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Item 7. Management’s Discussion and Analysis

2026-02-17 compared with 2025-02-19 · 151 added, 218 removed, 224 unchanged (62% of the section changed)

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The following information should be read in conjunction with the consolidated financial statements and related notes thereto included in this Annual Report on Form 10-K.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties which may cause our actual results to differ materially from plans and results discussed in forward-looking statements.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties.

We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A.

“Risk Factors” and “Forward-Looking Statements” included at the beginning of this Annual Report on Form 10-K.

The risks and uncertainties can cause actual results to differ significantly from those forecast in forward-looking statements or implied in historical results and trends.

The risks and uncertainties can cause actual results to differ materially from those forecast in forward-looking statements or implied in historical results and trends.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

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This section of this Annual Report on Form 10-K generally discusses 2025, 2024 and 2023 items and year-to-year comparisons between 2025 and 2024, and 2024 and 2023 of the Company ’ s results of operations and cash flows.

We are a fully integrated, commercial-stage biotechnology company focused on the discovery, development, and commercialization of genetic medicines to treat diseases with high unmet medical needs.

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

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

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

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

Our innovative technology platform is supported by an in-house, FDA and EMA-inspected, commercial scale Current Good Manufacturing Practice (“CGMP”) manufacturing facility and a second, completed and qualified, commercial scale CGMP facility to support future expansion.

Refer to Part I, Item 1 - Business for more information about our FDA approved product, VYJUVEK ® , clinical development pipeline and research programs, and the status of our product candidates.

Our FDA Approved Commercial Product

We are a fully integrated, commercial-stage, global biotechnology company focused on the discovery, development, manufacturing, and commercialization of genetic medicines to treat diseases with high unmet medical needs.

Using our patented gene therapy technology platform that is based on engineered herpes simplex virus-1 (“HSV-1”), we create vectors that efficiently deliver therapeutic transgenes to cells of interest in multiple organ systems.

The cell’s own machinery then transcribes and translates the transgene to treat the disease.

Our vectors are amenable to formulation for non-invasive or minimally invasive routes of administration at a healthcare professional’s office or in the patient’s home.

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

Refer to Part I, Item 1 - Business for more information about our commercial product, VYJUVEK ® , clinical development pipeline and research programs, and the status of our product candidates.

Our Commercial Product

VYJUVEK (beremagene geperpavec-svdt or B-VEC)

referred to as B-VEC outside the United States)

On May 19, 2023, the FDA approved VYJUVEK, the first ever redosable gene therapy, for treating patients, six months of age or older, suffering from 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 redosable topical gel containing our novel vector designed to deliver two copies of the COL7A1 transgene to a patient’s skin cells to produce the COL7 protein.

VYJUVEK is the first and only corrective medicine approved by the FDA for the treatment of DEB, both recessive and dominant, that can be administered by a healthcare professional in either a clinical setting or in the home.

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

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.

We are commercializing VYJUVEK directly in the United States, major European markets, and Japan.

We launched VYJUVEK in the United States in 2023, in Germany in August 2025, and in France and Japan in October 2025.

The launch in France is under the post-marketing authorization early reimbursed access Accès Précoce program.

Pricing negotiations are underway in both Germany and France and are expected to continue until at least the second half of 2026 in Germany and 2027 in France.

Pricing negotiations were successfully completed in Japan prior to launch.

We are advancing pricing discussions with Italian reimbursement authorities to enable a potential launch in Italy in the second half of 2026.

We are 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 additional European launches will depend on the cadence and outcomes of regulatory interaction and pricing negotiations.

We continue to expand our specialty distributor network to support the commercialization of VYJUVEK in territories outside of the United States, major European markets, and Japan.

Net VYJUVEK product revenue was $389.1 million for the year ended December 31, 2025.

Since launch in 2023, we have reported cumulative net product revenue of 341.2 million.

Since launch in August 2023, we have reported cumulative net product revenue of $730.3 million.

Gross margin for the year ended December 31, 2025 was 94%.

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

We have secured strong nationwide access and reimbursement for VYJUVEK in the United States since launch and, as of February 2025, positive access determinations have been achieved for 97% of lives covered under commercial and Medicaid plans.

In January 2024, we announced that the United States Centers for Medicare & Medicaid Services, or CMS, had assigned a permanent and product-specific J-code for VYJUVEK, effective on January 1, 2024.

As of February 2025, we have secured over 510 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, the infrastructure has been in place for patients to be treated in their home by a healthcare professional, 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, caregivers and healthcare professionals interested in accessing VYJUVEK.

Since launch and through the fourth quarter of 2024, patient compliance with once weekly treatment while on VYJUVEK remains high at 85%.

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

In October 2023, we submitted a MAA to the EMA for B-VEC for the treatment of DEB.

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

EMA review of our MAA is ongoing and we currently expect a CHMP opinion the first quarter of 2025.

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

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

In October 2024, we filed a JNDA with Japan’s 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 achieving the primary endpoint of complete wound closure at six months.

