Thank you for standing by, and welcome to the Krystal Biotech 4Q 2025 Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to hand the conference over to your host, Stephane Paquette, Vice President of Corporate Development.

Good morning, and thank you all for joining today's call. Earlier today, we released our financial results for the fourth quarter and full year of 2025. The press release is available on our website at www.krystalbio.com. We also filed our earnings 8-K and 10-K with the SEC earlier today. Joining me today will be Krish Krishnan, Chairman and Chief Executive Officer; Suma Krishnan, President of Research and Development; Christine Wilson, Senior Vice President and Head of U.S. Commercial; Laurent Goux, Senior Vice President and General Manager for Europe; and Kate Romano, Chief Accounting Officer. This conference call will and our responses to questions may contain forward-looking statements. You are cautioned not to rely on these forward-looking statements, which are based on current expectations using the information available as of the date of this call and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties and other factors can be found in our SEC filings. With that, I will turn the call over to Krish.

Thanks, Stephane. Before I begin, I want to recognize Suma for being named to the innovator list. The concept of enabling repeat dosing of a genetic medicine in a home setting by the patient is truly innovative. So congrats, Suma. Stepping back, I'm very pleased with where we are at Krystal. On the commercial side, in 2025, we've made meaningful progress across all geographies. In the U.S., we added sales capacity and successfully reaccelerated demand. In Europe, despite the country-by-country nuances, we launched a genetic medicine that can be applied in a home setting by a patient. In Japan, we leverage the attributes of VYJUVEK to establish a strong value proposition for patients. And we continue to broaden VYJUVEK access globally. To date, we signed distributor agreements covering more than 20 countries, and our goal is to expand to over 40 countries in 2026. More importantly, the patient stories that we continue to hear about how VYJUVEK is changing lives remains deeply motivating for our entire team. On the pipeline, we're currently in the middle of 2 registrational trials in NK and in treating eye lesions in DEB patients with the potential to initiate 2 additional registrational programs in CF and Hailey-Hailey later this year. Together, that positions us well for the next 5 years, and we believe that if approved, we have the capabilities to self-launch these 4 indications. Meanwhile, the oncology and the Alpha-1 trials continue to progress well. None of this would be possible without the dedication of the Krystal team, and I'm grateful for their commitment and execution. Overall, Krystal is building a durable commercial gene therapy company with disciplined capital allocation. We're generating strong gross margins and operating profitability while expanding global access for VYJUVEK and advancing our focused pipeline. Our operating principle is straightforward: invest behind measurable execution milestones, compound value without relying on dilution and work diligently to get the next pipeline medicine approved. Turning now to results. We're pleased to report another quarter of revenue growth with net VYJUVEK revenue of $107.1 million in Q4. That brings total net VYJUVEK revenue since launch to over $730 million. The net revenue reported this quarter includes contributions from Europe and Japan as we build momentum in our initial overseas markets. Christine and Laurent are both here today and will share more country-level color in a moment. Gross margin was 94% for the quarter and 94% for the full year. We continue to expect gross margins in the 90% to 95% range for the foreseeable future. With that, I'll turn it over to Christine to provide an update on the U.S. commercial performance.

Thank you, Krish. We remain very encouraged by the VYJUVEK launch and the momentum we are seeing in the U.S., which continues to support our long-term commercial outlook. I'm pleased to share that we have now seen reimbursement approval acceleration for 3 consecutive quarters with over 660 since launch, reflecting strong execution by our commercial organization. As we continue to expand our reach into the community setting, we added over 50 new prescribers in Q4 2025 and have reached over 500 unique prescribers since launch. With our expanded sales force now fully trained and deployed, we are also seeing continued improvement across key demand metrics. The impact of our expanded sales force is supporting broader patient identification across the United States, including patients with DDEB that are being treated by local dermatologists or primary care physicians. It is encouraging to see the benefit that VYJUVEK is providing to patients across the full spectrum of disease severity from severe cases to mild and moderate presentations. Patients are achieving durable wound closure, which, in many cases, is allowing them to transition to as-needed utilization of VYJUVEK over time. Importantly, our commitment to the DEP community remains unwavering. As the market continues to evolve as expected through the launch, we remain focused on optimizing our processes to better support patients and providers. We continue to execute on this through strong partnerships with advocacy organizations and centers of excellence, ongoing feedback from HCPs and patients gathered through objective market research and a continued focus on driving operational improvements and advancing the standard of care. I will now hand the call off to Laurent to share updates on the VYJUVEK launch overseas. Laurent?

