Krystal Biotech Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 4, 2024

There are 17 speakers on the call.

Operator

Thank you for standing by, and welcome to Crystal Biotech's Third Quarter Earnings Conference Call. At this time, all participants are on a listen only mode. After the speakers' presentations, there will be a question and answer session. During the question and answer session, there will be a limit of 2 questions per participant. As a reminder, today's conference is being recorded.

Operator

Would now like to hand the conference over to your host, Stephane Paquette, Vice President of Corporate Development. Please begin.

Speaker 1

Good morning, and thank you all for joining today's call. Earlier today, we released our financial results for the Q3 of 2024. The press release is available on our website at www.crystalbio.com. We also filed our earnings 8 ks and 10 Q with the SEC earlier today. Joining me today will be Krish Krishnan, Chairman and Chief Executive Officer Suma Krishnan, President of Research and Development Jennifer McDonough, Senior Vice President of Patient Access, Analytics and Operations Christine Wilson, Senior Vice President and Head of U.

Speaker 1

S. Sales and Marketing and Kate Romano, Chief Accounting Officer. This conference call will and our responses to questions may contain forward looking statements. You are cautioned not to rely on these forward looking statements, which are based on current expectations using the information available as of the date of this call and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties and other factors can be found in our SEC filings.

Speaker 1

With that, I will turn the call over to Krish.

Speaker 2

Thank you, Stephan. Good morning and welcome to the call. Look, as I mentioned in my PR attribution, we're well on our way to achieving the 2 year target that we set at the time of the launch. And by comparison to any other launch in orphan diseases or genetic therapies, we believe our launch has exceeded all expectations today. In my mind, there are 2 primary drivers for this success.

Speaker 2

The first obviously being the drug itself with all its attributes of efficacy, safety, patient convenience, etcetera. And the second being our assiduous focus on patient and physician experience. We have allowed the physician and the patient to drive demand at a pace they're comfortable with and it's been rewarding, especially in an indication where the expectation is that they will be on drug for a long time. On top of that, global opportunities for VizaVec come into focus. Ophthalmic formulation is progressing towards a registrational study in the next few months.

Speaker 2

And so we're starting to see increasing upside in the total market opportunity for the VYZOVIC franchise overall as we work toward treating death patients globally and comprehensively. In Europe, we're presently on track for a CHMP opinion before year end and our recent breakthrough with HAS granting early reimbursed taxes in France reflects the significant demand from IZUVAC in Europe. And with our JNDA submitted last month, we're also on track for a 2025 launch in Japan. And so all preparations are underway for launch in EU4, UK and Japan sequentially next year. Meanwhile, we had a positive readout for Genesthetics, KB301 in Q3, where we saw clear efficacy signals.

Speaker 2

And that propels us forward to a Phase 2 study expected to start next year and also continue to work on the gynaesthetics pipeline. That was the first of many data readouts upcoming from our deep clinical stage pipeline. We're looking forward to reporting on 2 more programs before year end, including our first data on HSV-one based gene delivery to the lung, a tissue that has to date been hard to reach with other approaches. So both on the commercial and clinical fronts, we're excited and look forward to the rest of 2024 2025. Finally, I'm happy to report that Cristal was again profitable this quarter at $0.95 per share, up sequentially from $0.54 per share in the Q2 of 2024.

Speaker 2

In Q3, we accrued $12,500,000 in litigation expenses that once again mitigated our EPS as it did in our 2 prior quarters. This is the final approval related to the litigation expense and there will be no additional litigation approvals moving forward. With increasing profitability, a strong balance sheet and upcoming expansion of our VYZUVEC franchise, both in the U. S. And through ex U.

Speaker 2

S. Launches and our eye drop formulation, we're super stoked about both the near term and the long term outlook for Cristal. Moving now to our results. Net visovec revenue for the Q came in at $83,800,000 while gross margins in GTN continue to behave as expected. Thanks to the strong growth we achieved this quarter, total net Bijoybac revenue since launch in August 2023 has already surpassed $250,000,000 Achieving this milestone, only a little over a year after our first sale is a tremendous achievement for our organization and a testament to the value VIZUREK is providing to patients suffering from DEB.

Speaker 2

Also, please note that net VIVIOVAK revenue reported today again includes an accrual for patients on contracted commercial plans who are projected to potentially hit the cap of $900,000 gross per patient per calendar year in 2024. With that, I'll hand it off to Jen and Christine to share more detail on our recent accomplishments and strong fundamentals, which we expect will sustain our launch for years to come. Jen?

