Krystal Biotech's Q3 2025 Earnings Call: Contradictions in U.S. vs. Ex-U.S. Revenue, Europe Launch Timelines, Manufacturing Process, and Patient Access

Date of Call: November 3, 2025

Financials Results

• Revenue: $97.8M net VYJUVEK revenue in Q3 2025; sustained growth vs Q2 and includes early Germany contribution; total net VYJUVEK revenue since launch > $623M.
• EPS: $2.66 per diluted share ($2.74 basic); net income $79.4M; EPS benefited from a one‑time noncash tax benefit and reversal of Section 174 (nonrecurring).
• Gross Margin: 96% for the quarter, compared to 93% in the prior quarter; COGS $4.3M; margins expected to normalize as ex‑U.S. sales grow until optimized process is approved ex‑U.S.

Guidance:

• Revised full‑year non‑GAAP R&D and SG&A guidance to $145M–$155M (prior $150M–$175M).
• No revenue guidance provided for 2026 at this time.
• Expect KB407 (CF) molecular interim readout before year‑end and potential repeat‑dosing FEV1 data next year.
• Target interim KB801 (NK) data by mid‑2026; KB803 enrollment expected complete by year‑end with mid‑2026 readouts anticipated.
• Optimized larger‑bioreactor manufacturing process approved in U.S.; ex‑U.S. approval expected sometime next year.

Business Commentary:

* Revenue Growth and Global Expansion: - Krystal Biotech reported $97.8 million in VYJUVEK net revenue for Q3 2025, marking a continued growth trend. - The growth was driven by the U.S. launch and the successful European expansion, particularly in Germany and France.

• Reimbursement Approval Acceleration:
• Krystal Biotech added over 40 new reimbursement approvals in the U.S. since the previous earnings update, reaching a total of over 615.

• This acceleration is attributed to the sales force expansion and an increase in prescriber penetration in the community setting.

• European Market Expansion:

• The launch in Germany resulted in approximately 20 patients prescribed VYJUVEK, with over 10 centers participating.

• The expansion in Europe is expected to continue, supported by positive pricing outcomes in Japan and potential EU priority list pricing in France.

• Pipeline Progress and Readouts:

• Krystal Biotech expects multiple readouts in the coming months, including from the cystic fibrosis program (KB407) and the oncology program (KB707).
• The progress is supported by the FDA's platform therapy designation, which should facilitate faster approvals and reduce manufacturing costs.

Sentiment Analysis:

Overall Tone: Positive

• Company reported $97.8M Q3 VYJUVEK revenue, 96% gross margin, $864M+ cash/investments, launches in Germany/France/Japan, platform designation for KB801, and multiple near‑term readouts planned (CF before year‑end; NK and ocular readouts in 2026).

Q&A:

• Question from Alec Stranahan (Bank of America): On the ex‑U.S. launch, are you focusing on expanding breadth of prescribers or depth of existing prescribers, and what was optimized in the manufacturing process and timing for ex‑U.S. approval?
  Response: Focus initially on centers of excellence to enable patient starts, then expand into community; optimized process is a scale‑up to a larger bioreactor approved in the U.S., with ex‑U.S. approval expected sometime next year.

• Question from Jiale Song (Jefferies): How should we think about ex‑U.S. versus U.S. revenue contribution into 4Q and 2026 and how will pricing negotiations (and U.S. MFN) affect pricing over time?
  Response: Expect steady, gradual EU uptake (no early bolus); Germany contribution was modest in Q3; pricing is country‑specific (Germany free pricing six months; Japan pricing was favorable) and outcomes so far bode well but exact splits remain uncertain.

• Question from Ritu Baral (TD Cowen): For NK, what are the gating items to start and enroll the trial, how many sites are open, and has formal enrollment begun?
  Response: Enrollment has started with multiple U.S. academic sites live and global sites being added; most U.S. sites expected live by year‑end and interim data targeted by mid‑2026.

• Question from Ritu Baral (TD Cowen): What percentage of planned sites are currently up and running for the NK study?
  Response: Most U.S. academic sites are up and running, with a few remaining to activate and expectation that most U.S. sites will be active by year‑end.

• Question from Ritu Baral (TD Cowen): For CF, how many null patients will be reported by year‑end, what molecular endpoints will you report, and what constitutes success in null patients?
  Response: Plan to report a minimum of three null patients with bronchoscopic biopsies assessing full‑length CFTR expression by immunofluorescence across lung sites; robust expression (even ~5–10% of normal) across biopsies would be considered meaningful.

• Question from Gavin Clark‑Gartner (Evercore): Why do you believe the selected dose for NK is appropriate (no dose exploration) and will a single efficacy study be sufficient for approval?
  Response: Dose selection is supported by animal PK/expression data and the study is powered based on those data and precedent; for this rare disease the team expects one well‑powered efficacy trial can be registrational.

• Question from Gavin Clark‑Gartner (Evercore): Any blinded safety signals to report from the ocular DEB or NK studies?
  Response: No adverse events of concern have been observed to date.

• Question from Samantha Corwin (William Blair): Are patients with prior ocular HSV infection excluded from the NK study and what will the initial data release show?
  Response: Prior HSV infection is allowed provided it is not active; the randomized 1:1 placebo‑controlled 8‑week study will report complete healing at 8 weeks assessed by an independent reader as the primary outcome.

• Question from Samantha Corwin (William Blair): Should we expect VYJUVEK full‑year revenue guidance early next year?
  Response: No, management will not provide revenue guidance for 2026 given multiple launches and variable geographic rollouts.

