Q4 2023 Krystal Biotech Inc Earnings Call
Participants
Krish Krishnan; Chairman & CEO; Krystal Biotech, Inc.
Suma Krishnan; President of Research & Development; Krystal Biotech, Inc.
Kate Romano; Executive VP & CAO; Krystal Biotech, Inc.
Alec Stranahan; Analyst; Bank of America
Yigal Nochomovitz; Analyst; Citi
Debjit Chattopadhyay; Analyst; Guggenheim Securities
Dae Gon Ha; Analyst; Stifel
Joe Pantginis; Analyst; H.C. Wainwright
Andrea Tan; Analyst; Goldman Sachs
Tim Lugo; Analyst; William Blair
Gavin Clark-Gartner; Analyst; Evercore ISI
Josh Schimmer; Analyst; Cantor Fitzgerald
Ritu Baral; Analyst; TD Cowen
Presentation
Operator
Thank you for standing by, and welcome to the Krystal Biotech Fourth Quarter and Full Year 2023 earnings conference call. (Operator instructions) As a reminder, today's conference is being recorded.
I would now like to hand the conference over to your host, Meg Dodge, Head of Investor Relations and Corporate Communications. Please begin.
Good morning and thank you all for joining today's call. Earlier today, we released our financial results for the fourth quarter and full year of 2023. The press release is available on our website at www.Krystalbio.com. Our earnings 8-K was filed earlier today. And additionally, we filed a 10-K with the SEC.
Joining me will be Krish Krishnan, Chairman and Chief Executive Officer; Suma Krishnan, President of Research and Development; and Kate Romano, Chief Accounting Officer.
I'd like to note during this webcast, we will be making a number of forward-looking statements about our future business plans, strategies, financial performances and protection product candidate development plans, including statements about VYJUVEK. These forward-looking statements involve risks and uncertainties, any of which are beyond Krystal's control.
Actual results could materially differ from these forward-looking statements as any and such risks can materially and adversely affect the business. Results of operations and trading price of Krystal's common stock for a detailed description of applicable risks and uncertainties, we encourage you to review our SEC filings. The Company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances.
With that, let me now turn the call over to Krish.
Krish Krishnan
Meg, thank you. Good morning and thanks for joining the Quicksilver Earnings Call. 2023 was a spectacular year for Crystal and an inflection point for our company. With the approval and launch of VYJUVEK for the treatment of dystrophic epidermolysis bullosa or DEB. We've now brought to market the first and only treatment that addresses the genetic cause of this debilitating disease.
It has been immensely rewarding to hear from patients families and the entire debt community on the positive impact VYJUVEK has had on their lives. It's also exciting to have secured this first approval for an entirely new treatment paradigm. We believe that a redosing topical off-the-shelf gene therapy that can be dosed at home by HCP holds significant potential not only for their patients, but for many of those suffering from other rare and serious diseases.
We've only just begun tapping into the power of the hedges we won based gene therapy platform, as I will share in a moment, our US launch of Asia Pac is in a great place tracking closely to some of the most successful rare disease launches from recent years with over $50 million in net product revenue from VYJUVEK in the last six months since approval.
We've seen rapid uptake across the US patient compliance is high accesses almost behind us. And all these are starting to reflect in our net revenue. We're also making significant progress globally and look forward to growing the number of patients benefiting from VYJUVEK in the days months and years to come.
Our success in 2023 allowed us to deliver another year of significant value creation for our shareholders and perhaps more importantly, set us down a path for continued growth in the years to come. Our vision for Crystal has always been to build a fully integrated commercially established biotechnology company, developing and commercializing a portfolio of high-value generic medicines and generating long-term shareholder returns. Thanks to a breakthrough year in 2023 and growing VYJUVEK revenue, we are positioned better than ever to deliver on that vision.
We expect to have at least five clinical trials this year. We have alignment with the FDA on a development path for VYJUVEK formulated as eyedrops to help treat lesions in patients that could potentially start another clinical trial in the second half of 2024. With strong financial resources and FDA approved redosing of gene therapy platform and to commercial scale, GMP manufacturing facilities were uniquely positioned to development, bring to market a highly differentiated gene therapies for many rare and serious diseases.
