What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-04 compared with 2025-05-06 · 205 added, 143 removed, 198 unchanged (64% of the section changed)

6 unchanged sentences

Forward-looking statements appearing in a number of places throughout this Quarterly Report on Form 10-Q include, but are not limited to, statements about the following, among other things:

• our commercialization plans in the United States and the European Union (“EU”) for our first commercial product, VYJUVEK ® (beremagene geperpavec-svdt) , which was approved by the U.S.

Food and Drug Administration (“FDA”) in May 2023 and the European Medicines Agency (“EMA”) in April 2025 for the treatment of dystrophic epidermolysis bullosa (“DEB”);

• the timing, scope;

or results of our regulatory filings and potential approval for a marketing authorization for B-VEC in Japan;

• our plans and expected timing of commercial launch of B-VEC in Europe and Japan;

• our commercialization plans in the United States, the European Union (“EU”), and Japan for our first commercial product, VYJUVEK ® (beremagene geperpavec-svdt) , which was approved by the U.S.

Food and Drug Administration (“FDA”) in May 2023, the European Commission (“EC”) in April 2025, and Japan’s Ministry of Health, Labour and Welfare (“MHLW”) in July 2025 for the treatment of dystrophic epidermolysis bullosa (“DEB”);

• our plans and expected timing of commercial launch of VYJUVEK in Europe and Japan;

• our plans for commercialization of B-VEC outside of the United States, major European markets, and Japan;

• the commercial success of B-VEC outside the U.S.;

• the initiation, timing, progress, and results of clinical trials for KB407, KB408, KB707 (intratumoral and inhaled), KB105, KB803, KB801, KB301, KB304, and any other product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and the timing of our disclosure of study data;

• the timing, scope or results of regulatory filings and approvals, marketing and other regulatory approval of our product candidates;

• our ability to achieve certain accelerated or orphan drug designations from the FDA or other regulators;

• our estimates regarding the potential market opportunity for our product candidates;

• our research and development programs for our product candidates;

• our plans and arbility to successfully identify, develop and commercialize our product candidates;

• our beliefs about our proprietary HSV-1 based vector platform, including its ability to deliver multiple genes and other effectors, which could enable development of therapies for more common conditions that are not necessarily the result of an inherited genetic defects;

• the initiation, timing, progress, and results of clinical trials for our product candidates;

• the timing of regulatory filings;

• our expectations regarding revenue, research and development expenses, selling, general and administrative expenses, and our primary uses of capital;

• our plans and ability to successfully identify, develop and commercialize our product candidates;

• our commercialization, marketing, and manufacturing capabilities and strategy;

• the scalability and commercial viability of our proprietary manufacturing methods and processes;

• our business model and strategic plans for our business, product candidates and technology.

• the rate and degree of market acceptance and clinical utility of VYJUVEK and our product candidates and gene therapy, in general;

• our competitive position;

• our intellectual property position and our ability to protect and enforce our intellectual property;

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

• the impact of laws and regulations and potential changes thereto;

• any statements regarding U.S.

or global economic conditions and the impact on our business, or performance and any statement of assumptions underlying any of the foregoing.

Forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Item 1A of Part II of this Quarterly Report on Form 10-Q and other filings we make with the SEC from time to time.

7 unchanged sentences

Throughout this Quarterly Report on Form 10-Q, unless the context requires otherwise, all references to “Krystal,” “the Company,” “we,” “our,” “us” or similar terms refer to Krystal Biotech, Inc., together with its consolidated subsidiaries.

Web links throughout this document are provided for convenience only and are not intended to be active hyperlinks to the referenced websites.

Web links throughout this document are provided for convenience only and are not intended to be active hyperlinks to the

referenced websites.

No content on the referenced websites shall be deemed incorporated by reference into this Quarterly Report on Form 10-Q.

4 unchanged sentences

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

Our FDA and EMA Approved Commercial Product

Our Commercial Product

VYJUVEK (beremagene geperpavec-svdt, or B-VEC;

referred to as B-VEC outside the U.S.

VYJUVEK is a non-invasive, topical, redosable gene therapy approved in the United States and Europe for the treatment of dystrophic epidermolysis bullosa (“DEB”), a rare and severe monogenic disease that affects the skin and mucosal tissues and is caused by one or more mutations in a gene called COL7A1 .

referred to as B-VEC outside the U.S., Europe, and Japan)

VYJUVEK is a non-invasive, topical, redosable gene therapy approved in the United States, Europe, and Japan for the treatment of dystrophic epidermolysis bullosa (“DEB”), a rare and severe monogenic disease that affects the skin and mucosal tissues and is caused by one or more mutations in a gene called COL7A1 .

VYJUVEK is designed to deliver two copies of the COL7A1 gene when applied directly to DEB wounds, providing the patient’s skin cells the template to make normal type VII collagen protein and thereby addressing the fundamental disease-causing mechanism.

