Krystal Biotech Inc — Earnings Call Q3 2026

Operator: Good morning, and thank you for standing by. And welcome to Krystal Biotech's Third Quarter 26 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. During the question-and-answer session, there will be a limit of 2 questions per participant. As a reminder, today's conference is being recorded. I would now like to hand the conference over to your host, Stephane Paquette, Chief-- sorry, Senior vice president of corporate development. Please begin. Stephane Paquette: Good morning, and thank you all for joining today's call. Earlier today, we released our financial results for the third quarter of 26. The press release is available on our website at www.crystalbio.com. We also filed our earnings 8 k and 10 Q with the SEC earlier today. Joining me today will be Krish S. Krishnan, chairman and chief executive officer Suma Krishnan, president of research and development Laurent Goux, executive vice president and general manager for Europe. Christine Wilson, senior vice president and head of US Commercial and Kathryn A. Romano, chief accounting officer. This conference call and our responses to questions may, contain forward looking statements. Are cautioned 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 and are 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, other factors can be found in our SEC filings. With that, I will turn the call over to Krish. Krish S. Krishnan: Good morning. And thank you for joining us. Q3 was another strong quarter for Krystal. $127.3 million in VYJUVEK revenue, an increase of 30% from the same period last year and reported diluted earnings of $2.05 per share and ended September with $1.2 billion in cash and investments. Those results they reflect the business that is growing, that is profitable, and generating the resources to advance our pipeline. They also reflect the work our teams have done to build Crystal into a global company with commercial operations, manufacturing capabilities, clinical development programs that we own and control. And today, we have generated approximately $1.1 billion in VYJUVEK revenues since launch, and that is an important milestone for a medicine developed here at Crystal. Behind that number are so many patients receiving treatment physicians incorporating a new paradigm of genetic medicines into their practices, and families getting access to a medicine that addresses the underlying cause of DEB. In the US, demand continues to grow as does the prescribing physician base. And internationally, we continue to translate physician interest into patient starts, across Germany, France, and Japan. The pricing secured for VYJUVEK in Japan and Germany and Italy today reflects recognition of the meaningful benefits that VYJUVEK provides patients and families. I am proud of our team's thoughtful work to demonstrate that value and establish a strong foundation for patient access internationally. We will continue to build on this progress in ensuing pricing discussions across additional markets and Laurent will discuss those markets in more detail. We also made meaningful progress in development. We were really encouraged by the recent Gorlin syndrome data clinical results that demonstrated regression in both injected and non-injected lesions together with the histologically confirmed clearance of an injected lesion in each patient. So that gives us a very strong foundation to have conversations with the FDA on next steps. I want to address the updated timing of some of our clinical readouts. And while we had hoped to share these readouts sooner, want to be clear that the programs continue to progress well. And we look forward to sharing results in the upcoming months. Suma will elaborate more in a few minutes. Alongside these developments, our board authorized a share repurchase program of up to $400 million that we expect to deploy over the next 2 years. We have reached a position where our financial resources allow us to support global commercial expansion, pipeline, and clinical development, and have the flexibility to return capital to shareholders. And the authorization reflects our confidence in Crystal's long term and our responsibility to allocate this capital thoughtfully. So taken altogether, this queue demonstrated the strength of the business we have built. It demonstrated continued commercial growth substantial profitability, and progress across the pipeline. For that, I would like to thank our employees, our investigators, and the patients and families participating in our studies for helping make that progress possible. And with that, I will turn it over to our team to walk through commercial, clinical, and financial updates. Laurent Goux: Thank you, Krish. VYJUVEK International revenue reached $32 million in the third quarter. We continue to translate physician interest into patient starts while strengthening the growth foundation through reimbursement progress and greater access to treatment at home. In Germany, pricing negotiations have concluded, providing greater visibility as we expand our reach across the country. More than 20 centers have now initiated patients on VYJUVEK, up ~15% from last quarter. Doing so, we continue to broaden the treatment network to reach