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Date

Monday, May 4, 2026 at 8:30 a.m. ET

Call participants

  • Chairman and Chief Executive Officer — Krish S. Krishnan
  • Chief Operating Officer — Suma M. Krishnan
  • President, Global Commercial — Laurent Goux
  • Chief Commercial Officer, US — Christine Wilson
  • Chief Financial Officer — Kathryn Romano

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Takeaways

  • Global net revenue -- $116.4 million, increasing 9% sequentially compared to Q4 2025 and marking 32% growth year over year, with contributions from US, Europe, and Japan.
  • VYJUVEK US net revenue -- $87.5 million reported, affected by insurance switchovers and patient treatment cadence shifts.
  • Ex-US net revenue -- $28.9 million generated in Europe and Japan, with over 140 DDEB patients prescribed VYJUVEK there.
  • Gross margin -- 95%, up from 94% in the prior year’s first quarter, attributed to US manufacturing process improvements.
  • Net income -- $55.9 million, with diluted EPS of $1.83, representing increases from $35.7 million and $1.20, respectively, in the previous year.
  • Cash and investments -- Exceeds $1 billion, supporting pipeline and global commercialization without further capital raises since 2022.
  • Operating expenses -- R&D at $15.3 million and G&A at $41 million, with the rise in G&A mainly due to headcount growth and global VYJUVEK launch costs.
  • Commercial reach -- Over 695 reimbursement approvals for DDEB patients in the US and more than 570 unique US prescribers since launch.
  • International expansion -- Ongoing pricing negotiations in Germany and France, expected decisions in Germany in second half of 2026 and in France in 2027, and accelerated launch potential for Spain in second half of the year.
  • Clinical milestones -- Two registrational readouts expected in 2026 and two more projected for 2027, with six total data readouts anticipated before year-end.
  • Platform technology designations -- FDA granted new platform designations to KB407 (CF) and KB111 (Hailey-Hailey), after KB801 (NK) in the prior year, facilitating streamlined development and regulatory pathways.
  • KB803 ophthalmology study -- Enrollment completed with 16 patients; primary efficacy endpoint to be read out in Q4 2026.
  • KB801 neurotrophic keratitis study -- Eight-week, 60-patient study on track for data in 2026.
  • KB407 cystic fibrosis study -- Initiation of a 24-week, open-label, five-patient safety study in May 2026, enabled by FDA and Cystic Fibrosis Foundation collaboration.
  • VYJUVEK label updates -- Home administration flexibility and self-administration options introduced, with positive adoption noted by patients and providers.

Summary

The call highlighted robust sequential and annual revenue growth driven by VYJUVEK’s performance in both established and early-stage markets, signaling momentum in global uptake. Expansion efforts are evidenced by advancing pricing negotiations in major European markets and early revenue contribution from international launches. The pipeline continues to progress, with multiple registration-readiness milestones and FDA designations positioning Krystal Biotech (KRYS +6.25%) for accelerated development and commercial leverage. Management reiterated a disciplined capital-allocation strategy, underpinned by a strong balance sheet and sustained operating leverage, while reiterating unchanged guidance for non-GAAP operating expenses. Operational commentary pointed to further broadening U.S. patient access, ongoing infrastructure enhancements, and clinical updates aligning with planned regulatory interactions.

  • The CFO confirmed, “we continue to build on our strong cash position now exceeding $1 billion in combined cash and investments.”
  • Management expects that “These designations bring a compounding advantage. Each developmental milestone on our pipeline strengthens our collective regulatory data set and reduces development risk, cost and time for the next program we bring to the clinic. This advantage is presently unique to Krystal and 1 we intend to leverage to its full potential” from FDA platform technology designations to reduce risk and accelerate future programs.
  • Ongoing early-access programs have enabled initial patient starts in Spain ahead of full reimbursement, pending negotiation outcomes.
  • U.S. commercial dynamics indicate that insurance switchovers and shifting to maintenance regimens have influenced recent revenue cadence, though management characterizes these changes as expected and temporary.
  • The company reiterated full-year 2026 guidance of $175 million to $195 million in non-GAAP R&D and SG&A expenses.

