10q10k10q10k.net

What changed in Krystal Biotech, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Krystal Biotech, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+657 added−581 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-26)

Top changes in Krystal Biotech, Inc.'s 2024 10-K

657 paragraphs added · 581 removed · 470 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

134 edited+42 added−35 removed180 unchanged
Biggest changeOur Technology Platform Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,441,614 United States Composition of Matter & Methods of Use – Delivery platform for targeted therapeutics, as well as methods of its use for delivering any effector to the skin 12/28/2036 Krystal U.S. 11,185,564 United States Methods of Use – Methods of use of replication-defective HSV vectors for delivering any effector to skin-targeted therapeutics 12/28/2036 Krystal U.S. 11,865,148 United States Methods of Use – Methods of use of replication-defective HSV-1 for delivering any effector to the eye 12/28/2036 Krystal AU 2019280069 Australia Composition of Matter & Methods of Use – Delivery platform for targeted therapeutics, as well as methods of its use for delivering any effector to the skin 12/28/2036 Krystal VYJUVEK / B-VEC Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 9,877,990 United States Composition of Matter & Methods of Use – Compositions comprising HSV vectors encoding certain effectors, including the effector encoded in B-VEC, and methods of using the same for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal U.S. 10,155,016 United States C omposition of Matter – Covers compositions containing B-VEC, formulated for alternate routes of administration 12/28/2036 Krystal EP 3,377,637 Europe C omposition of Matter – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal 18 JP 6,970,086 Japan C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal AU 2016401692 Australia C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal MX 394867 Mexico C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal Respiratory KB407 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,829,529 United States Methods of Use – Methods of using KB407 for the treatment of cystic fibrosis and other disease causing progressive lung destruction 2/7/2040 Krystal ZA 2022/05420 South Africa Methods of Use – Methods of using KB407 for the treatment of cystic fibrosis and other disease causing progressive lung destruction 2/7/2040 Krystal Oncology KB707 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 11,779,660 United States Composition of Matter – Pharmaceutical compositions comprising HSV vectors encoding IL-2 and IL-12 4/14/2042 Krystal Dermatology KB105 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,525,090 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising herpes virus vectors encoding TGM1, as well as methods of providing prophylactic, palliative, or therapeutic relief to TGM1-deficient ARCI subjects 4/11/2039 Krystal U.S. 11,717,547 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising replication-defective HSV-1 vectors encoding TGM, as well as methods of delivering TGM to cells 4/11/2039 Krystal AU 2019252658 Australia C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising herpes virus vectors encoding TGM1, as well as methods of providing prophylactic, palliative, or therapeutic relief to TGM1-deficient ARCI subjects 4/11/2039 Krystal 19 KB104 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 11,642,384 United States Composition of Matter – Pharmaceutical compositions comprising eplication-defective HSV vectors encoding SPINK5 9/24/2039 Krystal Aesthetics KB301 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,786,438 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising HSV vectors encoding one or more cosmetic proteins, as well as methods of their use for improving skin condition, quality, and/or appearance 4/26/2039 Krystal AU 2019260757 Australia C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising HSV vectors encoding one or more cosmetic proteins, as well as methods of their use for improving skin condition, quality, and/or appearance 4/26/2039 Krystal * Granted patents in the U.S. and elsewhere are shown.
Biggest changeA summary of granted composition of matter and/or methods of use patents that we own, which cover our technology platform, VYJUVEK, and our product candidates in the United States and elsewhere, is provided below. 17 Our Technology Platform Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,441,614 United States Composition of Matter & Methods of Use – Delivery platform for targeted therapeutics, as well as methods of its use for delivering any effector to the skin 12/28/2036 Krystal U.S. 11,185,564 United States Methods of Use – Methods of use of replication-defective HSV vectors for delivering any effector to skin-targeted therapeutics 12/28/2036 Krystal U.S. 11,865,148 United States Methods of Use – Methods of use of replication-defective HSV-1 for delivering any effector to the eye 12/28/2036 Krystal JP 7,480,105 Japan Composition of Matter & Uses Thereof – Delivery platform for targeted therapeutics, as well as uses thereof, including for delivery of any effector to the skin 12/28/2036 Krystal AU 2019280069 Australia Composition of Matter & Methods of Use – Delivery platform for targeted therapeutics, as well as methods of its use for delivering any effector to the skin 12/28/2036 Krystal VYJUVEK / B-VEC Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 9,877,990 United States Composition of Matter & Methods of Use – Compositions comprising HSV vectors encoding certain effectors, including the effector encoded in B-VEC, and methods of using the same for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal U.S. 10,155,016 United States C omposition of Matter – Covers compositions containing B-VEC, formulated for alternate routes of administration 12/28/2036 Krystal EP 3,377,637 Europe C omposition of Matter – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal JP 6,970,086 Japan C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal AU 2016401692 Australia C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal CL 69.593 Chile Composition of Matter & Uses Thereof – Compositions comprising replication-defective HSV vectors encoding certain effectors, including the effector encoded in B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal 18 Patent Number Country / Region * Patent Type Expiration Date ** Owner IN 498868 India Composition of Matter – Compositions comprising replication-defective HSV vectors encoding certain effectors, including the effector encoded in B-VEC 12/28/2036 Krystal MX 394867 Mexico C omposition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal NZ New Zealand Composition of Matter & Uses Thereof – Pharmaceutical compositions comprising B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal SG 11201808314Q Singapore Composition of Matter & Uses Thereof – Compositions comprising replication-defective HSV vectors encoding certain effectors, including the effector encoded in B-VEC, as well as uses thereof, including for providing prophylactic, palliative or therapeutic relief of a wound, disorder or disease of the skin 12/28/2036 Krystal Respiratory KB407 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,829,529 United States Methods of Use – Methods of using KB407 for the treatment of cystic fibrosis and other disease causing progressive lung destruction 2/7/2040 Krystal ZA 2022/05420 South Africa Methods of Use – Methods of using KB407 for the treatment of cystic fibrosis and other disease causing progressive lung destruction 2/7/2040 Krystal Oncology KB707 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 11,779,660 United States Composition of Matter – Pharmaceutical compositions comprising HSV vectors encoding IL-2 and IL-12 4/14/2042 Krystal U.S. 11,918,660 United States Composition of Matter – Pharmaceutical compositions comprising HSV-1 vectors encoding IL-2 and IL-12 4/14/2042 Krystal Dermatology KB105 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,525,090 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising herpes virus vectors encoding TGM1, as well as methods of providing prophylactic, palliative, or therapeutic relief to TGM1-deficient ARCI subjects 4/11/2039 Krystal 19 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 11,717,547 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising replication-defective HSV-1 vectors encoding TGM, as well as methods of delivering TGM to cells 4/11/2039 Krystal AU 2019252658 Australia C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising herpes virus vectors encoding TGM1, as well as methods of providing prophylactic, palliative, or therapeutic relief to TGM1-deficient ARCI subjects 4/11/2039 Krystal AU 2023222939 Australia Composition of Matter & Methods of Use – Pharmaceutical compositions comprising replication-defective HSV-1 vectors encoding TGM, as well as methods of delivering TGM to cells 4/11/2039 Krystal Other Dermatology Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 11,642,384 United States Composition of Matter – Pharmaceutical compositions comprising eplication-defective HSV vectors encoding SPINK5 9/24/2039 Krystal JP 7,562,515 Japan Composition of Matter & Uses Thereof – Pharmaceutical compositions comprising herpes virus vectors encoding SPINK, as well as uses thereof, including for providing prophylactic, palliative, or therapeutic relief of one or more signs or symptoms of Netherton Syndrome and/or atopic dermatitis 9/24/2039 Krystal AU 2019346549 Australia Compositions of Matter - Pharmaceutical compositions comprising replication-defective HSV vectors encoding SPINK5 9/24/2039 Krystal JP 7,560,449 Japan Composition of Matter & Uses Thereof – Herpes virus vectors and pharmaceutical compositions encoding laminin, as well as uses thereof, including for treating one or more signs or symptoms of Junctional Epidermolysis Bullosa 9/25/2039 Krystal 20 Aesthetics KB301 Patent Number Country / Region * Patent Type Expiration Date ** Owner U.S. 10,786,438 United States C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising HSV vectors encoding one or more cosmetic proteins, as well as methods of their use for improving skin condition, quality, and/or appearance 4/26/2039 Krystal U.S. 12,128,122 United States Composition of Matter & Methods of Use –Compositions comprising replication-defective HSV-1 vectors encoding one or more cosmetic proteins, as well as methods of their use for improving skin condition, quality, and/or appearance, and for treating one or more signs or symptoms of dermatological aging 4/26/2039 Krystal JP 7,602,999 Japan Compositions of Matter & Uses Thereof – Cosmetic compositions comprising herpes virus vectors encoding one or more cosmetic proteins, as well as uses thereof, including for improving skin condition, quality, and/or appearance 4/26/2039 Krystal AU 2019260757 Australia C omposition of Matter & Methods of Use – Pharmaceutical compositions comprising HSV vectors encoding one or more cosmetic proteins, as well as methods of their use for improving skin condition, quality, and/or appearance 4/26/2039 Krystal ZA 2023/06237 South Africa Composition of Matter & Uses thereof – Pharmaceutical compositions comprising HSV vectors encoding one or more cosmetic proteins, as well as uses thereof, including for improving skin condition, quality, and/or appearance 4/26/2039 Krystal * Granted patents in the U.S. and elsewhere are shown.
We initiated a pivotal Phase 3 trial (“GEM-3 trial”) in July 2020. The GEM-3 trial of topical B-VEC for the treatment of DEB was a randomized, double-blind, intra-patient placebo-controlled multicenter study designed to evaluate the efficacy and safety of B-VEC for patients suffering from both recessive and dominant forms of DEB.
We initiated a pivotal Phase 3 trial (the “GEM-3 trial”) in July 2020. The GEM-3 trial of topical B-VEC for the treatment of DEB was a randomized, double-blind, intra-patient placebo-controlled multicenter study designed to evaluate the efficacy and safety of B-VEC for patients suffering from both recessive and dominant forms of DEB.
Trademark registrations generally are for fixed but renewable terms. Government Regulation and Product Approval In the United States, the FDA regulates biologic products including gene therapy products under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”), and regulations and guidance implementing these laws.
Trademark registrations generally are for fixed but renewable terms. Government Regulation and Product Approval In the United States, the FDA regulates biologic products including gene therapy products under the Federal Food, Drug, and Cosmetic Act (the “FDCA”), the Public Health Service Act (“PHSA”), and regulations and guidance implementing these laws.
Additionally, each clinical trial protocol for a gene therapy product candidate is reviewed by the FDA, and in limited instances the National Institutes of Health (“NIH”), through its Recombinant DNA Advisory Committee, or RAC. The FDA’s authorization also must be obtained before marketing of biologic products.
Additionally, each clinical trial protocol for a gene therapy product candidate is reviewed by the FDA, and in limited instances the National Institutes of Health (the “NIH”), through its Recombinant DNA Advisory Committee, or RAC. The FDA’s authorization also must be obtained before marketing of biologic products.
In the United States, for example, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected and continues to face major uncertainty due to the status of major legislative initiatives surrounding healthcare reform. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.
In the United States, for example, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected and continues to face major uncertainty due to the status of major legislative initiatives surrounding healthcare reform. On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law.
These can be generally classified into four broad categories: • Gene Silencing Approaches: We are aware of two companies, Takeda Pharmaceutical Company Limited (in partnership with Arrowhead Pharmaceutical Inc.) and Novo Nordisk A/S (in partnership with Alnylam Pharmaceuticals, Inc.), which are developing interfering RNA medicines to treat the liver manifestations of AATD. • Alternate Augmentation Approaches: We are aware of companies, such as Kamada Ltd. and Sanofi S.A., which are developing new augmentation treatments with modified frequency or routes of administration to treat the lung manifestations of AATD. • Direct Protease Inhibition: We are aware of companies, such as Peak Bio, Inc. and Mereo BioPharma Group plc, which are developing protease inhibitors to treat the lung manifestations of AATD. • Gene Editing Approaches: We are aware of companies, such as Intellia Therapeutics, Inc., Wave Life Sciences Ltd., and Beam Therapeutics Inc., which are developing gene editing therapies inhibitors to treat both the lung and liver manifestations of AATD.
These can be generally classified into four broad categories: • Gene Silencing Approaches: We are aware of two companies, Takeda Pharmaceutical Company Limited (in partnership with Arrowhead Pharmaceutical Inc.) and Novo Nordisk A/S (in partnership with Alnylam Pharmaceuticals, Inc.), which are developing interfering RNA medicines to treat the liver manifestations of AATD. • Alternate Augmentation Approaches: We are aware of companies, such as Kamada Ltd. and Sanofi S.A., which are developing new augmentation treatments with modified frequency or routes of administration to treat the lung manifestations of AATD. • Direct Protease Inhibition: We are aware of companies, such as Peak Bio, Inc. and Mereo BioPharma Group plc, which are developing protease inhibitors to treat the lung manifestations of AATD. • Gene Editing Approaches: We are aware of companies, such as Wave Life Sciences Ltd. and Beam Therapeutics Inc., which are developing gene editing therapies inhibitors to treat both the lung and liver manifestations of AATD.
In making this determination we consider, among other things, the stage of development of our product candidate, the anticipated date of first 17 regulatory approval, whether we believe the intellectual property rights of others are valid, whether we believe we infringe the intellectual property rights of others, whether a license is available upon commercially reasonable terms, whether we will seek to challenge the intellectual property rights of others, the term of the rights, and the likelihood of and liability resulting from an adverse outcome should we be found to infringe the intellectual property rights of others.
In making this determination we consider, among other things, the stage of development of our product candidate, the anticipated date of first regulatory approval, whether we believe the intellectual property rights of others are valid, whether we believe we infringe the intellectual property rights of others, whether a license is available upon commercially reasonable terms, whether we will seek to challenge the intellectual property rights of others, the term of the rights, and the likelihood of and liability resulting from an adverse outcome should we be found to infringe the intellectual property rights of others.
Our process requires three critical components: • Production of a master virus seed stock (“MVSS”); • Production of complementing master cell bank (“MCB”); and • Optimized transduction parameters. For VYJUVEK and each of our product candidates, we generate a MVSS which is scaled up from a single purified clone of the modified HSV-1 vector expressing the therapeutic effector.
Our process requires three critical components: • Production of a master virus seed stock (“MVSS”); • Production of complementing master cell bank (“MCB”); and • Optimized transduction parameters. 14 For VYJUVEK and each of our product candidates, we generate a MVSS which is scaled up from a single purified clone of the modified HSV-1 vector expressing the therapeutic effector.