patients who are not routinely seen at established expert centers. In France, we achieved an important milestones with the first home administration through the retrocession pathway. This creates an opportunity to reduce the practical burden of treatment on patients and families, and support treatment continuity. We are now working to extend this approach to additional eligible patients and centers, while national pricing discussions continue. And in Japan, our team is making steady progress bringing new patients to treatment and expanding our prescriber network. We are also advancing support initiatives to help the EBV community maximize the potential benefits of VYJUVEK therapy, and navigate the complexity of VYJUVEK's GMO status. Looking ahead, pricing and reimbursement negotiations in Italy have also concluded, and we now expect to launch VYJUVEK in early 27. In Spain, pricing discussions are progressing with a decision expected before the end of the year. Some patients already have access to exceptional regional funding arrangements, providing a foundation for a potential launch next year. We are also advancing regulatory and market access activities in additional countries to expand VYJUVEK reach over time. Taken together, this development give us confidence in the international opportunity. Health systems are recognizing VYJUVEK's value, Physicians are gaining treatment experience. And barriers to administration are beginning to come down. Our focus is on turning that progress into more patient starting and continuing treatment. With that, I will hand the call over to Christine. Christine Wilson: Thank you, Laurent. US net revenue for the third quarter was $95.3 million reflecting continued demand for VYJUVEK and our efforts to reach more patients. We have now secured more than 760 reimbursement approvals nationwide. During the quarter, we added over 80 new prescribers. This expanding physician base supports continued adoption. And we believe substantial opportunity remains among diagnosed patients who have not yet started treatment. As well as those who remain undiagnosed or misdiagnosed. We are also seeing the benefits of greater treatment flexibility. Approximately 80% of patients now self administer VYJUVEK. Helping patients and caregivers incorporate treatment into their wound care routines at home. As patients gain experience, our focus extends beyond treatment initiation to supporting continued use as their wound care needs evolve. Our VYJUVEK Voices and VYJUVEK Connection programs. Provide education practical support, and opportunities for patients and caregivers to learn from 1 another. Engagement with physicians, advocacy organizations, and the broader DEB community also helps us understand barriers to treatment and improve the support we provide. Looking ahead, our priorities remain clear. Reach more patients, expand the prescribing network, and support long term treatment. With continued demand, a growing physician base, and greater flexibility in administration, we believe VYJUVEK is well positioned for sustained US growth. We are proud of the progress we have made and excited about the opportunities ahead as we continue working to establish VYJUVEK as the long term standard of care for patients living with DEB. With that, I will turn the call over to Suma. Suma Krishnan: Thank you, Christine, and good morning, everyone. We have encouraging progress to share this morning, including our initial Gorlin syndrome results, the upcoming Hailey-Hailey readout, and the ongoing dosing in cystic fibrosis. But before I get into the update, I want to acknowledge that some clinical results are going to take a bit longer than we initially expected. We recognize the importance of these milestones. Our teams are working diligently to advance each study, and we look forward to sharing the data as they become available. Importantly, the studies themselves are progressing well and we remain encouraged by their eventual outcome. I will walk through our rationale and expectations from here shortly. With that, I would like to start today's update with the latest addition to our pipeline, KB113 for Gorlin syndrome. Gorlin syndrome is a rare genetic disease estimated to affect more than 10 thousand Americans. Patients can develop hundreds of basal cell carcinomas or BCCs over their lifetime. Requiring repeated surgeries that can lead to tissue loss, disfigurement, and significant psychological burden. With no therapy specifically approved for Gorlin syndrome, there is a substantial need for a safe, effective treatment to reduce BCC burden. KB707 is our HSV-1-based immunotherapy designed to drive sustained localized expression of human IL-2 and IL-12 in the tumor microenvironment and promote systemic immune mediated tumor clearance. We recently completed a pilot study evaluating a low dose of intratumoral KB707 which we now refer to as KB113 in 3 adult patients with Gorlin syndrome. Each received 6 doses over 14 weeks Investigators assessed regression in both injected and non injected landmark BCCs throughout treatment, and 30 days after the final dose using a prespecified 5-point scale. Profound treatment benefits were observed following KB113 treatment, including broad anti tumor responses in