Krystal Biotech Q2 2026 Earnings Report

Krystal Biotech EPS Results

• Actual EPS: $1.79
• Consensus EPS: $1.70
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: N/A

Krystal Biotech Revenue Results

• Actual Revenue: $119.22 million
• Expected Revenue: $120.93 million
• Beat/Miss: Missed by -$1.70 million
• YoY Revenue Growth: N/A

Krystal Biotech Announcement Details

• Quarter: Q2 2026
• Date: 8/3/2026
• Time: Before Market Opens
• Conference Call Date: Monday, August 3, 2026
• Conference Call Time: 8:30AM ET

Krystal Biotech (NASDAQ:KRYS) is a clinical-stage biotechnology company focused on developing gene therapies for rare dermatological diseases. Headquartered in Pittsburgh, Pennsylvania, the company applies proprietary viral vector delivery technology to enable topical administration of corrective genes directly to the skin. By targeting the underlying genetic causes of inherited skin disorders, Krystal Biotech seeks to address areas of high unmet medical need with potentially transformative treatments.

The company’s lead product candidate, KB103, is designed to deliver a functional COL7A1 gene to patients with dystrophic epidermolysis bullosa (DEB), a severe and often debilitating blistering condition. KB103 has advanced through clinical trials under orphan drug and breakthrough therapy designations granted by the U.S. Food and Drug Administration. In addition to DEB, Krystal Biotech is advancing a second program, KB105, aimed at correcting the genetic defect underlying pseudoxanthoma elasticum. The company maintains an in-house cGMP manufacturing facility to support both development activities and future commercialization efforts.

Since its initial public offering on the Nasdaq in July 2019, Krystal Biotech has expanded its clinical and regulatory footprint, enrolling patients in multiple U.S. and international study sites. The company is led by a management team with deep expertise in gene therapy development and regulatory strategy. With a growing pipeline and a dedicated manufacturing infrastructure, Krystal Biotech is positioned to advance its targeted gene therapies through late-stage development and toward potential approval.

Krystal Biotech Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: VYJUVEK revenue rose 24% year over year to $119.2 million, with U.S. net revenue reaching $91.6 million and gross margin improving to 95%.
• Positive Sentiment: U.S. commercial momentum remains strong, with more than 730 reimbursement approvals surpassing the company’s initial 60% penetration target; management sees additional opportunity among community-based and currently undiagnosed patients.
• Positive Sentiment: The pipeline is advancing toward multiple catalysts, including readouts for the registrational DEB ocular study later this year, neurotrophic keratitis enrollment completion by year-end, and potential registrational starts in cystic fibrosis, Hailey-Hailey disease, and NSCLC in 2027.
• Neutral Sentiment: International demand and treatment volumes are increasing, but reported European and Japanese revenue was broadly flat because of accruals tied to German pricing negotiations; management expects key pricing outcomes in Germany, Italy, and Spain by year-end, while France may extend into 2027.
• Positive Sentiment: Krystal ended the quarter with more than $1.1 billion in cash and investments and maintained its 2026 non-GAAP R&D and SG&A expense guidance of $175 million to $195 million.

Presentation

[Operator]

Thank you for standing by, and welcome to the Krystal Biotech 2Q 2026 conference call. At this time, all participants have been placed on a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. As a reminder, today's conference is being recorded. I would now like to hand the conference over to your host, Stéphane Paquette, Senior Vice President of Corporate Development. Please begin.

[Stéphane Paquette, Senior Vice President of Corporate Development at Krystal Biotech]

Good morning. Thank you all for joining today's call. Earlier today, we released our financial results for the second quarter of 2026. The press release is available on our website at www.krystalbio.com. We also filed our earnings 8-K 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, Laurent Goux, Executive Vice President and General Manager for Europe, Christine Wilson, Senior Vice President and Head of U.S. Commercial, and Kate Romano, Chief Accounting Officer. This conference call will, in our responses to questions, may contain forward-looking statements.

[Stéphane Paquette, Senior Vice President of Corporate Development at Krystal Biotech]

You are cautioned not to rely on these forward-looking statements, which are based on current expectations using 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. With that, I will turn the call over to Krish.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Good morning. Thank you for joining us. We were focused on execution in Q2, making solid progress across both our commercial and clinical programs. Internationally, strong underlying demand and high patient excitement underpin our launch. We're working diligently to meet that demand and broaden access for DEB patients around the world. We're advancing pricing and reimbursement discussions in Germany, France, Italy, Spain, and the U.K. while working through the country-specific requirements associated with each launch. In the United States, demand continues to grow, supported by our increasing focus on reaching patients and physicians in the community setting. Laurent and Christine will provide additional detail on our commercial performance and international launch progress. Our clinical pipeline is also advancing across multiple important programs. We currently have two registrational studies underway, our study in neurotrophic keratitis and our study of ocular lesions in patients with dystrophic epidermolysis bullosa.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

