UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 2017
KRYSTAL BIOTECH, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38210 | 82-2908297 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
2100 Wharton Street, Suite 701
Pittsburgh, Pennsylvania 15203
(Address of principal executive offices, including Zip Code)
Registrant’s telephone number, including area code: (412) 586-5830
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an 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. ☒
| Item 2.02 | Results of Operations and Financial Condition |
On November 13, 2017, Krystal Biotech, Inc. (the “Company”) issued a press release announcing its results of operations for the three and nine months ended September 30, 2017 and providing an update on the Company’s recent corporate progress. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
This Current Report on Form 8-K and the exhibit attached hereto are being furnished by the Company pursuant to Item 2.02 and Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD and Item 2.02 of Form 8-K, insofar as they disclose historical information regarding the Company’s results of operations or financial condition for the three and nine months ended September 30, 2017.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto), shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 7.01 | Regulation FD Disclosure. |
The disclosure contained in Item 2.02 is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description | |
| 99.1 | Press release dated November 13, 2017 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 13, 2017 | KRYSTAL BIOTECH, INC. | |||||||
| By: | /s/ Krish S. Krishnan | |||||||
| Name: | Krish S. Krishnan | |||||||
| Title: | President and Chief Executive Officer | |||||||
Exhibit 99.1
Krystal Biotech Reports that KB103 Received Clearance From RAC Review and Announces
Third Quarter 2017 Financial Results
PITTSBURGH, Pa., November 13, 2017 — Krystal Biotech, Inc. (NASDAQ: KRYS), a gene therapy company advancing “off-the-shelf,” topical and intra-dermal treatments for dermatological diseases, today reported financial results for the third quarter ended September 30, 2017, and provided an update on the company’s recent corporate progress.
“We were pleased to complete a successful IPO on the Nasdaq Capital Market in September, and are now well-capitalized to advance our gene therapy product portfolio, particularly KB103, our lead product candidate for Dystrophic Epidermolysis Bullosa (DEB),” said Krish S. Krishnan, Chairman & Chief Executive Officer of Krystal Biotech. “Last week, our Phase 1/2 protocol for KB103 received clearance from RAC review and we are currently preparing to file an Investigational Drug Application (IND) for KB103 in the first quarter of 2018 and initiating a Phase 1/2 clinical trial in DEB shortly thereafter.”
Third Quarter Highlights
Pipeline Update
| • | Phase 1/2 protocol for KB103 to treat DEB received clearance from Recombinant DNA Advisory Committee (RAC) review. |
| • | KB103 granted Orphan Drug Designation by the Office of Orphan Product Development (OOPD). |
| • | Presented preclinical data assessing the in vitro and in vivo delivery of HSV-1 mediated KB103 at EB2017, the 5th World Conference on EB Research in Salzburg, Austria. |
Corporate Update
| • | In September, Krystal completed an initial public offering raising approximately $41.0 million in net proceeds. |
| • | In November, Krystal received funding totaling $770,000 from the EB Research Partnership (EBRP) and the EB Medical Research Foundation (EBMRF). EBRP and EBMRF have provided this funding following a highly competitive application and screening process overseen by EBRP’s Scientific Advisory Board (SAB), which is composed of leading scientists and physicians. |
Financial Results for the Third Quarter
| • | Cash totaled $52.6 million at September 30, 2017. |
| • | Research and development expenses for the third quarter were $1.4 million. |
| • | General and administrative expenses for the third quarter were $0.7 million. |
About KB103
KB103 is Krystal’s lead product candidate, currently in preclinical development and seeks to use gene therapy to treat dystrophic epidermolysis bullosa, or DEB, an incurable skin blistering condition caused by a lack of collagen in the skin. KB103 is a replication-defective, non-integrating viral vector that has been engineered employing Krystal’s STAR-D platform to deliver functional human COL7A1 genes directly to the patients’ dividing and non-dividing skin cells. HSV-1 is Krystal’s replication-deficient, non-integrating viral vector that can penetrate skin cells more efficiently than other viral vectors. Its high payload capacity allows it to accommodate large or multiple genes and its low immunogenicity makes it a suitable choice for direct and repeat delivery to the skin.