Thank you, Christine. It is my pleasure to share the latest on our operations outside the U.S., including an update on Japan on behalf of our colleagues. I'm proud to report that our global VYJUVEK launch continues to progress very well. The high patient demand we're seeing across our very different markets validates the transformative impact VYJUVEK brings to the dystrophic epidermolysis bullosa patients and their families. We now estimate that over 90 DEB patients have been prescribed VYJUVEK across Germany, France and Japan combined. Our launch in Germany continues to build momentum since late August of last year. We're seeing sustained prescription growth and good prescribing breadth. The initial centers of excellence are now routinely prescribing VYJUVEK, and we are expanding into the broader community setting. This geographic distribution is critical for patient access as it allows the patients to initiate therapy closer to home, reducing the burden on both patients and individual treatment centers. After initiation in a center, most of the patients are already benefiting from home administration. In France, our launch is progressing well under the AP2 early access program. The AP2 program is functioning exactly as designed, providing eligible patient access to VYJUVEK while we complete our negotiations with the French health authorities. Importantly, subject to the early access conditions, physicians and patients are demonstrating strong confidence in VYJUVEK's clinical profile. Please note that pricing negotiations in Germany and France are ongoing and progressing well. We expect this negotiation to continue until at least the second half of 2026 in Germany and 2027 in France. Our colleagues are also achieving early launch successes in Japan after successfully negotiating pricing in October of last year. This includes building a unique in-country distribution model to enable home delivery while addressing the many strict regulation regarding the handling…

Thank you, Laurent, and good morning, everyone. It is my pleasure to share today's update on our development efforts. Thanks to the hard work of our dedicated R&D team, we are making rapid progress on our rare disease pipeline, generating breakthrough clinical data and moving quickly towards multiple registrational data readouts later this year. I would like to start by highlighting one such breakthrough recently achieved with our KB407 program for the treatment of cystic fibrosis. A little over a month ago, we announced a successful delivery and expression of full-length wild-type CFTR protein following KB407 administration to the lungs of patients with CF. Not only could we confirm full-length protein expression in CF patients with Class I mutations, we also saw that HSV1 airway cell transduction was consistent across all patient biopsies. In a diverse patient population, including 4 modulator ineligible patients with uncorrected lung disease, we consistently observed transduction rates ranging from 29% to 42% and all usable biopsies were positive for transduction. Taken together with encouraging apical CFTR expression observed in Class I patients, as well as durability of expression out to at least 96 hours, these results give us high conviction in the potential of KB407 to fill the treatment gap that exists today for modulator in eligible patients. We are working closely with the CFF TDN and the FDA on a repeat dosing study design and streamlined pathways to support registration. We look forward to sharing updates once we have aligned with the agency and expect to start repeat dosing in the first half of the year. Our KB407 results also have profound implications for our platform, showcasing the versatility of HSV-1-based gene delivery to epithelial tissues beyond the skin. With upcoming readouts for KB801, KB803 and KB408, we hope to further underscore the exciting…

Thank you, Suma, and good morning, everyone. I'll now provide some highlights from our fourth quarter and full year financial results reported in our press release and 10-K filing earlier this morning. We previously announced preliminary 4Q 2025 VYJUVEK net revenue of $106 million to $107 million. Our final net revenue from global sales of VYJUVEK during the fourth quarter of 2025 was $107.1 million, which includes sales from our Q4 launches in both France and Japan. This marked growth as compared to the prior quarter of almost 10% and approximately 18% growth when compared to the prior year's fourth quarter. Year-to-date, VYJUVEK net revenue was $389.1 million, an increase of approximately 34% compared to full year 2024 revenue. Gross to net revenue percentages remain consistent with prior quarters. Cost of goods sold was $6.6 million compared to $4.3 million in the third quarter and $4.9 million in the prior year's fourth quarter. Gross margin for the quarter was 94% as compared to 96% in the third quarter and 95% in the fourth quarter of 2024. This change in gross margin is in part due to the volume of products sold outside of the U.S. increasing, which still carries a higher cost per unit ahead of our planned manufacturing process optimizations for products sold in these markets. R&D expenses were $14.8 million compared to $13.5 million in the prior year's fourth quarter, and SG&A expenses were $41.4 million compared to $31.3 million in the prior year's fourth quarter. This increase was primarily due to increased headcount, legal and consulting services and marketing costs to support our global launches of VYJUVEK. Operating expenses for the quarter included noncash stock-based compensation of $13.8 million compared to $13.4 million in the fourth quarter of last year. Consistent with the prior year, we are…

Thanks, Kate. I'd like to reiterate a few key points before we open for questions. First, geographic expansion is a meaningful tailwind for VYJUVEK and for Krystal. There are more DEB patients outside the United States than within it, and we are still early in addressing global demand. In 2026, we'll continue executing on a disciplined international rollout, and we look forward to adding our third European market, Italy, in the second half of the year. With large, identified patient pools, strong demand and favorable product labels in Europe and Japan, we expect our overseas expansion to be the predominant driver of revenue growth in 2026. In the U.S., demand continues to grow, but we're also seeing an evolution in utilization patterns among some longer tenured patients shifting toward more intermittent treatment cycles as their disease management stabilizes over time. Second, as we add patients overseas, it's important to note that revenue may not track linearly with patient counts this year due to accruals, timing effects and ongoing pricing negotiations. That said, having completed strong successful negotiations in Japan, we believe we have a strong value proposition to present to European payers, and we look forward to reaching final alignment on pricing. On the clinical front, we understand the importance of our registrational programs, and we're executing methodically to drive the desired outcomes. We remain on track to move KB407 into repeat dosing in the months ahead, and we strongly believe the updates to the KB801 and KB803 protocols position these programs to deliver tangible real-world benefit, maximizing convenience and building resilience to account for the inevitable human factor that comes with self-dosing. We were also pleased to receive RMAT for KB707 and Fast Track designation for KB111, 2 designations we know well and that can meaningfully shorten development time lines. We're excited to advance both of those programs, along with KB408 for alpha-1 deficiency, which is progressing through the redosing phase of the initial study. Overall, 2026 is shaping up to be a busy and an important year, and we're approaching it with a lot of enthusiasm. With that, let's open the call for questions.

[Operator Instructions] Your first question for today is coming from Roger Song with Jefferies.

Excellent. Congrats for the successful 2025. A couple of questions from us. On VYJUVEK, Krish, I heard you said a couple of comments around the U.S. versus ex U.S. Given 2 months in the 1Q, any visibility into the 1Q and then looking ahead of 2026, particularly contribution from ex U.S. versus the U.S. on the dollar value? Because I hear you say the revenue driver predominantly will come from ex U.S. in 2026.

Yes. Thanks, Roger. Thanks for the question. I want to clear out a couple of things. While I did say that the predominant growth driver will be from ex U.S., I do want to highlight that demand in the U.S. is accelerating. I mean you heard Christine talk about the number of reimbursement approvals being up Q-over-Q. And the one comment on while demand in the U.S. is accelerating, you should also assume that patients are now starting to settle into a start-stop regime, which is kind of tough -- it's nuanced and the kinetics of that is kind of a bit hard to predict. But in Europe, which -- where the launch is recent, definitely, it's an accelerating growth driver when you think about without exception. That all said, in terms of breakdown of U.S. versus ex U.S., we, at the moment, pretty strongly believe that when we report 1Q, we will be breaking them.

Got it. Yes. And then in terms of the pipeline, I just noticing you adjusting the dosing regimen for both ocular and NK be a little bit more frequent. Just curious, any data to support? I heard you said avoid the human error. So any data to suggest more frequent dosing may be resulting in better outcome? And any plan to test less frequent dosing later on?

Yes, I can take this. I mean, with 801, the weekly dose was deliberate. I mean, obviously, we have seen our blinded data from -- and we feel pretty confident about that data. The reason we -- initially, we started with in-clinic dosing for 801. And we realized commercially for this to be a viable product, we have to -- it has to be home administered. So again, there was interactions with the agency to get that home dosing. I mean, obviously, now it's implemented. The change was deliberate because now that the dose is being administered by the patient at their home, obviously, we train the patients. I mean there is always nuances with it, right? I mean our concern is you want to make sure that in the event of daily administration, there's a dose that they -- it doesn't get into the eye, they blink all kind of sort of administration errors. So we thought it would be easy. We have a very safe profile and the drug is clean. So we figured it's better to avoid and also it's more -- it's easy for the patient to remember, right? Daily one dose in the morning, you can drop it in the eye. So I think it was deliberate to make sure that dosing is -- they comply and we get the right dose in the eye.

Your next question is from Sami Corwin with William Blair.

I was curious if you could provide any insight into the compliance rate so far in the EU and Japan. And then, Krish, previously, you've commented on given Krystal's growing profitability, the company could potentially explore stock buyback options. So I guess I just wanted your updated thoughts there versus increased investment in the pipeline or M&A.

Thanks, Sami. When you talked about compliance, were you referring primarily to the United States compliance number? Or was it outside?

Outside and in the U.S.

Yes. Look, in Europe, compliance has been just as compliance had been in the U.S. when we first started the launch. The only comment on Japan I would make is by law, in Japan, in the first year of launch, the patient has to -- the patient only gets a 2-week prescription. And so one of the things which is a bit burdensome in the early days of the launch is for the patient to have to go back to the physician to get a new prescription every 2 weeks. To date, patients have been pretty compliant. It's the early days of launch. But when you look out over the next 6 to 9 months, one could imagine a situation where some patients may drop off on compliance purely based on this burden, but if there are any such dropouts, our expectation is by the time year 2 rolls out, which is late second half of this year, we expect compliance to come back up to normal levels.

Okay. And for Japan, that 2-week prescription burden, you said that lasts for the first year?

Yes. And on your second question on profitability and share buyback. Look, we understand we have a few research programs. As you know, our pipeline. We have a few rare diseases that are in registrational and have to launch. We have a couple of large indications, one being oncology, one being in alpha-1, one being in aesthetics. And until we kind of have a better sense of how those larger indications are going to go in terms of having a partner, having some support either in development or in commercialization, it's difficult to be very definitive on a time line for a stock buyback. But that said, one thing I have made clear in the past is we're not intending presently to use any of our cash towards in-licensing or buying any kind of third-party technology or company at the moment.

Your next question is from Alex Stranahan with Bank of America.

On the close to the year. Two questions. Maybe first on ex U.S. Can you just remind us what's left on the pricing negotiations and how you expect the balance of price and volumes to trend over the course of this year into next in France, Germany and Japan?

Yes. I think our present expectation is that we would reach some kind of pricing agreement with Germany in the second half of this year. It's tough, Alex, at this point to say if it's a 3Q or a 4Q, but our expectation is sometime in 3Q. With respect to France, clear expectation that we will not reach pricing agreement this year and probably be shifted to sometime in the first half of next year. That's our present expectation. Japan, we already have a price. The only thing to remember is in Germany, we will be accruing until the pricing is definite. We'll also be accruing in France until the pricing becomes definitive. And in general, and I've reiterated this in the past, we tend to be a bit conservative when it comes to accruing for a future price.

Okay. That makes sense. And then just maybe on ophthalmology, curious what kinds of updates you can get from these studies at this point given they're both actively enrolling. I guess just a bit more on specifically what drove the modified dosing regimens. And given the protocol amendments, curious if your comfort with the study powering has changed at all as well, either in NK or DEB.

Yes. No, as you can see, the powering and the number of patients have not changed because we clearly know that from oxalate and what the effects are -- gives us confidence from our data. With regards to, again, 801, we have 50% of our sites. I mean we are targeting 30 sites. so we can maximize and speeding up the process of enrollment. So with 60 patients, even on an average of 2 patients per site, we should be good to go. So we have 50% of our sites up and running, and we are aggressively working on getting the other 50, which we should be, I think all of them done by in the next couple of months. So I think with all of those sites up to speed, we feel confident in our enrollment as we -- as announced that we would enroll this -- complete enrollment of the study by end of the year. And for 803 and also potentially announce, I mean, it's 8 weeks and then we have -- hopefully, the data all comes in and we can get data by end of the year. For 803, again, we feel very good from what we saw in our initial blinded study. Again, same thing. Initially, it was designed to do administer by clinicians in the clinic. And obviously, we realize that this has to be home administered for the study to be enrolled in patients' convenience. So we shifted from in-clinic to home dosing. And as a result, again, of the same logic goes behind, we wanted to make sure that we know from the data we saw that give some flexibility for dosing for the patients because every day can be burdens -- I mean it can be -- so they have a volume and then they can administer the entire volume a couple of times a week. So that gives them some flexibility. This is what we learned from VYJUVEK. I mean there were lessons learned and that helped us optimize the dose for 803 in the clinic.

Your next question for today is from Yigal Nochomovitz with Citigroup.

Congrats on the progress. I was just curious if you could speak in a little bit more detail with respect to the 90 patients that have been prescribed VYJUVEK in Europe, how that splits out across the geographies, Germany, France and then also in Japan? And if you could speak to more specifically the cadence in terms of patient adds month-over-month in the recent quarter.

Yigal, thanks for the question. It's really difficult to estimate number of patients in Europe. We do not -- I mean, -- the laws are different between U.S. and Europe. And we're just making an estimate based on vials being shipped and pharmacies being disclosed. So while it's a close enough proxy, the number 90 itself is somewhat of an approximation and to segment that further into France versus Germany versus other countries just makes it that much more irrelevant at the moment. But it provides a directional guidance until we break out revenues. So our expectation is starting in 1Q, we'll have an idea -- I mean, you will have an idea of how U.S. is doing versus the rest of the world. But until then, the only reason we provided patient estimates is to give people a sense of -- some sense of how launch is going. And honestly, in all these 3 countries, given all the different nuances and Europe is definitely a bit more burdensome in terms of figuring out supply chain, logistics, getting the medication to the patient. We feel really good about the way it's gotten started. Fingers crossed, hopefully, it continues to go in the right direction.

Okay. Understood. And then I was just curious, in Italy, how does the reimbursement work there? I know in Germany, you have sort of this 3-phase negotiation and then in France, you accrue from the beginning. What's the setup in Italy as far as how you do the reimbursement?

Italy, we will launch once the pricing is finalized. So we're not expecting any accrual type situation in Italy.

Your next question is from Ritu Baral with TD Cowen.

This is Josh Fleishman, on the line for Ritu. Congrats on the quarter. Just curious, was patient compliance also the major factor required to get at-home self-dosing for 803 in ocular DEB? And what was the differentiating factor that resulted in the 3 times a week dosing schedule for 803 and the once-daily dosing schedule for 801?

Yes. I mean, I think one of the main deciding factor was obviously home administration. And the reason was, as I said, is we learned from VYJUVEK. I mean, from what we see from patient feedback, they have asked that can we administer the drug multiple times during the week. So I think we want to give them the flexibility. So we decided that, yes, let's have a volume and then give them the flexibility to administer it has a couple of times during the week. So that was the best regimen for these patients. Again, based on the data that we saw before, we feel pretty confident that this should not make any difference. So again, convenience for the patient home, we give them a volume and they can administer it that volume during the week.

Okay. Very helpful. And then I just have one follow-up, please. On the Italian discussions, we recall that the original guidance for the Italian launch was in mid-2026, now it's second half. Is the delay associated more with rescheduling? Or is it more on pushback than VYJUVEK efficacy?

This is -- I would not use the word delay. It's tough to predict whether it's in June or whether it's going to be in July, but I would not frame that as any kind of delay with respect to the Italian launch. Whatever we said in the past, we continue to believe that's the time line.

Your next question for today is from Gavin Clark-Gartner with Evercore ISI.

Also on the ocular modified dosing regimens, what happens to the data generated to date on the prior regimens? Like does this all get pooled into the primary analysis of the study? And then can I just also confirm, you didn't change the PFU or the volume of dose in either of the study, right? It's just the frequency.

Correct. No. No, none of that changes. The dose is correct. So what happens is basically, when we -- the first study goes towards safety and then we started the Phase III protocol with the SAP. We had to go through back and forth with the agency on the statistical analysis plan. There was a couple of iterations. So this helped us do that, too. So it was a combination. Now we have the final protocol, the agreed-upon statistical analysis plan with the agency, which they agree and concurred. All of this is important as we start the study. So it's all set and now it's in the process of execution.

Okay. So just to be clear, like if we just take the NK study for 801, like all of those 60 patients, those are all going to be enrolled on a go-forward basis at this modified regimen.

Correct. That is correct.

[Operator Instructions] We have reached the end of the question-and-answer session and today's conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.