Industry glossary

  • DDEB: Dystrophic Epidermolysis Bullosa, a severe genetic skin disorder characterized by fragile skin and blistering.
  • VYJUVEK: Commercial name for beremagene geperpavec, Krystal Biotech’s gene therapy for DDEB.
  • Platform technology designation: An FDA recognition that allows a company to leverage data and regulatory experience across multiple programs utilizing the same underlying technology, streamlining future drug development and approval pathways.
  • Start-stop paradigm: Treatment approach where patients intermittently pause and restart therapy based on clinical need or wound status.
  • CFF: Cystic Fibrosis Foundation, a key partner for clinical studies of cystic fibrosis-related Krystal Biotech programs.
  • KOL: Key Opinion Leader, typically a physician or specialist influential in treatment trends and clinical trial enrollment.
  • Self-administration: Option for patients to deliver therapy themselves without a healthcare provider present, enabled in VYJUVEK’s updated label.

Full Conference Call Transcript

Krish Krishnan: Good morning. It's now been 10 years since we founded Krystal. And in that time, we have worked to change the lives of depatients globally for the better, while building a durable, fully integrated company with the financial strength to continue delivering value for both patients and shareholders. We have done this with discipline. We've not accessed the capital market since 2022. 2022 is 6 years from when the company was founded. We maintained a strong balance sheet, and we continued to generate meaningful operating leverage. Yet more importantly, somewhat ironically, we believe the next 12 to 24 months represent 1 of the most exciting periods in Krystal's history.

We are positioned for 2 registrational readouts this year and 2 more next year. I sincerely want to thank our employees for their dedication and execution that have brought us to this point. Now turning to VYJUVEK. We delivered another quarter of global revenue growth with net revenue of $116.4 million in the Q. This brings cumulative net VYJUVEK?revenue since launch to more than $846 million. We are particularly pleased with this performance, which represents a 9% sequential growth versus 4Q 2025 despite a higher-than-usual level of insurance changes, which happens, by the way, not just to us, but many biotech commercial companies in 1Q. Gross margin was 95%, and we delivered our 11th consecutive quarter of positive EPS.

Outside the U.S., we're still early in the VYJUVEK launch in Europe and Japan, and I'm pleased with the progress overseas. We're also working to add 2 additional major European markets, Italy and Spain later this year. Laurent and Christine will provide more detail on VYJUVEK?commercial dynamics and the opportunity ahead in a moment. FDA has now granted platform technology designations to both KB407 for CF and KB111 for Hailey-Hailey. This is in addition to receiving the same designation for our NK program, KB801 last year. These designations have a profound implication for Krystal. At the program level, these designations allow us to streamline our interactions with the agency and our development plans.

We've already seen the benefits with KB801 as the designation allowed us to rapidly advance KB801 into a registrational study. The platform implications are also powerful. These designations bring a compounding advantage. Each developmental milestone on our pipeline strengthens our collective regulatory data set and reduces development risk, cost and time for the next program we bring to the clinic. This advantage is presently unique to Krystal and 1 we intend to leverage to its full potential. You'll hear more about our development plans from Suma. I'll now turn it over to the team to provide details on the commercial launch and the clinical pipeline. Laurent?

Laurent Goux: Thank You, Krish. We are very encouraged by the progress we are seeing outside the United States, where VYJUVEK?is beginning to establish itself as an important treatment option for DEB patients in key international markets. When we think about the international launch, the story is not just 1 of geographic expansion. It is a story of building trust across cultures with physicians, with treatment centers, with payers and ultimately with the entire EB community who have been waiting for new options. There are nuances in every country we launch and sometimes within a country by region.

That said, across Europe and Japan, we have seen strong word of mouth and increasing engagement from key centers, that is raising awareness of VYJUVEK?and helping translate physician interest into real patient demand. Importantly, our prescriber base continues to broaden. This gives more patients the opportunity to stop treatment closer to home, while also creating a more durable and resilient foundation for the launch. We estimate that more than 140 DDEB patients have been prescribed by VYJUVEK? across Germany, Japan and France. We believe this reflects both strong execution by our international team and growing physician confidence in VYJUVEK in the early launch market. This early momentum is also beginning to show financials.

European market plus Japan contributed to $28.9 million in net revenue, demonstrating the meaningful role these regions can play in the growth of VYJUVEK over time. Looking ahead, our focus is clear. We are working to deepen penetration in our current launch markets, secure positive access and reimbursement outcomes and expand it to additional major European markets. In Germany and France, pricing negotiations remain ongoing. We continue to expect a decision in Germany in the second half of 2026. In France, we continue to expect the decision in 2027, which would further support broader access and reimbursement stability.

We are also advancing discussions with reimbursement authorities in Italy and are actively preparing for potential launch in the second half of 2026 during the outcome of those negotiations. And in Spain, I'm pleased to report that our discussions with authorities have accelerated. Based on our latest interactions, we now see a potential opportunity to launch in Spain in the second half of the year. again, pending the outcome of negotiations. In the interim, we are also responding to opportunities to stop patients on VYJUVEK? through early reimbursement access pathways. Overall, we are very encouraged by the early tractions we are seeing internationally. The launch is progressing market by market, physician by physician and patient by patient.

