Gene therapy company Krystal Biotech (KRYS) raised more than anticipated in its initial public offering Wednesday.
Shares moved slightly higher after trading started on the Nasdaq.
Here’s what you need to know.
1. Shares Opened Higher
The stock opened at $10.50, a little bit above the $10 per share the IPO priced at.
Shares made it above $11 before settling to end the day at $10.54.
2. The IPO Raised $39.6 Million
Krystal Biotech priced 3.96 million shares at the aforesaid $10 per share, raising $39.6 million. It priced right in the middle of its range, but sold about a million more shares than the 3 million originally indicated.
The lead underwriter of the deal is Ladenburg Thalmann.
As part of the overallotment provision, the underwriter has the option to buy an additional $450,000 shares.
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3. Skin Disease Treatment Is Most Advanced Therapy
Krystal Biotech is a gene therapy company that is looking to bring products developed via its gene platform to the commercial market.
The company plans “to develop treatments for rare or orphan dermatological indications caused by the absence of or a mutation in a single gene, and plan to leverage our platform to expand our pipeline to include other dermatological indications in the future,” it said in its IPO filing.
The company’s leading product is known as KB103 and uses gene therapy to treat a rare genetic skin disease, dystrophic epidermolysis bullosa (DEB).
The disease currently has no approved treatment and those with it are often called “butterfly children” because the skin appears as fragile as butterfly wings.
KB103 is not yet in clinical trials.
The severest form of DEB is recessive DEB (RDEB), which “is characterized by severe skin blistering, extremely fragile skin, mutilating scarring of the hands and feet, joint contractures, strictures of the esophagus, and often, eventually the development of aggressive squamous cell carcinomas which may shorten the patient’s life,” the company said.
“Nearly 10% of RDEB patients die before the age of 10, almost 40% die by the age of 20, and over 70% die before the age of 30,” Krystal Biotech said.
4. No Revenue, No Surprises
There is nothing that stands out as unusual in the financials of the company. There is no product even in clinical testing, so there’s no revenue.
And costs will increase as Krystal Biotech tries to bring a product to market.
The net loss of the six months ended 2017 was $1.25 billion, compared with $201 million in the year-ago period.
5. Just One Gene Therapy Product Has the FDA’s OK
The market for the treatment would be 125,000 global patients, the company said, citing DEBRA International. There are about 3,200 to 3,500 patients in the U.S., European Union, Japan and Canada.
But here’s the big warning with the market opportunity for a gene therapy company.
“To date, only one gene therapy product has received marketing authorization from the FDA, and only two gene therapy products have received marketing authorization from the EMA,” Krystal Biotech said.
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