all 3 Gorlin syndrome patients. As summarized in the table, on the left, over 80% of the assessed lesions regressed over the course of the study, and more than half of all lesions regressed by over 50%. Critically, substantial regression was observed in lesions that were never directly injected. Providing preliminary evidence of systemic immune activation and an abscopal effect. Investigators also reported that a meaningful proportion, roughly 10% of all assessed tumors had shrunk by at least 90%, indicating potential for tumor eradication with KB113 treatment. To further assess depth of response, 1 injected tumor from each patient was biopsied for histological assessment. In all 3 cases, complete clearance was confirmed with no evidence of residual tumor tissue in the biopsy. Images shown on the right highlight the rapid improvement achieved in Gorlin patients with KB113. And add to the body of evidence suggesting significant potential for KB113 to dramatically reduce BCC burden in patients with Gorlin syndrome. With the addition of KB113 to our pipeline, we are now building out a robust development effort in rare dermatology diseases. An area we know well and where we can move fast. In the case of KB 3, we have already started engaging with FDA regarding potential clinical development pathways in Gorlin syndrome. We will share an update on our plans once aligned with the FDA. We are also making good progress on our KB105 program for HHD. We have completed enrollment of 5 patients in our repeat dose study for HHD-01 and expect to share a data update before year end. We then expect to meet with the FDA to discuss next steps. Turning to our ophthalmology pipeline, I want to start by saying that both NK program and ophthalmic DEB programs are progressing well. In the case of KB408, we enrolled 3 additional patients in our registrational DEB-I study. 2 of these additional patients have been enrolled to replace 2 patients who withdrew for reasons unrelated to safety. The third patient, a child 1 year of age, was enrolled to generate evidence to support potential treatment of corneal abrasions in DEB patients from birth. We now expect that the last-patient, last-visit in February 2027 with top line results to be reported shortly thereafter. In KB801 for NK patients, enrollment has progressed more slowly than we initially anticipated. Reflecting the study's narrowly defined eligibility criteria and the challenges of enrolling patients in a placebo-controlled trial for an indication with an available approved therapy. We are also working diligently to expand our clinical trial infrastructure. We have activated 22 sites in the United States, and we are close to activating sites in France, Spain, and United Kingdom. With continued investment and expansion of our trial network, we now expect to complete the enrollment and report top-line results in 2027. In the lung, we are steadily advancing our programs in CF and AATD. Starting with KB407 in CF, we are currently dosing 3 patients in our repeat-dose study, and expect to enroll and dose 3 additional patients before the year end. Based on this enrollment timeline, we now anticipate interim study results in the first half of 27. We are progressing in parallel our discussions with the FDA regarding our potential registrational study design having recently been selected for FDA complex innovative design meeting program. This is enabling intensive FDA engagement, and has us on track for a 2027 registrational study start. We also continue to enroll in our KB408 repeat dose study and are on track to report interim data next year. With successful gene delivery already confirmed by biopsies, for both KB407 and KB408 we believe we are uniquely positioned to fill urgent treatment gaps for CF and AATD patients. We look forward to sharing more in 2027. Finally, we are making great progress on our inhaled KB707 program. Enrolling patients with advanced NSCLC in the global KYANITE-1 expansion cohort evaluating inhaled KB707 plus chemotherapy. We have completed dose optimization in 10 patients to inform chemotherapy dose selection and expect to enroll and dose 70 patients at the selected regimen by mid 27. Results from this cohort will help us finalize our plans for subsequent registrational study of KB707. Each disease that we are targeting with our pipeline is an urgent unmet need. We recognize the importance of progressing deliberately and quickly to fill these treatment gaps. With our expanded R&D infrastructure, I am confident that we can deliver on our ambitions and dramatically grow our impact. With that, I will hand the call over to Kathryn. Kathryn A. Romano: Thank you, Suma. I will now provide a few additional highlights from our third quarter financial results as reported in our press release and 10 Q filing earlier today. Net revenue from global sales of VYJUVEK was $127 million for the quarter, driven by the continued growth from our Europe and Japan launches, and representing a 30% increase over the prior year's third quarter of $97.8 million which included only a partial quarter of sales from Europe and excludes sales from Japan. Cost of goods sold for the quarter was $7.6 million compared to $4.3 million in the prior year's third quarter. Gross margin for