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Krystal Biotech, Inc. (KRYS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid execution: Revenue was $96.0M with gross margin 93% and diluted EPS $1.29; results were driven by patient restarts and early lift from salesforce expansion .
  • Both top- and bottom-line beat S&P Global consensus: Revenue $96.0M vs $91.96M* and EPS $1.29 vs $1.13*; Q1 had missed both, highlighting improved in-quarter momentum [GetEstimates: Q2 2025].
  • Global expansion catalysts advanced: EU launch on track (Germany in Q3, France in Q4) and Japan approval with home-administration label; launch in Japan targeted before year-end .
  • Management flagged seasonality/usage dynamics: expects Q3 revenue below Q2 due to summer pauses, with a return to growth in Q4 as restarts and sales expansion normalize .
  • Balance sheet remains strong with $820.8M cash and investments to fund EU/JP launches and multiple near-term readouts in lung and eye programs .

What Went Well and What Went Wrong

What Went Well

  • International momentum: EMA approval earlier in the year and MHLW approval in Japan (broad label, including home/family administration), with first EU launch in Germany targeted for Q3 and France in Q4; Japan launch targeted by year-end .
  • Commercial execution: Q2 revenue $96.0M, gross margin 93%, reimbursement approvals >575 in the U.S.; net income rose to $38.3M (diluted EPS $1.29) .
  • Pipeline progress: Oncology ORR improved to 36% for inhaled KB707 in late-line NSCLC; AATD program (KB408) confirmed functional AAT expression with reduced free neutrophil elastase and initiated repeat-dosing cohort; first patients dosed in ophthalmology programs KB803 (Phase 3) and KB801 (Phase 1/2) .

Notable quotes:

  • “We are on the cusp of a global expansion that will build on our U.S. sales momentum...” – CEO .
  • “We were again profitable this quarter at $1.29 per share fully diluted...” – CEO .

What Went Wrong

  • Seasonality/usage volatility: Management expects Q3 revenue to be below Q2 (summer pauses and evolving patient mix), with growth resuming in Q4; compliance while on drug ticked down to 82% (from 83% in Q1 and 85% at YE’24) .
  • Timing slippage in CF readout (KB407): “later this year” vs prior “mid-2025,” largely due to academic site contracting and onboarding through the TDN network .
  • Rising operating costs in oncology: R&D allocation skewed to oncology given expensive combination cohorts (e.g., pembrolizumab) and preparations for potential controlled study, implying higher trials cost intensity .

Financial Results

Metric ($USD Thousands unless noted)Q2 2024Q4 2024Q1 2025Q2 2025
Revenue (Product revenue, net)70,284 91,139 88,183 96,042
Cost of Goods Sold6,009 4,949 5,028 7,165
Gross Margin (%)n/a95% 94% 93%
Research & Development15,583 13,523 14,255 14,410
Selling, General & Administrative27,626 31,288 32,723 35,160
Operating Income (Income from operations)8,566 41,379 36,177 39,307
Net Income15,568 45,479 35,733 38,333
Diluted EPS ($)0.53 1.52 1.20 1.29

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
U.S. Reimbursement Approvals (#)≥510 ≥540 ≥575
Compliance While on Drug (%)85% 83% 82%
Cash, Cash Equivalents & Investments ($)$749.6M $765.3M $820.8M
Gross Margin (%)95% 94% 93%

Vs S&P Global Consensus (Quarterly)

MetricQ1 2025Q2 2025
Revenue Consensus Mean ($)96,209,530*91,960,960*
Revenue Actual ($)88,183,000*96,042,000*
Result vs EstMiss*Beat*
Primary EPS Consensus Mean ($)1.36625*1.1325*
EPS Actual ($)1.20*1.29*
Result vs EstMiss*Beat*

Values retrieved from S&P Global.*

Segment breakdown: All reported revenue is VYJUVEK net product revenue .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP combined R&D + SG&A (ex-SBC)FY 2025$150.0–$175.0M $150.0–$175.0M Maintained

