Krystal Biotech Reports that KB103 Received Clearance From RAC Review and Announces Third Quarter 2017 Financial Results

PITTSBURGH, Nov. 13, 2017 (GLOBE NEWSWIRE) — Krystal Biotech, Inc. (NASDAQ:KRYS), a gene therapy company advancing “off-the-shelf,” topical and intra-dermal treatments for dermatological diseases, today reported financial results for the third quarter ended September 30, 2017, and provided an update on the company’s recent corporate progress.

“We were pleased to complete a successful IPO on the Nasdaq Capital Market in September, and are now well-capitalized to advance our gene therapy product portfolio, particularly KB103, our lead product candidate for Dystrophic Epidermolysis Bullosa (DEB),” said Krish S. Krishnan, Chairman & Chief Executive Officer of Krystal Biotech. “Last week, our Phase 1/2 protocol for KB103 received clearance from RAC review and we are currently preparing to file an Investigational Drug Application (IND) for KB103 in the first quarter of 2018 and initiating a Phase 1/2 clinical trial in DEB shortly thereafter.”

Third Quarter Highlights
Pipeline Update

  • Phase 1/2 protocol for KB103 to treat DEB received clearance from Recombinant DNA Advisory Committee (RAC) review.
  • KB103 granted Orphan Drug Designation by the Office of Orphan Product Development (OOPD).
  • Presented preclinical data assessing the in vitro and in vivo delivery of HSV-1 mediated KB103 at EB2017, the 5th World Conference on EB Research in Salzburg, Austria. 

Corporate Update

  • In September, Krystal completed an initial public offering raising approximately $41.0 million in net proceeds. 
  • In November, Krystal received funding totaling $770,000 from the EB Research Partnership (EBRP) and the EB Medical Research Foundation (EBMRF). EBRP and EBMRF have provided this funding following a highly competitive application and screening process overseen by EBRP’s Scientific Advisory Board (SAB), which is composed of leading scientists and physicians.

Financial Results for the Third Quarter

  • Cash totaled $52.6 million at September 30, 2017.
  • Research and development expenses for the third quarter were $1.4 million.
  • General and administrative expenses for the third quarter were $0.7 million.

About KB103
KB103 is Krystal’s lead product candidate, currently in preclinical development and seeks to use gene therapy to treat dystrophic epidermolysis bullosa, or DEB, an incurable skin blistering condition caused by a lack of collagen in the skin.  KB103 is a replication-defective, non-integrating viral vector that has been engineered employing Krystal’s STAR-D platform to deliver functional human COL7A1 genes directly to the patients’ dividing and non-dividing skin cells.  HSV-1 is Krystal’s replication-deficient, non-integrating viral vector that can penetrate skin cells more efficiently than other viral vectors.  Its high payload capacity allows it to accommodate large or multiple genes and its low immunogenicity makes it a suitable choice for direct and repeat delivery to the skin.

About Dystrophic Epidermolysis Bullosa, or DEB
Dystrophic epidermolysis bullosa, or DEB, is an incurable, often fatal skin blistering condition caused by a lack of collagen protein in the skin. It is caused by mutations in the gene coding for type VII collagen, or COL7, a major component of the anchoring fibrils, which anchor the epidermis to the underlying dermis, and provide structural adhesion in a normal individual. The lack of COL7 in DEB patients causes blisters to occur in the dermis as a result of separation from the epidermis.  This makes the skin incredibly fragile, leading to blistering or skin loss at the slightest friction or knock. It is progressive and incredibly painful.

The most severe form of DEB is recessive DEB, or RDEB, which is caused by null mutations in the COL7A1 gene.  DEB also occurs in the form of dominant DEB, or DDEB, which is considered to be a milder form of DEB.  There are no known treatments which affect the outcome of either form of the disease and the current standard of care for DEB patients is limited to palliative treatments.  Krystal is developing KB-103 for the treatment of the broad DEB population, including both recessive and dominant forms of the disease.    

About Krystal Biotech
Krystal Biotech, Inc. (NASDAQ:KRYS) is a gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from dermatological diseases. For more information, please visit http://www.krystalbio.com

Forward-Looking Statements
This press release includes certain disclosures that contain “forward-looking statements,” including, without limitation, statements regarding the development of KB103, including the timing of filing of an IND and commencing a Phase 1/2 clinical trial… You can identify forward-looking statements because they contain words such as “believes” and “expects.” Forward-looking statements are based on Krystal’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Krystal’s filings with the Securities and Exchange Commission, including its registration statement on Form S-1, as amended from time to time, under the caption “Risk Factors.”

