Krystal Biotech Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2023

There are 5 speakers on the call.

Operator

Thank you for standing by, and welcome to the Crystal Biotech Third Quarter 2023 Earnings Conference Call. As a reminder, today's conference call is being recorded. I would now like to hand the conference over to your host, Ned Dodge, Head of Investor Relations and Corporate Communications. Please begin. Good morning, and thank you all for joining today's call.

Operator

Earlier, we released our financial results for the Q3 of 2023. The press release is available on our website at crystalbio.com. Our earnings 8 ks was filed earlier today. And additionally, we filed our 10 Q with the SEC. Joining me on the call are Krish Krishnan, Chairman and Chief Executive Officer Suma Krishnan, President of Research and Development and Kate Romano, Chief Accounting Officer.

Operator

I'd like to note that during this call, we'll be making a number of forward looking statements about our future business plans, strategies, financial performances and projections, product candidate development plans, including statements about Vyjavec. These forward looking statements involve risks and uncertainties, any of which are beyond Crystal's control. Actual results could materially differ from these forward looking statements as any and such risks can materially and adversely affect the business, results of operations and trading price of For a detailed description of applicable risks and uncertainties, we encourage you to view our SEC filings. The company does not undertake any obligation to publicly update its forward looking statements, including any financial projections provided today based With that, I'd like to now turn the call over to Krish. Krish?

Speaker 1

Thank you, Meg. Welcome to Creswell Biotech's first ever earnings call. It's a bit of a coincidence that we're having our first earnings call when we have positive earnings. But I want to be clear that this quarter's positive EPS is simply driven by the sale of the Priority Review Voucher in Q3. More importantly, we're having this call on the heels of EPO Adventist Week.

Speaker 1

We thank the entire trophic epidermolysis pelota community who worked tirelessly to improve outcomes for patients with the generic disease. As we recognize the challenges that the patients and their families face every single day, Our goal remains focused on helping as many deaf patients as possible. We know that the disease far beyond the skin and we're committed to continuing to work to treat this disease comprehensively. We will discuss our early initial efforts in treating deaf patients with lesions in the eye And dose with Klamath's cell carcinoma of the skin later in this call. With that, I'd like to say that after the first full quarter into the Vazovec launch, I'm extremely pleased and proud by the commercial progress we're making.

Speaker 1

We continue to see strong patient demand into Q4 And as we announced, we finished Q3 with 284 stock forms since ViZoeck was approved. Our estimate right now is about an 85% conversion from stock forms to patients on drug, But we'll continue to update the stats in subsequent quarters as more and more smartphones continue to convert. That said, even at 85%, we're at a 20% penetration of the identified base of patients Following one full quarter post launch. Of the 284 start forms received, 20% were from patients suffering from the dominant form of TED. As I have mentioned before, Patients from dominant death patients continue to expand our base of identified patients.

Speaker 1

1 third of 33 percent of the start forms were from patients 10 years of age or younger To as young as 6 months old. We track that because it gives us a better sense of an overall estimate of the induction phase As we believe that patients younger than 10 years of age could potentially have a longer induction phase than adults, Meaning that they will potentially consume more vials annually For a longer period of time than adults did. So of the 2 84 start forms, 20% were from dominant death patients, 33% from patients 10 years or younger And presently estimate an 85% conversion rate to patients on drug, which could potentially be higher As we move into subsequent quarters. What is interesting and maybe a bit surprising Is that only 46%, less than half of patients' start forms were from centers of excellence with the balance of scripts Written by the community physicians. So it has not been a bullet from the center of excellence, But rather a steady flow of start forms.

Speaker 1

And this is attributable to, One, that some KOLs wanting a patient to physically visit at their centers prior to initiating their Von Visovac. Now that takes a certain amount of time because a lot of patients do not live right next to the center of excellence And scheduling can often be a challenge given the busy schedule of these KOLs. Some other KOLs, Generally, those who did not have prior experience with VizaVac in a clinical study or in the open label extension study are choosing a gated approach, prioritizing their most severe patients on Viceroy first, Seeing Helikos and then writing prescriptions for moderate patients. That said, We've encountered no reluctance from any KOL with respect to wanting to put their patients on VazuVag. It's simply a timing issue.

