In an Oct. 15 research note, analyst Joseph Pantginis with H.C. Wainwright & Co. reported that interim data were encouraging from Krystal Biotech Inc.'s (KRYS:NASDAQ) ongoing Phase 1/2 study with KB103, its topical gene therapy candidate for recessive dystrophic epidermolysis bullosa (RDEB), a genetic disorder causing severe skin fragility and easy blistering. "Although only in two patients, the overall reported results were compelling and provided the rationale for the study to move forward as the first potential topical gene therapy," he added.
Based on these results, H.C. Wainwright now projects KB103 has a 25% versus 22% chance of success in the United States and the European Union. Therefore, it raised its price target on Buy-rated Krystal Biotech to $35.50 per share from $32. Pantginis noted further potential upside exists as clinical data are released for KB103 in DEB and for another of Krystal's assets,KB105, for treatment of autosomal recessive congenital ichthyosis, another skin disease.
Pantginis summarized the interim results of the Phase 1/2 trial evaluating KB103 in DEB. In general, the two enrollees met the efficacy and safety endpoints. Both experienced wound closure within two weeks in areas topically treated with KB103. The wounds treated with a placebo never closed in one patient and took 10 weeks to close in the other.
Additionally, the KB103-treated wounds remained closed over time. At 4.5 and 3.5 months out, for Patient One and Patient Two, respectively, the wounds were still closed. One patient even chose to stop bandaging a KB103-treated wound that had needed constant bandaging prior to the treatment. "Importantly, this represents a significant improvement in the patients' quality of life," Pantginis pointed out.
The patients tolerated KB103 well, with no inflammation or skin reactions in the treated areas or serious adverse events overall. This held true even when patients received additional KB103 applications.
Also worth noting, according to Pantginis, is that topical administration yielded results similar to those with intradermal injection. A topical therapy is more convenient for patients and gives Krystal an advantage over its competitors. "We believe the results presented today represent the first and important clinical validation for KB103 and lifts the initial, potentially overhanging questions related to the validity of the topical administration."
Based on these interim results, Krystal amended its protocol for the Phase 3 trial, designed to evaluate wound closure durability. For one, it eliminated the intradermal injection arm. Also, it opened enrollment to pediatric patients and allowed for increased KB103 dosing for larger wounds. The Phase 3 study is expected to start in H2/19.
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Disclosures from H. C. Wainwright, Krystal Biotech Inc., Target Price Revision, Oct. 15, 2018
I, Joseph Pantginis, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of Krystal Biotech, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of Sept. 30, 2018 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Krystal Biotech, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm does not make a market in Krystal Biotech, Inc. as of the date of this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.