We remain focused on disciplined execution of our global commercialization strategy and on bringing VYJUVEK to more DDEB patients around the world. I will now hand the call of to Christine to share updates on VYJUVEK? launch in the U.S. Christine?

Christine Wilson: Thank you, Laurent. Our team has been making great progress in recent months, building on our leadership position and delivering transformational outcomes for patients across the United States. Strong sales force execution is expanding our community reach and allowing us to meet patients wherever they seek care, whether that is at the center of accidents with a pediatric, dermatologist or in the family practice office in the community. By bridging this gap, we have now been able to secure over 695 reimbursement approvals for DDEB patients nationwide. Even as access teams were navigating a higher volume of insurance.

Upstream demand metrics are even better, with over 60 new prescribers in the first quarter and were 570 unique prescribers since launch, underpinning a strong pain approval outlook for the rest of the year. Net adviser back revenues for the United States were $87.5 million for the quarter. Revenues were impacted by insurance switchovers in the quarter, which are now behind us, as well as the start-stop treatment cadence characteristics of a patient population shifting towards maintenance treat regimen. With VYJUVEK now on the market in the United States for nearly 3 years, a growing number of patients have been able to achieve dramatic and transformational wound closure outcomes.

Patients have been able to take control of their disease and their lives, opening up new opportunities and autonomy never before possible. These quality of life gains made possible by the robust efficacy and safety profile of VYJUVEK are deeply motivating and the foundation for the long-term trust-based relationships we are building with the DDEB patient community. These improvements are also a natural and anticipated evolution of the launch as patient motivation and support needs shift to reflect their newfound autonomy. This is where the flexibility of VYJUVEK?administration and last year's label updates are especially valuable providing patients with the option to self-administer or receive nurse support care when they want it.

To this end, we have launched patient support initiatives to communicate and educate around recent VYJUVEK?label updates, which provide greater administration flexibility and help DDEB patients and families conveniently integrate VYJUVEK?into lifelong [indiscernible] routines as part of their standard of care. Our goal is to establish long-term relationships with VYJUVEK?patients, ensuring ongoing connectivity and ease of use throughout their lifelong treatment journey. Skin cells do turnover and wounds eventually reopen, particularly as patients get more active. As patients transition into these start and stop phases, we are focused on enabling timely access to VYJUVEK?whenever it is needed.

This focus is driving continued assessment of our infrastructure to better support patients where they are in their journey and to further enhance the ease of delivering VYJUVEK?across the United States. At the recent American Academy of Dermatology Conference, key opinion leaders underscored their appreciation for VYJUVEK and the positive outcomes achieved by their treated patients. In a patient population where prior to VYJUVEK?approval, there were no treatment options beyond palatialon care. VYJUVEK?represents a meaningful advancement and fueling an increased focus on the long-term clinical and quality of life benefits that might come with long-term VYJUVEK?therapy. As we progress on our launch, we are excited about the opportunity ahead.

There are still hundreds of known diagnosed patients we hope to bring to therapy and many more not yet identified that we believe could benefit from VYJUVEK. By driving new patient starts and maximizing convenience for patients already on therapy, we see an opportunity to deliver significant growth in the years ahead. With that, I'll turn the call over to Suma to share the leads on our development pipeline. Suma?

Suma Krishnan: Thank you, Christine, and good morning, everyone. I am excited to share that we are faced with 2 registrational study readouts expected later this year and 2 more in 2027. And with respect to the ophthalmology registrational readouts this year, we are excited to announce we completed enrollment in our registrational study, evaluating KB803 for the treatment and prevention of corneal abrasions in DDEB patients, with a total of 16 patients were enrolled in the study. IOLITE is randomized, intrapatient double-blind, decentralized placebo-controlled study with crossover design in which patients are randomized 1:1 to receive KB803, 3 times weekly for 12 weeks followed by placebo, 3 times weekly for 12 weeks or vice versa.

The primary efficacy endpoint, the change from baseline in the average number of days per month with symptoms will be assessed at 24 weeks putting us on a path for a readout in the fourth quarter of this year. This is an exciting milestone for our team and the many DDEB patients suffering from ocular complications of this terrible disease. Our second registrational study evaluating KB801 for the treatment of neurotropic keratitis is also progressing well. Our focus here is operational supporting our trial sites, expanding our network and driving enrollment. This is an 8-week study. We expect to enroll 60 patients and are on track for a data readout later this year.

