And thank you for joining the Guggenheim Partners Healthcare Team at our sixth annual healthcare conference. I am Debjit, and joining me today is Krish Krishnan, the President and CEO of Krystal Biotech. Thank you for your time, Krish, and let's get it started with a quick intro. On the company? Yeah. Well, thanks for having me. It's a pleasure to be here. Krystal Biotech is a fully integrated commercial-stage company focused on developing medicines for unmet medical needs. We are a redosable gene therapy platform, which essentially means we go after diseases that are caused either by a missing or a mutated gene, and we try and provide a wild-type, clean copy of that gene to patient cells using a modified HSV-1 vector. Our first indication for DEB was approved on May nineteenth, and we're in the middle of the launch of VYJUVEK in the U.S., and are expecting to launch the drug in Europe and Japan in 2025. We have a pretty healthy pipeline spanning skin, primarily skin and pulmonology indications. Awesome. You got the J-code for VYJUVEK late last year. Has that simplified the process in terms of either reimbursement or more demand? In terms of reimbursement, J-code definitely helps. It takes a few weeks for the J-code to kind of settle down across the different states. But I will say, access in this launch has been fortunately really good. We have systematically. You know, we started with the commercial, then we went to managed Medicaid, and now we have mandatory Medicaid with the states covering. We haven't had pushback from any of the large payers with respect to access. So it definitely helps from an access perspective. From a demand perspective, look, we do see an uptick in Q1, but it's tough to discern whether it's because of the J-code or any pent-up demand due to the holidays in Q4. Got it. And will you be providing insights into the Q4 PSF, sorry, patient start form numbers? Yes, we will. Which is kind of the guidance? Yes, we plan to. Got it. And the guidance for 2024, is that forthcoming with the year-end call, or would that be more of a first quarter? We haven't decided when. Like, I don't think we know enough to guide on the revenue, so A, we will not be guiding on revenue in this upcoming call. And in terms of when we will start guiding, we don't have a clear answer on that yet. Got it. So any guidance for 2024 will be, again, mostly on a Patient Start Form basis, or, how should we sort of- The only guidance that we're contemplating announcing is the extent of cash OpEx spend in 2024. Got it. Now, given the severity of the recessive subtype, this has been the thesis that, you know, while the start forms look good, it wasn't as good as it should be, given how severe the patients are. Your pushback on, you know, the patient start form numbers versus Street's expectations? We completely disagree with that comment. It's the opening point. We ended up with 284 start forms at the end of Q3. I have talked before that, that they are adjudicated. That represents over 20% of the identified base of patients, and actually looking back at prior rare disease gene therapy launches, I am yet to find a launch that started off that well, from, launch in terms as a percentage of the identified patient base. So that's one point. The second point I would say is, people who comment that, "If it was my kid, I'd put the kid on the drug tomorrow," that's a bit naive. Mostly comes from the street, is where I've heard that comment, 'cause you got to think about VYJUVEK. First, it's gene therapy. Second, it's a redosable gene therapy. Third, it's based on delivering a gene using a HSV-1 vector. Fourth, it's not about going to a specialty center, but having a nurse come home and apply VYJUVEK. So if you are a parent with a kid, not too familiar with the gene therapy, I've only heard all the adverse events of gene therapy in the past, and you hear about a medication being delivered through this vector, I think you would agree that it warrants that parent would want a conversation with the KOL prior to putting the kid on drug. That takes some time, depending on the Center of Excellence and how often they have EB clinics. So this naive comment that, "If I had a kid, the kid should be on drug tomorrow," is somebody who's not looking at what this drug is, but simply comparing it to some acute pain medication that you get in a pharmacy. Got it. So given, you know, you've had approximately six months on the market right now, do you think some of those challenges have started to be, or have been addressed, and there is a more widespread understanding of what HSV-1 vector is and what VYJUVEK actually does? Yeah. It, you know, I would say obviously, if you look at 121 start forms in six weeks, we started off with a bolus, right? I think the launch is much more at a very steady pace, given