Speaker 1

And our medical affairs team is working closely with these care wells to educate them on the importance of getting the patients colored on Bizovac as soon as possible. With respect to reimbursement, 45% of the patient platforms that have been received as of the end of Q3 were from patients with a commercial insurance plan. Most of these patients, over 80% of them are already eligible for commercial reinvestment. As we mentioned in the press release, the company has received positive coverage determinations From all major commercial national health plans and several regional health plans. So, 45% commercial insurance Of the remaining 55% on government insurance, 74% are presently eligible for reimbursement, And we expect the remaining to be eligible once the permanent J code becomes available in Jan 2024.

Speaker 1

So overall, Axxess is in a very good place and we expect almost all patients to be eligible for some form of reimbursement Early in 2024, at which point we intend to transition to reporting number of patients on drug As opposed to patient start forms, as patients on drug will become a much better predictor of net revenues than start forms. So we talked about color on the platform and on access, now about conversion to net revenues. Flixl's guiding principle for the Vazalore launch is centered around the patient experience And we work tirelessly to ensure that each patient's path with respect to getting on VizaVax and staying on it It's smooth, timely and hassle free. We're partnering with patients and families who were previously traveling to a center of Excellence for palliative treatment and transitioning them to a home health visit by an HCP To apply the medication at a convenient time in their weekly schedule. Think about that.

Speaker 1

Definitely more steps involved than simply having a physician write a script and getting it filled at the local pharmacy. In addition, we're also working with payers who almost all agree that the home setting is best for the patient. So patient experience is foremost on our mind. And with the effective Visovac launch, We work to ensure that we do not make a patient wait for long, that we don't accept the start form unless we have Clear line of sight into getting our patients access to Visovac within a reasonable time. Our goal in 2024 is to convert stock forms to patients on drug in about 2 to 3 weeks.

Speaker 1

We're not there yet, but we expect we'll have most of access in place by the end of the year. And we're learning from some of the experiences on the initial set of patients, so we feel really confident in achieving that objective. It's really difficult to go below 2 to 3 weeks because it takes many families a week or 2 So this launch has been all about home dosing. Over 88% of the patients' platforms received by the end of September We're for patients who want to be dosed at home and they expect that trend to continue and potentially go higher. This has definitely helped adherence to drug, which has been excellent to rate and currently tracks So following approval in May, it took us a few weeks to get the drug

Speaker 2

in the

Speaker 1

tunnel, negotiate reimbursement and schedule home health visits. So our first paid patient did not get on Viceroy until early August. So the net revenue number of $8,600,000 is approximately 2 full revenue months in Q3 During a period where both commercial and government policies and reimbursement continued to be negotiated with an issue. The point being, while patient stock front is attributable to a full quarter, net product revenue Is only attributable to 2 other 3 months in the quarter. So to summarize, we believe we have a strong launch in our hands.

Speaker 1

We see really good demand from both successful and dominant patients. Access coverage has been relatively smooth And home health visits are pointing to a high patient compliance. We expect this momentum to continue going forward. Beyond the U. S.

Speaker 1

Commercial launch, we're also looking to expand the number of patients treated with WysuVec And we are working towards the main patient program in EU as we await our marketing authorization approval In the second half of twenty twenty four and launch thereafter. Sumo will speak to the strength of our pipeline shortly, but with close to $600,000,000 on our balance sheet, A strong launch and a very productive pipeline, we're well positioned strategically and financially to support The global launch of Ijuvac and advance our clinical programs. I should turn the call over to Suman to provide color on the clinical progress.

Operator

Thank you, Krish. This is an exciting time for us. In fact, with the approval of IZUREC, Our commercial team is leading the way for a successful U. S. Launch.

Operator

Our objective is to provide access to Vazovex globally and someday treat this debilitating disease, comprehensively. To that extent, We filed a marketing authorization with the European Medical Agency in October, and we anticipate an approval in the EU in the second half of twenty twenty four. Additionally, following acceptance of the open label extension study of PVAX by Japan Pharmaceuticals and Medical Device Agency in July 2023, we initiated the extension study and dosed 5 patients. Following completion of the open label extension study in Japan, we intend to file a Japanese new drug application for BVAC for DAB in the first half of twenty twenty four. We are presently expecting launched in the EU and in Japan in 2025.