Speaker 3

Thank you, Krish. I am pleased to report another quarter of strong BIJUVAX access growth across the U. S. In spite of summer seasonality headwinds as our team works tirelessly to help more and more patients gain control over this terrible disease. As of October, the number of patients with reimbursement approvals is up to over 460.

Speaker 3

Reimbursement approvals were modestly impacted by transient summer seasonality effects in this quarter. These scheduling disruptions are now behind us. More importantly, and thanks to our flexible support infrastructure that adapts to patient schedules and timelines, we have been able to keep patients and their applications for reimbursement on track to achieve positive access outcomes. Reimbursement approval splits are largely in line with recent quarters and roughly evenly split between commercial and government plans. Approvals continue to come across the entire DED patient population, including patients of all ages and with either dominant or recessive forms of the disease.

Speaker 3

With near complete coverage for commercial and Medicaid lives nationwide, the access for VIJUVEC is strong. This has enabled us to achieve 100% success rate on reauthorizations, all have either been approved or are in process and sets us up well for sustained success in the U. S. Our CRISPR Connect team works closely with the home health care providers employing a patient centric approach that focuses on patient needs and preferences. The team navigates things such as summer vacations, family activities, working back to school schedules to successfully integrate weekly treatments into the family's normal routine.

Speaker 3

Patient preference for at home administration is effectively unchanged and currently 97% of the weekly treatments occur in the home setting. With now over 1 year of real world experience, the team is developing and implementing strategies to ensure patients receive the best possible experience starting and staying on BIJUVEC. This includes developing enhanced education, tools and other resources for patients and nurses. We focus on topics such as preparing for treatment, practical considerations for wound selection and options for hydrophobic dressings. We recognize that every patient has unique needs and the impact of the disease varies for each patient.

Speaker 3

Our program and resources include regular touch points to support monitoring treatment progress and identifying potential issues early and addressing them promptly. While we continue to see a high compliance to weekly treatment at 87% across our dead patient population, including new starts for both recessive and dominant dystrophic EB, please note that for some patients that have been on BIJUVEC for over an extended period of time, in particular, who have been participated in our OLE study, we are seeing maintenance treatment patterns emerge. This includes cycling between periods of treatment pauses due to wound closure. While it's early and we believe it would be premature to estimate the frequency or the duration of treatment pauses, we can expect reported compliance to weekly treatment across the entire patient base to trend down in upcoming quarters. As we continue our launch, the Cristal Connect team is fully focused on ensuring patients have a smooth experience starting and staying on therapy.

Speaker 3

We are developing and investing in strategies that lead to better treatment outcomes and overall satisfaction. We are building long term patient relationships and are committed to providing sustained worry free access to corrective therapy where and when they need it. I will now hand it off to Christine to discuss recent sales and marketing activities that which have us on track to hit our most ambitious pre launch penetration targets. Christine?

Speaker 4

Thank you, Jen. As Jen just mentioned, at launch, we set an ambitious target for the commercial organization. We established a goal of 60% penetration of the identified patient pool, equating to roughly 7 20 reimbursement approvals within 2 years of launch. I'm happy to say that based on our progress to date, our ongoing sales and marketing efforts and the sustained demand we are seeing in the field, we remain on track to achieve this goal. Our core commercial strategy focused on the 3 pillars of claims analytics, medical education and patient activation is paying off.

Speaker 4

We are seeing strong demand across both key centers and in the community as we continue to drive awareness of IJUVEC and the real world impact to healthcare professionals, patients and caregivers. Healthcare professional education remains a major focus. We continue to educate physicians and their support staff on how BIJUVIK is the only FDA approved therapy that treats the genetic cause of DEB, sharing the clinical data that supports long term use in wound healing for all patients from localized to severe disease and showing the stunning real world results patients are seeing at home. In addition, we are working with physicians, particularly those in the community who may not regularly see these patients to educate them on the streamlined process for getting their patients started on BIJUVEC. This is a high touch, customer centric model that delivers a positive onboarding experience for both the prescriber and the patient.

