Krystal Biotech (KRYS) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We are substantially dependent on the commercial success of VYJUVEK
2. 02If we are unsuccessful in identifying and developing additional product candidates, our potential for growth may be impaired42% rewritten
3. 03allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangementNew
4. 04VYJUVEK and, if approved, our investigational product candidates regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway
5. 05If competitors are able to obtain marketing approval for biosimilars referencing any of our approved products, our approved products may become subject to competition from such biosimilars, which would impair our ability to successfully commercialize and generate revenue from sales of such products
6. 06Even if we commercialize a product candidate faster than our competitors, we could also face competition from lower cost biosimilars
7. 07If any product liability lawsuits are successfully brought against us, we may incur substantial liabilities and may be required to limit commercialization of VYJUVEK or our product candidates
8. 08Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our gene therapy product or product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates
9. 09Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations40% rewritten
10. 10The increasing use of social media platforms presents new risks and challenges
11. 11We have experienced significant growth in the number of employees and infrastructure and may experience difficulties in managing this growth. If we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer
12. 12Our future success depends on our ability to retain key employees and scientific advisors and to attract, retain, and motivate qualified personnel
13. 13Our employees, principal investigators and advisors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements28% rewritten
14. 14Healthcare legislative reform measures may have a material adverse effect on our business and results of operations49% rewritten
15. 15On July 4, 2025, legislation commonly referred to as the One Big Beautiful Bill Act was signed into law, which reduces funding to federal healthcare programs and imposes additional requirements to be eligible for healthcare, which may result in decreased access to healthcare, particularly in Medicaid programsNew
16. 16We are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties
17. 17Often, to avoid the threat of treble damages and penalties under the FCA, health care providers and drug manufacturers will resolve allegations in a settlement without admitting liability. Any such settlement could materially affect our business, financial operations, and reputation
18. 18If we fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business80% rewritten
19. 19Unfavorable global economic and geopolitical conditions could adversely affect our business, financial condition, or results of operations30% rewritten
20. 20misappropriation, loss or other unauthorized disclosure or use of confidential information of others, whether by us or a third-party, could: (i) subject us to civil and criminal penalties; (ii) have a negative impact on our reputation; or (iii) expose us to liability to third parties or government authoritiesNew
21. 21Artificial intelligence presents risks and challenges that could negatively impact our business30% rewritten
22. 22Our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
23. 23Our international operations may expose us to business, regulatory, political, operational, financial, pricing and reimbursement, and economic risks associated with doing business outside of the United States
24. 24Any of these factors could significantly harm our potential international expansion and operations and, consequently, our results of operations
25. 25The effect of pandemics, epidemics, outbreaks of infectious diseases, or similar public health crises on our operations and the operations of our customers, suppliers, third-party partners, and regulators could have an adverse impact on our business28% rewritten

Risks Related to the Development, Regulatory Review, and Approval of Our Product Candidates

1. 26If we are unable to advance our product candidates through clinical trials, obtain regulatory approval and ultimately commercialize our product candidates, or if we experience significant delays in doing so, our business will be materially harmed
2. 27Our gene therapy platform is based on novel technology, which makes it difficult to predict the time and cost of obtaining regulatory approvals for our product candidates43% rewritten
3. 28European Commission, MHLW, or other foreign regulators may issue new or revised guidelines concerning the development and marketing authorization of gene therapy medicinal productsNew
4. 29Our product or product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential, or result in significant negative consequences before or following any potential marketing approval
5. 30Any of these events could prevent us from achieving or maintaining market acceptance of VYJUVEK or our product candidates and could significantly harm our business, financial condition, results of operations, and prospects
6. 31Our product development costs will also increase if we experience delays in testing or obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all
7. 32Interim, “top-line,” and preliminary data from our clinical trials that we announce or publish from time to time may change as more data becomes available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in material changes in the final data
8. 33Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval for them outside of the United States, which would limit our market opportunities and adversely affect our business25% rewritten
9. 34The FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could negatively impact the existing marketing approval for VYJUVEK and prevent, limit, or delay regulatory approval of our product candidatesNew
10. 35Regulatory authorities in some jurisdictions, including the United States, the European Union, and Japan may designate drugs for relatively small patient populations as orphan drugs22% rewritten
11. 36Accelerated approval by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval
12. 37We have obtained a rare pediatric disease designation for certain of our product candidates; however, there is no guarantee that FDA approval will result in issuance of a priority review voucher46% rewritten
13. 38We have received designation for our platform technology as a designated platform technology, but such designation may not lead to a faster development or regulatory review or approval process31% rewritten

