Krystal (KRYS) Q2 Profit Jumps 143%

Krystal Biotech (KRYS -13.61%), a gene therapy company specialized in rare skin and genetic diseases, reported its latest quarterly results on August 4, 2025, for the second quarter of fiscal 2025. The company posted better-than-expected financials, reporting GAAP earnings per share of $1.29 compared to the analyst estimate of $1.18 in Q2 2025, and GAAP revenue of $96.0 million against the $91.97 million consensus in Q2 2025. This represents strong double-digit year-over-year growth in both revenue and GAAP earnings per share. The period also saw major international milestones, as its lead gene therapy, VYJUVEK, secured regulatory approvals in Europe and Japan. Overall, the quarter marked robust financial results, progress in global expansion, and a pivotal moment as the U.S. commercial opportunity begins to level off.

Source: Analyst estimates for the quarter provided by FactSet.

The Business and Its Key Drivers

Krystal Biotech specializes in developing genetic medicines to treat rare and serious skin and systemic conditions. Its core technology is built around an engineered herpes simplex virus type 1 (HSV-1) platform that allows targeted gene delivery to specific tissues with repeated dosing. This approach enables correction of underlying genetic defects across several disease areas.

The company’s primary focus recently has been on commercializing its first approved gene therapy, VYJUVEK, for dystrophic epidermolysis bullosa (DEB). It is also progressing a diversified clinical pipeline spanning respiratory, ophthalmology, oncology, dermatology, and aesthetics. Critical success factors for Krystal Biotech include execution of global launches for VYJUVEK, robust management of patient access and reimbursement, scalability of in-house manufacturing, and advancing its research pipeline for future growth.

Quarter Highlights: Financial Performance and Operational Developments

Krystal Biotech exceeded both GAAP sales and earnings expectations in Q2 2025. GAAP revenue grew to $96.0 million, a 36.6% increase compared to Q2 2024, driven mainly by continued uptake of VYJUVEK in the U.S. during Q2 2025. Gross margin reached 93% in Q2 2025. The company kept its GAAP operating expenses at $56.7 million, down from the prior year in Q2 2025, as lower research spending offset a rise in selling, general, and administrative (SG&A) costs.

Krystal Biotech ended the quarter with $820.8 million in cash, equivalents, and investments. This strong cash position gives the company substantial flexibility to fund expansions, research, and unforeseen challenges. No liquidity concerns were flagged, and the balance sheet is positioned to support further launches and development programs on a global scale.

The highlight of the quarter was global progress for VYJUVEK, a topical gene therapy for people living with DEB. In the U.S, the company now counts over 575 patient reimbursement approvals as of the end of the quarter. While patient compliance for weekly therapy remained high at 82% during the quarter, new patient starts are slowing as the most accessible patient groups have already begun treatment. This is a sign of marketplace maturity. As a result, Krystal Biotech expanded its field sales force and invested in direct patient outreach. Internationally, VYJUVEK was approved in both Europe and Japan. The first commercial launch is scheduled in Germany for the next quarter and in France later this year. In Japan, the launch is expected by year’s end, targeting a genetically confirmed population of about 200–225 patients, with the opportunity for broader uptake.

The pipeline also made strides. Key programs include KB407 for cystic fibrosis (a genetic lung disease), KB408 for alpha-1 antitrypsin deficiency (a rare respiratory disorder), KB803 for corneal abrasions in DEB, and KB707 for non-small cell lung cancer. The company reported positive trends across these, such as advancing into later-phase studies and demonstrating efficacy signals — for example, an objective response rate of 36% for KB707 in difficult-to-treat cancer patients as of the data cut-off on April 15, 2025. The platform’s versatility is crucial; its HSV-1 viral vector can deliver larger genetic “payloads,” is redosable, and targets a range of tissues — all unique features that underlie the commercial and clinical progress.

Global Commercial Execution and Product Pipeline

VYJUVEK is the company’s first and only approved product. It is a topical gene therapy for wounds associated with DEB, a rare and life-altering skin condition. Since launching in Q3 2023, VYJUVEK has generated $525.4 million in cumulative GAAP net product revenue. The U.S. commercial rollout led the company’s results, with product access now widespread across both commercial and government insurers. Demand trends are now shifting as the enrolled patient population matures. The company has noticed increased treatment pauses, a pattern associated with patient wounds closing during ongoing therapy. While this demonstrates clinical benefit and results in durable wound closure, it also means quarter-to-quarter swings in product revenue could occur.

In the U.S, the company is intensifying educational outreach to patients and providers less familiar with the disease. Management highlighted that incremental patient growth will require more effort as the pool of easily reached patients is now largely treated. The field force expansion, which began earlier in the year, is intended to address this challenge and maintain growth momentum pending international launches.

On the international front, VYJUVEK’s approval in Europe was a major milestone — especially as many European patients with DEB are already genetically diagnosed, allowing for faster identification and treatment. Launches in Germany and France are expected to bring a new growth phase. The company also received approval in Japan, where VYJUVEK will be launched shortly, supported by favorable regulatory and market access conditions.

Pipeline progress outside of VYJUVEK continues to be a critical pillar. Programs target respiratory (KB407 for cystic fibrosis; KB408 for alpha-1 antitrypsin deficiency), ophthalmic (KB803, KB801 for corneal and eye diseases), oncology (KB707 for non-small cell lung cancer), and aesthetic/dermatology conditions (KB304 for skin wrinkles, KB105 for ichthyosis). Several of these programs advanced to new phases or reported positive early data, paving the way for future product launches and organic revenue growth.

Outlook and What to Watch

Management’s guidance for FY2025 calls for combined non-GAAP research and development and SG&A expenses, excluding stock-based compensation, to range from $150.0 million to $175.0 million. No product or earnings-per-share guidance was provided for the year. The lack of forward-looking product revenue trends or patient count forecasts comes as the commercial U.S. market enters a maturing phase and the importance of overseas launches rises.

Investors should monitor how successfully the company can drive VYJUVEK uptake in Europe and Japan, as well as ongoing patient acquisition, compliance trends, and new treatment pauses in the U.S. At the same time, regulatory and payer acceptance, competitive gene therapy landscape, and results from ongoing clinical trials in the pipeline will influence the company’s growth trajectory in the coming quarters. The Department of Justice investigation into certain genetic testing practices remains ongoing, and management is fully cooperating but did not provide further updates this period.

KRYS does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.