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Item 1. Business

2023-02-27 compared with 2022-02-28 · 162 added, 144 removed, 434 unchanged (41% 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 debilitating 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 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.

We are a biotechnology company focused on developing and commercializing genetic medicines for patients with rare diseases.

Using our patented platform that is based on engineered HSV-1, we create vectors that efficiently deliver therapeutic transgenes to cells of interest in multiple organ systems.

The cell’s own machinery then transcribes and translates the encoded effector to treat or prevent disease.

We formulate our vectors for non-invasive or minimally invasive routes of administration at a healthcare professional’s office or potentially in the patient’s home by a healthcare professional.

Our goal is to develop easy-to-use medicines to dramatically improve the lives of patients living with rare diseases and chronic conditions.

Our innovative technology platform is supported by in-house, commercial scale Current Good Manufacturing Practice ("CGMP") manufacturing capabilities.

Our Redosable Gene Therapy Platform

We believe that certain inherent features of HSV-1 virus, combined with the modifications we have made to the viral backbone provides our proprietary gene therapy platform with specific advantages over other viral and non-viral vector platforms including the following:

We believe that certain inherent features of the HSV-1 virus, combined with the modifications we have made to the viral backbone provides our proprietary gene therapy platform with specific advantages over other viral and non-viral vector platforms including the following:

• Repeat Administration :

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We have harnessed the natural ability of HSV-1 to evade host-mediated immunogenicity, while removing specific viral elements that exacerbate the host immunity, thus making our viral vector safer for repeat administration as needed to achieve durability of effect.

The immune evasive properties of our vector also enable us to treat patients who may have baseline antibodies to HSV-1, ensuring that prior exposure to the wildtype virus will not limit the number of patients who may be amenable to treatment with our product candidates.

The immune evasive properties of our vector also enable us to treat patients who may have baseline antibodies to HSV-1, ensuring that prior exposure to the wild-type virus will not limit the number of patients who may be amenable to treatment with our product candidates.

• Non-Integrating Nature :

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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, Vyjuvek, we have successfully inserted two functional copies of the complete ~9Kb human COL7A1 gene.

In our lead product candidate, B-VEC, 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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Poor transduction efficiency has remained a major hurdle for direct delivery of most vectors particularly in the epithelia of the skin and lung.

HSV-1 has a natural affinity, or tropism, for epithelial cells, consequently our vector penetrates and delivers its payload much more efficiently than other vectors, resulting in transduction efficiencies or cell penetration as high as 95% in cell-based studies.

HSV-1 has a natural affinity, or tropism, for epithelial cells.

Consequently, our vector penetrates and delivers its payload much more efficiently than other vectors, resulting in transduction efficiencies or cell penetration as high as 95% in cell-based studies.

The greater payload capacity of our vector and the high transduction efficiencies achieved allow us to deliver a full gene (or genes) directly to any patient’s tissues for off-the-shelf, in vivo gene expression without additional manipulation.

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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.

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.

Our Product Candidates

The following table summarizes information regarding our product candidates in various stages of clinical and preclinical development:

Rare Skin Programs

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

The following table summarizes information regarding our product candidates in various stages of clinical and preclinical development as of the date of this Annual Report:

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

Disease Background

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.

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 approximately 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.

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

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.

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 European Medicines Agency (“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, 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.

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 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.

Clinical Development of B-VEC

We initiated Phase 1 testing of B-VEC 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.

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 March 2022, results from the complete Phase 1/2 study of topical B-VEC for the treatment of DEB were published in Nature Medicine.

We initiated a pivotal Phase 3 trial (“GEM-3 trial”) in July 2020.

The GEM-3 trial of B-VEC for the treatment of DEB was 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 enrolled 31 participants with DEB, 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.

one wound was randomized to receive a weekly topical application of B-VEC 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.

The dose administered to each wound was dependent on the size of the 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.

We announced positive results from the GEM-3 trial in November 2021 and in December 2022 full results from the GEM-3 trial were published in the New England Journal of Medicine.