In addition, our repeat dose studies in cystic fibrosis and Hailey-Hailey disease are progressing, and assuming supportive data, we believe both programs have the potential to advance into registrational development in 2027. We are also making great progress with our KB707 program in oncology. Our inhaled 707 formulation for the treatment of NSCLC is on track for a registrational study next year. We are now evaluating our intratumoral KB707 formulation in Gorlin syndrome, a rare skin indication that fits in well with our therapeutic focus and growing commercial footprint. Suma will provide a more comprehensive update on our clinical program shortly. Finally, we remain in a very strong financial position. Our continued financial strength reflects both the growing performance of our commercial business and the operating discipline we have maintained over the past 12 quarters.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

This allows us to invest confidently in global expansion and pipeline development while continuing to manage the business responsibly. With that, let's get into the details. Laurent?

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

Thank you, Krish. We are very encouraged by the recent progress in our VYJUVEK launch. Commercial momentum across Europe and Japan is strong and building, supported by growing physician familiarity, high engagement from leading treatment centers, and sustained interest across the dystrophic epidermolysis bullosa community. In July, Krystal had a strong presence at the Third World Congress of Rare Skin Diseases in France, including a well-attended symposium. This was another important step in building awareness and advancing our ambition to establish VYJUVEK as an essential treatment for DEB patients. Demand is high in France, Germany, and Japan and driving growth in both treated patients and treatment volumes. This growth also reflects the excellent work of our country teams as they navigate the access and operational dynamics unique to each market.

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

In Germany, for example, the care landscape is fragmented and only a limited proportion of DEB patients are routinely seen at established EB centers. Our team is therefore engaging a broader network of physicians and supporting patients in continuing treatment at home. In France, VYJUVEK is available through the early access pathway, where administration is currently concentrated in hospital settings due to the requirement associated with its GMO classification. Our team is working closely with centers to facilitate access and treatment continuity while exploring solutions that could support home administration over time. In Japan, an important nuance is the requirement for intensive prescription renewal, which can put a heavy burden on patients in the first year of launch. We are working closely with prescribers and patients to ensure all stakeholders understand the importance of consistent weekly administration and minimize potential disruptions.

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

Turning to revenues, reported revenue in Europe and Japan was broadly flat in the quarter, primarily due to a reserve provision related to the ongoing pricing process in Germany. This does not change our assessment of the underlying launch trajectory or our confidence in the longer-term opportunity across Europe and worldwide as we continue to grow patient and treatment volumes in our overseas markets. Turning to market access, pricing and reimbursement work continue across the EU4. In Germany, Italy, and Spain, we continue to expect key outcomes before the end of 2026, subject to each country's process. In France, formal pricing and reimbursement discussions are expected to progress into 2027. Our engagement with authorities remains constructive, and we believe VYJUVEK's clinical evidence and potential value to patients provide a strong foundation for these discussions. In the United Kingdom, we also achieved two important milestones.

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

On May 15, the MHRA granted marketing authorization for VYJUVEK, making it the first genetic medicine approved in the U.K. for DEB. This was followed in June by VYJUVEK receiving the 2026 Prix Galien U.K. award for best product for orphan disease. This is the third Prix Galien for VYJUVEK, following similar recognitions in France and Italy last year. Together, these milestones reinforce the strength of the evidence supporting VYJUVEK and its significance for patients and families living with DEB. Our ultimate objective is sustainable patient access. NICE's appraisal in the U.K. remains ongoing, and our team is engaging constructively to address NICE's question and showcase the transformational benefit achievable with VYJUVEK. Finally, we are planning multiple additional regulatory submission in the coming months, including Switzerland and Australia, representing another step towards bringing VYJUVEK to more DEB patients globally. Overall, we are pleased with the momentum across our international business.

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

We remain focused on discipline execution, navigating market-specific challenges, securing sustainable reimbursement, and converting strong physician engagement and patient demand into durable patient-centered access. With that, I will hand the call over to Christine.

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

Thank you, Laurent. I am pleased to report another strong quarter of commercial performance. U.S. net revenue was $91.6 million for the quarter. Our field team continues to perform exceptionally well as we extend our reach deeper into the community and across the country. Working in close partnership with healthcare providers nationwide, they are filling education gaps, raising awareness, and helping us reach more patients through the DEB community. To that end, I am also very happy to report that we have achieved more than 730 U.S. reimbursement approvals for VYJUVEK. We have now surpassed our initial penetration target of 60% and have no plans of stopping there. With a strong pace of approvals over the last year and a growing prescriber base, we expect continued penetration of the diagnosed DEB patient pool in the quarters to come.