Operator

With respect to treating this disease comprehensively, You have all seen the remarkable benefits in treating Phebeg patients with regions in the eye, and we are in early stages of working with the FDA to develop an approach for studying Y2VAC for this indication. We estimate approximately 750 patients with this manifestation in the U. S. In addition, we are hoping to enroll BLEB patients with somatostel carcinoma of the skin in our Phase 1 oncology study. While LYZURUS could potentially slow down the onset of SEC in the skin in the long term, Having a near term benefit that KB707 will go a long way towards treating this disease, comprehensive disease.

Operator

Moving on to a rich clinical pipeline using our HSV-one platform. On KB-four zero seven, we completed cohort 1 of the cohort 1 study with no severe or serious adverse events and plan on initiating COCA-two in the upcoming weeks. We anticipate announcing data from this study in 2024. In addition, we continue to work closely with the TBM network of the CF Foundation to provide us access to the broader network, This will enable us to complete the study a lot faster than the pace we are at right now. On KD-four zero eight for the treatment of alpha-one antitrypsin deficiency, which is formulated for inhaled delivery to the respiratory cells of the lung via nebulization.

Operator

The Phase 1 clinical trial is a Phase 1 open label single dose escalation study in adult patients With AATD with the PIZZ genotype, 3 planned dose levels of KB-four zero eight will be evaluated with 3 patients in each cohort to evaluate the safety, tolerability and expression of the protein in lung cells and serum. In September, we announced that FDA cleared our IND For KB-four zero eight, an agency granted KB-four zero eight orphan drug designation. We expect to dose the 1st patient in the clinic in a Phase I clinical trial in the Q1 of 2024. Our oncology program, KB-seven zero seven, has made advancements this past quarter after the FDA cleared our IND and granted us a fast track application for KB707 in July for the treatment of locally advanced or metastatic solid tumor malignancies. As a reminder, KB707 is a modified ETC1 vector designed to deliver genes encoding both IL-twelve and IL-two to the tumor microenvironment and promote systemic immune mediated tumor clearance.

Operator

We have 2 formulations of KD-seven zero seven in development: a liquid formulation for intratumoral injection and an inhaled formulation for lung delivery. The intratumoral KB-seven zero seven Phase 1 OPAL-one study It's an open label, multicenter, monotherapy, dose escalation and expansion study, enrolling patients with locally advanced on metastatic solid tumors who relapsed or are refractory to standard of care with at least one measurable on injectable accessible tumor. The primary objective of the study is to evaluate Safety and tolerability of KB707. Efficacy will also be assessed by multiple measures, including overall response rate, progression from survival and overall survival and immune effects of KB707 Monotherapy will be assessed in tumor tissue, lymph nodes and blood. In October, the first patient was dose in the Phase 1 study to evaluate intertunal KB707 in patients with locally advanced for metastatic form of tumor malignancies.

Operator

We are on track to file an amendment to the existing KB707 IND in the Q4 of 2023 to allow us to evaluate Aimmune's KB707 in their clinical trial to take tumors in the patient's lungs. We expect to dose the 1st patient with INEL QV-seven zero seven in the first half of twenty twenty four. Data was presented at the Society For Immunotherapy of Cancer in October. On localized delivery of common serum IL-twelve and IL-two for the treatment of cutaneous malignancies, we presented preclinical data showing back intratumoral injection and enhances tumor injection and survival in B16 Intertratory enhances tumor possession and survival in K7m2 milli osteosarcoma lung metastasis model compared to control our single vector treatment. Regarding our dermatology program, TB-four zero five, for the treatment of TGM-one, ARCI and KD-one hundred and four to treat patients with medical syndrome, we continue to move forward with both programs.

Operator

We are on track to commence the Phase 2 cohort of the TB105-forty two trial for the treatment of TGM1 ARCI in 2024. For KV104, we plan to file an IND to initiate the clinical trial of KV104 to 2 cases with medical syndrome in late 2024. As stated in our press release, Other pipeline programs continue to advance. I'd like to finish by saying we're presently working to them for ongoing clinical programs and anticipate presenting clinical data across these programs in 2024 besides advancing our preclinical and clinical efforts in the skin and in ophthalmology. With that, I would like to turn the call to Kate.