CONTACT
Ashley R. Robinson 
LifeSci Advisors
arr@lifesciadvisors.com

                     
Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Balance Sheets
                     
                   
             September 30,     December 31, 
(In thousands, except shares, units, per share and per unit data)   2017     2016  
             (unaudited)     
Assets                  
Current assets              
  Cash       $ 52,570     $ 1,923  
  Prepaid research and development expenses     48       246  
      Total current assets       52,618       2,169  
Property and equipment, net       55       13  
      Total assets     $ 52,673     $ 2,182  
                     
Liabilities, Convertible Preferred Stock and Stockholders’ and Members’ Equity (Deficit)            
Current liabilities              
  Accounts payable     $ 550     $ 42  
  Accrued expenses and other current liabilities     1,925       1  
      Total current liabilities       2,475       43  
Accrued interest             7  
Related party convertible promissory notes             698  
Convertible promissory notes             1,145  
      Total liabilities       2,475       1,893  
Commitments and contingencies              
Convertible preferred stock              
  Convertible preferred stock; $0.00001 par value; 20,000,000 shares authorized, 2,061,773 shares issued, and no shares outstanding at September 30, 2017 (unaudited); no shares authorized, issued, or outstanding at December 31, 2016            
      Total convertible preferred stock              
Stockholders’ and members’ equity (deficit)              
  Common stock; $0.00001 par value; 80,000,000 shares authorized, 10,237,247 shares issued and outstanding at September 30, 2017 (unaudited); no shares authorized, issued, or outstanding at December 31, 2016            
  Common units; no common units authorized, issued, or outstanding at September 30, 2017 (unaudited); no par value; 3,490,884 units authorized, issued, and outstanding at December 31, 2016            
  Preferred units; no par value; no preferred units authorized, issued, or outstanding at September 30, 2017 (unaudited); no par value; 179,613 units authorized, issued, and outstanding at December 31, 2016 (aggregate liquidation preference of $1,406)           1,406  
  Additional paid-in capital       57,875       33  
  Accumulated deficit       (7,677 )     (1,150 )
      Total stockholders’ and members’ equity     50,198       289  
      Total liabilities, convertible preferred stock and stockholders’ and members’ equity   $ 52,673     $ 2,182  
                     

                             
Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Statements of Operations
(Unaudited)
                             
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
(In thousands, except shares, units, per share and per unit data) 2017     2016     2017     2016  
                             
Expenses                        
  Research and development $ 1,355     $ 241     $ 2,120     $ 339  
  General and administrative   738       81       1,154       184  
    Total operating expenses   2,093       322       3,274       523  
    Loss from operations   (2,093 )     (322 )     (3,274 )     (523 )
Other Expense                      
  Interest expense, net   (3,180 )           (3,253 )      
    Total other expense   (3,180 )           (3,253 )      
    Net loss   (5,273 )     (322 )     (6,527 )     (523 )
Net loss applicable to stockholders and members $ (5,273 )   $ (322 )   $ (6,527 )   $ (523 )
                             
Net loss attributable to common stockholders per share:
  Basic and diluted
$ (1.26 )   $ (8.48 )   $ (1.75 )   $ (40.20 )
                             
Weighted-average common shares and common units outstanding:
  Basic and diluted
  4,183,075       37,982       3,725,825       13,016  
                             

                 
Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Statements of Cash Flows
(Unaudited)
                 
         
        Nine Months Ended September 30,
(In thousands)   2017   2016
         
Operating Activities          
Net loss     $ (6,527 )   $ (523 )
Adjustments to reconcile net loss to net cash used in operating activities          
  Depreciation   9       1  
  Stock-based compensation expense   188       7  
  Non-cash interest expense   3,263        
  (Increase) decrease in          
    Prepaid research and development expenses   198       (12 )
  Increase in          
    Accounts payable   271       62  
    Accrued expenses and other current liabilities   835       15  
      Net cash used in operating activities   (1,763 )     (450 )
                 
Investing Activities          
Purchases of property and equipment   (51 )     (6 )
      Net cash used in investing activities   (51 )     (6 )
                 
Financing Activities          
Proceeds from the issuance of convertible promissory notes   2,299        
Issuance of common stock and common units, net   43,162       100  
Issuance of preferred stock and preferred units   7,000       754  
      Net cash provided by financing activities   52,461       854  
      Net increase in cash   50,647       398  
                 
Cash at beginning of period   1,923        
Cash at end of period $ 52,570     $ 398  
                 
Supplemental Disclosures of Non-Cash Investing and Financing Activities          
Conversion of common units to preferred units $     $ 100  
Conversion of convertible promissory notes to preferred stock $ 4,142     $  
Conversion of preferred stock to common stock $ 12,661     $  
Unpaid deferred offering costs $ 1,327     $