What happened

Shares of Krystal Biotech (KRYS 2.11%) were up more than 15% Monday morning. The company announced on Friday that it had received Food and Drug Administration (FDA) approval for Vyjuvek (beremagene geperpavec-svdt) as the first therapy to treat dystrophic epidermolysis bullosa (DEB), known as "butterfly skin," at the genetic level. The rare disease weakens the skin, causes it to blister easily and leading to a greater incidence of injuries.

The stock is up more than 40% this year.

So what

DEB is a rare disease caused by mutations in the gene COL7A1. The disease is associated with high morbidity and mortality rates. Krystal, a clinical-stage biotech, said it plans to quickly market the therapy, with its launch in the U.S. expected in the third quarter.

On Monday, Krystal said it was doing a stock sale worth $160 million to raise money for the drug's launch. The approval means an added benefit for the company, a Rare Pediatric Disease Priority Review Voucher from the FDA. The voucher would grant priority review to a subsequent drug application that would not otherwise qualify for priority review.  

Now what

Krystal is a growth stock that could end up being a buyout candidate because of its newly approved therapy. The company uses HSV-1, a common virus, as a vector to deliver gene therapies. Krystal has a relatively big pipeline that includes eight programs that target cystic fibrosis, other rare skin diseases, and lung disorders. 

In the first quarter, the company said it had $355.5 million in cash, $3.5 million in revenue, and a net loss of $45.3 million. The stock sale should allow the company to get across the finish line in developing Vyjuvek.