Speaker 4

The prescriber base is expanding. Over 70% of the prescribers in 3Q were new writers. This demonstrates that our targeting efforts are effective and that both KOLs and community physicians see the value of BIJUVIC and ease of prescribing. We have also made significant progress recently in our direct to consumer outreach. We are now live on all planned social media channels showcasing real world experiences for both pediatric and adult patients, some of whom have been on therapy since 2020.

Speaker 4

Since January of this year, our paid social direct to consumer advertising has served over 31,300,000 impressions, connecting prospective patients and caregivers with VITUVIC. The 3Q launch into new social platforms, along with lead generation advertising on social media will continue to drive user engagement and expand our reach. Finally, as part of our annual recognition and support of EB Awareness Week, which took place just last week, the Cristal team hosted educational webinars for our target physician audience as well as sponsored a patient and caregiver webinar in conjunction with 1 of our EB advocacy partners. These live webinars feature dermatologists with real world DEB and BIJUVIC experience, as well as BIJUVIC treated patients, sharing their personal experience of the positive impact that BIJUVIC has brought to their condition. Members of the Cristal team also attended the Deborah of America benefit during EB Awareness Week, which honors those in the EB community and champions their ongoing mission to advance EB research and patient care.

Speaker 4

These are just a few highlights from our ongoing commercial efforts to drive awareness, streamline the physician experience and help more patients get on treatment faster. It has been deeply rewarding to see these efforts translate into reimbursement approvals and with continued education, we are optimistic that we can achieve not only the near term targets we have set, but ultimately grow well past them in later years. Now I

Speaker 5

will hand it off to

Speaker 4

Suma to share pipeline results.

Speaker 5

Thank you, Christine. Our development team continues to execute at a high level. And over the past few months, we have achieved key milestones to not only broaden that patient access, but also advance our diverse pipeline of redosable genetic medicines. Leading off with an update on the global development of PVAC, steady progress has poised for commercial launches in both Europe and Japan next year. In Europe, EMA's review of our marketing authorization application is progressing well.

Speaker 5

EU GMP certification was granted for our commercial manufacturing facility, Encoris earlier this year and our latest interactions with the EMA suggest support for home dosing and a broad label including dead patients from birth. Based on the current pace of discussions, we expect a CHMP decision before the end of the year and a first launch in Germany in the first half of twenty twenty five. In interim, we also achieved an access breakthrough in France. In September, Aute Autorite Descente in France approved pre marketing early reimbursed access to BVAC under the axi precochere program. That patient access to BVAC under AP1 is expected to start later this year.

Speaker 5

AP1 allows for early access to innovative therapies in France prior to European regulatory approval and is a reflection of the strongly positive benefit risk ratio provided by BVAC in a patient population with high unmet need. In addition to rapidly broadening patient access in France, this approval will also provide physicians with an opportunity to build clinical experience with BVAC even in advance of commercial launch. In Japan, we also achieved a major milestone with the recent submission of our Japan New Drug Application. Our application to the Japanese authorities include the results of our open label extension study in Japanese patients in which overall results closely mirrored those from our registrational Phase 3 trial. Having previously received orphan drug designation by Japan's Pharmaceuticals and Medical Device Agency, we expect a priority review putting us on track for both a decision by Japanese authorities as well as launch in 2025.

Speaker 5

Shifting focus to our broader pipeline, we are very excited to report the first of many upcoming data readouts last quarter. In this data readout for June Aesthetics, KB301, we reported clear and clinically significant improvements in not only wrinkles, but many other skin attributes including radiance, hydration and creepiness. This robust efficacy signal taken together with our previous reports of durable benefit positions KB301 as a potentially transformational product in the field of regenerative aesthetics. We look forward to progressing KB301 into Phase 2 next year. This is just the beginning.

Speaker 5

Before the end of the year, we expect to disclose interim updates on the KB-four zero eight and KB-seven zero seven programs. KB-four zero eight is our reducible inhaled therapy for alpha-one antitrypsin deficiency, which is currently being evaluated in a Phase 1 SERPENTINE 1 study. SERPENTINE 1 is an open label single dose escalation study in adult patients with AATD to allow assessment of safety, tolerability, alpha-one antitrypsin levels and key pharmacodynamic biomarkers. With strong enrollment and a recent protocol amendment to include bronchoscopies in Cohort 2, we hope to provide interim molecular data before the end of the year. A readout we expect to showcase the significant potential of HSV-one for gene delivery to the lung.

