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Buy Krystal Biotech With Conviction In STAR-D Technology

Nov. 26, 2018 5:00 AM ETKrystal Biotech, Inc. (KRYS)9 Comments
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  • A KB103 deep-dive suggests that the therapy is overwhelmingly safe and effective at treating dystrophic epidermolysis bullosa.
  • DEB costs $200,000 - 400,000 per year to maintain, paving the way for extremely favorable rare disease pricing based on this economic precedence.
  • Validating data in DEB implies future success in treating a number of dermatological genetic conditions using the company's proprietary STAR-D platform.
  • Shares of Krystal Biotech appear to be significantly undervalued on the basis of the commercial opportunity in DEB, as well as the value of Krystal's technology platform.


In my last article, I outlined the broader investment opportunity in Krystal Biotech (NASDAQ:KRYS), a unique gene therapy company focused on dermatological conditions. In that article, I gave a surface level overview of their STAR-D (Skin TARgeted Delivery) gene therapy platform and the company's commercial opportunity in DEB. This article will serve as a "deep dive" piece where I explain, in detail, why I have such high conviction in this investment despite its early stage. I'll be reviewing the science behind KB103 in detail, and why this investment opportunity may be overlooked simply because of the early current stage of development.

This article will be fairly lengthy, so I'll begin with my "elevator pitch". Krystal Biotech is an emerging gene therapy company with a technology platform, STAR-D, based on their proprietary HSV-1 viral vector, that is able to treat nearly any dermatological genetic disease. Unlike other dermatological gene therapies, it does not require the extraction, engineering, and re-injection of individual patient cells to be effective. Instead, their gene therapies can be administered in the form of a universal topical gel. While this might sound too good to be true, the company has convincing preliminary data in dystrophic epidermolysis bullosa (DEB) that serves to validate its technology platform, paving the way for this method to be used to treat any number of genetic skin diseases.

I believe the company is being overlooked due to its early stage of development, despite the fact that they benefit from an accelerated approval pathway and will be conducting pivotal phase III trials in DEB by mid-late 2019. Insiders seem to agree, as they have been purchasing stock on the open market hand over fist, with the CEO and COO also purchasing large blocks of shares from the firm's IPO and secondary offering. To date, insiders have sold zero shares on

This article was written by

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WCM Equity Research is a coterie of university students with an academic background in finance, economics, mathematics, and biology. We have had experience at bulge bracket banks, managed individual credit and equity portfolios, and have built upon a  track record of discoursing shoptalk with biopharma or industry-specific management. We research and write methodically on the topics of macroeconomics, geopolitical events, biotechnology and pharmaceuticals, and novel investment vehicles and asset classes.

Analyst’s Disclosure: I am/we are long KRYS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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