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Item 1. Business

2022-02-28 compared with 2021-03-01 · 145 added, 106 removed, 433 unchanged (37% of the section changed)

Krystal Biotech, Inc.

(the “Company,” “Krystal,” “we,” or “us,” or other similar pronouns) is a clinical-stage biotechnology company focused on the development of easy to use, redosable gene therapies to dramatically improve the lives of patients living with rare diseases.

We have developed a proprietary gene delivery platform that enables off-the-shelf treatments for serious rare diseases with significant unmet need, initially in the areas of dermatology and respiratory diseases.

We have developed a proprietary gene delivery platform that presently enables off-the-shelf treatments for serious dermatology and respiratory diseases.

Our platform consists of a patented, engineered viral vector derived from the herpes simplex virus type 1 (“HSV-1”) that we have optimized for local and repeat gene transfer to epithelial cells.

We are initially using our platform to develop treatments for rare or orphan monogenic diseases caused by the absence of or a mutation in a single gene.

We are also leveraging our innovative platform to develop novel therapies to treat more prevalent conditions.

Further, we have incorporated a wholly owned subsidiary, Jeune Inc, under which we are developing treatments for use in the setting of aesthetic skin conditions.

We are initially using our platform to develop treatments for rare or orphan monogenic diseases caused by the absence of or a mutation in a single gene and novel therapies to treat more prevalent conditions.

Further, we have incorporated a wholly owned subsidiary, Jeune Aesthetics, Inc., under which we are developing treatments for use in the setting of aesthetic skin conditions.

Our Redosable Gene Therapy Platform

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These deletions also enable the vector to easily accommodate a payload of 35Kb or greater without any significant impact on yield or titer.

In our lead product candidate, B-VEC, we have successfully inserted two functional copies of the complete ~9Kb human COL7A1 gene.

In our lead product candidate, Vyjuvek, we have successfully inserted two functional copies of the complete ~9Kb human COL7A1 gene.

In contrast, packaging capacity for most other vectors being used is at or under ~10Kb, which limits their ability to deliver large transgenes.

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Successful and reproducible execution of both processes is critical for clinical manufacturing and scale-up.

Our scientific team collectively has decades of experience and expertise in HSV engineering and purification that has allowed us to successfully optimize our HSV-1 vector production process and develop in-house CMC capabilities.

• Existing Regulatory Precedent :

The first FDA- and European Medicines Agency (“EMA”)-approved oncolytic virus product, Imlygic ® by Amgen, for treatment of melanoma, a skin cancer, is based on a genetically engineered HSV-1 virus.

Because this product also employs an HSV-1 backbone, it has

created a regulatory precedent for approval of an HSV-1-based therapy.

In addition, Imlygic ® is a chronic therapy, given bi-weekly, which provides support for the use of an HSV-1 backbone in chronic gene therapy of the type we are developing.

Because this product also employs an HSV-1 backbone, it has created a regulatory precedent for approval of an HSV-1-based therapy.

In addition, Imlygic ® is a chronic

therapy, given bi-weekly, which provides support for the use of an HSV-1 backbone in chronic gene therapy of the type we are developing.

The above listed benefits of our innovative platform make it the ideal choice for topical and intradermal applications to treat skin diseases, skin conditions and inhaled formulations to treat respiratory diseases.

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Rare Skin Programs

Beremagene Geperpavec (“B-VEC”) for dystrophic epidermolysis bullosa (“DEB”)

Investigational Vyjuvek (beremagene geperpavec) for dystrophic epidermolysis bullosa (“Dystrophic EB”)

Disease Background

Dystrophic epidermolysis bullosa, or DEB, is a rare and severe monogenic skin disease.

DEB affects the skin and mucosal tissues and is caused by one or more mutations in a gene called COL7A1, which is responsible for the formation of the protein type VII collagen ("COL7) that forms anchoring fibrils that bind the dermis ( inner layer of the skin) to the epidermis (outer layer of the skin).

In DEB patients, the genetic defect in COL7A1 results in loss or malfunctioning of these anchoring fibrils, leading to extremely fragile skin that blisters and tears from minor friction or trauma.

Those who are born with DEB are sometimes called “butterfly children,” because their skin is likened to be as fragile as the wings of a butterfly.

DEB patients may suffer from open wounds, skin infections, fusion of fingers and toes and gastrointestinal tract problems throughout their lifetime, and may eventually develop squamous cell carcinoma, a potentially fatal condition.

We believe that there are, at present, approximately 3,000 diagnosed DEB patients in the United States and ~9,000 worldwide.