In the United States, sales of any product candidates for which regulatory approval for commercial sale is obtained will depend in part on the availability of coverage and adequate reimbursement from third-party payors. Third-party payors include government authorities and health programs in the United States such as Medicare and Medicaid, managed care 26 providers, private health insurers and other organizations.
In the United States, sales of any product candidates for which regulatory approval for commercial sale is obtained will depend in part on the availability of coverage and adequate reimbursement from third-party payors. Third-party payors include government authorities and health programs in the United States such as Medicare and Medicaid, managed care providers, private health insurers and other organizations.
Clinical Development of KB301 We initiated a Phase 1 clinical trial, the PEARL-1 trial, for the treatment of aesthetic skin conditions in August 2020. The Phase 1 dose-ranging trial evaluated the safety, tolerability, and initial efficacy of intradermal injections of KB301 in adult 13 subjects aged 18-75. KB301 was well tolerated, and we were able to biopsy and demonstrate proof-of-mechanism.
Clinical Development of KB301 We initiated a Phase 1 clinical trial, the PEARL-1 trial, for the treatment of aesthetic skin conditions in August 2020. The Phase 1 dose-ranging trial evaluated the safety, tolerability, and initial efficacy of intradermal injections of KB301 in adult subjects aged 18-75. KB301 was well tolerated, and we were able to biopsy and demonstrate proof-of-mechanism.
The greater payload capacity of our vector and the high transduction efficiencies achieved allow us to deliver a full gene (or genes) directly to any patient’s tissues for off-the-shelf, in vivo gene expression without additional manipulation. • Direct Delivery : Our engineered HSV-1 vector allows for noninvasive or minimally invasive local gene delivery.
The greater payload capacity of our vector and the high transduction efficiencies achieved allow us to deliver a 4 full gene (or genes) directly to any patient’s tissues for off-the-shelf, in vivo gene expression without additional manipulation. • Direct Delivery : Our engineered HSV-1 vector allows for noninvasive or minimally invasive local gene delivery.
We are aware of several preclinical or early clinical stage nucleic-acid-based programs for treatment of this patient population including Vertex Pharmaceuticals Inc., ReCode Therapeutics, Inc., Spirovant Sciences, Inc., and 4D Molecular Therapeutics, Inc. Alpha-1 Antitrypsin Deficiency Currently approved treatments for AATD consist of IV administered alpha-1 antitrypsin augmentation therapy, administered weekly.
We are aware of several preclinical or early clinical stage nucleic-acid-based programs for treatment of this patient population including Vertex Pharmaceuticals Inc., ReCode Therapeutics, Inc., Spirovant Sciences, Inc., and 4D Molecular Therapeutics, Inc. Alpha-1 Antitrypsin Deficiency Currently approved treatments for AATD consist of IV administered AAT augmentation therapy, administered weekly.
In addition, our experience in clinical trials, obtaining FDA and other regulatory approvals, and manufacturing and commercialization of products may be more limited. 15 VYJUVEK / B-VEC Dystrophic Epidermolysis Bullosa A number of companies are developing drug candidates for the treatment of DEB. VYJUVEK is the only corrective therapy for DEB approved worldwide.
In addition, our experience in clinical trials, obtaining FDA and other regulatory approvals, and manufacturing and commercialization of products may be more limited. VYJUVEK / B-VEC Dystrophic Epidermolysis Bullosa A number of companies are developing drug candidates for the treatment of DEB. VYJUVEK is the only corrective therapy for DEB approved worldwide.
We announced the ground breaking of ASTRA in January 2020 and began operational production in the third quarter of 2023. Our proprietary manufacturing process which was initially developed for B-VEC and is now being used across our platform, was developed and optimized internally and involves both an upstream production process and downstream 14 purification process.
We announced the ground breaking of ASTRA in January 2020 and began operational production in the third quarter of 2023. Our proprietary manufacturing process which was initially developed for B-VEC and is now being used across our platform, was developed and optimized internally and involves both an upstream production process and downstream purification process.
Arrangements with third-party payors, existing or potential 25 customers and referral sources are subject to broadly applicable fraud and abuse and other healthcare laws and regulations, and these laws and regulations may constrain the business or financial arrangements and relationships through which manufacturers market, sell and distribute the products for which they obtain marketing approval.
Arrangements with third-party payors, existing or potential customers and referral sources are subject to broadly applicable fraud and abuse and other healthcare laws and regulations, and these laws and regulations may constrain the business or financial arrangements and relationships through which manufacturers market, sell and distribute the products for which they obtain marketing approval.
None of our employees are represented by a labor union and we consider our employee relations to be good. 27 We believe our employees are among the most important assets to our company and are key to achieving our goals and expectations. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, and incentivizing our existing and new employees.
None of our employees are represented by a labor union and we consider our employee relations to be good. We believe our employees are among the most important assets to our company and are key to achieving our goals and expectations. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, and incentivizing our existing and new employees.
Chiesi Farmaceutici S.p.A.’s palliative treatment Filsuvez ® (birch triterpenes) was approved by the FDA in the United States in 2023 and was previously approved by the EMA for the EU. Ophthalmology Ocular Complications Secondary to Dystrophic Epidermolysis Bullosa There are no approved therapies for ocular complications secondary to DEB at this time.
Chiesi Farmaceutici S.p.A.’s palliative treatment Filsuvez ® (birch triterpenes) was approved by the FDA in the United States in 2023 and was previously approved by the EMA for the EU. Ophthalmology Ocular Complications Secondary to Dystrophic Epidermolysis Bullosa 15 There are no approved therapies for ocular complications secondary to DEB at this time.
Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review and accelerated approval. Regenerative Medicine Advanced Therapy (“RMAT”) Designation Established under the 21st Century Cures Act, RMAT designation is a program designed to expedite the development and approval of regenerative medicine products, including gene therapy products.
Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review and accelerated approval. Regenerative Medicine Advanced Therapy (“RMAT”) Designation 25 Established under the 21st Century Cures Act, RMAT designation is a program designed to expedite the development and approval of regenerative medicine products, including gene therapy products.
In October 2023, we submitted a marketing authorization application (“MAA”) to the EMA for B-VEC for the treatment of DEB in patients from birth. In November 2023, we were notified that the MAA had been validated and was now under Committee for Medicinal Products for Human Use review.
In October 2023, we submitted a marketing authorization application (“MAA”) to the EMA for B-VEC for the treatment of DEB in patients from birth. In November 2023, we were notified that the MAA had been validated and was now under Committee for Medicinal Products for Human Use (“CHMP”) review.
The OLE study was concluded in the third quarter of 2023, and the safety profile continued to support the overall benefit-risk of B-VEC, with no new safety concerns noted with extended duration of dosing of B-VEC. We expect to disclose detailed study data at upcoming scientific meetings or in scientific publications.
The OLE study was concluded in the third quarter of 2023, and the safety profile continued to support the overall benefit-risk of B-VEC, with no new safety concerns noted with extended duration of dosing of B-VEC. We expect to disclose additional detailed study data at upcoming scientific meetings or in scientific publications.
In preclinical studies, single and repeated topical B-VEC administration to the eye in a mouse corneal lesion model resulted in localized COL7A1 expression with no adverse effects noted histologically. Ophthalmic B-VEC has been applied topically to the eye of one DEB patient under a compassionate use protocol.
In preclinical studies, single and repeated topical B-VEC administration to the eye in a mouse corneal lesion model resulted in localized COL7A1 expression with no adverse effects noted histologically. B-VEC has been applied topically to the eye of one DEB patient under a compassionate use protocol.
The FDCA, PHSA and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, importation, advertising and other promotional practices involving biologic products. IND applications to the FDA are required before conducting human clinical testing of biologic products.
The FDCA, PHSA and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, importation, advertising and other promotional practices involving biologic products. IND applications to the FDA are required before conducting human clinical 21 testing of biologic products.
Following completion of the GEM-3 trial, we initiated an open label extension study (“OLE”) to provide extension of B-VEC treatment for participants who completed study GEM-3 (“rollover participants”) and B-VEC treatment for newly enrolling (“naïve participants”) participants with DEB. The OLE was a multi-center, open-label study of B-VEC for the topical treatment of DEB wounds.
Following completion of the GEM-3 trial, we initiated an OLE to provide extension of B-VEC treatment for participants who completed the GEM-3 trial (“rollover participants”) and B-VEC treatment for newly enrolling participants (“naïve participants”) with DEB. The OLE was a multi-center, open-label study of B-VEC for the topical treatment of DEB wounds.
In all cases, the clinical trials are conducted in accordance with CGCPs and the applicable regulatory requirements of the country or countries in which the clinical trial is performed, as well as the ethical principles that have their origin in the Declaration of Helsinki (whichever provides the greater protection to the clinical trial participants).
In all cases, the clinical trials are conducted in accordance with CGCPs and the applicable regulatory requirements of the country or countries in which the clinical trial is performed, as well as the ethical 26 principles that have their origin in the Declaration of Helsinki (whichever provides the greater protection to the clinical trial participants).
HSV-1 has a natural affinity, or tropism, for epithelial cells. Consequently, we believe our vector penetrates and delivers its payload much more efficiently than other vectors, 5 resulting in transduction efficiencies or cell penetration as high as 95% in cell-based studies.
HSV-1 has a natural affinity, or tropism, for epithelial cells. Consequently, we believe our vector penetrates and delivers its payload much more efficiently than other vectors, resulting in transduction efficiencies or cell penetration as high as 95% in cell-based studies.
With gene therapy protocols, if 21 the FDA allows the IND application to proceed, but the RAC decides that full public review of the protocol is warranted, the FDA will request at the completion of its IND application review that sponsors delay initiation of the protocol until after completion of the RAC review process.
With gene therapy protocols, if the FDA allows the IND application to proceed, but the RAC decides that full public review of the protocol is warranted, the FDA will request at the completion of its IND application review that sponsors delay initiation of the protocol until after completion of the RAC review process.
It is illegal to pay, offer to pay or authorize the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.
It is 28 illegal to pay, offer to pay or authorize the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.
Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. 22 Additional Regulation for Gene Therapy Clinical Trials In addition to the regulations discussed above, there are a number of additional standards that apply to clinical trials involving the use of gene therapy.
Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Additional Regulation for Gene Therapy Clinical Trials In addition to the regulations discussed above, there are a number of additional standards that apply to clinical trials involving the use of gene therapy.
The FDA has provided guidance for the development of gene therapy products generally, including a growing body of guidance documents 20 on CMC, clinical investigations, and other areas of gene therapy development, all of which are intended to facilitate the industry’s development of gene therapy products.
The FDA has provided guidance for the development of gene therapy products generally, including a growing body of guidance documents on CMC, clinical investigations, and other areas of gene therapy development, all of which are intended to facilitate the industry’s development of gene therapy products.
Our scientific team’s collective decades of experience and expertise in HSV engineering and purification has allowed us to successfully optimize our engineered HSV-1 vector production process and develop in-house Chemistry, Manufacturing and Control (“CMC”) capabilities. • First Approval for Platform Builds on Existing Regulatory Precedent : The first FDA and European Medicines Agency (“EMA”)-approved oncolytic virus product, Imlygic ® by Amgen, for treatment of melanoma, a skin cancer, is based on a genetically engineered HSV-1 virus.
Our scientific team’s collective decades of experience and expertise in HSV engineering and purification has allowed us to successfully optimize our engineered HSV-1 vector production process and develop in-house Chemistry, Manufacturing, and Controls (“CMC”) capabilities. • First Approval for Platform Builds on Existing Regulatory Precedent : The first FDA and European Medicines Agency (“EMA”)-approved oncolytic virus product, Imlygic ® by Amgen, for treatment of melanoma, a skin cancer, is based on a genetically engineered HSV-1 virus.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on the investor relations section of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to the Securities and Exchange Commission, or the SEC.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act are available free of charge on the investor relations section of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to the Securities and Exchange Commission, or the SEC.
DEB patients may suffer from open wounds, skin infections, fusion of fingers and toes, ocular complications that can result in severe vision loss, and gastrointestinal tract problems throughout their lifetime, and may eventually develop squamous cell carcinoma, a potentially fatal condition. We believe that there are, at present, approximately 3,000 DEB patients in the United States and approximately 9,000 worldwide.
DEB patients may suffer from open wounds, skin infections, fusion of fingers and toes, ocular complications that can result in severe vision loss, and gastrointestinal tract problems throughout their lifetime, and may eventually develop squamous cell carcinoma, a potentially fatal condition. We believe that there are, at present, over 3,000 DEB patients in the United States and over 9,000 worldwide.
In addition to patent protection, regulatory exclusivity, and trade secret protection, we also protect our approved product, product candidates and platform technology with trademarks and contractual protections.
In addition to patent protection, regulatory exclusivity, and trade secret protection, we also protect our approved product, product candidates 16 and platform technology with trademarks and contractual protections.
Based on this positive opinion, we expect to be eligible for up to an additional two years of marketing exclusivity in the European Union (“EU”), on top of the ten-year EU market exclusivity after market approval in the EU. The European regulatory authorities have also granted B-VEC Orphan Designation and PRIority MEdicines eligibility for B-VEC to treat DEB.
Based on this positive opinion, we expect to be eligible for up to an additional two years of marketing exclusivity in the EU, on top of the ten-year EU market exclusivity after market approval in the EU. The European regulatory authorities have also granted B-VEC Orphan Designation and PRIority MEdicines eligibility for B-VEC to treat DEB.
In July 2023, the FDA granted intratumoral KB707 Fast Track Designation for the treatment of anti-programmed cell death protein-1 (“PD-1”) relapsed/refractory locally advanced or metastatic melanoma. In February 2024, the FDA also granted inhaled KB707 Fast Track Designation for the treatment of patients with solid tumors with pulmonary metastases that are relapsed or refractory to standard of care therapy.
In July 2023, the FDA granted intratumoral KB707 Fast Track Designation for the treatment of anti-programmed cell death protein-1 (“PD-1”) relapsed/refractory locally advanced or metastatic melanoma and, in February 2024, the FDA granted inhaled KB707 Fast Track Designation for the treatment of patients with solid tumors with pulmonary metastases that are relapsed or refractory to standard of care therapy.
The World Health Organization lists cancer as a leading cause of death globally and estimates that the disease was responsible for nearly 10 million deaths in 2020. Of these, an estimated 5 million deaths were attributed to solid tumor malignancies of the lung, colon and rectum, liver, stomach, and breast alone.
The World Health Organization lists cancer as a leading cause of death globally and estimates that the disease was responsible for nearly 10 million deaths in 2020. Of these, an estimated five million deaths were attributed to solid tumor malignancies of the lung, colon and rectum, liver, stomach, and breast alone.