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

In addition to driving new patient starts, we continue to strengthen our patient engagement efforts to help patients and caregivers successfully incorporate VYJUVEK into their long-term wound care routines. Based on ongoing feedback from the DEB community, we know that virtual education and peer-to-peer connection remain preferred ways to access information and support. As a result, we continue to invest in scalable, community-driven programs that educate, engage, and empower patients through their treatment journey. During the second quarter, we partnered with debra of America to host a virtual education webinar focused on recent VYJUVEK label updates and practical bandaging techniques presented by our Krystal Connect team. The program was developed in direct response to questions from the patient community as treatment needs continue to evolve.

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

As more patients achieve complete wound closure in larger wound areas and transition to managing smaller or more anatomically challenging wounds, including the scalp, ears, and other sensitive locations, the educational needs of patients and caregivers continue to change. The webinar attracted more than 100 live attendees and remain available on demand, extending its impact across the DEB community. Our VYJUVEK Voices program continues to provide peer-to-peer education and support by connecting patients and caregivers with trained ambassadors who share firsthand experience, practical insights, and ongoing encouragement through the treatment journey. During the quarter, we also launched VYJUVEK Connections, a virtual discussion series that brings together patients caregivers, and VYJUVEK ambassadors to discuss topics selected by the community. These sessions foster meaningful peer engagement while addressing the real-world questions that arise as patients gain experience with therapy.

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

Collectively, these initiatives support patients as they adopt greater self-administration at home following our recent label expansion and further integrate VYJUVEK into their long-term treatment routines. These programs also provide Krystal with valuable real-world insights into the evolving needs of the DEB community, enabling us to continuously refine and strengthen our patient engagement strategy. Just a few weeks ago, we were also proud to serve as a diamond sponsor of the debra of America Care Conference, one of the largest gatherings of the EB community. The conference provided an important opportunity to engage directly with patients, caregivers, healthcare professionals, and advocacy leaders. These interactions not only strengthen our connection with the community but also allow us to see firsthand the meaningful impact VYJUVEK continues to have on patients' lives.

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

These advancements, combined with our continued investment in patient support, education, and community engagement, further strengthen our reach and impact as we establish VYJUVEK as the long-term standard of care for patients living with DEB. I will now hand the call off to Suma to share pipeline highlights.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Thank you, Christine, good morning, everyone. I'm happy to share today's update and our progress. Thanks to the tireless commitment of our team, we are rapidly approaching two registrational study readouts in the front of the eye. These readouts have exciting implications both for the patients we aim to serve as well as our platform. Due to the rapid cell turnover and protein clearance, the front of the eye has historically been a difficult to shoot target with gene therapies and biologics. Our HSV-1 vectors, which we easily and repeatedly administered as an eye drop, are uniquely positioned to fill this treatment gap. In sentinel patient cases, repeat dosing of our vectors has been well-tolerated and delivered profound clinical improvement, underscoring the therapeutic potential of our HSV1-based approach. With our registrational programs for KB803 and KB801 nearing readouts, we are on the cusp of validating that potential.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Our registrational IOLITE study evaluating KB803 in DEB patients was fully enrolled in April and is on track for a readout later this year. On success, we expect to move rapidly to BLA submission, leveraging the extensive CMC work already completed for VYJUVEK. Our registrational EMERALD-1 study evaluating KB801 in NK patients is also progressing well. We expect to complete enrollment before year-end, given the short eight-week primary endpoint, we expect a readout soon thereafter. Our KB407 and KB111 programs are advancing on similar timelines to deliver clinical data this year and registrational study starts in 2027. Dosing is underway in our open-label single-arm study evaluating the safety of repeat-dose KB407 in patients with cystic fibrosis who are either ineligible or refractory to modulator therapy. We expect to enroll approximately five patients and report interim results before year-end.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

We are also working with the FDA, the Cystic Fibrosis Foundation, and the CF Therapeutics Development Network Coordinating Center, or TDN, on our innovative registrational study design. We are making good progress on the details of our design and statistical analysis plan. We expect study design alignment later this year and registrational study start in 2027. Dosing is also underway in our open-label single-arm study evaluating the safety of repeat-dose KB111 in patients with Hailey-Hailey disease. We expect to enroll approximately seven patients and report interim results before year-end. We have completed development of our HHD assessment scale, validations are now underway. Altogether, we are on track to discuss our repeat dosing safety results, scale, and study design with the FDA before the end of the year, again, enabling a registrational study start in 2027.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

