Krystal Biotech, Inc.

Krystal Biotech, Inc. is a fully integrated, global, commercial-stage biotechnology company focused on the discovery, development, manufacturing and commercialization of genetic medicines to treat diseases with high unmet medical needs. The company operates within the biotechnology and pharmaceutical industries, which are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. The field of gene therapy is noted for these competitive dynamics, and the company's proprietary gene therapy technology platform is based on engineered herpes simplex virus-1 (HSV-1).

The company faces significant competition in an environment of rapid technological change. Competitors include Abeona Therapeutics Inc. and Castle Creek Biosciences, Inc. for corrective approaches to dystrophic epidermolysis bullosa (DEB), and Chiesi Farmaceutici S.p.A. and RHEACELL GmbH & Co. for palliative treatments. In respiratory indications, competitors include Vertex Pharmaceuticals Inc., ReCode Therapeutics, Inc., Spirovant Sciences, Inc., and 4D Molecular Therapeutics, Inc. for cystic fibrosis, and CSL Limited, Takeda Pharmaceutical Company Limited, and Grifols, S.A. for alpha-1 antitrypsin deficiency. In ophthalmology, competitors include Dompé farmaceutici S.p.A. for neurotrophic keratitis. In aesthetics, competitors include AbbVie Inc., Revance Therapeutics, Inc., Merz Pharma GmbH & Co., KGaA, and Galderma S.A. The company believes its proprietary HSV-1-based platform provides specific advantages including repeat administration, non-integrating nature, payload capacity of 35 Kb or greater, high transduction efficiency, direct delivery, stability, and reproducible and scalable manufacturing.

The company generates revenue through the sale of its first commercial product, VYJUVEK (beremagene geperpavec-svdt), a redosable, off-the-shelf gene therapy for the treatment of dystrophic epidermolysis bullosa (DEB). The company possesses exclusive rights to develop, manufacture, and commercialize VYJUVEK and its pipeline product candidates throughout the world. The company's business model is centered on its proprietary gene therapy platform, which is supported by two in-house, commercial scale Current Good Manufacturing Practice (CGMP) manufacturing facilities. The company is commercializing VYJUVEK directly in the United States, major European markets, and Japan, and contracts with specialty distributors for territories outside of these regions.

The company's commercial product is VYJUVEK (beremagene geperpavec-svdt, or B-VEC), a redosable, off-the-shelf gene therapy designed to deliver two copies of the COL7A1 gene when applied topically directly onto an open wound for the treatment of DEB. VYJUVEK was first approved by the FDA in May 2023, by the European Commission in April 2025, and by Japan's MHLW in July 2025. The company's pipeline includes multiple clinical stage product candidates. KB407 is an inhaled (nebulized) gene therapy designed to deliver two copies of the full-length CFTR transgene for cystic fibrosis. KB408 is an inhaled (nebulized) formulation designed to deliver two copies of the SERPINA1 transgene for alpha-1 antitrypsin deficiency lung disease. KB803 is a redosable eye drop formulation of B-VEC for ocular complications of DEB. KB801 is an eye drop formulation of a novel HSV-1 based vector designed to deliver two transgene copies for the sustained, localized expression and secretion of nerve growth factor for neurotrophic keratitis. KB111 is a topical gel formulation designed to deliver two copies of the full-length, wild-type ATP2C1 transgene for Hailey-Hailey disease. KB707 is a redosable immunotherapy designed to deliver genes encoding both human interleukin-2 and interleukin-12 for solid tumors, with two formulations in development: a solution formulation for transcutaneous injection and an inhaled (nebulized) formulation for lung delivery. Through its wholly-owned subsidiary Jeune Aesthetics, Inc., the company is also evaluating KB304, designed to stimulate biorejuvenation of the skin via delivery of both COL3A1 and ELN transgenes for dynamic wrinkles of the décolleté, and KB301, a solution formulation for intradermal injection designed to deliver two copies of the COL3A1 transgene for aesthetic skin conditions.