We look forward to making continued progress in 2024. As you have no doubt seen by now, our commercial launch is proceeding exceptionally well. We reported net VYJUVEK revenue of $42.1 million for the fourth quarter and $50.1 million for 2023. Gross margins were 93% for the quarter, in line with our previous guidance of margins north of 90% at launch and expected to improve to over 95% after a few years.
Gross-to-net adjustments in the fourth quarter were 14%. Our long-term guidance on GTN is unchanged and we expect it will settle into the mid to high 10s range reflecting a roughly even split of the patients on commercial and government plans.
With respect to future revenue, I'd like to highlight that earlier this year, a permanent J-code was assigned VYJUVEK, a way to take what is an important milestone for finalizing coverage by Medicaid as it is required for many mandatory Medicaid states.
Although this is a long-term tailwind and sets us up for sustained broad access in the US, I will note that the revenue in the month of January was temporarily impacted as commercial and Medicaid coverage plans, including those that were previously covering VYJUVEK under a temporary J-Code were updated to the now issued permanent J-code. You can also expect to see an impact this year as we accrue for patients on contracted commercial plans potentially hitting the price cap of $900,000 gross per patient for calendar year in 2024.
Before sharing details on the US launch, I'd like to highlight a revision to our outlook on the total market opportunity that exists for VYJUVEK. Now that we have the benefit of six months launch data in the US and a clear line of sight on registrations and patient numbers in Europe and Japan and alignment with the FDA on the development plan to get B-VEC formulated as eyedrops to treat eye-lesions in patients we're confident in the total global market opportunity for VYJUVEK to get over $1 billion based on the trajectory of our launch and the feedback we're receiving from the field, our conviction in the total US market opportunity for biotech is only growing.
We have spoken before about a total population of 3,000 in the US, of which 1,200 are identified, that 1,200 figure initially based on independent third party claims datasets from multiple sources has been further strengthened by our latest data from the field, which includes interactions with over 1,500 unique HCPs as well as real-time claims alerts that they used to optimize field development.
We expect to close the gap between 1,200-3,000 in the years to come. We're already finding new patients, patients not part of the identified pool in the first few quarters of launch, and we expect this to continue, if not accelerate as we increase our focus on patient finding in later quarters. Once we reach a meaningful threshold of 1,500 patients, we'll update our identified patient population number.
Also, Christine Wilson has now joined crystal as the head of US sales and marketing reporting. To me, Christine brings decades of commercial experience at Crystal, including a strong record of leading U.S. rare disease sales teams at Revere, Reata and Shire. Most importantly, Christine has direct experience finding and activating rare disease patients in the community and will play a critical role for us as we continue to penetrate in and grow our identified patient pool in the months and years to come.
Outside of the United States, we benefit from patient registries. It gives us a high degree of confidence in the global market opportunity in France, Germany, Italy, Spain and the US alone. We believe there are over 2,200 DEB patients that could benefit from VYJUVEK and there are hundreds more in Japan. We look forward to seeing continued growth in 2024 not only the US, but also globally as we make progress towards EU and Japanese approvals at Sumavel share were on track to launch in both regions in 2025.
Now I'd like to share a few highlights on the US launch. With respect to patient start forms, we're pleased to report that burden. We have now received start forms, representing 35% of the initial 1,200 identified patient pool. We're happy to see that we're both expanding and deepening the prescriber base. As we progress in our launch.
We now have over 195 unique prescribers of Asia were up from the 136 unique prescribers we reported in the third quarter were encouraged to see the broadening of VYJUVEK prescriber base as awareness of our product grows through both our direct promotion efforts and organically through patient groups. And the medical community.
We're also seeing increasing depth of prescribing, as the number of physicians that had written two or more prescriptions for their patients increased from 37 in the third quarter to 60 as of mid-February. We believe this increase is a reflection of the growing familiarity among prescribers with VYJUVEK, and we expect this positive trend to continue as patient outcomes and VYJUVEK become more widely known.
With respect to the split of PSS between centers of excellence and the community trends are in line with what we saw earlier in the third quarter, 47% of patients start forms received as of mid-February were from centers of excellence and the balance of the scripts were written by community physicians. We continue to see a steady flow of start forms from centers of excellence at a cadence correlated to EV clinic days. The split between the debt and our debt start forms is also largely in line with what we saw in the third quarter with a slight uptick in the proportion of prescriptions received from did that patients.
