Everyone, I'm Josh Schimmer from the Cantor Biotech Equity Research team, and what a treat. We have both Krish and Suma Krishnan from Krystal Biotech. Krish is Chairman and Chief Executive Officer. Suma is President of R&D here with us. Krish, maybe kick things off. Give us a quick snapshot of where Krystal is today and where you think the company's headed. Yeah. So today, Krystal's a commercial genetic medicines company that's fully integrated. Integrated as in everything from research and development to manufacturing to packaging. We launched VYJUVEK in the U.S. three years ago. The launch went, has gone really well in the U.S., and now we're in the somewhat early days of launching in Europe and Japan. And our expectation is that the launch, given the efficacy of the drug and the profile of the drug, will do just as well in ROW as it did in the U.S. But more importantly, there's a bunch of pipeline readouts upcoming over the next few months to a year, and that could transform Krystal from being a single product commercial story to an actual genetic medicines company with the potential to have multiple products launched over the next few years. So that's pretty exciting. And the fundamental technology is a platform technology using the same herpes simplex virus vector for all the different pipeline compounds. So that's quick, but in addition, Krystal has been EPS positive, meaning earnings positive, for the last three years, which is somewhat of a different thing in this industry. And the reason I mention that is that as we develop our pipeline, a lot of the pipeline will get developed without the need for the company to be in any financing mode. So we're not expecting to be in financing, which is kind of great that you can realize your pipeline potential without diluting the shareholders. So that's a quick rundown on the company. We're based in Pittsburgh, about 340, 350 employees worldwide, and really in a very nice place financially and operationally to transform the company to the next stage. All right, excellent. Why don't we start with a few commercial questions, then we'll spend a lot of time on the pipeline, especially with Suma here. So VYJUVEK had just really an explosive launch. It has, obviously, in the U.S., plateaued over the last several quarters. Do you expect it to break out, and if so, what will be the catalyst or the driver to kind of get above that $85 million-$95 million per quarter range? Yeah, there are two drivers of VYJUVEK launch in the U.S. at the present moment. One is just pure demand, and pure demand is reflected in the number of new reimbursement approvals we announce every quarter, and that's been trending at about 40- 45, roughly, over the last few quarters. That's pure demand. A huge percentage of reimbursement approvals turn into patients. The patients are moderate to mild as we go further into the launch, but that's a pure demand driver. On the utilization side, we announced 730 reimbursement approvals to date, so there's a lot of patients who've been on the drug for three years, two years, one year, and a lot of the wounds are starting to heal, so they start taking pauses. But they get back on drug once a new wound comes and opens up. So those are the two dynamics. One is a pure demand, and the other is utilization. The utilization component, you're right, is somewhat getting close to steady state with about 50%-60% utilization, but the demand continues to grow. So if you look out, our expectation is that the revenue line will continue to increase, but not at the rate it did when we first launched in the U.S. At a decreasing rate, but we expect the revenue line to continue to go up. Such is not the case in Europe and Japan, where we are in the early stages of launch and expect them to be good. Do you expect ex-U.S. can reach the sales level that you've achieved in the U.S., and if so, what are the key drivers to get there? Yeah. We believe Europe, in terms of number of patients, could be twice what we got in the U.S., like Europe as a whole. Pricings may be not as great as we got in the U.S., given that that's what happens in Europe. But if Japan pricing is any indicator, we are very optimistic about, at least presently, about what pricing we can end up in Europe. So if you combine the two, Europe should be just as good as the market of the U.S., if not better. Japan, as a whole, for rare diseases, has always been a good market for rare diseases, and so we expect that to go. So overall, we feel really good about the VYJUVEK franchise, not just what happened in the past, but about what's going to happen over the next 12- 18 months. How are you navigating around MFN? There are actually a number of biotech companies that came to an agreement with the White House. I do not think Krystal. I do not know if you were even a part of the discussions or not, but how are you kind of now anticipating MFN to impact your global strategy? Yeah, one of the fortunate things for Krystal is we are not yet fully launched in many of the countries, right? We just launched in Germany, and we have launched in France, and in terms of negotiations, while we do hope and believe that MFN does not really apply to rare diseases of a certain size and prevalence, we are very cognizant going into the negotiations that we could potentially impact the U.S. prices. So we have an opportunity to make that part of the discussion. We are less concerned in some of the early discussions. So for example, we are upcoming in Germany this quarter, like