Krystal's VYJUVEK Hits $127.3M, but Net Income Slips as Pipeline Timelines Stretch

The quarter in numbers

Krystal Biotech reported third-quarter 2026 net product revenue of $127.3 million, up from $97.8 million a year earlier. The company put the increase at 30%. All of it comes from VYJUVEK, which the company said has generated $1.1 billion since launch. Gross margin was 94%, with cost of goods sold of $7.6 million against $4.3 million in the prior-year quarter.

Net income was $63.1 million, or $2.05 per diluted share ($2.13 basic). That compares with $79.4 million, or $2.66 diluted ($2.74 basic), in the third quarter of 2025. Profit therefore fell even as revenue grew. For the nine months, the picture is better: revenue was $362.9 million versus $282.0 million, and net income was $173.8 million ($5.66 diluted) versus $153.4 million ($5.14 diluted).

What drove revenue, and what the release leaves out

The company attributed growth to rising U.S. patient demand. It cited over 760 reimbursement approvals for VYJUVEK nationwide and a steadily expanding prescriber base. It also said it is converting physician interest into patient starts in its initial launch markets of Germany, France and Japan.

The release does not split revenue by region, and it does not separate price from volume or give patient counts on therapy. Readers cannot tell from this document how much of the 30% growth is U.S. versus international, or how quickly new reimbursement approvals become revenue.

Costs and the net income puzzle

Operating spending was restrained. R&D was $14.9 million (including $2.6 million of stock-based compensation) versus $14.6 million a year earlier. SG&A fell to $33.7 million (including $11.3 million of stock-based compensation) from $37.6 million.

By our arithmetic, revenue less the three cost lines shown was about $71.1 million this quarter versus about $41.3 million in the prior-year quarter. Net income moved the other way, from $79.4 million to $63.1 million. The release does not explain the gap, which would sit in items it does not itemize, such as other income or taxes, and it refers readers to the Form 10-Q. The 10-Q is the place to look before treating the earnings decline as an operating signal.

Over nine months, SG&A rose to $114.6 million from $105.3 million, and R&D to $44.7 million from $43.3 million. The quarterly SG&A decline therefore does not yet show up year to date.

Guidance and capital allocation

The only formal guidance is a full-year 2026 non-GAAP combined R&D and SG&A range of $155.0 million to $165.0 million. It excludes stock-based compensation, which the company said it cannot confidently estimate, so no GAAP reconciliation is given. No revenue guidance appears in the release.

Using the stated nine-month figures and assuming only stock-based compensation is excluded, nine-month non-GAAP spend is roughly $117.6 million. That would imply fourth-quarter spend of about $37.4 million to $47.4 million, against about $34.7 million in the third quarter. This is our derivation, not company guidance.

The Board authorized a repurchase of up to $400 million. CEO Krish Krishnan said the company expects to buy shares opportunistically over two years. The program has no expiration date, carries no obligation to repurchase any amount, and can be modified, suspended or discontinued at any time. Cash and investments stood at $1.2 billion at quarter-end.

Regulatory and pipeline catalysts

On market access, pricing negotiations are complete in Germany and Italy, and the company expects to launch in Italy in early 2027. A decision is expected in Spain later this year. France is no earlier than 2027, and negotiations continue in multiple other European countries and the UK. A marketing authorization application has been submitted in Australia, and a Swiss submission is expected before year end.

The pipeline update was mixed. In KB113 for Gorlin syndrome, a three-patient pilot showed investigator-assessed regression in more than 80% of assessed basal cell carcinoma lesions, including non-injected lesions. The company said KB113 was well tolerated and has begun FDA discussions. The sample is very small and the study open-label.

Several timelines moved out:

• KB801 (neurotrophic keratitis): enrollment is slower than anticipated, which the company attributed to narrow eligibility and the difficulty of running a placebo-controlled trial where an approved therapy exists. It now expects to enroll about 60 patients and report top-line results in 2027.

• KB803 (corneal abrasions in DEB): three more patients were enrolled to replace two who withdrew for reasons unrelated to safety. The last patient visit is now expected in February 2027.

• KB407 (cystic fibrosis): interim results are now anticipated in the first half of 2027, with registrational start on track for 2027 after selection for the FDA's CID Meeting Program.

KB111 for Hailey-Hailey disease has interim results due before year end (five patients enrolled) and an FDA meeting planned for the first quarter of 2027. Inhaled KB707 reported a 31% objective response rate and 75% disease control rate with pembrolizumab at ASCO in May. The company expects to enroll about 70 patients in the chemotherapy-combination cohort by mid-2027.

What to watch next

Near term, watch the 10-Q for the drivers of the net income decline and any revenue detail by geography. Then watch the Spain pricing decision, the HHD interim data and the Swiss filing, all slated for before year end. The fourth-quarter spending run-rate against the guidance range matters too.

In 2027, the Italian launch, the FDA meetings on KB111 and KB113, and the KB803 and KB801 top-line results will test whether Krystal can broaden beyond a single commercial product. The pace and size of buyback execution will show how management weighs repurchases against pipeline funding.