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Item 2. Management’s Discussion and Analysis

2025-11-03 compared with 2025-08-04 · 138 added, 125 removed, 278 unchanged (49% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“2024 10-K”), as filed with the SEC on February 19, 2025.

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 10-K”), as filed with the SEC on February 19, 2025.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

• our commercialization plans in the United States, the European Union (“EU”), Japan, and elsewhere 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 and expected timing of commercial launches of VYJUVEK in Europe outside of Germany and France and expected timing of pricing negotiations in Germany and France;

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

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

• the initiation, timing, progress, and results of clinical trials for our product candidates, as well as expected timing of reporting of data readouts from our clinical trials;

• the timing of regulatory filings;

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

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.

Forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced 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.

Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time.

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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.

links throughout this Quarterly Report on Form 10-Q 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.

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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 a non-invasive, topical, redosable gene therapy approved in the United States, Europe, and Japan for the treatment of 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 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.

VYJUVEK was first approved by the FDA in May 2023 for the treatment of wounds in patients, six months of age or older, suffering from DEB, making it the first ever redosable gene therapy and the first and only corrective medicine approved by the FDA for the treatment of both recessive and dominant subtypes of DEB.

In September 2025, the FDA approved a label update for VYJUVEK that expanded the treatment eligible population to include DEB patients from birth and provided patients with greater dosing flexibility, including the option for VYJUVEK to be applied by a healthcare professional (“HCP”), caregiver, or directly by the patient themselves, either at home or in a healthcare setting.

VYJUVEK was also approved in Japan and Europe earlier this year, making it the first and only corrective therapy approved for the treatment of DEB in each of those respective markets.

In April 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.

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 HCP.

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

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

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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.

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 Japan.

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 $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 launched VYJUVEK in the United States in 2023 and recently commenced the commercial launch of VYJUVEK in Europe and Japan.

In August 2025, we launched VYJUVEK in Germany, our first commercial launch outside the United States.

In September 2025, the Autorité de Santé (“HAS”) in France approved early reimbursed access to VYJUVEK under the post-marketing authorization Accès Précoce program, including the option to dispense VYJUVEK outside of the hospital setting, and, in October 2025, we launched VYJUVEK in France.

Also in October, the HAS appraised VYJUVEK as Amélioration du Service Médical Rendu III, a designation which recognizes the added clinical benefit of VYJUVEK and is an important milestone as the Company advances access discussions in France.

Pricing negotiations are underway in both Germany and France and are expected to continue until at least the second half of 2026.

The Company is also preparing regulatory filings for the United Kingdom and Switzerland, as well as initiating pricing discussions with relevant authorities in other key Western European markets.

The timing of European launches outside of France and Germany will depend on the cadence and outcomes of pricing negotiations.

In October 2025, VYJUVEK was awarded the Prix Galien Italia in the Advanced Therapy Medicinal Products category in Italy.

The Prix Galien is an international awards program recognizing excellence in scientific innovation that improves the state of human health.

In October 2025, the Company launched VYJUVEK in Japan following successful completion of pricing negotiations with Japan’s MHLW.

We have initiated distribution arrangements with specialty distributors to commercialize VYJUVEK in territories outside of the United States, major European markets, and Japan.

To date, we have entered into agreements with leading regional specialty distributors covering key markets in Central and Eastern Europe, the Middle East, and Turkey, and we expect to further expand our specialty distributor network in 2026.

Net VYJUVEK product revenue was $97.8 million for the three months ended September 30, 2025, and $623.2 million in cumulative net product revenue since launch.

Gross margin for the three months ended September 30, 2025 was 96%.

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

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

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.

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 the third quarter of 2025.

Pipeline Highlights and Recent Developments

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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.

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.

Enrollment in CORAL-1 is ongoing and we expect to report safety and CFTR delivery data from patients in the third and final cohort of CORAL-1 before year end.

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

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

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

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

In December 2024, we announced an interim clinical update from the first two dose escalation cohorts of SERPENTINE-1.