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

Pipeline Highlights and Recent Developments

KB407 for Cystic Fibrosis (“CF”)

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

In January 2026, we announced a positive interim clinical update from Cohort 3, the highest dose cohort of CORAL-1, our Phase 1 study evaluating KB407 for the treatment of patients with CF, regardless of their underlying genotype.

We are working on the study design for CORAL-3, a clinical study intended to evaluate the safety and efficacy of repeat KB407 administration, including through regular assessments of lung function by spirometry, and to support potential registration.

We expect to align on the CORAL-3 study design with the FDA and start enrollment in the potentially registrational CORAL-3 study in the first half of 2026.

Additional details on the study design will be provided by the time of study initiation.

KB408 for Alpha-1 Antitrypsin Deficiency (“AATD”) Lung Disease

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.

We are currently running a a Phase 1 study, SERPENTINE-1, evaluating KB408 for the treatment of AATD in adult patients with AATD with a Pi*ZZ or a Pi*ZNull genotype.

We expect to report interim safety and SERPINA1 transgene delivery data from the repeat dose cohort of SERPENTINE-1 in 2026.

Ophthalmology

KB803 is a redosable eye drop formulation of B-VEC, designed for the treatment of ocular complications that are thought to affect over 25% of DEB patients.

KB803 (Ophthalmic B-VEC) for Ocular Complications of DEB

KB803 is a redosable eye drop formulation of B-VEC, designed for the treatment of ocular complications in patients with DEB.

These complications, which include corneal erosions, abrasions, blistering and scarring, can lead to progressive vision loss.

There is currently no corrective therapy available.

Based on early clinical evidence of safety and potential benefit following topical B-VEC application to the eye of a DEB patient under compassionate use, we started discussions with the FDA on a potential clinical development path for KB803 and, in February 2024, we aligned with the FDA on our proposed single arm, open label registrational Phase 3 study to enable approval of KB803 to treat ocular complications of DEB.

We expect to initiate the study in the first half of 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 February 2025, we had enrolled approximately 50 patients in the study.

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

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

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

In December 2024, we announced an interim safety data update for patients treated with KB407 in the first two dose escalation cohorts, in which we found single and repeat inhaled administration of KB407 to be safe and well tolerated.

In January 2025, the CFF TDN Clinical Research Executive Committee granted full sanctioning of our KB407 Phase 1 CORAL-1 study protocol.

We expect to report safety and CFTR delivery data from patients in the third and final cohort in mid-2025.

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

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

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.

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

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

Two formulations of KB707 are in development,

a solution formulation for transcutaneous injection and an inhaled (nebulized) formulation for lung delivery.

Both intratumoral and inhaled KB707 have been granted RPDD and Fast Track Designations 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, 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 NSCLC, achieving an ORR of 27% and a DCR of 73% as of data cut-off.

Inhaled KB707 was also reported to be safe and generally well tolerated as monotherapy in the 37 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.

Evaluation of inhaled KB707 in monotherapy and combination dose expansion cohorts is ongoing.

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 evaluation of intratumoral KB707 in monotherapy and combination dose expansion cohorts is ongoing.

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

We expect to initiate the Phase 2 portion of JADE-1, a randomized, placebo-controlled Phase 1/2 study evaluating KB105 for the treatment of TGM1-deficient LI in 2026.

We are currently running a Phase 3 registrational study, IOLITE, evaluating KB803 for the treatment of and prevention of corneal abrasions in DEB patients six months of age or older.

We expect to complete enrollment in IOLITE in the first half of 2026 and report top-line results later in 2026.

KB801 for Neurotrophic Keratitis (“NK”)

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 and the treatment of NK, a rare, degenerative corneal disease caused by nerve damage in the eye that leads to corneal epithelial defects, ulcers, and perforation.

Our engineered HSV-1 viral vector used in KB801 was granted platform technology designation by the FDA in October 2025.

We are currently running a registrational, randomized, double-masked, multicenter, placebo-controlled study, EMERALD-1, evaluating KB801 for the treatment of NK.

We expect to enroll approximately 60 adult patients with Stage 2 or Stage 3 NK in EMERALD-1.

Enrollment is ongoing, and we expect to report top-line data in 2026.

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 transporter 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.

We are currently developing an HHD-specific evaluation scale necessary for the clinical evaluation of KB111.

We expect to complete development and validation of the scale in the first half of 2026 and initiate a registrational study evaluating KB111 for the treatment of HHD in the second half of 2026.

KB707 for Solid Tumors

KB707 is a redosable, cancer immunotherapy designed to deliver genes 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.

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, our ongoing, Phase 1/2 study evaluating inhaled KB707, as monotherapy or in combination to treat patients with locally advanced or metastatic solid tumors of the lung.

We opened a new cohort in KYANITE-1 in late 2025 to evaluate inhaled KB707 in combination with chemotherapy in patients with advanced NSCLC.

Enrollment in this cohort is ongoing, and we expect to report interim efficacy data and potential registrational study plans in 2026.