In April 2022, following feedback from the FDA, we announced that we planned to offer patients with DEB, who were enrolled in the GEM-3 open label extension study (“OLE”), the opportunity to be dosed in their homes by a health care professional.

Further study details are available at www.clinicaltrials.gov under NCT identifier NCT04917887.

Nothing included on this website shall be deemed incorporated by reference into this Annual Report on Form 10-K.

We are pleased with the on-going progress of the OLE in terms of both patient and physician experiences and plan to provide an update on the OLE study in 2023.

We submitted a Biologics License Application (“BLA”) to the FDA for B-VEC for the treatment of DEB in June 2022.

The FDA accepted the BLA in August 2022 granting B-VEC a Priority Review Designation with a Prescription Drug User Fee Act (“PDUFA”) action date of February 17, 2023.

In January 2023, the FDA notified us, that based on manufacturing information submitted to the agency on December 20, 2022 in response to an information request from the FDA, the PDUFA date has been revised to May 19, 2023.

In this notification, we were also informed that there will be no Advisory Committee meeting for B-VEC, and that a Risk Evaluation and Mitigation Strategies (“REMS”) program was not needed for the B-VEC application.

We submitted a request for Marketing Authorization Application (“MAA”) with the European Medicines Agency (“EMA”) in November 2022 for B-VEC for the treatment of DEB in patients 6 months and older.

The Company was informed by the EMA in January 2023 to modify the PIP waiver request to include patients between birth and 6 months.

The Company is modifying the application so that the MAA procedure can officially start in the second half of 2023 with an approval expected in early 2024.

Commercial readiness efforts have been underway for the past two years as we prepare for the potential approval of B-VEC by the FDA and the EMA.

In the United States, our Medical Science Liaisons have been interacting with and educating health care professionals (“HCPs”) on DEB and the importance of genetic testing in ensuring an accurate diagnosis.

We have completed the build of Krystal Connect, our US in-house patient services call center staffed with Krystal employees, and are ready, pending FDA approval of B-VEC, to assist patients, care givers and HCPs interested in accessing B-VEC.

Additionally, we have hired, trained and deployed commercial field teams who are interacting with physicians, patients, and commercial payers across the U.S.

to educate on DEB and to prepare for a U.S.

launch of B-VEC.

We are interacting frequently with the leading physicians in the major markets across Europe and in Japan.

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

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

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.

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.

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.

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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 May 2020, initial clinical data from the Phase 1 portion of the study which enrolled adult patients were presented at the Society for Investigative Dermatology (“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).

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

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.

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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.

We plan to resume enrollment in the Phase 2 portion of this trial in the first half of 2023.

KB104 for Netherton Syndrome

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Existing approaches are limited to palliative treatments, including topical moisturizers, repair formulas and steroids.

KB104 is a redoseable gene therapy designed to deliver two copies of the SPINK5 gene to relevant skin cells when applied topically.

KB104 is a redoseable off-the-shelf gene therapy designed to deliver two copies of the SPINK5 gene to relevant skin cells when applied topically.

By directly supplementing the skin with functional SPINK5, the goal of therapy is to locally correct the desquamation and improve the barrier function of the skin.

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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

We plan to file an investigational new drug (“IND”) application with the FDA and initiate a clinical trial of KB104 in Netherton Syndrome in 2023.

KB407 for Cystic Fibrosis (“CF”)

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CF is characterized by recurrent chest infections, increased airway secretions, and eventually, respiratory failure.

While CF comprises a multiorgan pathology affecting the upper and lower airways, gastrointestinal and reproductive tracts, and the endocrine system, the primary cause of morbidity and mortality in CF is due to progressive lung destruction.

While CF comprises a multiorgan pathology affecting the upper and lower

airways, gastrointestinal and reproductive tracts, and the endocrine system, the primary cause of morbidity and mortality in CF is due to progressive lung destruction.

According to the U.S.

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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 off the-shelf 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 full-length CFTR transgene 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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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.

We plan to dose our first patient in the Phase 1 clinical trial in Australia in the first half of 2023.

