What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-04 compared with 2025-05-06 · 127 added, 85 removed, 407 unchanged (34% of the section changed)

32 unchanged sentences

$ 0.00001 par value;

80,000 shares authorized as of March 31, 2025 and December 31, 2024;

28,899 and 28,794 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.

80,000 shares authorized as of June 30, 2025 and December 31, 2024;

28,927 and 28,794 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

Additional paid-in capital 1,146,092 1,127,238

Accumulated other comprehensive gain (loss)

1,157 ( 190 )

Accumulated deficit ( 106,602 ) ( 180,668 )

5 unchanged sentences

Krystal Biotech, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended March 31,

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended June 30, Six Months Ended June 30, 2025

(in thousands, except per share data)

2025 2024 2025 2024

Product revenue, net

7 unchanged sentences

Total operating expenses 56,735 61,718 108,742 113,652

Income (loss) from operations

Income from operations

39,307 8,566 75,483 1,883

1 unchanged sentence

Income before income taxes

46,775 16,045 90,372 16,978

Income tax expense

( 8,442 ) ( 477 ) ( 16,305 ) ( 477 )

Net income 38,333 15,568 74,067 16,501

Unrealized gain (loss) on available-for-sale securities and other

Comprehensive income (loss)

Unrealized (loss) gain on available-for-sale securities

( 158 ) ( 252 ) 186 ( 1,127 )

Foreign currency translation

925 ( 83 ) 1,161 ( 145 )

Comprehensive income

$ 39,100 $ 15,233 $ 75,414 $ 15,229

Net income per common share:

17 unchanged sentences

Stock-based compensation — — 14,447 — 14,447

Unrealized gain on investments and other (1)

Unrealized gain on investments

— — — 344 — 344

Foreign currency translation

— — — 236 — 236

Net income — — — — 35,733 35,733

1 unchanged sentence

28,899 $ — $ 1,129,219 $ 390 $ ( 144,935 ) $ 984,674

Issuance of common stock upon exercise of stock options 28 — 1,796 — — 1,796

Stock-based compensation — — 15,077 — — 15,077

Unrealized loss on investments

— — — ( 158 ) — ( 158 )

Foreign currency translation

— — — 925 — 925

— — — — 38,333 38,333

Balances as of June 30, 2025 28,927 $ — $ 1,146,092 $ 1,157 $ ( 106,602 ) $ 1,040,647

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity

8 unchanged sentences

Stock-based compensation — — 10,023 — — 10,023

Unrealized (loss) on investments and other (1)

Unrealized (loss) on investments

— — — ( 875 ) — ( 875 )

Foreign currency translation

— — — ( 62 ) ( 62 )

— — — — 932 932

Balances as of March 31, 2024

28,528 $ — $ 1,068,436 $ ( 299 ) $ ( 268,895 ) $ 799,242

(1) Includes foreign currency translation gain of $ 236 thousand and loss of $ 62 thousand for the three months ended March 31, 2025 and 2024, respectively.

Issuance of common stock upon exercise of stock options 181 — 10,637 — — 10,637

Stock-based compensation — — 13,781 — — 13,781

Unrealized (loss) on investments

— — — ( 252 ) — ( 252 )

Foreign currency translation

— — — ( 83 ) — ( 83 )

— — — — 15,568 15,568

Balances as of June 30, 2024 28,709 $ — $ 1,092,854 $ ( 634 ) $ ( 253,327 ) $ 838,893

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2025 2024

1 unchanged sentence

$ 74,067 $ 16,501

Adjustments to reconcile net income to net cash provided by (used in) operating activities

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation 2,759 3,262

Accretion on marketable securities ( 453 ) ( 802 )

Amortization (accretion) on marketable securities

464 ( 1,104 )

Amortization of operating lease right-of-use assets 418 368

11 unchanged sentences

Accrued rebates

14,834 15,756

Accrued litigation settlement ( 31,250 ) 25,000

18 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 1,230 ( 150 )

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

8,964 ( 12,542 )

6 unchanged sentences

Income taxes paid

$ 13,858 $ 2,002

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

In April 2019, we incorporated Jeune Aesthetics, Inc.