We continue to follow patients enrolled in OPAL-1, our Phase 1/2 study, evaluating intratumoral KB707, as monotherapy or in combination, for the treatment of locally advanced or metastatic solid tumors.

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.

Jeune Aesthethics’ 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 COL3.

In August 2024, Jeune Aesthetics 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.

Based on these Phase 1 results, Jeune Aesthetics has selected treatment of the dynamic wrinkles of the décolleté for advanced clinical development.

Jeune Aesthetics has initiated development of a décolleté-specific evaluation scale and expects to start a Phase 2 study evaluating KB301 in this indication in the second half of 2025.

In November 2024, Jeune Aesthetics dosed the first subject 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.

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

Jeune Aesthetics 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.

Based on the broad aesthetic improvements observed following KB304 treatment in PEARL-2, our Phase 1 study evaluating KB304 for the treatment of wrinkles of the décolleté, we are progressing KB304 into Phase 2 study for the treatment of wrinkles of the décolleté.

We have aligned with the FDA on our validated décolleté-specific photonumeric scale, and we now expect to initiate the Phase 2 study in 2027.

Jeune Aesthetics has several other aesthetic medicine product candidates in various stages of development, including our clinical-stage product candidate KB301 that is designed to deliver two copies of the COL3A1 transgene for the treatment of aesthetic skin conditions.

We are currently evaluating aesthetic indications most suitable for advanced clinical development of KB301.

Financial Overview

Product Revenue, Net

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

After FDA approval of VYJUVEK in May 2023, we launched VYJUVEK in the United States in 2023, in Germany in August 2025, and in France and Japan in October 2025.

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

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

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

Refer to Note 2 of the notes to the consolidated financial statements included in this Form 10-K for additional information.

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

We expense research and development costs to operations as incurred.

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.

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

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.

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.

Other selling, general and administrative costs include travel expenses, patient access program costs, management service fees, marketing expenses, and selling expenses which include transportation, shipping and handling fees.

Other selling, general

and administrative costs include travel expenses, patient access program costs, management service fees, marketing expenses, and selling expenses which include transportation, shipping and handling fees.

We anticipate that our selling, general and administrative expenses will increase in the future relating to our commercialization efforts and to support the development of our product candidates.

These increases will likely include increased costs for insurance, costs related to the hiring of additional personnel and payments to outside consultants, lawyers and accountants, among other expenses.

Additionally, we anticipate that we will continue to increase our salary and personnel costs and other expenses to support B-VEC commercialization globally.

Additionally, we anticipate that we will continue to increase our salary and personnel costs and other expenses to support Vyjuvek commercialization globally.

ASTRA Capital Expenditures

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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 and Significant Judgments and Estimates

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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.

On an ongoing basis, we evaluate estimates which include, but are not limited to, variable consideration associated with revenue recognition, stock-based compensation expense, accrued expenses, the fair value of financial instruments, and the valuation allowance included in the deferred income tax calculation during the period.

On an ongoing basis, we evaluate estimates which include, but are not limited to, variable consideration associated with revenue recognition, stock-based compensation expense, accrued expenses, and the valuation allowance included as part of the net deferred tax assets calculation during the period.

We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances.

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Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”) requires us to make estimates of variable consideration, included in our contracts, to be included in the transaction price.

Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring control of the promised good to the customer.

Revenue is recognized when the Company satisfies a performance obligation by transferring control of the promised good to the customer.

The only performance obligation in the Company’s contracts with customers is the timely delivery of the product to the customer’s designated location.

The Company sells VYJUVEK to a limited number of specialty pharmacy (“SPs”) providers that mix the medication to be administered by a healthcare professional in either a healthcare professional 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.

The Company sells VYJUVEK to a limited number of specialty pharmacy (“SPs”) providers that mix the medication to be administered at a healthcare professional’s office or in the patient’s home 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.

Revenue is recognized when the customer obtains control of the product, which occurs at a point in time, upon delivery to the customer.

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These reserves, representing the Company’s best estimates of the amount of consideration to which the Company is entitled, are based on the terms of the contract.

Variable consideration reduces the transaction price to reflect the Company’s best estimate of the amount of consideration to which the Company is entitled based on the terms of the contracts and is recorded in the same period the related product revenue is recognized.

related product revenue is recognized.

The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

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Accrued commercial rebates are recorded as a reduction of revenue on the consolidated statements of operations and are included in accrued rebates on the consolidated balance sheets

• Copay Assistance:

The Company provides copay assistance to qualified patients with commercial insurance in states that allow copay assistance, helping them meet copay obligations to their insurance provider.

The Company reimburses pharmacies for this discount through third-party vendors.

The Company estimates copay assistance costs using the expected value method based on estimated percentages of VYJUVEK that will be prescribed to qualified patients, average assistance paid based on reporting from third-party vendors and estimated levels of inventory in the distribution channel.

Copay assistance costs are recorded as reductions to revenue on the consolidated statements of operations and are recorded in accrued expenses and other current liabilities on the consolidated balance sheets.

• Product Returns:

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Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses, prepaid assets and other current liabilities.