KB707 KB707is a redosable, immunotherapy designed to deliver genes encoding both human interleukin-2 (“IL-2”) and interleukin-12 (“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.
KB707 KB707 is a redosable, immunotherapy designed to deliver genes encoding both human interleukin-2 (“IL-2”) and interleukin-12 (“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.
The characteristics of skin aging are largely due to aberrant collagen homeostasis, including reduced collagen biosynthesis, increased collagen fibril fragmentation, and progressive loss of dermal collagen culminating in a net collagen deficiency, resulting from both intrinsic ( e.g. , passage of time, genetics) and extrinsic ( e.g. , chronic light exposure, pollution) pressures.
Many characteristics of skin aging are largely due to aberrant collagen homeostasis, including reduced collagen biosynthesis, increased collagen fibril fragmentation, and progressive loss of dermal collagen culminating in a net collagen deficiency, resulting from both intrinsic (e.g., passage of time, genetics) and extrinsic (e.g., chronic light exposure, pollution) pressures.
The FDA had previously granted B-VEC Orphan Drug Designation (“ODD”), Fast Track Designation, Rare Pediatric Designation, and granted Regenerative Medicine Advanced Therapy to B-VEC for the treatment of DEB. In September 2023, we received a positive opinion from the EMA Pediatric Committee on the Pediatric Investigation Plan for B-VEC for the treatment of DEB.
The FDA had previously granted Orphan Drug Designation (“ODD”), Fast Track Designation, Rare Pediatric Designation (“RPDD”), and Regenerative Medicine Advanced Therapy to B-VEC for the treatment of DEB. 6 In September 2023, we received a positive opinion from the EMA Pediatric Committee on the Pediatric Investigation Plan for B-VEC for the treatment of DEB.
Mutations in the TGM1 gene, and the subsequent disruption to the epidermal barrier, leads to pronounced dehydration, trans-epidermal exposure to unwanted toxins and surface microorganisms, and a greatly increased risk of infection. Transglutaminase-1 deficiency is associated with increased mortality in the neonatal period and has a dramatic impact on quality of life.
Mutations in the TGM1 gene, and the subsequent disruption to the epidermal barrier, leads to pronounced dehydration, trans-epidermal exposure to unwanted toxins and surface microorganisms, and a greatly increased risk of infection. TGM1 deficiency is associated with increased mortality in the neonatal period and has a dramatic impact on quality of life.
People of every racial and ethnic group are affected by this debilitating disease. 9 KB407 KB407 is a redosable off the-shelf gene therapy designed to deliver two copies of the full-length CFTR transgene directly to the airway epithelia via inhaled (nebulized) administration.
People of every racial and ethnic group are affected by this debilitating disease. 8 KB407 KB407 is a redosable off the-shelf gene therapy designed to deliver two copies of the full-length CFTR transgene directly to the airway epithelia via inhaled (nebulized) administration.
KB707 leverages the Company’s HSV-1 vector platform – and its ability to efficiently deliver a durable DNA payload without active replication and minimal cytotoxicity – to drive local and sustained cytokine expression within the tumor microenvironment and maximize the therapeutic window and benefit of IL-2 and IL-12.
KB707 leverages our HSV-1 vector platform – and its ability to efficiently deliver a durable DNA payload without active replication and minimal cytotoxicity – to drive local and sustained cytokine expression within the tumor microenvironment and maximize the therapeutic window and benefit of IL-2 and IL-12.
One such goal is to review standard BLAs in 10 months after the FDA accepts the BLA for filing, and priority BLAs in six months, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time.
One such goal is to review standard BLAs in ten months after the FDA accepts the BLA for filing, and priority BLAs in six months, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time.
While a number of genetic mutations have been associated with the development of ARCI, the most common cause of ARCI is an inactivating mutation in the human TGM1 gene encoding the enzyme transglutaminase-1 (“TGM1”), a protein that is essential for the proper formation of the skin barrier.
While a number of genetic mutations have been associated with the development of ARCI and LI, the most common cause is an inactivating mutation in the human TGM1 gene encoding the enzyme transglutaminase-1 (“TGM1”), a protein that is essential for the proper formation of the skin barrier.
By inducing expression of full length, normal CFTR protein in the lung, treatment with KB407 has potential to restore ion and water flow into and out of lung cells to correct the lung manifestations of the disease in patients regardless of their underlying genetic mutation.
By enabling expression of full-length, normal CFTR protein in the lung, treatment with KB407 has potential to restore ion and water flow into and out of lung cells to correct the lung manifestations of the disease in patients regardless of their underlying genetic mutation.
The NIH and the FDA have a publicly accessible database, the Genetic Modification Clinical Research Information System, which includes information on gene therapy trials and serves as an electronic tool to facilitate the reporting and analysis of adverse events on these trials. U.S.
The NIH and the FDA have a publicly accessible database, the Genetic Modification Clinical Research Information System, which includes information on gene therapy trials and serves as an electronic tool to facilitate the reporting and analysis of adverse events on these trials.
The FDA has issued various guidance documents regarding gene therapies, which outline additional factors the FDA will consider at each of the above stages of development and relate to, among other things: the proper preclinical assessment of gene therapies; the CMC information that should be included in an IND application; the proper design of tests to measure product potency in support of an IND or BLA application; and measures to observe delayed adverse effects in subjects who have been exposed to investigational gene therapies when the risk of such effects is high.
The FDA has issued various guidance documents regarding gene therapies, which outline additional factors the FDA will consider at each of the above stages of development and relate to, among other things: the proper preclinical assessment of gene therapies; the CMC information that should be included in an IND application; the proper design of tests to measure product potency in support of an IND application or Biologics License Application (“BLA”); and measures to observe delayed adverse effects in subjects who have been exposed to investigational gene therapies when the risk of such effects is high.
It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be. U.S. Biologic Products Development Process The FDA must authorize the marketing of a product candidate for marketing in the United States.
It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be. United States Biologic Products Development Process The FDA must authorize the marketing of a product candidate in the United States.
We believe that our approach of directed expression of full-length human type III collagen via intradermal application of KB301 provides a unique and straightforward approach to restoring collagen homeostasis, and by extension, reconstructing an optimal physiologic environment in the skin to treat wrinkles or other presentations of aged or damaged skin.
We believe that our approach of directed expression of full-length human COL3 via intradermal application of KB301 provides a unique and straightforward approach to restoring collagen homeostasis, and by extension, reconstructing an optimal physiologic environment in the skin to treat wrinkles or other presentations of aged or damaged skin.
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company that we file electronically with the SEC. The address of the website is http://www.sec.gov. 28
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company that we file electronically with the SEC. The address of the website is http://www.sec.gov. 29
For example, in the U.S., under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, a patent that covers an FDA-approved biologic may be eligible for patent term extension (for up to 5 years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process.
For example, in the United States, under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, a patent that covers an FDA-approved biologic may be eligible for patent term extension (for up to 5 years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process.
If a drug receives the designation of a “rare pediatric disease” drug, it is eligible during the FDA marketing process to apply for a Rare Pediatric Disease Priority Review Voucher.
Rare Pediatric Disease Priority Review Voucher The FDA also offers a rare pediatric disease drug designation. If a drug receives the designation of a “rare pediatric disease” drug, it is eligible during the FDA marketing process to apply for a Rare Pediatric Disease Priority Review Voucher.
For each of our programs, our decision to seek patent protection in specific foreign markets, in addition to the U.S., is based on many factors, including: • our available resources; • the number and types of patents already filed or pending; • the likelihood of success of the product candidate; • the size of the commercial market; • the presence of a potential competitor in the market; and • whether the legal authorities in the market effectively enforce patent rights.
For each of our programs, our decision to seek patent protection in specific foreign markets, in addition to the United States, is based on many factors, including: • our available resources; • the number and types of patents already filed or pending; • the likelihood of success of the product candidate; • the size of the commercial market; • the presence of a potential competitor in the market; and • whether the legal authorities in the market effectively enforce patent rights.
IL-2 and IL-12 are secreted cytokines with complementary functions promoting cell-mediated immunity in humans. Both IL-2 and IL-12 have been shown to elicit anti-tumor immune responses in preclinical or clinical models and have been extensively studied for their potential in cancer immunotherapy.
IL-2 and IL-12 are secreted cytokines with complementary functions promoting cell-mediated immunity in humans. Both IL-2 and IL-12 have been shown to elicit anti-tumor immune responses in preclinical models and/or in the clinic and have been extensively studied for their potential in cancer immunotherapy.
Patients suffering from ARCI often exhibit life-long pronounced plate-like scaling of the skin, which is often of a dark color and can cover the whole body.
Patients suffering from LI often exhibit life-long pronounced plate-like scaling of the skin, which is often of a dark color and can cover the whole body.
Furthermore, in stringent, checkpoint inhibitor refractory ‘cold’ syngeneic mouse models, HSV-1 vector based delivery of murine equivalent IL2 and IL12 elicited robust antitumor responses and survival benefits, including via intratumoral injection in single and dual flank B16F10 melanoma models, as well as via intratracheal delivery in a metastatic K7M2 osteosarcoma model, with evidence of protection from tumor rechallenge in both models suggestive of prolonged adaptive immunity.
Furthermore, in stringent, checkpoint inhibitor refractory ‘cold’ syngeneic mouse models, HSV-1 vector based delivery of murine equivalent IL-2 and IL-12 elicited robust antitumor responses and survival benefits, including via intratumoral injection in single and dual flank B16F10 melanoma models, as well as via intratracheal delivery in a metastatic K7M2 osteosarcoma model, with evidence of protection from tumor rechallenge in both models suggestive of prolonged adaptive immunity.
Additionally, the containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products.
Additionally, the containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The United States government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products.
Solid tumor malignancies similarly impose a heavy burden on patients in the U.S., with the National Cancer Institute estimating that over 300,000 patients will have died from lung, colon and rectum, pancreas, breast, prostate, liver and bile duct, and melanoma of the skin cancers in 2023.
Solid tumor malignancies similarly impose a heavy burden on patients in the United States, with the National Cancer Institute estimating that over 300,000 patients will have died from lung, colon and rectum, pancreas, breast, prostate, liver and bile duct, and melanoma of the skin cancers in 2023.
B-VEC application frequency was further decreased to once monthly once the corneal epithelium was healed. B-VEC was well tolerated with no drug related adverse events noted. Full corneal healing was observed at 3 months, as well as significant visual acuity improvement from hand motion to 20/25 by 8 months.
B-VEC application frequency was further decreased to once monthly once the corneal epithelium was healed. B-VEC was well tolerated with no drug-related adverse events noted. Full corneal healing was observed at three months, as well as significant visual acuity improvement from hand motion to 20/25 by eight months.
Such patients frequently suffer from exposure of the inner eyelid surface due to turning away of the eyelids from the eye (ectropion), the turning outwards of the lips (eclabium), deformities of joint and nasal cartilage (hypoplasia), scarring alopecia (especially at the edge of the scalp) and a thickening of the skin on the palms of the hands and soles of the feet (palmoplantar keratoderma).
Such patients frequently suffer from exposure of the inner eyelid surface due to turning away of the eyelids from the eye (ectropion), the turning outwards of the lips (eclabium), deformities of joint and nasal cartilage (hypoplasia), scarring alopecia and a thickening of the skin on the palms of the hands and soles of the feet (palmoplantar keratoderma).
Currently, U.S. patents, as well as most foreign patents, are generally effective for 20 years from the date the earliest regular application was filed. In some countries, the patent term may be extended to recapture a portion of the term lost during regulatory review of the product candidate.
Currently, United States patents, as well as most foreign patents, are generally effective for 20 years from the date the earliest regular application was filed. In some countries, the patent term may be extended to recapture a portion of the term lost during regulatory review of the product candidate.
In addition to patent term extension under the Hatch-Waxman Act, patents in the U.S. may be granted additional term due to delays at the USPTO during prosecution of a patent application. We actively strive to maximize the potential for patent protection for our product and product candidates in accordance with the law.
In addition to patent term extension under the Hatch-Waxman Act, patents in the United States may be granted additional term due to delays at the USPTO during prosecution of a patent application. We actively strive to maximize the potential for patent protection for our product and product candidates in accordance with the law.
We estimate there are approximately 2,000 to 6,000 patients with of TGM1-deficient ARCI in the United States and Europe. KB105 KB105 is a redosable, off the-shelf gene therapy designed to deliver two copies of the TGM1 gene when applied topically, directly to a patient’s exfoliated skin.
We estimate there are approximately 2,000 to 5,000 patients with TGM1-deficient LI in the United States and Europe. KB105 KB105 is a redosable, off the-shelf gene therapy designed to deliver two copies of the TGM1 gene when applied topically, directly to a patient’s exfoliated skin.
Improvement on the IGA scale was observed in each treatment area, with the maximum effect observed in TA3 and TA4 that received the highest dose; at day 27, the investigator assigned an IGA score of 2, which was improved as compared to baseline score of 4 in each area.
Improvement on the IGA scale was observed in each treatment area, with the maximum effect observed in TA3 and TA4 that received the highest dose; at day 27, the investigator assigned an IGA score of two, which was improved as compared to baseline score of four in each area.
To that end, in April 2019, we incorporated Jeune Aesthetics, Inc. (“Jeune Aesthetics”), a wholly-owned subsidiary, for the purposes of undertaking preclinical and clinical studies for aesthetic skin conditions.
To that end, in April 2019, we incorporated Jeune Aesthetics, a wholly-owned subsidiary, for the purposes of undertaking preclinical and clinical studies for aesthetic skin conditions.
Trademarks Our trademarks are important to us and are generally filed to protect our corporate brand, our approved product, our product candidates, and our platform technology. We typically file trademark applications and pursue their registration in the U.S., Europe and other markets in which we anticipate using such trademarks.
Trademarks Our trademarks are important to us and are generally filed to protect our corporate brand, our approved product, our product candidates, and our platform technology. We typically file trademark applications and pursue their registration in the United States, Europe and other markets in which we anticipate using such trademarks.
Such therapies tend to be expensive, invasive and time consuming to use, and require extensive patient travel, extended hospital stays, highly sophisticated medical teams and procedures. Commercial Launch We launched VYJUVEK, the first FDA approved treatment for DEB and the first and only corrective therapy for DEB globally, in the United States in the second quarter of 2023.
Such therapies tend to be expensive, invasive and time consuming to use, and require extensive patient travel, extended hospital stays, highly sophisticated medical teams and procedures. Commercial Launch We launched VYJUVEK, the first FDA approved treatment for DEB and the first and only corrective therapy for DEB, in the United States in August 2023.