On April 23, 2025, the European Commission (“EC”) granted marketing authorization to VYJUVEK for the treatment of wounds in patients with DEB who have mutations in the COL7A1 gene, starting from birth.

VYJUVEK is the only corrective medicine approved in Europe for the treatment of DEB wounds.

The approval granted by the EC allows for flexible VYJUVEK dosing either at home or in a healthcare setting, with the option for patient or caregiver administration if deemed appropriate by a healthcare professional (“HCP”).

Previously, in May 2023, the United States Food and Drug Administration (“FDA”) approved VYJUVEK, the first ever redosable gene therapy, for the treatment of wounds in patients, six months of age or older, suffering from DEB.

On July 24, 2025, Japan’s MHLW approved VYJUVEK for the treatment of patients with DEB, starting from birth.

With this approval, VYJUVEK is now the first and only genetic medicine approved in Japan for the treatment of DEB.

The Japanese approval allows for dosing at home or in a healthcare setting, with the option for administration by patients or their family members.

As per the approval issued by the MHLW, VYJUVEK is intended for use only in patients with a definite diagnosis of dystrophic epidermolysis bullosa.

Genetic testing is not a requirement for treatment.

The re-examination period for VYJUVEK in Japan is ten years.

VYJUVEK was also approved in Europe earlier this year.

On April 23, 2025, the EC granted marketing authorization to VYJUVEK for the treatment of wounds in patients with DEB who have mutations in the COL7A1 gene, starting from birth.

VYJUVEK is currently the only corrective medicine approved in Europe for the treatment of DEB wounds.

The approval granted by the EC also allows for flexible VYJUVEK dosing either at home or in a healthcare setting, with the option for patient or caregiver administration if deemed appropriate by a healthcare professional (“HCP”).

Previously, in May 2023, the FDA approved VYJUVEK, the first ever redosable gene therapy, for the treatment of wounds in patients, six months of age or older, suffering from DEB.

VYJUVEK is the first and only corrective medicine approved by the FDA for the treatment of both recessive and dominant subtypes of DEB, and is approved in the United States for administration by a HCP in either a clinical setting or in the home.

We possess exclusive rights to develop, manufacture, and commercialize VYJUVEK and all our pipeline candidates throughout the world and intend to commercialize VYJUVEK directly in the United States, major European markets, and

We currently sell VYJUVEK to a limited number of specialty pharmacy (“SP”) providers that mix the medication to be administered by a HCP in either a healthcare or home setting and to a limited number of hospitals or specialty distributors (“SDs”) who deliver to hospitals where patients are administered the medication in a healthcare setting.

We currently sell VYJUVEK in the United States to a limited number of specialty pharmacy providers that mix the medication to be administered by a HCP in either a healthcare or home setting and to a limited number of hospitals or specialty distributors who deliver to hospitals where patients are administered the medication in a healthcare setting.

We intend to and have started entering into distribution arrangements with specialty distributors to commercialize VYJUVEK outside of the United States, in major European markets, and in Japan.

Net VYJUVEK product revenue was $88.2 million for the three months ended March 31, 2025, and $429.4 million in cumulative net product revenue since launch.

Gross margin for the three months ended March 31, 2025 was 94%.

Net VYJUVEK product revenue was $96.0 million for the three months ended June 30, 2025, and $525.4 million in cumulative net product revenue since launch.

Gross margin for the three months ended June 30, 2025 was 93%.

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

Our market access team has successfully secured strong nationwide coverage across the United States including, as of April 2025, positive policies or coverage decisions from plans covering over 97% of commercial and Medicaid lives.

As of April 2025, we have secured over 540 reimbursement approvals for VYJUVEK in the United States.

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 a HCP, reducing the need for regular visits to a clinic or hospital.

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

Since launch and through the first quarter of 2025, patient compliance with once weekly treatment while on VYJUVEK remains high at 83%.

Compliance in the United States is expected to trend down in coming quarters as patients achieving wound closure begin to transition to maintenance utilization patterns.

Preparations and infrastructure buildout are underway to support our planned direct commercial launch in key European markets and Japan in 2025, starting with our first European launch in Germany expected in mid-2025.

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 United States, with B-VEC exhibiting a safety profile consistent with previous studies and all four patients that completed the study achieved the primary endpoint of complete wound closure at six months.

As part of the ongoing JNDA review, the PMDA recently completed an inspection of our commercial manufacturing facility, ANCORIS.

The JNDA is under priority review, and we expect a decision by the PMDA in the second half of 2025.

Pipeline Highlights and Recent Developments

4 unchanged sentences

In January 2025, the Cystic Fibrosis Foundation Therapeutic Development Network Clinical Research Executive Committee granted full sanctioning of our KB407 Phase 1 CORAL-1 study protocol.

Enrollment in CORAL-1 is ongoing, and we expect to report safety and CFTR delivery data from patients in the third and final cohort in mid-2025.

Four patients have been enrolled in the third and final cohort of CORAL-1 and enrollment is ongoing.

