Executive Summary

KRYS delivered Q3 revenue of $97.8M, up 16.6% YoY and +1.9% QoQ; gross margin reached 96% aided by U.S. manufacturing optimizations; net income was $79.4M ($2.66 diluted EPS) with EPS inflated by a one‑time non‑cash tax benefit and Section 174 reversal .
Revenue and EPS beat S&P Global consensus: revenue $97.8M vs $93.4M*, EPS $2.66 vs $1.09*, while EBITDA outperformed $41.7M vs $29.8M*; management noted early ex‑U.S. contribution (Germany) and stable U.S. gross‑to‑net .
Non‑GAAP R&D+SG&A FY25 guidance was lowered and narrowed to $145–$155M from $150–$175M previously, reflecting execution discipline; no revenue guidance provided for 2026 .
Strategic progress: VYJUVEK launched in Germany (Q3) and subsequently in France and Japan (October), U.S. label expanded to allow treatment from birth and home/caregiver application, and FDA granted platform technology designation (initially for KB801) .
Near‑term catalysts: CF (KB407) interim molecular readout before year‑end; EU pricing negotiations underway (steady build expected), with geographic revenue breakout targeted for 2026—potential stock reaction levers .

What Went Well and What Went Wrong

What Went Well

Global commercialization inflected: Germany launch in late August with ~20 patients prescribed across 10+ centers; France early reimbursed access (ASMR III) and October launch; Japan pricing completed and launch in October, setting up 2026 growth .
U.S. label expansion increased TAM and convenience: FDA approved VYJUVEK use from birth and enabled patient/caregiver application, improving flexibility and potential compliance (“…most flexible and convenient corrective therapy…”) .
Strong unit economics and execution: gross margin 96% (up from 93% in Q2) on U.S. process optimization; 615+ U.S. reimbursement approvals and >450 prescribers; cash and investments $864.2M .

What Went Wrong

Quality of EPS beat: EPS was boosted by non‑recurring items—release of valuation allowance on deferred tax assets and the legislative reversal of Section 174 capitalization—masking underlying trend; EBITDA normalization ex‑U.S. could pressure GM near‑term .
U.S. revenue cadence: management said U.S. sales were “a bit lower” than Q2 with overall growth aided by early Europe; continued quarter‑to‑quarter “waviness” from treatment pauses and restarts remains a factor .
Pipeline adjustment: enrollment in OPAL‑1 (intratumoral KB707) was paused pending study reassessment, introducing uncertainty for that oncology path even as inhaled KB707 progresses toward a potential single Phase 3 in NSCLC combo .

Financial Results

Headline P&L (sequential, oldest→newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$88.2	$96.0	$97.8
Net Income ($M)	$35.7	$38.3	$79.4
Diluted EPS ($)	$1.20	$1.29	$2.66
Gross Margin (%)	94%	93%	96%

Operating Expenses (sequential)

Metric ($M)	Q1 2025	Q2 2025	Q3 2025
R&D	$14.3	$14.4	$14.6
SG&A	$32.7	$35.2	$37.6
COGS	$5.0	$7.2	$4.3

Year-over-Year (Q3)

Metric	Q3 2024	Q3 2025
Revenue ($M)	$83.8	$97.8
Net Income ($M)	$27.2	$79.4
Diluted EPS ($)	$0.91	$2.66

“Vs Estimates” (S&P Global)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Estimate ($M)*	96.2	92.0	93.4
Revenue Actual ($M)	$88.2	$96.0	$97.8
EPS Estimate ($)*	1.37	1.13	1.09
EPS Actual ($)	$1.20	$1.29	$2.66
EBITDA Estimate ($M)*	55.7	41.2	29.8
EBITDA Actual ($M)*	36.6	39.6	41.7

*Values retrieved from S&P Global.

Segment/Revenue Mix

Net product revenue entirely from VYJUVEK; management will begin geographic revenue breakout in 2026; ex‑U.S. contributed modestly in Q3 with Germany launch late in quarter .

Key KPIs

KPI	Q3 2025
U.S. Reimbursement approvals	615+
U.S. prescribers	>450
Compliance while on drug	Low‑80%
Cash & investments	$864.2M
Germany patient starts	~20 patients, 10+ centers
France ASMR rating	ASMR III (added clinical benefit)
Japan status	Pricing completed; Oct launch

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non‑GAAP R&D + SG&A ($M)	FY 2025	$150–$175	$145–$155	Lowered & narrowed

Notes: Non‑GAAP excludes stock‑based comp; company did not provide 2026 revenue guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Ex‑U.S. launches (EU/Japan)	EU approval; plan to launch Germany Q3, France Q4; Japan approval expected H2’25; EU/JP to drive multiyear growth	Germany launch late Aug; France early access and Oct launch; Japan priced and launched in Oct	Execution progressing; steady ex‑U.S. build
U.S. label/Access	Focus on patient pauses/restarts, long‑term use; compliance high; target 60% market share of ~1,200 U.S. patients	FDA label updated: from birth, home/caregiver application; >615 approvals, >450 prescribers	Larger eligible pool; convenience improved
Gross margin & manufacturing	GM ~93–94%; stable GTN; optimization underway	GM 96% on U.S. process optimization; may normalize as ex‑U.S. grows until process approved OUS	Near‑term benefit, medium‑term normalization
CF (KB407)	Interim molecular readout guided for summer; TDN sites onboarding	Interim data before YE; targeting ≥3 null patients; assess CFTR expression via immunofluorescence	Imminent catalyst
AATD (KB408)	Single‑dose functional AAT expression; moving to repeat dosing Cohort 2B	Repeat dosing underway; interim update 1H’26	Advancing to durability/efficacy
Oncology (KB707)	Inhaled monotherapy ORR improved to 36%; combo cohorts opened	FDA feedback: single Phase 3 combo vs chemo alone could suffice; intratumoral study paused	Clearer registrational path (inhaled); IT route paused
Platform designation	Not discussed	FDA platform technology designation granted (applies initially to KB801)	Regulatory leverage tailwind