We are moving quickly on our broader pipeline as well, including the initiation of 2 open-label studies, evaluating repeat dose KB807 and KB111, which we expect to read out later this year. Based on FDA interactions, we are initiating an open-label single-arm study to evaluate safety of repeat dose KB407 for 24 weeks in 5 patients with CF who are ineligible for do not tolerate or do not benefit from modular therapy. So dosing is expected to start later this month. With strong backing from the Cystic Fibrosis Foundation, the CFF, we expect to complete enrollment in the study later this quarter and report data by end of the year.

Then concurrently, we are working closely with the FDA and the CFF on an innovative registrational study design and systical analysis plan that may include prospectively collected natural Histidata from the CFF to supplement placebo-controlled data for evaluation of KB407 treatment effect. We will chair the design and associated statistical analysis plan of the registrational study following alignment with the FDA, which we expect in second half of 2026. We expect the registrational study to commence in first half of 2027. Strong patient and KOL engagement is also helping us move quickly on our KB111 program for the treatment of Hailey-Hailey disease.

We are making steady progress on our HD severity scale and expect to complete both the development and validation in the first half of this year. We also plan to initiate an open-label safety KYANITE-1 to evaluate KB111 for 12 weeks in 7 patients with HHD. We expect to dose the first patient in the [indiscernible] later this month, and submit our registrational study design to FDA in the second half of the year.

Based on the current time line, we expect the registrational study to start in 2027, and then we have our KB408 program for AATD lung disease and our KB707 program for non-small cell cancer, both are advancing steadily in the clinic and on track for data updates later this year, including in the case of KB707, a data update at ASCO next month. Altogether, this sets up for 6 potential readouts before year-end, including 2 registrational study readouts. With that, I'll hand the call over to Kate.

Kathryn Romano: Thank you, Suma and good morning, everyone. I'll now provide some highlights from our Q1 financial results reported in our press release and 10-Q filing earlier today. Net revenue from global sales of VYJUVEK was $116.4 million for the first quarter, which included sales from our commercial launches in Europe and Japan. This marked growth as compared to the prior quarter of 9% and was a 32% increase compared to the first quarter of 2025. Cost of goods sold for the quarter was $6.3 million compared to $5 million in the prior year's first quarter. Gross margin for the quarter was 95%, slightly up from 94% in 1Q 2025.

We are seeing the benefits of manufacturing process improvements related to our U.S.-approved product and are actively working to achieve similar efficiencies for our other markets. R&D expenses for the quarter were $15.3 million compared to $14.3 million in the prior year's first quarter. This was driven mainly by payroll, materials and support costs for production runs across several product candidates. G&A expenses were $41 million compared to $32.6 million in the prior year. This $8.4 million increase was primarily due to increased head count and related compensation expense as well as higher legal consulting and launch for costs for VYJUVEK globally.

Operating expenses for the quarter included noncash stock-based compensation of $13.6 million compared to $13.5 million in the first quarter of last year. The guidance we previously issued relating to non-GAAP operating expenses remains unchanged. We anticipate approximately $175 million to $195 million in non-GAAP R&D and SG&A expenses for the full year of 2026. Net income for the quarter was $55.9 million, which represented $1.91 per basic and $1.83 per diluted share. We are pleased to report growth as compared to the prior year's first quarter's net income of $35.7 million and EPS of $1.24 per basic and $1.20 per diluted share.

And finally, we continue to build on our strong cash position now exceeding $1 billion in combined cash and investments, which positions us well to support our pipeline and global commercial efforts. And with that, I'd like to turn the call back over to Krish.

Krish Krishnan: Thanks, Kate. I want to circle back and underscore our excitement in the global VYJUVEK launch trajectory. While there are nuances to a launch in every country, for example, prescription renewal frequency in Japan in the first year, mandatory first physician visit and ongoing pricing negotiations in Europe or the start-stop paradigm in the U.S. that we're now starting to see 3 years into launch. But taken as a whole, all these geographies, the resilience in our launch dramatically increased the number of patients able to benefit from VYJUVEK and strengthens our conviction in the long-term growth outlook. Country level fluctuations quarter-to-quarter are inevitable but mitigated by the diversification that geographic expansion brings.

I am pleased that VYJUVEK?continues to work well for patients living with DDEB, which, as you all know, is a devastating and debilitating disease. We're hearing meaningful stories from patients and families globally whose lives have improved, including patients who are now able to participate in activities they have never imagined before. Many are also able to pause weekly administration and return to treatment when wounds recur. We're deeply humbled to play a role in helping these patients and their families as they navigate a lifelong journey with this disease.