the quarter was 94% as compared to 96% in the third quarter of 25. The 2% decrease in gross margin was due in part to the increase in sales of product in Europe and Japan, which do not yet benefit from manufacturing process optimizations approved in the US, as well as the sale of lower cost R and D batches in the prior year quarter, following FDA approval of the optimized process. R&D expenses for the quarter were $14.9 million compared to the prior year of $14.6 million. G&A expenses were $33.7 million compared to $37.6 million in the prior year's third quarter. This $3.8 million decrease was primarily due to the receipt of insurance proceeds as reimbursement of legal costs previously incurred, along with a reduction in period over period legal costs. Professional service fees, and marketing costs, offset by increased payroll costs. Operating expenses for the quarter included noncash stock based compensation of $13.9 million compared to $13.2 million in the third quarter of last year. Net income for the quarter was $63.1 million which represented $2.13 per basic and $2.05 per diluted share. In the third quarter of 25, net income was $79.4 million and EPS was $2.74 per basic, and $2.66 per diluted share. In the third quarter of last year, we had released a majority of the valuation allowance that was historically recorded against our deferred tax assets, and we also benefited from the reversal of the Section 174 R&D capitalization requirement under the Tax Cuts and Jobs Act. Both of these items were nonrecurring. Looking ahead to the remainder of the year, we are also revising our full year non GAAP R&D and SG&A guidance to $155 million to $165 million from our prior guidance of $175 million to $195 million And finally, we continue to build on our solid financial position, now exceeding $1.2 billion in overall cash and investments. With this foundation, we remain focused on disciplined capital allocation to support our pipeline and global commercial strategy, while maintaining the ability to return capital to shareholders through our newly authorized share repurchase program. And now I will turn the call back over to Krish. Krish S. Krishnan: What excites me most is the opportunity we have to build a company whose impact that extends well beyond its first medicine. And with each program, we can apply what we have learned deepen our capabilities, and pursue additional diseases where patients need better options. With pricing negotiations behind us in Japan, Germany, and Italy, we can now more clearly see meaningful room for VYJUVEK growth internationally. We have a rich pipeline with several important readouts in the upcoming months. And as I said before, the initial findings are very encouraging. And we look forward to the upcoming Hailey-Hailey results along with CF and NK. Each program will generate evidence that helps us determine how best to bring additional medicine to patients. Financially, we have put ourselves in a good place growing commercial business, allows us to invest not just in global expansion, but also in development. And buyback shares opportunistically And so we will allocate capital with a clear focus on building lasting value per share. I am confident in Krystal's future. We have a strong foundation. We have the resources to invest. And a team that is super committed to turning scientific potential into meaningful medicines. And our responsibility is to translate all those strengths into more patients treated. So thank you to the employees, the patients, investigators, and our shareholders for your continued support, and I will open the call up for questions. Operator: Thank you. Thank you. At this time, we will be conducting our question and answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. I would like to remind you to please limit yourself to 2 questions. Thank you. Please hold while we poll for questions. Our first question today is coming from Lachlan Hanbury-Brown with William Blair. Your line is live. Lachlan Hanbury-Brown: Hey, guys. Thanks for the question, and congrats on all the progress. I guess first question maybe on KB407. You said you are enrolling in additional 3 patients. I was wondering on the rationale for that. Are you wanting to test a different dose. Is there something that you have seen in the first few patients that makes you want the larger sample here? And then on the second question, I am wondering about Japan. You know, Krish, you have talked in the past about how the sort of first year restrictions can limit adoption So as we kind of approach that 1-year mark, wondering how we should think about the sort of acceleration of growth in Japan moving forward. Suma Krishnan: Thanks a lot, Lachlan, for the questions. This is Suma. I can address the-- sorry, I can address the 407 question, Laurent, on 407. Yeah. I mean, we have 3 patients right now. They are ongoing on the repeat dosing. It has nothing to do with the dose. I mean, we are very excited. I mean, these patients are tolerating repeat dose. That was 1 of the biggest questions we had to address with regarding to you know, safety, and, obviously, we are collecting FEV1. The data enrollment for these additional 3 patients are going to happen this year. Unfortunately, it was a little