Risks Related to Manufacturing

1. 39Given the nature of biologics manufacturing, there is a risk of contamination. Any contamination could materially adversely affect our ability to produce VYJUVEK or our product candidates on schedule and could, therefore, harm our results of operations and cause reputational damage
2. 40Our failure to maintain or continuously improve our quality management program could have an adverse effect upon our business, subject us to regulatory actions, and cause patients to lose confidence in us or our products, among other negative consequences62% rewritten

Risks Related to Commercialization of VYJUVEK and Our Product Candidates

1. 41We have limited experience as a commercial company and the sales, marketing, and distribution of VYJUVEK or any future approved products may be unsuccessful or less successful than anticipated21% rewritten
2. 42If we are unable to maintain our agreements with third parties to distribute VYJUVEK to patients in the United States, our results of operations and business could be adversely affected
3. 43Using specialty distributors to market and sell VYJUVEK in certain jurisdictions outside of the United States, the United Kingdom, certain EU countries, and Japan subject us to certain risks21% rewritten
4. 44If we are unable to expand our medical affairs, marketing, market access, sales, and distribution capabilities or collaborate with third parties to market and sell our product candidates for which we obtain marketing approval, we may be unable to generate sufficient product revenue
5. 45If the market opportunities for VYJUVEK or our product candidates are smaller than we believe they are, our product revenue may be adversely impacted, and our business may suffer
6. 46The commercial success of VYJUVEK and our product candidates will depend upon their degree of market acceptance by physicians, patients, third-party payors, and others in the medical community
7. 47Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for VYJUVEK and our product candidates, if approved, which would adversely affect our revenue and results of operations
8. 48The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for VYJUVEK or our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate product revenue
9. 49Ethical, legal, and social issues related to genetic testing may reduce demand for our product candidates, if approved27% rewritten
10. 50Increasing demand for compassionate use or expanded access of our unapproved therapies could negatively affect our reputation and harm our business

Risks Related to Our Intellectual Property

1. 51We may not be able to protect our intellectual property rights throughout the world
2. 52Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business
3. 53Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities
4. 54We have been subject to claims asserting that we, our employees, or our advisors have wrongfully used or disclosed alleged trade secrets of other parties, and we may face such claims in the future or claims asserting ownership of what we regard as our own intellectual property
5. 55Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect VYJUVEK or our product candidates
6. 56If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
7. 57Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats25% rewritten

Risks Related to Our Financial Position and Need for Additional Capital

1. 58We have incurred net losses in the past and may not sustain profitability70% rewritten
2. 59Changes in tax law may adversely affect our business and financial condition
3. 60Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation48% rewritten

Risks Related to Ownership of Our Common Stock

1. 61Our Chief Executive Officer and Chairman of the Board of Directors and our Founder, President, Research & Development and Director have the ability to substantially influence all matters submitted to stockholders for approval32% rewritten
2. 62If securities analysts publish negative evaluations of our stock, the price of our stock could decline
3. 63Raising additional capital could cause the price of our common stock to decline and cause dilution to our stockholders, restrict our operations, or require us to relinquish rights46% rewritten
4. 64The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for holders of our common stock
5. 65If we fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in our company and, as a result, the value of our common stock
6. 66Provisions in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could make an acquisition of our company that may be beneficial to our stockholders more difficult and could prevent or deter our stockholders from replacing or removing our current managementNew
7. 67We have broad discretion in the use of our cash, cash equivalents, and marketable securities and may not use them effectively
8. 68Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be stockholders’ sole source of gain
9. 69Issuing additional shares of our common stock could cause the price of our common stock to decline and cause dilution to our stockholders