Note: Non-GAAP guidance excludes stock-based compensation; the company does not reconcile forward non-GAAP to GAAP due to inherent uncertainty .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Global expansion (EU/JP)Q4’24: EU CHMP opinion expected; PMDA review ongoing, 2H’25 decision . Q1’25: EC approval; first EU launch (Germany) mid-2025; Japan decision 2H’25 .EU launches targeted: Germany Q3, France Q4; Japan approved with broad/home-use label; Japan launch by YE’25 .Accelerating
U.S. commercial dynamics (pauses/restarts)Compliance 85% (YE’24), 83% in Q1; >540 approvals .Compliance 82%; Q3 revenue expected below Q2 due to summer pauses; Q4 re-acceleration expected .Near-term softness; 4Q recovery
Salesforce expansionLimited prior detail.Hiring ongoing; partial Q2 impact; full impact over next few quarters .Building
CF (KB407)Q4’24: mid-2025 readout plan . Q1’25: mid-2025 target reiterated .Now “later this year” due to TDN site contracting/onboarding; cohort 3 enrollment advancing .Slight delay
AATD (KB408)Late ’24 interim success; results from cohorts 2/3 later in ’25 .Confirmed SERPINA1 delivery, functional AAT, reduced free neutrophil elastase; opened repeat dosing Cohort 2B .Advancing
Oncology (KB707)Early monotherapy activity (ORR 27%) ; ASCO update expected .ORR improved to 36% with deeper responses; combos opened; safety favorable .Strengthening
Ophthalmology (KB803/KB801)Preparing IOLITE Phase 3; KB801 IND cleared .First patient dosed in IOLITE (KB803) and EMERALD-1 (KB801) .Executing
Aesthetics (KB304)PEARL-2 underway; topline 2H’25 .Positive PEARL-2; moving to Phase 2; photonumeric scale developed .De-risking

Management Commentary

  • “With the approval of VYJUVEK in Europe and Japan, we are on the cusp of a global expansion that will build on our U.S. sales momentum...” – Krish S. Krishnan, CEO .
  • “We were again profitable this quarter at $1.29 per share fully diluted, marking now two years of consistently positive EPS for the company.” – CEO .
  • “Based on the summer pausing trends... our current expectation is that 3Q revenues will come in below what we’re reporting here today, with a return to growth in 4Q...” – CEO .
  • “Gross to net revenues remained consistent with prior quarters... gross margin remained relatively consistent at 93% in 2Q’25.” – Management .

Q&A Highlights

  • Near-term revenue cadence: Management guided Q3 revenue below Q2 due to seasonal pauses, with anticipated Q4 growth resumption driven by restarts and field expansion .
  • Salesforce impact: Q2 benefited partially; full impact to build over next few quarters as hires complete training .
  • Patient mix/compliance: RDEB vs DDEB mix “largely stable” (~64/36) and compliance while on drug ranges ~76–84% depending on methodology; steady-state defined as ~26 vials/year at ~50/50 RDEB/DDEB mix .
  • EU pricing/HTA: Free pricing in Germany for first 12 months; HTA processes underway across major markets with acknowledgment of unmet need .
  • CF/AATD timelines: CF molecular data shifted to “later this year” due to TDN site onboarding; AATD repeat dosing cohort initiated following positive functional data .

Estimates Context

  • Q2 2025 beat on both revenue ($96.04M vs $91.96M*) and EPS ($1.29 vs $1.13*). Q1 2025 had missed on both revenue ($88.18M vs $96.21M*) and EPS ($1.20 vs $1.366*), indicating improved in-quarter momentum in Q2 [GetEstimates; Q1 & Q2 2025].
  • Given management’s Q3 sequential decline commentary and expected Q4 re-acceleration, near-term estimate revisions may skew modestly lower for Q3 then higher for Q4/FY as EU/JP contributions and restarts build .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q2 execution was strong with healthy revenue/EPS beats and 93% gross margin; U.S. utilization dynamics and restarts remain the core driver .
  • Expect a tactical air pocket in Q3 (seasonality and pauses) before growth resumes in Q4; trading setups may favor buying dips into EU/JP launch milestones and Q4 re-acceleration .
  • EU launch is imminent (Germany Q3, France Q4), benefitting from flexible dosing/home administration; Japan approval with home-use label is a 2026 revenue driver post-reimbursement .
  • Pipeline catalysts cluster over the next 6–12 months: CF (KB407) molecular data later this year, AATD (KB408) repeat-dosing data, eye programs (KB803/KB801) progress, and oncology (KB707) combo expansion .
  • Operating leverage sustained despite R&D scale-up; cash/investments of $820.8M provide ample runway for global commercial build-out and late-stage development .
  • Non-GAAP OpEx guidance maintained at $150–$175M (ex-SBC), signaling cost discipline even as international launches and trials expand .
  • Monitor metrics: reimbursement approvals, compliance trajectory as patient mix shifts, EU/JP patient onboarding cadence, and any updates on steady-state vial consumption and 720 U.S. patient target timing .

Additional supporting documents and highlights:

  • Japan approval press release with home administration allowance and expected 2025 launch timing .
  • European Commission approval press release (April 28, 2025) underpinning EU launch plans .
  • IOLITE Phase 3 first-patient dosed (KB803) and EMERALD-1 first-patient dosed (KB801), advancing ophthalmology franchise .