HCW starts Krystal Biotech at buy; PT $32

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H.C. Wainwright launched coverage of Krystal Biotech (NASDAQ:KRYS) with a “buy” rating and $32 price target. The stock closed at $16.88 on Sept 21.

“We believe the company has the potential to become a leader in the gene therapy space for the treatment of dermatological diseases,” writes analyst Joseph Pantginis.

He cites the company’s unique approach to dermatological diseases by leveraging the high skin tropism of herpes simplex virus-1 (HSV-1 ) as the vector of choice for transgene delivery; initial focus on two highly unmet medical needs in dystrophic epidermolysis bullosa (DEB) and autosomal recessive congenital ichthyosis; topical gel-based formulation of the compound; and optimized clinical manufacturing process meeting FDA standards, with scale-up plan already in place.

The company has two lead assets, KB103 and KB105, both based on an HSV-1 backbone modified to accommodate multiple copies of the genes of interest, COL7 and TGM1, respectively, he added.

Mr. Pantginis said a topical formulation is particularly convenient for patients affected by degenerative skin conditions and represents a potential advantage of the company over competitors. “If confirmed clinically, KB103 could be the first topical gene therapy approved.”

Krystal has an ongoing randomized, open label, single arm Phase 1/2 study testing the safety and efficacy of KB103 for the treatment of DEB. Initial data are expected by the fourth quarter of 2018, and a pivotal trial is anticipated to begin in the second half of 2019.

Stephen Kilmer