What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-04 compared with 2024-08-05 · 170 added, 159 removed, 254 unchanged (56% of the section changed)

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Food and Drug Administration (“FDA”) approved product for treating patients, six months of age or older, suffering from dystrophic epidermolysis bullosa (“DEB”);

• the timing, scope or results of regulatory filings and approvals for B-VEC outside of the U.S.

and the commercial success of B-VEC outside the U.S.

• the initiation, timing, cost, progress and results of our research and development activities, preclinical studies and clinical trials for our product candidates;

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• our ability to successfully avoid or resolve any litigation, intellectual property or other claims, that may be brought against us;

• global economic conditions, including the recent rise in inflation and interest rates;

• global economic conditions;

• the impact of changes in laws and regulations.

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You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect.

Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report.

Forward-looking statements represent our management’s beliefs and assumptions only as of the date of filing this Quarterly Report with the SEC.

Except as required by law, we assume no obligation to update these forward-looking statements publicly as a result of subsequent events, developments or otherwise, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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We possess exclusive rights to develop, manufacture, and commercialize VYJUVEK and all our pipeline candidates throughout the world.

We launched VYJUVEK in the United States in the second quarter of 2023.

Net VYJUVEK product revenue was $70.3 million for the three months ended June 30, 2024, and $166.2 million in cumulative net product revenue since launch in August 2023.

Gross margin for the three months ended June 30, 2024 was 91%.

Net VYJUVEK product revenue was $83.8 million for the three months ended September 30, 2024, and $250.1 million in cumulative net product revenue since launch.

Gross margin for the three months ended September 30, 2024 was 92%.

We define gross margin as product revenue, net less cost of goods sold expressed as a percentage of product revenue, net.

We have made steady progress securing access and reimbursement for VYJUVEK since launch and as of July 2024, positive access determinations have been achieved for 97% of lives covered under commercial and Medicaid plans.

As of July 2024, we have secured over 400 reimbursement approvals for VYJUVEK in the U.S.

We have made steady progress securing access and reimbursement for VYJUVEK since launch and as of October 2024, positive access determinations have been achieved for 97% of lives covered under commercial and Medicaid plans.

As of October 2024, we have secured over 460 reimbursement approvals for VYJUVEK in the U.S.

We seek to make the experience of starting and continuing on VYJUVEK treatment seamless for the patient.

Since launch, infrastructure has been in place for patients to be treated in their homes by an HCP, reducing the need for regular visits to a clinic or hospital.

Since launch, infrastructure has been in place for patients to be treated in their homes by a HCP, reducing the need for regular visits to a clinic or hospital.

Krystal Connect TM , our U.S.

in-house patient services call center, has been active since FDA approval and assists patients, care givers and HCPs interested in accessing VYJUVEK.

We also continue to offer no-cost genetic testing through our DecodeDEB program.

Since launch and through the second quarter of 2024, patient compliance with once weekly treatment while on VYJUVEK remains high at 90%.

Preparations and infrastructure buildout are underway in Europe and Japan to support our planned direct commercial launch in these regions.

In June 2024, the President and General Manager of Krystal Biotech Japan G.K.

joined the Company in preparation for a Japanese launch.

Since launch and through the third quarter of 2024, patient compliance with once weekly treatment while on VYJUVEK remains high at 87%.

Preparations and infrastructure buildout are underway in Europe and Japan to support our planned direct commercial launch in these regions in 2025.

In October 2023, we submitted a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) for B-VEC for the treatment of DEB.

In November 2023, we were notified that the MAA had been validated and was now under Committee for Medicinal Products for Human Use review.

In November 2023, we were notified that the MAA had been validated and was

now under Committee for Medicinal Products for Human Use (“CHMP”) review.

In February 2024, the EMA completed inspection of our manufacturing facility as part of the MAA review process and, in May 2024, good manufacturing practices certification was granted by the EMA.

We expect an EMA decision on our MAA in the second half of 2024.

In July 2023, the Pharmaceuticals and Medical Devices Agency (“PMDA”) in Japan officially accepted the open label extension (“OLE”) study of B-VEC.

Based on recent interactions with the EMA, we expect a CHMP opinion on the MAA in the fourth quarter of 2024 and a launch in Germany in the first half of 2025.

In September 2024, the Haute Autorité de Santé in France approved pre-marketing early reimbursed access to B-VEC under the Accès Précoce (AP1) program.

DEB patient access to B-VEC under AP1 is expected to start in the fourth quarter of 2024.

AP1 allows for early access to innovative therapies in France prior to European regulatory approval when a positive benefit/risk ratio is recognized and when no other therapeutic alternatives are available.

In October 2024, we filed a Japan New Drug Application (JNDA) with Japan’s Pharmaceuticals and Medical Devices Agency (PMDA).

The JNDA includes the results from the Japan OLE study, the design of which had been approved by the PMDA in July 2023.

The efficacy portion of the Japan OLE study was completed in April 2024 and results closely mirrored those of our Phase 3 study in the U.S.

A total of 5 patients were enrolled, with one patient discontinuing after 8 weeks due to scheduling challenges.

B-VEC was well tolerated in the Japanese study population, with a safety profile consistent with previous studies, and all four patients that completed the study achieved the primary endpoint of complete wound closure at 6 months.

We anticipate filing our Japan New Drug Application with Japan’s PMDA in the second half of 2024, enabling a potential authorization by PMDA in 2025.

A total of five patients were enrolled, with one patient discontinuing after eight weeks due to scheduling challenges.

A decision on the JNDA by the PMDA is expected in the second half of 2025.

The application is expected to receive priority review given the Orphan Drug Designation status granted to B-VEC in December 2023.