Additional complications experienced by ARCI patients include episodes of sepsis, fluid and electrolyte imbalances due to impaired skin barrier function, and failure to thrive, especially during the neonatal period and infancy. Severe heat intolerance and nail dystrophy are also frequently observed. There are currently no treatments targeting molecular correction of this disease.
Additional complications can include episodes of sepsis, fluid and electrolyte imbalances due to impaired skin barrier function, and failure to thrive, especially during the neonatal period and infancy. Severe heat intolerance and nail dystrophy are also frequently observed. There are currently no treatments targeting molecular correction of this disease.
As with VYJUVEK, the goal of therapy with ophthalmic B-VEC is to treat the disease locally, at the molecular level, by providing the patient’s epithelial cells of the eye the template to make normal COL7 protein, and thereby address the fundamental disease-causing mechanism.
As with VYJUVEK, the goal of therapy with KB803 is to treat the disease locally, at the molecular level, by providing the patient’s epithelial cells of the eye the template to make normal COL7 protein, and thereby address the fundamental disease-causing mechanism.
Additional patent protection in the U.S., Europe or other countries or regions through pending or granted counterparts may be available. ** Stated expiration dates do not account for any patent term extension, supplemental protection certificate, or pediatric extensions that may be available.
Additional patent protection in the United States, Europe or other countries or regions through pending or granted counterparts may be available. ** Stated expiration dates do not account for any patent term extension, supplemental protection certificate, or pediatric extensions that may be available.
We are the owner of several federal trademark registrations in the U.S. and have pending trademark applications and registrations in the U.S. and in major foreign markets. Trademark protection varies in accordance with local law and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered.
We are the owner of several federal trademark registrations in the United States and have pending trademark applications and registrations in the United States and in major foreign markets. Trademark protection varies in accordance with local law and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered.
Our FDA Approved Product and Pipeline The following table summarizes information regarding our FDA approved product, VYJUVEK, and product candidates in various stages of clinical and preclinical development as of the date of this Annual Report: 6 Our FDA Approved Commercial Product VYJUVEK (beremagene geperpavec-svdt, or B-VEC; referred to as B-VEC outside the U.S.) Disease Background DEB is a rare and severe monogenic skin disease.
Our FDA Approved Product and Pipeline The following table summarizes information regarding our FDA approved product, VYJUVEK, and product candidates in various stages of clinical and preclinical development as of the date of this Annual Report: 5 Our FDA Approved Commercial Product VYJUVEK (beremagene geperpavec-svdt, or B-VEC; referred to as B-VEC outside the United States) Disease Background DEB is a rare and severe monogenic skin disease.
We actively seek patent protection for our product candidates and certain of our proprietary technologies by filing patent applications in the U.S. and other countries as appropriate. These patent applications are directed to various inventions.
We actively seek patent protection for our product candidates and certain of our proprietary technologies by filing patent applications in the United States and other countries as appropriate. These patent applications are directed to various inventions.
U.S. Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. corporations and individuals from engaging in certain activities to obtain or retain business abroad or to influence a person working in an official capacity.
United States Foreign Corrupt Practices Act The United States Foreign Corrupt Practices Act (“FCPA”) prohibits United States corporations and individuals from engaging in certain activities to obtain or retain business abroad or to influence a person working in an official capacity.
In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians, certain other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members; • the federal Health Care Fraud statute imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which imposes obligations, including mandatory contractual terms, with respect to safeguarding the transmission, security and privacy of protected health information; • the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for federally sponsored healthcare benefits, items or services; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians, certain other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members; • the federal Health Care Fraud statute imposes criminal and civil liability for executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, and as amended again by the final HIPAA omnibus rule (together with HIPAA and HITECH, the “HIPAA Rules”) which imposes privacy, security, and breach obligations, including mandatory contractual terms, with respect to safeguarding the security and privacy of individually identifiable health information by certain entities subject to the HIPAA Rules, such as health plans, health care clearinghouses, and health care providers that engage in certain covered transactions; • the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for federally sponsored healthcare benefits, items or services; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of 27 personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Review and Approval Processes The results of the preclinical tests and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling, among other things, are submitted to the FDA as part of a Biologics License Application (“BLA”) or other submission requesting authorization to market the product for one or more indications.
United States Review and Approval Processes The results of the preclinical tests and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling, among other things, are submitted to the FDA as part of a BLA or other submission requesting authorization to market the product for one or more indications.
Concurrent with clinical trials, companies usually must complete some long-term preclinical testing, such as animal studies of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the biological product and finalize a process for manufacturing the biological product in commercial quantities in accordance with CGMP requirements.
The conduct of the preclinical tests must comply with federal regulations and requirements including CGLPs. 22 Concurrent with clinical trials, companies usually must complete some long-term preclinical testing, such as animal studies of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the biological product and finalize a process for manufacturing the biological product in commercial quantities in accordance with CGMP requirements.
Some of the most established companies in the marketing and development of new cancer drugs include Merck & Co Inc., Bristol Myers Squibb Company, Johnson & Johnson, and Pfizer Inc. 16 Dermatology Autosomal Recessive Congenital Ichthyosis There are no approved therapies for ARCI at this time.
Some of the most established companies in the marketing and development of new cancer drugs include Merck & Co Inc., Bristol Myers Squibb Company, Johnson & Johnson, and Pfizer Inc. Dermatology Lamellar Ichthyosis There are no approved therapies for LI at this time.
The study, OPAL-1, is an open-label, multi-center, monotherapy, dose escalation and expansion Phase 1 study, enrolling 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. The primary objective of the study is to evaluate safety and tolerability of KB707.
The study, OPAL-1, is 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.
Orphan medicinal product status in the European Union (“EU”) and Japan have similar, but not identical benefits.
Orphan medicinal product status in the EU and Japan have similar, but not identical benefits.

… 131 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

224 edited+84 added−22 removed360 unchanged
Biggest changeCases against pharmaceutical manufacturers support the view that certain marketing practices, including off-label promotion, may implicate the FCA; • the federal Health Care Fraud statute imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; 34 • the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, and as amended again by the final HIPAA omnibus rule (the “Omnibus Rule” and together with HIPAA and HITECH, the HIPAA Rules), which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information by certain entities subject to the HIPAA Rules, such as health plans, health care clearinghouses and health care providers that engage in certain covered transactions; • federal transparency laws, including the federal Physician Payment Sunshine Act, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to: (i) payments or other “transfers of value” made to physicians and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members; • state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states; and • state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the HIPAA Rules, thus complicating compliance efforts.
Biggest changeCases against pharmaceutical manufacturers support the view that certain marketing practices, including off-label promotion, may implicate the FCA; • the federal Health Care Fraud statute imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the HIPAA Rules, which impose certain requirements relating to the privacy, security, and transmission of individually identifiable health information by certain entities subject to the HIPAA Rules, such as health plans, health care clearinghouses, and health care providers that engage in certain covered transactions, known as covered entities, as well as their business associates that perform certain services that involve the use or disclosure of individually identifiable health information for or on behalf of covered entities; 35 • federal transparency laws, including the federal Physician Payment Sunshine Act, that require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to: (i) payments or other “transfers of value” made to physicians and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members; • state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and • state and foreign laws governing data privacy and security of health information, many of which differ from each other and require attention to frequently changing regulatory requirements, thus complicating compliance efforts in certain circumstances and increasing exposure to liability.
If any of the following risks actually occur, it could harm our business, prospects, operating results and financial condition and future prospects. In such event, the market price of our common stock could decline, and you could lose all or part of your investment.
If any of the following risks actually occur, it could harm our business, prospects, operating results, financial condition, and future prospects. In such event, the market price of our common stock could decline, and you could lose all or part of your investment.
Risks Related to Our Business and Industry We are substantially dependent on the commercial success of VYJUVEK To date, we have invested substantial efforts and financial resources in the research and development of our product candidates.
Risks Related to Our Business and Industry We are substantially dependent on the commercial success of VYJUVEK To date, we have invested substantial efforts and financial resources in the research and development of VYJUVEK and our product candidates.
Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our gene therapy product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates. Gene therapy remains a novel technology.
Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our gene therapy product or product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates. Gene therapy remains a novel technology.
We may engage third parties to sell VYJUVEK or our product candidates, if approved, abroad and/or to obtain necessary marketing authorizations, permits, licenses, patent registrations and other regulatory approvals. We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations.
We engage third parties to sell VYJUVEK and may engage third parties to sell our product candidates, if approved, abroad and/or to obtain necessary marketing authorizations, permits, licenses, patent registrations, and other regulatory approvals. We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations.
Additionally granting of an authorization for another similar orphan medicinal product where another product has market exclusivity can happen at any time: (i) the second applicant can establish that its product, although similar, is safer, more effective, or otherwise clinically superior; (ii) the applicant cannot supply enough orphan medicinal product, or (iii) where the applicant consents to a second orphan medicinal product application.
Additionally granting of an authorization for another similar orphan medicinal product where another product has market exclusivity can happen at any time: (i) that the second applicant can establish that its product, although similar, is safer, more effective, or otherwise clinically superior, (ii) that the applicant cannot supply enough orphan medicinal product, or (iii) where the applicant consents to a second orphan medicinal product application.
Further, we cannot assure you that any of our other product candidates will be approved for any orphan-designated use in any jurisdiction, in a timely manner or at all, or that a competitor will not obtain orphan drug exclusivity that could block the regulatory approval of any of our drug candidates for several years.
Further, we cannot assure you that any of our other product candidates will be approved for any orphan-designated use in any jurisdiction, in a timely manner, or at all, or that a competitor will not obtain orphan drug exclusivity that could block the regulatory approval of any of our product candidates for several years.
We seek to maintain a robust quality management program which includes the following broad pillars of quality: • monitoring and assuring regulatory compliance for clinical trials, manufacturing, and testing of good applicable practice (“GxP”) (e.g., CGCP and CGMP regulated) products; • monitoring and providing oversight of all GxP suppliers; • establishing and maintaining an integrated, robust quality management system for clinical, manufacturing, supply chain and distribution operations; and • cultivating a proactive, preventative quality culture and employee and supplier training to ensure quality.
We seek to maintain a robust quality management program which includes the following broad pillars of quality: • monitoring and assuring regulatory compliance for clinical trials, manufacturing, and testing of good applicable practice (“GxP”) for regulated products (e.g., CGCP and CGMP); • monitoring and providing oversight of all GxP suppliers; • establishing and maintaining an integrated, robust quality management system for clinical, manufacturing, supply chain, and distribution operations; and • cultivating a proactive, preventative quality culture and employee and supplier training to ensure quality.
We may become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to VYJUVEK or our product candidates or related technologies, including, for example, interference proceedings, post grant review challenges, and inter partes review before The United States Patent and Trademark Office.
We may become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to VYJUVEK, our product candidates, or related technologies, including, for example, interference proceedings, post grant review challenges, and inter partes review before The United States Patent and Trademark Office.
For instance, as described in Note 7 of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, in April of 2022, we entered into a settlement agreement with PeriphaGen, Inc., which had alleged breach of contract and misappropriation of trade secrets.
For instance, as described in Note 7 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, in April of 2022, we entered into a settlement agreement with PeriphaGen, Inc., which had alleged breach of contract and misappropriation of trade secrets.
To complete the process of obtaining regulatory approval for our product candidates and to continue building the manufacturing, sales, marketing, and distribution infrastructure that we believe is or will be necessary to successfully commercialize VYJUVEK and commercialize our product candidates, if approved, we may require substantial additional funding.
To complete the process of obtaining regulatory approval for our product candidates and to continue building the manufacturing, sales, marketing, and distribution infrastructure that we believe is or will be necessary to successfully commercialize VYJUVEK and our product candidates, if approved, we may require substantial additional funding.
For example: • others may be able to make gene therapy products that are similar to our approved product or any of our product candidates but that are not covered by the claims of our current patents, or of patents that we may own or license in the future; • we, or any future license partners or collaborators, might not have been the first to file patent applications covering certain aspects of the concerned technologies; • others may independently develop similar or alternative technologies, or duplicate any of our technologies, potentially without falling within the scope of our current or future issued claims, thus not infringing our intellectual property rights; • it is possible that our filed or future patent applications will not lead to issued patents; • issued patents to which we currently hold rights or to which we may hold rights in the future may be held invalid or unenforceable, including as a result of legal challenges by third parties or our competitors; • others may have access to any future intellectual property rights licensed to us on a non-exclusive basis; • our competitors might conduct research and development activities in countries where we do not have or pursue patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents or other intellectual property rights of others may have an adverse effect on our business; and • we may choose not to file a patent application covering certain of our trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make gene therapy products that are similar to our approved product or any of our product candidates but that are not covered by the claims of our current patents, or of patents that we may own or license in the future; • we, or any future license partners or collaborators, might not have been the first to file patent applications covering certain aspects of the concerned technologies; • others may independently develop similar or alternative technologies, or duplicate any of our technologies, potentially without falling within the scope of our current or future issued claims, thus not infringing our intellectual property rights; • it is possible that our filed or future patent applications will not lead to issued patents; • issued patents to which we currently hold rights or to which we may hold rights in the future may be held invalid or unenforceable, including as a result of legal challenges by third parties or our competitors; • others may have access to any future intellectual property rights licensed to us on a non-exclusive basis; • our competitors might conduct research and development activities in countries where we do not have or pursue patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents or other intellectual property rights of others may have an adverse effect on our business; and 62 • we may choose not to file a patent application covering certain of our trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property.
The degree of market acceptance of gene therapy products and VYJUVEK and our product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy and safety of VYJUVEK and our product candidates as demonstrated in clinical trials; • the potential and perceived advantages of VYJUVEK and our product candidates over alternative treatments, if available; • the cost of VYJUVEK and our product candidates relative to alternative treatments if any are available; • the clinical indications for which VYJUVEK and our product candidates are approved by the FDA and other regulatory authorities; • the willingness of physicians to prescribe new therapies; • the willingness of the target patient population to try new therapies; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA, the EMA, or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; • relative convenience and ease of administration; • the strength of marketing and distribution support; • the timing of market introduction of competitive products; • the availability of products and their ability to meet market demand; • publicity concerning VYJUVEK and our product candidates or competing products and treatments; • any restrictions on the use of VYJUVEK and our products together with other medications; and • favorable third-party payor coverage and adequate reimbursement.
