Krystal Biotech, Inc. Common Stock 2026 Q2 Earnings Call

Please begin. 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 Kathryn Romano, Chief Accounting Officer. This conference call will, in 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 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.

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.

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.

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? 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.

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.

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 U.K., we also achieved two important milestones.

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.

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 Kristy.

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.