pretty soon, followed by Spain, followed by Italy, and I think France happens summer of next year. Then, of course, NICE, which is U.K., which traditionally has been much more difficult for companies to navigate. But that is out in the future, and we have plenty of time, A, to figure out to do it right in the first few countries, see how MFN evolves in the U.S., and then make a decision in the U.K. at some point in the future. Okay. Second quarter internationally was a little choppy. Maybe walk us through what was going on in Europe, and Germany specifically, and Japan, and what you are expecting for the rest of the year and beyond. Yeah. Germany was a bit of an aberration. The fundamental demand continued to grow really nicely, but we have to accrue. There is a concept in accounting called accrual, where the company kind of does its best guess at what pricing should be ahead of the actual outcome of the pricing negotiations. While we try to be as close to the actual number as possible, companies tend to be more conservative in their estimate, as opposed to aggressive in their estimate. That is generally what companies do. That pressure that was reflected in Europe being flat in Q2, we are hoping will get alleviated pretty quickly once we have established pricing in Germany. France continues to accrue until the middle of next year. In all the other countries, Spain, Italy, Japan, we launch after we get a pricing, so there is no accrual concept. A little bit in Spain, but since we are going to get pricing in Spain pretty quickly, we are hoping that alleviates. Yes, Q2 was the first full quarter where accrual had an impact on how demand looked. If you really think about demand and pricing, Europe is actually doing pretty well right now, and we do not have the issue yet in Japan or anything. We are hoping that by the summer of next year, any accrual that tends to dampen the outlook will get alleviated. Can you quantify the reserve provision for Germany in the quarter? We are not getting into specifics of what that accrual was, but we have looked at what traditionally other enzyme replacement, protein replacement companies have gotten relative to the U.S., and based on how well the efficacy of VYJUVEK is in comparison to some of those other drugs, and made a really, I think, good estimate of what the accrual should be. We are not expecting any volatility except that the pressure of the accrual will get relieved as we move forward. The adoption curve in the U.S. was quite swift. Do you anticipate in most of the European countries, it will be a comparable adoption? Are there unique barriers in certain European countries, or are there unique tailwinds? There are country-specific challenges in Europe, logistical challenges. The concept of having a genetic medicine administered at home by a patient is so novel. I mean, it was novel in the U.S. to begin with, but when you are dealing with conservative countries, that concept means pharmacies now have to learn to ship the drug to the patient. For genetic medicines, they are used to patients coming into a hospital pharmacy, picking up the medication, or being administered the medication. Given that we have to work with pharmacies and hospitals to make sure the logistics are good, the ramp, and there are capacity constraints, both financial constraints and time constraints in some of these hospitals. We expect the ramp to be much more linear than the bolus that happened in the U.S. But over 12, 18 months, we actually believe that the final outcome should not be any different. Just the way we got there would be different in Europe. All right. Let's talk some pipeline. Suma, I will let you choose where we should start. Derm? Eye? Lung? All of them are equally good. They are all exciting. I think the exciting programs for us, there are diseases where we are working on that there is a real unmet need. There is no other therapies available. For example, in derm, Hailey-Hailey. We are really excited to be working in that space because that disease has not been well-studied, and there is not much data available in the literature, and there is not much of epidemiology data in that disease. It is very exciting to get embark on that space. I think we are the first ones to actually now thoroughly study this patient population. We embarked on what is called a natural history study. Because we have our teams and our derms connections because of VYJUVEK, it is mostly the same derms that see these rare diseases across EB or Hailey-Hailey or Darier. We, just by sending out a simple message saying, yes, we are working on Hailey-Hailey. Please let us know if you have patients, we got tons of response. Within three weeks, we got over 50 patients that reached out. We continue to get patients on this natural history study. We are actually studying the disease. We do assessments to look at what is their profile of the disease, what are the. Obviously, we did meet with the FDA on this at the IND meeting. We discussed about potential registrational studies and designs of the study. We proposed a scale. Obviously, the scales are very similar to what they use in psoriasis or eczema. But again, the disease is more specific to Hailey-Hailey. We modified the scale to more fit for Hailey-Hailey. And with the agency's guidance, we worked on validation of the scale specific to Hailey-Hailey. We have completed the major aspect of the validation. We are right now in a phase I study design study where we are just like VYJUVEK. We have handful