We look forward to sharing clinical updates on both programs in the coming months as we work to deliver meaningful benefits to the 10 of thousands of patients with untreated cystic fibrosis or Hailey-Hailey disease. In addition to our work in rare disease, we continue to advance our broader pipeline, which leverages the flexibility of HSV-1 to target more common diseases of the lung, skin, and eye. The most advanced of these programs is our inhaled KB707 program for the treatment of non-small cell lung cancer, or NSCLC. Inhaled KB707 is currently under investigation in our phase I/II dose escalation and expansion study, KYANITE-1. Last year, we disclosed the inhaled KB707, a monotherapy achieved 36% response rate in heavily treated late-line NSCLC patients. Inhaled KB707 was also generally well-tolerated, with a safety profile amenable to outpatient management.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

At ASCO this year, we provided a clinical update on our dose expansion cohort evaluating KB707 in combination with pembrolizumab. We again saw strong response in late-line NSCLC patients with an objective response rate of 31%, an encouraging durability. Response were achieved in a diverse array of tumor types, including those with driver mutation, squamous histology, and low PD-L1 expression. The combination regimen was also well-tolerated, a positive indicator for KB707 combination potential with checkpoint inhibitors and immunotherapies more broadly. We expect to complete enrollment in our final dose expansion cohort evaluating inhaled KB707 in combination with chemotherapy later this year. Once data from this cohort is available, we expect to have full information needed to finalize and initiate a registrational study in second-line NSCLC, expected in 2027. We are also moving intratumoral KB707 forward.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Building on early signals of efficacy in patients with basal cell carcinoma from our phase I/II OPAL-1 study, we expanded the scope of OPAL-1 to evaluate intratumoral KB707 in patients with Gorlin syndrome. Gorlin syndrome is a rare genetic disease which imposes a heavy burden on patients, dramatically increasing the risk of developing basal cell carcinomas. Patients with Gorlin syndrome can suffer from hundreds of BCCs over their lifetimes, requiring frequent and potential disfiguring surgeries. There is no specific therapy approved for Gorlin, and as a result, there exists a clear and urgent need for a safe and effective therapy that reduces BCC burden for these patients. We have now enrolled three patients with Gorlin syndrome and expect to provide a clinical update on these patients, as well as our development plan in Gorlin later this year.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

With multiple registrational study readouts and starts upcoming, as well as growing momentum in our oncology pipeline, we are uniquely positioned to deliver transformational impact to patients. This is an addition to our ongoing work on alpha-1 antitrypsin lung disease, aesthetics, and earlier stage preclinical programs. We look towards to sharing many updates in the months ahead. With that, I'll hand the call over to Kate.

[Kate Romano, Chief Accounting Officer at Krystal Biotech]

Thank you, Suma, and good morning, everyone. I'll now provide some highlights from our second quarter financial results as reported in our press release and 10-Q filing earlier today. Net revenue from global sales of VYJUVEK was $119.2 million for the quarter, which included sales from our commercial launches in Europe and Japan as compared to $96 million or a 24% increase from the second quarter of 2025. Note that this quarter also included a full quarter of accrued pricing for Germany as we started our pricing negotiations mid-last quarter, which contributed to reduced quarter-over-quarter net European revenue despite growth in related vial sales. Cost of goods sold for the quarter was $6.4 million compared to $7.2 million in the prior year's second quarter. Gross margin for the quarter was 95%, improved from 93% in the second quarter of 2025.

[Kate Romano, Chief Accounting Officer at Krystal Biotech]

R&D expenses for the quarter were $14.5 million, which was essentially flat to the prior year of $14.4 million. G&A expenses were $39.9 million compared to $35.1 million in the prior year. This $4.8 million increase was primarily due to increased headcount and related compensation expense, as well as commercial costs related to global sales of VYJUVEK. Operating expenses for the quarter included non-cash stock-based compensation of $14.2 million, compared to $14.1 million in the second quarter of last year. Net income for the quarter was $54.8 million, which represented $1.85 per basic and $1.79 per diluted share. This marks an increase compared to the prior year's second quarter net income of $38.3 million and EPS of $1.33 per basic and $1.29 per diluted share. I will also note that the guidance we previously issued relating to non-GAAP operating expenses remains unchanged.