slow because of the patients that were supposed to get on the drug you know, fell sick. Remember, these are patients that are you know, null and with no other options. So it is their life events that actually pushed out, but I think we feel confident that all the patients will get on the study, and we expect to have this data by middle of next year. Krish S. Krishnan: Hey. On the Japan question, I mean, that is valid, like that in the next-- I think, I do not remember the timing, which should be November, December. The prescription restriction kind of lifts off, and it goes from maybe twice a month to once a month. And we definitely believe that would incentivize faster adoption, especially in a country where commute long distances to get to the physician office. Thanks. Operator: Thank you. Our next question is coming from Ritu Baral with TD Cowen. Your line is live. Ritu Baral: Good morning, guys. I wanted to keep my 2 questions to KB408 and NK. Can you talk a little bit about how much how much you are expanding sites beyond the 22 US sites? Do you have a number of additional sites and how you expect that to impact potential study conduct. And also, can you talk to sort of the exclusion criteria where that is driving most of the screen failures for enrollment of the study and anything else you can give us on potential timing in 2027. Thanks. Suma Krishnan: Thank you. So I will address this question. We are expanding additional sites in the US. We have another 10 to 15 sites. Unfortunately, the academic sites the big ones that have the patients, have been delayed because of contracts. And remember, this is a, you know, GMO, and this is going to be home-administered. So we ran into some glitches with them, but we are overcoming all these sites. So we expect many of these academic sites with large number of patient pool to come online very shortly. I think we have overcome the bump. So we continue to expand the US pool, but we are going to go beyond US. Because there are. You know, OXERVATE is available to these patients. As you know, OXERVATE is being aggressively marketed in the US So I think we have an opportunity in the EU where OXERVATE is not available We have talked to sites. there is a lot of patients We are in the process of actually, you know, activating all of the sites. So we are, you know, going pretty aggressively and getting multiple sites across the EU region and even Eastern Europe to get to actually, really improve our enrollments. I think with what we have seen, I am hopeful that enrollment will pick up. But to your second point also, we do have some screen failures that we ran into because of a stringent inclusion exclusion criteria. We want to make sure that the lesion that we are seeing is persistent So if you see any decrease in a lesion size between our first and second screening. Second screening, we do not enroll that patient because, obviously, as you know, with this disease that there is, you know, a lot of waxing and waning of the of the corneal lesion. And we want to make sure we know our drug is therapeutically effective. So we want to make sure we are really enrolling the chronic patients it is a placebo controlled study, and our chances of winning against the placebo is robust. So these 2 factors as delayed entry, but we feel confident that we can get back on track and get the get the enrollment. Going early next year with all these multiple sites. Operator: Our next question is coming from Yigal Nochomovitz with Citigroup. Yigal Nochomovitz: Yeah. Hi. Thanks very much for taking the questions. I just wanted to have a broad 1 on capital allocation. Obviously, you have a lot of cash, 1.2 billion. You lowered R&D a little bit to $155 million to 165 million in your quarterly R&D spend is obviously very low at $15 million. So I just was kind of wondering in terms of how you think about spend, I am just wondering, would you perhaps consider expanding and increasing R&D, especially since some of these studies like DEB and NK and CF are taking a little bit longer. And if you invested more in each of them, perhaps you could enroll more patients and get to data a little faster and just curious if you could speak to that just general thinking in terms of the way you are deploying capital. Thank you. Krish S. Krishnan: Hey, thanks for the question. I will say the following. If we the whole point of initiating a buyback is a high level of comfort that we have enough both in terms of the revenues from VYJUVEK and in terms of supporting our pipeline before we embark on such a thing as a cash buyback. And you have to-- I mean, we definitely if in any place, whether it is NK or CF or oncology or if additional investment would immediately translate to either increasing enrollment, or conducting a faster study, or opening a site, of course, we are very open to doing that. And we have done some of that seems like something we should be doing and we are doing. So I think the whole timing of the buyback was based on. Look. With pricing in Germany, and Italy behind us, We have much more clarity on what VYJUVEK revenues could be globally and really pleased with how that is trending We have a really good idea of the amount it would take to bring some of these pipeline products to the