We announced, in August 2022, that the FDA had accepted our IND application to evaluate KB407 in a clinical trial to treat patients with CF.

We are closely working with the Therapeutics Development Network (“TDN”) of the CFF to validate our clinical protocol and plan on initiating a Phase 1 clinical trial in the U.S.

in the first half of 2023.

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

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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.

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

We are planning to file an IND for KB408 to treat AATD patients in 2023.

While our focus is on the development of gene therapies to treat serious rare diseases, we are also evaluating the potential of our platform to address more prevalent and/or non-genetic conditions.

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

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

To that end, in April 2019, we incorporated Jeune Aesthetics, Inc.

(“Jeune Aesthetics”), 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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Clinical development of KB301

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.

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

The Phase 1 dose-ranging trial evaluated the safety, tolerability, and initial efficacy of intradermal injections of KB301 in adult subjects aged 18-75 (NCT04540900).

KB301 was well tolerated, and we were able to biopsy and demonstrate proof-of-mechanism.

Complete results from Cohort 1 focused on safety were presented at the 2021 SID Annual Meeting.

In March 2022, we announced positive proof-of-concept efficacy and safety data from Cohort 2 of the PEARL-1 study of KB301 for the treatment of aesthetic skin indications.

Cohort 2 was a randomized, double-blind, placebo-controlled clinical trial that evaluated the safety and efficacy of KB301 for the improvement of fine lines and skin texture in the lower and upper cheek and for improvement in skin thickness in the knee.

Cohort 2 enrolled 27 subjects across two trial sites.

Bilateral treatment areas included the neck behind the ear to assess initial safety and on the cheek below and above the zygomatic arch (lower and upper cheek), and around the knee.

Subjects were randomized 2:1 to receive low dose KB301 or placebo in the upper cheek and knee as multiple micro depot injections over the selected treatment area with a 33 G needle.

Subjects receiving KB301 in the lower check were randomized 2:1 to receive either low dose KB301, high dose KB301 or placebo.

Four patients dropped out of the Cohort 2 study – one subject following the initial safety assessment behind the ear, two subjects for unspecified reasons, and one subject due to unevenness in face between active and placebo during the study.

A subset of subjects from the PEARL-1 Cohort 2 trial (Cohort 3) were enrolled into a durability trial to look for duration of effect, reduction of the unevenness in placebo treated sites, and for long term safety monitoring.

Ten subjects from the PEARL-1 Cohort 2 study were enrolled in the durability trial, an open-label study to assess duration of effect below the zygomatic arch (the lower cheek area).

The extension cohort enrolled subjects who had received the high dose regimen of KB301 during the efficacy cohort in one or both of their lower cheeks.

Subject Satisfaction Scores and Investigator Assessments were measured monthly for three consecutive visits that correspond to timepoints up to nine-months following

administration of the last dose of KB301.

In addition, subjects with placebo-treated lower cheeks were dosed with KB301 during the open-label extension cohort to normalize their appearance.

In November 2022, we announced nine-month durability of effect in Cohort 3 of the PEARL-1 study of KB301.

We are planning to initiate a Phase 2 study in fine lines in 2023.

Future Opportunities

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Further, we evaluated one of these vectors in an animal model of atopic dermatitis where expression of the vector-encoded-antibody was confirmed and efficacy was observed.

If we are able to successfully generate product candidates to treat non-orphan diseases, we intend to seek collaborative alliances towards the development and potential commercialization of these therapies.

If we are able to successfully generate product candidates to treat these non-orphan diseases, we intend to seek collaborative alliances towards the development and potential commercialization of these therapies.

Manufacturing

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

In-House 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 first facility, ANCORIS, a commercial scale CGMP-compliant manufacturing facility, is producing the 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 facility following FDA approval.

In December 2022, the FDA completed a successful audit of our ANCORIS facility as part of the B-VEC BLA review process.

Our second commercial scale CGMP facility, ASTRA, is expected to be completed and validated in 2023.

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 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.