Importantly, we are starting to see significant conversion of patients converted to paid drug with 228 patient reimbursement approvals secured to date most approvals of six months or more. So a few have been up for reauthorization so far, but all have been either approved or still in process in line with our high conversion rates. Access is in a great place. We have received positive coverage policies or decisions for 97% of lives covered by commercial plans and 88% of lives covered by Medicaid. With the permanent J-Code now assigned this trajectory for access and reimbursement approvals, it's only looking better. At-home administration demand continues to be high. Now two full quarters into launch with 98% of the drug starts occurring in a home setting.
And accordingly, we also continue to see strong patient compliance to once-weekly treatment while on drug holding at 96% in the fourth quarter. The belief that compliance is both the reflection of the significant clinical benefits that can be realized through device-based therapy as well as our commitment to the patient experience and ensuring more process to getting on drug at this point in our launch. I think it's also worthwhile to reiterate an update on some of the key dynamics that shape the trajectory of the basic update, although there is a temptation to think that for a severe rare disease such as death, all patients would get prescriptions The day after approval. There are practical considerations that need to be understood. First, it's important to recall that COE. visits occur at a steady pace around EB clinics with only a subset of the EV. patients seen at each visit due to the time spent on each patient and the multi-specialty care they receive and the COV selling. In addition, we are also seeing some care was less familiar with leisure at taking a stepwise approach, starting with the more severe RA patients and stage gating, particularly in the early stages of access reimbursement, was still being set up.
Second, it's important to understand that the patients are not all clustered around centers of excellence prior to 2023, only palliative treatment options that are available, whether offered by ICOE. or a community physician as a result, there was often little reason for a patient to visit, let alone return to a COE. unless it was conveniently located. Certainly there are some patients that are actively managed at COE.s, but an equal number or more exists in the community and many patients have relied on community physicians for many years prior to 2023 this also has implications for the launch. It means that we have to make local doctors aware of Asia were educated on death, gene therapy and sometimes both recall as well that prior to buy generic approval. Care of EP ones did not require genetic confirmation. So even establishing this practice is an evolution in patient management. This is all addressable through physics, physician education programs, but it does take a certain amount of time and contributes two a more gradual ramp in patients.
Yes, finally, there are logistical aspects of integrating at-home dosing of BioVex into existing wound care and bending routines as the first and only FDA approved the dose of gene therapy providing access to and coordinating weekly home treatment of adjuvant. It's not as simple as dispensing pills at a local pharmacy for patient pickup or even one-and-done gene therapies administered at a large specialty center. Once the initial scheduling and setup is complete, which again, takes a certain amount of time.
What we're seeing is strong adherence, given that Bystolic is designed to be integrated into existing wound care routines and demonstrated efficacy together, these real-world dynamics influence the shape of our launch curve, which we expect to be characterized by a steady stream of prescriptions and patient conversions to drug. Recall that our own estimates for the United States are informed by multiple third party estimates and our own real-time and boots on the ground in sites and further supported by the prevalence in Europe by robust patient registries and genetic testing indicate that prevalence rates well in excess of our US identified patient pool. So trying to correlate the shape of the launch curve to prevalence is simply erroneous. Our conviction in the total opportunity and our ability to capture it has only been strengthened after these first few quarters of launch.
Before closing on your slides, I'd like to underscore that. Thanks to the efforts of our team and our focus on the patient experience with changing the treatment paradigm for patients years ago, we set out to build the necessary infrastructure to support a strong commercial launch, including our patient support program for So connect our no-cost genetic testing program, deCODE, Deb, and a network of local pharmacies to prepare and deliver via way to a patient's home along with a trained nurse to apply the treatment each week. As I just said, this at-home administration infrastructure has been in high demand since launch, supporting strong compliance to the therapy.
As I also reported, we're broadening and deepening the prescriber base. All KOLs within centers of excellence across the U.S. have now prescribed BioVex and outside of the centers of excellence. Our field team has had tremendous success educating regional adult and pediatric dermatologists and community physicians. As evidenced by the continued influx of community prescriptions. Sales cycles tend to be a bit longer in the community. But for 2024, with more evidence of a dispersed patient community, we expect to continue to generate demand from large GB. centers, regional dam specialists and community physicians.