The degree of market acceptance of gene therapy products and VYJUVEK and our product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy and safety of VYJUVEK and our product candidates as demonstrated in clinical trials; • the potential and perceived advantages of VYJUVEK and our product candidates over alternative treatments, if available; • the cost of VYJUVEK and our product candidates relative to alternative treatments if any are available; • the clinical indications for which VYJUVEK and our product candidates are approved by the FDA and other regulatory authorities; • the willingness of physicians to prescribe new therapies; • the willingness of the target patient population to try new therapies; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA, the EMA, the PMDA, or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; • relative convenience and ease of administration; • the strength of marketing and distribution support; • the timing of market introduction of competitive products; • the availability of products and their ability to meet market demand; • publicity concerning VYJUVEK and our product candidates or competing products and treatments; • any restrictions on the use of VYJUVEK and our products together with other medications; and • favorable third-party payor coverage and adequate reimbursement.
In 2017, the FDA established the RMAT designation as part of its implementation of the 21st Century Cures Act to expedite review of any drug that meets the following criteria: it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell 47 and tissue product, or any combination product using such therapies or products, with limited exceptions; it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.
In 2017, the FDA established the RMAT designation as part of its implementation of the 21st Century Cures Act to expedite review of any drug that meets the following criteria: it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.
Our use of distributors in these market to market and sell VYJUVEK involves certain risks, including, but not limited to, risks that these organizations will not comply with applicable laws and regulations, not effectively sell or support VYJUVEK or reduce or discontinue their efforts to sell or support VYJUVEK, not devote the resources necessary to market and sell VYJUVEK in the volumes and within the time frame we expect, not be able to satisfy financial obligations to us or others, not provide us with accurate or timely information regarding their inventories of VYJUVEK or the number of patients who are using VYJUVEK, or not provide us with accurate or timely information regarding serious adverse events and/or product complaints.
Our use of distributors in these markets to market and sell VYJUVEK involves certain risks, including, but not limited to, risks that these organizations will not comply with applicable laws and regulations, not effectively sell or support VYJUVEK or reduce or discontinue their efforts to sell or support VYJUVEK, not devote the resources necessary to market and sell VYJUVEK in the volumes and within the time frame we expect, not be able to satisfy financial obligations to us or others, not provide us with accurate or timely information regarding their inventories of VYJUVEK or the number of patients who are using VYJUVEK, or not provide us with accurate or timely information regarding serious adverse events and/or product complaints.
The incurrence of indebtedness would result in fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
The incurrence of indebtedness would result in fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or 65 license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business.
Under the Orphan Drug Act of 1983, as amended, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.
Under the Orphan Drug Act of 1983, as amended, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States of such drug.
Although we endeavor to observe the terms of agreements under which we obtain access to third-party intellectual property and to ensure that our 57 employees and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals, or we, have used or disclosed intellectual property, including trade secrets or other proprietary information, of third parties or the current or former employers of employees or advisors.
Although we endeavor to observe the terms of agreements under which we obtain access to third-party intellectual property and to ensure that our employees and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals, or we, have used or disclosed intellectual property, including trade secrets or other proprietary information, of third parties or the current or former employers of employees or advisors.
Serious adverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.
Serious adverse events in our clinical trials or other clinical trials involving gene therapy products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved, and a decrease in demand for any such product candidates.
Risks Related to Our Intellectual Property If we are unable to obtain and maintain adequate United States and foreign patent protection for VYJUVEK, our current product candidates, and any future product candidates we may develop, and/or our vector platform, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and 55 technologies similar or identical to ours, and our ability to successfully commercialize VYJUVEK, our current product candidates, any future product candidates we may develop, and our platform technologies may be adversely affected.
Risks Related to Our Intellectual Property If we are unable to obtain and maintain adequate United States and foreign patent protection for VYJUVEK, our current product candidates, and any future product candidates we may develop, and/or our vector platform, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technologies similar or identical to ours, and our ability to successfully commercialize VYJUVEK, our current product candidates, any future product candidates we may develop, and our platform technologies may be adversely affected.
The ten-year market exclusivity in the European Union may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for which it received orphan designation, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity, or where the prevalence of the condition has increased above the threshold.
The ten-year market exclusivity in the European Union may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for 48 which it received orphan designation, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity, or where the prevalence of the condition has increased above the threshold.
Eligible products must target conditions for which where is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones.
Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention, or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones.
Our efforts to enforce or protect our proprietary rights related to patents, trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations. 58 Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats.
Our efforts to enforce or protect our proprietary rights related to patents, trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations. Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats.
A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital when needed or on acceptable terms, if at all. A weak or declining economy, sanctions, trade restrictions and other global conditions could also strain our suppliers, possibly resulting in supply delays or disruptions.
A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital if needed or on acceptable terms, if at all. A weak or declining economy, sanctions, trade restrictions, and other global conditions could also strain our suppliers, possibly resulting in supply delays or disruptions.
This distribution network requires significant coordination with our sales and marketing and finance organizations. In addition, failure to coordinate financial systems could negatively impact our ability to accurately report product revenue from VYJUVEK. If we are unable to effectively manage the distribution process, the sales of VYJUVEK could be compromised and our results of operations may be harmed.
This distribution network requires significant coordination with our sales 54 and marketing and finance organizations. In addition, failure to coordinate financial systems could negatively impact our ability to accurately report product revenue from VYJUVEK. If we are unable to effectively manage the distribution process, the sales of VYJUVEK could be compromised and our results of operations may be harmed.
Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacture, sale, and distribution expenses, and therefore, the approved reimbursement amount may not be adequate to realize a sufficient return on our investment.
Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property protection, manufacture, sale, and distribution expenses, and therefore, the approved reimbursement amount may not be adequate to realize a sufficient return on our investment.
The stock market in general and the market for biopharmaceutical or pharmaceutical companies specifically has experienced extreme volatility that has often been unrelated to the operating performance of such companies. As a result of this volatility, a stockholder may not be able to sell 62 their common stock at or above the price that they paid for it.
The stock market in general and the market for biopharmaceutical or pharmaceutical companies specifically has experienced extreme volatility that has often been unrelated to the operating performance of such companies. As a result of this volatility, a stockholder may not be able to sell their common stock at or above the price that they paid for it.
Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our products or allow our competitors to bring products to market before we do, which could limit our potential revenue or impair our ability to successfully commercialize our products and may harm our business, financial condition, results of operations and prospects.
Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our approved products or allow our competitors to bring products to market before we do, which could limit our potential revenue or impair our ability to successfully commercialize our approved products and may harm our business, financial condition, results of operations, and prospects.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. Any of these factors could significantly harm our potential international expansion and operations and, consequently, our results of operations. We are subject to U.S. and certain foreign export and import controls, anti-corruption laws and anti-money laundering laws and regulations.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. 41 Any of these factors could significantly harm our potential international expansion and operations and, consequently, our results of operations. We are subject to U.S. and certain foreign export and import controls, anti-corruption laws and anti-money laundering laws and regulations.
Accelerated approval by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval. 46 We may seek approval of our current or future product candidates using the FDA’s accelerated approval pathway.
Accelerated approval by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval. We may seek approval of our current or future product candidates using the FDA’s accelerated approval pathway.
Coverage and reimbursement by a third-party payor may depend upon several factors, including the third-party payor’s determination that use of a product is: • a covered benefit under its health plan; • safe, effective, and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational.
Coverage and reimbursement by a third-party payor may depend upon several factors, including the third-party payor’s determination that use of a product is: • a covered benefit under its health plan; 57 • safe, effective, and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational.
We depend upon third parties to conduct certain aspects of our preclinical studies and depend on third parties, including independent principal investigators, to conduct our clinical trials under agreements with universities, medical institutions, and others. We negotiate budgets and contracts with such third parties, which may result in delays to our development timelines and increased costs.
We depend upon third parties to conduct certain of our preclinical studies and depend on third parties, including independent principal investigators, to conduct our clinical trials under agreements with universities, medical institutions, and others. We negotiate budgets and contracts with such third parties, which may result in delays to our development timelines and increased costs.
VYJUVEK, our first FDA-approved product, and any other product candidates that obtain regulatory approval in the future, will remain subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, 44 promotion, sampling, record-keeping and submission of safety and other post-market information.
VYJUVEK, our first FDA-approved product, and any other product candidates that obtain regulatory approval in the future, will remain subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, and submission of safety and other post-market information.
We could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing product or technologies. We also could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right.
We could be forced, 60 including by court order, to cease developing, manufacturing, and commercializing the infringing product or technologies. We also could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right.
A product may be eligible for accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.
A product may be eligible for accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and demonstrates an effect on a surrogate endpoint or an intermediate clinical endpoint that is reasonably likely to predict clinical benefit.
You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes.
You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes included in this Annual Report on Form 10-K.
However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our investigational medicines to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.
However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our investigational genetic medicines to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.
We use appropriate social media in connection with our commercialization efforts of VYJUVEK and intend to use it in connection with our commercialization efforts of our product candidates, if approved. Social media practices in the biotechnology and biopharmaceutical industries continue to evolve , and regulations and regulatory guidance relating to such use are evolving and not always clear.
We use social media in connection with our commercialization efforts of VYJUVEK and intend to use it in connection with our commercialization efforts of our product candidates, if approved. Social media practices in the biotechnology and biopharmaceutical industries continue to evolve, and regulations and regulatory guidance relating to such use are evolving and not always clear.
These laws impact, among other things, our sales, marketing, access assistance, sponsored genetic patient testing, and educational programs. In addition, we are subject to patient privacy laws by both the federal government and the states in which we conduct our business as well as other jurisdictions.
These laws impact, among other things, our sales, marketing, access assistance, sponsored genetic patient testing, and educational programs. In addition, we are subject to patient privacy laws by both the federal government and the states in which we conduct our business, as well as by foreign jurisdictions.
To achieve commercial success for VYJUVEK, we have devoted and anticipate that we will continue to devote significant resources to support our sales force, marketing, market access, and medical affairs teams and distribution 51 capabilities. There are risks involved with establishing our own sales, marketing, distribution, training, and support capabilities.
To achieve commercial success for VYJUVEK, we have devoted and anticipate that we will continue to devote significant resources to support our sales force, marketing, market access, and medical affairs teams and distribution capabilities. There are risks involved with establishing our own sales, marketing, distribution, training, and support capabilities.
The success of our commercialization efforts is difficult to predict and subject to the effective execution of our business plan, including, among other things, the continued development of our internal sales, marketing, and distribution capabilities and our ability to navigate the significant expenses and risks involved with the development and management of such capabilities.
The success of our commercialization efforts is difficult to predict and subject to the effective execution of our business plan, including, among other things, the continued development of our internal sales, marketing, manufacturing, and distribution capabilities and our ability to navigate the significant expenses and risks involved with the development and management of such capabilities.
Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or 39 import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other adverse consequences.
Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other adverse consequences.
The production of VYJUVEK and our product candidates require processing steps that are more complex than those required for most chemical pharmaceuticals. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized.
The production of VYJUVEK and our product candidates require processing steps that are more complex than those required for most pharmaceuticals. Moreover, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect VYJUVEK or our product candidates. Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect VYJUVEK or our product candidates. 61 Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
Recruiting and retaining other qualified employees and scientific advisors for our business, including scientific and technical personnel, also will be critical to our success . Competition for skilled personnel, including in gene therapy research and vector manufacturing, is intense and the turnover rate can be high.
Recruiting and retaining qualified employees and scientific advisors for our business, including scientific and technical personnel, also will be critical to our success. Competition for skilled personnel, including in gene therapy research and vector manufacturing, is intense and the turnover rate can be high.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company and/or product and product candidates, such initiatives may be costly and may not have the desired effect.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company and/or VYJUVEK and our product candidates, such initiatives may be costly and may not have the desired effect.
Even if this is not the case, our actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG efforts, even if such initiatives are currently voluntary.
Even if this is not the case, our actions may subsequently be determined 40 to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG efforts, even if such initiatives are currently voluntary.
For example, as we commercialize VYJUVEK in the United States and learn more about market dynamics and engage with regulators on additional potential marketing approvals, our view of VYJUVEK’s initial potential market opportunity will 52 become more refined.
For example, as we commercialize VYJUVEK in the United States and learn more about market dynamics and engage with regulators on additional potential marketing approvals, our view of VYJUVEK’s initial potential market opportunity will become more refined.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent 63 any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
The terms of additional financing may be impacted by, among other things, general market conditions, the market’s perception of our approved product, VYJUVEK, and product candidates, our growth potential, and the market price per share of our common stock.
The terms of additional financing may be impacted by, among other things, general market conditions, the market’s perception of our approved product, VYJUVEK, 64 and product candidates, our growth potential, and the market price per share of our common stock.
If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. 29 VYJUVEK and, if approved, our investigational product candidates regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.
If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. 30 VYJUVEK and, if approved, our investigational product candidates regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.
Furthermore, 37 cybersecurity incidents and their legal consequences may impact investor confidence, potentially leading to a decrease in our stock price or limitations on our access to capital markets.
Furthermore, cybersecurity incidents and their legal consequences may impact investor confidence, potentially leading to a decrease in our stock price or limitations on our access to capital markets.
The issuance of restricted common stock, common stock upon exercise of outstanding options, common stock upon vesting of restricted stock units, or common stock upon vesting of performance stock units would be dilutive and may cause the market price for our common stock to decline.
The issuance of restricted common stock, common stock upon exercise of outstanding options, common stock upon vesting of restricted stock units, or common stock upon vesting of performance-based restricted stock units would be dilutive and may cause the market price for our common stock to decline.
Often, to avoid the threat of treble damages and penalties under the FCA, health care providers will resolve allegations in a settlement without admitting liability. Any such settlement could materially affect our business, financial operations, and reputation. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial costs.
Often, to avoid the threat of treble damages and penalties under the FCA, health care providers and drug manufacturers will resolve allegations in a settlement without admitting liability. Any such settlement could materially affect our business, financial operations, and reputation. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial costs.
Even with the requisite approvals from the FDA in the United States, potential approvals of VYJUVEK from the EMA in the European Union and other regulatory authorities internationally (and potential approvals of any of our product candidates by regulatory authorities), the commercial success of VYJUVEK and our product candidates will depend, in part, on the acceptance of physicians, patients and health care payors of gene therapy products in general, and VYJUVEK and our product candidates, in particular, as medically necessary, cost-effective, and safe.
Even with the requisite approvals from the FDA in the United States, potential approvals of VYJUVEK from the EMA in the European Union, PMDA in Japan, and other regulatory authorities internationally (and potential approvals of any of our product candidates by regulatory authorities), the commercial success of VYJUVEK and our product candidates will depend, in part, on the acceptance of physicians, patients, and health care payors of gene therapy products in general, and VYJUVEK and our product candidates, in particular, as medically necessary, cost-effective, and safe.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, or a loss of patient 50 confidence in us or our product or product candidates, which may result in difficulty in successfully launching products and the loss of potential future sales, which could have an adverse effect on our business, financial condition, and results of operations.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, or a loss of patient confidence in us or VYJUVEK or our product candidates, which may result in difficulty in successfully launching products and the loss of potential future sales, which could have an adverse effect on our business, financial condition, and results of operations.