Speaker 5

KB707 is a modified HSV-one vector designed to deliver genes encoding both human IL-twelve and IL-two to the tumor microenvironment and promote systemic immune mediated tumor clearance. 2 formulations, 1 for the inter tumor injection and the other for delivery via inhalation are being evaluated in Phase 1 dose escalation and expansion studies. Both studies are enrolling well and with this phase we expect to share an interim data update focused on safety and early immune profiling data before end of the year. I'm also happy to share that intratumoral KD707 was granted a rare pediatric disease designation for the treatment of rhabdomyosarcoma, both inhaled and intratumoral KD707 has now been granted rare pediatric disease designation and fast track designation by the FDA. We expect additional data updates in 2025, including follow on updates on our oncology programs as well as initial data from our ongoing Phase 1 study evaluating inhaled KB-four zero seven for cystic fibrosis.

Speaker 5

We recently activated 2 additional clinical sites in our Phase 1 CORO-one study evaluating KB-four zero seven and are now on a path to report intermolecular data for KB-four zero seven in the first half of twenty twenty five. Finally, we are on track to both start and report interim data from our registrational trial, IO LITE next year. IO LITE will be a single arm, open label study designed to evaluate KB-eight zero three, our newly developed ophthalmic formulation of PVAC for the treatment of ocular complications in death patients. In the interim, we continue to enroll in our natural history study to prospectively collect data on the frequency of corneal abrasions in patients with DAP. This study will also serve as a run-in period for patients who may be eligible to participate in IOLITE and should enable us to accelerate enrollment in this registrational study.

Speaker 5

We have entered an exciting period for Cristal as we unveil trial results that we expect will highlight the versatility of our gene delivery program. We look forward to sharing these updates as they unfold and advancing our pipeline of uniquely differentiated genetic therapies. With that, I would like to turn the call to Kate.

Speaker 6

Thank you, Suma. In the Q3, Cristal saw continued VizaVac revenue growth with net product revenue of $83,800,000 representing an increase of approximately $75,300,000 over the Q3 of 2023, which was the Q1 that we had revenue after our approval in May of 2023. Cost of goods sold was $6,700,000 for the quarter or about 8% of net product revenue, resulting in a gross margin of 92%. In the Q3 of 2023, cost of goods sold was artificially low at $223,000 as a result of a significant portion of the cost to manufacture being previously expensed to research and development expense prior to product approval. Research and development expenses for the quarter were $13,500,000 inclusive of stock based compensation of $2,300,000 compared to $10,600,000 for the prior year's Q3, inclusive of $2,300,000 of stock based compensation.

Speaker 6

Higher research and development expenses in the Q3 of 2024 were due to increased clinical development costs, increased R and D related manufacturing costs for our pipeline candidates and increased R and D facilities and equipment costs this quarter. These increases were partially offset by capitalization of direct and indirect over cost to manufacture VIVIVAC being charged to inventory following our FDA approval. Selling, general and administrative expenses for the quarter were $28,700,000 inclusive of stock based compensation of $11,000,000 compared to $23,700,000 for the prior year's 3rd quarter, inclusive of stock based compensation of $6,000,000 Higher selling, general and administrative expenses in the Q3 of 2024 compared to the prior year's Q3 were primarily the result of increased commercial related professional service fees and Visovac marketing costs. The most significant increase in SG and A is related to the increase in stock compensation expense of $5,000,000 quarter over quarter. We again recorded litigation settlement expense this quarter of $12,500,000 due to our anticipation of reaching the 3rd and final milestone payment in the Perifogen settlement, which is triggered at $300,000,000 in cumulative sales, payable within 30 days following the filing of our Form 10 ks in which the $300,000,000 milestone is achieved.

Speaker 6

We now have fully accrued for the entirety of this matter and if achieved anticipate making the final related payments in early 2025. Net income for the quarter was $27,200,000 which represented $0.95 per basic and $0.91 per diluted share. We have reduced and narrowed the range of our non GAAP R and D and SG and A expense guidance, which is now expected to be between $115,000,000 $125,000,000 for the full year ending December 31, 2024. As a reminder, this guidance excludes the non cash impact of stock based compensation. Finally, we ended the Q3 with $374,000,000 in cash on hand and $694,200,000 in total cash plus short term and long term investments, marking continued quarterly growth in our overall cash and investment position with an increase over our Q2 of 2024 cash and investments balance by about $65,000,000 And now I will turn the call back over to Krish.