market. In a timely manner. We also internally believe that the intrinsic value of the what the stock value is and what we believe is intrinsic value are dislocated at the moment. And a balance of like $1.2 billion and a $400 million gives us plenty of cushion to do all of the above. Operator: Okay. You very much. Our next question is coming from Gavin Clark-Gartner with Evercore. Gavin Clark-Gartner: Hey, guys. Thanks for taking the question. Can I just ask for the ocular DEB, for those patients that withdrew, what exactly was the reason? Suma, I think you mentioned the patients may have gotten sick. And then similar topic for NK, acknowledging it is been slower enrollment, Have you seen the trial completion rates at least thus far in line with your expectations? Thanks. Suma Krishnan: Yeah. I will address the KB408 first. I mean, on the DEB-I study, these are the patients. Remember, they are. You know, they are difficult patients. I mean, so these 2 just dropped out because they were traveling and they did not want to commit to the weekly dosing. So it was becoming. You know, they did not want to be compliant, so they dropped out. And as we mentioned, the third subject is because I mean, there were patients that were in a natural history study, and they were expecting to jump onto the study. Some of them came in, you know, later, and we had to stop at some point because there were more patients that ever wanted to participate. We did open up for a 1-year-old child again because they were very interested. Child had constant abrasion in the eyes. He figured this is a younger population that we can add on the label and with, you know, request from the investigator and the patient you know, family. Decided to enroll that patient. So it was truly because we wanted to get that patient in, and we thought even if we did not add these patients, we had enough powering for the study. But, again, it made sense to add them because it did not affect the time. It just pushed the timeline by a few months. And so that was a logical. That was a rationale for including these additional patients in 08/2003. So nothing with regard to NK. NK, again, as I mentioned, we have 21 sites up and running. We do have a bunch of screen failures. it is not because of lack of enrolling these patients because of our stringent inclusion exclusion criteria, As you know, when your sites open, they do want to put patients in. And they put in milder patients or patients that tend to, you know, sporadically spontaneously close their lesion. So we wanted to ensure that we did not want to enroll these patients But now we understand with enrollment what kind of patients, and we are actively getting additional sites in the US. As I mentioned, there were some academic sites that were delayed because, unfortunately, as I said, because of some of the biosafety requirements, I think we have just crossed those hurdles. So we expect with all of these academic sites up and running and the European sites up and running, we are very confident that we should be able to get back on track with enrolling NK patients. Krish S. Krishnan: Hey, Gavin. Just to. A couple of things. You mentioned some kind of sickness that was a comment on KB407, not on KB408. The second point I will make on NK is to date, the study is progressing really well. And we feel good about the limited number of patients on the trial. Alright. Gavin Clark-Gartner: Great. that is super helpful. Thank you. Operator: Thank you. Our next question is coming from Samantha Corwin with RBC. Analyst: Good morning. Thanks for taking our questions. Maybe first 1 for me on the NK program. Can you share how many patients have been enrolled so far or give us a bench like, for instance, are we at the halfway mark? In terms of enrollment? And, also, on ocular DEB, should we expect to see the results ahead of the NK readout? Any color here would be helpful. Thanks so much. Suma Krishnan: With regarding to NK, we are not telling you. We are not giving any guidance, but as I said, we are very confident that we should be able to, you know, get these patients. Get the study enrolled by 2027. So we are doing all efforts We do not wanna give you any indication or any numbers right now. But, again, as I said, from what we see, the sites up and coming, we feel confident we should be enrolled we should be able to enroll the patients we need for that trial. On the ocular, again, as I said, we have 3 patients. The last patient out should be end of February. So, again, this will be. We will once we have the last patient in, we should be shortly announcing data on KB408 first half of next year. Operator: And, Sami, to answer your question directly, the ocular DEB will come ahead of NK. Krish S. Krishnan: At the moment. Analyst: Got it. Thanks so much. Operator: Thank you. Our next question is coming from Josh Schimmer with Cantor Fitzgerald. Your line is live. Josh Schimmer: Hi, guys. Congrats on the quarter. This is [Analyst Name] on for Josh. So for the Hailey-Hailey disease program, so maybe you can clarify a bit what you are looking for in those first 5 patients that would give you confidence to move this forward into a registrational study? Thanks. Suma Krishnan: HHD is an indication that there is no prior