Operator

Thank you, Suma. With our focus in the VIVOVAC launch being centered around the patient's journey and resulting initial strong patient adherence on drug in the 1st few months of launch, we recorded $8,600,000 in net product revenues, which began in August of 2023 through the end of Q3. As visevec was approved by the FDA in May of 2023, there were no comparative period revenues.

Speaker 2

Cost of goods sold was

Operator

$223,000 for the quarter as compared to 0 for the previous year's Q3 due to initial sales advice back after FDA approval was obtained on May 19, 2023. Prior to receiving FDA approval, costs associated with the manufacturing of Biovac were expensed as research and development expense, and as such, a portion of the cost of inventory sold during the period had been previously expensed prior to FDA approval. We expect that cost of goods sold will continue to be lower as we sell off the remaining inventory that had portion of its costs that were previously spent as R and D prior to approval. Research and development expenses for the quarter were $10,600,000 inclusive of $2,300,000 of stock based compensation compared to $11,500,000 inclusive of $2,200,000 of stock based compensation for the quarter ended September 30, 2022. This overall decrease of $887,000 was primarily due to costs related to the manufacturing of VizaVax being reported to inventory following our FDA approval that were previously expensed to research and development expense.

Operator

Selling, general and administrative expenses for the quarter were $23,700,000 inclusive of $6,000,000 of stock based compensation compared to $19,900,000 inclusive of $6,900,000 of stock based compensation for the quarter ended September 30, 2022. This overall increase of $3,800,000 was largely due to costs incurred related to launching VizaVec such as salaries, travel, technology and other professional fees and was offset by lower marketing costs due to the timing of developing marketing materials. This quarter, we also recorded a gain from the sale of our rare pediatric disease priority review voucher, which was awarded to the company in connection with the FDA's approval of VyjuVac of $100,000,000 I want to emphasize that this gain was a one time item recorded in other income and was the primary driver of net income and positive EPS this quarter. Finally, we closed the quarter well capitalized with $598,600,000 in cash, cash equivalents and investments on hand as of September 30, and we believe this cash on hand is sufficient to fund all of our planned activities for the next several quarters. And with that, I will turn the call back over to Krish.

Speaker 1

Thanks, Kate. While Krutzel has always been known for execution on the developmental front, The 3rd quarter demonstrated our ability to execute equally well on the commercial front. We're now a fully integrated company with a commercially validated platform that allows us the privilege of developing medicines To serve patients with debilitating diseases. With a strong launch of productive pipeline and $600,000,000 or so on the balance sheet, We are in a strong place financially to execute on our objectives. Finally, as the largest shareholders in the company, management is aligned and well positioned to continue to deliver And I'd like to now open the call for Q and A.

Operator

Absolutely. We will now begin the question and answer session. The first question comes from the line of Robert Finke with Guggenheim Partners. Your line is now open.

Speaker 2

Hey, good morning team. This is Robert on for Tejit. Thanks for taking our question and congrats on the strong launch. One question from us today. Do you anticipate any slowdown in the Q4 compared to Q3 as far as patients start form rate?

Speaker 2

And if so, what is this implied off peak demand for the company? Thank you. Chris, excuse me, but there's nothing coming from your line. You might be on mute.

Speaker 3

I'm sorry. Thanks, Robert. I was coming on and on for a minute. So as of now, Robert, the base continues to be as it was at the end of 3Q. What is difficult to predict is How the holidays are, if at all, are going to have an impact on the base of stock points.

Speaker 3

So my best answer is, as of now, we continue at the same pace and it remains to be seen how The next 2 months go by. With respect to peak demand, look, When I was indeed made the call at the time of approval, it was simply based on a base of 1200 1500 identified patients paying about $500,000 annually. That's how we came up with 750,000,000 As we find more dominant patients, as we start getting approved in Europe and Japan,

Speaker 2

Great. Thank you. And one follow-up from us. The start forward numbers start from approximately 20 per week in 2nd quarter to 13.5 per week in the 3rd quarter. What's your best explanation for why this has occurred?