(“Jeune Aesthetics”), in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

(“Jeune Aesthetics”), a wholly-owned subsidiary, in Delaware, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

In January 2022, August 2022, December 2022, August 2023, March 2024, November 2024, and December 2024 we incorporated wholly-owned subsidiaries in Switzerland, Netherlands, France, Germany, Japan, Italy, and Spain, respectively, for the purpose of establishing initial operations in Europe and Japan for the commercialization of VYJUVEK ® and our product pipeline.

4 unchanged sentences

Our innovative technology platform is supported by two in-house, commercial scale Current Good Manufacturing Practice (“CGMP”) manufacturing facilities.

As of March 31, 2025, the Company had an accumulated deficit of $ 144.9 million.

Our continued operating profitability is dependent upon the continued successful commercialization of VYJUVEK, our FDA and EMA approved product, as well as successful development, approval and commercialization of our product candidates.

Management intends to fund future operations through its on hand cash and cash equivalents, revenue generated from the sale of VYJUVEK and the sale of equity, and may also seek additional capital through arrangements with strategic partners, debt financings or other sources.

There can be no assurance that additional funding will be available on terms acceptable to the Company, if at all.

As of June 30, 2025, the Company had an accumulated deficit of $ 106.6 million.

Our operating profitability is dependent upon the continued successful commercialization of VYJUVEK, our U.S.

Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”), and Japan’s Ministry of Health, Labour, and Welfare (“MHLW”) approved product, as well as successful development, approval and commercialization of our product candidates.

Management intends to fund future operations through its on hand cash and cash equivalents and revenue generated from the sale of VYJUVEK, and may also seek additional capital through arrangements with strategic partners, the sale of equity, debt financings or other sources.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to the failure of product candidates in clinical and preclinical studies, the development of competing product candidates or other technological innovations by competitors, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to commercialize product candidates.

The Company expects to incur significant costs to further its pipeline and to expand its commercialization capabilities in advance of the potential global regulatory approvals of VYJUVEK.

The Company believes that its cash, cash equivalents and short-term investments of approximately $ 616.8 million as of March 31, 2025 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

The Company expects to incur significant costs to further its pipeline and to expand its commercialization capabilities in advance of further potential global regulatory approvals of VYJUVEK.

The Company believes that its cash, cash equivalents and short-term investments of approximately $ 682.0 million as of June 30, 2025 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

Summary of Significant Accounting Policies

1 unchanged sentence

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

In the opinion of management, all adjustments, which consist of all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods presented, are reflected in the interim condensed consolidated financial statements.

All intercompany balances and transactions have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The reclassified amounts have no impact on the Company’s previously reported financial position or results of operations.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

2 unchanged sentences

Use of Estimates

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

accompanying notes.

Actual results could materially differ from those estimates.

2 unchanged sentences

In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends.

The estimation process often may yield a range of potentially

reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates.

The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates.

If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates in the period these variances become known.

3 unchanged sentences

See Note 2 to our consolidated financial statements included in our 2024 10-K.

There were no material changes to the Company’s significant accounting policies during the three months ended March 31, 2025.

There were no material changes to the Company’s significant accounting policies during the six months ended June 30, 2025.

Recently Issued Accounting Pronouncements, Not Yet Adopted

There were no accounting pronouncements issued or adopted during the three months ended March 31, 2025 that are expected to have a material impact on the Company’s condensed consolidated financial statements.

There were no accounting pronouncements issued or adopted during the six months ended June 30, 2025 that are expected to have a material impact on the Company’s condensed consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 Income Taxes (Topic 740):

3 unchanged sentences

This new standard will be effective for fiscal years starting after December 15, 2024, with the option to apply it retrospectively.

Early adoption is also allowed.

Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.

6 unchanged sentences

Product Revenue, Accounts Receivable and Reserves for Product Sales

The Company’s product revenue, net of sales discounts and allowances totaled $ 88.2 million and $ 45.3 million for the quarters ended March 31, 2025 and March 31, 2024 respectively.

