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Krystal Biotech (NASDAQ:KRYS) is up hugely since I first covered it earlier this year. KRYS has a gene therapy drug targeting Dystrophic Epidermolysis Bullosa (DEB)., and a phase 3 trial produced excellent results in November last year. The company filed an NDA for the gene therapy, B-VEC, in June, so they should have a PDUFA date sometime in early to mid next year.
Meanwhile, key competitor Amryt’s (AMYT) Filsuvez (Oleogel-S10) was recently approved in the EU but handed a CRL by the FDA in February. Filsuvez is a topical gel formulation which can be administered at home. B-VEC’s current formulation is also topical, however, being a gene therapy, it cannot currently be administered at home. Krystal is working to produce one that can be home-administered. This is important because DEB patients usually find travel difficult because that could cause wounds to open. This is currently an advantage of Amryt.
However, in every other respect, Krystal has an advantage. Amryt’s phase 3 data has been less than stellar. Although the trial met its primary endpoint – wound closure at 45 days – it failed to meet a key secondary endpoint, wound closure at 90 days. That means, wounds that closed opened up again.
For B-VEC, those numbers were 71% and 67% respectively, which means that only 4% of patients had wounds reopen at 90 days. Moreover, one potential advantage of Vyjuvek is that patients can be redosed, which was actually done in the trial. Patients were dosed once weekly until the wounds closed; but if they reopened, patients were redosed.
This is the reason the FDA rejected the drug. They said:
The FDA communicated that it had completed its review of the application and has determined that the application cannot be approved in its present form. The FDA has asked Amryt to submit additional confirmatory evidence of effectiveness for Oleogel-S10 in EB. Amryt intends to discuss with the FDA the nature of the data required to address the Agency’s concerns.
Amryt has now gone for a Formal Dispute Resolution request with the FDA. This may mean that filsuvez will not be approved anytime soon, because clearly the FDA is looking for a fresh trial. This is a major positive for Krystal.
Filsuvez is not a gene therapy. Amryt has one, however it is in early stages of development. Filsuvez is a topical gel formulation of the plant extract betulin and acts more like a maintenance therapy. Not being a gene therapy, its effect is not as long-term as B-VEC’s. Those are B-VEC’s main competitive advantage.
According to Evaluate estimates, this advantage translates to $462mn in 2026 sales of Vyjuvek versus $269mn for Filsuvez.
Abeona (ABEO) and Castle River also have upcoming data readouts for their gene therapies. However, both Abeona and Castle River’s therapies are personalized gene therapies with elaborate procedures. “Abeona’s treatment involves surgically transplanting sheets of cells onto patients’ wounds while Castle Creek’s uses intradermal injections.” If KRYS data remains competitive, it will win over the elaborate procedure issue, which should definitely lead to higher costs.
On June 22, KRYS filed an NDA with the FDA. Note the following designations:
The FDA and EMA have each granted B-VEC orphan drug designation for the treatment of DEB, and the FDA has granted B-VEC fast track designation and rare pediatric designation for the treatment of DEB. In addition, the FDA granted Regenerative Medicine Advanced Therapy (RMAT) to B-VEC for the treatment of DEB and the EMA granted PRIority MEdicines (PRIME) eligibility for B-VEC to treat DEB.
Thus, given the Fast Track, the FDA has 60 days from June 22 to accept or reject the NDA, and another 6 months to approve, if the NDA is accepted. Thus we are looking at a possible PDUFA date in February or earlier. If approved, the company will also get a rare pediatric disease voucher, which has a current market price of $100+mn.
Data from the two trials supporting the NDA – GEM-1/2 and GEM-3 – have been stellar. The GEM-3 trial showed complete wound healing starting at 3 months and continuing on to 6. Both trials showed that the drug was safe, and could be dosed more than once. These trials leave one with confidence that the drug will be approved on its own terms. The company estimates a $500mn addressable market for the DEB indication alone. However, like I have said before, if a gene therapy can induce collagen production in the body, there’s an unlimited market for its applications in aesthetics. Jeune, Krystal’s aesthetics subsidiary, is thus a much bigger potential.
Financials
KRYS has a market cap of $1.95bn and a cash reserve of $485mn. Research and development expenses for the quarter ended June 30, 2022 were $10.9 million, while general and administrative expenses were $17.9 million. Thus the company has enough money to last them a dozen quarters at this rate. They are financially well-secured.
Bottomline
I like KRYS. The stock has done well by me in the last few months. However, it has gone up a lot. I will keep holding, taking profits at specific increases.
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