of patients that we have all enrolled the patients. We are looking at patient-reported outcomes using the scale, along with investigators-based assessment over a three month period, just like VYJUVEK, with continuous application. And we continue to enroll additional patients, and we have a lot of patients that are enrolling in because this is a dominant disease. Unlike RDEB, the patients, if you have one patient, usually there are five members in the family that have Hailey-Hailey. We are finding that there is a lot of Hailey-Hailey patients, and you do not have to go far within the family. They have generations and families with the disease. That makes it easier to really get patients onto the study. Excited about this. We expect to finish that study end of the year and give us a good understanding of the journey of the disease so we can accurately design the study and the clinical endpoint. This will be very meaningful, and then we will sit down with the FDA to potentially do a registration trial. Maybe you can help characterize how Hailey-Hailey manifests and what you are hoping to show with that. Absolutely Therapy. Hailey-Hailey disease, it is a genetic disease, but unlike EB, it is not seen at birth. It is mostly at adolescence. The onset of the disease is when patients get into puberty and at that stage, the disease is triggered. Because it is a dominant disease, it is a haploinsufficiency, so one of the alleles do produce functional protein, but the other doesn't produce, and it is not enough. So it manifests more in adolescence. So it is based on a natural history. I was surprised because I thought EB is one of the worst diseases. What is Hailey-Hailey? It cannot. It is just a few lesions like psoriasis. But we really learned that this is as debilitating or even worse to these patients than EB, because EB, these patients are born with it. They know no different because the disease, they live with it from the birth, and they learn to manage it. When something hits you like cancer in the middle of when you are in puberty, in adolescence, it can be very. It is not just the physical aspects. There is a lot of pain, lesions, and it is mostly in the private areas of the body, like the genitals and folds of the skin. It is mentally, and I have heard a patient saying that it affects their mental health and they do not want to live, and it is suicide. They feel like they do not want to live on this planet. So it is very bad and debilitating. So we have learned a lot. We hope to collect not just the physical aspects, but also the mental aspects of the data by interviewing these patients so we can put a comprehensive effect on these patients and how debilitating it is. So hopefully, all of this will help us to work with the FDA. What type of body surface area is typically affected in Hailey-Hailey? Is it meaningfully different than DB? Yeah, it depends on the severity. For EB, they can be across all of the. This is more localized. Yes, they are big lesions, and it is all in the areas of folds, so under the breast, on the back. Yes, I would say still 15%-20% of the body surface area can be. Because we had the dynamic with VYJUVEK where patients kind of had to prioritize wounds because the volume that they could treat at any or the surface area they could treat at any moment was limited. Do you anticipate- Right. a similar phenomenon with Hailey-Hailey? It is a good question. When we started with VYJUVEK, this was the first drug, so obviously, speed was important, getting the drug to the market was important. And we learnt a lot from what we learned from VYJUVEK, because the FDA does not allow you to move with the dose. Whatever you do in your physical approval, you are limited. So we understand the limitations, what we did. So we are making sure that with Hailey-Hailey, we understand the body surface area. So in the get go, we are going to make sure that we have higher volumes to cover all these surface areas, so we don't have that limitation. And also frequency of administration. They can administer more frequently, so we will collect the safety data, so to maximize effect and efficacy. Do you anticipate a similar dynamic of kind of an induction healing regimen followed by less frequent applications once the wounds are addressed? What we are seeing from Hailey-Hailey, it is very chronic. Again, it is not localized to one region. They have it, as I said, it could be in the folds on their back, in the butt region, or under the breast. So they do have constant, if one side heals, the other will open up. So it is very similar dynamics that we see in EB. As you are learning about the unmet need relative to the number of EB patients you are treating with VYJUVEK, do you have a rough sense in terms of how many Hailey-Hailey patients might ultimately be addressable, especially as you go out to identify them? I mean, again, Yeah, it's- Can I answer this question? it's almost- Yeah at the very least twice what the- Yeah the EB was. This is dominant. In terms of prevalence. Yes. We think it is much more because many of these patients, there is no therapy. Some of them have been identified. I think there is a lot that have not been diagnosed either. Just even with EB, we were so surprised that there is. You think it is such a horrible disease, everybody should be diagnosed. We are still finding patients that do not even have a genetic testing. Very similar, I think there will be a lot more patients. Once you make disease awareness, once you know there is a