The Company’s accounts receivable, net balance relating to VYJUVEK sales was $ 103.3 million as of March 31, 2025 and $ 104.7 million as of December 31, 2024.

Accounts receivable, net from the Company’s customers who individually accounted for 10% or more of accounts receivable, net consisted of the following:

Percent of Accounts Receivable, Net

Three Months Ended March 31,

All other customers represent less than 10% of outstanding in the applicable period.

The following table summarizes changes in allowances and discounts for the three months ended March 31, 2025:

The Company’s product revenue, net of sales discounts and allowances totaled $ 96.0 million and $ 70.3 million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ 184.2 million and $ 115.5 million for the six months ended June 30, 2025 and June 30, 2024 respectively.

The Company’s accounts receivable, net balance relating to VYJUVEK sales was $ 111.4 million as of June 30, 2025 and $ 104.7 million as of December 31, 2024.

As of June 30, 2025 and December 31, 2024, approximately 78 % and 97 %, respectively, of the Company’s accounts receivable, net was outstanding from a single customer.

All other single customers represent less than 10% of outstanding in the applicable period.

The following table summarizes changes in allowances and discounts for the six months ended June 30, 2025:

(in thousands) Rebates Prompt Pay Other Accruals Total

3 unchanged sentences

Payments/Credits ( 14,716 ) ( 4,362 ) ( 261 ) ( 19,339 )

Balance as of March 31, 2025

Balance as of June 30, 2025

$ 54,425 $ 4,453 $ 322 $ 59,200

Rebates are included in accrued rebates and other long-term liabilities on the condensed consolidated balance sheets.

Other long-term liabilities are comprised of $ 2.0 million of long-term accrued rebates.

Other long-term liabilities are comprised of $ 2.8 million and $ 1.4 million of long-term accrued rebates as of June 30, 2025 and December 31, 2024, respectively.

Prompt pay is recorded as an allowance against accounts receivable, net on the condensed consolidated balance sheets.

Other accruals are included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Provisions for rebates, prompt pay and other accruals are recorded as a reduction to product revenue, net on the condensed consolidated statements of operations and comprehensive income (loss).

Provisions for rebates, prompt pay and other accruals are recorded as a reduction to product revenue, net on the condensed consolidated statements of operations and comprehensive income.

Net Income Per Share Attributable to Common Stockholders

2 unchanged sentences

Common stock equivalents consist of common stock issuable upon (1) exercise of stock options and (2) vesting of restricted stock awards, restricted stock units and performance-based restricted stock units (collectively, “restricted stock”).

For the three months ended March 31, 2025 and 2024, respectively, there were 413 thousand and 154 thousand common stock equivalents outstanding in the form of stock options and 48 thousand and 78 thousand in unvested restricted stock, that have been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

Three Months Ended March 31,

For the three months ended June 30, 2025 and 2024, respectively, there were 604 thousand and 215 thousand common stock equivalents outstanding in the form of stock options and 275 thousand and 2 thousand in unvested restricted stock, that have been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

For the six months ended June 30, 2025 and 2024, respectively, there were 520 thousand and 169 thousand common stock equivalents outstanding in the form of stock options and 89 thousand and 1 thousand in unvested restricted stock, that have each been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

Three Months Ended June 30, Six Months Ended

(in thousands, except per share data)

2025 2024 2025 2024

$ 38,333 $ 15,568 $ 74,067 $ 16,501

Weighted-average basic common shares

7 unchanged sentences

Fair Value Instruments

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of March 31, 2025 and December 31, 2024:

March 31, 2025

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of June 30, 2025 and December 31, 2024:

June 30, 2025

(in thousands)

46 unchanged sentences

Leasehold improvements 27,487 25,673

Construction in progress

Laboratory equipment 3,546 3,183

Construction in progress

Computer equipment and software 2,514 2,032

3 unchanged sentences

Property and equipment, net $ 150,388 $ 155,168

Depreciation expense was $ 1.4 million and $ 1.4 million for the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense capitalized into inventory was $ 965 thousand and $ 867 thousand for the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense was $ 1.3 million and $ 1.8 million for the three months ended June 30, 2025 and 2024, respectively, and $ 2.8 million and $ 3.3 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Depreciation expense capitalized into inventory was $ 1.1 million and $ 559 thousand for the three months ended June 30, 2025 and 2024, respectively, and $ 2.0 million and $ 1.4 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of March 31, 2025 and December 31, 2024:

Accrued expenses and other current liabilities consisted of the following as of June 30, 2025 and December 31, 2024:

(in thousands)

3 unchanged sentences

Accrued payroll and benefits 5,107 9,558

Other current liabilities 3,388 2,403

Accrued preclinical and clinical expenses 3,322 2,537

Accrued construction in progress

Other current liabilities 2,173 2,403

Accrued inventory 1,288 1,217

Accrued construction in progress

Accrued litigation settlement — 31,250

6 unchanged sentences

Refer to Note 7 of our consolidated financial statements in our 2024 10-K for additional information.

The Company recorded litigation settlement expense of zero and $ 12.5 million for the three months ended March 31, 2025 and 2024, respectively, on the condensed consolidated statements of operations and comprehensive income (loss).

At December 31, 2024, the Company had recorded $ 31.25 million within accrued expenses and other current liabilities on the consolidated balance sheet.

During the three months ended March 31, 2025 and 2024, respectively, the Company paid $ 31.25 million and zero , and as such, the Company has fully paid the $ 75.0 million of total consideration discussed above.

The Company recorded litigation settlement expense of zero and $ 12.5 million for the three months ended June 30, 2025 and 2024, respectively, and zero and $ 25.0 million for the six months ended June 30, 2025 and 2024, respectively on the condensed consolidated statements of operations and comprehensive income.

As of March 31, 2025, the Company has fully paid the $ 75.0 million of total consideration discussed above.

Commitments and Contingencies

5 unchanged sentences

The Company may also be responsible for the payment of a monthly service fee for project management services for the duration of any agreements.

The estimated remaining commitments as of March 31, 2025 under these agreements was approximately $ 414 thousand.

The Company has incurred research and development expenses related to commitments under these agreements of $ 2.2 million for the three months ended March 31, 2025 and $ 1.5 million for the three months ended March 31, 2024.

The estimated remaining commitments as of June 30, 2025 under these agreements was approximately $ 507 thousand.

The Company has incurred research and development expenses related to commitments under these agreements of $ 2.2 million and $ 4.3 million for the three and six months ended June 30, 2025, respectively, and $ 1.0 million and $ 2.5 million for the three and six months ended June 30, 2024, respectively.

Contingencies

6 unchanged sentences

It is not possible to estimate the amount of any loss or range of possible loss that might result from this inquiry, and because the final outcome cannot be predicted with certainty, unfavorable or unexpected developments or outcomes could result in a material impact to the Company’s results of operations.

As of March 31, 2025, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows:

As of June 30, 2025, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows:

(in thousands)

Operating Leases

2025 (remaining nine months) $ 1,127

2025 (remaining six months) $ 783

Thereafter 9,227

2 unchanged sentences

Present value of lease liability $ 9,681

As of March 31, 2025 and December 31, 2024, the Company’s weighted-average remaining lease term for operating leases was 10.6 years and 12.2 years, respectively, and the Company’s weighted-average discount rate for operating leases was 9.6 % and 9.5 % as of March 31, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the Company’s weighted-average remaining lease term for operating leases was 10.4 years and 12.2 years, respectively, and the Company’s weighted-average discount rate for operating leases was 9.7 % and 9.5 % as of June 30, 2025 and December 31, 2024, respectively.

The components of the Company’s lease expense are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

8 unchanged sentences

The Company has historically granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs” and with RSUs commonly referred to collectively as “restricted stock units”) to certain employees.

Shares remaining available for grant under the Plan were 2.0 million as of March 31, 2025.

Shares remaining available for grant under the Plan were 2.0 million as of June 30, 2025.

Stock Options

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2025:

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2025:

Stock Options Outstanding Weighted-Average Exercise Price

7 unchanged sentences

Cancelled or forfeited ( 63,985 ) $ 105.98

Outstanding as of March 31, 2025

Outstanding as of June 30, 2025

2,275,288 $ 94.68 7.1 $ 117,142

Exercisable as of March 31, 2025

Exercisable as of June 30, 2025

1,255,141 $ 70.95 6.2 $ 85,882

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2024 and March 31, 2025 and the exercise price of outstanding in-the-money options.

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024:

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2024 and June 30, 2025 and the exercise price of outstanding in-the-money options.

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2024:

Stock Options Outstanding Weighted-Average Exercise Price

7 unchanged sentences

Cancelled or forfeited ( 321,134 ) $ 68.85

Outstanding as of March 31, 2024

Outstanding as of June 30, 2024

2,071,613 $ 77.65 7.7 $ 219,580

Exercisable as of March 31, 2024

Exercisable as of June 30, 2024

818,577 $ 62.85 6.9 $ 98,872

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2023 and March 31, 2024 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised was $ 1.4 million and $ 24.5 million during the three months ended March 31, 2025 and 2024, respectively.

The weighted-average grant-date fair value per share of options granted to employees, non-employees, and directors was $ 116.88 and $ 106.92 during the three months ended March 31, 2025 and 2024, respectively.

There was $ 76.1 million of unrecognized stock-based compensation expense related to employees’, non-employees’, and directors’ options that is expected to be recognized over a weighted-average period of 2.9 years as of March 31, 2025.

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2023 and June 30, 2024 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised was $ 2.0 million and $ 19.8 million during the three months ended June 30, 2025 and 2024, respectively, and $ 3.4 million and $ 44.3 million for the six months ended June 30, 2025 and 2024, respectively.

The weighted-average grant-date fair value per share of options granted to employees and directors was $ 87.69 and $ 112.05 during the three months ended June 30, 2025 and 2024, respectively, and $ 109.93 and $ 109.18 for the six months ended June 30, 2025 and 2024, respectively.

There was $ 71.4 million of unrecognized stock-based compensation expense related to employees’ and directors’ options that is expected to be recognized over a weighted-average period of 2.8 years as of June 30, 2025.

Restricted Stock Awards

The following table summarizes the Company’s RSA activity:

Three Months Ended March 31,

Six Months Ended June 30,

Number of Shares Weighted-Average Grant Date Fair Value

8 unchanged sentences

The following table summarizes the Company’s RSU activity:

Three Months Ended March 31,

Six Months Ended June 30,

Number of Shares Weighted-Average Grant Date Fair Value

7 unchanged sentences

338,878 $ 153.01 316,401 $ 135.14

There was $ 51.8 million of unrecognized stock-based compensation expense related to employees’ RSU awards that is expected to be recognized over a weighted-average period of 3.3 years as of March 31, 2025.

There was $ 46.4 million of unrecognized stock-based compensation expense related to employees’ RSU awards that is expected to be recognized over a weighted-average period of 3.0 years as of June 30, 2025.

Performance-Based Restricted Stock Units

The following table summarizes the Company’s PSU activity:

Three Months Ended March 31,

Six Months Ended June 30,

Number of Shares Weighted-Average Grant Date Fair Value

6 unchanged sentences

56,250 $ 159.47 137,500 $ 145.37

PSUs vest ratably over two years based upon continued service through the vesting date and the achievement of specific regulatory and commercial performance criteria as determined by the Compensation Committee of the Company’s Board of Directors and were met by the end of the year in which the PSU awards were granted.

There was $ 8.2 million of unrecognized stock-based compensation expense related to employees’ PSU awards that is expected to be recognized over a weighted-average period of 0.9 years as of March 31, 2025.

PSUs vest ratably over two years based upon continued service through the vesting date and the achievement of specific regulatory and commercial performance criteria as determined by the Compensation Committee of the Company’s Board of Directors which were met by the end of the year in which the PSU awards were granted.

There was $ 6.0 million of unrecognized stock-based compensation expense related to employees’ PSU awards that is expected to be recognized over a weighted-average period of eight months as of June 30, 2025.