Speaker 2

Thanks, Krish.

Speaker 3

Look, maybe the 1st 6 weeks were there was a little bit of bolus From the open label extension study, as I mentioned in the call, we're also a bit careful of rushing to put somebody on the cell form If you don't have a clear line of sight into when the nurse is going to come home or they're going to get reimbursed, the worst thing we can do is to have a patient Submit a cell phone and have them wait a significant amount of time for converting. And so to some extent, we managed the inbound queue a little bit. That should start to open up. As I mentioned, with Access, we pretty much have majority of the commercial plans in place, A significant amount of the Medicaid plans in place, especially upon starting in October. And so Some of it is the OLE, some of it is our own billing to maximize patient experience.

Operator

The next question comes from the line of Alex Stratahann with Bank of America Merrill Lynch. Your line is now open.

Speaker 4

Hey, guys. Thanks for taking our questions and congrats to me as well on the early launch progress. Just a couple of questions from us. Maybe first, could you walk us through the process a bit further of getting new patients to start forms and then converting Those patients onto therapy, and what was the barrier for maybe the 15% or so that didn't convert? And I think you just touched on this And the last question, but do you think it's reasonable to assume that now that insurance is probably coming online that the rate of conversion between start form and Initialization on therapy could accelerate?

Speaker 3

We believe so. That 85% is an estimate, right? If you don't have enough to make A very standard prediction on that number, 85% is just based on some patients maybe one Not to get going for a while. Some patients do not have insurance. Some patients choosing to wait to See how long their patients are doing.

Speaker 3

So it's a pure estimate. We definitely expect that number to go up. I alluded to that in the call. But in terms of process, look, we'd like to get a quality and audited stock fund to begin with, Because that helps from a timing perspective of converting them to patients on drug. Because we don't have a fully full start form with The physician report and the genetic sequencing, a lot of information on prior what they have the prior history of the patient.

Speaker 3

It took longer this insurance to get them reimbursed. And to avoid that, We were trying to get a clear line of sight before we totally accepted a softphone internally Because patients get very anxious once they submit a cell phone to get access to the drug as soon as possible. We tried to bridge the gap with some pre bio program while waiting for the insurance, and that varies depending on if you're commercial or Medicaid. And once we get a StarPharm, it's essentially about a couple of things happen in parallel, once we are getting them on reimbursement. And the other path is to work with our specialty pharmacy to get the nurse schedule to come home at a Time that's convenient to them and that usually takes a week or 2.

Speaker 3

So that's essentially the process. But once the patient is on drug and the reimbursement is in place, The adherence rate has been really high because the nurses essentially basically going home To fit the patient's schedule as opposed to put any burden on the patient having to travel to death to leave this on-site. And as I mentioned, a significant percentage of our patients are on home dosing at the moment.

Speaker 2

Okay. Thanks. And one more question.

Speaker 4

When you look to approval and launch in the EU and Japan, Chris, How will you be approaching these markets? And if you do seek to partner, would you still be making BIJUVAX yourselves presumably? And How would this work logistically?

Speaker 3

Thanks. Yes. I think we're sticking to what we've been saying that our intent is Launching in EU5 and Japan. We already have a team in the EU. We're starting to think about building out A small team in Japan in anticipation of a launch in 2025.

Speaker 3

In terms of supply of the drug, It will all be supplied from Amphorix, which has capacity for a global supplier of Visovac, At the right point in time, maybe supplemented with Astra, which is now up and running. So Essentially, we do not anticipate setting up any non manufacturing facility in either Europe or Japan.

Speaker 4

Okay, great. And thanks. Congrats again on the progress.

Speaker 3

Thanks, Alex.

Operator

Thank you. The next question comes from the line of Ritu Gharwal with Cowen, your line is now open. Krish, I wanted to sort of get my arms around the sort of intent to prescribe. So you mentioned that the 284 start forms, if I'm interpreting your answers correctly, the 284 start forms that you have quoted this morning, these are high quality accepted start forms. And there are additional start forms that Either you have not accepted or that you're sort of pushing back and, I guess, waiting to tally as part of your report.