Speaker 2

Thanks, Kate. So in closing, I'd like to highlight the significant potential for value creation in the years ahead to be driven both by VIZUVAC and our deep clinical stage pipeline. Our VIZUVAC launch having already achieved over $250,000,000 in net revenue is progressing very well. However, as we saw in Q4 of last year, we do anticipate some disruption over the holiday season as life gets in the way for many families. That said, our conviction in the overall trajectory of our launch remains unchanged.

Speaker 2

More importantly, this is only the beginning of the opportunity we see for the VizoVec franchise. In the coming years, we expect ex U. S. Expansion, development and launch of our eye drop formulation for KB-eight zero three, both driving significant revenue growth. Meanwhile, our KB301 readout is a reminder of the significant yet to be tapped potential that we see in our pipeline.

Speaker 2

With multiple readouts coming up, we think we're on the verge of demonstrating the true potential of our HSV-one based gene therapy platform. And with the benefit of commercial scale in house GMP manufacturing infrastructure, growing revenues, 5 quarters of positive EPS, we have the necessary resources to pursue these opportunities efficiently and in such a way to maximize value for our shareholders. Thanks for listening. I'd like to open the call for Q and A.

Operator

Certainly. At this time, we will be conducting a question and answer session. As a reminder, during the question and answer session, Your first question for today is from Alex Stranahan with BOA.

Speaker 7

Hey, guys. Thanks for taking our questions. Just 2 from us. First, could you give us a sense of how many patients are at or near their annual cap currently? Is this something we should be looking for when we model sales into year end?

Speaker 7

Or should the new patient adds throughout the year sort of offset this? And second, appreciate this data is probably still evolving, but on the duration of wound closures over time, curious if there's any trends coming out of your clinical studies you could point to for duration of wound closure? Just trying to get a sense of how long a pause due to wound closure could last before a patient would need to receive therapy again. Thanks.

Speaker 8

Hey, Alec. On your first question this is Krish. Alec. On your first question on how many patients are going to hit the cap, we're not particularly disclosing that aspect of it. You can kind of glean that the cap is in the GTN.

Speaker 8

And the whole point of crewing was to make sure there's no volatility with respect to net revenues in any of the quarters. That's the whole point. And I think we're on track to make sure that the net revenue growth is pretty smooth over Q1, Q2, Q3 and Q4. We'll have a much better sense as we go further into the launch on that point. With respect to duration of wound closure, a couple of things I want to mention.

Speaker 8

Look, there are depending on the location of the wound and the nature of the activity, this can be pretty varied across individuals. Our thesis is still to stick on even though we've seen much larger durations of wound closure in some patients, we still stick to the science behind it, which is given the half life of collagen, we expect the average wound to be durable for about 90 days.

Speaker 5

And then I mean, can I add? Also agreed, I mean, we get we are seeing very good clinical benefits. The wounds are closing and they are seeing durable. But also what happens is these patients are now increasing their activity. We hear from patients now they can go out and do more physical activities, they can walk.

Speaker 5

As a result, they see breakdown in the skin, but now they're very I mean, they want the wound to be treated because they see the benefit of treating BIJULAG. So the patients are being extra cautious. So even if there's boozer cold and if they're right open, they want the drop back on. So that's the trend that we see in the commercial setting.

Speaker 7

Makes sense. Thank you.

Operator

Your next question is from Yigal Nochomovitz with Citigroup.

Speaker 9

Hi, thanks very much. I was just curious about your broader marketing campaign. So I think you mentioned something about the very broad footprint on the social media platforms, 31.3 impression. Can you comment to what extent that's actually helping identify patients or obviously it's a low conversion rate given the market size, but I'm just curious how that's working as far as identifying patients and if any of that effort has translated to new starts?

Speaker 8

Christine?

Speaker 10

Sure. Yes, we're excited about our goal is to receive patients wherever they may be. And our social media and campaigns are allowing us to do that. We are seeing benefit of finding some patients that are not yet engaged or haven't been engaged for some period of time with the health care system that is allowing to reach them, educate them and engage them in re accessing their HCP. So we are pleased.

Speaker 10

As you mentioned, the volumes low, right, from a patient base to begin with, right, as we're in this ultra rare space. But our opportunity to reach every patient is ultimately our goal and 1 by 1 we're getting there.