[Kate Romano, Chief Accounting Officer at Krystal Biotech]

We continue to expect to incur in the range of $175 million-$195 million in non-GAAP R&D and SG&A expenses for the full-year of 2026. Finally, we continue to further strengthen our cash and investments foundation, now exceeding $1.1 billion in overall cash and investments. We remain committed to thoughtfully and efficiently deploying our capital as we execute on our upcoming pipeline milestones and continued global commercial strategy. With that, I would like to turn the call back over to Krish.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Thanks, Kate. To summarize, on the commercial side, we are working through typical overseas launch dynamics, including accruals and pricing negotiations, as we build a foundation to sustain our launch for years to come. We are confident that the work we are doing this year will put us in a position to provide access to thousands of patients worldwide and provide a clear path for VYJUVEK to reach its full commercial potential. On the clinical side, we are focused on completing the ongoing registrational trials and initiating at least two more registrational trials in 2027. When we do that in the next 12 to 18 months, Krystal has the potential to transition from a commercial success story into a multi-product, genetic medicines company. Thank you, and we are now ready to answer questions.

[Operator]

Certainly. At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is from Roger Song with Jefferies.

[Roger Song, Analyst at Jefferies]

Great. Congrats for the quarter. Thank you for taking our question. Maybe one for commercial, one for pipeline. For the commercial side, seeing the European sales down a little bit from the first quarter, understanding some pricing dynamic, can you just give us some color around the demand side, then maybe the compliance between Germany and France? That would be very helpful. On the pipeline, Hailey-Hailey seems very interesting indication underappreciated right now. Given you will have phase I data by year-end, what should we expect from that data readout? Also what the current thinking about the epidemiology, then the overall market opportunity for Hailey-Hailey. Thank you.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Roger, thanks for the question. Laurent, do you want to take a first stab at the European question?

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

As we said earlier, the market dynamics are pretty strong. We're facing a strong growth in both patient inclusion and volume and the overall revenues, the full quarter of the German reserve for the future price.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Hey, Laurent, do you want to make any comment on demand? There was a question on demand.

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

The demand is strong. With Europe and other countries, over 180 patients have been treated in Western Europe and Japan so far. As we are expanding in more centers and countries, it is more and more difficult to have a precise estimation in Europe. That's why we might not have explicitly given the number.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

I will add, Roger, just to close on that, I think compliance in the early days of launch in any country tends to be really good as we start off treating severe patients. Your question on compliance in Germany and France, we see pretty good, strong compliance, similar to what we saw in the U.S.. Suma?

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Yeah, I can take the Hailey-Hailey. Hailey-Hailey is an interesting disease. Again, underappreciated, not well-studied. There's not a lot of information in the literature. The beauty of this is we have done a natural history study. It's been five months. We have over 60 to 70 patients already enrolled in this natural history because we use these patients to understand the disease. We've been collecting data over the past four to five months, so we have extensive knowledge and understanding now about the disease, the cycle time and all of that good stuff. We've also used these patients to obviously validate our scale. As you can tell, we're nearing the end of the scale validation. We feel pretty confident, like now we understand the disease and what the endpoints we should go after.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

We have also put together scientific experts and KOLs in the space together to develop the scale and also to the endpoint. The phase I study is basically what we learned from the natural history. Most of the patients already, everybody's excited to be part of this trial. We have no problem enrolling. We have already got patients on the study and started dosing them. We will, again, through imaging and investigators evaluation over three months, just like we did with VYJUVEK, pretty similar. Again, it's going to be a gel. We have learned a lot from VYJUVEK, how to administer, how to have these patients maintain the treatment and use the right bandages. It's very useful. It is very easy for us to take the VYJUVEK experience into Hailey-Hailey.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

I think in the three months, we will look at treated versus non-treated. We'll also biopsy these patients at baseline and see some sort of correction of the treated area. I think we'll have enough data for us to basically then sit with the agency and let them know what the endpoints are, because the FDA has no idea. We are going to let them know based on our data that we generated. We're going to propose the endpoints. We expect to start registrational style early next year. As I said, we have over 60 to 70 patients already in our natural history, and new patients continue to enroll into that study.

[Roger Song, Analyst at Jefferies]

Got it. Thank you.

[Operator]

Your next question is from Alec Stranahan with Bank of America.

[Alec Stranahan, Analyst at Bank of America]