The company's development pipeline includes multiple clinical stage product candidates. KB407 is an inhaled (nebulized) gene therapy designed to deliver two copies of the full-length CFTR transgene for cystic fibrosis. The FDA and EMA have granted KB407 Orphan Drug Designation and the FDA has granted KB407 Rare Pediatric Disease Designation. In January 2026, the company announced a positive interim clinical update from Cohort 3 of the Phase 1 CORAL-1 study, confirming successful lung delivery and expression of wild-type CFTR protein. KB408 is an inhaled (nebulized) formulation designed to deliver two copies of the SERPINA1 transgene for alpha-1 antitrypsin deficiency lung disease. The FDA has granted KB408 Orphan Drug Designation. In August 2025, the company confirmed SERPINA1 delivery and functional AAT expression in a third patient dosed with KB408 in Cohort 2 and amended the SERPENTINE-1 protocol to investigate repeat dosing. KB803 is a redosable eye drop formulation of B-VEC for ocular complications of DEB. In June 2025, the company announced it dosed the first patient in IOLITE, a Phase 3 registrational study. KB801 is an eye drop formulation of a novel HSV-1 based vector designed to deliver two transgene copies for the sustained, localized expression and secretion of nerve growth factor for neurotrophic keratitis. In October 2025, the FDA granted platform technology designation to the engineered HSV-1 viral vector used in KB801. In July 2025, the company announced it dosed the first patient in EMERALD-1, a Phase 1/2 study. KB111 is a topical gel formulation designed to deliver two copies of the full-length, wild-type ATP2C1 transgene for Hailey-Hailey disease. In January 2026, the FDA granted KB111 Fast Track Designation. In October 2025, the FDA cleared the company's investigational new drug application to evaluate KB111 in the clinic. KB707 is a redosable immunotherapy designed to deliver genes encoding both human interleukin-2 and interleukin-12 for solid tumors. In July 2023, the FDA granted intratumoral KB707 Fast Track Designation for the treatment of anti-PD-1 relapsed/refractory locally advanced or metastatic melanoma. In February 2024, the FDA granted inhaled KB707 Fast Track Designation for the treatment of patients with solid tumors with pulmonary metastases. In February 2026, the FDA granted RMAT designation to KB707 for the treatment of advanced or metastatic NSCLC. In December 2024, the company announced an initial clinical update from KYANITE-1, showing an ORR of 27% and a DCR of 73% in a cohort of 11 evaluable patients with advanced NSCLC. In June 2025, the company disclosed an updated ORR of 36% and a DCR of 54% in the NSCLC patient cohort. Through its wholly-owned subsidiary Jeune Aesthetics, Inc., the company is also evaluating KB304, designed to stimulate biorejuvenation of the skin via delivery of both COL3A1 and ELN transgenes for dynamic wrinkles of the décolleté. In July 2025, the company announced positive safety and efficacy results from PEARL-2, a Phase 1 study evaluating KB304. The company is also advancing KB301, a solution formulation for intradermal injection designed to deliver two copies of the COL3A1 transgene for aesthetic skin conditions.

Significant operational developments during the period include the European Commission granting marketing authorization to VYJUVEK on April 23, 2025, and Japan's MHLW granting marketing authorization on July 24, 2025. The company launched VYJUVEK in Germany in August 2025, in France in October 2025 under the Accès Précoce program, and in Japan in October 2025. In September 2025, the FDA approved a label update for VYJUVEK that expanded the treatment eligible population to include DEB patients from birth and provided greater dosing flexibility. In October 2025, the FDA granted platform technology designation to the company's genetically modified, non-replicating HSV-1 viral vector used in KB801. In February 2026, the FDA granted RMAT designation to KB707 for the treatment of advanced or metastatic NSCLC. In January 2026, the FDA granted KB111 Fast Track Designation for the treatment of HHD. The company also entered into distribution agreements with leading regional specialty distributors covering key markets in Central and Eastern Europe, the Middle East, and Turkey, with Israel representing the most recent addition in February 2026. In May 2020, PeriphaGen, Inc. commenced litigation against the company, which was settled in April 2022. During the year ended December 31, 2025, the company paid $31.25 million ¹ in connection with the settlement, fully paying the $75.0 million ² of total consideration. In the first quarter of 2025, the company and certain employees received subpoenas from the U.S. Department of Justice regarding its sponsored genetic testing program. On September 18, 2025, a stockholder filed a derivative complaint in the Court of Chancery of the state of Delaware. The company also completed a technical transfer process for a revised commercial manufacturing process for VYJUVEK, which was approved by the FDA.

For the year ended December 31, 2025, the company reported product revenue, net of $389.1 million ³, compared to $290.5 million ⁴ for the year ended December 31, 2024 and $50.7 million ⁵ for the year ended December 31, 2023. Net income for the year ended December 31, 2025 was $204.8 million ⁶, compared to $89.2 million ⁷ for 2024 and $10.9 million ⁸ for 2023. Income from operations was $161.3 million ⁹ for 2025, compared to $65.7 million ¹⁰ for 2024 and a loss from operations of $109.6 million ¹¹ for 2023. Gross margin for the year ended December 31, 2025 was 94% ¹². Since launch in August 2023, the company has reported cumulative net product revenue of $730.3 million ¹³.

A major growth vector is the continued global commercialization of VYJUVEK. The company launched VYJUVEK in Germany in August 2025, in France in October 2025 under the Accès Précoce program, and in Japan in October 2025. Pricing negotiations are underway in both Germany and France and are expected to continue until at least the second half of 2026 in Germany and until 2027 in France. The company is advancing pricing discussions with Italian reimbursement authorities to enable a potential launch in Italy in the second half of 2026. The company is also initiating pricing discussions with relevant authorities in other key Western European markets and preparing regulatory filings for the United Kingdom and Switzerland. The company expects to further expand its specialty distributor network during 2026. The company estimates there are over 3,000 DEB patients in the United States and over 9,000 worldwide. Over 1,000 DEB patients are already identified across Germany and France.

Another major growth vector is the advancement of the company's pipeline of product candidates. For KB407, the company expects to align on the CORAL-3 study design with the FDA and start enrollment in the potentially registrational CORAL-3 study in the first half of 2026. For KB408, the company expects to report interim safety and SERPINA1 delivery data from the repeat dose Cohort 2B in 2026. For KB803, the company expects to complete enrollment in the IOLITE study in the first half of 2026 and report top-line results later in 2026. For KB801, the company expects to enroll approximately 60 adult patients in the EMERALD-1 study and report top-line data in 2026. For KB111, the company expects to complete development and validation of an HHD-specific evaluation scale in the first half of 2026 and initiate a registrational study in the second half of 2026. For KB707, the company expects to report interim efficacy data and potential registrational study plans in 2026. For KB304, the company expects to initiate a Phase 2 study in 2027.The company has built in-house CGMP facilities in the United States, including ANCORIS, a commercial-scale CGMP-compliant manufacturing facility producing VYJUVEK for commercial sales, and ASTRA, a second commercial scale CGMP facility completed and qualified in 2023. The company plans to complete a technical transfer process to allow it to commercially manufacture VYJUVEK at ASTRA, which will require an FDA inspection. The company's proprietary manufacturing process involves a master virus seed stock (MVSS) and a complementing master cell bank (MCB). The company believes the MVSS and MCB ensure reproducible production of multiple commercial and clinical batches in a short six-week cycle time frame.

The company's capital allocation strategy includes significant investment in research and development. Research and development expenses were $58.0 million ¹⁴ for the year ended December 31, 2025, compared to $53.6 million ¹⁵ for 2024 and $46.4 million ¹⁶ for 2023. The company expects research and development expenses will increase as it continues manufacturing of preclinical and clinical materials, managing clinical trials, and seeking regulatory approval. Capital expenditures were $12.0 million ¹⁷ for the year ended December 31, 2025, compared to $4.2 million ¹⁸ for 2024 and $11.8 million ¹⁹ for 2023. The company has a $150 million ²⁰ at-the-market offering (ATM) program that has never been utilized and does not currently intend to renew it after the shelf registration statement expires. The company has never declared or paid cash dividends on its common stock and does not intend to declare or pay any cash dividends in the foreseeable future.

The company faces several headwinds and constraints. The company is substantially dependent on the commercial success of VYJUVEK. The company has limited experience as a commercial company and the sales, marketing, and distribution of VYJUVEK or any future approved products may be unsuccessful or less successful than anticipated. The company faces significant competition in an environment of rapid technological change. Government price controls or other changes in pricing regulation could restrict the amount that the company is able to charge for VYJUVEK and its product candidates. The insurance coverage and reimbursement status of newly approved products is uncertain. The company's international operations expose it to business, regulatory, political, operational, financial, pricing and reimbursement, and economic risks associated with doing business outside of the United States.

The company faces several execution risks. The company may encounter substantial delays in its clinical trials or may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities. Delays in obtaining regulatory approvals of the process, or changes to the process, and facilities needed to manufacture VYJUVEK or its product candidates or disruptions in its manufacturing process may disrupt production or delay development and commercialization efforts. The company relies on a limited number of third-party suppliers for some of the components and materials used in manufacturing VYJUVEK and its product candidates. Any contamination in, or changes to, the manufacturing process, shortages of raw materials or failure of any key suppliers to deliver necessary components could result in delays. The company may need to raise additional funding to maintain and expand its commercialization capabilities and to complete the development of, and obtain the regulatory approvals necessary to, commercialize its product candidates.

The company is substantially dependent on the commercial success of VYJUVEK, its only approved product, and if it is not successful in discovering, developing, and commercializing additional product candidates, its ability to expand its business and achieve its strategic objectives would be impaired. The company faces significant competition in an environment of rapid technological change, and competitors may achieve regulatory approval before it or develop therapies that are more advanced or effective. The company has limited experience as a commercial company, and the sales, marketing, and distribution of VYJUVEK or any future approved products may be unsuccessful. Government price controls or other changes in pricing regulation could restrict the amount the company is able to charge for VYJUVEK and its product candidates, and the insurance coverage and reimbursement status of newly approved products is uncertain. The company's international operations expose it to business, regulatory, political, operational, financial, pricing and reimbursement, and economic risks associated with doing business outside of the United States.

Management's message emphasizes the company's position as a fully integrated, global, commercial-stage biotechnology company focused on genetic medicines. Key themes include the successful global expansion of VYJUVEK, with approvals in the United States, European Union, and Japan, and the advancement of a broad pipeline of product candidates across respiratory, ophthalmology, dermatology, oncology, and aesthetics. Management highlights the advantages of the proprietary HSV-1 based gene therapy platform, including repeat administration, high payload capacity, and the recent FDA platform technology designation for the vector used in KB801. Strategic priorities for the period ahead include continuing the global commercialization of VYJUVEK, advancing pipeline candidates through clinical trials and toward potential registration, and expanding the company's manufacturing and commercial infrastructure.