Krystal Biotech, Inc.

Thank you for standing by, and welcome to the Crystal Biotech third quarter 2023 earnings conference call. As a reminder, today's conference call is being recorded. I would now like to hand the conference over to your host, Meg Dodge, head of investor relations and corporate communications. Please begin.

Good morning, and thank you all for joining today's call. Earlier, we released our financial results for the third quarter of 2023. The press release is available on our website at crystalbio.com. Our earnings 8K was filed earlier today. And additionally, we filed our 10Q with the SEC. Joining me on the call are Krish Krishnan, Chairman and Chief Executive Officer, Suma Krishnan, President of Research and Development, and Kate Romano, Chief Accounting Officer. I'd like to note that during this call, we'll be making a number of forward-looking statements about our future business plans strategies, financial performances, and projections, product candidate development plans, including statements about Vajabek. These forward-looking statements involve risks and uncertainties, any of which are beyond Crystal's control. Actual results could materially differ from these forward-looking statements, as any and such risk can materially and adversely affect the business, results of operations, and trading price of Crystal's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to view our SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. With that, I'd like to now turn the call over to Krish.

Krish? Thank you, Meg. Welcome to Crystal Biotech's first-ever earnings call. It's a bit of a coincidence that we're having our first earnings call when we have positive earnings, but I want to be clear that this quarter's positive EPS is simply driven by the sale of the Priority Review Voucher in Q3. More importantly, we're having this call on the heels of EB Awareness Week. We thank the entire dystrophic Epidermolysis bullosa community who work tirelessly to improve outcomes for patients with this genetic disease. As we recognize the challenges that the patients and their families face every single day, our goal remains focused on helping as many deaf patients as possible. We know that this disease extends far beyond the skin, and we're committed to continuing to work to treat this disease comprehensively. We will discuss our early initial efforts in treating deaf patients with lesions in the eye and those with squamous cell carcinoma of the skin later in this call. With that, I'd like to say that after the first full quarter into the Vajravec launch, I'm extremely pleased and proud by the commercial progress we're making. We continue to see strong patient demand into Q4, and as we announced, we finished Q3 with 284 stock forms since Weisheweck was approved. Our estimate right now is about an 85% conversion from stock forms to patients on drug, but we'll continue to update the stat in subsequent quarters as more and more start forms continue to convert. That said, even at 85%, we're at a 20% penetration of the identified base of patients following one full quarter post-launch. Of the 284 start forms received, 20% were from patients suffering from the dominant form of PEB. As I have mentioned before, patient scripts from dominant deaf patients continue to expand our base of identified patients. One-third or 33% of the start forms were from patients 10 years of age or younger to as young as six months old. We track that because it gives us a better sense of an overall estimate of the induction phase as we believe that patients younger than 10 years of age could potentially have a longer induction phase than adults, meaning that they will potentially consume more vials annually for a longer period of time than adults did. So of the 284 start forms, 20% were from dominant deaf patients, 33% from patients 10 years or younger, and presently estimate an 85% conversion rate to patients on drug, which could potentially be higher as we move into subsequent quarters. What is interesting and maybe a bit surprising is that only 46%, less than half of patient start forms were from centers of excellence with a balance of scripts written by the community physician. So it has not been a bolus from the center of excellence, but rather a steady flow of star forms. And this is attributable to, one, that some KOLs wanting a patient to physically visit at their centers prior to initiating them on Vajravax. Now, that takes a certain amount of time because a lot of patients do not live right next to the center of excellence. And scheduling can often be a challenge given the busy schedule of these KOLs. Some other KOLs, generally those who did not have prior experience with Visevac in a clinical study or in the open-label extension study are choosing a gated approach, prioritizing their most severe patients on Visevac first, seeing how it goes, and then writing prescriptions for moderate patients. That said, we've encountered no reluctance from any KOL with respect to wanting to put their patients on Valjavac. It's simply a timing issue. And our medical affairs team is working closely with these KOLs to educate them on the importance of getting the patients started on Valjavac as soon as possible. With respect to reimbursement, 45% of the patient support forms that have been received, as of the end of Q3, were from patients with a commercial insurance plan. Most of these patients, over 80% of them, are already eligible for commercial reimbursement. As we mentioned in the press release, the company has received positive coverage determinations from all major commercial national health plans and several regional health plans. So 45% commercial insurance, Of the remaining 55% on government insurance, 74% are presently eligible for reimbursement, and we expect the remaining to be eligible once the permanent J-code becomes available in Jan 2024. So overall, access is in a really good place, and we expect almost all patients to be eligible for some form of reimbursement early in 2024. at which point we intend to transition to reporting number of patients on drug as opposed to patient star forms, as patients on drug will become a much better predictor of net revenues than star forms. So we talked about color on the star forms and on access. Now about conversion to net revenues. Crystal's guiding principle in the Vizervac launch is centered around the patient experience, and we work tirelessly to ensure that each patient's path with respect to getting on Vizuvac and staying on it is smooth, timely, and hassle-free. We're partnering with patients and families who were previously traveling to a center of excellence for palliative treatment and transitioning them to a home health visit by an HCP to apply the medication at a convenient time in their weekly schedule. Think about that. Definitely more steps involved than simply having a physician write a script and getting it filled at the local pharmacy. In addition, we're also working with payers who almost all agree that the home setting is best for the patient. So patient experience is foremost on our mind. And with respect to the VizuVac grant, we work to ensure that we do not make a patient wait for long, that we don't accept a stock form unless we have a clear line of sight into getting our patients access to VizuVac within a reasonable time. Our goal in 2024 is to convert stock forms to patient-owned drugs in about two to three weeks. We're not there yet, but we expect we'll have most of access in place by the end of the year, and we're learning from some of the experiences on the initial set of patients, so we feel really confident in achieving that objective. It's really difficult to go below two to three weeks, because it takes many families a week or two to get comfortable with the nurse and schedule a home health visit. So this launch has been all about home dosing. Over 88% of the patient stock forms received by the end of September were for patients who want to be dosed at home. And we expect that trend to continue and potentially go higher. This has definitely helped adherence to drug, which has been excellent to rate and currently tracks around 96%. We shall continue to update this statistic in upcoming quarters. So following approval in May, it took us a few weeks to get the drug in the channel, negotiate reimbursement, and schedule home health visits. So our first paid patient did not get on Visevac until early August. So the net revenue number of 8.6 million is approximately two full revenue months in Q3, during a period where both commercial and government policies and reimbursement continued to be negotiated an issue. The point being, while patient stock forms is attributable to a full quarter, net product revenue is only attributable to two out of the three months in the quarter. So to summarize, we believe we have a strong launch in our hands. We see really good demand from both recessive and dominant patients. Access coverage has been relatively smooth. And home health visits are pointing to a high patient compliance. We expect this momentum to continue going forward. Beyond the U.S. commercial launch, we're also looking to expand the number of patients treated with Visevac and we are working towards a named patient program in EU as we await our marketing authorization approval in the second half of 2024 and launch thereafter. Sumo will speak to the strength of our pipeline shortly, but with close to 600 million on our balance sheet, a strong launch and a very productive pipeline, We're well positioned strategically and financially to support the global launch of iGVEC and advance our clinical programs. I shall turn the call over to Suma to provide color on the clinical programs.