the time it takes at a Center of Excellence and the time it takes in the community. That said, patient experience on the drug has been really good. Compliance continues at the right clip, even today. Conversion from start form to patient on drug has been consistent. Reimbursement has been pristine. So I would say yes, we're definitely a lot of the scheduling issues and reimbursement issues are getting into our rearview mirror, and sometime by the middle of this year, we expect most of these tactical issues to be gone. Like, if any. Like, they are dwindling as we speak, and hopefully, we'll reach a great point by the middle of this year. Got it. Let's pass through some of the individual components there. Let's start with compliance. Have you noticed any difference between the recessive patients and the dominant patients? Because you had a pretty decent number of dominant patients on VYJUVEK. We will talk about compliance again in the upcoming earnings. We announced compliance at 96% at the end of Q2, and we've seen no meaningful deterioration in compliance at all, and definitely not any difference between dominant and recessive patients. It's been tracking as we expect to date. Got it. And the cadence of dominant patients coming on the drug, is that similar to what you saw before? Or again, that was the more severe subtype of- I'll simply say, we actually are starting to believe that there could be more dominant patients out there than we previously estimated. That said, we will, in the upcoming earnings, talk about the percentage of the start forms that came from dominant patients, like we do before. But we've seen no reduction in those values as we continue to move forward. Got it. So, this dichotomy between recessive patients are more severe and dominants are not as severe, and hence, they will not seek treatment from or with, with VYJUVEK. Does that resonate with you or the thought leaders, or that should also sort of fade away? Look, obviously, the recessive patients are priority one because the disease is severe. But by and large, your comment is right, that dominant is a much more milder form of the disease than recessive. There are patients who overlap that spectrum. But the rate of dominant start forms that we continue to see makes us pretty pleased that our message, that you should not discriminate whether you're recessive or dominant, but you have to get on VYJUVEK, I think is echoing out there in the marketplace. Got it. And in terms of the genotyping, one of the things that came across when we were trying to do some surveys on it was not everybody's genotype, and that itself was taking time. What is sort of the situation right now with genotyping, and who's paying for it, etc.? It's a bit of a hands-off relationship. We offer free genetic testing to any patient wanting to make sure that they are the right subtype of EB. Pretty much in this country, unfortunately, which is not echoed worldwide, sequencing has never been reimbursed by the payers, and so there still exists a sizable number of patients who are either misdiagnosed or undiagnosed. But with Krystal Decode, more and more are taking advantage of the program, more and more are getting sequenced, and hopefully, when the results come out, now they have a treatment also, and they will talk to the physicians about what to do. But that's the service we provide to address some of the issues with patients not being sequenced. Got it. So what% of the market do you think is actually sequenced? Just that 1,200, which sort of are captured in the registry, or the number is far smaller than that? You know, some of the 1,200 also needed to be sequenced. So if you look at the prevalence estimate of us being 3,000, I would say one-third are sequenced, and two-thirds are yet to be sequenced at a very high level. Got it. And, from a market sizing perspective, 1,200 recessive, 1,800-ish dominant, does that still resonate, or to your earlier comments, that it might be more than 1,800? Look, we firmly stand behind 1,200 identified patients in the U.S. We validated it analytically through a couple of sources, and with the reps on the ground, have been able to put a finer point on that number. Out of the 1,200, we believe it's predominantly recessive, because severe patients tend to get treated, like, this is pre-VYJUVEK, and the claims data are probably 80% recessive and 20% dominant. Going from 1,200 to 3,000, we anticipate it would be predominant, it would be more leaning towards the dominant side than towards the recessive side. And we have started efforts already, in identifying these patients. Some are coming in through these dominant start forms that we get. We're starting to engage with the patients already on the drug, conversations about family trees to hunt for these dominant patients, either within