We announced the ground breaking of ASTRA in January 2020.

We are planning to initiate our first GMP run in ASTRA in 1H 2023.

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

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Infection of the MCB with the MVSS at the optimal concentration results in production of the viral particle.

Once the MCB, the MVSS, and the conditions of infection are established, virus production and resultant yield and titer are highly reproducible and scalable over multiple runs, and the risk of failure is minimal.

Once the MCB, the MVSS, and the conditions of infection are established, virus

production and resultant yield and titer are highly reproducible and scalable over multiple runs, and the risk of failure is minimal.

Optimization of MCB, MVSS and production methods requires extensive knowledge and technical experience with the HSV-1 genome and significant upfront effort to design and select the best virus seed stock and complementing cell line.

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 number of companies are developing drug candidates for EB.

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

There is no approved treatment for DEB 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 dystrophic EB.

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

• Palliative Treatments:

We are aware of companies such, as Amryt Pharmaceuticals and Castle Creek Pharmaceuticals, who are developing product candidates taking a palliative approach to treating the disease.

Autosomal Recessive Congenital Ichthyosis ("ARCI")

We are aware of companies like Novartis Inc.

We are aware of companies, such as Amryt Pharmaceuticals and Castle Creek Pharmaceuticals, which are developing product candidates taking a palliative approach to treating the disease.

Autosomal Recessive Congenital Ichthyosis

We are aware of companies such as Novartis Inc.

and Patagonia Pharmaceuticals, LLC who have conducted clinical trials for ARCI in the past.

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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 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.

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

In addition to our patents, we rely on trade secrets and know-how to develop and maintain our competitive position.

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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

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)

11,185,564 United States Methods of Use

– Methods of their using replication-defective HSV vectors for delivering any effector as skin-target therapeutics interest to the skin.

B-VEC (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 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

United States Composition of Matter & Methods of Use – Compositions comprising HSV vectors encoding certain effectors, including the effector 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 – Covers compositions containing B-VEC, 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 Vyjuvek, as well as uses thereof.

EP 3 377 637 B1 Europe Composition of Matter – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin.

12/28/2036 Krystal

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In the United States, the FDA regulates biologic products including gene therapy products under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”), and regulations and guidance implementing these laws.

The FDCA, PHSA and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involving biologic products.

Applications to the FDA are required before conducting human clinical testing of biologic products.

The FDCA, PHSA and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, importation, advertising and other promotional practices involving biologic products.

IND applications to the FDA are required before conducting human clinical testing of biologic products.

Additionally, each clinical trial protocol for a gene therapy product candidate is reviewed by the FDA, and in limited instances the National Institutes of Health (“NIH”), through its Recombinant DNA Advisory Committee, or RAC.

FDA approval also must be obtained before marketing of biologic products.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals to successfully develop and commercialize our product candidates.

The FDA’s authorization also must be obtained before marketing of biologic products.

The process of obtaining regulatory approvals or licenses and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals to successfully develop and commercialize our product candidates.

Within the FDA, the Center for Biologics Evaluation and Research (“CBER”) regulates gene therapy products.

Within CBER, the review of gene therapy and related products is in the Office of Cellular, Tissue and Gene Therapies ("OCTGT") and the FDA has established the Cellular, Tissue and Gene Therapies Advisory Committee ("CTGTAC") to advise CBER on its reviews.

Within CBER, the review of gene therapy and related products is in the Office of Therapeutic Products (“OTP”) and the FDA has established the Cellular, Tissue and Gene Therapies Advisory Committee (“CTGTAC”) to advise CBER on its reviews.

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.

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Biologic Products Development Process

The FDA must approve a product candidate before it may be legally marketed in the United States.

The FDA must authorize the marketing of a product candidate for marketing in the United States.