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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.

The first patient in Cohort 2B was dosed in August 2025 and enrollment in this repeat dose cohort is ongoing.

We expect to report interim safety and SERPINA1 delivery data from the repeat dose Cohort 2B in the first half of 2026.

Enrollment in single dose cohorts is now closed.

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

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.

In June 2025, we announced that we dosed the first patient in IOLITE, an intra-patient, double-blind, placebo-controlled, multicenter Phase 3 registrational 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.

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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.

We continue to enroll patients in IOLITE and expect to complete enrollment by the end of the year.

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

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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.

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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 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 at 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 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.

In July 2025, we announced that we dosed the first patient in EMERALD-1, a randomized, double-masked, multicenter, placebo-controlled 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.

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.

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

In October 2025, the FDA granted platform technology designation to the engineered HSV-1 viral vector used in KB801.

The FDA’s platform technology designation program is intended to provide efficiencies in drug development, manufacturing, and review processes for drug product applications that incorporate designated platform technologies, with potential benefits including more frequent engagement with the FDA during clinical development, as well as opportunities to leverage manufacturing and nonclinical safety data from FDA-approved products that incorporate designated platform technologies, such as VYJUVEK, in submissions to the FDA.

KB707 for Solid Tumors

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

KB707 is a redosable, immunotherapy designed to deliver transgenes encoding both human interleukin-2 and interleukin-12 to the tumor microenvironment and promote systemic immune-mediated tumor clearance.

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

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

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

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 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.

Both intratumoral and inhaled KB707 have been granted Rare Pediatric Disease Designations and Fast Track Designations by the FDA.

We have prioritized development of the inhaled KB707 formulation for the treatment of non-small cell lung cancer (“NSCLC”) based on early evidence of efficacy from 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.

As of the latest data cut-off disclosed in June 2025, in an evaluable cohort of 11 patients with heavily pre-treated advanced NSCLC, we observed monotherapy activity with inhaled KB707 therapy, achieving an objective response rate of 36% and a disease control rate of 54%.

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.

Enrollment in KYANITE-1 is ongoing.

Details of the Phase 1/2 study can be found at www.clinicaltrials.gov under NCT identifier NCT06228326.

Intratumoral KB707 is currently under evaluation in OPAL-1, an open-label, multi-center, dose escalation and expansion Phase 1/2 study, evaluating intratumoral KB707, as monotherapy or in combination, in patients with locally advanced or metastatic solid tumors, who relapsed or are refractory to standard of care, with at least one measurable and injectable tumor accessible by transcutaneous route of administration.

The final monotherapy dose escalation cohort was cleared in May 2024 and enrollment in OPAL-1 is ongoing.

Details of the Phase 1/2 study can be found at www.clinicaltrials.gov under NCT identifier NCT05970497.

KB105 for Lamellar Ichthyosis (“LI”)

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

We expect to resume enrollment in the Phase 2 portion of JADE-1, a randomized, placebo-controlled Phase 1/2 study evaluating KB105 for the treatment of LI in 2026.

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

Pipeline Expansion

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 August 2025, we were granted an End of Phase 2 meeting with the FDA to discuss the inhaled KB707 program and based on the FDA’s feedback, we now expect that a single Phase 3 registrational study, evaluating inhaled KB707 in combination with chemotherapy against chemotherapy alone in patients with advanced NSCLC, would be sufficient to support potential registration of inhaled KB707 in combination with chemotherapy as a second-line treatment for NSCLC.

In support of this potential registrational pathway, we have opened a new cohort in KYANITE-1 to evaluate a fixed dose of inhaled KB707 in combination with chemotherapy in patients with advanced NSCLC.

Enrollment is ongoing, and we expect to report interim efficacy data from KYANITE-1 and potential registrational study plans in the second half of 2026.

