Krystal Biotech: KB-103 Sprints To Become The First Approved Topical Gene Therapy For Skin Disease

Summary

• Krystal Biotech is currently developing KB-103, an off-the-shelf easily applicable gene therapy for rare congenital skin diseases. If approved, KB-103 will be market disruptive.
• Krystal's topical gene therapy leverages HSV-1 viral delivery to target skin cells, complement defects in single genes and restore normal skin function.
• In Recessive Dystrophic Epidermolysis Bullosa, large open wounds treated with KB-103 closed in 3 weeks, compared to over 3 months for placebo.
• Long-term Phase 2 data convincingly shows efficacy: KB-103 forms functional protein staples, not only accelerating but also maintaining wound closure better than placebo.
• Both upcoming catalyst events and pipeline development make Krystal Biotech an interesting short- and long-term investment opportunity (KRYS to outperform at $77, currently at $44).

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Imagine you could heal genetic conditions by applying lotion to your skin, like sun-lotion to cool down the burn after a long day at the beach. Krystal Biotech (NASDAQ:KRYS) is making this possible, with interesting value catalysts for 2020 (KB-103 top-line Phase 2/3 data and KB-105 top-line Phase 2 data) while heading up towards a long-term $77 price target (currently $44). The valuation is based on Krystal's pipeline to clear rare skin diseases, focusing on the leading asset KB-103, which is sprinting for regulatory approval with efficient and durable effects. Below I will present the scientific and financial analysis in support of this thesis.

KB-103 is a safe minimalistic gene therapy, smartly designed to restore normal skin function

I believe that Krystal Biotech's (KRYS) proprietary topical gene therapy technology (STAR-D platform), which leverages high payload Herpes Simplex Virus 1 (HSV-1) to express genes in skin cells, is safe and efficient. There is already a regulatory precedent for HSV-1 vector usage, albeit as an oncolytic agent in cancer (Imlygic, Amgen (AMG)). The gene-expressing cassette carries the healthy human cDNA version of the mutated gene causing the disease, which through the production of functional proteins will help restore skin health.

KB-103 is being developed to treat Recessive Dystrophic Epidermolysis Bullosa (RDEB), a rare orphan skin disease, which results in large open wounds and blisters caused by defects in dermis-epidermis anchoring. KB-103 is a non-integrating, non-replicating Herpes Simplex Virus 1 vector (HSV-1) carrying a transgene that expresses COL7A1, an important collagen protein. This protein

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

This article was written by Miguel Coelho, Ph.D. The author wrote this article independently from his academic or financial affiliations, and it expresses its own opinions and analysis from currently available data. The author acknowledges Rachel Zsido, B.A. for proof-reading and insightful comments on the article. The author declares no responsibility for third-party investment decisions based on this article, since it contains forward looking statements and speculative hypothesis that do not guarantee future clinical development of the assets mentioned, nor increased valuation of the companies listed. The author does not hold a stock position with KRYS and was not compensated or has any work connections to the companies mentioned.