the family or within the community. A big part of our efforts going forward is taking us from the 1,200 number, which we stand behind, to the 3,000 or slightly bigger number that we could end up with. Got it. And did you, at least from, on the commercial side, did you see any impact of the holiday season in patient start forms? We did. But we should think about the impact of holidays, not just as, oh, there were no patients on the drug, but rather that a postponement of getting on the drug, right? Usually, and what I'm trying to say there is if there was an EB clinic that was postponed or not well represented due to the holiday session, most Centers of Excellence reschedule that to a different week. Got it. So it's more of a time delay than a... That's the impact of, if any. Do you think the end of your conference call will provide clarity on that delta between patients who got rescheduled or should have? We intend to- Okay. explain, which is why when you asked me before, "Have you seen an uptick due to the J-code?" I responded by saying, "It's tough for me to discern if it was a shift from the holidays or any impact due to the J-code itself. Got it. Outside the Centers of Excellence- Mm. -What does a typical practice volume look like for, you know, DEB patients? And do you have boots on the ground hitting the smaller, Oh, definitely. It's been going on for a while. Once we realized that the COEs are at a very steady clip based on the EB clinics, we started efforts in the community a few months ago. A typical practice maybe has 1-4 patients, 4 probably being on the high end. Mostly derms and peds derms, for the most part. There are some patients who've stopped going to the derms and peds derms and deal with esophageal issues and other types of manifestations of EB, but by and large, derms, peds derms. We've been in the community for a while, and it's a big part of our story going forward. Yeah. Any impact of the Filsuvez launch? I don't even know if I'm saying it right, but the oleogel product. We haven't seen any so far. Filsuvez, I believe, has been in Europe for about a year already. They got approved, like, a year ago. So we haven't seen any meaningful impact yet. I think down the road this year, Abeona is probably thinking of getting their BLA approved. How do you think that is gonna impact VYJUVEK? Tough to tell. They are autologous, but we're allogeneic. A big percent of our patients, a huge percent, are in home dosing. And the reason I mention that is we're starting to realize how important convenience is for these patients. They do not even want to go to the local derm, peds derm office to get treated by choosing to be dosed at home. So it remains to be seen, depending on the label and the approval, what impact Abeona will have on Krystal. So it's a wait-and-see. Got it, but in the best-case scenario, do you think there is a case to be made for synergistic use? We have never said that. We believe VYJUVEK was designed to work on small wounds, large wounds, chronic wounds, recurring wounds. So there is no segmentation of wounds in our mind that VYJUVEK would not be applicable. So from that lens, which I get could be a bit biased, but from that lens, there appears to be no reason for a synergistic situation. But that decision will ultimately be made by KOLs and patients, and we'll see what impact us. plans to move to a single vial or change formulations to, so you have a single vial as opposed to two, would that change anything or from a timing perspective? The work we're doing, there is 2 activities going on. One is to increase the size of the bioreactor to get more efficiencies on cost of goods sold. I know we talked about a 90% gross margin, getting to about 95% in 18 months. That's the bioreactor scale-up type efforts, that's ongoing. The other formulation work that is going on is more with respect to treating with B-VEC for patients with lesions in the eye... we're definitely starting to engage with the agency to talk about what would it take. You saw that one compassionate use story that continues to be very positive for the patient, and we're trying to work with the agency to figure out how we can, on the, on the same label or a separate label, allow for B-VEC to treat lesions in the eye. That represents about 25% of the DEB population. Got it. Do you have a handle on what the regulatory ask could be? Is it a 5-10-patient study follow-up? Our position, and we haven't gotten complete feedback yet, our position is to do a simple open label trial on a handful of patients, like the ones you mentioned. Look for some kind of improvement in the 3-month period, with follow-up after 6 months, and use that as a basis for approval. But remains to be seen what the agency responds. If you do get approved in that setting, from a frequency of dosing perspective, is