If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our manufacturing facilities, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
If a natural disaster, power outage, or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our manufacturing facilities and IT systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
If in the future we are unable to demonstrate that such adverse events were caused by the administration process or related procedures and not by our product candidates, the FDA, the European Commission, the EMA, or other regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications.
If we are unable to demonstrate that such adverse events were caused by the administration process or related procedures and not by our product candidates, the FDA, the European Commission, the EMA, or other regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications.
Specific measures to support the development of orphan drugs in Japan include subsidies for research and development expenditures, prioritized consultation regarding clinical development, reduced consultation fees, tax incentives, priority review of applications, reduced application fees, and extended registration validity period. Up to 10 years of orphan exclusivity, known as the re-examination period, is granted for the product after approval.
Specific measures to support the development of orphan drugs in Japan include subsidies for research and development expenditures, prioritized consultation regarding clinical development, reduced consultation fees, tax incentives, priority review of applications, reduced application fees, and extended registration validity period. Up to ten years of orphan exclusivity, known as the re-examination period, is granted for the product after approval.
The severity and frequency of weather-related natural disasters have been amplified, and are expected to continue to be amplified by, global climate change. Such natural disasters may cause damage to and/or disrupt our operations, which may result in a material adverse effect on our VYJUVEK sales, our other product candidates, business, and results of operations.
Additionally, the severity and frequency of weather-related natural disasters have been amplified, and are expected to continue to be amplified by, global climate change. Such natural and technological disasters may cause damage to and/or disrupt our operations, which may result in a material adverse effect on our VYJUVEK sales, our other product candidates, business, and results of operations.
In addition, government funding of government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
In addition, 42 government funding of government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
The results of nonclinical and preclinical studies and early clinical trials may not be predictive of the results of later-stage clinical trials, and interim results of a clinical trial do not necessarily predict final results.
The results of nonclinical studies and early clinical trials may not be predictive of the results of later-stage clinical trials, and interim results of a clinical trial do not necessarily predict final results.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: 42 • be delayed in obtaining marketing approval, if at all, or be required to conduct additional confirmatory safety and/or efficacy studies; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • obtain approval without labeling claims that are necessary or desirable for the successful commercialization of our product candidates; • be subject to additional and costly post-marketing testing requirements or clinical trials; • be required to perform additional clinical trials to support approval; • have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its distribution; • be subject to the addition of labeling statements, such as warnings, precautions, or contraindications; • be sued; or • experience damage to our reputation.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval, if at all, or be required to conduct additional confirmatory safety and/or efficacy studies; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, precautions, or contraindications; • obtain approval without labeling claims that are necessary or desirable for the successful commercialization of our product candidates; • be subject to additional and costly post-marketing testing requirements or clinical trials; • be required to perform additional clinical trials to support approval; • have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its distribution; • be sued; or • experience damage to our reputation.
Moreover, we may not be able to successfully complete such initiatives due to factors that are within or outside of our control.
Moreover, we may not be able to successfully complete such voluntary initiatives due to factors that are within or outside of our control.
Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial 45 incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers.
Orphan drug designation itself does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages, and user-fee waivers.
Therefore, we are subject to the risk that these third parties may not perform satisfactorily. We may maintain third-party manufacturing capabilities in order to provide multiple sources of supply of VYJUVEK or a product candidate that is approved for sale. In addition, we may utilize third parties to manufacture components of our products.
Therefore, we are subject to the risk that these third parties may not perform satisfactorily. We may maintain third-party manufacturing capabilities in order to provide multiple sources of supply of VYJUVEK or a product candidate that is approved for sale. In addition, we may utilize third parties to manufacture components of VYJUVEK or our product candidates.
If we are required by the FDA, the EMA, or other regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of our product candidates, our expenses could increase and potential revenue from product candidates in development could be delayed.
If we are required by the FDA, the EMA, the PMDA, or other regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in 63 completing our clinical trials or the development of our product candidates, our expenses could increase and potential revenue from product candidates in development could be delayed.
We face an inherent risk of product liability lawsuits related to the sale of VYJUVEK, use of VYJUVEK and our product candidates, and testing of our product candidates. Product liability claims may be brought against us by participants enrolled in our clinical trials, patients, health care providers or others using, or administering VYJUVEK and our product 30 candidates.
We face an inherent risk of product liability lawsuits related to the sale of VYJUVEK, use of VYJUVEK and our product candidates, and testing of our product candidates. Product liability claims may be brought against us by participants enrolled in our clinical trials, patients, health care providers, or others using or administering VYJUVEK and our product 31 candidates.
Any dispute, claim or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim or lawsuit, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.
Any dispute, claim, or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim, or lawsuit, and we may be required to pay damage awards or settlements or 32 become subject to equitable remedies that could materially and adversely affect our operations and financial results.
If we fail to comply with applicable regulatory requirements, a regulatory authority may: • issue a warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil, or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategic partners, if any; • restrict the marketing or manufacturing of the product; • seize or detain the product or otherwise require the withdrawal of the product from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into government contracts.
If we fail to comply with applicable regulatory requirements, a regulatory authority may, among other actions: • issue a warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil, or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; 47 • suspend any ongoing clinical trials; • refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategic partners, if any; • restrict the marketing or manufacturing of the product; • seize or detain the product or otherwise require the withdrawal of the product from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into government contracts.
The development of a salesforce, marketing, market access, and medical affairs teams and distribution capabilities effort is expensive and time-consuming, and our expenses associated with maintaining our sales force may be disproportional compared to the revenue we may be able to generate on sales of VYJUVEK and future products.
The development of a sales force, marketing, market access, and medical affairs teams and 55 distribution capabilities effort is expensive and time-consuming, and our expenses associated with maintaining our sales force may be disproportional compared to the revenue we may be able to generate on sales of VYJUVEK and future products.
We also have stock options, restricted common stock, restricted stock units, and performance stock units outstanding, and we expect to issue additional equity awards to directors and employees.
We also have stock options, restricted common stock, restricted stock units, and performance-based restricted stock units outstanding, and we expect to issue additional equity awards to directors and employees.
If we issue preferred stock in the future, the holders of that preferred stock could gain rights superior to our existing stockholders, such as liquidation and other preferences, or the market price of our common stock could be adversely affected. Item 1B. Unresolved Staff Comments. None. 64
If we issue preferred 67 stock in the future, the holders of that preferred stock could gain rights superior to our existing stockholders, such as liquidation and other preferences, or the market price of our common stock could be adversely affected. Item 1B. Unresolved Staff Comments. None.
For instance, VYJUVEK, KB105, and KB707 were granted Fast Track Designation by the FDA. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the sponsor may apply for Fast Track Designation.
For instance, VYJUVEK, KB105, and KB707 (intratumoral and inhaled) were granted Fast Track Designation by the FDA. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the sponsor may apply for Fast Track Designation.
VYJUVEK and any product candidate that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable.
VYJUVEK and any product candidate that we commercialize may not gain acceptance by physicians, patients, health care payors, and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue 56 and may not become consistently profitable.
The inability to recruit, or loss of services of certain executives, key employees, or advisors, may impede the progress of our research, development and 32 commercialization objectives and have a material adverse effect on our business, financial condition, results of operations and prospects.
The inability to recruit, or loss of services of 33 certain executives, key employees, or advisors, may impede the progress of our research, development, and commercialization objectives and have a material adverse effect on our business, financial condition, results of operations, and prospects.
The biotechnology and pharmaceutical industries are 56 characterized by extensive and complex litigation regarding patents and other intellectual property rights.
The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights.
We may need to raise additional funding to maintain and expand our commercialization capabilities for VYJUVEK and to complete the development of, and obtain the regulatory approvals necessary to, commercialize our product candidates. Such funding may not be available on acceptable terms, or at all.
We may need to raise additional funding to maintain and expand our commercialization capabilities and to complete the development of, and obtain the regulatory approvals necessary to, commercialize our product candidates. Such funding may not be available on acceptable terms, or at all.
Our commercial opportunities could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than VYJUVEK or any product candidate that we may develop.
Our commercial opportunities could be reduced or eliminated if competitors commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than VYJUVEK or any product candidate that we may commercialize.
For example, when the U.S. government has shut down in the past, certain regulatory agencies, such as the FDA and the United States Securities and Exchange Commission, or the SEC, have had to furlough critical employees and stop critical activities.
For example, when the U.S. government has shut down in the past, certain regulatory agencies, such as the FDA and the United States Securities and Exchange Commission have had to furlough critical employees and stop critical activities.

… 250 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed5 unchanged
Biggest changeOur Vice President of Information Technology has served in various roles in information technology and information security for over 28 years, including serving as Chief Information Security Officer of several public companies. He holds undergraduate and graduate degrees in electrical engineering and computer science and has attained numerous professional certifications in Information Security throughout his career.
Biggest changeOur Senior Director of Cyber Security has served in various roles in information technology and information security for over 20 years, including serving as Information Security Officer for a global medical device manufacturer . He holds degrees in Global Business Management and Computer Science.
Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected or are reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition. 65
Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected or are reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition. 68
At least once each year, the Board discusses the Company’s approach to cybersecurity risk management with the Company’s Vice President of Information Technology, who is the member of management that is principally responsible for overseeing cybersecurity at the Company, in partnership with other business leaders across the Company, including our Chief Executive Officer, Chief Accounting Officer, General Counsel, and Human Resources leader.
At least once each year, the Board discusses the Company’s approach to cybersecurity risk management with the Company’s Senior Director of Cyber Security, who is the member of management that is principally responsible for overseeing cybersecurity at the Company, in partnership with other business leaders across the Company, including our Chief Executive Officer, Chief Accounting Officer, General Counsel, and Human Resources leader.

Item 2. Properties

Properties — owned and leased real estate

3 edited+2 added−4 removed0 unchanged
Biggest changeIn December 2019, we entered into a lease agreement for our second commercial gene therapy facility ("ASTRA") in the Pittsburgh, Pennsylvania area, which contained an option to purchase the building.
Biggest changeIn 2021, we completed the acquisition of the building shell for ASTRA, our second commercial scale CGMP facility located outside of Pittsburgh, PA, and entered into an associated ground lease.
The information set forth in Note 7 of the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K is incorporated by reference into this Item 3. Item 4. Mine Safety Disclosures. Not applicable. 66 PART II
The information set forth in Note 7 of the Notes to the Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K is incorporated by reference into this Item 3. Item 4. Mine Safety Disclosures. Not applicable. 69 PART II
Item 2. Properties. As of December 31, 2023, we leased approximately 54,000 square feet of combined laboratory and office space in Pittsburgh, Pennsylvania that we use for our research, development and manufacturing efforts.
Item 2. Properties. As of December 31, 2024, we leased approximately 54,000 square feet of combined laboratory and office space in Pittsburgh, Pennsylvania that we use for our research, development and manufacturing efforts. The lease for combined laboratory and office space expires in October 2031.
Removed
The lease for approximately 7,000 square feet of office space expires in September 2024, and the lease covering the remaining combined laboratory and office space expires in October 2031. As of December 31, 2023, we also leased additional U.S. office space in Boston, Massachusetts and European office space in Zug, Switzerland, and Amsterdam, Netherlands.
Added
Astra is an approximately 155,000 sq. ft., state-of-the-art CGMP manufacturing facility that, in addition to adding significant capacity to support our growing pipeline, also allows for in-house incorporation of raw material preparation, excipient manufacturing, testing, packaging, labeling and distribution, thereby fully integrating all components of the supply chain from starting materials to patient experience.
Removed
In January 2021, we entered into a Purchase and Sale Agreement (“PSA”) with Northfield I, LLC, an Ohio limited liability company to acquire ASTRA, and the related purchase closed in March 2021.
Added
Astra was completed and validated in 2023. As of December 31, 2024, we also leased international office space in Switzerland, Netherlands, Germany, Japan, Italy and Spain. Item 3. Legal Proceedings.
Removed
In June 2021, we entered into a Standard Form of Contract for Construction and the corresponding General Conditions of the Contract for Construction with The Whiting-Turner Contracting Company (“Whiting-Turner”), pursuant to which Whiting-Turner constructed and managed the construction of ASTRA. The facility was completed and validated in 2023.
Removed
Refer to Note 8 of the Notes to the Consolidated Financial Statements included in Part II of Item 8 of this Annual Report on Form 10-K for more information regarding this transaction. Item 3. Legal Proceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−0 removed5 unchanged
Biggest changeSales of Unregistered Securities There have been no sales of unregistered securities by us during the past three years except as previously disclosed on prior Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 67 Stock Performance Graph Set forth below is a graph comparing the cumulative total return on an indexed basis of a $100 investment in the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index commencing on December 31, 2018 and continuing through December 31, 2023.
Biggest changeStock Performance Graph Set forth below is a graph comparing the cumulative total return on an indexed basis of a $100 investment in the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index commencing on December 31, 2019 and continuing through December 31, 2024.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers There were no repurchases of shares of common stock made during the three months ended December 31, 2023.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers There were no repurchases of shares of common stock made during the three months ended December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the NASDAQ Global Select Market under the symbol KRYS. Holders of Record As of February 19, 2024, there were two stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol KRYS. Holders of Record As of February 12, 2025, there were two stockholders of record of our common stock.
The graph assumes our closing sale price on December 31, 2018 of $20.78 68 per share as the initial value of our common stock for indexing purposes. Points on the graph represent the performance as of the last business day of each of the months indicated. The comparisons shown in the graph below are based upon historical data.
The graph assumes our closing sale price on December 31, 2019 of $55.38 per share as the initial value of our common stock for indexing purposes. Points on the graph represent the performance as of the last business day of each of the months indicated. The comparisons shown in the graph below are based upon historical data.
The past performance of our common stock is no indication of future performance. 69 Item 6. [Reserved]
The past performance of our common stock is no indication of future performance. 70 71 Item 6. [Reserved]
Added
Securities Authorized for Issuance Under Equity Compensation Plans Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Part III, Item 12 of this Annual Report on From 10-K.