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses.

This process involves reviewing open contracts and commitments, communicating with our personnel to identify services that have been performed for us and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met.

We make estimates of our accrued research and development expenses and other current liabilities as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

Examples of accrued research and development expenses, prepaid assets and other current liabilities include fees paid to contract manufacturers made in connection with the manufacturing of preclinical and clinical trials materials.

We record our expenses related to clinical manufacturing based on our estimates of the services performed pursuant to contracts with the entities producing clinical materials on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

Payments under these types of contracts depend heavily upon the successful completion of many separate tasks involved in the manufacturing of drug product.

In accruing service fees, we estimate the time period over which services will be performed, and the actual services performed in each period.

We make estimates of our accrued research and development expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

Examples of accrued research and development expenses include costs associated with services for preclinical development, manufacturing of our product candidates and the conduct of clinical trials.

If actual results in the future vary from our estimates, we will adjust these estimates in the period these variances become known.

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We have applied the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification, or ASC, Topic 718, Compensation—Stock Compensation (“ASC 718”), to account for stock-based compensation.

We recognize compensation costs related to stock granted based on the estimated fair value of the awards on the date of grant.

ASC 718 requires all stock-based payments, including grants of stock options and restricted stock, to be recognized in the consolidated statements of operations and comprehensive income (loss) based on their grant-date fair values.

We recognize compensation costs related to stock-based awards granted based on the estimated fair value of the awards on the date of grant.

Compensation expense for stock options, restricted stock awards and restricted stock units is recognized on a straight-line basis based on the grant-date fair value over the associated service period of the award, which is generally the vesting term.

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We recognize stock-based compensation expense over the requisite service period, which is the vesting period of the award.

Calculating the fair value of stock-based awards requires that we make assumptions.

Calculating the fair value of stock-based awards requires that we make

We estimate the fair value of its stock options using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including:

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We estimate the expected term of stock options using the “simplified” method as prescribed by SEC Staff Accounting Bulletin No.

107, Share-Based Payments , whereby the expected term equals the arithmetic mean of the vesting term and the

original contractual term of the option.

107, Share-Based Payments , whereby the expected term equals the arithmetic mean of the vesting term and the original contractual term of the option.

The risk-free interest rates are based on US Treasury securities with a maturity date commensurate with the expected term of the associated award.

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Stock-based compensation expense recognized in the financial statements is based on awards for which service conditions are expected to be satisfied.

The Company is subject to tax in the United States and numerous foreign jurisdictions.

Significant judgments and estimates are required in the determination of consolidated income tax expense.

Income tax expense reflects the Company’s best estimate of current and future taxes to be paid.

The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect when the differences are expected to reverse.

Valuation allowances are provided when necessary to reduce net deferred tax assets to the amount that is more likely than not to be realized.

The Company weighs all available evidence, including cumulative income and forecasted future income in order to assess the realizability of deferred tax assets.

The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates the Company is using to manage the underlying business.

In the event the Company determines that it will be able to realize deferred tax assets for which a valuation allowance was used to reduce their carrying value, the adjustment to the valuation allowance will be recorded as a reduction to the provision for income taxes in the period such determination is made.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across global operations.

Significant judgment is required in the identification and measurement of uncertain tax positions.

The liability for unrecognized tax benefits contains uncertainties because the Company is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions.

The Company adjusts the liabilities when judgment changes as a result of new information not previously available.

Results of Operations

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Interest and other income, net 28,176 29,608 22,514 (1,432) 7,094

Income (loss) before income taxes 95,356 12,897 (139,975) 82,459 152,872

Income tax expense (6,197) (1,965) — (4,232) (1,965)

Net income (loss) $ 89,159 $ 10,932 $ (139,975) $ 78,227 $ 150,907

Income before income taxes

189,471 95,356 12,897 94,115 82,459

Income tax benefit (expense)

15,360 (6,197) (1,965) 21,557 (4,232)

$ 204,831 $ 89,159 $ 10,932 $ 115,672 $ 78,227

Product Revenue, Net

Product revenue, net was $290.5 million for the year ended December 31, 2024 as compared to $50.7 million for the year ended December 31, 2023 and zero for the year ended December 31, 2022 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

The increase in product revenue, net from 2023 to 2024 was driven by an increase in VYJUVEK sales following initial commercial sales recorded in August 2023.

Product revenue, net was $389.1 million for the year ended December 31, 2025 as compared to $290.5 million for the year ended December 31, 2024 and $50.7 million for the year ended December 31, 2023 due to sales of VYJUVEK after FDA

approval was obtained on May 19, 2023.

The increase in product revenue, net from 2024 to 2025 was driven by an increase in VYJUVEK sales as compared to the prior year.

Cost of Goods Sold

Cost of goods sold was $20.1 million for the year ended December 31, 2024 as compared to $3.1 million for the year ended December 31, 2023 and zero for the year ended December 31, 2022 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

The increase in cost of goods sold from 2023 to 2024 was driven by an increase in VYJUVEK sales following initial commercial sales recorded in August 2023.