that a once-a-month thing, or how are you thinking about that, and also the pricing? On that one patient, I'm talking about the one patient experience we have, it's presently a once-a-month type treatment, and the kid continues to have really good vision at 20/25, which is really positive. No adverse events, although it's N-of-1. Our objective is—I mean, our hope is that we keep it separate from B-VEC, where it has a separate NDC, and, like, we're trying to keep it separate from the B-VEC story. Got it. So just to frame the upcoming, you know, conference call, it's gonna be patient start forms as of end of 2023. And guide going forward is we won't necessarily give us any clarity on 2024 patient start forms or revenue expectations. Correct. Got it. Given the number of patients that you had end of third quarter and whatever you add, you know, our back of the envelope looks like the company could be profitable. So when you said you're gonna give cash guidance, is that something that, you know, you'll talk about? Look, we, I mean, I'll honestly say we don't run the company with the, like, with the EPS in mind. I think we have four clinical trials. So the R&D expense at a high level last year, and we'll announce this, is roughly around $100 million in cash OpEx, right? We expect that number to go up in 2024 because of the four clinical trials. And so what we thought, when I say that, people go, "Well, what do you mean it's gonna go up? By how much?" And so we thought it would be very prudent for the company to say, "Hey, we plan to spend $X million on cash OpEx in 2024." So you have a frame of reference. And then, depending on what you all model for VYJUVEK revenue line, you can figure out, are we gonna turn positive or negative based on that guidance? Got it. So switching to the pipeline initiatives, let's start with 407 and cystic fibrosis. How's the enrollment coming along, and what do you need to do to get the CF Foundation to really back the program? Yeah. Enrollment's getting better. It took us about six months to enroll the cohort one of the CF study. And given the experience there, cohort two enrollment is tracking at a faster rate. So we have. It's a three-cohort study. We haven't guided, and we will at some point, but it's likely that we announce some top-line data in 2024. I say top line, top line is in safety, primarily bronch data, and the customary FEV1 changes. We have still to convince the CF Foundation about giving us access to the TDN network, and we continue to go back and forth on the preclinical data we have versus the requirement and yet to align to get. So we are literally enrolling outside the TDN network at the moment. Got it. And what's your sort of internal threshold for a go, no-go decision on 407? Predominantly expression. So on 407, if you think about it, especially a severe patient, right? You have an inflamed lung, you have epithelium turning over, with big mucus plugs on the lung. And it's really difficult in my-- I find it really difficult to imagine that you could get through all that with a one-and-done therapy. What's important about KB407, it's redosable. So you could systematically chip at all these things I talked about, the mucus plug, which we have shown in preclinical, our vector can get through the mucus. You can chip away at, and get better over time, which is why we're super excited by the redosable aspect of 407 when compared to other companies and other deliveries, which are one and done. Like, it's tough to get there with one and done. So that's the excitement. What we're looking for from a go, no-go, A, safety, B, expression data, you know, we encode for two wild-type, full-length CFTR gene. So if we see good expression data each time, we know we can systematically chip at the problem over time. Got it. And then the last-minute thoughts on 707, if you're gonna see data this year and how enrollment is coming up? I mean, and look, some of you have already figured this out. We're on clinicaltrials.gov on the pulmonary delivery too. So we got IND clearance on 707 for the lung delivery, and we already are dosing in solid tumors. We believe the combination of IL-2/IL-12 is super unique, especially when dosed in small levels in a local environment for a certain duration, which is the turnover of the cell involved. So I think we have a very clear paradigm going after both solid tumors in the lung and in the skin. A lot of excitement around enrollment. We have not officially guided to data at the moment, but enrollment is going at a really good clip, on, like, especially on the solid tumors. We will announce when we dose our first patient for the lung, so we'll make that announcement. Got it. All right. Thank you so much, Krish, for your time, and good luck with the upcoming conference call. Thanks for having me. Thank you.