We expect to report safety and CFTR delivery data from patients in the third and final cohort before year end.

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

4 unchanged sentences

Inhaled KB408 was safe and well-tolerated at both tested dose levels and clear evidence of successful SERPINA1 delivery and AAT expression was observed in both patients that underwent bronchoscopies.

Following this data update, we simultaneously expanded the second cohort and opened enrollment in the third and final cohort of SERPENTINE-1 for more comprehensive molecular assessments at both dose levels.

Enrollment in SERPENTINE-1 is ongoing, and we expect

to report results for both cohorts in the second half of 2025.

We have since confirmed SERPINA1 delivery and functional AAT expression in a third patient dosed with KB408 in Cohort 2 and amended the SERPENTINE-1 protocol to investigate repeat dosing at the Cohort 2 dose level (the repeat dose cohort now referred to as “Cohort 2B”).

A total of five patients were dosed in Cohort 2 of which three underwent bronchoscopy.

The first patient in Cohort 2B was dosed earlier this month and enrollment in this repeat dose cohort is ongoing.

Enrollment in single dose cohorts is now closed.

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

11 unchanged sentences

Full corneal healing was observed at three months, as well as significant visual acuity improvement from hand motion to 20/25 by eight months.

Building on this early clinical evidence of safety and potential benefit under compassionate use, we are preparing to initiate a registrational Phase 3 study to enable approval of KB803, our eye drop formulation of B-VEC, to treat ocular complications of DEB.

We expect to dose the first patient in the study in May 2025 and plan to enroll up to 30 DEB patients.

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 Phase 3 study.

Enrollment in the study is ongoing and, as of April 2025, we had enrolled approximately 50 patients in the study.

In June 2025, we announced that we dosed the first patient in IOLITE, an intra-patient, double-blind, placebo-controlled, multicenter Phase 3 study with a crossover design to evaluate KB803 for the treatment and prevention of corneal abrasions in DEB patients, six months of age or older.

We expect to enroll approximately 16 patients in the IOLITE study.

Enrolled patients will initially receive either a single eye drop of placebo or KB803, at a concentration of 10 9 PFU/mL, to each eye once weekly for 12 weeks.

At the conclusion of the first 12 weeks, patients will be switched from placebo to KB803, or vice versa, and continue with once weekly administration for a second 12 week period.

IOLITE is a decentralized study and drug administration will occur at the patient’s home by a HCP.

The primary study endpoint will be the change in the average number of days per month with corneal abrasion symptoms while receiving KB803 versus placebo.

Safety and secondary efficacy data, including weekly assessments of eye pain and monthly Epidermolysis Bullosa Eye Disease Index questionnaires, will be collected through to the end of the 24-week study period.

Enrollment in IOLITE is ongoing.

More details of the IOLITE study can be found at www.clinicaltrials.gov under NCT identifier NCT07016750.

Patients seeking to participate in IOLITE must first enroll in an ongoing natural history study and complete a 12-week run-in period, during which they report the number of days that they experience symptoms of corneal abrasions.

Patients meeting the inclusion criteria following the 12-week run-in are eligible to participate in the IOLITE trial.

The natural history study was initiated in August 2024 and remains open for enrollment.

As of June 2025, we had enrolled 48 patients in the study.

Details of the natural history study can be found at www.clinicaltrials.gov under NCT identifier NCT06563414.

KB801 for Neurotrophic Keratitis (“NK”)

KB801 is an eye drop formulation of our novel HSV-1 vector designed to deliver two transgene copies to the corneal epithelium for the sustained, localized expression and secretion of nerve growth factor (“NGF”) and treatment of NK, a rare, degenerative corneal disease caused by nerve damage in the eye that leads to corneal epithelial defects, ulcers, and perforation.

KB801 is an eye drop formulation of our novel HSV-1 based vector designed to deliver two transgene copies to the corneal epithelium for the sustained, localized expression and secretion of nerve growth factor (“NGF”) and treatment of NK, a rare, degenerative corneal disease caused by nerve damage in the eye that leads to corneal epithelial defects, ulcers, and perforation.

Recombinant NGF eye drops have been shown to significantly improve corneal healing and are approved for the treatment of NK in multiple jurisdictions worldwide, including the United States, but rapid clearance from the eye requires intensive administration six times a day, with eye pain frequently reported, and may result in suboptimal treatment outcomes.

In preclinical studies presented the Association for Research in Vision and Ophthalmology (“ARVO”) 2025 Annual Meeting in May 2025, KB801 was shown to efficiently transduce corneal epithelial cells in vitro and in vivo leading to sustained NGF production in the front of the eye.

In preclinical studies presented the Association for Research in Vision and Ophthalmology 2025 Annual Meeting in May 2025, KB801 was shown to efficiently transduce corneal epithelial cells in vitro and in vivo leading to sustained NGF production in the front of the eye.