Speaker 9

Okay. Thanks. And then I think, Chris, on the last call you'd mentioned that you'd identified about 10% more patients from the 1200 base that was sort of forecast at the launch. I'm just curious if you had any updated thoughts in terms of that number or you're comfortable with that statement now? Thanks.

Speaker 8

In terms of comfortable, yes, we were comfortable when we reported the number. The trend continues to go up. And if we hit a significant milestone moving forward, we'll report again. But more and more patients as visevect tends to be well used as the volume of patients increases, the awareness goes up, we are starting to see the market expand beyond the original estimate.

Speaker 11

Thanks.

Operator

Your next question for today is from Ritu Baral with TD Cowen.

Speaker 12

Hi, guys. Thanks for taking the question. I'm going to focus on Europe with my two questions today. Have you guys received the 180 day questions? And if so, can you comment on the topics and whether you've responded and whether at this point you're expecting oral arguments?

Speaker 12

And then, I think it was, Suma, to your point on label expectations, You mentioned that it sounded like you could go down to DEB patients from birth literally, but you didn't comment on recessive versus dominant. Is that a question in Europe? And then the follow-up question is for Krish on pricing in Europe. What can you say on how we should be thinking about European pricing versus U. S.

Speaker 12

Pricing and how to best model that? Thanks.

Speaker 5

Thanks, Vasu, for the question. Yes, we did receive the 180 questions. And in fact, today is our response as our response date to the 180 question. Yes, I mean, most of the all the issues are resolved. There doesn't seem to be an oral meeting at the point set with the EMA at the moment.

Speaker 5

So that's where we stand. With regarding to the label, the label right now as the way it goes based on our 180 day comment on the SMBC, it's going to be from birth in DEV patients that includes both dominant and resistant patients for the SMBC.

Speaker 8

On pricing, Ritu, we're going to do our very best to get the maximum price possible. We're starting quite a bit excuse me. You think about pricing, in Germany, for example, we get to launch with the U. S. Price for the 1st 6 months as we start to begin negotiations in Germany, the 1st country of launch.

Speaker 8

At the end of 6 months, we'll start accruing, expecting a certain price that we land with at the end of 12 months. So the actual pricing in Europe in the first country doesn't really get set till 1Q of say 2026 at this moment. We will have an amnog price given the NPP. So what will be public is the U. S.

Speaker 8

And the amnog price. But overall expectations for us, if you combine all of Europe, look at the conservative end about 50% of the U. S. Price and we'll do our very best given all the product differentiators for Visovent to make a strong case in an ultra rare disease to land somewhere between the 50% and the U. S.

Speaker 8

WACC first.

Speaker 12

Great. Thanks for the color.

Speaker 5

I just want to add one more thing is we are still on track to get home dosing in yellow. So based on the 180 days, so that's something very positive for us.

Operator

Your next question is from Sami Corwin with William Blair.

Speaker 13

Hey, there. Thanks for taking my question. How do you expect the client compliance to impact revenue? And do you plan on giving any revenue guidance for 2025? And then just as a follow-up, you kind of pointed us to reimbursement approvals as a measure of advice and device like launch in the U.

Speaker 13

S. What metrics are we kind of looking for the launch as it progresses in Europe and Japan next year?

Speaker 8

Hey, Sami, I missed the first half of your first question ahead of the guidance. What were you saying?

Speaker 13

How you expect the decline in compliance to impact revenue?

Speaker 8

In the U. S, you mean?

Speaker 13

Yes, yes.

Speaker 8

Look, when we launched at the time of the launch, our expectation was that patients would be utilizing 4 vials a month and our expectation was that it would get to about 2 vials a month 18 months post launch. That was the expectation we had at the time of launch. We seem to be much ahead with respect to compliance because the overwhelming proportion of patients in the study were recessive and potentially more severe in the early days of launch. So we're tracking a little bit higher of that. We're already at like 15 months and we don't expect to get to 50% over the next 3 months.

Speaker 8

So we're ahead and that, as I mentioned before, is primarily because the percentage of RDEB patients is much higher than the dominant patients in the study. With respect to revenue guidance next year, we're still thinking and internally talking about it. We have put ourselves in a position where we're actually expecting an EU launch early in 1Q and we have to get closer to figure out the rate at which the German launch progresses. And then we're up in France under the AP2 or the AP1 program. So a lot of moving parts next year to be extremely definitive about guidance at this point.