Hey, guys. Thanks for taking my questions and good to see all the progress in the quarter. I guess first maybe on NK, could you talk a bit about the patient treated with KB801 that had a complete closure? Is this patient still being followed, and I guess how does their disease stage or demographic compare to the population that's being enrolled in EMERALD-1? Then, on CF, just on the five-patient follow-up study, could you maybe just remind us what kind of functional metrics the study is designed to show? Or is it maybe more around the dosing PK side? Just hoping to link the CFTR expression to improved lung function, but possible this is maybe something we see more with the pivotal study. Thank you.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Alec, before Suma gets into the comment on NK patients, I want to say, look, it was a legal requirement that made us disclose that one patient data, stemming from some of the patent disclosures that ensued as we were supporting the patent with clinical information. We have always said and expressed to not have the investment community read too much into a single patient data. I mean, the data was fantastic on that single patient. It is a one-patient data, and the new study that we are working on is a different design. With that, I'll turn it over to Suma.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Correct. Okay. This patient, again, was chronic wounding in the eye from his records. We treated the patient, obviously, you can see that there was complete closure, and we monitored this patient over a couple of weeks after, and we see durability of that wound healing. We are done with this patient because that study got closed out. As in the past, we've explained why we changed the dosing regimen, because it made more sense to give daily. It's just not only for compliance and it makes sense when you're administering them into the eye, these are older patients, to maximize the dose. There was no safety concerns. Again, very similar population.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

We want to make sure that we get patients that have chronic wound healing, because that's important, because if you want to separate from placebo, you want to treat those patients that when you express NGF, you're going to see the better effect or the efficacy from that drug when you compare to placebo. We are very excited because we opened this trial globally. We have filed our CTA, and we have identified several sites across EU. We want to expand it because we think we want to go for a global trial, just like we did with VYJUVEK, and hope to get approval just if everything is successful, not just in the U.S., but globally. That's the intent for the NK study.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

On the CF-

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Oh, sorry. On the CF, again, as we have said earlier in our previous calls, the intent of this study is, as per our discussions, which is ongoing with the FDA, where the FDA wanted to see some repeat dosing data in these patients. We have enrolled and dosed patients already. We expect to enroll five patients. This is going to be a weekly repeat dosing study. They come in monthly, and we check for FEV1 and other safety outcomes. It's going to be a measurement of FEV1 over six months. Every month, the patient comes in, and hopefully by six months, we'll have data on what's with repeat dosing and what's the improvement in these patients. Again, remember, we are enrolling really sick patients. These patients have very low FEV1. They have no other options.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

The null patients and patients that have no other option today. It's a very sick patient population.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

That was.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

With high demand.

[Alec Stranahan, Analyst at Bank of America]

Thank you.

[Operator]

Your next question for today is from Yigal Nochomovitz with Citigroup.

[Yigal Nochomovitz, Analyst at Citigroup]

Hi. Great. Thank you for taking the questions. I'm just wondering if you could be perhaps a little more specific with respect to the progress in Germany in terms of the quarter-over-quarter vial growth, the demand growth relative to the accrual process and what the headwind is on the accrual, given that starting in 2Q, I believe there was accrual throughout the quarter. Then on NK, if you could just clarify, it sounds like you're going to finish enrollment before the end of the year and then eight weeks to the endpoint, it appears, unless I'm correct, that the data will be likely in early 2027 or could it still be in this year? Thank you.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Laurent, do you want to take the German question?

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

We don't provide country-by-country details for the number of patients and revenues, but the dynamic in terms of patient inclusion and vial increases is very solid in Germany.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

You go on the accrual process. We are expecting at this moment to complete negotiations in Q3, pricing negotiations in Germany, assuming successful completion of the negotiation, the impact of accrual. Our whole objective is to be conservative in the accrual and get it over with once the pricing is established in Germany. We did experience some accrual in the first half of Q1, completely in Q2, maybe a partial in Q3. Hopefully by the time Q4 comes around, we'll be back to an actual net revenue number in Germany. On NK, Suma?

[Suma Krishnan, President of Research and Development at Krystal Biotech]

NK, again, as I mentioned, we are going globally. As I said, we're getting all the sites activated in EU countries and regions because we want to do one global filing. We are targeting and getting all of it enrolled by end of the year. Potentially early 2027 by the time we clean the database and announce data. Again, keep in mind, the thing is the CMC, right? That's the stuff. We have the platform technology. We have all the stuff ready to go. Once data is out, in its entirety, I think we'll be ready to file the BLA.

[Yigal Nochomovitz, Analyst at Citigroup]

Okay. Thank you.

[Operator]

Your next question is from Ritu Baral with TD Cowen.

[Ritu Baral, Analyst at TD Cowen]

Good morning, guys. Thanks for taking the question. Suma, I just want to clarify on NK enrollment. Are you pushing out the enrollment completion and the data just slightly for the sake of the European patients? I wanted to just ask how enrollment rate was going overall, as far as a reflection of the interest in the therapy. Also, are you upsizing the trial at all to include these European patients? Then my second question was a commercial question just on VYJUVEK in the U.S. In your remarks, Krish, you mentioned that you were going more to the community setting. What commercial opportunity or patient number opportunity is left in the community setting for DEB? Is it mostly dominant DEB? And what sort of market research trends have you seen to sort of drive that interest? Thanks.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

Ritu, I'll take the NK study. Obviously, it makes sense for us to go global, to file in Europe. Obviously in Europe, Oxervate is not available, so there is a need for these patients. When we talk to all of the KOLs in Europe, they all want to participate because there's nothing for these patients. Obviously we want to take advantage of that so we can speed up some of the enrollment with adding more patients in Europe that are willing to get. There's a need. That's the intent. Again, we are not upsizing the study trial. We want to do global filing. We want to increase recruitment with keeping the study design the same and the numbers the same, the intent is to get a global filing.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Ritu, we presently expect enrollment to be done year-end, as we've been saying. On the commercial side, Christine, you want to take a shot?