And finally, our marketing team has invested and will begin deploying several social media campaigns on different channels to generate awareness to patients and families directly who we know similar to other rare diseases having varying levels of engagement, but the healthcare system, as they've learned to self-manage the depth wounds but deserve to learn about buyback and the benefit it can provide to them, combined with our partnership with advocacy groups are committed to reaching all patients and families to share the powerful wound healing adviser that can provide them altogether, these successes point to a strong long-term growth strategy from Asia Pac in the US and in the interim, it's important to highlight that by any metric, the launch of Asia Pac has been among the top tier of rare disease launches in recent years.
Despite all the nuances that I outlined in only two full quarters since approval, we recorded $50.7 million in revenue. And as and now as of mid-February, we have secured reimbursement approvals for 228 patients and have positive coverage policies in place for over 93% of commercial and Medicaid patients. We are excited about our success to date and more excited so by the years to come as we work to change the treatment paradigm for every patient with DEB.
Finally, before I turn the call over to Soma, I'd like to touch on the power of our platform and our milestone rich clinical pipeline because the story is more than just devices that had history. One is, unlike any other vector system currently in development with a capacity for large genetic cargo, broad tissue tropism re-dose ability and no integration risk. Hsv-1 is also amenable to formulations to target multiple tissues such as the skin, the lung and thereby providing us with a large number of opportunities to develop first and best in class genetic medicines for rare and serious diseases. Our team is hard at work, leveraging these unique platform attributes and advancing our programs to and through the clinic. These include a new eyedrop formulation of the vaccine to treat ocular complications of DEB, which is already being evaluated and single patient under compassionate use two clinical stage lung programs targeting cystic fibrosis and alpha-1 antitrypsin deficiency and emerging oncology program that leverages our experience in skin and lung drug delivery as well as clinical stage candidates for rare skin disease and a static skin condition with four active clinical programs and more to come later this year. We look forward to the data readouts, which will validate the breadth of our history one based gene delivery platform.
I shall now turn the call over to Suma to provide a clinical and a regulatory update and provide more color on the clinical programs.
Suma Krishnan
Thank you. Krish. 2023 was a milestone year for Krystal and our development team securing the first ever FDA approval for a redosing gene therapy. It has been immensely gratifying to see a growing number of US patients benefit from VYJUVEK as our commercial launch progresses. However, our work is not yet done. Our goal has always been to enable global access for patients suffering from DEB, and I'm happy today to share. We are on track for commercial launches in both Europe and Japan by 2025.
For Europe, we announced in October that we filed for a marketing authorization with a European Medical Agency. Subsequently in November, our filing was validated by the agency, putting us on track for a decision by the European authorities in the second half of 2024.
In Japan, we recently announced in December that we had received orphan drug designation, Japan's Pharmaceutical and Medical Device Agency designation, which confers specific benefit for orphan drug development, including priority review of applications, extended registration validity and reduced development cost.
With our open label bidding study in Japanese patients fully enrolled, we are on track for Japanese New Drug Application filing in 2024 and a decision by Japanese authorities in 2025. We are also making important progress on our broader clinical pipeline, where we have four programs in the clinic and more coming in the first half of this year. As said previously, we are committed to treating DEB comprehensively. Ocular complications are thought to affect over half of patients with recessive DEB.
And to date, only supportive care and surgical interventions are available. Earlier this month, the New England Journal of Medicine published the clinical results for the first patient treated with topical, Vivek to the eye. The improvement seen in this patient was dramatic, including fully healing of the corneal epithelium, an improvement of visual equity from hand motion 2025 by eight months. Given these outcomes, we started discussion with the FDA earlier this year regarding a potential development program, bring an ophthalmic direct formulation to market and earlier this month, we reached alignment with the FDA on the single arm open label study to enable approval of feedback eyedrops for the treatment of lesions in the eye of the patient. We are now planning to initiate this study in the second half of 2024 on KB407.
Our redosing will inhale gene therapy for the treatment of cystic fibrosis. We completed Cohort one of the quarter one study, but no severe or serious adverse events and initiated dosing in cohort two. Coral one is a Phase one open label dose escalation study in patients with cystic fibrosis. The primary objective of this study is to evaluate safety and tolerability of KB407, but bronchoscopies are planned for cohort three to allow evaluation of airway epithelial cell transduction and expression of CFTR Transcrypt and 14 cohort three also includes minimum enrollment threshold for patients that are not eligible for modulators, an important patient population for which no effective disease spine therapies exist.