Pipeline Highlights and Recent Developments

KB407 is an inhaled (nebulized) formulation of our novel vector designed to deliver two copies of the full-length cystic fibrosis transmembrane conductance regulator (“CFTR”) transgene for the treatment of cystic fibrosis (“CF”), a serious rare lung disease caused by missing or mutated CFTR protein.

In July 2023, we announced that we had dosed the first patient in CORAL-1, a Phase 1 multi-center, dose-escalation study evaluating KB407, delivered via a nebulizer, in patients with CF, regardless of their underlying genotype.

In May 2024, we cleared the safety evaluation window for the second cohort of CORAL-1, and we expect to initiate the third and final cohort in the second half of 2024.

Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT05504837.

We presented preclinical data at the American Thoracic Society 2024 International Conference held in May 2024 demonstrating KB407 transduction of fully differentiated, patient airway epithelial cell-derived apical out airway organoids leading to production of full-length and fully glycosylated CFTR.

KB408 is an inhaled (nebulized) formulation of our novel vector designed to deliver two copies of the SERPINA1 transgene, that encodes for normal human alpha-1 antitrypsin protein, for the treatment of alpha-1 antitrypsin deficiency (“AATD”), a serious rare lung disease.

In February 2024, we dosed the first patient in SERPENTINE-1, a Phase 1, open-label, single dose escalation study evaluating KB408, delivered via a nebulizer, in adult patients with AATD with a Pi*ZZ or a Pi*ZNull genotype.

In May 2024, we cleared the safety evaluation window for the first cohort of SERPENTINE-1 and enrollment in the second cohort is ongoing.

We are working closely with the Alpha-1 Foundation and their Therapeutic Development Network on the SERPENTINE-1 study and intend to announce interim data from the study in the fourth quarter of 2024.

In September 2024, after initiating dosing in Cohort 2, we amended the SERPENTINE-1 protocol to include mandatory bronchoscopies in Cohort 2 for molecular evaluation of alpha-1 antitrypsin (“AAT”) expression .

We are on track to report interim molecular data from the study before the end of the year.

Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier:

An overview of KB408 IND-enabling studies conducted to support the initiation of SERPENTINE-1 was presented at the American Thoracic Society 2024 International Conference held in May 2024.

KB407 is an inhaled (nebulized) formulation of our novel vector designed to deliver two copies of the full-length cystic fibrosis transmembrane conductance regulator (“ CFTR ”) transgene for the treatment of cystic fibrosis (“CF”), a serious rare lung disease caused by missing or mutated CFTR protein.

In May 2024, we cleared the safety evaluation window for the second cohort of CORAL-1.

We recently activated two additional clinical sites for CORAL-1 and expect to report interim molecular data for KB407 in the first half of 2025.

Dosing of the first patient in the third and final cohort in CORAL-1 is expected before the end of the year.

Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT05504837.

Ophthalmology

In April 2023, we announced clinical data on the compassionate use of B-VEC, administered as an eyedrop, to treat a patient suffering from ocular complications of DEB.

In April 2023, we announced clinical data on the compassionate use of B-VEC, formulated and administered as an eyedrop, to treat a patient suffering from ocular complications of DEB.

Data was first presented at the Association for Research in Vision and Ophthalmology (“ARVO”) 2023 Annual Meeting and subsequently published in the New England Journal of Medicine in February 2024.

Regular application of B-VEC to the eye was well tolerated and associated with full corneal healing at 3 months and visual acuity improvement from hand motion to 20/25 by 8 months.

Based on this early clinical evidence of safety and potential benefit under compassionate use, we started discussions with the FDA in the first quarter of 2024 on a potential clinical development path for ophthalmic B-VEC, and in February 2024, we aligned with the FDA on our proposed single arm, open label study in approximately 10 to 15 patients to enable approval of B-VEC eyedrops to treat ocular complications which are thought to affect over 25% of DEB patients.

We plan to initiate the registrational study in the fourth quarter of 2024.

In August 2024, we initiated a natural history study to prospectively collect data on the frequency and severity of corneal abrasions in patients with DEB and serve as a run-in period for patients who may be eligible to participate in the registrational study.

We are actively evaluating multiple, preclinical-stage genetic medicine candidates for the treatment of front and back of the eye diseases and presented preclinical data highlighting the potential of Krystal’s HSV-1-based gene delivery platform for back of the eye gene delivery at the ARVO 2024 Annual Meeting that was held in May 2024.

Regular application of B-VEC to the eye was well tolerated and associated with full corneal healing at three months and visual acuity improvement from hand motion to 20/25 by eight months.

Based on this early clinical evidence of safety and potential benefit under compassionate use, we started discussions with the FDA in the first quarter of 2024 on a potential clinical development path for KB803, an ophthalmic formulation of B-VEC, and in February 2024, we aligned with the FDA on our proposed single arm, open label study in approximately 10 to 15 patients to enable approval of KB803 to treat ocular complications which are thought to affect over 25% of DEB patients.

We plan to initiate the registrational IOLITE study in the first half of 2025.

In August 2024, we initiated a natural history study to prospectively collect data on the frequency of corneal abrasions in patients with DEB and serve as a run-in period for patients who may be eligible to participate in the registrational study.

Enrollment in the study is ongoing.

We are actively evaluating multiple, preclinical-stage genetic medicine candidates for the treatment of front and back of the eye diseases.

KB707 is a redosable, immunotherapy designed to deliver genes encoding both human interleukin-2 (“IL-2”) and interleukin-12 (“IL-12”) to the tumor microenvironment and promote systemic immune-mediated tumor clearance.

Two formulations of KB707 are in development, a solution formulation for transcutaneous injection and an inhaled (nebulized) formulation for lung delivery.