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

Research and Development Expenses

Research and development expenses increased approximately $7.1 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The increase was primarily driven by the following:

• an increase of $4.2 million in payroll related expenses, including stock-based compensation, primarily driven by an increase in headcount to support overall growth,

• an increase of $3.8 million in manufacturing expenses related to our product candidates,

• an increase of $3.6 million in clinical development costs,

• an increase of $3.6 million in other research and development expenses primarily relating to licensing and regulatory costs and facilities and equipment related costs, and

• an increase of $602 thousand in depreciation due to the Company’s second CGMP facility being placed into service throughout 2023 and 2024 partially offset by the capitalization of depreciation associated with increased commercial batches of VYJUVEK.

The increases were partially offset by:

• a decrease of $7.4 million due to the capitalization of allocated overhead costs for increased commercial batches of VYJUVEK and

• a net decrease of $1.4 million in direct manufacturing expenses due to the costs to manufacture VYJUVEK being capitalized into inventory and cost of goods sold.

Research and development expenses increased $4.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The increase was primarily driven by the following:

• an increase of $5.8 million in payroll related expenses which was primarily driven by an increase in personnel to support overall growth and includes a $2.2 million increase in stock-based compensation,

• an increase of $2.2 million in depreciation, and

• an increase of $428 thousand in other research and development expenses, primarily due to increases in facilities expenses.

These decreases were partially offset by:

• a decrease of $2.0 million in preclinical, clinical and pre-commercial manufacturing due to the costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and due to fewer receipts of raw materials and lab supplies period over period that were purchased for planned manufacturing runs of our products,

• a decrease of $1.3 million from overhead allocations to inventory, and

• a decrease of $1.2 million from outsourced research and development costs.

Cost of goods sold was $23.0 million for the year ended December 31, 2025 as compared to $20.1 million for the year ended December 31, 2024 and $3.1 million for the year ended December 31, 2023 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.

The increase in cost of goods sold from 2024 to 2025 was driven by an increase in VYJUVEK sales partially offset by a decrease primarily due to manufacturing process optimizations that resulted in lower average costs per unit.

The following table summarizes our research and development expenses by product candidate or program, and for unallocated expenses, by type, for the years ended December 31, 2025, 2024 and 2023:

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$ 6,690 $ 8,760 $ 9,039 $ (2,070) $ (279)

KB105 935 282 276 653 6

1,837 — — $ 1,837 $ —

KB301 184 635 485 (451) 150

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2,175 1,314 — 861 1,314

2,564 604 — 1,960 604

Other dermatology programs 12 935 284 (923) 651

Other aesthetics programs 6 25 111 (19) (86)

Other ophthalmology programs

44 554 71 (510) 483

Other research programs 1,274 567 876 707 (309)

Other development programs 823 939 645 (116) 294

Stock-based compensation 9,237 10,051 7,897 (814) 2,154

Other unallocated manufacturing expenses (1)

Other programs

2,493 2,098 1,506 395 592

Stock-based compensation 10,375 9,237 10,051 1,138 (814)

Other unallocated expenses (1)

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Research and development expense $ 58,045 $ 53,580 $ 46,433 $ 4,465 $ 7,147

(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.

As noted above, research and development expenses increased approximately $7.1 million in the year ended December 31, 2024 compared to the year ended December 31, 2023.

(1) Other 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 increased $4.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The increase was primarily driven by the following:

• an aggregated increase of $4.9 million related to KB304 costs, KB105 costs, KB408 costs, KB803 costs, other ophthalmology programs and other aesthetics programs all related to increases in manufacturing expenses, payroll costs and professional services related to pre-clinical contracts,

• an increase of $4.8 million in KB707 costs following the expansion of our research and development pipeline to oncology consisting of an increase in payroll related costs to support our research, an increase in contract research expenses in preparation for clinical trials, and an increase in clinical trial costs associated with our Phase 1/2 clinical trial of KB707 that commenced in 2024,

• an increase of $978 thousand in other unallocated expenses, which largely relates to (1) depreciation due to the Company’s second CGMP facility being placed into service throughout 2023 and 2024 partially offset by the capitalization of depreciation associated with increased commercial batches of VYJUVEK and (2) other facilities and equipment related costs, and

• an increase of $707 thousand in other research programs.

The increases were partially offset by:

• a decrease of $3.5 million in other unallocated manufacturing expenses primarily due to the costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and cost of goods sold, and

• a decrease of $814 thousand in stock-based compensation due to the allocation of labor costs related to work performed to manufacture VYJUVEK to inventory.

• an increase of $2.1 million in payroll related expenses, inclusive of $1.1 million in stock-based compensation, to support our research and development primarily due to an increase in KB111, KB801, KB803 and other research & development programs partially offset by a decrease in B-VEC and KB304;

• a net increase of $2.3 million in clinical development costs, primarily due to an increase in KB707 costs related to our Phase 1/2 clinical trials for inhaled KB707.