Operator

Can you give us an idea, qualitative or quantitative, about the number of Outstanding, like half filled start forms or inadequate start forms, just to give us an idea of intent to prescribe. And then, I'm also wondering about the non center of excellence prescribing doctors. Is there a profile of these doctors that is emerging? And then I have another follow-up. Thanks.

Speaker 3

Yes. I'll start the second one first. Predominantly, feed terms It's a profile of the community physician, but that's very straight to it. It could be a dermatologist. Some of the patients go to blood transfusion centers Probably been tired of going to dermatologists and managing cannulatively at home in the past.

Speaker 3

But in terms of the stock on itself, Well, we like to accept a very high quality software. Sometimes we make exceptions when there is an urgent need or a request by the physician, but by and large, the staff forms are highly audited. In terms of providing any kind of guidance on how many is in the queue that we're trying to convert, I think it will be a bit premature And I'd like for me to talk about that, but I would say that we expect Now with access in place, we expect the pace to be distanced, but it's not better going forward.

Operator

Got it. And then I just wanted to ask a follow-up on the persistent rate, persistence rate. How are you defining that 96%? Is it patients who are reimbursed and who either skip a week or are they Are you finding or are you tallying patients who skipped like 2 weeks and don't intend to refill? I'm just wondering how that 96% is defined.

Operator

Thank you.

Speaker 3

It's basically, I mean, to simplify what it's, if you can see my bio, Sometimes once in a while somebody misses a visit for some personal reason of schedule, but most of the patients on drug to date All at 4 vials of each where we are accessible down in it. So when I say compliance is really hard, It means we're shipping 4 miles of utilization at the moment.

Operator

Got it. Thank you very much.

Speaker 3

4 bottles a month. I'm sorry. I meant to say a month.

Operator

Thank you. The next question comes from the line of Carly Kessler with Citigroup. Your line is now open. Great. Good morning.

Operator

Thank you for taking my questions. Two questions from me. First, on the reimbursement side, just wondering if There has been any surprises with respect to the policies insurance companies are putting in place, particularly as it relates to The prior auth process, just anything unexpected there? And then the second question is if you can just remind us What proportion of patients of the identified patients are tied to centers of excellence in the U. S?

Operator

Thank you.

Speaker 3

On Axis, Carly thanks for the question, Carlo. On Axis, I think that the both of them is smooth. There's nothing unexpected. We have a good System of offering contracts to payers if they are accepting, then they get eligible for the price gap. So both On the commercial side and on the government side, access has been at a good pace, like we're pleased.

Speaker 3

We expect to get the J code finalized, officially published in January, which is, I think, on time Based on when we got approval, so overall, pretty pleased nothing unexpected. In terms of patients at the center of excellence, that's a great question. It's a tough one Because a lot of patients who once saw or saw the physician at the center of excellence, a lot of them have actually stopped And gone back to the local community in the absence of an approved drug. And so Trying what we like to the way we think about it is the number of active patients presently At the center of excellence. And so, which is why if you look at the Starforms for the If you think about like only 36% came from the center of excellence, we believe there is Demand left at these centers of excellence, limited by the two factors I mentioned.

Speaker 3

1, Physicians wanting to literally have a patient visit prior to getting them on Vazalorex, which is which happens in various diseases Quite a bit. And it's a tough one to overcome because they'd like to see the patient, talk to them about it, At least some of them. And the second is something we're trying to educate around, which is when physicians decide, Yes, I'm going to put a handful of our patients, see how Viceroy works before opening the gate to the remainder of the patients. And that We disagree with that and we're using our medical affairs to work very I mean very closely with these tail ups to come to the urgency of getting the patients on drug.

Operator

The next question comes from the line of Day Gan Hao with Stifel.

Speaker 4

Congrats on the progress, Krish. Maybe one more on the VIGAVAC before switching over to KB-four zero seven. In terms of the Q3, I guess, can you talk about sort of the cadence of StarForms that kind of came in? I know you don't want to talk about sort of the Q, but What can you qualitatively say about that? And bearing in mind the holiday season is upon us, is that cadence at all kind of representative you think or at least 20%, 30% haircut, how should we think about that from a modeling perspective?