And on the pipeline, we have multiple data readouts coming later this year, including 2 registrational readouts in DI, initial repeat dose data from KB407 in CF and KB111 in Hailey-Hailey?disease, along with data update for KB707 in NSCLC and KB408 in AATD. So it's turning out to be a really busy clinical and a commercial year for Krystal Biotech. Overall, we're set up for an exciting 2026. Thank you and May the 4th be with you. Operator?

Operator: [Operator Instructions] Your first question comes from Roger Song with Jefferies.

Jiale Song: Great. Maybe just 2 questions, 1 related to the commercial and then the pipeline. For the commercial looking at the 10-Q, so you have a U.S. 87.5% and then Europe 20.7%, Japan 8.1% seems a very strong launch ex U.S. How should we think about the growth trajectory in the U.S. for the rest of the 2026 and then how this strong trend in ex U.S., Europe and Japan will continue for the rest of the year? I know long term, I totally hear you for the outlook, how about the 2025? And then just quickly on the pipeline. On the CF 24-week data, what would be the endpoint for that data readout?

And then what will be the [indiscernible] decision before you start a pivotal?

Krish Krishnan: Thanks for your question, both super relevant. Yes, on the commercial and the U.S. As you can see from the reimbursement approvals, the top line demand continues to grow very nicely. I know we've previously said there's maybe about 1,200 identified patients and we're steadily marching towards that and even hope to get to that $720 million number by next quarter, right? So we're at 60% market share. And so the top line is growing well. What is a bit difficult to predict is the start-to-stop paradigm on a Q-by-Q basis. But the point I made in the call in my script was, look, people are pretty -- patients are really happy with that experience on VYJUVEK.

We've seen many instances of patients stopping and coming back on drug, which is what we had always wanted this to be that's the tail on the drug. But on a Q-by-Q basis, it's really tough to predict the ups and downs. So you can have a down 1Q up the second Q. But overall, we expect the trend to be appointed in the positive direction.

Christine Wilson: Yes, Christine, if I may add, we're continuing to launch support programs that really educate them on the label updates that will help these patients continue to integrate this into their daily life as we look to establish lifelong partnerships with these patients and support their ongoing trajectory with VYJUVEK?as they start and stop through natural wound healing.

Suma Krishnan: I can take the CF question. No, I know. I got it. Yes. And so as you guys are aware, we finished the single-dose study in these patients. And clearly, we were able to establish molecular correction, and as we discussed in our last call, we are obviously working collaboratively with the CFF Foundation and the FDA. We met with the agency. I mean, the agency is convinced with our expression data. And I mean, they seem to agree that we do see nice positive expression. The only feedback that we got from the agency is, obviously, we don't have safety regarding repeat dose administration that was not established.

So in order to satisfy that requirement, we set up this interim 5 patient study to establish safety in repeat dose administration safety in these patient population. Obviously, in the interim, we are in discussion -- actively in discussion with the agency and the CFF Foundation. On the design of the registrational trial, I mean, obviously, we are proposing some sort of innovative trial design. And I think we have -- working with the CFF, we have really come up with a very good -- we feel confident in our study design. And we hope to sit with the agency and basically get their confidence on this design, so we can start the registrational trial early next year.

Krish Krishnan: And Roger, I was looking at the question. You had a comment about global trajectory. That's the point I wanted to emphasize. We feel really good about the direction of the global trajectory launch. And the individual ones, especially in mature markets like the U.S. are tough to predict up and down. It's also difficult on a quarterly basis to think about as Japan up versus France versus Germany. But really, we feel really good about the overall global trajectory launch in 2020.

Operator: Your next question is from Alec Stranahan with Bank of America.

Unknown Analyst: This is Matthew on for Alex. First, on KB803, assuming positive data in the fourth quarter of this year, can you maybe speak to how we should think about the potential launch trajectory vis-a-vis VYJUVEK?in terms of overlap with existing prescribers patients, reimbursement or site of care dynamics. And then maybe 1 on Hailey-Hailey?. I guess in terms of the data that we should expect later this year and sort of why the registration was pushed out to 2027. Just any commentary on that would be helpful.

Krish Krishnan: Great. On KB803, look, you should expect a really positive launch trajectory because now that we have identified these patients, we have a good sense of who these patients are, the whole supply chain mechanism of getting the drug to a patient's home, when needed, self-administration versus needing a nurse store administer like all the things in the launch have been ironed out with JV -- with VV. And so should the drug get approved and so the label have a really strong profile. We expect the launch to be really positive. It's tough for me to quantify to what extent about.