The current standard of care for DEB patients is limited to palliative measures that seek to provide relief from some of the symptoms of DEB but do not meaningfully impact disease outcomes.

Dystrophic epidermolysis bullosa, or dystrophic EB, is a rare and severe monogenic skin disease.

Dystrophic EB affects the skin and mucosal tissues and is caused by one or more mutations in a gene called COL7A1 , which is responsible for the formation of the protein type VII collagen ("COL7") that forms anchoring fibrils that bind the dermis (inner layer of the skin) to the epidermis (outer layer of the skin).

In dystrophic EB patients, the genetic defect in COL7A1 results in loss or malfunctioning of these anchoring fibrils, leading to extremely fragile skin that blisters and tears from minor friction or trauma.

Those who are born with dystrophic EB are sometimes called “butterfly children,” because their skin is likened to be as fragile as the wings of a butterfly.

Dystrophic EB patients may suffer from open wounds, skin infections, fusion of fingers and toes and gastrointestinal tract problems throughout their lifetime, and may eventually develop squamous cell carcinoma, a potentially fatal condition.

We believe that there are, at present, approximately 3,000 diagnosed dystrophic EB patients in the United States and approximately 9,000 worldwide.

The current standard of care for dystrophic EB patients is limited to palliative measures that seek to provide relief from some of the symptoms of dystrophic EB but do not meaningfully impact disease outcomes.

While not disease-modifying, current treatment is estimated to cost between $200,000 and $400,000 annually per patient in the United States.

B-VEC is a redosable, off-the-shelf gene therapy designed to deliver two copies of the COL7A1 gene when applied topically, directly onto an open wound.

Unlike the current standard of care, B-VEC seeks to treat DEB at the molecular level by providing the patient’s skin cells the template to make normal COL7 protein, thereby addressing the fundamental disease-causing mechanism.

B-VEC was specifically designed to be easily administered by a healthcare professional in a doctor’s office

or potentially at the patient’s home.

The FDA and the EMA have each granted B-VEC orphan drug designation for the treatment of DEB, and the FDA has granted B-VEC fast track designation and rare pediatric designation for the treatment of DEB.

In addition, in 2019, the FDA granted Regenerative Medicine Advanced Therapy (“RMAT”) to B-VEC for the treatment of DEB and the EMA granted PRIority MEdicines ("PRIME"), eligibility for B-VEC to treat DEB.

We believe our approach to treating DEB is positively differentiated relative to other known efforts to develop corrective treatments that employ autologous approaches.

Vyjuvek is a redosable, off-the-shelf gene therapy designed to deliver two copies of the COL7A1 gene when applied topically, directly onto an open wound.

Unlike the current standard of care, Vyjuvek seeks to treat dystrophic EB at the molecular level by providing the patient’s skin cells the template to make normal COL7 protein, thereby addressing the fundamental disease-causing mechanism.

Vyjuvek was specifically designed to be easily administered by a healthcare professional in a doctor’s office or potentially at the patient’s home.

The FDA and the EMA have each granted Vyjuvek orphan drug designation for the treatment of dystrophic EB, and the FDA has granted Vyjuvek fast track designation and rare pediatric designation for the treatment of dystrophic EB.

In addition, in 2019, the FDA granted Regenerative Medicine Advanced Therapy (“RMAT”) to Vyjuvek for the treatment of dystrophic EB and the EMA granted PRIority MEdicines ("PRIME"), eligibility for Vyjuvek to treat dystrophic EB.

We believe our approach to treating dystrophic EB is positively differentiated relative to other known efforts to develop corrective treatments that employ autologous approaches.

Autologous treatments use a patient’s own tissues and cells to manufacture an individualized therapy.

Such therapies tend to be expensive, invasive and time consuming to use, and require extensive patient travel, extended hospital stays, highly sophisticated medical teams and procedures.

Clinical Development of B-VEC

On July 28, 2020, we announced initiation of our Phase 3 pivotal study known as GEM-3.

The trial is a randomized, double-blind, intra-patient placebo-controlled multicenter study designed to evaluate the efficacy and safety of B-VEC for patients suffering from both recessive and dominant forms of DEB.

The trial aims to enroll approximately thirty (30) participants with DEB, aged 6 months or older at time of consent.

Investigator identified wound pairs, up to three in each patient, are deemed the “primary” wounds.

These primary wounds will be treated once weekly for six months with either B-VEC or placebo, until wound closure.

If a wound were to re-open at any point during the study, weekly dosage will resume until closure.

The dose administered to each wound is dependent on the size of the wound and ranges from 4x10^8 to 1.2x10^9 PFU per wound.

A maximum vector dose per patient per week has been defined on the basis of preclinical and clinical safety data.

In the event that the maximum dose per patient has not been reached based on dosing of the primary wounds, the study investigators and patients will have the opportunity to select additional “secondary” wounds across which the remaining weekly dose may be applied.

We expect to complete enrollment in this study in the first quarter of 2021 and anticipate having top-line data from this trial in 4Q21.

We expect to file a Biologics License Application ("BLA") with the FDA shortly thereafter.

We are aligned with the EMA on a pivotal trial design and we believe that data from GEM-3 will form the basis of a Marketing Authorisation Application ("MAA"), filing shortly after the BLA.

In May 2020, complete Phase 1/2 data from the GEM-1 and GEM-2 studies was presented at the Society of Investigational Dermatology ("SID") meeting.

The Phase 1 portion of the trial commenced in May 2018 at Stanford University, and we announced positive interim results from this clinical study on two patients in October 2018.

Clinical Development of Vyjuvek

We initiated Phase 1 testing of Vyjuvek in May 2018 at Stanford University, and we announced positive interim results from this clinical study on two patients in October 2018.

The Phase 2 portion of the trial commenced in December 2018 at Stanford University, and we announced positive interim results from this clinical study on June 24, 2019.

KB105 for TGM1-deficient autosomal recessive congenital ichthyosis (“TGM1-ARCI”).

Complete Phase 1/2 was initially presented at the Society of Investigational Dermatology ("SID") meeting in May 2020.

We initiated Phase 3 testing of Vyjuvek in July of 2020.

The pivotal GEM-3 trial of Vyjuvek for the treatment of dystrophic EB was a randomized, double-blind, intra-patient placebo-controlled multicenter study designed to evaluate the efficacy and safety of Vyjuvek for patients suffering from both recessive and dominant forms of dystrophic EB.

The trial enrolled 31 participants with dystrophic EB, aged 6 months or older at time of consent.

In each patient, a primary wound pair was identified by the investigator;

one wound was randomized to receive a weekly topical application of Vyjuvek and the other to receive placebo.

These primary wounds were treated once weekly for six months until wound closure.

If a wound re-opened at any point during the study, weekly dosage resumed until closure.

The dose administered to each wound was dependent on the size of the wound and ranged from 4x10^8 to 1.2x10^9 PFU per wound.

A maximum vector dose per patient per week was defined on the basis of preclinical and clinical safety data.

In the event that the maximum dose per patient had not been reached based on dosing of the primary wounds, the study investigators and patients had the opportunity to select additional “secondary” wounds across which the remaining weekly dose was applied.

The primary outcome measure was complete wound healing determined by the Investigator in the primary Vyjuvek treated wounds versus placebo treated at the six-month timepoints, meaning week 22 and Week 24 or Week 24 and Week 26.

Secondary endpoints included investigator assessed complete wound healing at the three-month timepoints, meaning weeks 8 and 10 or 10 and 12 and mean change in pain severity using either a VAS or FLACC-R Scale at weeks 22, 24 and 26.

In November 2021 we announced positive topline results from the GEM-3 trial:

• 31 patients (31 primary matched-wound pairs) were enrolled and evaluable for safety and efficacy per the primary intent-to-treat ("ITT") analysis

• 67% of wounds treated with Vyjuvek achieved the primary endpoint of investigator assessed complete wound healing at the six-month timepoints as compared to 22% of wounds treated with placebo (absolute difference (95% CI):

45.8% (23.6%-68.0%);

• 71% of wounds treated with Vyjuvek achieved the secondary endpoint of investigator assessed complete wound healing at the three-month timepoints as compared to 20% of wounds treated with placebo (absolute difference (95% CI):

51.0% (29.3%-72.6%);

• In an ad-hoc analysis, the trial also demonstrated a statistical difference between the active and placebo groups for wounds that demonstrated complete wound healing at both the three- and six-month timepoints (p<0.005)

• Vyjuvek was well tolerated.

No drug-related serious adverse events or discontinuations due to treatment were reported.

One mild drug-related adverse event was reported during the trial

• The immunogenicity profile of Vyjuvek (as measured by anti-HSV-1 and anti-COL7 antibodies) was consistent with the prior GEM-1/2 study where we observed no meaningful change in anti-HSV-1 or anti-COL7 antibodies

We expect to file a Biologics License Application ("BLA") with the FDA in the first half of 2022.

We are aligned with the EMA that data from GEM-3 is sufficient to form the basis of a Marketing Authorisation Application ("MAA"), which we expect to submit to the EMA in the second half of 2022.

KB105 for TGM1-deficient autosomal recessive congenital ichthyosis (“ARCI”)

Disease Background

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The goal of direct supplementation of TGM1 protein at the site of administration is local correction and phenotypic improvement.

Like B-VEC, KB105 was designed to be easily administered by a healthcare professional in the doctor’s office or, potentially, at the patient’s home.

Like Vyjuvek, KB105 was designed to be easily administered by a healthcare professional in the doctor’s office or, potentially, at the patient’s home.

The FDA and the EMA have each granted KB105 orphan drug designation for the treatment of TGM1-ARCI, and the FDA has granted KB105 fast track designation and rare pediatric designation for the treatment of TGM1-ARCI.

Clinical Development of KB105

In August 2020, we initiated the second phase of our Phase 1/2 clinical trial of KB105 to treat ARCI.

We have enrolled one patient in whom four rectangular 100cm2 (4-inch x 4-inch) areas of skin were selected as Target Areas.

Two sites will receive an initial and a repeat dose of 4.0 x 10^9 PFU/Treated Area ("TA") while the other two sites will receive 1.0 x 10^10 PFU/ TA.

Data from this patient is anticipated in the first half of 2021 and will inform the dosing regimen and enrollment criteria for the enrollment of subsequent patients in 2021.

The primary objective of the study is to assess the improvement in localized severity of disease through an Investigator’s Global Assessment (“IGA”) of disease severity in the treatment area and TGM1 expression and activity and to evaluate safety through the incidence of adverse events associated with KB105 post administration.

In May 2020, initial clinical data from the first phase of the Phase 1/2 study which enrolled adult patients were presented at the SID meeting.

In September 2019 we initiated a Phase 1/2 trial in TGM1-ARCI patients.

In May 2020, initial clinical data from the Phase 1 portion of the study which enrolled adult patients were presented at the SID meeting.

In August 2020, we initiated the second phase of our Phase 2 portion of the clinical trial of KB105 to treat ARCI.

We enrolled one patient in whom four rectangular 100cm2 (4-inch x 4-inch) areas of skin were selected as Target Areas.

Each treatment area was assigned to receive repeat doses of 4.0x109 PFU (n=2 treatment areas) or 1.0x1010 PFU (n=2 treatment areas).

Each area was dosed on Day 1 and 3, after which dosing continued either every 3 days (n=2 treatment areas) or every 6 days (n=2 treatment areas) up to day 30.

Treatment areas were clinically evaluated at pre- and post-KB105 application timepoints, using a 5-point IGA scale (0 = clear;

1 = almost clear;

3 = moderate;

4 = very severe).

In July 2021, we announced initial Phase 2 data.

Repeated topical doses of KB105 were well tolerated, and no drug-related adverse effects were reported.

No vector shedding or systemic viral exposure was detected at any time point.

Improvement on the IGA scale was observed in each treatment area, with the maximum effect observed in TA3 and TA4 that received the highest dose;

at day 27, the investigator assigned an IGA score of 2, which was improved as compared to baseline score of 4 in each area.

Variable 1-point improvements were observed at other time points and in the treatment areas that received the lowest dose.

As in the Phase 1 portion of the trial, TGM1 turnover was observed to be variable but relatively rapid, and the observed IGA improvements were not sustained through day 60.

We plan to resume enrollment in the Phase 2 portion of this trial in 2022.

KB104 for Netherton Syndrome

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KB104-mediated human SPINK5 was expressed in the correct layer of skin at the transcript and protein levels.

The FDA has granted KB104 rare pediatric designation for the treatment of Netherton Syndrome.

We plan to file an IND with the FDA and initiate a clinical trial of KB104 in Netherton Syndrome in 2022.

Rare Pulmonary Programs

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Cystic Fibrosis Foundation (“CFF”), the median age at death for patients with CF in the United States was 30.8 years in 2018.

Currently approved CFTR modulating therapies are limited to patients with specific genetic mutations and there is a significant unmet medical need for the ~10% of patients with CF who have genetic mutations non-amenable to currently approved CFTR small molecule “modulators”.

Currently approved CFTR modulating therapies are limited to patients with specific genetic mutations and there is a significant unmet medical need for the approximately 10% of patients with CF who have genetic mutations non-amenable to currently approved CFTR small molecule “modulators”.

According to the CFF, approximately 30,000 patients in the United States and more than 70,000 patients worldwide are living with CF, and approximately 850 new cases of CF were diagnosed in 2018.

KB407 is a redosable gene therapy designed to deliver two copies of the CFTR gene directly to the airway epithelia via inhaled (nebulized) administration.

KB407 is a redosable off the-shelf gene therapy designed to deliver two copies of the CFTR gene directly to the airway epithelia via inhaled (nebulized) administration.

By inducing expression of full length, normal CFTR protein in the lung, treatment with KB407 has potential to restore ion and water flow into and out of lung cells to correct the lung manifestations of the disease in patients regardless of their underlying genetic mutation.

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Successful delivery and distribution throughout the lung also was observed in a nonhuman primate.

We expect to announce additional preclinical data from the GLP toxicology study, which evaluated repeat doses of KB407 in 36 nonhuman primates, and initiate a clinical trial in 1H2021.

The FDA has granted KB407 orphan drug designation and rare pediatric designation for the treatment of cystic fibrosis.

The FDA and the EMA have each granted KB407 orphan drug designation for the treatment of cystic fibrosis, and the FDA has granted KB407 rare pediatric designation for the treatment of cystic fibrosis.

Clinical Development of KB407

In September 2021, we announced that we were granted approval by the Bellberry Human Research Ethics Committee ("HREC") in Australia to conduct a Phase 1 clinical study of inhaled KB407 in patients with CF.

We previously received license to evaluate KB407 from Australia's Office of the Gene Technology Regulator ("OGTR").

We plan to initiate the Phase 1 clinical trial in Australia in the first half of 2022.

We plan to file an IND with the FDA and initiate a Phase 1 clinical trial in the U.S.

in the second half of 2022.

KB408 for Alpha-1 antitrypsin deficiency (“AATD”)

Disease Background

AATD is a genetic condition caused by mutations that lead to decreased levels and/or decreased functionality of the alpha-1- antitrypsin ("AAT") protein.

AATD lung disease is a consequence of diminished or absent functional protein in the lungs due to impaired transport into, and low concentrations in, patient plasma.

Low AAT serum levels can result in life threatening, progressive pulmonary impairment and severe respiratory insufficiency, manifesting as chronic obstructive pulmonary disease ("COPD") and panacinar emphysema.

The lung degeneration observed in AATD patients derives from an unopposed, and therefore enhanced, neutrophil elastase ("NE") activity, leading to an excessive degradation of elastin, collagen, and fibronectin.

The absence of proper NE inactivation by functional AAT ultimately results in lung tissue destruction, airway obstruction, and an increased inflammation state that compromises the integrity of the organ and contributes to an inadequate response to insults, including inefficient pulmonary bacterial clearance.

There are an estimated 90,000 to 100,000 people in the U.S.

with severe AAT deficiency.

Currently, many AATD patients undergo “augmentation therapy” consisting of weekly intravenous ("IV") infusions of either plasma-purified AAT or recombinant AAT.

This therapy requires burdensome weekly IV infusions and often includes the risk of exposure to bloodborne pathogens connected with the use of blood-derived products.

KB408 is an inhaled (nebulized) formulation of our propeieatry vector, designed to deliver two copies of the SERPINA1

gene that encodes functional, full-length human protein, for the treatment of AATD.

Preclinical studies to date have shown that KB408 successfully transduces patient-derived lung epithelial cells in vitro, leading to production and secretion of full-length human AAT protein capable of irreversibly binding its cognate target NE.

In small animal models, analysis of lung tissue biopsies, serum, and bronchoalveolar lavage fluid harvested 24 and 48 hours after inhalation of KB408 shows secretion of full-length AAT protein, with no evidence of significant or systemic toxicity.

Other Programs

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To that end, on April 24, 2019, we incorporated Jeune, Inc.

a wholly-owned subsidiary, for the purposes of undertaking preclinical studies for aesthetic skin conditions.

(now Jeune Aesthetics, Inc.), a wholly-owned subsidiary, for the purposes of undertaking preclinical and clinical studies for aesthetic skin conditions.

KB301 for aesthetic skin conditions

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KB301 leverages our clinical experience in delivering genes of interest to the skin, and is designed to stimulate biorejuvenation of the skin via delivery of the gene that encodes for type III collagen ("COL3") when administered via intradermal injection.

We believe that our approach of directed expression of full-length human type 3 collagen via intradermal application of KB301 provides a unique and straightforward approach to restoring collagen homeostasis, and by extension, reconstructing an optimal physiologic environment in the skin to treat wrinkles or other presentations of aged or damaged skin.

We believe that our approach of directed expression of full-length human type III collagen via intradermal application of KB301 provides a unique and straightforward approach to restoring collagen homeostasis, and by extension, reconstructing an optimal physiologic environment in the skin to treat wrinkles or other presentations of aged or damaged skin.

Clinical development of KB301

We initiated a Phase 1 safety clinical trial for the treatment of wrinkles and acne scars on August 25, 2020.

We expect to announce initial safety data from the first cohort of this study in 1Q21.

On October 8, 2020, we announced presentation of preclinical data supporting the ongoing development of KB301 at the American Society for Dermatologic Surgery 2020 Virtual Meeting.

We initiated a Phase 1 clinical trial, the PEARL-1 trial, for the treatment of aesthetic skin conditions on August 25, 2020.

The first Cohort enrolled 7 subjects and evaluated the safety and tolerability of intradermal injections of KB301 in healthy buttock tissue, as compared to uninjected or saline injected control sites.

Data from this cohort was announced in March 2021.

In August 2021, we announced the initiation of dosing in the efficacy cohort of the PEARL-1 trial.

Cohort 2 is a randomized, double-blind, saline-controlled trial to evaluate the safety and efficacy of KB301 for the improvement of skin quality attributes such as fine lines, texture, and skin thickness.

This cohort enrolled 27 subjects across two trial sites.

Bilateral treatment areas on the neck behind the ear, on the cheek below and above the zygomatic arch, and around the knee were chosen on Day 0 and randomized 2:1 to receive low dose KB301, high dose KB301, or saline.

KB301 or saline was injected in multiple micro depot injections over the selected treatment area.

We anticipate announcing top line data from the efficacy cohort in 1Q 2022.

Future Opportunities

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Manufacturing

In-House Good Manufacturing Practice (“GMP”) Facilities

We have built in-house current good manufacturing practices (“cGMP”) facilities to enable better quality control, shorter lead times, lower costs and better command over our intellectual property.

Our first, 7,500 square foot commercial scale cGMP-compliant manufacturing facility, ANCORIS, is producing the pivotal and long-term extension study material for B-VEC at commercial scale and we expect to produce initial commercial launch material of B-VEC at the same facility.

Our second commercial scale cGMP facility, ASTRA, is 150,000 square feet and expected to be complete and validated in 2022.

In-House Current Good Manufacturing Practice (“cGMP”) Facilities

We have built in-house cGMP facilities to enable better quality control, shorten lead times, lower costs and strengthen command over our intellectual property.

Our first facility, ANCORIS, a commercial scale cGMP-compliant manufacturing facility, is producing the long-term extension study material for Vyjuvek at commercial scale and we expect to produce initial commercial launch material of Vyjuvek at the facility.

Our second commercial scale cGMP facility, ASTRA, is expected to be completed and validated in 2022.

It is a state-of-the-art cGMP manufacturing facility that, in addition to adding significant capacity to support the growing pipeline, will also allow the in-house incorporation of raw material preparation, excipient manufacturing, testing, packaging, labeling and distribution, thereby fully integrating all components of the supply chain from starting materials to patient experience.

We announced the ground breaking of ASTRA on January 24, 2020.

Our proprietary manufacturing process which was initially developed for B-VEC and is now being used across our platform, was developed and optimized internally and involves both an upstream production process and downstream purification process.

Recombinant viral vectors are made safe by removal of specific viral machinery, including packaging proteins, so that they are rendered incapable of, or attenuated for, replicating in human cells.

Our proprietary manufacturing process which was initially developed for Vyjuvek and is now being used across our platform, was developed and optimized internally and involves both an upstream production process and downstream purification process.

Recombinant viral vectors are rendered incapable of, or attenuated for, replacing in human cells by removal of specific viral machinery, including packaging proteins.

However, to produce the recombinant virus, these viral proteins have to be re-introduced into the virus production process so that the viral vector can be packaged.

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To date we have screened hundreds of cell line clones to find the best complementing cell lines, and similarly designed and generated the optimal virus seed stocks for each of our product candidates.

The viral seed stock expresses the therapeutic proteins under the control of strong constitutive or tissue-specific promoters and additional non-coding regulatory sequences have been included to optimize gene expression.

The viral seed stock expresses the therapeutic proteins under the control of strong constitutive or tissue-specific promoters and additional non-coding regulatory sequences have been

included to optimize gene expression.

We also have optimized the transduction conditions to reproducibly obtain high yields of the virus.

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• A proprietary vector manufacturing technique and a series of high-efficiency purification processes that produce highly purified therapeutic vectors and can be adapted for each product candidate;

• A critical list of GMP assays to accurately characterize our process and the HSV-1 vectors we produce.

• A critical list of cGMP assays to accurately characterize our process and the HSV-1 vectors we produce.

The biotechnology and pharmaceutical industries are highly competitive.

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A number of companies are developing drug candidates for EB.

There is no approved treatment for DEB at this time.

There is no approved treatment for dystrophic EB at this time.

We believe our competitors fall into two broad categories:

• Corrective approaches:

We are aware of two companies, Abeona and Castle Creek Pharmaceuticals, which are developing autologous or grafting gene therapy approaches to treating DEB.

We are aware of two companies, Abeona and Castle Creek Pharmaceuticals, which are developing autologous or grafting gene therapy approaches to treating dystrophic EB.

We are also aware of a recombinant-protein based approach being developed by Phoenix Tissue Repair.

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Cystic Fibrosis

We are aware of several preclinical or early clinical stage nucleic-acid-based programs for the treatment of CF including TranslateBio, Spirovant, and 4D Molecular Therapeutics.

We are aware of several preclinical or early clinical stage nucleic-acid-based programs for the treatment of CF including TranslateBio, ReCode Therapeutics, Spirovant, and 4D Molecular Therapeutics.

Intellectual Property

Our success depends in part on our ability to maintain proprietary protection surrounding our product candidates, platform technology, and know-how, to operate without infringing the proprietary rights of others, and to prevent others from infringing our proprietary rights.

We have a portfolio of patents, patent applications and other intellectual property owned entirely by the Company - that protect our core platform technology (sometimes referred to as STAR-D) and products based thereupon, and affords us freedom to use this platform for the development of novel therapeutics for multiple applications.

our proprietary rights.

We have a portfolio of patents, patent applications and other intellectual property owned entirely by the Company - that protect our core platform technology and products based thereupon, and affords us freedom to use this platform for the development of novel therapeutics for multiple applications.

We continue to advance our IP portfolio actively through the filing of new patent applications, divisionals, and continuations relating to our technologies as we deem appropriate.

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10,441,614 United States Composition of Matter & Methods of Use – The Skin TARgeted Delivery platform, or STAR-D, for skin-targeted therapeutics, as well as methods of its use for delivering any effector of interest to the skin

Beremagene Geperpavec ("B-VEC")

11,185,564 United States Composition of Matter & Methods of Use

Composition of Matter & Methods of Use

– Engineered HSV-1 vectors for skin-targeted therapeutics, as well as methods of their use for delivering any effector of interest to the skin

Vyjuvek (beremagene geperpavec)

Patent Number Country / Region* Patent Type Expiration Date** Owner / Licensor

United States Composition of Matter & Methods of Use – Compositions comprising HSV vectors encoding certain effectors, including the gene encoded in B-VEC, and methods of using the same for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin

10,155,016 United States Composition of Matter & Methods of Use – Covers compositions containing B-VEC, formulated for alternate routes of administration

United States Composition of Matter & Methods of Use – Compositions comprising HSV vectors encoding certain effectors, including the gene encoded in Vyjuvek, and methods of using the same for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin

10,155,016 United States Composition of Matter & Methods of Use – Covers compositions containing Vyjuvek, formulated for alternate routes of administration

12/28/2036 Krystal

EP 3 377 637 B1 Europe Composition of Matter & Methods of Use – Pharmaceutical compositions comprising B-VEC, as well as uses thereof.

EP 3 377 637 B1 Europe Composition of Matter & Methods of Use – Pharmaceutical compositions comprising Vyjuvek, as well as uses thereof.

12/28/2036 Krystal

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CBER works closely with the NIH and the RAC, which makes recommendations to the NIH on gene therapy issues and engages in a public discussion of scientific, safety, ethical and societal issues related to proposed and ongoing gene therapy protocols.

The FDA has provided guidance for the development of gene therapy products generally, including a growing body of guidance documents on Chemistry, Manufacturing and Control ("CMC") clinical investigations and other areas of gene therapy development, all of which are intended to facilitate the industry’s development of gene therapy products.

The FDA has provided guidance for the development of gene therapy products generally, including a growing body of guidance documents on CMC clinical investigations and other areas of gene therapy development, all of which are intended to facilitate the industry’s development of gene therapy products.

Ethical, social and legal concerns about gene therapy, genetic testing and genetic research could result in additional regulations restricting or prohibiting the processes we may use.

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• review of the product by an FDA advisory committee, if applicable;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biologic product candidate is produced to assess compliance with c requirements and to assure that the facilities, methods and controls are adequate to preserve the biologic product candidate’s identity, safety, strength, quality, potency and purity;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biologic product candidate is produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the biologic product candidate’s identity, safety, strength, quality, potency and purity;

• potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the BLA;

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With gene therapy protocols, if the FDA allows the IND to proceed, but the RAC decides that full public review of the protocol is warranted, the FDA will request at the completion of its IND review that sponsors delay initiation of the protocol until after completion of the RAC review process.

The FDA also may

impose clinical holds on a biologic product candidate at any time before or during clinical trials due to safety concerns or non-compliance.

The FDA also may impose clinical holds on a biologic product candidate at any time before or during clinical trials due to safety concerns or non-compliance.

If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.

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Human Clinical Trials Under an IND

Clinical trials involve the administration of the biologic product candidate to healthy volunteers or patients under the supervision of qualified investigators which generally are physicians not employed by or under the control of the trial sponsor.

Clinical trials involve the administration of the biologic product candidate to healthy volunteers or patients under the supervision of qualified investigators who generally are physicians not employed by or under the control of the trial sponsor.

Clinical trials are conducted under written study protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur.

Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND.

Each protocol and any

amendments to the protocol must be submitted to the FDA as part of the IND.

An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to a proposed clinical trial and places the trial on clinical hold, including concerns that human research subjects will be exposed to unreasonable health risks.

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Accordingly, submission of an IND may or may not result in the FDA allowing clinical trials to commence.

Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising good clinical practices, or GCP requirements, including the requirement that all research subjects provide informed consent.

Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising GCP requirements, including the requirement that all research subjects provide informed consent.

Further, each clinical trial must be reviewed and approved by an IRB and IBC at or servicing each institution at which the clinical trial will be conducted.

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An approval letter authorizes commercial marketing of the biologic product with specific prescribing information for specific indications.

A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for

the FDA to reconsider the application.

A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application.

If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter.

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The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time.

The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

The review process and the PDUFA goal date may be extended by three months

if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

Fast Track Designation

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Orphan Drug Designation

On Under the Orphan Drug Act, the FDA may designate a biologic product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a biologic product available in the United States for treatment of the disease or condition will be recovered from sales of the product

Under the Orphan Drug Act, the FDA may designate a biologic product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a biologic product available in the United States for treatment of the disease or condition will be recovered from sales of the product.

If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, meaning that the FDA may not approve any other applications to market the same drug or biologic product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or if the party holding the exclusivity fails to assure the availability of sufficient quantities of the drug to meet the needs of patients with the disease or condition for which the drug was designated.

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Whether or not a sponsor obtains FDA approval for a product, a sponsor must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial

application, much like the IND, prior to the commencement of human clinical trials.

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application, much like the IND, prior to the commencement of human clinical trials.

In the EU, for example, a request for a Clinical Trial Authorization, or CTA, must be submitted to the competent regulatory authorities and the competent Ethics Committees in the EU Member States in which the clinical trial takes place, much like FDA and the IRB, respectively.

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• state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance

guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

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On April 24, 2019, the Company incorporated Jeune, Inc.

in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical studies for aesthetic skin conditions.

(now Jeune Aesthetics, Inc.) in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical studies for aesthetic skin conditions.

Our website address is www.krystalbio.com.

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You should not rely on any such information in making your decision whether to purchase our common stock.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on the investor relations section of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to the Securities and Exchange Commission ("SEC").

The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company that we file electronically with the SEC.

The address of the website is http://www.sec.gov.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act").

As a smaller reporting company and an emerging growth company, we may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies.

These provisions include:

• Reduced obligations with respect to financial data, including presenting only two years of audited financial statements and only two years of selected financial data in this Form 10-K;

• An exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

• Reduced disclosure about our executive compensation arrangements in our periodic reports, proxy statements and registration statements;

• Exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements.

We may take advantage of these provisions for up to five years or such earlier time that we no longer qualify as an emerging growth company.

We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period.

We may choose to take advantage of some but not all of these reduced reporting burdens.

For example, we intend to take advantage of the reduced reporting requirements with respect to disclosure regarding our executive compensation arrangements, have presented only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” elsewhere in this Annual Report on Form 10-K, and have taken advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting.

To the extent that we take advantage of these reduced reporting burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We have irrevocably elected not to adopt this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business