By transducing the cells of the corneal epithelium to produce and secrete NGF, KB801 has the potential to significantly reduce the treatment burden for patients while also maintaining more consistent NGF levels in the front of the eye.

In April 2025, the FDA cleared our investigational new drug application to evaluate KB801 in a randomized, double-blind, placebo-controlled, multi-center Phase 1/2 study in moderate-to-severe NK patients.

We expect to dose the first patient in the EMERALD-1 Phase 1/2 study in May 2025.

Additional details on EMERALD-1 study design and endpoints will be disclosed at the time the first patient is dosed.

In July 2025, we announced that we dosed the first patient in EMERALD-1, a randomized, double-masked, multicenter, placebo-controlled Phase 1/2 study evaluating KB801, administered as an eye drop, for the treatment of NK.

We expect to enroll up to 27 adult patients with Stage 2 or Stage 3 NK, as defined by the Mackie criteria, in the study.

Patients will be randomized 2:1 to receive either KB801, at a concentration of 10 10 PFU/mL, or placebo topically to the study eye twice weekly for eight weeks.

The primary objective of EMERALD-1 is to evaluate the safety and tolerability of topical ocular administration of KB801 in patients with NK.

The secondary objective is evaluation of efficacy based on the proportion of patients with complete durable healing of corneal epithelium at eight weeks.

Additional exploratory efficacy measures will include change in corneal lesion size from baseline, each assessed at weeks 4, 6, 8, 10, and 20, as well as evaluations of corneal sensation and patient-reported symptom burden.

Enrollment in EMERALD-1 is ongoing.

More details of the EMERALD-1 study can be found at www.clinicaltrials.gov under NCT identifier NCT06999733.

KB707 for Solid Tumors

4 unchanged sentences

Inhaled KB707 is currently under evaluation in KYANITE-1, an open-label, multi-center, dose escalation and expansion Phase 1/2 study, evaluating inhaled KB707, as monotherapy or in combination, in patients with locally advanced or metastatic solid tumors of the lung.

In December 2024, we announced an initial clinical update for the monotherapy dose escalation and expansion cohorts of KYANITE-1.

Early evidence of monotherapy activity was observed in the evaluable cohort of 11 patients with heavily pre-treated advanced non-small cell lung cancer, achieving an objective response rate of 27% and a disease control rate of 73% as of data cut-off.

In December 2024 and June 2025, we announced clinical updates for the monotherapy dose escalation and expansion cohorts of KYANITE-1.

Early evidence of monotherapy activity was observed in the evaluable cohort of 11 patients with heavily pre-treated advanced non-small cell lung cancer, achieving an objective response rate of 36% and a disease control rate of 54% as of the latest data cut-off.

Inhaled KB707 was also reported to be safe and generally well tolerated as monotherapy in the 39 patients included in the safety analysis.

The majority of treatment-related adverse events have been mild to moderate in severity and transient with no Grade 4 or 5 adverse events observed.

We expect to present a clinical update on the monotherapy cohort from KYANITE-1 at the 2025 American Society of Clinical Oncology (“ASCO”) Annual Meeting in June 2025.

Enrollment in KYANITE-1 is ongoing.

8 unchanged sentences

Pipeline Expansion

We expect to present preclinical data at the Society for Investigative Dermatology (“SID”) 2025 Annual Meeting in May 2025 on early-stage dermatology genetic medicine candidates for the treatment of Hailey-Hailey and Darier diseases.

We presented preclinical data at the Society for Investigative Dermatology 2025 Annual Meeting in May 2025 on early-stage dermatology genetic medicine candidates for the treatment of Hailey-Hailey and Darier diseases.

In addition to focusing on genetic medicines to treat patients with diseases with high unmet medical needs, we are leveraging the ability of our platform to deliver proteins of interest to cells in the skin in the context of aesthetic medicine via our wholly-owned subsidiary, Jeune Aesthetics, Inc.

We recently expanded the senior leadership team at Jeune, with Marc Forth joining as Jeune CEO in April 2025 and Nishant Saxena joining as Jeune CFO in January 2025.

Jeune’s lead program, 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 July 2025, Jeune announced positive safety and efficacy results, including significant improvements in key skin aesthetic attributes such as wrinkles and elasticity, in PEARL-2, a 2:1 randomized, double-blind, placebo-controlled Phase 1 study evaluating KB304, for the treatment of wrinkles of the décolleté.

KB304 is a solution formulation of our novel vector for intradermal injection designed to deliver two copies of the COL3A1 transgene and one copy of the ELN transgene to address various signs of skin aging including elasticity loss.

Meaningful aesthetic improvements in multiple skin attributes were reported by the investigator and subjects alike following KB304 treatment, with clear and statistically significant advantages over placebo.

Improvements were reported not only for wrinkles but also multiple additional skin attributes, including elasticity, crepiness, hydration, and radiance.

Increased subject satisfaction with wrinkle appearance was also reported, with clear separation from placebo.

All adverse events were mild-to-moderate in severity and transient.

The frequency and duration of adverse events also decreased with subsequent doses of KB304.

No serious or severe adverse events were reported.

Details of the study can be found at www.clinicaltrials.gov under NCT identifier NCT06724900.

Based on the broad aesthetic improvements observed following KB304 treatment in PEARL-2, Jeune has selected KB304 for progression into Phase 2 study for the treatment of wrinkles of the décolleté.

In support of the Phase 2 study, Jeune recently completed development and validation of a décolleté-specific photonumeric scale (“JDWS”).

Jeune intends to submit the JDWS to the FDA and align on the Phase 2 study protocol in the second half of 2025.

Jeune currently expects to initiate the Phase 2 study in the first half of 2026.

Jeune’s second clinical-stage program, 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 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.

Meaningful and sustained improvements in multiple skin aesthetic attributes, as well as increased subject satisfaction with wrinkle appearance, were 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 selected treatment of the dynamic wrinkles of the décolleté for advanced clinical development and expects to initiate a randomized, placebo-controlled Phase 2 study evaluating KB301 in this indication in the fourth quarter of 2025.

In February 2025, Jeune completed enrollment in the PEARL-2 study, an ongoing, 2:1 randomized and placebo-controlled Phase 1 study evaluating its second clinical-stage investigational aesthetic therapy, KB304, for the treatment of wrinkles.

Jeune expects to report top-line results from the study in the second half of 2025.

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

Jeune is currently evaluating aesthetic indications most suitable for the advanced clinical development of KB301.

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

Financial Overview

9 unchanged sentences

Research and Development Expenses

Research and development expenses consist primarily of costs incurred to advance our preclinical and clinical candidates, which include:

• expenses incurred under agreements with contract research organizations, consultants and other vendors that conduct our preclinical activities;

• costs of acquiring, developing and manufacturing clinical trial materials and lab supplies;

• facility costs, depreciation and other expenses, which include direct expenses for rent and maintenance of facilities and other supplies;

Research and development expenses consist primarily of costs incurred to advance our preclinical and clinical development programs and the development and manufacturing of our product candidates, which include:

• agreements with contract research organizations, consultants and other third parties that conduct preclinical activities, clinical trials and other research and development activities on our behalf;

• costs of acquiring, developing and manufacturing product candidates and clinical trial materials, lab supplies and consumables;

• facility costs, depreciation and other related expenses, which include expenses for rent and the maintenance of our facilities;

• other testing and support costs and supplies;

• payroll related expenses, including stock-based compensation expense.

We expense internal research and development costs to operations as incurred.

We expense third-party costs for research and development activities, such as the manufacturing of preclinical and clinical materials, based on an evaluation of the progress to completion of specific tasks such as manufacturing of drug substance, fill/finish and stability testing, which is provided to us by our vendors.

We expense research and development costs to operations as incurred.

A significant portion of our research and development expenses are not allocated to individual products or programs, as certain expenses benefit multiple product candidates and preclinical development programs.

For example, we do not allocate costs associated with stock-based compensation, certain manufacturing related costs, rent, storage, depreciation, or other facility related costs.

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

10 unchanged sentences

Critical Accounting Policies, Significant Judgments and Estimates

There have been no significant changes during the three months ended March 31, 2025 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 2024 Form 10-K.

There have been no significant changes during the six months ended June 30, 2025 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 2024 Form 10-K.

Results of Operations

2 unchanged sentences

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 March 31, 2025 and 2024

Three Months Ended March 31, Change

Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30, Change

(in thousands) (unaudited)

5 unchanged sentences

Total operating expenses 56,735 61,718 (4,983) (8) %

Income (loss) from operations 36,177 (6,684) 42,861 (641) %

Income from operations

39,307 8,566 30,741 359 %

Interest and other income, net 7,468 7,479 (11) — %

4 unchanged sentences

Product Revenue, Net

Product revenue, net was $88.2 million for the three months ended March 31, 2025, as compared to $45.3 million for the three months ended March 31, 2024.

Product revenue, net was $96.0 million for the three months ended June 30, 2025, as compared to $70.3 million for the three months ended June 30, 2024.

The increase in product revenue, net was driven by an increase in VYJUVEK sales as compared to the prior year.

Cost of Goods Sold

Cost of goods sold was $5.0 million for the three months ended March 31, 2025, as compared to $2.4 million for the three months ended March 31, 2024, due to increased sales of VYJUVEK.

Cost of goods sold was $7.2 million for the three months ended June 30, 2025, as compared to $6.0 million for the three months ended June 30, 2024, due to an increase in VYJUVEK sales as compared to the prior year.

Research and Development Expenses

Research and development expenses increased $3.3 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The increase was primarily driven by the following:

• an increase of $1.8 million in payroll related expenses, including stock-based compensation, primarily driven by an increase in headcount to support our research and development efforts;

• an increase of $813 thousand and $331 thousand in clinical development costs and manufacturing expenses, respectively, related to our product candidates;

• an increase of $481 thousand in facilities and equipment related costs;

• an increase of $316 thousand in licensing and regulatory costs.