• Question from Alexa Deemer (Cantor Fitzgerald): Can you break out Q3 VYJUVEK sales by U.S. versus Germany (percentage)?
  Response: Not this quarter due to accounting/auditor considerations; management plans to begin geographic segment reporting in 2026 as ex‑U.S. contribution becomes more material.

• Question from Alexa Deemer (Cantor Fitzgerald): How did U.S. sales in Q3 compare to Q2?
  Response: U.S. sales were a bit lower than Q2 but overall Q3 exceeded Q2 due to reimbursement approval acceleration and early ex‑U.S. contributions.

• Question from Morgan Lamberti (Goldman Sachs): With 615 reimbursement approvals, what's driving that growth and how do you get to ~60% penetration?
  Response: Acceleration is driven by an expanded sales force enabling greater community penetration and faster start form pull‑through; 60% (~720 approvals) is reachable within a quarter or two from current levels.

• Question from Jon Kim (Citi): For KB408 (AATD), do you expect a significant uptick in AAT with repeat dosing versus single dose and is opening more sites a priority given complexity of bronchoscopy/lavage?
  Response: They expect an uptick with repeat dosing but are not quantifying it publicly; repeat‑dosing cohorts are collecting bronchoscopy and lavage samples at a limited number of specialized sites and regulatory discussions will follow the cohort readout.

Contradiction Point 1

U.S vs. Ex-U.S. Revenue Contribution

It involves the expected contribution of U.S. and ex-U.S. revenues, which directly impacts the company's financial performance and growth strategies.

How to compare ex-U.S. and U.S. revenue contributions post ex-U.S. launch, especially in the coming year? - Jiale Song (Jefferies LLC)

2025Q3: Export revenues are expected to grow steadily rather than in a bolus format. - Krish Krishnan(CEO)

How will drug holidays affect the original guidance of 720 U.S. patients initiating VYJUVEK? - Joshua Seth Fleishman (TD Cowen)

2025Q2: We're still on track to reach 720 U.S. patients, but we may be a quarter or two behind, aiming to get there early next year. - Krish S. Krishnan(CEO)

Contradiction Point 2

Europe Launch Timeline

It involves the timeline for the Europe launch, which affects the company's expansion strategy and revenue expectations.

For the launch outside the U.S., are you focusing on expanding the breadth of prescribers or deepening engagement with existing prescribers? - Unknown Analyst (Bank of America)

2025Q3: We anticipate applying for this in Europe and expect approval sometime next year, which should bring efficiency to ex U.S. operations. - Krish Krishnan(CEO)

Can you comment on the onboarding process for patients in Europe and the impact of requiring initial treatment at a physician's office? - Samantha Danielle Corwin (William Blair)

2025Q2: Reimbursement application processes are proceeding as planned in Germany with free pricing for the first 12 months post-approval. - Laurent Goux(CMO)

Contradiction Point 3

Ex U.S. Launch Focus and Strategy

The contradiction lies in the company's strategic approach to the ex U.S. market, which impacts growth and revenue expectations, as well as the timeline for expansion and optimization of the production process.

On the international launch, are you focusing on expanding the breadth of prescribers or deepening the engagement of existing prescribers? - Unknown Analyst (Bank of America)

2025Q3: Our objective in Europe is primarily to accelerate getting a patient to meet the physician as soon as possible. We start by focusing on centers of excellence, but then we spread out into the community. - Krish Krishnan(CEO)

What are your expectations for Europe in H2? Are 1,000 patients in Germany and France treated at centers of excellence? - Ritu Baral (TD Cowen)

2024Q4: In Germany, we start accruing for German price after 6 months, and the actual price is expected after 12 months. In France, under AP2, we accrued from day 1, and the price is expected after 18 months. - Krish Krishnan(CEO)

Contradiction Point 4

Manufacturing Process Optimization and Timeline

The contradiction involves the timeline and implementation of the optimized manufacturing process, which directly impacts production costs, efficiency, and revenue.

Is your focus on expanding the breadth or deepening the engagement of prescribers in the ex-U.S. launch? What specific process improvements led to better gross margins, and what is the timeline for expanding these optimizations to ex-U.S. markets? - Unknown Analyst (Bank of America)

2025Q3: The optimized process involved moving to a larger bioreactor, which is approved in the U.S. We anticipate applying for this in Europe and expect approval sometime next year, which should bring efficiency to ex U.S. operations. - Krish Krishnan(CEO)

Has the VYJUVEK manufacturing process changed? - Josh Schimmer (Cantor)

2024Q4: We scaled up to a higher-level bioreactor, with FDA approval. This process offers adaptability across our pipeline, reducing CMC risks. - Suma Krishnan(President, Research and Development)

Contradiction Point 5

Patient Access and Reimbursement Approval Growth

It relates to the company's strategies to improve patient access and the factors driving the growth in reimbursement approvals.

What factors drove the increase in reimbursement approvals to 615? What does the path to 60% penetration look like? - Morgan Lamberti (Goldman Sachs Group, Inc.)

2025Q3: Growth in reimbursement approvals is due to increasing the size of the sales force, which now handles community prescribers effectively. - Krish Krishnan(CEO)

What steps are needed to accelerate reaching 60% drug penetration within 2 years? - Andrea Newkirk (Goldman Sachs)

2024Q4: We've seen delays due to holidays and reverification season. We're on track with a healthy patient pipeline. We expect a return to increased trajectories. - Jennifer McDonough(SVP, Patient Access, Analytics and Operations)