Krystal files for IPO to move gene therapies into clinic

Krystal Biotech has filed to raise about $35 million in a Nasdaq IPO. The money will equip Krystal’s ex-Intrexon executive team to file an IND for its rare skin disease gene therapy in the first quarter of next year.

That gene therapy, KB103, is designed to treat dystrophic epidermolysis bullosa, a rare disease that makes the skin fragile and susceptible to blisters and tears. Krystal thinks it can improve outcomes in these patients, who currently only have palliative options, by using a HSV-1-based vector to fix defects in the COL7A1 gene.

Pittsburgh, Pennsylvania-based Krystal has yet to back up the idea with clinical data. But having run preclinical tests of topical and intradermal formulations of KB103 and met with the FDA late last year, it plans to embark on a whistle-stop development program. The plan is to file an IND in the first quarter, have results by the middle of the year and use that readout to guide the design of a pivotal trial.  

Krystal will need more than the forecast IPO haul to execute that strategy, although it does expect to have some money left over from the Nasdaq listing to fund work on its follow-up program, KB104. That gene therapy treatment for Netherton syndrome is due to reach the IND stage by the second half of next year.

The early-stage nature of Krystal’s pipeline is one of several characteristics that mark it out as a biotech trying to make the leap to public markets early in its development as a company. Notably, given the financial reporting requirements for public companies, Krystal has yet to hire a full-time CFO or in-house principal accounting officer. The biotech’s seven-person team is heavily skewed toward R&D.   

Krish Krishnan, CEO, and Suma Krishnan, COO, lead this small team. The pair have worked together for most of the past 13 years, starting at New River Pharmaceuticals in the run-up to its takeover by Shire. Both Krishnans popped up next at Pinnacle Pharmaceuticals, where Krish was CEO, before reuniting with their former New River boss Randal Kirk at Intrexon.

Krystal sees the pair strike out on their own—and stand to win big if their gene therapies succeed. A family trust owned by Krish and Suma owns more than two-thirds of Krystal’s stock. The only other organization to own more than 5% of the company is Sun Pharma, which bought its 16.5% stake in a $7 million series A round earlier this month. That round bolstered Krystal’s cash position, which stood at $3.5 million at the end of June.