About Dystrophic Epidermolysis Bullosa, or DEB
Dystrophic epidermolysis bullosa, or DEB, is an incurable, often fatal skin blistering condition caused by a lack of collagen protein in the skin. It is caused by mutations in the gene coding for type VII collagen, or COL7, a major component of the anchoring fibrils, which anchor the epidermis to the underlying dermis, and provide structural adhesion in a normal individual. The lack of COL7 in DEB patients causes blisters to occur in the dermis as a result of separation from the epidermis. This makes the skin incredibly fragile, leading to blistering or skin loss at the slightest friction or knock. It is progressive and incredibly painful.
The most severe form of DEB is recessive DEB, or RDEB, which is caused by null mutations in the COL7A1 gene. DEB also occurs in the form of dominant DEB, or DDEB, which is considered to be a milder form of DEB. There are no known treatments which affect the outcome of either form of the disease and the current standard of care for DEB patients is limited to palliative treatments. Krystal is developing KB-103 for the treatment of the broad DEB population, including both recessive and dominant forms of the disease.
About Krystal Biotech
Krystal Biotech, Inc. (NASDAQ: KRYS) is a gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from dermatological diseases. For more information, please visit http://www.krystalbio.com.
Forward-Looking Statements
This press release includes certain disclosures that contain “forward-looking statements,” including, without limitation, statements regarding the development of KB103, including the timing of filing of an IND and commencing a Phase 1/2 clinical trial... You can identify forward-looking statements because they contain words such as “believes” and “expects.” Forward-looking statements are based on Krystal’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Krystal’s filings with the Securities and Exchange Commission, including its registration statement on Form S-1, as amended from time to time, under the caption “Risk Factors.”
CONTACT
Ashley R. Robinson
LifeSci Advisors
arr@lifesciadvisors.com
Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Balance Sheets
| (In thousands, except shares, units, per share and per unit data) |
September 30, 2017 |
December 31, 2016 |
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| (unaudited) | ||||||||
| Assets |
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| Current assets |
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| Cash |
$ | 52,570 | $ | 1,923 | ||||
| Prepaid research and development expenses |
48 | 246 | ||||||
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| Total current assets |
52,618 | 2,169 | ||||||
| Property and equipment, net |
55 | 13 | ||||||
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| Total assets |
$ | 52,673 | $ | 2,182 | ||||
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| Liabilities, Convertible Preferred Stock and Stockholders’ and Members’ Equity (Deficit) |
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| Current liabilities |
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| Accounts payable |
$ | 550 | $ | 42 | ||||
| Accrued expenses and other current liabilities |
1,925 | 1 | ||||||
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| Total current liabilities |
2,475 | 43 | ||||||
| Accrued interest |
— | 7 | ||||||
| Related party convertible promissory notes |
— | 698 | ||||||
| Convertible promissory notes |
— | 1,145 | ||||||
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| Total liabilities |
2,475 | 1,893 | ||||||
| Commitments and contingencies |
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| Convertible preferred stock |
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| Convertible preferred stock; $0.00001 par value; 20,000,000 shares authorized, 2,061,773 shares issued, and no shares outstanding at September 30, 2017 (unaudited); no shares authorized, issued, or outstanding at December 31, 2016 |
— | — | ||||||
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| Total convertible preferred stock |
— | — | ||||||
| Stockholders’ and members’ equity (deficit) |
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| Common stock; $0.00001 par value; 80,000,000 shares authorized, 10,237,247 shares issued and outstanding at September 30, 2017 (unaudited); no shares authorized, issued, or outstanding at December 31, 2016 |
— | — | ||||||
| Common units; no common units authorized, issued, or outstanding at September 30, 2017 (unaudited); no par value; 3,490,884 units authorized, issued, and outstanding at December 31, 2016 |
— | — | ||||||
