for joining us in the next 30-minute session of our Stifel Healthcare Conference. My name is Dae Gon Ha, one of the biotech analysts. For the next half hour, I have the pleasure of being here with Krish Krishnan, Chairman and CEO of Krystal Biotech, so I guess to level set, Krish, maybe Krystal's a familiar story, but if you wouldn't mind maybe laying the landscape before we dive right into the Q&A. Thanks for being here. Sure. Hey, thanks for having me. Krystal Biotech primarily is in the business of bringing genetic medicines to rare diseases at the moment. We target monogenic diseases, diseases caused by one gene that's missing or mutated. We use a herpes simplex virus to deliver a clean copy of the gene to the patient's cell. HSV is a unique virus, so our approach is not a one-and-done, as is classic with gene therapies, but more of a redosable concept. We have one approved drug for dystrophic epidermolysis bullosa, a monogenic skin disease. We have a huge pipeline working on other diseases of the lung with respect to CF and alpha-1 antitrypsin. Early days of getting into oncology, where we're using the same approach to deliver cytokines, combinations of cytokines to skin and lung. With the approved drug, we're on the verge of getting approved in Europe and sometime in 2025, potentially an approval in Japan. The Vyjuvek launch seems to be in a really good place. Okay. Let's start with the upcoming data. You've guided to the 408 phase I data in Q4 of this year, which is an alpha-1 antitrypsin. You've had some recent update or the amendment to the protocol. So maybe we can kind of take a step back and set the expectations for what we can hear from that update. And if you can maybe also touch upon what exactly was the amendment to the protocol that leads to what we should be expecting in Q4. KB408 phase I study was a classic dose-ascending study. We had three cohorts, cohort one with a lower dose, a medium dose, and a high dose. We were expecting cohorts one and two to be primarily about safety and getting bronch data in cohort three, where we will have some directional evidence of efficacy. What happened, fortunately for us, is the site and the physician were able to convince a handful of patients in cohort two to provide bronch data. It's really difficult on the patient. That was a very fortunate thing for us. What it allows us to do is to have a peek at efficacy in Cohort 2, which provides us better insight into making a call whether we stick with the dose in cohort two or we proceed to the higher dose in cohort three. In terms of efficacy, what to expect is a combination of the following molecular data: some brushing data where we can get them, BAL data or bronch data to look at AAT levels in the lung, extent of neutrophil elastase binding, some extent of downstream proteolytic activity. So it's a very comprehensive molecular package. To what extent we're able to get all of these from all of the patients in a timely fashion still remains to be seen, as we're not done with the phase II at the moment. But we do intend to provide some initial update before the end of the year on 408, and that would primarily include phase I and phase II of the 408 study. You mean cohort one and cohort two? I'm sorry, cohort one and c ohort two. Yeah. You're getting too excited already. So on that cohort two, I guess to maybe, again, take a step back, the enrollment goal was three patients. And you mentioned the site was able to get the consent from these patients to conduct the bronch earlier than expected. So at that point, can you maybe remind us how many have been agreed to do this bronch and how many have actually completed the bronch at this point? Do you have a sense of that? We do. Two Two have completed the bronch at this stage. We are yet to dose the third patient in the study. Have you enrolled? We're close to enrolling. Okay. And do we know if that patient is willing to do the bronch or less likely? Until someone actually goes to getting a bronch, what they say in advance is a bit suspect because the more they learn about it, it is difficult on the patient. We got it done on two patients. Hopefully, we get it done on the third. Got it. So at least two patients and maybe three, depending on their willingness. So with regards to the metric itself, you mentioned a battery of assessments you're going to be conducting. At what time point are they getting tested? Because there is a baseline, but I'm just curious how close to the administration you're going to be doing this to make sure you're adequately capturing the treatment benefits. Yeah. So we'll have a baseline, a pre-dosing baseline, and a post. And the post is, depending on the situation, 24-48 hours after dosing. Okay. Okay. So a little bit of variability there. How much of an impact will augmentation therapy have to your lung AAT level measurement? Yeah. So we're trying to get the baseline dose at the tail end of the augmentation if you assume that in over a week it tapers off. We're trying to get the baseline done at the end of that, so hopefully it's clean enough. That's how we're thinking about the study. So we're starting with a good baseline and seeing how much added benefit we get from dosing 408. Okay. To be clear then, at the end of the one-week mark, are they now off augmentation before they get on 408? Correct. Okay, and so the measurement should presumably be purely from 408. That's the intent. Okay. Okay. A couple of questions we had been getting from investors was, what led to this change? I understand the willingness from patients is one, but we've also seen kind of an intensification, if you will, of AAT drug development. So Kamata's in it. You also had recent data from Wave. Beam's talking about it a lot more. Intelli also has their program up and running. So the speculation runs wild in terms of, was this because you're