Speaker 4

And then second question on KB-four zero seven, Just wondering if you can narrow that guidance in 'twenty four. Is it closer to ECFS or NACFC? And just looking at the Competitors' recent data, it seems like expression of the protein may not necessarily be representative of clinical profile. So Can you maybe remind us what's the differentiation that you think you're going for? Thanks so much.

Speaker 3

Yes. Look, on cadence with the holidays, I wouldn't I wasn't advocating any kind of discount. I was simply saying that the pace has been good as of now, as of this call. And with the upcoming holidays, we don't know if it will continue or will there be a pause and it varies depending on the patient and the urgency and the family So I wasn't guiding to any slowdown at all. I was just saying we don't know.

Speaker 3

On the 407, look, it's tough for us to guide when without access to the TDN network. Well, because it does take us, as Shuna mentioned in the call, it takes a long it takes us a bit longer To find these patients outside the network and then some get them on drug. So unfortunately, not able to Like with the other programs, we have to put prediction on when we will pay them. Suma, do you want to comment on let me say one thing on the expression and I'll turn it over to Suma. Our new employee and team, Which I think you were asking, look, you have to remember it's a micro CFTR, Right.

Speaker 3

So micro it's not the full gene, it's a micro gene. And so I would disagree with the comment. I think once you expect that protein expression should dictate the functionality, In our opinion, but Suma, do you want to add something?

Operator

I think you covered it pretty much on the top, Krish. Agree. I mean, again, if you look at the histo chemistry, it's not very clear, where you see the Because it's all over, there's a lot of questions. We also spoke with some of the experts on that expression data and they had similar concerns. So again, we don't know what this is going to push that is.

Operator

If you're seeing the kind of expression level, is it the full TRCR protein And how does that correlate to function? It's the question that's still on April. With regards to CDN, we are working very diligently. We have begun Beyond what other companies have done with regards to its own function, and we're pretty confident we'll get there. So we're close.

Operator

We're looking at all the same studies, including NTB animal studies. We're looking we know we can express the full length protein by Western Bluff. We see it. We're very confident. We just need to get the assay for function optimized.

Operator

So we feel pretty good. I think Hopefully, we will get there sooner and we can get that study mostly aggressively enrolled.

Speaker 4

Great. Thank you very much for taking my questions.

Operator

Thank you. The next question comes from the line of Tim F. Lugar with William Blair. Your line is now open.

Speaker 2

Thanks for the question. Going back to VYJUVEC, can you talk about the progress you've made Identifying patients outside of the initial, I think, 1200 or 1100 patients that you had identified during the summer. And I guess on top of that, penetrating 30% into that as of now, I think is what you mentioned. Can you talk about Is there really any need for a C. T.

Speaker 2

E. O. If you're going to get 50% penetrated into the population within The next couple of quarters?

Speaker 3

Tim, I didn't follow The second part of the question, what were you saying in terms of penetration?

Speaker 2

The second yeah. The second part is, I believe you mentioned you're about 30% penetrated. And it looks like I

Speaker 3

said 20 of the I guess. I'm gonna

Speaker 2

be able to get to I just Oh, 20%. Okay. All right. Well, are you just an update on this 1200 patients or 1100 patients that you've identified so far?

Speaker 3

Yes. What I did to get the 20%, just to be clear, we got 2.80% for cell farms. You multiply that by 85 percent conversion rate, you divide by 1200, you're close to 21%. That was that's how we estimate the 20% penetration, it could be a bit higher. It'd be 85% is higher than the estimate at With respect to finding patients, it's to date After 1 third quarter end launch, it's been more opportunistic than deliberate, meaning we're still working off The Tier 1, Tier 2s that we identified, going after trying to get them converted, Our objective is to get More serious about finding patients past 1200 early next year as we start to play now The base the reservoir that I've identified patients.

Speaker 2

And with that, I guess, can you update us on Your thoughts around a new Chief Commercial Officer. I feel like previously you mentioned that that would be the focus of a new CCO.

Speaker 3

Yes. So we are in the process of looking honestly. It's right in our queue candidates at different levels in the queue at the moment. We hope to have one in place Early in 2024, that's the objective what's important to us is we find someone with a good fit And the way we operate and thankfully there's been a lot of interest from potential candidates so far.