Added
Sales of Unregistered Securities There have been no sales of unregistered securities by us during the past three years except as previously disclosed on prior Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

96 edited+56 added−50 removed28 unchanged
Biggest changeThe 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, 2023, 2022 and 2021: Years Ended December 31, Change (in thousands) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 KB103 (1) $ 9,039 $ 8,096 $ 6,204 $ 943 $ 1,892 KB105 282 276 74 6 202 KB407 1,668 1,895 987 (227) 908 KB301 460 1,312 1,217 (852) 95 KB707 3,828 400 — 3,428 400 Other dermatology programs 2 500 789 (498) (289) Other respiratory programs 1,043 972 280 71 692 Other aesthetics programs 91 114 16 (23) 98 Other research programs 638 876 799 (238) 77 Other development programs 939 645 708 294 (63) Stock-based compensation 10,051 7,897 3,435 2,154 4,462 Other unallocated manufacturing expenses (2) 12,550 15,036 9,207 (2,486) 5,829 Other unallocated expenses (3) 5,840 4,442 4,168 1,398 274 Research and development expense $ 46,431 $ 42,461 $ 27,884 $ 3,970 $ 14,577 (1) For the year ended December 31, 2023 , KB103 expenses consist of pre-approval activity costs, post marketing study costs and overseas preclinical and clinical trial costs, licensing and regulatory costs.
Biggest changeThe 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, 2024, 2023 and 2022: Years Ended December 31, Change (in thousands) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 B-VEC $ 8,760 $ 9,039 $ 8,096 $ (279) $ 943 KB105 935 282 276 653 6 KB301 635 460 1,312 175 (852) KB304 1,342 66 3 1,276 63 KB407 1,877 1,668 1,895 209 (227) KB408 1,630 1,043 972 587 71 KB707 8,677 3,828 400 4,849 3,428 KB803 604 — — 604 — Other dermatology programs — 2 500 (2) (498) Other aesthetics programs 6 25 111 (19) (86) Other ophthalmology programs 1,868 71 — 1,797 71 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) 9,087 12,550 15,036 (3,463) (2,486) Other unallocated expenses (2) 6,818 5,840 4,442 978 1,398 Research and development expense $ 53,573 $ 46,431 $ 42,461 $ 7,142 $ 3,970 (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.
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 expand our product portfolio.
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.
Our future funding requirements will depend on many factors, including, but not limited to: • the costs needed to commercialize and market our lead product, VYJUVEK; • the progress, timing and costs of clinical trials of our current product candidates; 79 • the progress, timing and costs of manufacturing of 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; • the initiation, scope, progress, timing, costs and results of drug discovery, laboratory testing, manufacturing, preclinical studies and clinical trials for any product candidates that we may pursue in the future, if any; • the costs of maintaining our own commercial-scale CGMP manufacturing facilities; • the outcome, timing and costs of seeking regulatory approvals; • the costs associated with the manufacturing process development and evaluation of third-party manufacturers; • the extent to which the costs of VYJUVEK and our product candidates, if approved, will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors; • the costs of commercialization activities for our current and future product candidates if we receive marketing approval for such product candidates, including the costs and timing of establishing product sales, medical affairs, marketing, distribution and manufacturing capabilities; • subject to receipt of marketing approval, if any, revenue received from commercial sale of our current and future product candidates; • the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish; • the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, maintenance, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments and patent prosecution fees that we are obligated to pay pursuant to our license agreements; • our current license agreements remaining in effect and our achievement of milestones under those agreements; • our ability to establish and maintain collaborations and licenses on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies.
Our future funding requirements will depend on many factors, including, but not limited to: • the costs needed to commercialize and market our lead product, VYJUVEK; • 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 continued development and the filing of an IND application for current and future product candidates; • the initiation, scope, progress, timing, costs and results of drug discovery, laboratory testing, manufacturing, preclinical studies and clinical trials for any product candidates that we may pursue in the future, if any; • the costs of maintaining our own commercial-scale CGMP manufacturing facilities; • the outcome, timing and costs of seeking regulatory approvals; • the costs associated with the manufacturing process development and evaluation of third-party manufacturers; • the extent to which the costs of VYJUVEK and our product candidates, if approved, will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors; • the costs of commercialization activities for our current and future product candidates if we receive marketing approval for such product candidates, including the costs and timing of establishing product sales, medical affairs, marketing, distribution and manufacturing capabilities; • subject to receipt of marketing approval, if any, revenue received from commercial sale of our current and future product candidates; • the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish; • the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, maintenance, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments and patent prosecution fees that we are obligated to pay pursuant to our license agreements; • our current license agreements remaining in effect and our achievement of milestones under those agreements; • our ability to establish and maintain collaborations and licenses on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies.
These increases were partially offset by decreases 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 from overhead allocations to inventory of $1.3 million, and a decrease from outsourced research and development costs of $1.2 million.
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.
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 (“CMOs”), 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; and • payroll related expenses, including stock-based compensation expense.
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; and • payroll related expenses, including stock-based compensation expense.
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-inspected, commercial scale Current Good Manufacturing Practice (“CGMP”) manufacturing facility and a second, completed and qualified, commercial scale CGMP facility to support future expansion.
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.
Gain from sale of Priority Review Voucher Gain from sale of priority review voucher for the year ended December 31, 2023 was $100.0 million related to the sale of our rare pediatric PRV, which was awarded to the Company in connection with the FDA’s approval of VYJUVEK.
Gain from Sale of Priority Review Voucher Gain from sale of priority review voucher for the year ended December 31, 2023 was $100.0 million and was related to the sale of our rare pediatric PRV, which was awarded to the Company in connection with the FDA’s approval of VYJUVEK.
Due to the numerous risks and uncertainties associated with product 73 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.
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.
Additionally, we anticipate that we will continue to increase our salary and personnel costs and other expenses to support B-VEC commercialization globally. ASTRA Capital Expenditures In March 2021, we closed on the purchase of the building that was constructed to house our second CGMP facility, ASTRA.
Additionally, we anticipate that we will continue to increase our salary and personnel costs and other expenses to support B-VEC commercialization globally. ASTRA Capital Expenditures In March 2021, we closed on the purchase of the building that was constructed to house our second commercial scale CGMP facility, ASTRA.
Research and Development Expenses Research and development expenses increased approximately $4.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and development expenses increased $4.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Selling, general and administrative expenses also include professional fees associated with corporate and intellectual property-related legal expenses, consulting and accounting services, facility-related costs and expenses associated with obtaining and maintaining patents. Other selling, general, and administrative costs include travel expenses, patient access program fees, management service fees, and other selling expenses which include transportation, shipping and handling fees.
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.
Higher selling, general and administrative spending was due largely to increased payroll related expenses of approximately $15.1 million which is primarily driven by an increase in personnel to support overall growth and includes an approximate $4.5 million increase in stock-based compensation, increased selling expenses related to the launch of VYJUVEK of $1.7 million, increased information technology infrastructure costs of $2.1 million, increased software-related costs of $1.3 million, increased travel costs of $1.1 million, an increase in sponsorships of $425 thousand, an increase in net legal costs of $381 thousand, which consists of a decrease in litigation proceeds of $570 thousand, offset by a decrease in legal and professional fees of $189 thousand and an increase of other selling, general and administrative expense of $676 thousand, primarily due to increases in depreciation and rent expense.
The increase was primarily driven by the following: 80 • 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.
We anticipate that our selling, general and administrative expenses will increase in the future to support the continued research and 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.
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.
Higher research and development expenses were due to increases in payroll related expenses of $5.8 million 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 in depreciation of $2.2 million, and an increase in other research and development expenses of approximately $428 thousand, primarily due to increases in facilities expenses.
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.
Litigation Settlement Litigation settlement for the years ended December 31, 2023 and 2022 was $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 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.
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, commercial, business development and other administrative functions.
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.
Contractual Obligations Operating Leases Operating lease payments represent our commitments for future minimum rent made under non-cancelable leases for our corporate headquarters in Pittsburgh, Pennsylvania, office location in Boston, Massachusetts, office locations in Switzerland and Netherlands, and for the ground lease associated with our second CGMP manufacturing facility, ASTRA.
Contractual Obligations Operating Leases 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.
This section of this Form 10-K generally discusses 2023, 2022 and 2021 items and year-to-year comparisons between 2023 and 2022, and 2022 and 2021 of the Company ’ s results of operations and cash flows.
This section of this Annual Report on Form 10-K generally discusses 2024, 2023 and 2022 items and year-to-year comparisons between 2024 and 2023, and 2023 and 2022 of the Company ’ s results of operations and cash flows.
These increases were partially offset by a decrease in other unallocated manufacturing expenses of $2.5 million 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 in KB301 expenses of $852 thousand due to the timing of clinical research costs, and a decrease in spending on other dermatology programs of $498 thousand due to a reduction in contract manufacturing expenses.
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.
Variable consideration is estimated and reduces the transaction price to reflect our best estimate of the amount of consideration to which we are entitled based on the terms of the contracts and are recorded in the same period the related product revenue is recognized.
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.
(3) 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 $4.0 million in the year ended December 31, 2023 compared to the year ended December 31, 2022.
(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.
Furthermore, we expect to incur increasing costs associated with satisfying regulatory and quality standards, maintaining product and clinical trials, and furthering our efforts around our current and future 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.
Net cash used in investing activities for the year ended December 31, 2022 was approximately $114.1 million and consisted primarily of purchases of $318.8 million of available-for-sale investment securities, and expenditures of $53.0 million on the build-out of our ASTRA facility, leasehold improvement of new office space, and purchases of computer and laboratory equipment, partially offset by proceeds of $257.7 million from maturities of investments.
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.
The Company estimates copay assistance costs using the expected value method. The estimate is based on contract prices, 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.
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.
Refer to Part I, Item 1 - Business for more information about our United States Food and Drug Administration (“FDA”) approved product, VYJUVEK ® , clinical development pipeline and research programs, and the status of our product candidates.
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.
Revenue Recognition After FDA approval of VYJUVEK in May 2023, we began commercial marketing and made our first product sales in 3Q 2023. ASC 606 Revenue from Contracts with Customers requires us to make estimates of variable consideration, included in our contracts, to be included in the transaction price.
Revenue Recognition After FDA approval of VYJUVEK in May 2023, we began commercial marketing and made our first product sales in 3Q 2023. 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.
The study, OPAL-1, is an open-label, multi-center, monotherapy, dose escalation and expansion Phase 1 study, enrolling 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.
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.
Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP.
Interest and Other Income, Net Interest and other income, net consists primarily of income earned from our cash, cash equivalents and investments. 75 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP.
Copay assistance costs are recorded as reductions to revenue and are accrued in other accrued liabilities on the consolidated balance sheets. – Product Returns: We offer SPs and SDs limited return rights relating only to product damage or defects identified upon receipt, and therefore we expect minimal returns.
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: The Company offers limited return rights relating only to product damage or defects identified upon receipt, and therefore the Company expects minimal returns.
With the net proceeds raised from our previous public and private offerings and sale of the PRV, 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 Form 10-K.
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.
Other Income (Expense) Interest and other income for the years ended December 31, 2023, 2022, and 2021 was $22.6 million, $5.2 million and $197 thousand, respectively, and consisted of realized gains from maturities of our investments, interest income earned from our cash, cash equivalents and investments.
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.
To date, all of our product revenue has been generated in the United States. Cost of Goods Sold Cost of goods sold was $3.1 million for the year ended December 31, 2023 as compared to zero for the years ended December 31, 2022 and 2021 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.
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.
Results of Operations Years Ended December 31, 2023, 2022 and 2021 Years Ended December 31, Change (in thousands) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Product revenue, net $ 50,699 $ — $ — $ 50,699 $ — Expenses Cost of goods sold 3,094 — — 3,094 — Research and development 46,431 42,461 27,884 3,970 14,577 Selling, general and administrative 98,401 77,735 40,391 20,666 37,344 Litigation settlement 12,500 25,000 — (12,500) 25,000 Total operating expenses 160,426 145,196 68,275 15,230 76,921 Loss from operations (109,727) (145,196) (68,275) 35,469 (76,921) Other income (expense) Gain from sale of priority review voucher 100,000 — — 100,000 — Interest and other income, net 22,624 5,221 197 17,403 5,024 Interest expense — — (1,492) — 1,492 Income (loss) before income taxes 12,897 (139,975) (69,570) 152,872 (70,405) Income tax expense (1,965) — — (1,965) — Net income (loss) $ 10,932 $ (139,975) $ (69,570) $ 150,907 $ (70,405) Product Revenue, net Product revenue, net was $50.7 million for the year ended December 31, 2023 as compared to zero for the years ended December 31, 2022 and 2021 due to initial sales of VYJUVEK after FDA approval was obtained on May 19, 2023.
Results of Operations Years Ended December 31, 2024, 2023 and 2022 Years Ended December 31, Change (in thousands) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Product revenue, net $ 290,515 $ 50,699 $ — $ 239,816 $ 50,699 Operating expenses Cost of goods sold 20,061 3,094 — 16,967 3,094 Research and development 53,573 46,431 42,461 7,142 3,970 Selling, general and administrative 113,686 98,401 77,735 15,285 20,666 Litigation settlement 37,500 12,500 25,000 25,000 (12,500) Total operating expenses 224,820 160,426 145,196 64,394 15,230 Income (loss) from operations 65,695 (109,727) (145,196) 175,422 35,469 Other income Gain from sale of priority review voucher — 100,000 — (100,000) 100,000 Interest and other income, net 29,661 22,624 5,221 7,037 17,403 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 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.
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.
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. 82 We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect.
The total future payments for our operating lease obligations at December 31, 2023 are $16.2 million, of which $1.5 million is due in the next twelve months and the remaining payments are due over the terms of the respective leases.
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 83 remaining payments are due over the terms of the respective leases.
Gains from Sale of Priority Review Voucher Gain from sale of priority review voucher relates to proceeds from sale of the rare pediatric PRV we received in connection with the FDA’s approval of VYJUVEK. Interest and Other Income Interest and other income consists primarily of income earned from our cash, cash equivalents and investments.
Gains from Sale of Priority Review Voucher (“PRV”) Gain from sale of priority review voucher relates to proceeds from sale of the rare pediatric PRV we received in connection with the FDA’s approval of VYJUVEK.
We plan to initiate this study in the second half of 2024. Pipeline • KB407 is an inhaled (nebulized) formulation of our novel vector designed to deliver two copies of the full-length cystic fibrosis transmembrane conductance regulator, or CFTR, transgene for the treatment of cystic fibrosis (“CF”), a serious rare lung disease caused by missing or mutated CFTR protein.
Respiratory 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.
We received the permanent occupancy permit for ASTRA in March 2023, which permitted utilization of certain parts of the building, and subsequently placed a portion of ASTRA into service. Qualification of the facility was completed later in 2023, and we began research and development operations.
In March 2023, we received the permanent occupancy permit for ASTRA which allowed the Company to begin utilizing certain parts of the building for research and development operations once qualification was completed and a portion of the assets were placed into service throughout 2023 and 2024.