It affects about 50% of the RD population according to publications, and maybe 10% to 15% of the dominant population, and there are evidences of many more patients having lesions in the eye, but it is positioned as somewhat like a prophylactic, and so we expect the launch to be really good. So the drug get approved.

Christine Wilson: I can take Hailey-Hailey. Yes. Hailey-Hailey, again, this is a disease that nobody has ever embarked upon. So there was a little bit of learning and understanding, and this is where we have -- we talk to the agency, we came to an agreement on a patient-reported outcome scale. So the agency wanted us to basically validate the scale. So we are in the process of validating the scale, which should be done shortly. But in the process of validating the scale, we were able to really reach out and we have a lot of patients technically reached out and to participate in this scale.

So now we have a repository of these patients where we are actually like our mini natural history sort of database, we collect the data on these patients as we are validating the scale, and we have a lot of interest from these patients to participate in the trial. But again, since we don't have any clinical data, I think the best approach for us was to do a small Phase I study, where we have 5 to 6 patients.

I mean we're already the patients in our system, the scales are being validated and to just collect both safety dosing regimen and also some sort of the scale validation to really validate because before we want to go into the registration trial, we want to be really comfortable with our skills, really understand the disease. So we position ourselves for success. So that's the goal. So I think the Phase I study in this handful of patients will allow us to really evaluate this patient population, the timing of the evaluation and the robustness of the scale. So I think all of this will be completely established by end of the year.

And then we expect to get into the registration trial early. And I think the study should go pretty quickly because we have the patient population. I mean, as I said, as we with the validation of the scale, establishing these patients, we have been genetically testing them. So I think once we have this the registrational style should be pretty fast because, again, this is a decentralized study, the patient reported outcome editions, the drug is shipped to the relations house. So because of the decentralized nature and the CRO outcome of the endpoint, we expect once the registration trial that this trial could pretty much be fully enrolled pretty rapidly.

Operator: Your next question is from Joe Pantginis with H.C. Wainright.

Joseph Pantginis: So Chris, at the end of your prepared comments, you started to highlight some of the key factors or differences with regard to ex U.S. launch of VYJUVEK. I was hoping to get a little more color on that. So do you see any key education steps that are needed for ex U.S. doctors versus U.S.? What are some of the key negotiation points besides, say, pricing or any other factors you'd like to highlight that might be different from the U.S. launch.

Krish Krishnan: Thanks, Joe. Look, given that Europe launched after the U.S. a lot of physicians in Europe, especially like Germany, France, the countries we're going after Italy, Spain are aware of the significant benefit that VYJUVEK has been affording to patients in the U.S. So in terms of bringing them up to speed, teaching them about the disease, the benefits of VYJUVEK and how it works and the application, it's been a lot easier relative to the U.S. in terms of physician education and getting them up to speed, and that's true in Japan, too. In -- so that part, like we feel really good about what the physicians think about VYJUVEK?so and so.

It's kind of helped us accelerate launches in both Spain and Italy, given the voice of the physicians in these countries. With respect to negotiations, look, that's a tough question. that beyond the nature of the drug itself, which is very powerful, the clinical benefits are great. There are also political factors that come into negotiations in these countries. They have budgets for rare diseases. But today, the negotiations have been progressing well. We've been able to make a good compelling benefit. We'll obviously know the outcome first in Germany, second half of this year, followed by maybe Italy ahead of that.

So we'll have a couple of European benchmarks, which will probably dictate the direction of the French and U.K. and subsequent Spanish pricing. But all in all, given what we were able to do in Japan, given the benefits of the drug, we feel really good about making the compelling value proposition. The question always is what are the macroeconomic factors in these countries that could potentially influence our pricing.

Operator: Your next question for today is from Ritu Baral with TD Cowen.

Ritu Baral: I've got 1 on VYJUVEK?and then a couple on CF. Krish, we have been hearing just of sort of insurance friction around the stop-start drug holidays that insurance companies are sort of coming down on patients whether it's requirements for documentation of reopened wounds or things like that and how insurance companies are sort of monitoring whether wounds are closed or not. So if you could elaborate just on insurance dynamics around stop and start and reauthorization of coverage? And then I've got a couple on CF.