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

With the prioritization of inhaled KB707, we have paused enrollment in OPAL-1, an open-label, multi-center, dose escalation and expansion Phase 1/2 study, evaluating intratumoral KB707, as monotherapy or in combination, in patients with locally advanced or metastatic solid tumors, who relapsed or are refractory to standard of care, with at least one measurable and injectable tumor accessible by transcutaneous route of administration.

Patients enrolled in OPAL-1 continue to be followed and based on safety and efficacy results from the study, the Company may adjust development plans for intratumoral KB707.

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

KB111 for Hailey-Hailey Disease (“HHD”)

KB111 is a topical gel formulation of our novel vector designed to deliver two copies of the ATP2C1 transgene encoding the human calcium-transporting ATPase type 2C member 1 (“ATP2C1”) for the treatment of HHD, a serious and rare monogenic skin disorder characterized by painful rash and blistering in skin folds and linked to low ATP2C1 expression levels in keratinocytes.

Patients with HHD report debilitating symptoms of pain, itch, burning, infections, and body odor, as well severe, negative impacts on quality of life and psychological distress.

The prevalence of HHD is not well characterized and is most commonly estimated at roughly 1 per 50,000, although underreporting is possible.

Current disease management is supportive in nature and no specific therapy for HHD has been approved by the FDA or EMA.

In preclinical studies presented at the Society for Investigative Dermatology 2025 Annual Meeting in May 2025, KB111 was shown to efficiently deliver ATP2C1 to keratinocytes in vitro and in vivo resulting in increased expression of functional ATP2C1.

By increasing functional ATP2C1 levels in the skin, KB111 has the potential to accelerate lesion healing and meaningfully reduce disease burden for HHD patients.

In October 2025, the FDA cleared our investigational new drug application to evaluate KB111 in the clinic, and we expect to dose HHD patients in an intra-patient randomized, double-blind, placebo-controlled, multi-center study evaluating KB111 in HHD patients in the first half of 2026.

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.

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.

Meaningful aesthetic improvements 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.

All adverse events were mild-to-moderate in severity and transient and no serious or severe adverse events were reported.

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.

Details of the PEARL-2 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 is progressing KB304 into a Phase 2 study for the treatment of wrinkles of the décolleté.

In support of the Phase 2 study, Jeune has developed

and validated a décolleté-specific photonumeric scale (“JDWS”) and, following feedback from the FDA in the second half of 2025, 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.

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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.

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

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

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

Subsequently in April 2025 and July 2025, VYJUVEK was approved in Europe and Japan, respectively.

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

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Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of salaries and other related costs, including stock-based compensation for personnel in our executive, finance, legal, commercial, business development, information technology and other general and administrative functions.

and other general and administrative functions.

Selling, general and administrative expenses also include professional fees associated with corporate and intellectual property-related legal expenses, consulting and accounting services, insurance, facility-related costs and expenses associated with obtaining and maintaining patents.

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Interest and Other Income, Net

Interest and other income, net consists primarily of income earned from our cash, cash equivalents and investments.

Interest and other income, net consists primarily of income earned from our cash, cash equivalents and investments and gains and losses on foreign currency transactions.

Critical Accounting Policies, Significant Judgments and Estimates

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.

There have been no significant changes during the nine months ended September 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 the 2024 10-K.

Results of Operations

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

Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30, Change

Three Months Ended September 30, 2025 and 2024

Three Months Ended September 30, Change

(in thousands) (unaudited)

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47,967 29,769 18,198 61 %

Income tax expense (8,442) (477) (7,965) 1670 %

Income tax benefit (expense)

31,398 (2,589) 33,987 (1313) %

$ 79,365 $ 27,180 $ 52,185 192 %

Product Revenue, Net

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.

Product revenue, net was $97.8 million for the three months ended September 30, 2025, as compared to $83.8 million for the three months ended September 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 $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.

Cost of goods sold was $4.3 million for the three months ended September 30, 2025, as compared to $6.7 million for the three months ended September 30, 2024, representing a decrease primarily due to manufacturing process optimizations that resulted in lower average costs per unit of VYJUVEK partially offset by an increase in units sold.