Operator

The next question comes from the line of Gavin Park Gartner with Evercore ISI. Your line is now open.

Speaker 2

Good morning. I'm happy to answer the progress with the launch. So you noted our goal of getting to 2 to 3 weeks For the conversion cycle, MPFS to paid revenue, where did the numbers start from launch? And how long do you think it will take you to get to that 2 to 3 weeks?

Speaker 3

Yes. We're hoping to get to 2 to 3 weeks in 2024, hopefully in the first half, first quarter. Right now, it's pretty I mean, it was long and it continues to come down. When we started, it was more like 6, 7 weeks. And a lot of it had to do with submitting for reimbursement, getting denied, By resubmitting single case forms, the reimbursement was not smooth.

Speaker 3

So that was a big aspect. And that has gotten steadily better over time. So that's one of the reasons we feel good about getting to 2 to 3 weeks. We find that families take about 2 to 3 weeks to schedule a nurse visit. There's some time in figuring out the right nurse that they're comfortable with, finding a time that works for them.

Speaker 3

That I don't think it's compressible, right? So our goal is 2 to 3 weeks in 2024. And so every month that's gone by, we've been steadily coming down the curve of conversion and We're at a good point at the moment and we hope to get to 2 to 3 weeks early in 2024.

Speaker 2

Okay. That makes sense. And you noted 45% of the PFS are coming through for commercial patients. Are you able to disclose the commercial versus Medicaid split of patients that are on paid drug?

Speaker 3

That are on paid drug. Thanks, Tuffy. I would say the percentage of Commercial versus Medicaid, we have the estimate right now is 51% commercial over 35% Medicaid. Okay. And I'll go ahead.

Speaker 3

Yes. And as we go into as starting October, we expect a lot of the mandatory states to start covering and so we expect the May date number to go up a bit.

Speaker 2

Yes, that makes sense. Just a last quick clarification on the OLE patients. Have all these patients converted over to drug, just confirming this was captured in the PFS number? And how much of this came through in the Q2 versus the Q3?

Speaker 3

Yes, they're all converted. I would say 60% in the second, 30% in the third.

Speaker 1

All right.

Speaker 2

That's very helpful. Thanks so much and congrats again. Chris, thanks for taking my follow-up. On the comment you made about expecting it to be the same or better now that reimbursement is largely in place, Does that pertain to patient start forms or conversion to reimbursement on therapy? Thank you.

Speaker 3

I may have said that comment in both contexts. Definitely conversion with access and that's a good and that's obvious. Like if they're not getting dinged and we're getting Reimburse and we file and that process is smooth. Definitely, the conversion should be faster Hi, Bharat. The comment I made on stock warrants was the base continues to be good at the moment.

Speaker 3

And I left it open to figure out what happens over the holidays, which we have no visibility into at the moment.

Operator

We now have another follow-up question from the line of Ritu Baral with Cowen. Your line is now open. Hi, guys. Thanks for taking the follow-up. Chris, just going back to the rejected start form, Can you mention like what are the most frequent reasons for that that you're encountering?

Operator

Is it Formal genotyping of these patients, is it insurance coverage? Is it like purely administrative paperwork sort of stuff? What is what is that reason? And then I have another quick follow-up.

Speaker 3

Mostly genotyping.

Operator

Got it. And then are you seeing any early trends in intent To implement buy and bill from any of these centers and are you seeing like clinics at Centers of excellence sort of adding either clinic days or availability for Appointments, such that patients can come in more easily.

Speaker 2

Thank you.

Speaker 3

Buying bill has been minimal. I'm certain to remember if there's 1. Actually, it's probably 0. What happens at the Center of Excellence, like, there is a everybody, the KOLs At Centers of Excellence, the payers, everybody would like the base of the rebuilds at home. And so the only thing gaining in the case of the Center of Excellence is the first digit, I mean, what's the date on BioZurex?

Speaker 3

I mean, so they wait for the patient to come visit them, examine the patient before putting them on BioZurex. Once they decide to put them on vyzograd, the actual process is not buy and build but sent back to the patient's home for home base.

Operator

Thank you. That will conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

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Earnings Conference Call
Krystal Biotech Q3 2023
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