The pace of enrollment in Q1 is improving as clinicians grow more familiar with inhaled KB407, potential for patients to roll over into multiple cohorts is also expected to help us progress more rapidly through Cohorts two and three. In addition, we continue to work closely with the therapeutic development network of Cystic Fibrosis Foundation. It provide us access to the broadest site network, which should enable us to accelerate enrollment on KB408 are reversible inhaled therapy for alpha-1 antitrypsin deficiency. We just recently dosed our first patient in our certain TIMES one study. The pandemic one is a Phase one open label single dose escalation study in adult patients with ATD2 allow assessment of safety, tolerability and alpha-1 antitrypsin levels and key pharmacodynamic biomarkers. With strong support from the Alpha-1 research community. We are optimistic that this study will enroll quickly in 2024. We also made several advancements in our oncology program, KB. 7.7 last quarter and earlier this year. Recall that KB. seven seven is a modified HSV-1 vector design to deliver genes encoding both human IL-12 and IL two, so the tumor micro environment and promote systemic immune mediated chemo clearance.
We have two formulations of the D. seven seven in development, a liquid formulation for intratumoral injection and an inhaled formulation for lung delivery. In October, the first patient was dosed in phase one ApoE one study evaluate intra-tumoral KB. 7.7 monotherapy in patients with locally advanced or metastatic solid tumor malignancies. Additionally, an amendment to the existing KD. seven seven IND was cleared earlier this January, allowing us to evaluate inhaled KB. seven seven in a clinical trial to treat tumors in patients' lungs. We will initiate this study, which we'll be calling skylight one in the first half of 2024.
It will be an open-label, multi-center dose escalation and expansion study to evaluate in healthcare, the cellular seven monotherapy in patients with advanced solid tumor malignancies affecting alone. And finally, we are looking forward to sharing a data update on our lead aesthetic program, KBTO. one later this year, to be clear, one is being evaluated in the full one multi-cohort Phase one study. We previously announced data from Cohorts one and two, we've demonstrated that KBTO. one encoded.
The payload called three A. one was expressed locally after international injection and the injections to the upper and lower cheek and above the knee, but generally well tolerated and associated with clinically meaningful and durable improvements in subject satisfaction. We are now running Cohort three and four of four one in parallel to evaluate Gabitril one fall to potential target indications improvement of plateau capital lines at risk and improvement of dynamic wrinkles of the technology both were identified as potential indications based on initial data from cohort one and cohort two and the high demand for effective aesthetic options in these regions, we expect to announce data in first half of 2024.
We are also progressing on our broader pipeline in dermatology. We expect to commence the Phase two cohort of the SKD. one oh five. That's owed to date one trial, but the treatment of TGM. one CASARCI. later this year, subject to alignment with FDA on study endpoints. Additional preclinical candidates are also in development, and we expect to share updates in the quarters to come. Our HSC platform has potential to yield a large number of highly differentiated redosing gene therapies. We look forward to making continued progress in 2024 and sharing data updates on our clinical pipeline later this year.
With that, I'd like to turn the call to Kate.
Kate Romano
Thank you, Suma. We concluded 2023 with $358.3 million of cash on hand and $594.1 million of cash and investments, which positioned us well for our future growth expansion advisory back outside of the US and our pipeline development plans. In our second quarter since the launch, we recorded $42.1 million in net product revenues from VYJUVEK in the fourth quarter and $50.7 million for the year ended 2023.
As VYJUVEK was approved by the FDA in May of 2023. There were no comparative period revenues. Cost of goods sold was $2.9 million for the quarter, or about 7% of net product revenue and $3.1 million for the year or about 6% of net product revenues.
Cost of goods sold increased on a sequential quarter basis as a portion of the initial costs associated with the manufacturing advisory back were expensed as research and development costs earlier in the year prior to approval. Research and development expenses for the quarter were up $11.4 million, inclusive of stock-based compensation of $2.4 million compared to $10.7 million for the prior year's quarter, inclusive of $2.4 million of stock-based compensation.