Speaker 8

But hopefully by the time the next Q comes around, we'll have more clarity on what we're going to talk about with respect to guidance in 2025. With respect to your last question, in the U. S, we had reimbursement approvals. In the EU, everything is a bit different. Germany is a bit different than France, it's a bit different than Japan.

Speaker 8

And so we haven't made a decision at this point in time. And as we get closer to the CSMP opinion, we'll sit down and talk about what makes the best sense in terms of expecting what net revenues for 2025 will end up being.

Speaker 5

Great. Thank you.

Operator

Your next question for today is from Gavin Clark Gartner with Evercore ISI.

Speaker 14

Hey guys, thanks for taking the questions. I just wanted to focus in on AATD and the data coming later this year. A first question here, can you just level set on the amount of data that we'll be getting, like how many patients per cohort, which patients can be on augmentation therapy and also remind us, which cohorts the lavages are done in and at what time point?

Speaker 5

Sure. Right now we are in the process of enrolling Cohort 2. We have finished enrolling 3 patients. We are going to enroll additional patients in Cohort 2. And based on our animal study and our NHP study, we feel this is a cohort that we really need to evaluate molecular correction for this dose because we did see nice expression that this equivalent dose in the NHP animal model.

Speaker 5

So we have additional patients. They are basically ZZ patients. They could be patients that right now we have patients that are not on augmentation and on augmentation. So we will do evaluate them before and after for molecular correction in their lung lavage. So we hope to have couple of patients enrolled before end of the year and hope to have data on that cohort by end of the year.

Speaker 5

With regards to levels of expressions, multiple biomarkers, A1AT expression, neutral elastase, binding of neutral elastase, so we'll understand and have a complete picture of what are inhaled case molecule is doing.

Speaker 14

That's helpful. And do you believe that the bronchoalveolar lavages or the bronchoscopies will be more informative? And what's the bar on either of those measures?

Speaker 5

So we are looking at everything. I mean, obviously, these patients were subjected to bronchoscopy, so we have their baseline bronchoscopy done. We not just we have we collected the lavage, we did biopsies. So we have both and brushing of the lung. So all three was taken at the baseline and after dosing.

Speaker 5

So we will look at all of that in completeness to understand what it looks like. As far as levels, I mean, again, we are hoping, I mean, again, we feel hopefully, I mean, these patients will not have A180. So we're going to hope to see good expression levels of A180, at least 1 micromolar in the lung.

Speaker 8

Gavin, I do want to add one point. We are a redosing mechanism, right? So and one of our objectives following a good readout in AATV is to go into a redosing type situation. So while one is kind of like a target we've set for ourselves, if you look at the complete package and we get close enough to it, we will look to re dosing to kind of move the program forward. But I do want to be clear at this point, we do not have any sense of what the levels are in any of these situations.

Speaker 5

I mean, keep in mind, we are looking at the entirety, right? You're looking at expression of neutrophil elastase, the binding of K182 to the neutrophil elastase. So it's not just the expression of A180. You want to make sure you're seeing wild type A with A180 and it's functional. So that's critical.

Speaker 5

So we're going to those are that's the kind of data that's going to be critical for us. And hopefully that's what we will achieve to see clinical benefit.

Speaker 14

That's really helpful. Thank you.

Operator

Your next question is from Dae Gon with Stifel.

Speaker 15

Hey, Good morning. Thanks for taking our questions. 2 from us as well. Going back to the VIGAVAC launch metric, you mentioned 460 being reimbursed. I was kind of curious if you can maybe give us a little bit more color around how that distribution is between centers of excellence and the primary care, I guess the community dots?

Speaker 15

Just kind of curious what kind of growth we should be expecting going into Q4 and the future? And secondly, on the AATD, just to kind of level set and clarify here, Suma, is it the expectation that the year end update is cohort 1 and 2, and therefore, you will make a go forward decision as well as the protocol amendment for re dosing after the cohort 2? Or will you still go through cohort 3a and 3b, which I recall was the IV augmentation or without IV augmentation? Thanks so much.

