krys-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

_____________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38210

_____________________________________________________

Krystal Biotech, Inc.

(Exact name of registrant as specified in its charter)

_____________________________________________________


Delaware						82-1080209
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

2100 Wharton Street, Suite 701

Pittsburgh, Pennsylvania 15203

(Address of principal executive offices and zip code)

(412) 586-5830

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KRYS	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company ☐

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, there were 27,994,177 shares of the registrant’s common stock issued and outstanding.

Krystal Biotech, Inc.

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (unaudited)	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48

SIGNATURES		49

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Krystal Biotech, Inc.

Condensed Consolidated Balance Sheets

(unaudited)



(In thousands, except share and per share data)	June 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	275,875	$	161,900
Short-term investments	201,642		217,271

Prepaid expenses and other current assets	6,487		4,608
Total current assets	484,004		383,779
Property and equipment, net	163,737		161,684
Long-term investments	28,410		4,621
Right-of-use assets	7,590		8,042
Other non-current assets	285		324
Total assets	$	684,026	$	558,450
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	4,446	$	3,981
Current portion of lease liability	1,529		1,561
Accrued expenses and other current liabilities	17,923		23,305

Total current liabilities	23,898		28,847
Lease liability	7,014		7,372
Total liabilities	30,912		36,219
Commitments and contingencies (Note 6)
Stockholders' equity
Common stock; $0.00001 par value; 80,000,000 shares authorized at June 30, 2023 and December 31, 2022; 27,974,916 shares issued and outstanding at June 30, 2023; and 25,763,743 shares issued and outstanding at December 31, 2022	—		—
Additional paid-in capital	1,012,616		803,718
Accumulated other comprehensive loss	(236)		(728)
Accumulated deficit	(359,266)		(280,759)
Total stockholders' equity	653,114		522,231
Total liabilities and stockholders' equity	$	684,026	$	558,450

The accompanying notes are an integral part of these condensed consolidated financial statements.

Krystal Biotech, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share data)	2023		2022		2023		2022
Expenses
Research and development	$	12,144	$	10,890	$	24,432	$	20,204
General and administrative	25,904		17,863		49,939		33,771
Litigation settlement	—		—		12,500		25,000
Total operating expenses	38,048		28,753		86,871		78,975
Loss from operations	(38,048)		(28,753)		(86,871)		(78,975)
Other Income
Interest and other income, net	4,838		645		8,364		902

Net loss	$	(33,210)	$	(28,108)	(78,507)		(78,073)
Unrealized gain (loss) on available-for-sale securities and currency translation adjustment	(82)		(348)		492		(1,382)
Comprehensive loss	$	(33,292)	$	(28,456)	$	(78,015)	$	(79,455)

Net loss per common share: Basic and diluted	$	(1.25)	$	(1.10)	$	(3.00)	$	(3.08)

Weighted-average common shares outstanding: Basic and diluted	26,656,883		25,545,167		26,187,161		25,331,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

Krystal Biotech, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(unaudited)


	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
(In thousands, except shares)	Shares	Amount		Capital		(Loss)		Deficit		Equity
Balances at January 1, 2023	25,763,743	$	—	$	803,718	$	(728)	$	(280,759)	$	522,231
Issuance of common stock, net	42,021	—		2,208		—		—		2,208
Shares surrendered for taxes	(9,551)	—		(749)		—		—		(749)
Stock-based compensation expense	—	—		10,599		—		—		10,599
Unrealized gain on investments and other	—	—		—		574		—		574
Net loss	—	—		—		—		(45,297)		(45,297)
Balances at March 31, 2023	25,796,213	$	—	$	815,776	$	(154)	$	(326,056)	$	489,566
Issuance of common stock, net	2,178,703	—		185,397		—		—		185,397
Shares surrendered for taxes and forfeitures	—	—		—		—		—		—
Stock-based compensation expense	—	—		11,443		—		—		11,443
Unrealized (loss) on investments and other	—	—		—		(82)		—		(82)
Net loss	—	—		—		—		(33,210)		(33,210)
Balances at June 30, 2023	27,974,916	$	—	$	1,012,616	$	(236)	$	(359,266)	$	653,114


	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
(In thousands, except shares)	Shares	Amount		Capital		(Loss)		Deficit		Equity
Balances at January 1, 2022	25,207,985	$	—	$	734,523	$	(163)	$	(140,784)	$	593,576
Issuance of common stock, net	1,475	—		55		—		—		55
Shares surrendered for taxes and forfeitures	(10,379)	—		(649)		—		—		(649)
Stock-based compensation expense	—	—		6,571		—		—		6,571
Unrealized (loss) on investments and other	—	—		—		(1,034)		—		(1,034)
Net loss	—	—		—		—		(49,965)		(49,965)
Balances at March 31, 2022	25,199,081	$	—	$	740,500	$	(1,197)	$	(190,749)	$	548,554
Issuance of common stock, net	472,706	—		30,748		—		—		30,748
Shares surrendered for taxes and forfeitures	(7,500)	—		—		—		—		—
Stock-based compensation expense	—	—		8,335		—		—		8,335
Unrealized (loss) on investments and other	—	—		—		(348)		—		(348)
Net loss	—	—		—		—		(28,108)		(28,108)
Balances at June 30, 2022	25,664,287	$	—	$	779,583	$	(1,545)	$	(218,857)	$	559,181

The accompanying notes are an integral part of these condensed consolidated financial statements.

Krystal Biotech, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Six Months Ended June 30,
(In thousands)	2023		2022
Operating Activities
Net loss	$	(78,507)	$	(78,073)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,743		1,991
Stock-based compensation expense	21,768		14,619



Other, net	(2,371)		(166)
Changes in operating assets and liabilities
Prepaid expenses and other current assets	(1,524)		848

Other non-current assets	110		15
Lease liability	(380)		(286)
Accounts payable	481		24
Accrued expenses and other current liabilities	(1,666)		2,476

Net cash (used in) operating activities	(60,346)