studies or there is no validated clinical endpoint. As I mentioned earlier, we did have. We discussed with the FDA. We have a natural history that is ongoing that has enrolled a pretty decent number of patients. We developed a scale based on our discussions with the agency. We are. We validated the first part of the scale. The second part of the scale should complete validation. We are using the scale. it is an investigator based evaluation. So the patients come in, and the investigator uses the scale to look at improvement in these patients. And we feel pretty good about the scale. As I said, Part A of the validation is completed. The Part B section should be almost done. So it will be an investigator based evaluation. We show improvement from baseline and after treatment at the end of 3 months. We will also be biopsying these patients at baseline and at the end of the treatment to show, you know, molecular correction. And also expression of ATP2A2. Sorry, ATP2C1. So we should have that data by end of this year. And 1 last point. We also intend to show. They are not easy to see, but before and after images of the area that has been treated. Along with the biopsy and the scale validation improvement. Josh Schimmer: Okay. Awesome. Thank you so much. Operator: Thank you. Our next question is coming from Roger Song with Jefferies. Your line is live. Roger Song: Hi, guys. This is Fiona on for Roger. Congrats on the quarter, thanks for taking our question. Just 2 quick ones from us. 1 is on the ex US revenue. Now that our Germany and Italy pricing negotiation completed. We expect a more stabilized ex-U.S. revenue build moving forward, or any other factors that you expect can still contribute to the volatility? And the second 1 is on ocular DEB. Assuming the February completion is smooth and data is positive, anything else that is outstanding before the filing? Thank you. Krish S. Krishnan: Hey. On the ex-US revenue, as Laurent mentioned, demand continues to grow really nicely. We are really pleased that pricing in some of the leading countries like Germany and Italy are behind us. And we are not too far away from Spain. And because there are a lot of countries and pricing has not been done in many of those countries, Approvals will continue to be part of the story. Until many of those countries, at least the big 5, like Italy, Spain, UK, are behind us Spain and UK are behind us. I would not use the word volatility because demand continues to go up in some of the big countries. Pricing is already done, but we are excited and looking forward to bringing more and more patients in Europe on the drug as soon as possible. But Germany was the big 1 with the approval, and that is behind us at the moment. Suma Krishnan: Yeah. On ocular DEB, I think we are all set from a CMC perspective. We have all the requirements. I think from a BLA, we should be ready to go. As soon as we have the last patient enrolled. And we have locked the database and we analyze the data. So, obviously, we are working very diligently to, you know, get the BLA started. So it would be just once we have the data, we should be able to file the application shortly after that. Roger Song: Super helpful. Thank you. Operator: Thank you. Our next question is coming from Alec Stranahan with Bank of America. Your line is live. Alec Stranahan: Hey, guys. Thanks for taking our questions. 2 from us. 1 on commercial and 1 on the pipe. Appreciate the color on the pricing negotiations. Maybe just in France, I think the press release said no earlier than 2027. Can you just remind us kind of the nuances around pricing in France specifically? And what sort of gating factors are at this point to get that completed? And then may. Maybe 1 actually on the Gorlin syndrome program, which I am surprised no 1's actually asked you about. But I guess what are you sort of working through with the FDA? What kind of size of the study do you think would be feasible in this population? And I guess since you have observed an upscalable effect, do expect the lesion level or maybe a patient level registration, end. Endpoint for the primary? Thank you. Krish S. Krishnan: I will let Laurent answer the French question. Laurent Goux: Thank you, Krish. In France, new president of the committee negotiating the price, in charge of negotiating the price, has been made clear that they usually expect a 13-month negotiation timelines. And for us, these 13 months, I mean, we are 6 months in this negotiation framework. So we are completely within the boundaries of the negotiations. Usually, the negotiations are in 2 steps The first step is to agree on, you know, what is the framework of the reimbursement will be, and then entering into the more granular aspect of the pricing itself. So we are well engaged in the negotiations and it is following its normal course. Suma Krishnan: I will take the Gorlin question. I mean, as you can see from a 3 patient study where we looked at it, the data was pretty remarkable. You can see response in all 3 patients. I think we were also surprised to see the response. It was consistent across the 3 patients. And we were also able to confirm this by histology to show that the injected tumors that show complete response had no BCCs in them. So again, very