These increases were partially offset by:

• a decrease of $837 thousand due to the capitalization of allocated overhead 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.

Direct research and development expenses associated with our product candidates or development programs consist of compensation related expenses for our internal resources conducting research and development activities, fees paid to external consultants, contract research organizations, or for costs to support our clinical trials.

Indirect research and development expenses that are allocated to our product candidates or programs consist of lab supplies and software fees.

A significant portion of our research and development expenses are not allocated to individual product candidates and preclinical programs, as certain expenses benefit multiple product candidates and preclinical programs.

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 March 31, 2025 and 2024.

Three Months Ended March 31, 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 June 30, 2025 and 2024.

Three Months Ended June 30, Change

(in thousands) (unaudited)

1 unchanged sentence

KB301 24 223 (199) (89) %

KB301 38 176 (138) (78) %

424 823 (399) (48) %

4 unchanged sentences

408 214 194 91 %

Other dermatology programs 706 21 685 3262 %

Other ophthalmology programs

15 243 (228) (94) %

Other dermatology programs 27 — 27 — %

Other aesthetics programs — 3 (3) (100) %

Other research programs 351 393 (42) (11) %

1 unchanged sentence

Stock-based compensation 2,627 2,772 (145) (5) %

Other unallocated manufacturing expenses (1)

Other unallocated expenses (1)

3,879 4,220 (341) (8) %

Research and development expense $ 14,410 $ 15,583 $ (1,173) (8) %

(1) Unallocated expenses consist of shared pre-commercial manufacturing costs, primarily relating to certain raw materials, process development, quality control and quality assurance activities, as well as other manufacturing and facility related costs including rent, storage and depreciation which support the development of multiple product candidates.

Research and development expenses decreased by $1.2 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The decrease in research and development expenses was primarily attributable to:

• a net decrease of $1.6 million in manufacturing costs driven by the scheduling of production runs across our product candidates and programs, including payroll related expenses to support our research and development, primarily due to a decrease in B-VEC, KB304, KB407, KB707 and other unallocated expenses offset by an increase in other dermatology expenses.

This decrease was partially offset by:

• a net increase of $582 thousand in preclinical and clinical development costs, primarily due to an increase in KB707 costs related to our ongoing Phase 1/2 clinical trials for inhaled and intratumoral KB707.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $7.5 million in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The increase was primarily driven by the following:

• an increase of $3.3 million related to professional services, including legal and consulting services;

• an increase of $1.6 million in payroll-related costs, inclusive of $1.1 million in stock-based compensation, primarily driven by additional grants awarded during the year and an increase in headcount;

• an increase of $1.5 million in marketing costs to support commercial sales of VYJUVEK;

• an increase of $1.3 million in other G&A costs, including $461 thousand in other taxes, $245 thousand in facilities expenses, and $243 thousand in subscription expense.

The increases were partially offset by:

• a decrease of $214 thousand in selling expenses related to our commercial launch of VYJUVEK, primarily related to our patient access program.

Litigation Settlement

Litigation settlement for the three months ended June 30, 2025 and 2024 was zero and $12.5 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

See discussion in Note 7 of the notes to consolidated financial statements included in the December 31, 2024 Annual Report on Form 10-K and

in Item 1 of Part II of this Form 10-Q for more information.

Interest and Other Income, Net

Interest and other income, net was $7.5 million for both of the three months ended June 30, 2025 and 2024, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

The increase in investment activity for the three months ended June 30, 2025 was offset by less favorable interest rates on investments as compared to the prior period.

Income Tax Expense

Income tax expense for the three months ended June 30, 2025 and 2024 was $8.4 million and $477 thousand, respectively, which relates to state, federal and foreign income taxes.

Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30, Change

(in thousands)

Product revenue, net

$ 184,225 $ 115,535 $ 68,690 59 %

Cost of goods sold

12,193 8,428 3,765 45 %

Research and development 28,666 26,539 2,127 8 %

Selling, general and administrative

67,883 53,685 14,198 26 %

Litigation settlement — 25,000 (25,000) (100) %

Total operating expenses 108,742 113,652 (4,910) (4) %

Income from operations

75,483 1,883 73,600 3909 %

Interest and other income, net 14,889 15,095 (206) (1) %

Income before income taxes

90,372 16,978 73,394 432 %

Income tax expense

(16,305) (477) (15,828) 3318 %

$ 74,067 $ 16,501 $ 57,566 349 %

Products Revenue, net

Product revenue, net was $184.2 million for the six months ended June 30, 2025 as compared to $115.5 million for the six months ended June 30, 2024.

The increase in product revenue, net was driven by an increase in VYJUVEK sales as compared to the prior year.

Cost of Goods Sold

Cost of goods sold was $12.2 million for the six months ended June 30, 2025 as compared to $8.4 million for the six months ended June 30, 2024, due to an increase in VYJUVEK sales as compared to the prior year.