Research and development expenses increased $7.1 million in the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was primarily driven by the following:

• an increase of $3.4 million in KB707 spending due to increased payroll related costs and increased contract research costs in preparation for the Phase 1/2 clinical trial,

• an increase of $2.2 million in stock-based compensation due to an increase in internal resources to support overall research and development growth,

• an increase of $1.4 million in other unallocated expenses primarily due to increases in depreciation expense offset by a decrease from rent expense allocated to inventory, and

• an increase of $943 thousand in KB103 expenses primarily due to increased payroll related expenses to support VYJUVEK’s preapproval activities, clinical trial costs, license and regulatory costs, costs associated with overseas clinical trials and regulatory agency filings, and increased allocated research.

These increases were partially offset by:

• a decrease of $2.5 million in other unallocated manufacturing expenses primarily due to the costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and due to fewer receipts of raw materials period over period that were purchased for planned manufacturing runs of our products and product candidates,

• a decrease of $852 thousand in KB301 expenses due to the timing of clinical research costs, and

• a increase of $6 thousand in KB105 expenses.

• an aggregated increase of $4.9 million related to KB304 costs, KB408 costs, KB803 costs, other dermatology programs, other ophthalmology programs and other aesthetics programs all related to increases in manufacturing expenses, payroll costs and professional services related to pre-clinical contracts;

• an increase of $0.7 million in other research programs.

The increases were partially offset by:

• a net decrease of $2.5 million in other unallocated expenses primarily due to the costs related to the manufacturing of VYJUVEK following FDA approval being recorded as inventory and cost of goods sold, partially offset by increases related to (1) depreciation due to the Company’s second CGMP facility being placed into service throughout 2023 and 2024 partially offset by the capitalization of depreciation associated with increased commercial batches of VYJUVEK and (2) other facilities and equipment related costs;

• a decrease of $0.8 million in stock-based compensation due to the allocation of labor costs related to work performed to manufacture VYJUVEK to inventory.

Selling, General and Administrative Expenses

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The increase was primarily driven by the following:

• an increase of $9.2 million of payroll costs, including stock-based compensation;

• an increase of $5.5 million in other general and administrative costs mainly related to $1.5 million in charitable contributions, $1.1 million in taxes and $1.1 million in subscriptions;

• an increase of $11.1 million related to professional services, including legal and consulting services;

• an increase of $6.7 million in marketing costs to support commercial sales of VYJUVEK.

Selling, general and administrative expenses increased $15.3 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was primarily driven by the following:

• an increase of $10.0 million in stock-based compensation;

• an increase of $3.7 million in selling expenses related to the commercial launch of VYJUVEK, which includes $1.2 million related to our patient access program, and

• an increase of $3.7 million in selling expenses related to the commercial launch of VYJUVEK, which includes $1.2 million related to our patient access program;

• an increase of $3.3 million related to professional services incurred to support our commercial growth.

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

Selling, general and administrative expenses increased $20.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The increase was primarily driven by the following:

• an increase of $15.1 million in payroll related expenses which is primarily driven by an increase in personnel to support overall growth and includes a $4.5 million increase in stock-based compensation,

• an increase of $1.7 million in selling expenses related to the launch of VYJUVEK,

• an increase of $2.1 million in information technology infrastructure costs,

• an increase of $1.3 million in software-related costs,

• an increase of $1.1 million in travel costs,

• an increase of $425 thousand in sponsorships,

• an increase of $381 thousand in net legal costs, which consists of a decrease in litigation proceeds of $570 thousand, offset by a increase in legal and professional fees of $189 thousand, and

• an increase of $676 thousand in other selling, general and administrative expense, primarily due to increases in depreciation and rent expense.

These increases were partially offset by:

• a decrease of $1.2 million of commercial preparedness expenses,

• a decrease of $466 thousand in medical affairs costs, and

• a decrease of $428 thousand in business development costs.

Litigation Settlement

Litigation settlement for the years ended December 31, 2024, 2023 and 2022 was $37.5 million, $12.5 million and $25.0 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

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

Litigation settlement for the years ended December 31, 2025, 2024 and 2023 was zero, $37.5 million and $12.5 million, respectively, and consisted of amounts related to the settlement of litigation with PeriphaGen.

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

Gain from Sale of Priority Review Voucher

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Interest and Other Income, Net

Interest and other income, net for the years ended December 31, 2024, 2023 and 2022 was $29.7 million, $22.6 million and $5.2 million, respectively, and consisted of interest and dividend income earned from our cash, cash equivalents and investments.

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

Income Tax Expense

Income tax expense for the years ended December 31, 2024, 2023 and 2022 was $6.2 million, $2.0 million, and zero, respectively.

Interest and other income, net for the years ended December 31, 2025, 2024 and 2023 was $28.2 million, $29.6 million and $22.5 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.

The decrease in interest and other income for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily the result of the effects of foreign exchange rates.

The increase in interest and other income for the years ended December 31, 2024 compared to the year ended December 31, 2023 is the result of increased investment activity and more favorable interest rates as compared to the prior period and an increase in our balance of cash, cash equivalents, and investments.