The process required by the FDA before a biologic product candidate may be marketed in the United States generally involves the following:

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• submission to the FDA of an IND application, which allows human clinical trials to begin unless FDA objects within 30 days;

• approval by each clinical trial site’s institutional review board ("IRB") and institutional biosafety committee, or IBC before the clinical trial may be initiated;

• approval by each clinical trial site’s Institutional Review Board (“IRB”) and Institutional Biosafety Committee (“IBC”), before the clinical trial may be initiated;

• performance of adequate and well-controlled human clinical trials according to the FDA’s Good Clinical Practice (“GCP”) regulations and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biologic product candidate for its intended use;

• preparation and submission to the FDA of a BLA for marketing approval that includes substantial evidence of safety, purity and potency from results of nonclinical testing and clinical trials;

• preparation and submission to the FDA of an application for marketing approval that includes substantial evidence of safety, purity and potency from results of nonclinical testing and clinical trials;

• 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 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;

• payment of user fees and FDA review and approval, or licensure, of the BLA.

Before testing any biologic product candidate in humans, including a gene therapy product candidate, the product candidate must undergo preclinical testing.

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

• payment of user fees and FDA review and marketing authorization..

Before testing any new biologic product candidate in humans, including a gene therapy product candidate, the product candidate must undergo preclinical testing.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as in vivo studies to assess the potential safety and activity of the product candidate and to establish a rationale for therapeutic use.

The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.

Concurrent with clinical trials, companies usually must complete some long-term preclinical testing, such as animal studies of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug product.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted, to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

Concurrent with clinical trials, companies usually must complete some long-term preclinical testing, such as animal studies of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the biological product and finalize a process for manufacturing the biological product in commercial quantities in accordance with CGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the biological product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final biological product.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted, to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of an IND.

Some preclinical testing may continue even after the IND is submitted.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

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.

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.

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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.

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.

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

An IND 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.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

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Review and Approval Processes

The results of the preclinical tests and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling, among other things, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

The results of the preclinical tests and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling, among other things, are submitted to the FDA as part of a BLA or other submission requesting authorization to market the product for one or more indications.

For gene therapies, selecting patients with applicable genetic defects is a necessary condition to effective treatment.

For the therapy we are currently developing, we believe that diagnoses based on existing genetic tests developed and administered by laboratories certified under the Clinical Laboratory Improvement Amendments (“CLIA”) are sufficient to select appropriate patients and will be permitted by the FDA.

Under the Prescription Drug User Fee Act ("PDUFA") each BLA must be accompanied by a significant user fee.

Under the PDUFA, each BLA (or New Drug Application (“NDA”) for some biologics) must be accompanied by a significant user fee.

The FDA adjusts the PDUFA user fees on an annual basis.

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Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the product candidate also includes a non-orphan indication.

Additionally, no user fees are assessed on BLAs or NDAs for product candidates designated as orphan drugs, unless the product candidate also includes a non-orphan indication.

The FDA reviews a BLA within 60 days of submission to determine if it is substantially complete before it accepts it for filing.

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The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

During the product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategies ("REMS") is necessary to assure the safe use of the product candidate.

During the product approval process, the FDA also will determine whether a REMS program is necessary to assure the safe use of the product candidate.

REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks.

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On the basis of the BLA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter.

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.

An approval letter or license 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.

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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These can include meetings to discuss study design, data required to support approval, or other aspects of the clinical program.

Additionally, products that have been granted Fast Track designation may be eligible for priority review of a BLA application and the FDA may consider reviewing portions of a New Drug Application ("NDA") before the sponsor submits the complete application, also known as a rolling review.

Additionally, products that have been granted Fast Track designation may be eligible for priority review of a BLA application and the FDA may consider reviewing portions of the submission before the sponsor submits the complete application, also known as a rolling review.

Orphan Drug Designation

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Orphan medicinal product status in the European Union (“EU”) has similar, but not identical benefits.

Regenerative Medicine Advanced Therapy (“RMAT”) Designation

Regenerative Medicine Advanced Therapy Designation

Established under the 21st Century Cures Act, RMAT designation is a program designed to expedite the development and approval of regenerative medicine products, including gene therapy products.

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To be eligible and accepted for PRIME, a medicine has to show its potential to benefit patients with unmet medical needs based on early clinical data coupled with non-clinical data.

