study. So patients that were severe, met the inclusion criteria to then move on and enroll into the study. So I think this is a intrapatient study, just like the Vajubek study. So it's a crossover design, randomized, placebo controlled, double-blinded. So patients are either randomized to either drug or placebo. So, I mean, obviously from the natural history study helps us to understand the impact on these patients or the you know the patient reported outcomes that we are measuring and we are hoping with the based on that we were able to come up with the you know as you said a sample size because to see drug effect we know from YGVAC that this is a corrective therapy the reason that these patients have these lesions or blisters in the eye is because of a defect of collagen 7 so we believe if you can see expression and we can you know we can improve those symptoms so we collectively with the animal studies with the corrective nature we were able to power the study to for success and being an interpatient study we know when they're not on draw the and our natural history study the you know we'll be able to separate placebo versus treated so we feel very comfortable with the powering of the study the interpatient uh designed to minimize variability and so the statistical analysis plan that we have you know obviously got blessings from the agency so we all said in and we feel maximizes the chance of success okay great and obviously the collagen 7 mechanism of action is pretty well validated in db with by Juvec.

It's the exact same thing. Same vector, just a different tissues and formulation. And we already have, I guess, a single patient of data that you've shared. What is sort of a meaningful endpoint here for patients and, I guess, for regulators in terms of the alignment you've achieved with the FDA? Is it, I guess, corneal abrasion? Are there any other symptoms that would increase kind of the quality of life for the patient?

I mean, again, you have to look at this therapy. It's more not, I mean, unlike Vyjuvec, you have to open wound and then you're closing the wound. This is more of a prophylactic design because, again, this is something we work very closely with the agency and this is why it's a patient-reported outcome. It's because what are the patients? I mean, these patients, you know, they have, it's not just the lesions, it's that symblephony, they have blisters on the eyelids, not just the cornea, but surrounding the eyes. So I think when we put the vector into the eye, you have exposure to all of these areas that can minimize your symptoms. So again, our natural history study, really, the main focus of this study was, you know, I mean, dead blisters in the eye, unlike, is very well studied and very published literature. We have, you know, patient reported outcome measurements. So based on what was in the literature, we came up with the scale, you know, looking at different clinical, you know, complications and how you rate them. So the scale was developed from the natural history study. Again, this is something we have, you know, the agency is aware what the PRO scale is. And then we are looking at these multi-measurements and measuring, you know, number of days of events. It's a number of events, days of events, and treatment versus non-treatment improvement of the events. It's a scale-based measurement. And then you look at placebo versus the treated cycle and see the improvement.

Okay, that makes sense. And I guess when you look at your natural history study or even just experience through the Vyjuvec launch and kind of feedback you're hearing from the field, you know, how many of the patients that are already on Vyjuvec would be candidates for your ocular DEB program?

I mean, if you look at a natural history, we have a good number of D-deb patients and R-deb patients because D-deb patients also, I mean, they have similar eye complications. I mean, most of the patients that are on a natural history study are also on the Vyjuvac commercially. So we do see that overlap.

I would add about half the RDV population and the percentage of the DJV. That's true in the commercial setting. It's also true in this clinical setting.

Yeah. And I guess when we think about assuming that the study reads out positive and you're advancing towards the launch of your second product, is there an opportunity to piggyback off the sales force and the commercial scale that you have for VIAJUVAC with 803?

I believe so. After all, the end physician is not that different. There could be some ophthalmology overlap as we think about NK, but predominantly derms. We feel that the uptake could be quicker, given that we've already identified the patients, we've gone through the genetic testing. um so we're i mean fingers crossed once we get past the pivotal and the approval um on a all launches are difficult but on a relative scale we feel it's a pretty uh it's the launch is in our sweet spot i mean also uh this clinical study has been done by dermatologists like eb specialists so it's not an ophthalmologist and we do not require you know examination of the It's more of a patient-reported outcome.

So based on the label and the prescribing physicians and participants in the clinical trial, we think it's the same physicians that be able to write the prescription for these patients.

Okay. And just for the sake of time, maybe we can talk about NK disease. It's a pretty well-validated market, a billion-dollar market at least, probably more. Some clear benefits to improve upon the existing approved therapy. You recently upsized your study to 60 patients with daily home administration after updating the protocol. How does this kind of help the caregiver flexibility around the dosing? And I guess what would KB801 need to show to support an accelerated approval here?

I just want to correct. It's not a caregiver. It's going to be patient administered. So I think this is obvious. It's going to be like Oxavate, right? I mean, you ship it to the patient's home. The patient can administer. There's no caregiver. It's going to be just like OXA weight. The only difference is obviously are we are, you know, once a day administration versus multiple dose administration. So in the clinical study, again, these patients, to initiate them in the clinical study, they come to the site because you have to, you know, take imaging of the eye to, you know, and make sure that they meet inclusion-exclusion criteria. We enroll them, basically train these patients how to administer in the first two visits. And then the drug is shipped into the patient's home and they self-administer the drug. So again, we don't anticipate, unlike Viseurac, it's going to be off the shelf into the patient's home, prescription written, shipped to the patient's home and administered by the patient.

Okay. And I guess assuming we see the ocular DEB data first. Is there any lateral reads either around the route of administration?

Absolutely. There's no lateral reads because different diseases, very different endpoints because patient reported outcome is 803. That's more of a noisy endpoint. Whereas with NK, I mean, I think it's very well established. Like if you treat it with a vector and you can produce a neurotropic protein, NGF, Oxervate has already shown that by having NGF and initiating neuronal growth that will help with healing. So very different endpoint. You measure the lesion at the baseline, and the endpoint is in eight weeks, complete healing. So it's an independent reader. It's not a patient. We'll have patient-reported outcomes as quality of life and improvements as secondary. But the primary read is the photographic images are read by an independent reader to evaluate complete closure. So very different mechanism, different endpoints.

Okay, but similar vector and formulation?

Correct, from the safety. Safety read through will be absolutely, there will be overlap.

Okay, okay. I want to ask about your CF program. We saw some pretty important, I guess, delivery expression type de-risking for the program. Now, you know, the next steps sound like, you know, aligning on sort of a registrational endpoint and really connecting the dots between expression and function. What should investors look forward to sort of in the second half of this year? What are sort of the next updates from the program? Is it alignment with the FDA on the pivotal? Should we get, you know, extended follow-up with maybe some functional type of endpoints? How should we be thinking about the catalyst?

I mean, obviously, the very first thing that we showed was, I mean, the first part of the study was the dose ranging. We had a safe, effective dose. And then the biggest achievement for us internally was basically showing that the dose that we picked with the single-dose administration, that we were able to bronc these patients and established molecular correction, I mean, molecular expression. This is exactly what we did with our YGVAC program. If you look at it, it's the same mechanism that we followed. We showed expression, and in YGVAC, obviously, based on that expression, we were able to get into a registrational trial and show that expression translated into fact. It's the same thing that we are following with the CF in the CF population. I mean, obviously, we have met with the agency. We have shared the expression data. We have discussions around the data. The agency is, you know, convinced that we do so expression, this molecular correction. What the agency's request was that since we had not established safety in CF patients with repeat dose administration, they wanted us to do a small patient population to establish safety in a repeat dose administration setting. And that's exactly what we have done. The protocol has been approved by the agency. We are in the process of enrolling patients. I think we should be enrolling that study pretty quickly, and it will be a repeat dose to establish safety. In parallel, we have also been discussing with the agency on a registrational trial design, the statistical analysis and sample size. I mean, you can see from the data that we showed the expression, now that we have, you things from the TDN and the CFF Foundation. The TDN is working very closely with us and the FDA. They're actually in the meetings with agency with us. We're coming up with a hybrid design model where we can use CFF or TDN's external reach data, which is their prospectively designed natural history data, which to allow us to, you know, efficiently design a clinical study so we can effectively use this external control in our pivotal phase three design. So these are the discussions that we will be having with the agency. We are in the process of finalizing the study design, the protocol, the statistical analysis plan, and we intend to submit that to the agency and work very closely with the FDA. And we are pretty confident that by end of the year, we'll have agreement with the agency and sign off on this design and the sample. And we plan to execute the pivotal trial beginning of next year.

Okay, great. Maybe in the last minute or so, if we could just, you know, rehash sort of the next 12-month outlook for the company. What gets you most excited from the pipeline? You know, what are you looking for to really gauge the strength of the Vyjuvic launch? And, you know, how does your capital position sort of set you up to succeed?

From a Vyjuvic launch perspective, it's in a good place. We're excited to bring this medication to patients, not just in Germany, France, but in Italy and Spain. Japan continues, and we are working to find a way to get beyond these countries and maybe into other nations of the world next year. With respect to the pipeline, look, it's a very important clinical year for us. Obviously, the open-label data on the CF is kind of exciting because this is a program that we've been working on for a very long time. and being able to communicate that expression does translate the functionality would be very big for the company and for the patient long-term. NK, of course, well-established market. We know the value proposition, so if the data were to read out, that would have a very strong impact. It's tough to handicap which one's better. But at the same time, I would think about Haley Haley, which is very similar to DEB, where we have an open-label study ongoing, and definitely not to forget our deaf patients. Being able to provide some kind of relief in the eye is definitely a very positive thing for the deaf patients. So overall, a very busy but super exciting year. And as I mentioned in the Q1, the next 12 to 24 months are the most exciting in the history of crystal, although we've had a pretty remarkable 10-year look back.

Great. Well, with that, I think we'll have to end it there. so thank you so much christian sumo for the great conversation and thanks for everyone for attending thank you alex