[Christine Wilson, Senior VP and Head of US Commercial at Krystal Biotech]

Sure. I'd be happy to. Yes, we continue to believe there's opportunity in the community setting. We've made a lot of great progress of finding these patients wherever they may be located across the U.S.. As mentioned, we have surpassed our initial penetration target of 60% of the diagnosed patient population. We're continuing to see opportunities and finding opportunities which supports the demand growth that you're continuing to see. In addition, you asked about the DDEB population. We're continuing to see patients come in that are both RDEB and DDEB. As you can imagine, as the launch has gone on, we're seeing the DDEB patient population grow as they sit more on that mild-to moderate-spectrum. We're still also seeing RDEB patients coming in. It is still a healthy split of the opportunity that's being found in that community setting.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Yeah. Ritu, in terms of overall, I don't think there's any change. There's about 1,200 identified patients. That's the initial target. Once we get close to that number, we're going to expand our efforts to go after the 3,000 or so, the majority of whom probably are undiagnosed. If you look at the number of reimbursement approvals we're able to generate every quarter, that shows there is still a healthy demand left. We're not in any kind of stable mode. It is true-

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

That most of the new patients coming into the drug tend to be more moderate to mild than super severe. That said, demand continues to be really strong, somewhere between 35 and 50 reimbursement approvals. We keep hitting on that almost every quarter.

[Ritu Baral, Analyst at TD Cowen]

Great. Thanks.

[Operator]

Your next question for today is from Lachlan Hanbury-Brown with William Blair.

[Lachlan Hanbury-Brown, Analyst at William Blair]

Hey, guys. Thanks for the questions. Maybe a couple on access. I think over the past couple of weeks, we've seen headlines out of Germany that they're sort of passing some reforms on drug pricing or health insurance. I know your negotiations are ongoing, and this new law is still very early, but is there any thoughts on your side on how, if at all, that could impact either the negotiations or the ultimate outcome there? Then in the U.S., maybe somewhat similar, but wondering how the sort of negotiations on pricing and coverage and access is going through the PBMs for the at-home administration, given that's sort of earlier in the launch of that than the original HCP-administered product.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

I'll answer the U.S. quickly and turn it to Laurent to talk about Germany. Look, in the U.S., since the beginning of the launch, we've had really good access. We really haven't had any substantive issue with regard to access to date to really talk about. We do have some wrinkle on the early part of January every year as people transition insurances. In terms of pricing, in terms of rebates, we've had a very productive relationship with payers and payers in general. Laurent, on the German side, do you have any comments on the question?

[Laurent Goux, EVP and General Manager for Europe at Krystal Biotech]

Each market has its own pricing and reimbursement framework and specificities. The outcome will naturally vary from one country to another, but our focus is definitely on achieving sustainable reimbursement that reflects VYJUVEK's clinical value. The high unmet medical need in the countries, while being able to provide access to an expanding group of patients. Keeping it consistent with international reference pricing framework. Yeah, the new things are evolving in Germany, but we are very aware of it and negotiation are very constructive.

[Operator]

Your next question for today is from Debjit Chattopadhyay with Guggenheim Securities.

[Debjit Chattopadhyay, Analyst at Guggenheim Securities]

Hey, good morning, and thanks for taking my questions. I have a couple. The first one on NK. Our channel checks seems to suggest patients who have undergone prior corneal surgeries or any vision correction procedures might be at risk for NK. If that's correct, how are you thinking about the commercial opportunity? The second question, the ocular DEB program will read out prior to NK. How are you thinking about the read-through from DEB to NK? Thank you so much.