now feeling like competition is catching up, so you want to see an earlier look rather than kind of an absolute decision on its own or in isolation of KB408? What do you have to say to that? It's in isolation. It has nothing to do with the competitive situation at all. We weren't expecting it. We were enforcing it. It just happened to us, and it was great. It was very fortunate. Right. Right. So then looking ahead then, what's the expectation for this particular cohort? You mentioned if it's good enough, you're going to continue on. If it's not, you're going to move into cohort three. What is that good enough definition? I think Stifel drew a line in the sand on good enough, which I think, so let me explain. In systemic circulation, as you very well know, there is a number, 11 micromolar trough levels. The expectation is one should see between five and 10% in the lung as a starting point. There's been a lot of people who have talked about this. There's publications on this. I think you drew a line at 10% in your analyst report saying it should be one micromolar. The important thing to realize is we are a re-dosing approach. So if we get in the range of 5%-10%, hopefully closer to 10%, and we know we're able to re-dose, we believe we can build upon the efficacy. That would be a good range for us to think about, hey, this dose could be a dose we could move forward with. There is a school of thought, so just to step back and talk about it, if it's less than five micromolar, we're definitely going into cohort three. If we end up in the two micromolar range in cohort two, we will potentially stop at cohort two or in that range, north of one. But if we're close enough to one, then the internal thinking right now is that we continue re-dosing in cohort two, but still try a patient or two in Cohort 3 to see if it is meaningfully larger. So we have all three options on the table at the moment. Depending on where the data shows across two or three patients, we'll make that call about whether we only go into cohort three or we go re-dosing and cohort three. Gotcha. So anything above 0.5 seems like the needle is kind of moving in the direction of pursuing future directions. Ideally closer to one. Ideally closer to 1.5 and above would be at least getting that discussion going. Another question. But I will say, look, it is a comprehensive evaluation. We're looking at brushing data. We're looking at neutrophil elastase binding. So the evaluation at Krystal will be a comprehensive look at the molecular data, not simply is it one or not. I just wanted to put that out. Yep. Yep. Well put. On that point, another uncertainty or discussion we've been having was around regulatory. So 11 seems to be, as you pointed out, well established in the literature space. And elevation of serum AAT was the basis for augmentation therapy and some of the other guys kind of pursuing that route as well. But since yours is more lung-specific, just kind of curious how you feel about the accelerated approval argument, how you feel about maybe necessitating a natural history to argue that one or above is really clinically meaningful. What do we know about that regulatory bar, if you will, when it comes to lung-specific? We are yet to have a conversation with the agency on this matter. We would potentially have a conversation following re-dosing to establish the level before we go have a conversation. But to be honest, our expectation is if we show a comprehensive molecular package, neutrophil, all the three things I talked about, we believe we have a compelling case at the moment. But it all remains to be seen. We haven't yet to have a conversation, right? So we are definitely wanting to have the conversation. If I will say the decision to keep alpha-1 antitrypsin in-house at Krystal or license it depends a lot on the outcome of that conversation. If it ends up being a broader efficacy trial with FEV levels, then most likely we would look for a partner for alpha-1 antitrypsin. If it's based on if you get accelerated approval, then there's a case to be made that we hold on to it for a bit longer. Gotcha. Gotcha. On that aspect of the comprehensive evaluation for your next step, right, for 408, does it maybe this is kind of a strange question, but is there a priority of endpoints that you would consider? So for example, bronchoalveolar lavage being one or above would be kind of a strong argument. But you also talk about neutrophil elastase inhibition and some of the other metrics. But again, comprehensive makes perfect sense to me. But is there an order that you would look at things to kind of check off to make sure that it is on the right track or not really? We haven't talked through an order of the sequence. At step one, we'd like to see a level of alpha-1 antitrypsin. The micromolar seems the most important. But neutrophil elastase is just as important. And asking me to categorize seems a bit academic to me. I honestly do not know the answer to that question. Gotcha. Okay. So from a timeline standpoint, once you do, let's say in a hypothetical situation, you get the data that you need, and so you decide to move forward and the repeat dosing, how rapid or how soon can we expect that level of data? Would that be a 2025 event given you already have three patients, or would you? It could potentially be a 2025 event. Unlike CF, we have the full support of the Alpha-1 Foundation. We have access to more sites. Whether we're able to do bronch in re-dosing is a bigger question. We don't know the answer to that question. But if we do determine that Cohort 2 is right for us to move forward with and we choose not to do Cohort 3, then we will quickly move into re-dosing. And there is a high likelihood we have data on re-dosing by the end of 2025. What's the patient size that you're envisioning for the repeat? We don't know yet. We haven't