therapy, I would expect more patients to be there with Hailey-Hailey. The patients that are naturally sick, many of them have not been genetically tested. But we have been genetically testing them, and a good chunk, 80%-90% of those patients are Hailey-Hailey. We have been able to genetically confirm. When are we likely to get early efficacy data? The early read on these five patients that we, by end of the year. That will be a big update. Yeah. All right. Why don't we stick with derm? It feels like it has been a little while since we talked about Jeune. Maybe highlight some of the progress that you have been making and why at least it may feel like it has been. Yeah. A bit of a quiet stretch. Before I start, I just want to say, while Suma talked about Hailey-Hailey and an unmet medical need, there's no medication. From a commercial perspective, which is somehow my forte right now, we're starting to get prepared on KB803 VYJUVEK in the eye and NK, which the readouts are not too far apart. I just want to point out this, while they all. Like in the case of VYJUVEK in the eye, that's an unmet medical need. But in the case of NK, there is an alternate drug. Even so, we are excited about the profile of these two going forward. But with regard to aesthetics is so big and we are so focused on commercializing rare diseases that we definitely need a partner to launch something in aesthetics, whether it be elastin or a combo. That said, in today's world, with the GLP-1s and all taking prevalence, aesthetics has come much more into prominence. In the old days, it used to be Allergan and Galderma were the two companies. We were somewhat in the space, and now there are more. The reason we paused last year was all the upcoming registrational trials we have on CF, which is going into this update, NK, Hailey-Hailey. We wanted to focus as a company, and we paused Jeune. Our goal is to get Jeune resumed next year to do the phase II study, but definitely start looking for a partner who can help us even potentially do the phase II study and the ensuing phase III, but definitely help launch the drug. It's not the data that made us stop the thing, and we're super excited about it. It's just a question of bandwidth and how Krystal does work that we have to pause Jeune and move it to next year, get a few of these out of the way before we come back. Okay. Very helpful explanation. Thank you. You brought up the eye program, so maybe we can go to the ocular platform next. I think one aspect that many investors, myself included, struggle with a little bit, you got for the NK program, good biology, good preclinical data, good validation from OXERVATE, but we kind of only have one patient worth of data in the- Yeah. public domain, and it's actually similar for ocular VYJUVEK. We only have one patient. Right. For investors who are struggling with how do you really get confidence despite more clinical data, how do you think about addressing that? Right. The reason we embarked on a registrational trial right away is because we know OXERVATE works. We know the mechanism. We know the PK profile of OXERVATE. We know our PK profile. We're very confident in our PK profile. As I said, the patient data we showed supported that. Look, we can administer and we get. This was a patient that was a chronic open lesion at NK level three. So we needed to embark on additional study. We said, why not just, we have. At that time, we also got a platform technology from the agency. As I was mentioning, the rate limiting step to any program is a CMC. Because when you have to start CMC, it can take you five years, as everybody knows, making all the small scale batches, scaling them to large batches, process validation, assays, all of that good stuff, and it took us six years for VYJUVEK. Our rate limiting factor for VYJUVEK was CMC. Now that we got the platform technology, we were able to fast track our CMC because we didn't need to do those validation batches. Because it's the same platform, same process with minor tweaks. FDA gave us guidance on what the requirement was. When we mapped out the timeline, it dawned on us, you know what? CMC is no more the gating or the rate limiting step. So we said, let's just go embark on registrational study. We feel pretty confident. We have animal studies. We have PK data from the patient. We have to do this study anyway, so we just converted the phase II to a phase III, and to a pivotal trial. That was the goal. So we thought, okay, let's go ahead and submit to the FDA, submit the statistical plan. Maybe the FDA pushes back. They didn't push back. They were fine with it. So we said, let's proceed. So that is the reason why we went into the registrational trial actively saying, you know what? The intent was to do a phase II study, small patients. Look at the effect size and do it systematically. We said with this, we can still achieve that, and we can win too. Even if it'll give us an. Why not proceed in that direction? So that was the reason we accelerated the registration drive. Okay. I guess we'll get the answer to it for both programs in the coming months. For ocular VYJUVEK, that seems like a very easy addition to VYJUVEK commercially. How do you think about addressing the NK prescribers and the type of sales force expansion you'd need to? Yeah. I would say no program's really easy as you describe easy, especially blinded studies. Fingers are always crossed on every blinded study. Although we are optimistic about our pipeline. In the case of NK, what we've