[Stéphane Paquette, Senior Vice President of Corporate Development at Krystal Biotech]

Yeah, Debjit, thanks for the question on the NK market opportunity, and you're flagging the prospect of maybe a higher incidence rate of NK-associated surgeries. It's certainly something we're looking at. We look collectively across the claims data, some of which we've disclosed, and Oxervate's performance. It's clear the number of patients being diagnosed and treated annually with NK has increased dramatically. Some of this likely awareness, but it does also point to some potential incident forces that we are investigating. I think quite clearly, the trends both on the claims side and the sales data, the recent sales data for Oxervate point to NK being a large and growing market in the U.S. As Suma alluded to, underserved disease worldwide. Plenty of opportunity here for us on KB801.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

I think the advantage for KB801 is our CMCs. If you look, we have optimized cost of goods, all of that. With regards to read-ons, completely different, right? If you look at NK, it's very similar to open wounds and Vizylac. You need to make sure they're chronic, you treat them. You have to then look for complete wound healing. It's mechanistically, because they have to have an open wound, and then you treat the wound in the eye and complete closure. Whereas for KB803, it's very different. It's prophylactic. There is no ophthalmologist involved in the study. It's purely a patient-reported outcome. We have patients in a natural history study. We look at number of events, and then we treat them. They are prophylactically administered, and it's a patient-reported outcome.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

The patients evaluate and say, hey, on a scale of five, they measure like, do I feel I have pain? Do I have abrasions? It's very patient-reported outcome, apples and oranges. Whereas for NK, it's a physician, and you have to take the pictures of the images, independent lab. They have to show that the wound is completely closed. Again, very different. Two endpoints are different, evaluation's different. Read-through from one to the other, either way, it's not the right thing to do.

[Debjit Chattopadhyay, Analyst at Guggenheim Securities]

If I may follow up with one more. When we did our channel checks, the physicians are also reporting a huge influx of Dompé sales or sales reps, which is obviously being reflected in the observed sales numbers. Assuming a successful outcome of the study, how are you thinking about sales force in 2027 prepping for a launch later on, so you can address the market opportunity there?

[Stéphane Paquette, Senior Vice President of Corporate Development at Krystal Biotech]

Yeah. Debjit, I think it's a little early for us to be getting into phase IV plans. Certainly, we recognize that there is a significant unmet need and patient opportunity here, and I think certainly on success of EMERALD-1, if it is successful, we would be looking to assume a dominant position in the United States and worldwide, and we'd do everything we could to achieve that.

[Operator]

Your next question is from Kal Patel with Wolfe Research.

[Kal Patel, Analyst at Wolfe Research]

Great. Hey, good morning, and thanks for taking the questions. For the ocular DEB program, can you remind us if that also includes global patients like you're planning for the NK program? One for the NK program itself. Can you comment on what the screening to enrollment rates are and what the demand looks like for the trial itself? Finally, for the Germany question or Europe question, on a gross pre-pricing accrual basis, can you give us any color if European VYJUVEK sales increased sequentially, and if so, by approximately how much? Thank you.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Suma, you want to quickly talk about.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

For the eye study.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Ocular

[Suma Krishnan, President of Research and Development at Krystal Biotech]

it's not a global study because I think patient-reported outcomes are not very well accepted by Europe. We have to first show this in the U.S. At least we were able to negotiate that with the agency. It's just right now, it is just focused on the U.S.. It's a U.S.-based study. Based on the outcome, then we will open up discussions with them. Again, because of the patient-reported outcome as the endpoint. Unlike NK, it's a well-defined physician imaging. It's well-recognized, and it's accepted by Europe and rest of the world. That's the main difference between the two trials. Regarding to enrollment, as I said, we are really picking up enrollment at the moment because we have got most of our sites up and running.

[Suma Krishnan, President of Research and Development at Krystal Biotech]

We are almost in the process of getting Europe sites up and coming, so enrollment, the pace is going to continue to increase.

[Krish Krishnan, Chairman and CEO at Krystal Biotech]

Hey, on the Germany question, the answer is yes. We try not to quantify these things because then it becomes a perpetual question that we are held responsible to. I will say, it's in the double-digits.

[Kal Patel, Analyst at Wolfe Research]

Okay. Thank you very much.

[Operator]

Thank you. We have reached the end of the question-and-answer session and today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Participants

Executives

• Stéphane Paquette, Senior Vice President of Corporate Development
• Krish Krishnan, Chairman and CEO
• Laurent Goux, EVP and General Manager for Europe
• Christine Wilson, Senior VP and Head of US Commercial
• Suma Krishnan, President of Research and Development
• Kate Romano, Chief Accounting Officer

Analysts

• Roger Song, Analyst at Jefferies
• Alec Stranahan, Analyst at Bank of America
• Yigal Nochomovitz, Analyst at Citigroup
• Ritu Baral, Analyst at TD Cowen
• Lachlan Hanbury-Brown, Analyst at William Blair
• Debjit Chattopadhyay, Analyst at Guggenheim Securities
• Kal Patel, Analyst at Wolfe Research