thought through that far out. Okay. But presumably more than the three that you have now, right? Definitely. Another data point as it pertains to the lung expansion opportunity is CF, which you're now guiding to first half 2025. To what extent should we be looking at AAT program as a read-through, bearing in mind both are nebulized, both are also using HSV vector, but the cargo is different? And the pushback we often get is, look at 4D. They had really robust expression, but it didn't really translate in terms of functional endpoint. So is that the right way to think about it, or how should we think about the read-through from 408? Those are two separate. So let me address 4D first, and I'll come back to the read-through part. Most of our competitors, they have a vector that's unable to accommodate the entire gene, and they often trim the gene into a mini gene. And it's always been in the back of many people's mind, when you trim a gene, yes, you show transcription levels and nucleic acid levels, but it does not mean it translates into functionality. Because unlike them, what we do is encode two full copies of the gene. So we actually believe that if we do show transcript or translational levels, there's a high likelihood it will translate to functionality. So that's one topic that differentiates us, we believe, from other AAV companies or other approaches where they trim a gene. In terms of read-through, the CF lung is probably the most difficult lung to penetrate given the occlusion and the mucus. But data on AAT definitely in our minds de-risks to some extent the CF data output because we're now starting to show we can comfortably and conveniently re-dose to the lung. And it's not just limited to CF. One of the things about the AAT data for us is it opens up, like if we're able to re-dose and show sufficient levels, it opens up lung as a tissue for us. Realize we are in the clinic dosing a combination of cytokines for the oncology lung program. So any good read-through on AAT to some internally at Krystal de-risks lung as a big opportunity for us. One of the things, or I guess the headwinds to your 407, the CF program has been enrollment, which you earlier mentioned you have the blessings of alpha-1 antitrypsin group, but I guess it's not the case with CF just yet. Correct. I guess how should we think about that development going forward given first half is going to be a really de-risking event from a clinical standpoint? But the fact that they're still not really on board, even though according to your commentary, patients are getting excited. So the enrollment in cohort two was faster than cohort one. What needs to happen to expedite enrollment in development of CF? Look, our disagreement with the CF Foundation has been on the preclinical data. They are yet to see any clinical data on CF. Our hope is that if we do show some good robust expression in Cohort 3 through molecular data, that we will be able to make a convincing case to the TDN that they should look past the preclinical data we have to date and think about the benefit to the patient. Because from a CF Foundation TDN perspective, they are primarily concerned about safety. They are primarily concerned about integrating vectors. Because once you deliver through an integrating vector, it's tough to unwind that. So if we're able to show clinical data that we are re-dosing, we're safe, we're directionally efficacious, we feel confident, we'll get past this hurdle we've been facing for so long, and then hopefully enrollment improves going forward. I do want to point out our objective is to go after the Null Mutation, where we believe we could have an impact. That's the development path we're contemplating for now. Although if you do deliver full copies of the CF gene, you are mutation agnostic, right, but our initial approach is the Null Mutation. Are you able to go a little deeper on their preclinical issue that TDN is raising? I mean, you mentioned they're concerned about safety, but what is it about the preclinical side that they're so hung up on? At a high level, some of the models that they want to use for us to show that it is functional is not amenable to the HSV1. We have shown functionality in preclinical models, which gave us confidence, but they're not the exact models or the exact assays that the TDN uses. So we're trying to fit our answer into their question. And that has been taken a few iterations because it's not instantly conducive to their existing models. And we're slowly but surely on a parallel path trying to get over that hump while advancing on the clinical side. Right, right. And then from a dosing standpoint, how much of a similarity is there between 407 and 408 programs? I guess going back to the read-through side of things. I don't believe they're not dramatically different. I can't recall the Cohort 3, but it can be verified pretty quickly. But I don't believe there is a big difference in the dosing between the two programs. Okay. Sorry to leave the Vyjuvek side of the story sort of at the back end of the talk because it's obviously been a huge success for you guys. What are you currently seeing in terms of the next leg of growth? I mean, we've had basically one year of commercialization now. You have a lot of experience and boots on the ground commentary from physicians as well as your own colleagues. So yeah, where should we expect that next leg of growth to come from? Is it just maintaining the revenue base and building on top of that? Is there a pocket of patients that are not on therapy yet? Are there community centers that you're more targeting as the next? Yeah, I would break it up. So first, there is still growth left in the U.S. We're going towards 720 reimbursement approvals by two years post-launch. We're at, what, 460 right now. So that's definitely a growth for the revenue going forward