Krystal Biotech Inc KRYS announced positive Phase 2 data for KB103 Monday and said the gene therapy received the Regenerative Medicine Advanced Therapy designation from the FDA.
The Phase 2 results are close to a “best-case scenario”, according to Guggenheim Securities.
The Analyst
Whitney Ijem maintained a Buy rating on Krystal Biotech and raised the price target from $48 to $73.
The Thesis
In the clinical trials, 83% of the treated wounds closed within 90 days and remained closed, versus zero with a placebo, according to Krystal Biotech.
This data, along with the FDA’s RMAT designation, puts to rest any questions regarding the efficacy of KB103, Ijem said in a Monday note. (See her track record here.)
With this data, the probability of success for KB103 has increased from 40% to 60%, the analyst said.
Guggenheim estimates peak sales potential of around $500 million and said this could prove conservative.
The forecast assumes around 50% penetration in recessive dystrophic epidermolysis bullosa (DEB) patients, who are estimated to number around 2,000 in the U.S.
The annual cost is conservatively projected at $250,000 per patient per annum, Ijem said.
If the drug is used more broadly in DEB patients, there could be further upside potential, the analyst said.
The gene therapy has also exhibited a continued clean safety and tolerability profile, she said.
“Looking ahead to 2H19, we see potential for additional de-risking with more data expected from KB103 + clarity on the pivotal plans, as well as potential initial data from KB105 (which leverages the same platform)."
Price Action
Krystal Biotech shares were up 7.97% at $44.48 at the time of publication Tuesday.
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