Research and Development Expenses

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, 2025 and 2024:

Six Months Ended June 30, Change

2025 2024 $ %

(in thousands) (unaudited)

B-VEC $ 4,353 $ 5,815 $ (1,462) (25) %

KB301 62 383 (321) (84) %

KB304 667 958 (291) (30) %

KB407 655 1,451 (796) (55) %

KB408 516 495 21 4 %

KB707 5,147 3,156 1,991 63 %

879 205 674 329 %

894 214 680 318 %

Other dermatology programs 744 35 709 2026 %

Other ophthalmology programs

42 293 (251) (86) %

Other research programs 745 643 102 16 %

Other development programs 459 425 34 8 %

Stock-based compensation 5,096 4,640 456 10 %

Other unallocated expenses (1)

1 unchanged sentence

Research and development expense $ 28,666 $ 26,539 $ 2,127 8 %

(1) Unallocated manufacturing expenses consist of shared pre-commercial manufacturing costs, primarily relating to raw materials, contract manufacturing, contract testing, process development, quality control and quality assurance activities and other manufacturing costs which support the development of multiple product candidates in our preclinical and clinical development programs.

(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 March 31, 2025 compared to the three months ended March 31, 2024 are as follows:

• an increase of $1.3 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 $601 thousand in stock-based compensation primarily driven by an increase in headcount to support our research and development efforts;

• an increase of $486 thousand in KB803 in preparation for the registrational Phase 3 study to enable approval of KB803;

• an increase of $486 thousand in other unallocated costs primarily driven by facilities and equipment related expenses;

• an increase of $437 thousand in other manufacturing costs related to increased allocated overhead;

• an increase of $403 thousand in KB801 in preparation for the Phase 1/2 study.

These increases were partially offset by a decrease of $434 thousand in KB407 due to the timing of the Phase 1 CORAL-1 study.

Research and development expenses increased by $2.1 million in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The increase in research and development expenses was primarily attributable to:

• a net increase of $1.4 million in clinical development costs, primarily due to an increase in KB707 costs related to our Phase 1/2 clinical trials for inhaled and intratumoral KB707;

• an increase of $605 thousand facilities costs and equipment costs included in other unallocated expenses.

These increases were partially offset by:

• a net decrease of $382 thousand in manufacturing costs mainly driven by the scheduling of production runs across our product candidates and programs, including payroll related expenses to support our research and development, primarily due to a decrease in B-VEC and KB407 costs offset by increases in KB801, KB803 and other dermatology programs costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $6.7 million in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Selling, general and administrative expenses increased $14.2 million in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The increase was primarily driven by the following:

• an increase of $4.4 million in payroll-related costs, including $3.6 million in stock-based compensation primarily driven by an increase in headcount;

• an increase of $2.0 million in other G&A costs, including $1.0 million in charitable contributions, $258 thousand in G&A facilities expense, $238 thousand in G&A insurance, and $189 thousand in subscription expenses;

• an increase of $5.9 million in payroll-related expenses, including stock-based compensation, primarily driven by an increase in headcount to support our growth;

• an increase of $4.5 million related to professional services, including legal and consulting services;

• an increase of $242 thousand in marketing costs to support commercial sales of VYJUVEK.

• an increase of $3.2 million in other G&A costs, including $1.0 million in charitable contributions;

$503 thousand in facilities expenses, $432 thousand in subscription expenses, $471 thousand in other taxes, and $318 thousand in insurance expenses;

• an increase of $1.7 million in marketing costs to support commercial sales of VYJUVEK.

The increases were partially offset by:

• a decrease of $1.0 million, inclusive of a decrease in costs associated with our patient access program of $1.1 million partially offset by an increase in selling expenses.

• a decrease of $1.1 million in selling expenses related to our commercial launch of VYJUVEK, primarily related to our patient access program.

Litigation Settlement

Litigation settlement for the three months ended March 31, 2025 and 2024 was zero and $12.5 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

See discussion in Note 6 of the notes to condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Litigation settlement for the six months ended June 30, 2025 and 2024 was zero and $25.0 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

See discussion in Note 7 of the notes to consolidated financial statements included in the December 31, 2024 Annual Report on Form 10-K and

in Item 1 of Part II of this Form 10-Q for more information.

Interest and Other Income, Net

Interest and other income, net for the three months ended March 31, 2025 and 2024 was $7.4 million and $7.6 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

The decrease in interest and dividend income is primarily the result of market conditions.

Interest and other income, net for the six months ended June 30, 2025 and 2024 was $14.9 million and $15.1 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

The decrease in interest and dividend income is primarily the result of less favorable interest rates on investments as compared to the prior period.

Income Tax Expense

Income tax expense for the three months ended March 31, 2025 and 2024 was $7.9 million and zero, respectively.

Income tax expense for the three months ended March 31, 2025 relates to state, federal and foreign income taxes.