Both formulations of KB707 have been granted Fast Track Designation by the FDA and in May 2024, intratumoral KB707 was also granted Rare Pediatric Disease Designation by the FDA for the treatment of osteosarcoma.

Both intratumoral and inhaled KB707 have been granted Rare Pediatric Disease Designation (“RPDD”) by the FDA, with intratumoral receiving RPDD for the treatment of rhabdomyosarcoma in August 2024 and inhaled KB707 receiving RPDD for the treatment of osteosarcoma in May 2024.

Both formulations of KB707 have also been granted Fast Track Designation by the FDA.

In October 2023, we dosed the first patient in OPAL-1, an open-label, multi-center, monotherapy, dose escalation and expansion Phase 1 study, evaluating intratumoral KB707 in patients with locally advanced or metastatic solid tumors, who relapsed or are refractory to standard of care, with at least one measurable and injectable tumor accessible by transcutaneous route of administration.

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Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT05970497.

Based on the current pace of enrollment, we expect to report interim data in the fourth quarter of 2024.

In April 2024, we dosed the first patient in KYANITE-1, an open-label, monotherapy, dose escalation and expansion Phase 1 study, evaluating inhaled KB707 in patients with locally advanced or metastatic solid tumors of the lung.

The safety evaluation window for the first dose escalation cohort of the KYANITE-1 study was cleared in June 2024 and enrollment of the second cohort is ongoing.

In August 2024, the dose escalation portion of the study was completed and a dose was selected for expansion.

Enrollment in the dose expansion cohort is ongoing.

Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT06228326.

We presented preclinical efficacy data generated in syngeneic mouse models using murine equivalents to KB707 at the American Association for Cancer Research Annual Meeting that was held in April 2024.

Study results demonstrated that IL-12 and IL-2, delivered intratumorally using Krystal’s HSV-1-based gene delivery platform, enhanced local and systemic T-cell effector responses consistent with previously reported anti-tumor activity.

Based on the current pace of enrollment in OPAL-1 and KYANITE-1, we expect to report initial interim data for KB707 in the fourth quarter of 2024.

KB105 is a topical gel containing our novel vector designed to deliver two copies of the TGM1 transgene encoding the human enzyme transglutaminase-1 (“TGM1”) for the treatment of lamellar icthyosis, a serious rare skin disorder most often caused by missing or mutated TGM1 protein.

KB104 is a topical gel formulation of our novel vector designed to deliver two copies of the SPINK5 transgene for the treatment of Netherton Syndrome, a debilitating autosomal recessive skin disorder caused by missing or mutated SPINK5 protein.

We expect to resume enrollment in the Phase 2 portion of JADE-1, a randomized, placebo-controlled Phase 1/2 study evaluating KB105 for the treatment of lamellar icthyosis in the first half of 2025, and plan to file an investigational new drug (“IND”) application and initiate a clinical trial of KB104 to treat patients with Netherton Syndrome following initiation of the KB105 Phase 2 study.

We expect to resume enrollment in the Phase 2 portion of JADE-1, a randomized, placebo-controlled Phase 1/2 study evaluating KB105 for the treatment of lamellar icthyosis in the first half of 2025.

Details of the JADE-1 Phase 1/2 study can be found at www.clinicaltrials.gov under NCT identifier NCT04047732.

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KB301 is a solution formulation of our novel vector for intradermal injection designed to deliver two copies of the COL3A1 transgene to address signs of aging or damaged skin caused by declining levels of, or damaged proteins within the extracellular matrix, including type III collagen.

In April 2023, Jeune initiated and treated the first subject in the Phase 1 PEARL-1 Cohort 3 clinical study.

The PEARL-1 Cohort 3 study is an open label study to evaluate different doses of KB301 for the improvement of lateral canthal lines at rest in up to 20 subjects.

In January 2024, Jeune initiated the PEARL-1 Cohort 4 clinical study, an open label study to evaluate KB301 for the improvement of dynamic wrinkles of the décolleté in up to 20 subjects.

Cohorts 3 and 4 were fully enrolled in April 2024 and Jeune plans to announce results for both cohorts in the third quarter of 2024.

Following completion of both cohorts, Jeune plans to initiate a Phase 2 study of KB301.

In August 2024, Jeune announced positive interim safety and efficacy results from Cohorts 3 and 4 of the Phase 1 study PEARL-1, open label studies evaluating KB301 in the treatment of lateral canthal lines at rest and dynamic wrinkles of the décolleté, respectively.

Meaningful and sustained improvements in multiple skin aesthetic attributes, including wrinkles, crepiness, hydration, and radiance, were reported by the study investigators and subjects alike in both the décolleté and lateral canthal regions.

Increased subject satisfaction with wrinkle appearance was also reported.

Details of the Phase 1 study can be found at www.clinicaltrials.gov under NCT identifier NCT04540900.

Based on these Phase 1 results, Jeune has selected treatment of the dynamic wrinkles of the décolleté for advanced clinical development and expects to initiate a Phase 2 study evaluating KB301 in this indication in 2025.

Jeune has several other aesthetic medicine product candidates in various stages of preclinical development.

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Product Revenue, Net

After FDA approval of VYJUVEK in May 2023, we began commercial marketing and sales throughout the United States and began recognizing revenue during the third quarter of 2023.

After FDA approval of VYJUVEK in May 2023, we began commercial marketing and sales and began recognizing revenue during the third quarter of 2023.

Our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such sales.

We have contracted to sell VYJUVEK to a limited number of specialty pharmacy providers (“SPs”) that mix the medication and administer it to patients in the patient’s home by a healthcare professional and through a specialty distributor (“SD”) to hospitals and outpatient clinics where patients are administered the medication at a healthcare professional’s office.