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 three months ended June 30, 2025 and 2024.

Three Months Ended June 30, Change

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the three months ended September 30, 2025 and 2024.

Three Months Ended September 30, Change

(in thousands) (unaudited)

$ 1,810 $ 1,255 $ 555 44 %

568 — 568 — %

KB301 120 138 (18) (13) %

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(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.

Research and development expenses increased by $1.1 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

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

• a net increase of $549 thousand in manufacturing costs driven by the timing of production runs across our product candidates and programs, mainly due to an increase in B-VEC and KB407 runs offset by a decrease in KB408 and KB707 runs;

• a net increase of $797 thousand in payroll related costs, inclusive of $316 thousand in stock-based compensation, to support our research and development across our product candidates and programs, primarily due to an increase in KB111, KB801, and other research programs.

These increases were partially offset by:

• a decrease of $349 thousand in other unallocated expenses due to fewer facilities and equipment related costs in the period.

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.

Selling, general and administrative expenses increased $8.9 million in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

The increase was primarily driven by the following:

• an increase of $3.5 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 $1.8 million in payroll-related costs;

• an increase of $1.8 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.

• an increase of $1.2 million in other general and administrative costs, including $286 thousand in subscription expense, $250 thousand in charitable contributions, and $222 thousand in facilities expense;

• an increase of $663 thousand primarily related to higher costs associated with our patient access program.

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.

• a decrease of $479 thousand in stock-based compensation.

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.

Litigation settlement for the three months ended September 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 2024 10-K and in this Quarterly Report on 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.

Interest and other income, net was $6.6 million and $7.3 million for the three months ended September 30, 2025 and 2024, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments as well as the effects of foreign exchange rates.

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

Income tax benefit for the three months ended September 30, 2025 was $31.4 million and income tax expense was $2.6 million for the three months ended September 30, 2024,, which relates to state, federal and foreign income taxes.

In the third quarter of 2025, we determined that it was more likely than not that the benefit from certain of our deferred tax assets will be realized.

Accordingly, the related valuation allowance was released and a one-time benefit was recognized.

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

Nine Months Ended September 30, 2025 and 2024

Nine Months Ended September 30, Change

(in thousands)

13 unchanged sentences

138,340 46,746 91,594 196 %

Income tax expense

Income tax benefit (expense)

15,091 (3,066) 18,157 (592) %

1 unchanged sentence

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.

Product revenue, net was $282.0 million for the nine months ended September 30, 2025 as compared to $199.4 million for the nine months ended September 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.

Cost of goods sold was $16.5 million for the nine months ended September 30, 2025 as compared to $15.1 million for the nine months ended September 30, 2024, due to an increase in units sold partially offset by manufacturing process optimizations that resulted in lower average costs per unit of VYJUVEK.

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

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30, Change

2025 2024 $ %

1 unchanged sentence

B-VEC $ 6,144 $ 7,068 $ (924) (13) %

1,309 — 1,309 — %

KB301 185 521 (336) (64) %

15 unchanged sentences

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.

Research and development expenses increased by $3.2 million in the nine months ended September 30, 2025 as compared to the nine months ended September 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.

• a net increase of $1.3 million in clinical development costs, primarily due to an increase in KB707 costs related to our Phase 1/2 clinical trials for inhaled KB707;

• a net increase of $2.2 million in payroll related expenses, inclusive of $772 thousand of stock-based compensation, to support our research and development primarily due to an increase in KB111, KB707, KB801, KB803, and other research programs;

• an increase of $900 thousand in R&D support fees, inclusive of $310 thousand of lab supplies primarily related to KB707, $270 thousand of subscription costs primarily related to KB803, and $270 thousand of regulatory fees primarily related to B-VEC.

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.