heard recently is the incumbent has been able to significantly increase from the. It's a private company, but what we found out in terms of sales force and in terms of detailing and in terms of making awareness, the market has definitely expanded a lot in NK. So our objective is we do have a. Depending on the outcome of the drug, we're hoping to differentiate on efficacy. As Suma mentioned, the PK profile. We're hoping to differentiate on safety. We're hoping that some of the adverse events that OXERVATE saw that we could potentially be less severe, and our dosing frequency, which is a big We're once a day versus six times a day. Six times a day, just from a commercial perspective, is not easy to remember. Compliance is hard. Six times a day is also subpar dosing. So a lot of limitations with six times a day. If we have a differentiated product at the end of the clinical study, hopefully our objective would be to get to the market as quickly as possible with as big a sales force as we need to make the case that there is a better drug in the market. So that's in the U.S. where it's a bit competitive. However, this company is not launched or does not treat patients in Europe and Japan. One of the reasons Suma set up a clinical site in Europe was to get Europe quickly going up to speed because there it's truly an unmet medical need today. There is no alternative for NK. While all these sound a little bit early and a little bit less refined, that's because of where we are in the study, where we still haven't read out on the clinical study. We maybe have 18 months to prepare properly, but we realize how important NK is to the company, and we'll make sure that the study is done well and the launch goes well, like we did with VYJUVEK. Do you have a sense of the number of OXERVATE prescribers in the U.S.? I do not know on the top of my head, but I know at least there are between 60 and 100 reps detailing these physicians. Okay. Yeah. Which means that the number of prescribers is quite a large number. Predominantly ophthalmologists. The one thing we did notice when we did the claims data analysis early on was there is a concentration of patients among a certain bunch of physicians. There is always the bolus that you talked about with Bevac. There is a potential to get a bolus, then we would have to go detail all the other physicians to make the case. Not that much time left, but I do want to touch on the pulmonary program, and specifically KB407, because I don't think that comes up that often with investors. Nobody asked, so you're the first one to ask. The efficacy data's actually quite impressive. Very, yes. As monotherapy. I agree. Yeah. I guess it doesn't shift that much in combination with KEYTRUDA. I would've thought the combo response rate might've been materially higher than monotherapy, and correct me if I'm wrong with the facts, but how do you interpret the signal, and where do you take it from here? We do have a cohort. This is a basket study, so we have the monotherapy. We have a combination with KEYTRUDA, and then we have the docetaxel combination. With the KEYTRUDA, actually, the patient population was extremely, they failed three or four lines of therapy. They were not the frontline failed patients. They were very bad patients, and we enrolled six or seven patients. We still have three patients on the study. They have been going on for almost two years, and they are alive. They are not stable disease, but they are partial response, and we continue to see that durability. We do not know what we are going to do with that, but it is very exciting data. The FDA is aware of it. We got the RMAT because not only do we have an acceptable ORR for this patient population, but we have durability of that. We are really able to control the lung lesions, but we do need with the systemic approach, like KEYTRUDA or docetaxel, we can also control the distal tumor till the immune system picks up. That study is still ongoing. We have patients on the trial. They are still alive, and they are still seeing response. Hopefully, some of them will move over into complete response. We hope to. But the docetaxel combination study is interesting because, again, in this patient population, we are going after a broader population, both squamous and non-squamous lung cancer. The frontline therapy for them is PD-1 plus platinum. We are going after frontline patients because there is no approved therapy in that space. That is where we can position for an accelerated approval with docetaxel. We are doing the study. We are enrolling. We have submitted the protocol with the agency. We have had discussions. We have also mapped out the confirmatory phase III designs to the FDA, so all of that has happened. We submitted the FDA as part of the RMAT, and we are actively enrolling patients. Is this a program you can plan to advance on your own, or would you look for a strategic partner? At least the current study in its way, the 60, 70 patients that we are well into that study. But beyond that- That- have you made up your mind, or you will? We are definitely. Look, it is oncology. We know how difficult it is. We definitely will find a partner at the right point. Hopefully, we find one. Yeah, for sure. I think if you have compelling data, people will. It's the different- It's like- Yeah. For the space that there is nothing for these patients. Krish, Suma, thank you so much for joining. Thanks, everyone, for coming out, and I hope you enjoy the rest of the conference. Thanks, Josh.