| Preferred units; no par value; no preferred units authorized, issued, or outstanding at September 30, 2017 (unaudited); no par value; 179,613 units authorized, issued, and outstanding at December 31, 2016 (aggregate liquidation preference of $1,406) |
— | 1,406 | ||||||
| Additional paid-in capital |
57,875 | 33 | ||||||
| Accumulated deficit |
(7,677 | ) | (1,150 | ) | ||||
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| Total stockholders’ and members’ equity |
50,198 | 289 | ||||||
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| Total liabilities, convertible preferred stock and stockholders’ and members’ equity |
$ | 52,673 | $ | 2,182 | ||||
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Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (In thousands, except shares, units, per share and per unit data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Expenses |
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| Research and development |
$ | 1,355 | $ | 241 | $ | 2,120 | $ | 339 | ||||||||
| General and administrative |
738 | 81 | 1,154 | 184 | ||||||||||||
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| Total operating expenses |
2,093 | 322 | 3,274 | 523 | ||||||||||||
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| Loss from operations |
(2,093 | ) | (322 | ) | (3,274 | ) | (523 | ) | ||||||||
| Other Expense |
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| Interest expense, net |
(3,180 | ) | — | (3,253 | ) | — | ||||||||||
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| Total other expense |
(3,180 | ) | — | (3,253 | ) | — | ||||||||||
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| Net loss |
(5,273 | ) | (322 | ) | (6,527 | ) | (523 | ) | ||||||||
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| Net loss applicable to stockholders and members |
$ | (5,273 | ) | $ | (322 | ) | $ | (6,527 | ) | $ | (523 | ) | ||||
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| Net loss attributable to common stockholders per share: |
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| Basic and diluted |
$ | (1.26 | ) | $ | (8.48 | ) | $ | (1.75 | ) | $ | (40.20 | ) | ||||
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| Weighted-average common shares and common units outstanding: |
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| Basic and diluted |
4,183,075 | 37,982 | 3,725,825 | 13,016 | ||||||||||||
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Krystal Biotech, Inc. (formerly Krystal Biotech, LLC)
Condensed Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| (In thousands) | 2017 | 2016 | ||||||
| Operating Activities |
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| Net loss |
$ | (6,527 | ) | $ | (523 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities |
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| Depreciation |
9 | 1 | ||||||
| Stock-based compensation expense |
188 | 7 | ||||||
| Non-cash interest expense |
3,263 | — | ||||||
| (Increase) decrease in |
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| Prepaid research and development expenses |
198 | (12 | ) | |||||
| Increase in |
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| Accounts payable |
271 | 62 | ||||||
| Accrued expenses and other current liabilities |
835 | 15 | ||||||
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| Net cash used in operating activities |
(1,763 | ) | (450 | ) | ||||
| Investing Activities |
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| Purchases of property and equipment |
(51 | ) | (6 | ) | ||||
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| Net cash used in investing activities |
(51 | ) | (6 | ) | ||||
| Financing Activities |
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| Proceeds from the issuance of convertible promissory notes |
2,299 | — | ||||||
| Issuance of common stock and common units, net |
43,162 | 100 | ||||||
| Issuance of preferred stock and preferred units |
7,000 | 754 | ||||||
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| Net cash provided by financing activities |
52,461 | 854 | ||||||
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| Net increase in cash |
50,647 | 398 | ||||||
| Cash at beginning of period |
1,923 | — | ||||||
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| Cash at end of period |
$ | 52,570 | $ | 398 | ||||
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| Supplemental Disclosures of Non-Cash Investing and Financing Activities |
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| Conversion of common units to preferred units |
$ | — | $ | 100 | ||||
| Conversion of convertible promissory notes to preferred stock |
$ | 4,142 | $ | — | ||||
| Conversion of preferred stock to common stock |
$ | 12,661 | $ | — | ||||
| Unpaid deferred offering costs |
$ | 1,327 | $ | — | ||||