• a net decrease of $1.4 million in manufacturing costs mainly driven by the timing of production runs across our product candidates and programs primarily due to a decrease in B-VEC, KB304, KB407, KB707 and other dermatology programs partially offset by an increase in KB111

Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses increased $23.0 million in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The increase was primarily driven by the following:

• 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 $8.0 million related to professional services, including legal and consulting services;

• 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 $7.2 million in payroll-related expenses, including stock-based compensation;

• an increase of $4.3 million in other general and administrative costs, including $1.3 million in charitable contributions, $725 thousand in facilities expenses, $718 thousand in subscription expenses, $521 thousand in other taxes, and $406 thousand in insurance expenses;

• an increase of $3.6 million in marketing costs to support commercial sales of VYJUVEK.

The increases were partially offset by:

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

• a decrease of $523 thousand primarily related to lower costs associated with our patient access program.

Litigation Settlement

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.

Litigation settlement for the nine months ended September 30, 2025 and 2024 was zero and $37.5 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 2024 10-K and in this Quarterly Report on Form 10-Q for more information.

Interest and Other Income, Net

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.

Interest and other income, net for the nine months ended September 30, 2025 and 2024 was $21.3 million and $22.4 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments as well as the effects of foreign exchange rates.

Income Tax Expense

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.

Income tax benefit for the nine months ended September 30, 2025 was $15.1 million and income tax expense was $3.1 million for the nine months ended September 30, 2024, which relates to state, federal and foreign income taxes.

In the third quarter of 2025, we determined that it was more likely than not that the benefit from certain of our deferred tax assets will be realized.

Accordingly, the related valuation allowance was released and a one-time benefit was recognized.

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

Liquidity and Capital Resources

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.

As of September 30, 2025, our cash, cash equivalents and short-term investments balance was approximately $731.1 million.

As of September 30, 2025, we had an accumulated deficit of $27.2 million.

We believe that our cash, cash equivalents and short-term investments as of September 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.

Food and Drug Administration (“FDA”), European Commission (“EC”), 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.

Further, we expect future revenue to fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any product sales.

We expect our future revenue to fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any product sales.

While we are in the process of building out our internal vector manufacturing capacity, some of our manufacturing activities will be contracted out to third parties.

9 unchanged sentences

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development, manufacturing and commercialization of genetic medicines, we are unable to estimate the exact amount of our operating capital requirements.

Because of the numerous risks and uncertainties associated with research, development, manufacturing and commercialization of genetic medicines, we are unable to estimate

the exact amount of our operating capital requirements.

Our future funding requirements will depend on many factors, including, but not limited to:

20 unchanged sentences

Sources and Uses of Cash

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,

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

Nine Months Ended September 30,

(in thousands)

6 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 923 136

Net increase (decrease) in cash

Net increase in cash

$ 47,739 $ 15,638

Operating Activities

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.

Net cash provided by operating activities for the nine months ended September 30, 2025 was $123.4 million and consisted primarily of net income of $153.4 million adjusted for $15.8 million of non-cash items and a $45.9 million decrease in cash from increased working capital.

Non-cash adjustments included depreciation of $4.2 million, amortization of operating lease right-of-use assets of $627 thousand, stock-based compensation expense of $40.8 million, amortization on marketable securities of $139 thousand, and other adjustments of $395 thousand, offset by a change in our deferred income taxes of $24.7 million and realized gain on investments of $5.5 million.

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

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

Investing Activities

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.

Net cash used in investing activities for the nine months ended September 30, 2025 was $69.6 million and consisted of $350.1 million in purchases of short-term and long-term investments and $9.8 million in purchases of property and equipment, offset by $289.9 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 nine months ended September 30, 2024 was $79.7 million and consisted of $314.3 million in purchases of short-term and long-term investments and $3.4 million in purchases of property and equipment, offset by $238.0 million received from the maturities of short-term investments.

Financing Activities

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.

Net cash used in financing activities for the nine months ended September 30, 2025 was $7.0 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 $7.0 million from exercises of stock options.

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

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