Research and development expenses increased $14.6 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Research and development expenses increased $4.0 million in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Returns are estimated taking into consideration several factors including these limited product return rights, historical return activity, and other relevant factors.. There were no returns for the year ended December 31, 2023.
Returns are estimated taking into consideration several factors including these limited product return rights, historical return activity, and other relevant factors. The Company has not experienced significant product returns to date, and accordingly no allowance for returns was recorded for the year ended December 31, 2024.
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.
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.
ASC 718 requires all stock-based payments, including grants of stock options and restricted stock, to be recognized in the statements of operations based on their grant-date fair values. Compensation expense 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.
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.
These increases were partially offset by a decrease of $1.2 million of commercial preparedness expenses, a decrease in medical affairs costs of $466 thousand, and a decrease in business development costs of $428 thousand. General and administrative expenses increased $37.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
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.
Our net proceeds from the offerings were $29.1 million after deducting underwriting discounts and commissions of approximately $900 thousand. Additionally, we received $7.0 million of proceeds related to the exercise and settlement of employee stock options and restricted stock awards, offset by $649 thousand of taxes paid for the settlement of restricted stock awards.
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. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements. 85
Product revenue, net is recorded at the net sales price, or transaction price, upon delivery and transfer of control to the customer, and includes an estimate of variable consideration, which results from discounts, rebates, copay assistance, and returns that are offered within contracts between the Company and its customers. 74 – Prompt Pay Discounts: As an incentive for prompt payment, we offer a cash discount to our counterparty.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring VYJUVEK and is generally based upon a list price and is recorded at the net sales price upon delivery and transfer of control to the customer, and includes an estimate of variable consideration, which results from discounts, rebates, copay assistance, and returns that are offered within contracts between the Company and its customers.
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 (J3401) for VYJUVEK, effective on January 1, 2024. We seek to make the patient experience of starting and continuing on VYJUVEK treatment as seamless as possible.
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.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates in the period these variances become known.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, the Company will adjust these estimates in the period these variances become known. • Prompt Pay Discounts : As an incentive for prompt payment, the Company may offer cash discounts to its counterparties.
Refer to Part I, Item 1 – Business for more information about our intellectual property and issued patents. • KB301 is a solution formulation of our novel vector for intradermal injection designed to deliver two copies of the COL3A1 transgene to address signs of aging or damaged skin caused by declining levels of, or damaged proteins within the extracellular matrix, including type III collagen.
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.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $202.8 million and consisted primarily of proceeds of $160.0 million received from a private placement equity offering and proceeds of $43.5 million primarily from exercises of stock options, partially offset by $749 thousand used for the employee tax withholding payment for settlement of vested restricted stock awards. 81 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 (“ATM”) Program.
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.
Since launch, the infrastructure has been in place for patients to be treated in their home by a healthcare provider, or HCP, reducing the need for regular visits to a clinic or hospital.
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.
Our funds may not be sufficient to enable us to conduct pivotal clinical trials for, seek marketing approval for or commercial launch of KB104, KB105, KB407, KB408, KB301, KB707 or any other product candidate.
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.
We estimate accrued government rebates using the expected value method. We accrue estimated rebates based on estimated percentages of VYJUVEK that will be prescribed to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be prescribed to qualified patients and record the rebates as a reduction of revenue.
The Company also estimates accrued government rebates using the expected value method based on estimated percentages of VYJUVEK that will be prescribed to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be prescribed to qualified patients and records the rebates as a reduction of revenue on the consolidated statements of operations and accrued rebates and other long-term liabilities on the consolidated balance sheets. • Commercial Rebates: The Company participates in certain commercial rebate programs.
Prior to receiving FDA approval in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense. As such, a portion of the cost of inventory sold during 2023 was expensed prior to FDA approval.
Cost of goods sold may also include period costs related to certain manufacturing services and inventory adjustment charges. Prior to receiving FDA approval in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expenses.
In accruing service fees, we estimate the time period over which services will be performed, and the actual services performed in each period.
In accruing service fees, we estimate the time period over which services will be performed, and the actual services performed in each period. If actual results in the future vary from our estimates, we will adjust these estimates in the period these variances become known.
Two formulations of KB707 are in development, a solution formulation for transcutaneous injection and an inhaled (nebulized) formulation for lung delivery.
Two formulations of KB707 are in development, 73 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.
Accrued commercial rebates are included in other accrued liabilities 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.
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 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 our contracts. Refer to Note 2 of our consolidated financial statements for additional information.
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.
Refer to Part I, Item 1 - Business for more information about our intellectual property and issued patents. • KB105 is a topical gel containing our novel vector designed to deliver two copies of the TGM1 transgene encoding the human enzyme transglutaminase-1 (“TGM1” ) for the treatment of TGM1-deficient autosomal recessive congenital ichthyosis, a serious rare skin disorder caused by missing or mutated TGM1 protein.
Dermatology 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.
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 non-cash items of $36.6 million primarily made up of stock-based compensation expense of $33.2 million and depreciation and amortization of $4.1 million, and cash provided by decreases in net working capital of approximately $2.8 million.
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.
Our transition to operating profitability is dependent upon the continued successful commercialization of VYJUVEK and the successful development, approval and commercialization of our product candidates and the achievement of a level of revenue adequate to support our cost structure.
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.
Prior to 76 receiving FDA approval for VYJUVEK in May 2023, costs associated with the manufacturing of VYJUVEK were expensed as research and development expense. As such, a portion of the cost of inventory sold during 2023 was expensed prior to FDA approval.
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.
Costs related to clinical trials can be unpredictable and therefore there can be no guarantee that we will have sufficient capital to fund our continued clinical studies of KB105, KB407, KB301, KB707 or our planned clinical and preclinical studies for our other product candidates, or our operations.
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. 81 Further, we expect future revenue to fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any product sales.
Accrued government rebates are included in other accrued liabilities on the consolidated balance sheets. For Medicare, the Company also estimates the accrued liability based on the number of patients in the prescription drug coverage gap under the Medicare Part D program. – Commercial Rebates: We participate in certain commercial rebate programs.
For Medicare, the Company estimates the accrued liability based on the estimated number of patients in the prescription drug coverage gap under the Medicare Part D program.
In 2023, income tax expense related to U.S. state and federal taxes related to the PRV sale and our initial commercial activities in those jurisdictions. See Note 11 of the notes to consolidated financial statements included in this Form 10-K for more information.
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. In 2023 and 2024, income tax expense related to state, federal and foreign income taxes. See Note 11 of the notes to consolidated financial statements included in this Form 10-K for more information.
B-VEC is marketed as VYJUVEK in the United States and is the first and only corrective medicine approved by the FDA for the treatment of DEB, both recessive and dominant. VYJUVEK can be administered by a healthcare professional in either a healthcare professional or home setting. We launched VYJUVEK in the United States in the second quarter of 2023.
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.
Cash Flows The following table summarizes our sources and uses of cash (in thousands): Years Ended December 31, 2023 2022 2021 Net cash used in operating activities $ (88,804) $ (100,569) $ (47,938) Net cash provided by (used in) investing activities 82,638 (114,083) (226,770) Net cash provided by financing activities 202,750 35,347 347,685 Effect of exchange rate changes on cash and cash equivalents (156) (41) — Net change in cash $ 196,428 $ (179,346) $ 72,977 Operating Activities 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 non-cash items of $61.9 million primarily comprised of a gain on sale of the rare pediatric PRV of $100.0 million, stock-based compensation expense of $39.9 million, realized gain on investments of $5.1 million, depreciation and amortization of $3.7 million, other non-cash items of $451 thousand, and cash used by increases in net working capital of approximately $37.9 million.
Sources and Uses of Cash The following table summarizes our sources and uses of cash: Years Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by (used in) operating activities $ 123,420 $ (88,804) $ (100,569) Net cash (used in) provided by investing activities (163,439) 82,638 (114,083) Net cash provided by financing activities 27,014 202,750 35,347 Effect of exchange rate changes on cash and cash equivalents (458) (156) (41) Net increase (decrease) in cash $ (13,463) $ 196,428 $ (179,346) Operating Activities Net cash provided 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.
Under these rebate programs, we pay a rebate to the commercial entity or third-party administrator of the program. Accrued commercial rebates are estimated using the expected value method.
Under these rebate programs, the Company pays a rebate to the commercial entity or third-party administrator of the program. 76 Accrued commercial rebates are estimated using the expected value method based on estimated percentages of VYJUVEK that will be prescribed to qualified patients and estimated levels of inventory in the distribution channel.
Investing Activities Net cash provided by investing activities for the year ended December 31, 2023 was approximately $82.6 million and consisted primarily of proceeds of $100.0 million from the sale of the rare pediatric PRV, proceeds from maturities of investments of $503.2 million, offset by purchases of available-for-sale investment securities of $508.8 million, and expenditures of $11.8 million on the build-out of our ASTRA facility, leasehold improvement of new office space, and purchases of computer and laboratory equipment.
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.
We presented preclinical pharmacology data for KB408 at the European Society of Gene & Cell Therapy Congress that was held in October 2023. 71 • 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.
We expect to report results for both cohorts in the second half of 2025. Oncology 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.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements.
Because of the numerous risks and uncertainties associated with research, development, manufacturing and commercialization of genetic medicines, we are unable to estimate the exact amount of our operating capital requirements.
KB707 spending increased $3.4 million due to increased payroll related costs and increased contract research costs in preparation for the Phase 1 clinical trial. Stock-based compensation increased $2.2 million due to an increase in internal resources to support overall research and development growth.
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.
We have contracted to sell VYJUVEK to a limited number of specialty pharmacy providers (“SPs”) that mix the medication and administer it to patients in the patient’s home by a healthcare professional and through a specialty distributor (“SD”) to hospitals and outpatient clinics where patients are administered the medication at a healthcare professional’s office.
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.
If actual results in the future vary from our estimates, we will adjust these estimates in the period these variances become known. 75 Stock-Based Compensation 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.
Stock-Based Compensation 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.
In August 2022, we announced that the FDA had accepted our investigational new drug (“IND”) application to evaluate KB407 in a clinical trial to treat patients with cystic fibrosis. In July 2023, we dosed the first patient in our Phase 1 CORAL-1 study evaluating KB407, delivered via a nebulizer, for the treatment of patients with CF.
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.
The estimated remaining commitment as of December 31, 2023 under these agreements is approximately $1.7 million, all of which is expected to be due in the next twelve months. 80 ASTRA Contractual Obligations We have contracted with various third parties to complete and qualify our second CGMP facility, ASTRA.
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.
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 We enter into various agreements in the normal course of business with CROs, CMOs and other third parties for preclinical research studies, clinical trials and testing and manufacturing services.
Clinical Supply and Product Manufacturing Agreements We enter into various agreements in the normal course of business with Contract Research Organizations, Contract Manufacturing Organizations and other third parties for preclinical research studies, clinical trials and testing and manufacturing services. We are obligated to make milestone payments under certain of these agreements.
Cost of Goods Sold We recognize cost of goods sold for direct and indirect costs related to the manufacturing of VYJUVEK. These costs consist of manufacturing costs, personnel costs, including stock-based compensation, facility costs, and other indirect overhead costs. Cost of goods sold may also include period costs related to certain manufacturing services and inventory adjustment charges.
Refer to Note 2 of the notes to the consolidated financial statements included in this Form 10-K for additional information. Cost of Goods Sold 74 Cost of goods sold includes direct and indirect costs related to the manufacturing of VYJUVEK. These costs consist of manufacturing costs, personnel costs including stock-based compensation, facility costs, and other indirect overhead costs.
Net cash used in operating activities for the year December 31, 2021 was $47.9 million and consisted primarily of a net loss of $69.6 million adjusted for non-cash items of $19.1 million primarily made up of stock-based compensation expense of $15.3 million, depreciation and amortization of $2.8 million and build to suit interest expense of $1.5 million, and cash provided by decreases in net working capital of approximately $2.5 million.
Net cash used by operating activities for the year ended 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.
Liquidity and Capital Resources Overview On December 31, 2023, our cash, cash equivalents and short-term investments balance was approximately $532.2 million. Since operations began, we have incurred operating losses.
Liquidity and Capital Resources Overview As of December 31, 2024, our cash, cash equivalents and short-term investments balance was approximately $597.5 million. As of December 31, 2024, we had an accumulated deficit of $180.7 million.
Further, we expect future revenue to fluctuate between periods for many reasons, including the uncertain timing and amount of any product sales. While we are in the process of building out our internal vector manufacturing capacity, some of our manufacturing activities will be contracted out to third parties.
While we are in the process of building out our internal vector manufacturing capacity, some of our manufacturing activities will be contracted out to third parties. Additionally, we currently utilize third-party contract research organizations to carry out some of our clinical development activities.

… 122 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed4 unchanged
Biggest changeWe do not hold or issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes. Further, we do not believe our cash, cash equivalents and short-term investments have significant risk of default or illiquidity.
Biggest changeWe do not believe that our results of operations or our financial position would be materially affected by an immediate change of 10% in foreign currency exchange rates We do not hold or issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes.
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. As of December 31, 2023, we have established operations in Europe and Australia and hold cash in Swiss Francs, Euros, and Australian Dollars.
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. We also have established operations in Europe and Japan and hold cash in Swiss Francs, Euros and Japanese Yen.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk We had cash, cash equivalents and short-term investments of approximately $532.2 million as of December 31, 2023, which consist primarily of money market funds, commercial paper, corporate bonds, and government agency securities.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk We had cash, cash equivalents and short-term investments of approximately $597.5 million as of December 31, 2024, which consisted primarily of money market funds, commercial paper, corporate bonds and U.S. government agency securities.
While we believe our cash, cash equivalents and short-term investments do not contain excessive risk, we cannot provide absolute assurance that any investments we make in the future will not be subject to adverse changes in market value. Our cash, cash equivalents and short-term investments are recorded at fair value. 83
Further, we do not believe our cash, cash equivalents and short-term investments have significant risk of default or illiquidity. While we believe our cash, cash equivalents and short-term investments do not contain excessive risk, we cannot provide absolute assurance that any investments we make in the future will not be subject to adverse changes in market value.
We are subject to foreign exchange rate risk arising from transactions conducted in the aforementioned foreign currencies, however our foreign operations are not currently material to our business. We do not believe that our results of operations or our financial position would be materially affected by an immediate change of 10% in foreign currency exchange rates.
We are subject to foreign exchange rate risk arising from transactions conducted in the aforementioned foreign currencies, however, our foreign operations are not currently material to our business.
Added
Our cash, cash equivalents and short-term investments are recorded at fair value. 86

Other KRYS 10-K year-over-year comparisons