Krish Krishnan: Yes. Thanks, Ritu. I mean we have had -- I mean, from since the launch, we've had no issues with access to date, whether that's in terms of reimbursement, reauthorization, start and stop effect. The start and stop decisions are obviously made by the patient in consultation with their physician. But once they're ready to start, we've had no delays with respect to getting them back on drug at all. So it's been really smooth. Fingers crossed.

Ritu Baral: Okay. And then on CF, you mentioned that the patients, the patients include those that do not tolerate modulators or do not benefit from modulators. Are there sort of prescribed definitions around either liver enzyme elevations or sweat chloride changes either longer retreatment periods that the FDA wanted. If so, why? And would it be possible to get functional data from these 4-week patients ahead of pivotal?

Suma Krishnan: So Ritu, I'll answer that question. Yes, we are enrolling patients that are now and that are modulator intolerant. With regards to sweat chloride, I mean, I don't think there is any marker because we are nebulizing the drug, it directly goes into the lung, and that's where the action is. So we don't have systemic levels of measurements. But yes, we are -- I mean, we have a lot of now patients ready to go on this trial in our -- the study that where we are evaluating repeat dose. So we are evaluating patients who are ineligible for modulation. Either they don't tolerate it or they cannot take these drugs.

So with regarding to your second question, we never did a repeat dose administration. As was a single dose. When you see 4 dose of applications, this is something that we discussed with the agency. -- because when we made the first batch titers, I mean, the dose was not enough to deliver all of it in 1 sitting. I mean, obviously, now we have manufacturing and we have doses that can be done as a single administration. So we discussed with the agency and the agency recommended that we divide the dose over 4 days. So it was not immediately with day 1, day 2, day 3, day 4, but they're still considered as a single dose.

And the entire dose is now was between 4 days. But if you look at the study that we are proposing, it's the same dose as a single administration as a single dose, but as a repeat administration. So now we are going -- so this has never been done -- so we're going to do it weekly, the same dose, but once a day, weekly over the entire 6-month period, and we will evaluate Obviously, safety is going to be is the primary endpoint of the study. We will look at -- we will also evaluate obviously, we will be measuring FEV1. We will look at patients reported out PRO scales to see that benefit.

So we are going to look at all of that in an expiatory fashion because more data that will help us so the better for us as we embark upon our base registration trial.

Operator: Your next question is from Yigal Nochomovitz with Citi.

Yigal Nochomovitz: Just a few on Europe. Could you just comment as to whether you've entered the second 6 months of the accrual phase in Germany, and then with regard to Spain and Italy, could you clarify whether this is going to be a pricing first model where there's no accrual? Or will it be an accrual model where you'll launch and then negotiate similar to Germany and France? And then I have 1 other 1 on KB-803.

Krish Krishnan: Yes, Lauren you want to start.

Laurent Goux: Yes. So maybe to start with the second question on the pricing model. in Italy and Spain. What we expect is definitive reimbursement in those countries. So it will not be advanced, like the 1 in France or Germany currently. And with regard to the German situation, yes, we've entered with within the second 6 months of the launch. So that's the first semester where we start accruing for future potential pricing.

Yigal Nochomovitz: Okay. And then on 803, I'm just curious if you could comment on the natural history run-in data. Those are tracking with expectations? And if you have any comments on the diary, the blinded symptom diaries in terms of compliance with logging that during the trial?

Christine Wilson: Sure. I mean we -- as you know, we do have a natural -- it's the same diary that -- I mean, the same information or data that we are collecting in the natural history study. Once they qualify to be in the main study, at that point, we have a database where it's blinded, randomized the patients I mean the drug is randomized and the patients that are signed to either placebo or drug. And they have -- so then they start a new diary, which is, I mean, a complete different database always blinded.

So the patient is blinded, the physician is blinded, we have blinded it except the pharmacy that ships the drug to the patients where they do the randomization and the blinding. So it's a completely blinded system, which is completely maintained. And then the patient is just still the diary on a weekly basis, just like the natural history. So they have the practice and experience.

Obviously, the clinical operations team will help them answer or address any questions they have, or we have, I mean the external CRO that is managing the diary, if there is a patient that's missing information, then we can cross them to say make sure you feel so the data can be is there's nothing no missing information. So it's a completely blinded system.

Operator: Your next question for today is from Bill Maughan with Clear Street.

Bill Maughan: So you mentioned in the press release that your 803 trial is powered to detect at least a 25% reduction in symptom days. How conservative would you describe that bar as being? And might we see something meaningfully -- a meaningfully larger separation and I guess, how much does that delta matter in terms of supporting commercialization down the road?