exciting. I mean, as you know, with Gorlin, these lesions do not heal on its own, unlike others, so whatever we see is a drug effect. So even if you assume placebo as a 0% response and us to see a pretty good response, we do not expect to see, this to be a large study So, again, you know, it should be well within less than 100 patients that we should be able to do a pivotal trial if you have to, based on the response rate that we see in these 3 patients. Operator: Thank you. Our next question is coming from Sami Corwin with Goldman Sachs. Your line is live. Good morning. Thanks for taking the question. Suma, maybe here to follow-up on NK, can you just remind us on the inclusion criteria with regard to the expected proportion of OXERVATE experience versus naive patients. And then also just given the availability of commercial OXERVATE, especially in the U.S, would you consider any protocol adjustments such as adjusted lesion windows to accelerate the accrual? Thanks so much. I mean, if you look at our inclusion exclusion criteria, again, there is 2 screenings. The first screening we look at the lesion size, and, obviously, it is random. It is stratified for, you know, lesion surface area. And we. it is pretty stringent. So even if we see, like, a 10 percent decrease between the first and the second screening, we do not enroll those patients. With regards to OXERVATE, the average inclusion criteria OXERVATE patients have to wash out if they are on OXERVATE. Or if they, you know, they failed oxalate and they wanna get on our study. There is a 30 day washout for these patients before they can enroll on the study. Thank you. Oh. Sorry, ma'am. Did you have another question? Oh, no. Thank you so much. Yeah. Maybe I could just ask 1 other question on 04/2007. Could you just confirm if we will see FEV1 data in the first half of next year when that data set comes? And what threshold of lung function improvement or disease stabilization would you view as the benchmark to support the plans for the pivotal program? Thanks again. Yes. We will have FEV1 data in these patients. Obviously, we are also collecting some of the natural history of these patients. So I think we will have. I mean, it is not like a number, Hopefully, we will have it holistically. We will look at these patients what are their lung function over the period of time, and the lung function of these patients. With on 407. So that is what we are expecting to announce. Thank you. Our next question is coming from Morgan Lamberti with Goldman Sachs. Your line is live. Morgan Lamberti: Hi, team. Thanks for taking our question. Can you please speak to the rate of recurrence for patients taking OXERVATE and then how that informs your view on the expected TAM for KB408. In terms of if the TAM is actually patients who have not been treated with OXERVATE. Just how to think about that. Thank you so much. Suma Krishnan: Yeah. I mean, we do not really ask those questions. We are. We do not look at the history of fails and the rate of recurrence. We do collect some medical history at this point. it is too early. To tell for us. We have not looked at all the data. But all of that, we will have collected as a medical team to try to calculate. But we have not-- I mean, it is too early to look at that data population to make that you know, determination. Thank you. Operator: Thank you. Our final question today is coming from Kalpit Patel with Wolfe Research. Your line is live. Kalpit Patel: Yeah. Hey. Good morning, and thanks for taking the questions. For Ocular DEB, for those 2 patients that withdrew would those be counted in the ITT efficacy population and any color on how you might handle incomplete crossover data in the primary analysis, that would be useful. And then for the NK program, you mentioned that you are trying to essentially trying to reduce spontaneous lesion decreases. Do we know, is that criteria similar to how it was in the OXERVATE studies? Thanks for taking the questions. Suma Krishnan: Yeah. I think the. I will answer the KB408 first. Yes. The 2 patients yes, they will meet the ITT because that is the definition of ITT. Obviously, we have, you know, sensitivity analysis to capture that. And also, remember, we have the natural history of each of these patients. So in our analysis, I am not going to get into depth of it, we will be able to use some of that natural history study even though with the crossover design to help with if there is any carryover effect. So all of that is taken into consideration for the statistical analysis plan for us to improve the chance of success. And for NK, Suma, the question was the spontaneous decrease. Yeah. Did OXERVATE also observe that in their study? We do not know, but they did have an inclusion criteria for some persistence, but I cannot comment on the OXERVATE-- what was that level But I think they did have something in the inclusion criteria. But I do not know the level of the level of decrease for them to enroll that patient. Not sure. Got it. Okay. Thank you very much. Operator: Thank you. Ladies and gentlemen, this does conclude today's question and answer session. And will also conclude today's conference. You may disconnect your lines at this time, and we thank you for your participation.