Income Tax Benefit (Expense)

Income tax benefit for the year ended December 31, 2025 was $15.4 million.

Income tax expense for the years ended December 31, 2024 and 2023 was $6.2 million, and $2.0 million, respectively.

In 2023 and 2024, income tax expense related to state, federal and foreign income taxes.

In 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 Note 11 of the notes to consolidated financial statements included in this Form 10-K for more information.

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As of December 31, 2025, our cash, cash equivalents and short-term investments balance was approximately $827.8 million.

As of December 31, 2024, we had an accumulated deficit of $180.7 million.

As of December 31, 2025, we had a retained earnings balance of $24.2 million.

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

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.

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.

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Additionally, we currently utilize third-party contract research organizations to carry out some of our clinical development activities.

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

Furthermore, pursuant to our settlement agreement with PeriphaGen, we will be required to pay a $6.25 million milestone payment as a result of reporting $100.0 million in cumulative sales during the second quarter of 2024 payable within 120 days following December 31, 2024 and two additional $12.5 million milestone payments as a result of reporting $200.0 million in cumulative sales during the third quarter of 2024 and $300.0 million in cumulative sales during the fourth quarter of 2024, both of which are payable within 30 days following the filing by the Company of its Annual Report on Form 10-K for the year ended December 31, 2024.

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

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.

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

On December 31, 2020, the Company entered into a sales agreement with Cowen and Company, LLC ("Cowen") with respect to an at-the-market equity offering program (“2020 ATM Program”), under which the Company issued and sold from time to time through Cowen, acting as agent and/or principal, shares of its common stock, par value $0.0001 per share, having an aggregate offering price up to $150.0 million (“2020 Placement Shares”).

The issuance and sale of the 2020 Placement Shares were made pursuant to the Company's effective “shelf” registration statement on Form S-3 that was filed with the SEC on May 4, 2020 (the “2020 Shelf Registration Statement”).

During the year ended December 31, 2022, the Company issued and sold 434,782 2020 Placement Shares at a weighted average price of $69.00 per share for net proceeds of $29.1 million after deducting selling commissions of approximately $900 thousand.

The Company’s 2020 Shelf Registration Statement expired on May 4, 2023, and the Company put in place a new at-the-market equity offering program under substantially the same terms as the 2020 ATM Program (the “New ATM Program”).

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

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

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

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

The New ATM Program is not and has never been active.

2023 Private Placement Offering

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

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

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

Operating Capital Requirements

Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs for preclinical and clinical materials, regulatory expenses, third-party clinical trial research and development services, laboratory and related supplies, selling expenses, costs to manufacture our commercial product, legal expenses, payments of settlement amounts to PeriphaGen and general overhead costs.

In order to complete the process of obtaining regulatory approval for any of our product candidates and to build the sales, manufacturing, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we may require substantial additional funding.

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• the progress, timing and costs of clinical trials of our current product candidates;

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

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

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

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Operating lease payments represent our commitments for future minimum rent made under non-cancelable leases for our corporate headquarters in Pittsburgh, Pennsylvania and our global office locations, and for the ground lease associated with our second CGMP manufacturing facility, ASTRA.

The total future payments for our operating lease obligations that had commenced as of December 31, 2024 are $14.6 million, of which $1.3 million is due in the next twelve months and the

remaining payments are due over the terms of the respective leases.

For additional details regarding our leases, see Note 8 and Note 14 to our consolidated financial statements included in this Annual Report on Form 10-K.

The total future payments for our operating lease obligations that had commenced as of December 31, 2025 are $17.0 million, of which $1.9 million is due in the next twelve months and the remaining payments are due over the terms of the respective leases.

For additional details regarding our leases, see Note 8 to our consolidated financial statements included in this Annual Report on Form 10-K.

Clinical Supply and Product Manufacturing Agreements

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We are obligated to make milestone payments under certain of these agreements.

The estimated remaining commitment as of December 31, 2024 under these agreements is approximately $627 thousand, all of which is expected to be due in the next twelve months.

The estimated remaining commitment expected to be due in the next twelve months as of December 31, 2025 under these agreements is immaterial.

Sources and Uses of Cash

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Net cash provided by operating activities for the year ended December 31, 2025 was $200.9 million and consisted primarily of net income of $204.8 million adjusted for $32.5 million of non-cash items and a $36.4 million decrease in cash due to an increase in net working capital.

Non-cash adjustments included depreciation of $6.0 million, amortization of operating lease right-of-use assets of $747 thousand, stock-based compensation expense, net of $49.1 million, and other adjustments of $652 thousand offset by realized gain on investments of $6.1 million and accretion on marketable securities of $1.7 million.

Non-cash adjustments included depreciation of $5.7 million, amortization of operating lease right-of-use assets of $0.8 million, stock-based compensation expense, net of $54.5 million, and other adjustments of

$0.7 million offset by a change in our deferred income taxes of $22.8 million, realized gain on investments of $6.0 million and accretion on marketable securities of $0.5 million.