Christine Wilson: I mean, again, I think any improvement in these patients because, I mean, it's such a debilitating disease. And once they have 1 of these abrasions or symptoms, it can be pretty rough on these patients, because they can open the eyes, they can be decommissioned for 3 days. And in addition to all of the other comorbidities that they have to experience. So I think from a any improvement, I think, is a benefit to these patients. The good thing is we have this natural history study that we have been collecting over a year.

So we have a ton of data that -- so as we embark upon this study will have some flexibility to even use some of this natural history as we do the analysis. So again, I think any improvement that the prospectively collected natural history, I mean a lot of the I mean, reasons that you see the agencies have issues with external control of using them as controllers because many of that data is not prospectively collected. In our case, we have over 100 patients in this natural is very prospectively collected, which simulates exactly what they're going to do in the clinical.

So I think we can leverage that data to -- in the analysis as we move forward.

Bill Maughan: And then with a large cash balance and growing, I guess, how are you looking at capital allocation right now?

Krish Krishnan: Yes. Yes, a regular question for me. I'll say a couple of things, like right now, we are in a growth out, both in terms of commercial growth in the world and in terms of our pipeline. We're not planning on licensing or buying and I've said that before in different forms. So once we have visibility into the future of our pipeline, especially on the drugs that address large markets, KB408, the oncology, the aesthetics, and then when we have some visibility into the launch of our next drug, that would be a great timing to think about share buyback.

Operator: Your next question is from Gavin Clark-Gartner with Evercore ISI.

Gavin Clark-Gartner: Krish, I didn't know you were Star Wars fan. Anyways, on KB 803, I just wanted to double click on the powering a little bit. So for the 16 patients that you enrolled in the study from a natural history runner, what was the average symptom is at baseline? And what was the standard deviation that you saw in the natural history portion? And then on the powering side, you noted the study is 90% powered for a 25% reduction and symptom is -- at what point does the study become 50% powered? Like what's the minimum detectable benefit you think you could tease out in this trial?

I mean, obviously, we looked at our natural history data extensively, and we know the pattern, right? I mean we know there are patients that have the severity of the disease. I mean, you can see from our natural history are a subset of patients that these abrasions are pretty frequent, right, and really over 1-year period. So the benefit we have is because of this [indiscernible], we could select those patients. So we can see a difference from a drug effect. I mean, so that was very important to us. So if you look at the patients, we have the patients that are enrolled into the 16 patients that we have meet that criteria.

So hopefully, I mean, because of that, the drug effect should become evident. And I think based on that, we were -- that's how we powered it. We were able to see, okay, 25% difference with what is the least amount of difference we need to see statistical significance, what is the sample size. And again, with the crossover design where patients -- the same patient gets either drug or placebo -- we that also improve our sample size and increases the chances. So all of that was taken into account to calculate the sample size and the powering for the stent.

Operator: Your next question is from [ Joshua Sodo ] with William Blair.

Unknown Analyst: Congrats on the quarter. This is Josh on from Sami and Logan. I have questions on VYJUVEK?. The first is ever since the company gave home administration in the U.S. at the end of Q4. I was wondering what has been the impact of that on either if that has been the driver in the decrease of start-stop dynamic? Or nation adds in the U.S. The second question was on the ex U.S. launch. I was wondering if pricing in Spain is going to be similar compared to other European territories and how many patients does the company estimate can address the territory.

Christine Wilson: Thank you for the question. In terms of the label updates in the home administration, it's been received incredibly well, both by patients and physicians as it really offers the opportunity for patients to integrate this differently. So we have seen a subset of patients who maybe didn't initiate therapy early on because they weren't comfortable with the nurse coming to their home, and now they have that flexibility and that choice. We've also seen a subset of patients that have transitioned from home nursing into self-administration. And if you think about our goal of being able to create a scenario where this fits comfortably into their daily routines.

The label updates that have allowed that flexibility, and we've seen some really positive impact of that, both from patients receptivity to VYJUVEK?and supporting their stop and start on therapy, but also the way physicians are thinking about initiating therapy for their patients.

Krish Krishnan: Laurent, do you want to talk on the international question.

Laurent Goux: Yes. So if I understood the question, it was related to Spain, specifically. And the first 1 was about the pricing in Spain. We do have a pricing corridor reflecting the value of Vivek. And so we do expect Spain to be within this pricing corridor. But of course, negotiations are ongoing. So difficult to speculate at this stage. And the number of patients in Spain, we would think, we would look at it as an equivalent prevalence to the other European countries. So there are no difference in prevalence versus the other European countries.

Operator: Thank you. We have reached the end of the question-and-answer session and today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.