We have contracted to sell VYJUVEK to a limited number of specialty pharmacy providers that mix the medication and administer it to patients in the patient’s home by a healthcare professional and through a limited number of hospitals and distributors where patients are administered the medication in a hospital or clinic.

The transaction price that we recognize as revenue for VYJUVEK sales includes an estimate of variable consideration, which includes discounts, returns, copay assistance and rebates that are offered within contracts.

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We expect our research and development expenses will increase as we continue the manufacturing of preclinical and clinical materials and manage the clinical trials of, and seek regulatory approval for, our product candidates and as we expand our product portfolio.

In the near term, we expect that our research and development expenses will increase as we continue our Phase 1 trials for KB407, KB408, intratumoral KB707, and inhaled KB707, resume dosing with KB105 in our Phase 1/2 clinical trial, complete the Phase 1, Cohorts 3 and 4 study and initiate a Phase 2 trial for KB301, begin our open label study evaluating ophthalmic B-VEC, and incur preclinical expenses for our other product candidates.

In the near term, we expect that our research and development expenses will increase as we continue our preclinical and clinical trials and studies and incur preclinical and clinical expenses for our product candidates.

Due to the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration, costs and timing of clinical trials, and, as a result, the actual costs to complete clinical trials may exceed the expected costs.

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In March 2021, we closed on the purchase of the building that was constructed to house our second commercial scale CGMP facility, ASTRA.

completed and a portion of the assets were placed into service throughout 2023.

In March 2023, we received the permanent occupancy permit for ASTRA which allowed the Company to begin utilizing certain parts of the building for research and development operations once qualification was completed and a portion of the assets were placed into service throughout 2023 and 2024.

We incurred significant capital expenditures related to the construction of ASTRA in 2023 and expect to continue to incur capital expenditures related to ASTRA throughout the operational life of the facility.

Gains from Sale of Priority Review Voucher (“PRV”)

Gain from sale of priority review voucher relates to proceeds from sale of the rare pediatric PRV we received in connection with the FDA’s approval of VYJUVEK.

Interest and Other Income, Net

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Critical Accounting Policies, Significant Judgments and Estimates

There have been no significant changes during the six months ended June 30, 2024 to our critical accounting policies, significant judgments and estimates as disclosed in our management’s discussion and analysis of financial condition and results of operations included in our 2023 10-K.

There have been no significant changes during the nine months ended September 30, 2024 to our critical accounting policies, significant judgments and estimates as disclosed in our management’s discussion and analysis of financial condition and results of operations included in our 2023 10-K.

Results of Operations

Our management’s discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with U.S.

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles, or GAAP.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30,

2024 2023 Change

(in thousands)

Three Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Change

(in thousands) (unaudited)

Product revenue, net $ 83,841 $ 8,556 $ 75,285 880 %

$ 70,284 $ — $ 70,284

Cost of goods sold 6,684 223 6,461 2897 %

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Selling, general and administrative 28,713 23,697 5,016 21 %

27,626 25,904 1,722

Litigation settlement 12,500 — 12,500 — %

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Income (loss) from operations 22,433 (25,993) 48,426 (186) %

8,566 (38,048) 46,614

Gain from sale of priority review voucher — 100,000 (100,000) (100) %

Interest and other income, net 7,336 6,740 596 9 %

Income (loss) before income taxes

Income before income taxes

29,769 80,747 (50,978) (63) %

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$ 27,180 $ 80,747 $ (53,567) (66) %

Net income (loss)

$ 15,568 $ (33,210) $ 48,778

Product Revenue, Net

Product revenue, net was $70.3 million for the three months ended June 30, 2024, as compared to zero for the three months ended June 30, 2023 due to sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

As VYJUVEK initial product sales revenue did not begin until the third quarter of 2023, there was no comparative period revenue.

Product revenue, net was $83.8 million for the three months ended September 30, 2024, as compared to $8.6 million for the three months ended September 30, 2023.

The increase in product revenue, net was driven by an increase in VYJUVEK sales following initial commercial sales recorded in August 2023.

Cost of Goods Sold

Cost of goods sold was $6.0 million for the three months ended June 30, 2024, as compared to zero for the three months ended June 30, 2023 due to sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

Cost of goods sold was $6.7 million for the three months ended September 30, 2024, as compared to $223 thousand for the three months ended September 30, 2023, due to increased sales of VYJUVEK following initial commercial sales recorded in August 2023.

Prior to receiving FDA approval for VYJUVEK in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense.

Research and Development Expenses

Research and development expenses increased $3.4 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Research and development expenses increased $2.9 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

The increase was primarily driven by the following:

• an increase in manufacturing expenses of $2.0 million related to our product candidates, including on-going manufacturing efficiency and process optimization costs for which such processes have not yet been approved by the FDA,

• an increase of $820 thousand in clinical development costs,

• an increase in depreciation of $621 thousand due to the Company's second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with commercial batches of VYJUVEK after FDA approval in May 2023 and

• an increase in other research and development expenses of $678 thousand primarily relating to licensing and regulatory costs.

The increases were partially offset by:

• a decrease of $407 thousand due to the capitalization of allocated overhead costs for commercial batches of VYJUVEK after FDA approval in May 2023 and

• a net decrease in direct manufacturing expenses of $269 thousand primarily due to the capitalization of costs to manufacture VYJUVEK into inventory following FDA approval.

• an increase of $1.8 million in clinical development costs,

• an increase of $1.5 million in other research and development expenses primarily relating to facilities and equipment related costs, and

• an increase of $636 thousand in manufacturing expenses related to our product candidates.