Net cash used by operating activities for the year ended December 31, 2024 was $123.4 million and consisted primarily of net income of $89.2 million adjusted for $48.7 million of non-cash items and a $14.5 million decrease in cash due to an increase in net working capital.

Non-cash adjustments included gain on sale of priority review voucher of $100.0 million, which is classified as an investing activity, realized gain on investments of $5.1 million and accretion on marketable securities of $2.2 million, partially offset by stock-based compensation expense, net of $39.9 million, depreciation of $5.0 million, amortization of operating lease right-of-use assets of $904 thousand and other adjustments of $217 thousand.

Net cash used in operating activities for the year December 31, 2022 was $100.6 million and consisted primarily of a net loss of $140.0 million adjusted for $36.7 million of non-cash items and an increase in cash due to a decrease in net working capital of $2.7 million.

Non-cash adjustments included stock-based compensation expense, net of $33.2 million, depreciation of $2.6 million, amortization of operating lease right-of-use assets of $742 thousand, amortization of marketable securities of $670 thousand and other adjustments of $34 thousand, partially offset by realized gain on investments of $570 thousand.

Non-cash adjustments included depreciation of $6.0 million, amortization of operating lease right-of-use assets of $0.7 million, stock-based compensation expense, net of $49.1 million, and other adjustments of $0.7 million offset by realized gain on investments of $6.1 million and accretion on marketable securities of $1.7 million.

Net cash used in operating activities for the year December 31, 2023 was $88.8 million and consisted primarily of net income of $10.9 million adjusted for $61.2 million of non-cash items and a $38.5 million decrease in cash due to an increase in net working capital.

Non-cash adjustments included gain on sale of priority review voucher of $100.0 million, which is classified as an investing activity, realized gain on investments of $5.1 million and accretion of marketable securities of $2.2 million, partially offset by stock-based compensation expense, net of $39.9 million, depreciation of $5.0 million, amortization of operating lease right-of-use assets of $0.9 million and other adjustments of $0.2 million.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $58.4 million and consisted of $422.5 million in purchases of short-term and long-term investments and $12.0 million in purchases of property and equipment, partially offset by $375.6 million received from the maturities of investments and $0.4 million received in proceeds from disposal of assets.

Net cash used in investing activities for the year ended December 31, 2024 was $163.4 million and consisted of $457.7 million in purchases of short-term and long-term investments and $4.2 million in purchases of property and equipment, partially offset by $298.5 million received from the maturities of investments.

Net cash provided by investing activities for the year ended December 31, 2023 was $82.6 million and consisted of $503.2 million received from the maturities of investments and $100.0 million in proceeds from the sale of priority review voucher, partially offset by $508.8 million in purchases of short-term and long-term investments and $11.8 million in purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2022 was approximately $114.1 million and consisted of $318.8 million in purchases of short-term and long-term investments and $53.0 million in purchases of property and equipment on the build-out of our ASTRA facility, leasehold improvement of new office space and computer and laboratory equipment, partially offset by $257.7 million received from the maturities of short-term investments.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $8.7 million and consisted of proceeds of $22.7 million from exercises of stock options, partially offset by $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.

Net cash provided by financing activities for the year ended December 31, 2024 was $27.0 million and consisted of proceeds of $32.4 million from exercises of stock options, partially offset by $4.2 million used for employee tax withholding.

payments related to vested restricted stock units and $1.2 million used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the year ended December 31, 2023 was $202.8 million and consisted of proceeds of $159.7 million from issuances of common stock, net of offering costs and proceeds of $43.8 million from exercises of stock options, partially offset by $749 thousand used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the year ended December 31, 2022 was $35.3 million and was primarily from proceeds from public offerings of 434,782 shares of our common stock at a weighted-average price of $69.00 per share through our at-the-market equity offering program.

Our net proceeds from the offerings were $29.0 million after deducting underwriting discounts and commissions of approximately $900 thousand.

Additionally, we received $7.0 million from exercises of stock options, offset by $649 thousand used for employee tax withholding payments for settlement of vested restricted stock awards.

Net cash provided by financing activities for the year ended December 31, 2023 was $202.8 million and consisted of proceeds of $159.7 million from issuance of common stock, net of offering costs and proceeds of $43.8 million from exercises of stock options, partially offset by $0.7 million used for employee tax withholding payments for settlement of restricted stock awards.

Recent Accounting Pronouncements

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To minimize this risk, we intend to maintain a portfolio which may include cash, cash equivalents and short-term investment securities available-for-sale in a variety of securities which may include money market funds, government and non-government debt securities and commercial paper, all with various maturity dates.

Based on our current investment portfolio, we do not believe that our results of operations or our financial position would be materially affected by an immediate change of 10% in interest rates.

Based on our current investment portfolio, we do not believe that our financial position would be materially affected by an immediate change of 1% in interest rates.

We also have established operations in Europe and Japan and hold cash in Swiss Francs, Euros and Japanese Yen.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis