Q2 2025 Krystal Biotech Inc Earnings Call
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Thank you for standing by, and welcome to the Krystal Biotech Q2 2025 earnings call.
At this time, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question and answer session.
As a reminder, today's conference is being recorded.
I would now like to hand the conference over to your host, Stefan Peket, Vice President of Corporate Development. Please begin.
Good morning, and thank you all for joining today's call.
Earlier today, we released our financial results for the second quarter of 2025.
The press release is available on our website at www.crystal.com
We also filed our earnings 8K and 10 Q with the SEC earlier today.
joining me today, will be
Chris Krishnan, Chairman and Chief Executive Officer.
Summa Cushman, president of research and development.
Senior Vice President and General Manager for Europe.
And Kate Romano, Chief Accounting Officer.
This conference call Will and our responses to questions. May contain 4 looking statements.
Your caution not to rely on these forward-looking statements, which are based on current expectations using the information available as of the date of this call, is subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected.
A description of these risks uncertainties and other factors can be found in our SEC filings.
With that, I will turn the call over to Chris.
Defend, thank you.
Uh, good morning, everyone, and welcome to the Krystal Learning call.
Um we'd like to touch on 4 topics in this call. Um, first the Visa launch which is progressing. Well,
And the upcoming launches in Europe and Japan are expected to significantly.
To what is already a top, tier trajectory in the US.
Second.
We're expecting several clinical readouts in the upcoming months for diseases in the lung and the eye.
Which could Propel Crystal into its next state of growth and dramatically increase our ability to deliver benefits to patients.
We'll talk briefly on our recent KB3 or 4. Read out.
Which we believe validates the platform.
And the opportunity that exists.
For our subsidiaries June in Aesthetics.
Finally, I'm proud to report.
That we've been able to achieve these milestones while maintaining operational discipline.
We were again profitable this quarter, with a fully diluted earnings per share of $1.29.
Marking now.
2 years of consistently positive, EPS for the company.
Moving on to our Q2 results.
Q2 net rise, affecting revenue, was $96 million.
This brings total net Visa revenue since launch to over $525 million.
The return to growth in Q2.
Was due to patients.
Who paused earlier getting back on drug?
And the additional impact of our ongoing sales team expansion.
It's important to note.
That Salesforce hiring is still underway.
We expect the full impact of our new hires will only be felt over the next few quarters as hiring is completed.
Reps are trained to be fully operational in the field.
Gross, margins. And gtn were largely consistent with prior quarters.
I'm also happy to report.
That we saw an increase of reimbursement approvals over the course of 2 Q.
And we have secured over 575.
Reimbursement approvals for patients in the U.S.
Compliance while on drugs at as of the end of the second quarter.
Came in at 82%.
We do expect compliance to Trend down in the coming quarters.
As severe patients, who started early.
Are now achieving durable. Wound closure on visovac.
and as the percentage of moderate and Mild patients,
Increase in the overall patient. Mix.
but as we discussed last quarter,
Complete wound closure and treatment outcomes are fantastic for patients.
And exactly what we set out to do. When founding this company,
It's also been rewarding to see patients grow increasingly comfortable with deposing and restarting dynamic.
and gaining confidence in the fact that when wounds do open,
They can easily access fisa.
And again, achieve durable wound closure.
These treatments successes.
Together with the tireless commitment of our Crystal Connect patient support team.
Our what allows us to build strong, trust-based patient relationships for the long term.
They also help activate new patients.
And together with our recent Publications and digital tools.
They raise awareness of what is achievable with regular therapy.
This also means that they remain in a period with inherent unpredictability quarter to quarter.
consistent advisor X mechanism of action and skin turnover.
The are seeing a growing number of patients.
Restarts.
but the exact case at the individual patient, level is highly variable and still difficult to predict
Based on the summer pausing trends, we're seeing over the first few weeks of Q3.
Our current expectation is that Q3 revenues will come in below what we're reporting here today.
With a return to growth in Q4.
Driven by a growing patient funnel.
Restarts and sales expansion efforts.
However, as usage patterns stabilized in the U.S., the expected waviness is subsiding, with transformative patient outcomes driving long-term sustainable growth and penetration of the identified patient pool.
And bringing new patients to therapy.
The growth trajectory will also benefit from global expansion and our launch overseas.
La rangu. Our GM for Europe, will touch on the European launch Dynamics, and near-term activities in a moment.
But before getting into the European opportunity, I want to highlight another fantastic milestone for our team.
Late last month.
We announced the approval of Visa by Japan's Ministry of Health, Labor and Welfare.
We received a broad label from the Japanese authorities, similar to the one in Europe earlier this year.
That includes all debt patients from Burke.
With the option of home.
Sell for family Administration.
The label also provides clinicians flexibility with how to diagnose debt patients.
And does not require a genetic test, facilitating onboarding and initiation of treatment.
Depends on other attractive markets into which Crystal can launch directly with hundreds of debt patients in urgent need of a safe and effective therapy.
We already have our core team in place to secure a pricing decision in the upcoming months and launch before the year-end.
Thanks to the recently completed and published Japanese open label extension data.
Key opinion leaders in Japan already have initial experience with visovac, which is a Tailwind for our launch.
I'll now turn it over to Lauron to share more details on our European launch plans and the latest timeline.
Thank you, Kish. I'm pleased to present an update on the upcoming European launch of V after receiving approval earlier. This year, we are on track for our European launch this quarter.
in the second half of 2025, we will bring this important therapy to patients in Germany and then in France,
Based on our latest analysis, the identified pool of patients in each country. Exceeds 500 patients
Usually University, Hospitals.
Please note that the launch in France is subject to the continuity of the access or Early Access program.
We are working closely with local authorities to ensure that eligible patients can benefit from this pathway.
We have already established dedicated commercial teams in both countries, with roughly 8 team members on the ground in each market, supported by an additional 8 colleagues at our European headquarters and leveraging our back-office resources.
In Germany, we anticipate that our first commercial patient will be treated in August, marking an important milestone in our efforts to bring meaningful solutions to the patients and the healthcare professionals.
To facilitate rapid and effective access, we have established comprehensive patient, service, and education programs.
This initiatives are designed to support home administration of the therapy as well as Administration by caregivers ensuring that patient can benefit from our treatment regardless of their health care settings.
These different possibilities are allowed by the very strong label approved by EMA since approval. The team has worked on identifying the key centers and preparing them to enroll patients.
Our focus is to ensure a successful launch, driving a take at key centers and ensuring an efficient patient experience.
This launch is a significant step for Crystal reflecting, both our commitment to where disease patients and strategic execution of our International commercial plan.
I will now hand the call back over to ksh.
Thank you, Laura.
With Vis delivering transformational clinical outcome for patients. We remain as confident as ever in the Blockbuster trajectory for our first approved generic medicine.
In the U.S., we're already starting to see the benefits of our sales force expansion, which we expect to drive significant penetration of the remaining identified patient pool.
In Europe.
With a broad label.
Flexible dosing options and a large identified patient pool.
We see a pack for steady multi-year growth. As we work with key centers and launch sequentially in major markets,
the broad label in Japan. Adds another high value launch market which would start adding meaningfully to our Top Line in 2026.
And increasingly, we're pursuing meaningful opportunities in the rest of the world markets.
Accessible through Distributors and partners.
All together, these providers of economic trajectory and provide a strong financial foundation and significant optionality for the company.
I'll now hand it off to Suma to touch on the recent pipeline developments, said Crystal.
Thank you, Chris.
Our R&D team has had another productive quarter as we work diligently to build a 2 portfolio of high-value genetic medicines.
Today, I will touch on key accomplishments, including clinical data updates for oncology and aesthetic programs.
Progression of KB408 into repeat dosing for AATD, as well as new study starts that set up for multiple near-term readouts in both the lung and eyes.
I would like to start with a few highlights on inhaled, KB 707.
Earlier this summer at ASCO, we shared an update on our Phase 1/2 study, KITE-1, evaluating inhaled KB-707 for solid tumors of the lung.
This update included safety data from 39 subjects treated with inhaled kb7 as monotherapy.
As well as an efficacy data update for the 11 KB-7007 treatment patients with late-line NFC LC.
with an extended follow-up and new data cut of April 15, 2025.
We saw a deepening of the responses in the NFL C cohort, with an improved objective response rate of 36%.
Median. Duration of response and progression-free survival were not yet reached
Outpatient setting.
We are increasingly excited about the profile of inhaled KV 707 monotherapy in the clinic.
In addition, combination therapy, cohorts have been open in tinight 1 and enrollment is ongoing.
We have also made exciting progress with KB, 408 for the treatment of aatd, lung disease.
We recently completed dosing and bronchoscopy of a third, aat patient toast with KB, 408 in cohort 2.
As shown on the slide. We again, saw a robust Airway, transaction resulting in functional Aid, expression, as demonstrated by neutral elastase, binding in the elf.
Please note that this patient was an background IV augmentation. And yet, we still detected a reduction of free neutri for last days.
Following KB 408 dosing.
Across all 3 bronchoscopy patients, we have seen transaction rates in the 30-. 40% range after a single dose.
The safety profile of KB 408 continues to be attractive across all five patients.
Dosed in cohort, 2.
Based on these data, we recently amended the Serpentine 1 protocol and started dosing. In a newly opened cohort, 2B, we are investigating repeat dosing in cohort 2 at two dose levels.
Our study objectives with this new cohort are to evaluate safety and tolerability of repeat dosing, as well as assess additive, efficacy of repeat, dosing, and explore optimal dosing, timing based on durability of effect.
Design details are summarized on the slide.
Patients will undergo a baseline bronchoscopy.
Receive four weekly doses of KB 408, and then receive a bronchoscopy either one or two weeks after the final dose to assess expression and durability.
We expect the data generated from cohort to be to dictate our approach with respect to the advanced clinical development of KB 408 including potential accelerated approval approaches.
We are also making steady progress on KB 407.
With TD and sanctioning, and the addition of new network sites, providing expanded access to CF patients, including those that are currently ineligible for modulators.
We now have our fourth patient enrolled in cohort, 3, and expect to soon, have 5, TD and sites up and running to support completion of both cohort 3, as well as subsequent, repeat dosing studies.
Based on the latest patient screening and enrollment timelines. We expect to be able to share molecular data later this year.
Finally, we have our recent clinical data in aesthetics.
Where we reported positive results from our 2 to 1 randomized, double blind, and Placebo control study.
Evaluating our second aesthetic candidate, KB3-04.
KBT 04 is a combination of aesthetic therapy and coding, utilizing both collagen 3 and elastin to drive aesthetic improvements in the skin.
As the June 3 weeks ago investigator and subjects alike. Reported meaningful, aesthetic improvements across multiple attributes including wrinkles and elasticity with clear and statistical significant advantages over placebo.
The images shown on right? Highlight the Improvement achieved by some of our KD 304 treated subjects.
The safety profile of KB3 or KB4 was also in line with expectations.
All advertisements were mild to moderate and transient.
Based on the broad aesthetic Improvement, observed with kb3 or4 in Pearl 2.
We have decided to progress kb3 or 4 interface to study for the treatment of wrinkles of the decollete.
In support of this goal. We also recently completed development and validation of a decollete specific total numeric scale.
We intend to align on the phase 2 protocol later. This year,
Finally, I would like to add that we started 2 opal. Clinical trials in the last 2 months.
Iolite, a Phase 3 study, evaluating KB 803 for the treatment and prevention of coral liberations in depth patients.
And EMERALD 1, a Phase 1/2 study, evaluating KB 801 for the treatment of neurotropic keratitis.
Both of these programs leverage the unique attributes of our platform.
And showcase what is achievable with our hsc1 based platform.
In the front of the eye.
We are looking forward to sharing data and progress updates on those programs as they progress.
Altogether, this steady execution sets up for many near-term readouts in CF.
Aatd, NK and Deb.
Then we expect to validate the breadth of opportunity that exists with our hs3 1 Place platform.
With that, I would like to turn the call to Kate.
Thank you, Summa and good morning everyone.
I would like to provide some highlights from our second quarter financial results that were reported in our press release and filing this morning.
As Chris mentioned earlier, our net product revenue for Visc was $96 million for the second quarter of 2025.
This marks continued growth compared to the second quarter of 2024, as well as 9% growth over the recent first quarter of 2025.
Gross to net revenues remain consistent with prior quarters.
cost of goods sold was 7.2 million compared to 6 million in the prior Year's second quarter and gross margin remain relatively consistent at 93% in 2q 255,
Research and development, expense was 14.4 million, compared to 15.6 million in the prior year.
the decrease quarter of a quarter is primarily due to the timing of our various research and development manufacturing runs
Offset slightly by increased clinical development costs across many of our product candidates.
General and administrative expenses were $35.2 million compared to 27.6%.
Primarily due to increased professional services fees, including marketing services consulting and legal.
We also saw increased personnel-related costs compared to last year. Do you attribute this mainly to growth in our headcount to support global commercialization?
And this was inclusive of increased stock-based compensation costs from new grants.
Operating expenses for the quarter included non-cash, stock-based compensation of $14.1 million, compared to $13.2 million in the second quarter of 2024.
You’ll note that our non-GAAP R&D and SG&A guidance remains unchanged on Slide 14.
Net income for the quarter was $38.3 million, which represented $1.33 per basic share and $1.29 per diluted share.
This is compared to 15.6 million in the prior year's second quarter at $0.54 per basic and $0.53 per diluted share.
Finally, I am happy to comment on the sustained strength of our balance sheet.
We closed the quarter with over $820 million in combined cash and investments, with continued growth in our net cash provided by operating activities over previous quarters.
We believe this puts us in a great position ahead of our upcoming Europe and Japan launches.
As well as for the significant number of research and development objectives we have set forth for the remainder of 2025 and into 2026.
With that, I'll now turn the call back over to Chris.
Thanks Kate.
With clear growth drivers for VA in the U.S. and abroad.
Plus the additional upside of a potential KB 803 launch for corneal abrasions over the next few years. We're excited about the path ahead for visa and for crystal
It's important to understand that this upward trajectory will not necessarily be linear, but looking beyond the short term, this is a multi-year growth story that has only just begun.
I had a written a growing pipeline of clinical stage programs targeting, clear unmet needs.
Which Step jump implications for crystal.
We see opportunities to build significant shareholder value in the years ahead.
Long readouts and CF and aatd.
Together with Opthalmology readouts in NK and deeb, will make clear the potential of our platform across multiple tissues and open up Blockbuster product opportunities.
Finally, our inhaled 707 program for nsclc continues to progress. Well and stay tuned for readouts in 2026.
Thanks for listening.
and I'd like,
To now open the call for Q&A.
Certainly at this time we will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.
We ask that while posing your question. You please pick up your handset if listening on speakerphone to provide Optimum sound quality.
Please hold while we Poll for questions.
Your first question for today is from Roger song with Jeffries.
Uh, hi. This is Fiona Alpha, Roger. Congrats on the quarter and thanks for taking our questions. Um, my first question is, uh, just to clarify the revenue growth for this queue is not impacted by the Salesforce extension expansion. And if you think the volatility for the next quarters will be offset by uh the sales force expansion kicking in and the EO launch. Thank you.
No, um, you know, as I alluded to in my script.
um,
Part of the increase in Q2 was driven by people uh patients who are pausing getting back on drug.
And the start, you know, and we have been hiring uh reps since the tail end of q1. And so there was an incremental effect. I think the point I was trying to make is the full impact of all the hires.
Um,
will be felt over the next couple quarters as they come on board, get trained and are fully functional in the field.
Yeah, that's very helpful.
Your next question is from Gavin, Clark Gartner with evercore isi.
Hey guys, thanks for taking the questions. Um,
Could you just give us a little more quantitative commentary um, on the magnitude of how much slower the first few weeks of the quarter have been versus q1. Just had a rough way to think about that.
um,
now we're not we're not going to get to that level of detail Gavin and it is early in the quarter. Um, I was just trying to set expectations that in the summer. People take vacation and the summer holidays, always as an impact on pauses.
Um but beyond that um it's tough for me to quantify because it's such an variable thing. The quarter is just maybe 1 third of its way in um but
I just wanted to point out that summer is usually filled with more pauses than usual.
Okay, great, just a quick follow-up. Um, for us, advise you back. Uh, what's the mix of Arab versus dab, patients either. Um, and, and reimbursement approvals or in Star forms that are coming out the therapy. Thanks.
um,
That's a good question. I believe as of the last quarter that mix is more like 6436 in that range.
Um, but I asked the Fein, Stephanie, if you have a clearer number, can you jump in?
Yeah. It's basically, in line, we didn't see really much movement at all in the breakdowns for reimbursement, approvals. Either our debt age, even the insurance plan.
so,
It's 1 of the reasons. We didn't really get into it this time around, but there are largely stable, maybe shifting, you know, as always, you know, shifting we're very gradually with you guys. So
Okay, great. Thanks.
You're next question for today is from ratu barl with TD Cowen.
Hi team. This is Joshua fleshman on the line for a 2 Congress in the quarter and thanks for taking our question. How do you expect for drug holidays to factor into the original? Guidance of 720, us patients initiating FAQ and on Europe. How should we think about pricing and what's important to the country's Health technology assessments? Thank you.
Um,
Uh, Joshua as uh, we mentioned last quarter.
Uh we're on track but we're maybe a quarter or 2 behind. Um sometime early next year is when we think we'll get to that number or our original ambitious. Goal was to get there by September October of this year and so um, I think
Uh we're still very pleased with the track we're on and um we hope to get there pretty quickly. Um in terms of the EU pricing, I'm going to let Lauren speak to it and I'll come back to the last question when he's done.
Thank you. Um yep. Thank you, Chris, uh reimbursement application processes or proceeding as planned. Um
With the HTA bodies in the main countries in Europe. Um, as you know in Germany, we benefit from a free pricing uh during the first 12 months post approval. And and then the negotiation with gkv are about to start now. Um, it's it's a bit premature to uh, provide any uh, feedback given that we have not received any uh, feedback from the authorities with regard to our HTA dossier. But, uh, the early uh, engagement, we had, uh, with the key authorities in throughout Europe, were very, uh, productive and the unmet medical need of uh, in uh, DB is well recognized by the payers
and, uh, the potential benefit transformational benefit of of vux seems to be understood
Chris.
Yeah, thanks Laura. Uh, and Joshua, your last question was on. Um,
Something around technology used in Salesforce.
It was on um what's important to the country's Health technology assessments.
Gotcha, gotcha. So he's
Okay, great. Um,
does that answer your question, any follow-up?
No, that's great. Thank you so much.
Your next question is from Sammy Corwin with William Blair.
Hey, good morning. Um, congrats on the quarter and thanks for taking our questions. Um, I have another couple questions about the upcoming European launches. Um, I know previously you mentioned that there might be a dynamic of onboarding patients based on their need to get treated in a physician office first. So I wonder if you could comment on that a little bit and then do you have any goal in terms of the, a reimbursement ramp, like the 720 number that was initially applied for the US launch?
Thank you.
Laura.
Yes, please. Uh, thanks for. Thanks for the question. I mean, the, the requirement for an appointment at a specialty center is quite customary in practice in Europe to access a prescription in general and even more for specialty drugs. So it's not something unusual uh that you have to go through an appointment at the center. Um, I mean, this is the reason why the team has dedicated the past 3 months in in notifying, the centers understanding the potential. But next
um, and then sharing their Readiness to enroll patients, either through education, Advanced scheduling or addressing any other, uh, needs in on a Case by case basis,
Um, so these are are, are the main, uh, guidelines, then with regard to uh the number of patients covered um in Europe, when the country uh grants. Um
Uh, grants, uh, reimbursement. It will be for the entire, uh, for the entire population that will be designated in the reimbursement approval. So there is no, uh, Case by case, uh, request. Once the, the the drug is approved by the uh, by the the, the payer body the uh, National Insurance in most cases.
Okay, if I could rephrase those questions slightly then. So, is it possible for patients to do that initial appointment in a group, or does it need to occur on a patient-by-patient basis? And then, I guess instead of a patient ramp, do you have a goal in terms of onboarding patients to the drug?
Over a particular period of time.
So I don't think we are, uh, we have communicated any, uh, guidance for.
Of the patient pool. Um, the eligible patient pool within the the first 2 to 3 years. But um,
We have not communicated more detailed numbers.
Great, thanks.
Your next question for today is from Alex Stranahan with Bank of America.
Hey guys, this is Matthew on for Alex. I appreciate you taking our questions.
Maybe on the pipeline. Uh, notice that the timeline for CF data was mid-2025. Now, by year-end, anything to read into this or is this just, you know, enrollment timelines? And then maybe you can remind us of sort of the number type of patients we expect in that first readout.
I can take this question.
Um, as you, uh, may be aware that we did announce that the TDN, you know, we got endorsement from the TDN, so that opened up all the TDN sites. So, we have been actively working. We have, at the moment, 6 Teddy in sites. Uh, that's, we are in contract and budget phase. So, I'm, uh, unfortunately with these academic sites, just the whole process and paperwork, uh, took more time than we anticipated. Our team's really pushed, but we're getting close. So, we believe, once we can get these sites up and running, which we...
We're pretty close. Uh, we should be able to enroll the patient, so, uh, that pushed out. But hopefully, we can enroll, you know, more patients across these sites once they are up and operational.
And, um, with respect to the data announcement, look, you know, Cohort 3 is essentially 3 patients: 3 modulator and 3 null.
And what we're looking to show is molecular data on 3 n mutation patients and see and again, keep in mind. Now, patients are harder to get by but the TDN sites, do that have them. So, uh, we have patience but you also need patients that are willing to rock, okay?
Not easy, but we are there. We're getting there.
Gotcha, thank you.
Your next question for today is from Andrea Newkirk, with Goldman Sachs.
Hi. Thank you for taking our question. This is Morgan on for Andrea Newkirk. Following up on 1 of the previous questions. Do you anticipate a similar Dynamic will be required in Japan? Such that patients will need to be seen by a a healthcare practitioner before initiating a vag. And then also, um, can you share some details on the fifth patient dose in cohort, 2? Um, for aat? Um, in terms of the percent cells that were transduced and the level of aat expression and um, distribution of 48 across the lungs,
Um, thank you so much.
Hey. On the on the Japan question? Yeah. It's very similar to uh Europe. Um it's um it's the way all drugs. Like the first visit is in a physician office.
So, no change there. Um, in terms of the AAT, I'd ask somebody to go back to that slide.
Um, I don't know, Stephanie, if you can, uh, pull up that slide.
On a a t. Just give us a minute.
Yeah. And um, as you
we're trying.
You should be, of course, again. Yeah. So basically, all three patients we saw had expression in the biopsy samples. You could clearly feel expression from baseline increase.
Have you seen the lavidge, uh, 1 of the patients, we had difficulty, you know, recovering the right amount of blood because this whole procedure is pretty tricky. And, uh, it, you know, it's a, it's because of some of the issues with recovery of the lavidge. We were not able to get the levels, but in 2 patients, we were able to show both expression of, uh, in the lavaggi were able to measure a and shown useful elastic and binding and reduction of the Neutra for elastic. But in all of the patients in their biopsies, we did see, expressional aity about the levels of
Baseline.
Okay, great. Thank you.
Your next question is from Joe Panini with HC Wayne Wright.
And also might include a lot of patient variability. So I don't know if it really could be answered. How would you view, you know, based on the pausing and restarting and, you know, chronic wounds being closed versus mild to moderate? How would you define if you can steady state for a patient as they're on vage over the long term with regard to starts and restarts and wound reopening?
Um,
you know, we've said consistently
Um, even from at the pre-launch stage.
That steady state implies that the entire patient base, on average, consumes about 26 miles a year.
And we're not there yet.
And we believe we'll get the steady state.
When the ratio of our depth to data patients,
It's about 50% each. So if you have an even split of recessive and dominant,
And they're in a, you know, they've been on drug a while.
Uh, we expect the average consumption across the patient based to be 26 miles a year.
So that is how we define steady state, and got it. And if you look at the compliance, if you look at the RF DW ratio, um, you look at the vials consumed.
Uh, we're definitely months away from getting to that point.
That's helpful. Thank you. And then um, just want to switch gears to June right now. Uh, I'll I'll start with the phase 2 program. Um, the prepared comments, you know, with regard to decollete Phase 2, you talked about a um a photo numeric scale. I guess I wanted to discuss, you know, the novelty of that. And you know what are the key aspects of the regulatory discussions around this um endpoint
I mean, obviously, as you know, with 3 or 4, it's a combination of collagen 3 and elastin. Um, so I mean, with adding elastin, we clearly know that we can express elastin from animal models with direct... the definition of elastin, obviously, is not, you know, it's not going to be... it's going to be slightly different. You're going to see improvement in the texture of the skin, skin quality, etc., etc. And that's something that we captured in our 3 or 4 study. If you look at a patient's feedback, I mean, or their rating, that's some of the consistent feedback that we got from consistently all the patients that were on the drug, that they felt their skin was smoother, the texture felt better. So, obviously, some of that cannot be captured just...
By putting numeric scale. So we do. We do want to talk to the agency about the novel mechanism. Obviously, with this division, we know that we can express collagen, 3 will Express elastin and we need to, uh, you know, we're going to propose some sort of a, you know, quality evaluation for a for uh for the patient reported outcome of the skin quality and skin texture. So this is something we're going to sit down. We have with the agency and have that discussions. We have developed a proton numeric scale at the moment uh for the decollete. So we have a scale that's developed and validated. So we want to do some sort of a combination and then just have that discussion with the agency.
Got it. And then just quickly on June again. Um, I know Chris, you've talked about this in the past with regard to potential options of how June, you know, the corporate aspect might play out with regard to, say, you know, keeping it a subsidiary part of Krystal, spinning it out, or what have you. Um, do you have any potential thoughts on when we might see visibility on potential outcomes there?
Yeah, I think, um, following the announcement on 3 or 4, um, Suma's, um, starting to have conversations with the FDA. Um, from a development perspective, we expect to start Phase 2 in the upcoming months.
And, um, meanwhile Nishant, the CEO and the CFO of June.
We are actively pursuing, um, we are diligently working towards.
Uh, getting to John finance and spun out.
Um, and the broad, the broad. Um,
Broad timing on. That is roughly before the end of Phase 2.
so, um, our expectation is
By the middle to the end of 2026.
We're expecting June to be a separate subsidiary of.
Just great, appreciate all the answers.
Can you clarify that when you, um, suggested a decline in, uh, budget revenue quarter over quarter in the third quarter, is that in the U.S. only, or does that encompass worldwide? Because you do have the offsetting launch in Europe. And then, uh, second question, your R&D expense allocation, at least in the 10-Q, seems very heavily weighted to the oncology program. Specifically, I'm just curious as to why that's the case and what trends you expect to see going forward in the other programs. Thank you.
Hey, I'm the decline that was, uh, on the U.S., uh, commentary. It was a completely 100% U.S.-specific commentary dig into account. Like we saw last year, in the summer months, families go on vacation and there are more disruptions and pauses than usual.
Um, but with respect to the R&D breakdown.
On, uh, cost, uh, cancer trials are expensive and I'll have. I can fairly chime in; obviously, you guys saw the monotherapy data. Uh, we are now, uh, in the process of the studies that have already started between the combination. Uh, keto is not cheap and it's expensive. Um, and also given, uh, you know, the agency's recent actions and other stuff, we believe we have very strong data. So we want to position ourselves to meet with the agency and start talking about a control study. So we, and I mean, again, this is something we'll have based on our discussions with the agency, but we anticipate that into the future.
Asked what it would take if you would go into a full-blown study.
Your next question for today is from your gal, Nacho Moitz with Croup.
Hey, Christian team. Thanks uh, 2 questions, could you talk about the you've talked a lot about the 720. Uh, the 60% as you pointed out, I'm curious about the the other 40%, the 420 to get to the full 1200. What, what have you said, or what can you say today about the timeline to capture that aspect of the, uh, the US market?
Look the 720.
Um, it's a number like if you look at the past history of drugs that have been launched.
Uh, the best of the launches have gotten to about 60% market share in 2 years. So this is more of an academic Benchmark than anything related to oh it has nothing to do with, we're going to stop at 720. Be fully believed that the entire 1200 patient base is something that um we need to Target. Uh but we had set a goal in terms of the rate of launch. Um trying to get to like a 60% market share and compete with the best of Prior launches out there. Um, the only point I'll make is as you get past 700, the profile of patients that we get will be much more moderate to mild. Uh,
Much more out in the community.