These increases were partially offset by:

• a decrease of $1.1 million due to the capitalization of allocated overhead costs, including facilities costs, for increased commercial batches of VYJUVEK.

Research and development expenses consist primarily of costs relating to our preclinical development, the development of our product candidates and our clinical trial programs.

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For example, we do not allocate costs associated with stock-based compensation, manufacturing of preclinical or clinical development products or costs relating to facilities and equipment to individual product candidates and preclinical programs.

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the three months ended June 30, 2024 and 2023.

Three Months Ended June 30,

2024 2023 Change

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the three months ended September 30, 2024 and 2023.

Three Months Ended September 30, Change

(in thousands) (unaudited)

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KB407 180 441 (261) (59) %

Ophthalmology programs

Other dermatology programs 21 16 5

612 340 272 80 %

KB707 3,312 1,265 2,047 162 %

180 — 180 — %

Other ophthalmology programs

303 9 294 3267 %

Other aesthetics programs 189 9 180 2000 %

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(2) Other unallocated expenses include rental, storage, depreciation, and other facility related costs that we do not allocate to our individual product candidates.

The primary changes in our research and development expenses by product candidate or program in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 are as follows:

• a net increase in B-VEC costs of $1.5 million largely due to the following:

◦ on-going manufacturing efficiency and process optimization costs for which such processes have not yet been approved by the FDA,

◦ an increase in overseas preclinical and clinical trial costs and

◦ overseas licensing and regulatory costs;

◦ partially offset by costs being to research and development expense prior to receiving FDA approval in May 2023 that are now included as part of the cost of inventory,

• an increase in KB707 costs of $827 thousand following the expansion of our research and development pipeline to oncology consisting of an increase in payroll related costs to support our research and an increase in contract research expenses in preparation for the Phase 1 clinical trial of inhaled KB707 that has now commenced,

• an increase in other aesthetics programs of $822 thousand,

• an increase in ophthalmology programs of $612 thousand, inclusive of $214 thousand for ophthalmic B-VEC and

• an increase in other unallocated expenses of $430 thousand, which largely relates to depreciation due to the Company's second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with commercial batches of VYJUVEK after its approval in May 2023.

The primary changes in our research and development expenses by product candidate or program in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 are as follows:

• an increase of $2.0 million in KB707 costs following the expansion of our research and development pipeline to oncology consisting of an increase in payroll related costs to support our research and an increase in contract research expenses for our Phase 1 clinical trial of inhaled KB707,

• an increase of $679 thousand in other unallocated expenses primarily driven by facilities and equipment related costs, and

• an increase of $441 thousand in KB105 costs to further advance this program.

The increases were partially offset by:

• a decrease in other unallocated manufacturing expenses of $1.2 million primarily due to costs related to the manufacturing of VYJUVEK being recorded as inventory and cost of goods sold following FDA approval.

• a net decrease of $504 thousand in B-VEC costs due to the timing of the manufacturing process optimization activities and

• a decrease of $460 thousand in other unallocated manufacturing expenses primarily due to the increased costs related to the manufacturing of VYJUVEK which are recorded as inventory and cost of goods sold, offset by an increase in facility related expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $1.7 million in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Selling, general and administrative expenses increased $5.0 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The increase was primarily driven by the following:

• an increase in stock-based compensation of $1.9 million,

• an increase related to professional services incurred to support our commercial growth of $938 thousand and

• an increase in selling expenses related to the launch of VYJUVEK of $909 thousand, which includes $184 thousand related to our patient access program.

• an increase of $5.1 million in stock-based compensation,

• an increase of $439 thousand related to professional services incurred to support our commercial growth, and

• an increase of $434 thousand in marketing costs to support commercial sales of VYJUVEK.

The increases were partially offset by:

• a decrease in marketing costs of $1.5 million due to the timing of marketing activities ahead of the VYJUVEK launch and

• a decrease in information technology infrastructure costs of $355 thousand.

• a decrease of $714 thousand in payroll related costs.

Litigation Settlement

Litigation settlement for the three months ended June 30, 2024 and 2023 was $12.5 million and zero, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

Litigation settlement for the three months ended September 30, 2024 and 2023 was $12.5 million and zero, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

See “Legal Proceedings” in Note 7 of the notes to condensed consolidated financial statements included in this Form 10-Q for more information.

Gain from Sale of Priority Review Voucher

Gain from sale of priority review voucher for the three months ended September 30, 2024 and 2023 was zero and $100.0 million, respectively, and consisted of amounts related to the sale of our rare pediatric disease PRV, which was awarded to the Company in connection with the FDA’s approval of VYJUVEK.

Interest and Other Income, Net

Interest and other income, net for the three months ended June 30, 2024 and 2023 was $7.5 million and $4.8 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

The increase in interest and dividend income is the result of increased investment activity and more favorable interest rates as compared to the prior period and an increase in our balance of cash, cash equivalents and investments.

Interest and other income, net for the three months ended September 30, 2024 and 2023 was $7.3 million and $6.7 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

The increase in interest and dividend income is the result of increased investment activity.

Income Tax Expense

Income tax expense for the three months ended June 30, 2024 and 2023 was $477 thousand and zero, respectively.

Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30,

2024 2023 Change

Income tax expense for the three months ended September 30, 2024 and 2023 was $2.6 million and zero, respectively, as a result of initial commercial sales of VYJUVEK recorded in August 2023.

Income tax expense for the three months ended September 30, 2024 relates to state, federal and foreign income taxes.

Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Change

(in thousands)

10 unchanged sentences

24,316 (112,865) 137,181 (122) %

Gain from sale of priority review voucher — 100,000 (100,000) (100) %

Interest and other income, net 22,430 15,105 7,325 48 %

Income (loss) before income taxes

Income before income taxes

46,746 2,240 44,506 1987 %

1 unchanged sentence

(3,066) — (3,066) — %

Net income (loss) $ 16,501 $ (78,507) $ 95,008

$ 43,680 $ 2,240 $ 41,440 1850 %

Products Revenue, net

Product revenue, net was $115.5 million for the six months ended June 30, 2024 as compared to zero for the six months ended June 30, 2023 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

As VYJUVEK was approved by the FDA in May 2023, there were no comparative period revenue.

Product revenue, net was $199.4 million for the nine months ended September 30, 2024 as compared to $8.6 million for the nine months ended September 30, 2023 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

Cost of Goods Sold

Cost of goods sold was $8.4 million for the six months ended June 30, 2024 as compared to zero for the six months ended June 30, 2023 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

Cost of goods sold was $15.1 million for the nine months ended September 30, 2024 as compared to $223 thousand for the nine months ended September 30, 2023 due to initial sales of VYJUVEK.

Prior to receiving FDA approval for VYJUVEK in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense.

Research and Development Expenses

Research and development expenses increased $2.1 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Research and development expenses increased $5.0 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The increase was primarily driven by the following:

• an increase in manufacturing expenses of $1.8 million related to our product candidates,

• an increase in clinical development costs of $983 thousand,

• an increase in depreciation of $893 thousand due to the Company's second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with commercial batches of VYJUVEK after FDA approval in May 2023 and

• an increase in other research and development expenses of $1.0 million primarily relating to licensing and regulatory costs.

• an increase of $2.8 million in clinical development costs,

• an increase of $2.4 million in manufacturing expenses related to our product candidates,

• an increase of $2.5 million in other research and development expenses primarily relating to licensing and regulatory costs and facilities and equipment related costs, and

• an increase of $1.0 million in depreciation due to the Company’s second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with increased commercial batches of VYJUVEK.

The increases were partially offset by:

• a decrease of $1.3 million due to the capitalization of allocated overhead costs for commercial batches of VYJUVEK after FDA approval in May 2023 partially offset by increased payroll related expenses, including stock-based compensation, primarily driven by an increase in headcount to support overall growth and

• a net decrease in direct manufacturing expenses of $1.2 million due to the capitalization of costs to manufacture VYJUVEK into inventory following FDA approval.

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

2024 2023 Change

(in thousands) (unaudited)

• a decrease of $2.4 million due to the capitalization of allocated overhead costs for increased commercial batches of VYJUVEK partially offset by increased payroll related expenses, including stock-based compensation, primarily driven by an increase in headcount to support overall growth and

• a net decrease of $1.3 million in direct manufacturing expenses due to the costs to manufacture VYJUVEK being capitalized into inventory and cost of goods sold.

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30, Change

2024 2023 $ %

(in thousands) (unaudited)

B-VEC $ 7,068 $ 6,337 $ 731 12 %

KB105 484 274 210 77 %

1 unchanged sentence

KB407 1,631 1,259 372 30 %

Ophthalmology programs

Other dermatology programs 35 257 (222)

KB408 1,107 749 358 48 %

KB707 6,469 2,633 3,836 146 %

394 — 394 — %

Other ophthalmology programs

801 8 793 9913 %

Other aesthetics programs 1,146 23 1,123 4883 %

9 unchanged sentences

(2) Other unallocated expenses include rental, storage, depreciation, and other facility related costs that we do not allocate to our individual product candidates.

The primary changes in our research and development expenses by product candidate or program in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 are as follows:

• an increase in KB707 costs of $1.7 million following the expansion of our research and development pipeline to oncology consisting of increase in payroll related costs to support our research and an increase in contract research expenses in preparation for the Phase 1 clinical trial of inhaled KB707that has now commenced,

• a net increase in B-VEC costs of $1.3 million largely due to:

The primary changes in our research and development expenses by product candidate or program in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 are as follows:

• an increase of $3.8 million in KB707 costs following the expansion of our research and development pipeline to oncology consisting of an increase in payroll related costs to support our research and an increase in contract research expenses in preparation for the Phase 1 clinical trial of inhaled KB707 that has now commenced,

• an increase of $1.1 million in other aesthetics programs,

• an increase of $1.1 million in other unallocated expenses, which largely relates to (1) depreciation due to the Company’s second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with increased commercial batches of VYJUVEK and (2) other facilities and equipment related costs,

• an increase of $793 thousand in other ophthalmology programs,

• a net increase of $731 thousand in B-VEC costs largely due to:

◦ on-going manufacturing efficiency and process optimization costs for which such processes have not yet been approved by the FDA,

◦ an increase in overseas preclinical and clinical trial costs, and

◦ overseas licensing and regulatory costs partially offset by costs being expensed to research and development expense prior to receiving FDA approval in May 2023 that are now included as part of the cost of inventory,

• an increase in other aesthetics programs of $944 thousand,

• an increase in ophthalmology programs of $712 thousand, inclusive of $214 thousand for ophthalmic B-VEC,

• an increase in KB407 costs of $632 thousand and

• an increase in other unallocated expenses of $343 thousand, which largely relates to depreciation due to the Company's second CGMP facility being placed into service in 2023 partially offset by the capitalization of depreciation associated with commercial batches of VYJUVEK after its approval in May 2023.

◦ overseas licensing and regulatory costs.

The increases were partially offset by:

• a decrease in other unallocated manufacturing expenses of $3.0 million primarily due to the costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and cost of goods sold and

• a decrease in stock-based compensation of $719 thousand due to the allocation of labor costs related to work performed to manufacture VYJUVEK to inventory following FDA approval.