Income tax expense for the six months ended June 30, 2025 and 2024 was $16.3 million and $477 thousand, respectively, which relates to state, federal and foreign income taxes.

Liquidity and Capital Resources

As of March 31, 2025, our cash, cash equivalents and short-term investments balance was approximately $616.8 million.

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

We believe that our cash, cash equivalents and short-term investments as of March 31, 2025 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.

Furthermore, we expect to incur increasing costs associated with satisfying regulatory and quality standards, maintaining and initiating product clinical trials, and furthering our efforts to discover, develop, manufacture, and commercialize current and future product candidates.

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

As of June 30, 2025, our cash, cash equivalents and short-term investments balance was approximately $682.0 million.

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

We believe that our cash, cash equivalents and short-term investments as of June 30, 2025 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 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.

Costs related to clinical trials can be unpredictable and, therefore, there can be no guarantee that we will have sufficient capital to fund the continued or planned pre-clinical and clinical studies for our product candidates, or our operations.

3 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.

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.

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.

10 unchanged sentences

• the progress, timing and costs of manufacturing VYJUVEK and revenue received from commercial sale of VYJUVEK;

• the continued development and the filing of IND applications for current and future product candidates;

• the continued development and the filing of investigational new drug applications for current and future product candidates;

• the initiation, scope, progress, timing, costs and results of drug discovery, laboratory testing, manufacturing, preclinical studies and clinical trials for any product candidates that we may pursue in the future, if any;

11 unchanged sentences

We may need to obtain substantial additional funding in order to receive regulatory approval and to commercialize our product candidates.

securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders.

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.

1 unchanged sentence

Sources and Uses of Cash

The following table summarizes our sources and uses of cash for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following table summarizes our sources and uses of cash for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

(in thousands)

6 unchanged sentences

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

Net (decrease) increase in cash

Net increase (decrease) in cash

$ 8,964 $ (12,542)

Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2025 was $31.0 million and consisted primarily of net income of $35.7 million adjusted for $13.8 million of non-cash items and a $18.5 million decrease in cash from an increase in working capital.

Non-cash adjustments included depreciation of $1.4 million, amortization of operating lease right-of-use assets of $224 thousand, stock-based compensation expense of $13.5 million and other adjustments of $614 thousand, offset by realized gain on investments of $1.5 million and accretion on marketable securities of $453 thousand.

Net cash provided by operating activities for the three months ended March 31, 2024 was $15.9 million and consisted primarily of net income of $0.9 million adjusted for $8.7 million of non-cash items and a $6.3 million increase in cash from a decrease in working capital.

Non-cash adjustments included depreciation of $1.4 million, amortization of operating lease right-of-use assets of $182 thousand and stock-based compensation expense of $9.3 million, offset by realized gain on investments of $1.2 million, accretion on marketable securities of $0.8 million and other adjustments of $238 thousand.

Net cash provided by operating activities for the six months ended June 30, 2025 was $83.7 million and consisted primarily of net income of $74.1 million adjusted for $27.7 million of non-cash items and a $18.0 million decrease in cash from increased working capital.

Non-cash adjustments included depreciation of $2.8 million, amortization of operating lease right-of-use assets of $418 thousand, stock-based compensation expense of $27.6 million, amortization on marketable securities of $464 thousand, and other adjustments of $690 thousand, offset by realized gain on investments of $4.3 million..

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 cash from increased 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.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2025 was $54.8 million and consisted of $137.8 million in purchases of short-term and long-term investments and $6.2 million in purchases of property and equipment, partially offset by $88.8 million received from the maturities and early calls of short and long-term investments and $435 thousand received in proceeds from disposal of assets.

Net cash used in investing activities for the three months ended March 31, 2024 was $26.0 million and consisted of $88.3 million in purchases of short-term and long-term investments and $1.3 million in purchases of property and equipment, partially offset by $63.6 million received from the maturities of short-term investments.

Net cash used in investing activities for the six months ended June 30, 2025 was $65.3 million and consisted of $251.7 million in purchases of short-term and long-term investments and $8.1 million in purchases of property and equipment, offset by $194.1 million received from the maturities and early calls of short and long-term investments and $435 thousand received in proceeds from disposal of assets.

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,offset by $158.8 million received from the maturities of short-term investments.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2025 was $12.5 million and consisted of $12.1 million used for employee tax withholding payments related to vested restricted stock units and $1.8 million used for employee tax withholding payments for settlement of vested restricted stock awards partially offset by $1.5 million from exercises of stock options.

Net cash provided by financing activities for the three months ended March 31, 2024 was $10.6 million and consisted of proceeds of $16.0 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 used in financing activities for the six months ended June 30, 2025 was $10.7 million and consisted of $12.1 million used for employee tax withholding payments related to vested restricted stock units and $1.8 million used for employee tax withholding payments for settlement of vested restricted stock awards partially offset by $3.3 million from exercises of stock options.

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.

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