Through PRIME, the EMA offers enhanced support to medicine developers including early interaction and dialogue, and a pathway for accelerated evaluation by the agency.

Through PRIME, the EMA offers enhanced support to medicine developers including early interaction and dialogue, and a pathway for

accelerated evaluation by the agency.

The program is intended to optimize development plans and expedite the review and approval process so that these medicines may reach patients as early as possible.

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In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency and effectiveness of biologic products.

A sponsor also must comply with the FDA’s advertising and promotion requirements, such as the prohibition on promoting products for uses or in- patient populations that are not described in the product’s approved labeling (known as “off-label use”).

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.

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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.

In the EU, for example, a request for a Clinical Trial Authorization (“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.

Once the CTA request is approved in accordance with the EU and the EU Member State’s requirements, clinical trial development may proceed.

The requirements and processes governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, the clinical trials are conducted in accordance with GCPs and the applicable regulatory requirements of the country or countries in which the clinical trial is performed, as well as the ethical principles that have their origin in the Declaration of Helsinki (whichever provides the greater protection to the clinical trial participants).

In all cases, the clinical trials are conducted in accordance with GCPs and the applicable

regulatory requirements of the country or countries in which the clinical trial is performed, as well as the ethical principles that have their origin in the Declaration of Helsinki (whichever provides the greater protection to the clinical trial participants).

Failure to comply with applicable foreign regulatory requirements may result in, among other things, fines;

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• the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments and other transfers of value to physicians, certain other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members;

• the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which imposes obligations, including mandatory contractual terms, with respect to safeguarding the transmission, security and privacy of protected health information;

• the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

• the federal Health Care Fraud statute imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which imposes obligations, including mandatory contractual terms, with respect to safeguarding the transmission, security and privacy of protected health information;

• 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;

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In the United States, for example, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected and continues to face major uncertainty due to the status of major legislative initiatives surrounding healthcare reform.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government, including allowing Medicare to negotiate prices for certain prescription drugs, requiring drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologicals covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation (CPI-U), and limiting out of pocket spending for Medicare Part D enrollees.

Additionally, On October 14, 2022, President Biden signed Executive Order 14087 on “Lowering Prescription Drug Costs for Americans.” The Executive Order specifically requests that the Center for Medicare and Medicaid Innovation consider “models that may lead to lower cost sharing for commonly used drugs and support value-based payment that supports high-quality care.”

Additional Regulation

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Human Capital

As of February 18, 2022, we had 119 full-time employees, primarily engaged in research and development, manufacturing and administrative activities.

As of February 20, 2023, we had 210 full-time employees, primarily engaged in research and development, manufacturing, administrative activities, and activities in preparation of commercialization of B-VEC.

None of our employees are represented by a labor union and we consider our employee relations to be good.

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Corporate Information

We commenced operations on April 15, 2016.

On March 31, 2017, we converted from a California limited liability company to a Delaware C-corporation, and changed our name from Krystal Biotech, LLC to Krystal Biotech, Inc.

We commenced operations in April 2016.

In March 2017, we converted from a California limited liability company to a Delaware C-corporation, and changed our name from Krystal Biotech, LLC to Krystal Biotech, Inc.

Our principal offices are located at 2100 Wharton Street, Suite 701, Pittsburgh, PA 15203, and our telephone number is 412-586-5830.

On June 19, 2018, the Company incorporated Krystal Australia Pty Ltd., an Australian proprietary limited company, for the purpose of undertaking preclinical and clinical studies in Australia.

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

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

In June 2018, the Company incorporated an Australian subsidiary, for the purpose of undertaking preclinical and clinical studies in Australia.

In April 2019, the Company incorporated Jeune Aesthetics, Inc.

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

In January 2022, August 2022 and December 2022, we incorporated subsidiaries in Switzerland, Netherlands, and France, respectively, for the purpose of establishing initial operations in Europe for the development and commercialization of Krystal’s pipeline.

Our website address is www.krystalbio.com.

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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