◦ costs being expensed to research and development expense prior to receiving FDA approval in May 2023 that are now included as part of the cost of inventory,

• an increase of $469 thousand in other research programs,

• an increase of $394 thousand in KB803 costs, and

• an increase of $372 thousand in KB407 costs.

The increases were partially offset by:

• a decrease of $3.6 million in other unallocated manufacturing expenses primarily due to the increased costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and cost of goods sold and

• a decrease of $788 thousand in stock-based compensation due to the allocation of labor costs related to work performed to manufacture VYJUVEK to inventory.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $3.7 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Selling, general and administrative expenses increased $8.8 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increase was primarily driven by the following:

• an increase in selling expenses related to the launch of VYJUVEK of $3.0 million, which includes $1.7 million related to our patient access program,

• an increase related to professional services incurred to support our commercial growth of $1.7 million,

• an increase in stock-based compensation of $1.4 million and

• an increase in payroll related expenses of $1.0 million, which was primarily driven by an increase in headcount to support overall growth.

• an increase of $6.5 million in stock-based compensation,

• an increase of $3.3 million in selling expenses related to the commercial launch of VYJUVEK, which includes $1.5 million related to our patient access program, and

• an increase of $1.5 million related to professional services incurred to support our commercial growth.

The increases were partially offset by:

• a decrease in marketing costs of $2.5 million due to the timing of marketing activities ahead of the VYJUVEK launch and

• a decrease in information technology infrastructure costs of $436 thousand.

• a decrease of $2.0 million in marketing costs due to the timing of marketing activities ahead of the VYJUVEK commercial launch.

Litigation Settlement

Litigation settlement for the six months ended June 30, 2024 and 2023 was $25.0 million and $12.5 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

Litigation settlement for the nine months ended September 30, 2024 and 2023 was $37.5 million and $12.5 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

See “Legal Proceedings” in Note 7 of the notes to condensed consolidated financial statements included in this Form 10-Q for more information.

Gain from Sale of Priority Review Voucher

Gain from sale of priority review voucher for the nine months ended September 30, 2024 and 2023 was zero and $100.0 million, respectively, and consisted of amounts related to the sale of our rare pediatric disease PRV, which was awarded to the Company in connection with the FDA’s approval of VYJUVEK.

Interest and Other Income, Net

Interest and other income, net for the six months ended June 30, 2024 and 2023 was $15.1 million and $8.4 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

Interest and other income, net for the nine months ended September 30, 2024 and 2023 was $22.4 million and $15.1 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

Income Tax Expense

Income tax expense for the six months ended June 30, 2024 and 2023 was $477 thousand and zero, respectively.

Income tax expense for the nine months ended September 30, 2024 and 2023 was $3.1 million and zero, respectively, as a result of initial commercial sales of VYJUVEK recorded in August 2023.

Income tax expense for the nine months ended September 30, 2024 relates to state, federal and foreign income taxes.

Liquidity and Capital Resources

As of June 30, 2024, our cash, cash equivalents and short-term investments balance was approximately $559.6 million.

As of June 30, 2024, we had an accumulated deficit of $253.3 million.

We believe that our cash, cash equivalents and short-term investments as of June 30, 2024 will be sufficient to allow us to fund our operations for at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

As of September 30, 2024, our cash, cash equivalents and short-term investments balance was approximately $588.3 million.

As of September 30, 2024, we had an accumulated deficit of $226.1 million.

We believe that our cash, cash equivalents and short-term investments as of September 30, 2024 will be sufficient to allow us to fund our operations for at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

Our ability to continue to achieve operating profitability is dependent upon the continued successful commercialization of VYJUVEK and the successful development, approval, manufacturing, and commercialization of product candidates.

6 unchanged sentences

As we seek to obtain regulatory approval for our product candidates, we expect to continue to incur significant manufacturing and commercialization expenses as we prepare for product sales, marketing, commercial manufacturing, packaging, labeling and distribution.

Furthermore, pursuant to our settlement agreement with PeriphaGen, we will be required to pay three $12.5 million contingent milestone payments upon reporting $100.0 million in cumulative sales, $200.0 million in cumulative sales and $300.0 million in cumulative sales.

Furthermore, pursuant to our settlement agreement with PeriphaGen, we will be required to pay (1) a $6.25 million milestone payment as a result of reporting $100.0 million in cumulative sales during the second quarter of 2024 payable within 120 days following December 31, 2024, (2) a $12.5 million milestone payment as a result of reporting $200.0 million in cumulative sales during the third quarter of 2024 payable within 30 days following the filing by the Company of its Annual Report on Form 10-K for the year ended December 31, 2024 and (3) a $12.5 million contingent milestone payment within 30 days following the filing of its Annual Report on form 10-K that reports $300.0 million in cumulative sales.

Our funds may not be sufficient to enable us to conduct pivotal clinical trials for, seek marketing approval for or commercially launch our product candidates.

Accordingly, to obtain marketing approval for and to commercialize these or any other product

candidates, we may be required to obtain further funding through public or private equity offerings, debt financings, collaboration and licensing arrangements or other sources.

Accordingly, to obtain marketing approval for and to commercialize these or any other product candidates, we may be required to obtain further funding through public or private equity offerings, debt financings, collaboration and licensing arrangements or other sources.

Adequate additional financing may not be available to us on acceptable terms, if at all.

Our failure to raise capital when needed could have a negative effect on our financial condition and our ability to pursue our business strategy.

On May 8, 2023, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”) with respect to an at-the-market equity offering program (“ATM Program”), under which the Company may issue and sell from time to time through Cowen, acting as agent and/or principal, shares of its common stock having an aggregate offering price up to $150.0 million (“Placement Shares”).