Stock-Based Compensation Expense, Net

The Company recorded stock-based compensation expense, net related to its stock options, RSAs, RSUs and PSUs in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2025 and 2024 as follows:

Three Months Ended March 31,

The Company recorded stock-based compensation expense, net related to its stock options and restricted stock in the condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2025 and 2024 as follows:

Three Months Ended June 30, Six Months Ended

(in thousands) 2025 2024 2025 2024

2 unchanged sentences

Total stock-based compensation $ 14,119 $ 13,156 $ 27,597 $ 22,455

The Company capitalized stock-based compensation associated with the allocation of labor costs related to work performed to manufacture VYJUVEK of $ 969 thousand and $ 724 thousand for the three months ended March 31, 2025 and 2024.

The Company recorded an income tax provision of $ 7.9 million for the three months ended March 31, 2025.

The Company capitalized stock-based compensation associated with the allocation of labor costs related to work performed to manufacture VYJUVEK of $ 958 thousand and $ 625 thousand for the three months ended June 30, 2025 and 2024, respectively, and $ 1.9 million and $ 1.3 million for the six months ended June 30, 2025 and 2024, respectively.

The Company recorded an income tax provision of $ 8.4 million and $ 16.3 million for the three and six months ended June 30, 2025.

The tax provision for interim periods is calculated using an estimate of the annual effective tax rate, adjusted for discrete items.

If there are any changes to the estimated annual tax rate, the Company will make a cumulative adjustment to the income tax provision in the period the change becomes known.

The Company did not record an income tax provision for the three months ended March 31, 2024 as it generated sufficient tax losses, after consideration of discrete items, during the period.

At March 31, 2025, the Company maintains a full valuation allowance against its net deferred tax assets.

The Company recorded an income tax provision of $ 477 thousand for the three and six months ended June 30, 2024.

At June 30, 2025, the Company maintains a full valuation allowance against its net deferred tax assets.

Segment Information

2 unchanged sentences

The CODM uses consolidated gross margin, operating margin, net income and total research and development expenses by product candidate or program to assess performance, forecast future financial results and to allocate resources.

The following table presents selected financial information with respect to the Company’s single operating segment for the quarters ended March 31, 2025, and 2024:

The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025, and 2024:

Three Months Ended

(in thousands) 2025 2024

Six Months Ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Product revenue, net

1 unchanged sentence

Cost of goods sold 7,165 6,009 12,193 8,428

93 % 91 % 93 % 93 %

B-VEC 2,378 3,594 4,353 5,815

3 unchanged sentences

KB408 219 249 516 495

KB707 2,413 1,770 5,147 3,156

426 155 879 205

KB803 408 214 894 214

Other dermatology programs 706 21 744 35

Other aesthetics programs — 3

Other ophthalmology programs 15 243 42 293

2 unchanged sentences

Other research and development costs (1)

6,506 6,992 13,503 12,465

Total research and development

3 unchanged sentences

Litigation settlement

Income (loss) from operations

— 12,500 — 25,000

Income from operations

$ 39,307 $ 8,566 $ 75,483 $ 1,883

Interest and other income, net

7,468 7,479 14,889 15,095

Income before income taxes

2 unchanged sentences

$ ( 8,442 ) $ ( 477 ) $ ( 16,305 ) $ ( 477 )

$ 38,333 $ 15,568 $ 74,067 $ 16,501

(1) Includes stock-based compensation, other manufacturing expenses related to our product candidates and other unallocated expenses which largely relates to depreciation and other facilities and equipment related costs .

Subsequent Events

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States.

This legislation includes changes to U.S.

federal tax law, which may be subject to further clarification and the issuance of interpretive guidance.

The Company is currently in the process of assessing the legislation and its effect on our consolidated financial statements, which we expect to account for in the applicable period.

The Company evaluates events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements, to identify matters that require recognition or disclosure.

The Company concluded that no subsequent events have occurred, that would require recognition or disclosure in the condensed consolidated financial statements.

The Company concluded that no additional subsequent events have occurred, that would require recognition or disclosure in the condensed consolidated financial statements except as discussed above.

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 1. Financial Statements