into 2025 and more. Ultimately, we're trying to get to 3,000 or somewhere close to that number. Europe, hopefully if we get the positive CHMP opinion, we have a launch in Germany. And in France, it's ATU, which is not technically a commercial launch, but definitely adds a certain number of patients to the launch in 2025. In addition, we're doing distributor agreements in a couple of other countries like MENA. We're looking at Eastern Europe. And we're in early conversations in Israel. So there should be a distribution agreement or two with a handful of patients in 2025. By the time Europe starts to pick up by the end of 2025, we're on track for B-VEC in the eye to be potentially close to approval by the end of 2025. By the time 2025 ends with the U.S. launch and the growth in the European launch in Japan, which is expected to get approved mid next year. We have a launch in Japan till half of next year. By the time 2025 finishes, we have another cycle of B-VEC in the eye starting with the U.S. and extending into Europe. Overall, I would say there's plenty left for growth in the Vyjuvek trajectory. We're super excited. Like you said, it's been a great success in the U.S. We hope to replicate that ROW. Okay. As we think about E.U., first, we'll have to get through the hump of CHMP and EMA or E.C. approval. But to what extent should we look at the U.S. launch trajectory as a relevant read-through for Europe given the different jurisdictions, different healthcare plans that are nationalized? Is there anything to be gleaned from the U.S. when it comes to E.U.? It's tough to answer that question in the short term. So first, ROW launch. But our internal goal for pretty much every country is to get to a 60% market share two years from launch. The same goal. I'm not saying that we're going to get that in every country we launch because the dynamics are different. The patient base is different. But that's a good long-term goal for us to work towards. But I will say that the feedback from physicians both in France and Germany have been very positive. There was an approved drug in Europe for the last 18-24 months in terms of Filsuvez has been approved for a while in Europe. In spite of that, we see a lot of positive interactions with physicians. And so we're expecting it to be a good launch. We will provide more commentary on the trajectory once we have a definitive agreement on the label. Gotcha. With the U.S. approval, I think the pre-approval estimate on the size was 500. And then you incrementally upped it to 750. And I think the most recent estimate for the size, the opportunity for DEB is now a billion. How should we think about pricing-wise in E.U.? I think in the past, you generally characterize it as about 50% of the U.S. Given that U.S. has this pricing cap that you have going, should we be thinking about 95% of that for E.U.? Or is it some more nuanced interpretation to the pricing strategy? We're not thinking about a similar cap structure in Europe at the moment. There are countries in Europe that are limited by annual budget constraints, which provides a cap-like structure to any launch, which is not specific to Krystal. What I mean by that is there are countries with a certain budget size. And if you go beyond, there may be an opportunity for the single payer to ask for more discounts from the sponsor. But in general, we expect pricing in Germany to be higher than the pricing in France, to be higher than the pricing in U.K., and Japan to be hopefully somewhere between the U.S. and Germany price based on high-level benchmarks. But much remains to be seen. A lot depends on the dossier we submit and what the negotiations are. But you're right. A conservative view would be to assume 50% and expect everything above to be based on the efficacy of the drug and the strength of the dossier presented. Okay. I know we're kind of running out of time, but maybe if you can just briefly remind us of the B-VEC ophthalmic opportunity. You're obviously running a study on that based on the New England Journal published N of one case, which was robust. So what should we expect from that opportunity as it pertains to that indication? From a market opportunity perspective, we think at least 50% of the RDEB patients have lesions in the eye. There is early evidence of a small percentage of dominant patients also having lesions in the eye. We know that because we're doing a natural history study, and there have been a few dominant patients wanting to be enrolled in the study, so market opportunity is half of the RDEB patients' conservative estimate and maybe a small percentage for dominant. In terms of where we are upon completion of the natural history, we have alignment with the FDA on conducting a registrational trial. Following the completion of the registrational trial, we'll file the BLA, and it is, I believe, a six-month review if we get accelerated approval or a nine-month review if we don't, and then we launch, but there's a lot of launch synergies with Vyjuvek. Yes. I know you guys are profitable. You've been reporting profitable quarters. I think, what, two quarters now? Five. Five quarters. I stand corrected. So maybe kind of a moot point, but remind us your cash position, where things stand. I think the balance sheet is close to $700 million. Revenues from Vyjuvek continue to be good. We do not at the moment see operational expenses get ahead of between the cash balance and the revenue coming in. So we have no expectations presently of raising money over the next few years. I never say never. Oncology could pick up and could have a big impact, which is a positive. Like if we are spending R&D on oncology, we're in a very different place as a company. But based on everything I see, I think we should continue this trend for a while. Awesome. Well, with that, Krish, thanks very much. Thanks for having me.