The Placement Shares will be offered and sold pursuant to the Company’s effective shelf registration statement on Form S-3 filed with the SEC on April 6, 2023 (the “Form S-3”), and a prospectus supplement relating to the Placement Shares that was filed with the SEC on May 8, 2023.

We may terminate the ATM Program at any time upon 10 days’ notice to Cowen.

If not earlier terminated, the ATM Program will automatically terminate upon issuance of all of the Placement Shares or the expiration of the Form S-3 on April 6, 2026.

The ATM Program is not and has never been active.

2023 Private Placement Offering

On May 22, 2023 and May 23, 2023, the Company sold 1,720,100 and 9,629 shares of Common Stock, respectively, in a private placement to certain institutional investors at a price of $92.50 per share for aggregate net proceeds of $160.0 million.

In addition, the Company entered into a Registration Rights Agreement that required the Company to file a registration statement with the SEC within 60 days of the date of the Registration Rights Agreement registering the resale of the shares of Common Stock issued in the private placement.

On July 18, 2023, the Company filed the resale registration statement on Form S-3ASR with the SEC, which became effective upon filing.

Operating Capital Requirements

22 unchanged sentences

To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may be materially diluted and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders.

In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that

include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely affect our ability to conduct our business.

In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely affect our ability to conduct our business.

If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development or commercialization of our product candidates, seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, and relinquish or license, potentially on unfavorable terms, our rights to our product candidates that we otherwise would seek to develop or commercialize ourselves.

Sources and Uses of Cash

The following table summarizes our sources and uses of cash for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

The following table summarizes our sources and uses of cash for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(in thousands)

1 unchanged sentence

$ 70,577 $ (81,572)

Net cash (used in) investing activities

Net cash (used in) provided by investing activities

(79,661) 92,798

Net cash provided by financing activities

24,586 200,131

Effect of exchange rate changes on cash and cash equivalents 136 (16)

Net (decrease) increase in cash

Net increase in cash

$ 15,638 $ 211,341

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2024 was $11.7 million and consisted primarily of net income of $16.5 million adjusted for $22.2 million of non-cash items and a $27.0 million decrease in working capital.

Non-cash adjustments included depreciation of $3.3 million, amortization of operating lease right-of-use assets of $368 thousand, stock-based compensation expense of $22.5 million and other adjustments of $89 thousand, offset by realized gain on investments of $2.9 million and accretion on marketable securities of $1.1 million.

Net cash used in operating activities for the six months ended June 30, 2023 was $60.3 million and consisted primarily of net loss of $78.5 million adjusted for $21.2 million of non-cash items and a $3.0 million decrease in working capital.

Net cash provided by operating activities for the nine months ended September 30, 2024 was $70.6 million and consisted primarily of net income of $43.7 million adjusted for $35.7 million of non-cash items and a $8.8 million increase in working capital.

Non-cash adjustments included depreciation of $4.6 million, amortization of operating lease right-of-use assets of $556 thousand, stock-based compensation expense of $35.8 million and other adjustments of $725 thousand, offset by realized gain on investments of $4.4 million and accretion on marketable securities of $1.5 million.

Net cash used in operating activities for the nine months ended September 30, 2023 was $81.6 million and consisted primarily of net income of $2.2 million adjusted for $71.3 million of non-cash items and a $12.5 million increase in working capital.

Non-cash adjustments included gain from sale of priority review voucher of $100.0 million, realized gain on investments of $3.9 million, accretion on marketable securities of $1.6 million and other adjustments of $77 thousand, partially offset by depreciation of $3.5 million, amortization of operating lease right-of-use assets of $671 thousand and stock-based compensation expense of $30.1 million.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2024 was $45.3 million and consisted of $201.7 million in purchases of short-term and long-term investments and $2.4 million in purchases of property and equipment, partially offset by $158.8 million received from the maturities and early calls of short- and long-term investments.

Net cash used in investing activities for the six months ended June 30, 2023 was $12.4 million and consisted of $320.0 million in purchases of short-term and long-term investments and $8.2 million in purchases of property and equipment, partially offset by $315.7 million received from the maturities of short-term investments.

Net cash used in investing activities for the nine months ended September 30, 2024 was $79.7 million and consisted of $314.3 million in purchases of short-term and long-term investments and $3.4 million in purchases of property and equipment, partially offset by $238.0 million received from the maturities and early calls of short- and long-term investments.

Net cash provided by investing activities for the nine months ended September 30, 2023 was $92.8 million and consisted of $428.6 million received from the maturities of short-term investments and $100.0 million received from gain from sale of priority review voucher, partially offset by $425.9 million in purchases of short-term and long-term investments and $10.0 million in purchases of property and equipment.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2024 was $21.2 million and consisted of proceeds of $26.6 million from exercises of stock options, partially offset by $4.2 million used for employee tax withholding payments related to vested restricted stock units and $1.2 million used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the six months ended June 30, 2023 was $186.7 million and consisted of proceeds of $159.8 million from issuances of common stock, proceeds of $27.7 million from exercises of stock options, partially offset by $749 thousand used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $24.6 million and consisted of proceeds of $30.0 million from exercises of stock options, partially offset by $4.2 million used for employee tax withholding payments related to vested restricted stock units and $1.2 million used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the nine months ended September 30, 2023 was $200.1 million and consisted of proceeds of $159.7 million from issuances of common stock, proceeds of $41.2 million from exercises of stock options, partially offset by $749 thousand used for employee tax withholding payments for settlement of vested restricted stock awards.

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-Q

Item 2. Management’s Discussion and Analysis