Um, probably higher on the 8 scale.
and so,
um,
but it does not mean every wound is important for Weis effect to be treated and it's it's by no means. Are we trying to convey that once we get to 720? We're on some different mode of pathway. We'll continue with the same level of diligence and effort to get to the remaining 1200. And once we get to that point, uh, we'll definitely start thinking about how to go after the gap between the 1200 and the 3000, which is a much more undiagnosed uh, difficult to find uh Target population.
Okay, that that's helpful and then I think you made a comment with respect to France the something about the continuity of the EAP. Can you just expand on that were? Are there specific risks to continuity or why wouldn't there be continuity of the EAP? That would impact the transition to the commercial? Can you just walk through that? In more detail, please.
yeah, Laura
Yes. Um, I mean this is a more formal aspect to it. Um, we had the AOS.
Pre-marketing authorization in France. And now we are waiting for access post-authorization.
It does happen even though it's very rare, but it does happen that some companies don't. So, uh, we will respect the process, uh, that we have engaged with the authorities. Um, but we are confident that. Uh, yeah. The the patients will will be able to have access to to the drug and the acceptance in France.
Okay, thank you.
Your next question is from Debjit Chato with Guggenheim Securities.
Hey, good morning, and thank you for taking my questions. I have got a couple of clarifications on the 82% compliance.
Uh, could you sort of clarify what percentage of patients are currently using 4 months of aisle versus 321, etc.? And how have recessive patients evolved versus the dominant patients? And I have a follow-up.
Yeah. Hey, they did it. I was following you along. I know. Uh, can you just repeat the first part of your question?
So, of the 82% compliance rate, what percentage of these patients are on 4 BS versus 3, 2, 1? We're just trying to get a better feel for how to calculate that 82%.
How to calculate in our models, rather. Um, look, the way, uh, the the way we Define compliance is always been consistent and the same since the time of the launch. Um, to I mean, the easiest way to think about compliance is if you are on drug for uh if you're on a drug for 10 weeks and you miss a week, you're at 90% compliance. Um, that said um,
If somebody paused for an extended period and got back on a drug they hate, they kind of hurt compliance. And if you never came back on the drug, you're kind of helping compliance. Um, so it's, it's just so that's why it's compliance while you're on the drug as opposed to if you're not on the drug. Um, but that said, depth um, irrespective of how one calculates compliance, whether on a quarterly basis or a 6-month basis.
On an annual basis, we're talking a range somewhere between 76% and 84%. It's not that far off.
Uh, with respect to... there could be many ways to calculate, and we try not to get into when it's not that material to the overall situation.
I appreciate the clarification that, um, just to follow up on that.
The utilization that you're seeing in the recessive patients versus the dominant. Um, I know you mentioned, you know, once you get to 50/50 roughly 26 versus per patient. But right now, what are you seeing in the recessive versus dominant?
Um, the recessive are definitely much more consistent and have been since the beginning of the launch.
Um, I mean, we even look at what is the compliance of the people who came on the drug in Q3 of 2023. How are they doing today? Um, all the pauses and delays and stops and starts are heavily impacted by moderate to mild patients, typically adult moderate to mild patients, um, is who.
Make this pause and start difficult to figure it out. Um, the RAB is extremely consistent on drug for the most part, some of them now are approaching a point where the wounds are fully healed. And so there is an opportunity for them to take a break and get back on drug. Um, but the entire conversation around,
Stops and starts.
Is on the moderate to malsa.
Awesome. And then one last one. Um, so based on the single alarm data, what kind of TPS scores are you enrolling in the combo program in non-small cell lung cancer? Thanks so much.
Okay. T. I mean, we are looking at, obviously, we are agnostic, right? It doesn't matter what kind of PD-1 expression or PD-L1 expression, right? I mean, obviously, we are looking for frontline face, uh, field patients. So either they failed PD-1 or PD-L1.
are impacted with higher PD-1 expression versus negative feedback.
Thank you. Good luck.
Thank you.
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