Speaker 5

So I'll take your question first and then I think the commercial team will answer your question 1. Yes, I think cohort 1 and I mean if we see the expression we need to, I think we will stop at cohort 2. If not, I mean we have the option to move to cohort 3 because so far we don't see any dose limiting toxicity in our COVID-two. So we have the option, but I think we are at a pretty good dose level right now with COVID-two. And if you get you see what we see then, I think we will be ready to go into repeat dosing with cohort 2 or the option to go into cohort 3.

Speaker 10

Hi. And I'm happy to answer question number 2. Our success has been built on the fact that we balanced growth in both the COEs and the community settings. Our KOLs continue to position Vicente in a very healthy way. What we see in the COEs is either new patients that are coming in and more patients who maybe haven't yet seen the COE since the approval of VITU BEC.

Speaker 10

In the community setting, as was mentioned, 70% of our prescribers in Q3 were new prescribers and that's because we are successful in identifying where these patients are through our claims alert, but it's allowing us to find these patients all across the United States, including in the community setting. So we need to do both in order for us to continue to see the growth trajectory that we see today.

Speaker 15

I guess, Suma, just to clarify cohort 1 and 2 data for the year end update for AATD?

Speaker 5

Correct. That's what we're shooting for. I mean, we have patients enrolled in the bronchoscopy version and hopefully we'll keep adding more patients to that.

Speaker 15

Sounds good. Thanks very much guys.

Operator

Your next question is from Debjit Chattopadhyay with Guggenheim Securities.

Speaker 11

Hey, good morning and thanks for taking my questions. So, as patients approach their reimbursement caps coupled with the holiday season, how should we think about 4Q? Do you expect a significant growth here or this is going to be a sequentially flat quarter? And then on the 2025 guidance, I understand lots of moving parts as far as Europe is concerned, but why not guide to the U. S.

Speaker 11

Market, especially now that you have trends both from the summer and the holiday season under your belt? Thanks so much.

Speaker 8

Yes. Look, on the first question, the only reason I made that comment, I remember some confusion last year after we came through Q4 and the only point I'm trying to make is Thanksgiving and Christmas, right? Those are at least 2 weeks where patients try to not have a dose or due to life or family or vacations or whatever and also the nurses have their own schedules. So the only reason for making that comment was not to directionally point to some weakening or flattening. We're still on track for the 7.20 reimbursement approvals as we said at the time of the launch.

Speaker 8

I just wanted to alleviate concerns post Q4 right now by saying please think about the holidays, life gets in the way. With respect to guidance for 2025, you are right. We will have a much better handle of the U. S. We will not have a handle on Germany or France or some of the other ex U.

Speaker 8

S. Countries. And so at the end of the year, we'll sit down and think about going into the Q4 if that's something that would be useful to shareholders as a way to model, fully realizing that it will be supplemented by revenues potentially in Germany and France and hopefully even Japan.

Operator

Your next question is from Andrea Newkirk with Goldman Sachs.

Speaker 16

Good morning. Thanks for taking our question. Maybe one here on the European launch. Just curious if you could share what activities are currently underway as you prepare for this potential launch starting in Germany? And then as you do look to next year, what type of step up in infrastructure do you believe is required support the launch?

Speaker 16

Thanks so much.

Speaker 8

Yes. Thanks, Andrea. With respect to activities, look, we're starting to work on the dossiers ahead of the pricing negotiations in several countries. The commercial team in Germany is in place and would probably and the commercial team in France is expected to be in place by the end of the year, the first two countries we're going to be launching in. In terms of infrastructure, look, we're expecting somewhere about 10 employees per country at a high level.

Speaker 8

And that usually includes pretty much all aspects of commercial like medical affairs, reps, maybe somebody for access, etcetera. So a rough estimate would be less than 10 employees per country for each of the European countries.

Speaker 11

Got it.

Speaker 16

And should we expect those to be onboarded, I guess, maybe closer to the potential launch in each of those in each of those as those countries come online?

Speaker 8

I think in Germany, most of them will be onboarded before the end of the year. In France, maybe some by the end of the year and some early next year. And so and we're also we also have a team out in Japan. We have like 6 to 8 employees in Japan today and they'll be onboarded in the first half in anticipation of a 2H launch in Japan.

Operator

There are no further questions in queue.

Speaker 8

So thank you all for joining the call. We look forward to answering any follow on questions in the upcoming days. Thank you.

Operator

Thank you for joining the Crystal Biotech's 3rd quarter earnings conference call. This concludes today's event. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

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Earnings Conference Call
Krystal Biotech Q3 2024
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