Management Commentary

“Net VYJUVEK revenue [was] $97.8 million… Gross margins were 96% for the quarter… Gross to net dynamics were stable” – Krish Krishnan .
“We have now also launched VYJUVEK in Japan… we successfully completed pricing negotiations… contribution in 2025 [to be] modest, [driver] in 2026” – Krish Krishnan .
“Platform technology designation… could significantly accelerate the path to approval… we intend to apply for this designation for additional programs” – Suma Krishnan .
“We are revising our full‑year non‑GAAP R&D and SG&A guidance to $145–$155 million… During the quarter, we released a majority of the valuation allowance… [and] benefited from the reversal of the Section 174… non‑recurring” – Kate Romano .
“We expect to provide an interim data readout [for KB407] before year end… [assessing] full‑length wild‑type CFTR” – Suma Krishnan .

Q&A Highlights

Ex‑U.S. ramp and pricing: Expect a steady EU build (no early bolus) with country‑specific pricing mechanics; Germany free pricing first six months; France accrual from day one; ASMR III rating and Japan pricing bode well for Europe .
Process optimization: Higher U.S. gross margin driven by scale‑up to larger bioreactors; filing underway in Europe with expectation for approval “sometime next year” .
Revenue disclosure: Geographic breakdown deferred to 2026 due to modest early ex‑U.S. contribution; Q3 U.S. revenue “a bit lower” than Q2 but total Q3 was higher .
CF readout scope: Targeting at least three null patients; success defined by immunofluorescent detection of full‑length CFTR across lung biopsies; 5–10% expression viewed as robust .
Penetration path: U.S. reimbursement approvals accelerated; management reiterated a 60% market share target (~720 of ~1,200 diagnosed patients) within a few quarters; prescriber expansion supports community reach .

Estimates Context

Q3 beats across the board: Revenue $97.8M vs $93.4M*, EPS $2.66 vs $1.09*, EBITDA $41.7M vs $29.8M*; note EPS benefitted from one‑time tax items and the Section 174 reversal .
Sequentially, Q2 revenue also beat while Q1 missed; EBITDA missed in Q2 and Q1 likely on opex and GTN dynamics, then outperformed in Q3 as gross margin improved and ex‑U.S. contribution began .
Street models may lift revenue and EBITDA for 2026 to reflect Japan/EU traction, while EPS normalization (absence of one‑time tax benefits) should be considered in forward EPS revisions .
*Values retrieved from S&P Global.

Key Takeaways for Investors

Quality of beat: Headline EPS materially above consensus due to one‑time tax items; focus on operating profit and EBITDA where Q3 also beat and gross margin improved structurally in the U.S. .
Global expansion underway: Early Germany contribution and October launches in France and Japan de‑risk 2026 growth; ex‑U.S. pricing and process approval cadence the key swing factors .
U.S. label expansion is a structural TAM/adhesion driver (from birth, home dosing) likely supporting higher compliance and prescriber breadth over time .
Near‑term catalysts: KB407 (CF) interim molecular data by year‑end; KB803 (DEB ocular) enrollment completion near YE; these readouts can validate platform breadth and drive multiple expansion .
Margin trajectory: Expect some gross margin normalization as ex‑U.S. mix grows until the optimized process is approved outside the U.S.; medium‑term potential to re‑expand margins post‑approval .
Cash runway is robust ($864M) to fund global launches and pipeline, limiting financing risk amid execution of multiple clinical programs .
Watch for 2026 geographic revenue disclosures and EU/Japan adoption slope; steady, not stepwise, growth is expected by management .

Additional Detail

VYJUVEK Commercial Update

Germany: ~20 patients prescribed across >10 centers since late‑August launch; focus on growing center breadth to alleviate initiation bottlenecks .
France: Early reimbursed access under AP2 and ASMR III appraisal; October launch; ability to dispense outside hospital setting (first for a gene therapy in France) .
Japan: Pricing negotiations completed; launch in October; modest 2025 contribution, growing in 2026 .
U.S. label: Expanded to birth; caregiver/patient administration at home; wound‑care flexibility improved .

Pipeline Highlights

CF (KB407): Interim Cohort 3 molecular data before YE focusing on null patients; positive signal (5–10% CFTR expression) would enable repeat‑dosing and FEV1 readout next year .
AATD (KB408): Repeat‑dose Cohort 2B enrolling; interim update expected 1H 2026 .
Ophthalmology: KB803 Phase 3 (IOLITE) enrollment set to complete by YE; KB801 NK randomized study progressing globally; FDA platform tech designation initially granted to KB801 .
Oncology: Inhaled KB707 potential single Phase 3 pathway in second‑line NSCLC combo; intratumoral KB707 enrollment paused in OPAL‑1 .

Cross-Checks and Non-GAAP

Non‑GAAP R&D+SG&A FY25: $145–$155M; excludes stock‑based comp; company did not provide a GAAP reconciliation due to uncertainty in stock‑based comp .
Management highlighted the valuation allowance release and 174 reversal as non‑recurring EPS drivers .

Krystal Biotech, Inc. (KRYS)·Q3 2025 Earnings Summary