Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Krystal Biotech Inc (KRYS, Financial) reported a 55% increase in net product revenue for Q2 2024 compared to Q1 2024.
- The company achieved a gross margin of 91% for the quarter.
- VYJUVEK, the company's corrective therapy for DEB, has seen strong patient demand and high compliance rates.
- Krystal Biotech Inc (KRYS) is on track for launches in Europe and Japan by 2025.
- The company reported another profitable quarter with earnings of $0.54 per share.
Negative Points
- Krystal Biotech Inc (KRYS) accrued $12.5 million in litigation expenses, impacting EPS.
- There is a time lag of two to three weeks from insurance authorization to the first home treatment, affecting immediate revenue realization.
- The company faces challenges in converting prescriptions from community prescribers due to less familiarity with rare disease reimbursement.
- Research and development expenses increased to $15.6 million, partly due to higher R&D-related manufacturing and process optimization expenses.
- Selling, general, and administrative expenses rose to $27.6 million, driven by increased stock-based compensation and commercial-related professional services fees.
Q & A Highlights
Q: How do you expect patient compliance to trend in the second half? Do you think it's reasonable to expect this to reach some steady-state as new patients go on therapy and older patients maybe see a benefit from therapy?
A: (Krish Krishnan, CEO) We are seeing a minority of patients drop below max compliance, defined as north of 90%. However, the majority are still tracking to high compliance. (Jennifer McDonough, SVP, Patient Access, Analytics and Operations) We are excited about the adherence to weekly redosing, with patients scheduling within their normal routines. Overall, compliance remains high, driven by the impact of VYJUVEK and the convenience of home administration.
Q: Any changes in the way you plan to approach the international markets if VYJUVEK gets approved in the EU or Japan?
A: (Krish Krishnan, CEO) No change in our approach. We will continue with our strategy for the UK and Japan and look to do distributor agreements in other countries.
Q: What is the status of manufacturing approvals for expanded capacity? Will there be any new inspections required?
A: (Suma Krishnan, President - Research and Development) ANCORIS has the capacity to meet commercial demand for the US and potentially Europe. We are scaling up production and anticipate approval by the end of the year. We are prepared for any potential inspections and have already transferred key starting materials to ASTRA.
Q: Can you provide an update on the European application and the status of the 120-day questions?
A: (Suma Krishnan, President - Research and Development) We have completed responding to the 120-day questions and expect the 180-day questions shortly. The questions were aligned and predictable, with no surprises. Home dosing was a discussion point, and we have responded to those questions.
Q: What proportion of VYJUVEK patients are coming from centers of excellence versus community settings?
A: (Jennifer McDonough, SVP, Patient Access, Analytics and Operations) The majority of patients are seen in centers of excellence, but we are seeing a trend towards community settings. The community continues to be strong, and our strategy is pointing our sales team towards these areas.
Q: Can you frame expectations ahead of the KB408 data later this year?
A: (Suma Krishnan, President - Research and Development) Cohort two is fully enrolled, and we expect to go into cohort three shortly. Cohort three will be important as we will evaluate the highest dose and measure expression levels in the lung. We expect to enroll patients and get molecular correction data.
Q: How many new patients have you identified outside of the original 1,200, and what is your current comfort level with the estimated total of around 3,000 patients in the US?
A: (Krish Krishnan, CEO) We have expanded the identified base by close to 10% at the moment. Our comfort level with the estimated total of around 3,000 patients remains the same.
Q: What are the eligibility criteria for the natural history run-in for the ocular formulation study?
A: (Suma Krishnan, President - Research and Development) The inclusion criteria require patients to have at least two episodes of blisters in the past six months. The natural history study is progressing well, with many patients having constant blisters in their eyes.
Q: What should we expect for go-forward metrics as you transition to a more mature phase of the launch?
A: (Krish Krishnan, CEO) We are still in a growth phase and not yet in a mature phase of the launch. When we reach a mature phase, we may guide on revenue. Compliance and other metrics may become less clear over time as we expand into the community.
Q: What are your expectations for steady-state revenue per patient, and do you think you could get to over 700 patients on approved therapy by mid-2025?
A: (Krish Krishnan, CEO) It is premature to provide a steady-state revenue per patient. Our goal is to achieve 60% market share in two years from launch, which aligns with getting to over 700 patients by mid-2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