Research and development expenses for the year were $46.4 million, inclusive of stock-based compensation of $10.1 million compared to $42.5 million in the prior year, inclusive of $7.9 million of stock-based compensation.
Higher research and development expenses in 2023 were due to increases in payroll and facility related costs, primarily driven by an increase in personnel to support our overall growth, especially as we ramp up our KB707 program, partially offset by decreases in R&D manufacturing costs. As following our FDA approval are costs related to the manufacturing advisor that are now recorded as part of our cost of inventory.
Selling, general and administrative expenses for the quarter were $24.8 million, inclusive of stock-based compensation of $7.5 million, compared to $24 million for the prior year's quarter, inclusive of stock-based compensation of $7.2 million. Selling, general and administrative expenses for the year were $98.4 million, inclusive of stock-based compensation of $29.9 million compared to $77.7 million in the prior year, inclusive of stock-based compensation of $25.3 million.
Higher selling, general and administrative expenses in 2023 were largely driven by an increase in personnel, increased selling expenses related to the launch of VYJUVEK, increased IT infrastructure and software costs, as well as increases in travel, sponsorship and professional fees. These increases were partially offset by a decrease in commercial preparation expenses, a decrease in medical affairs costs and a decrease in business development costs.
Our net income for the quarter was $8.7 million, which represented $0.31 per basic share and $0.3 per diluted share. Net income for the year ended 2023 was $10.9 million, which represented $0.4 per basic share and $0.39 per diluted share compared to a $140 million net loss in 2022, which equated to a loss of $5.49 per share, both basic and diluted.
We would also like to provide some perspective on our forecast for operating costs in 2024, given the objectives we have for the year we expect between $150 million and $175 million in combined non-GAAP R&D and SG&A costs this year.
This projection excludes stock-based compensation. This expected increase over 2023 is driven primarily by increased SG&A costs associated with our continued US launch and planned expansion VYJUVEK outside of the US from a research and development perspective, we expect a pickup in our clinical and regulatory costs associated with our oncology and respiratory programs, as well as for costs associated with initiating a clinical trial for the Vivax formulation to treat lesions in the DEB patients.
With that being said, and given our projected revenue trajectory in 2024 and our current strong balance sheet, we are well capitalized and positioned for these growth drivers, and we look forward to reporting our progress over the next several quarters. And now I will turn the call back over to Krish.
Krish Krishnan
Before we open the call up to Q&A, I'd like to underscore our excitement for 2024 as we have successfully transitioned Bristol to a fully integrated commercial biotech with a deep clinical pipeline. With the great launch underway and growing revenue to contribute to our already strong balance sheet, we believe we are well positioned to create value for our shareholders and deliver our mission for patients now and in the future.
Thanks for listening, and I'd like to now open the call for Q&A.
Question and Answer Session
Operator
Thank you. (Operator instructions)
Alec Stranahan, Bank of America.
Alec Stranahan
Hey, guys. Thanks for taking our questions and congrats on the strong close to 0.3. I've two questions from us as what has been the rough for the average conversion time between new start forms and initiating therapy in 4Q? And where do you see this tracking over the next few quarters? Or is that's really not the metric we should be looking at anymore?
And second, could you maybe walk us through the anticipated J code impact to uptake and looking at the next couple of quarters, especially in the Medicare segment.
Krish Krishnan
Thanks, Alec. And hey, on your first question, at the end of Q3, we were tracking like at a two month pace between start farms to patients on drug, we were making progress. And presently we're about 30 days from a start from the patient on drug. Our goal at least by the second half of this year is seeing it down back via by a few weeks, maybe two to three weeks. And a lot of it has to do with a single case agreements. And with access getting behind us, we expect that trend to only decrease and get to a steady state of two to three weeks in second half of this year.
And with respect to the J code and the reason I mentioned that comment, look, J-code is a great tailwind for the company long term. I just was simply pointing out that in January as our specialty pharmacy was transitioning people from home into the official check order from a prior a J-code. And you should expect a few weeks of revenue hit to the story in Europe. But outside of that, we don't particularly see the J-code having any impact going forward, especially impact in the positive direction, not having any kind of impact in the other direction.
Alec Stranahan
Thank you.
Operator
Yigal Nochomovitz, Citi
Yigal Nochomovitz
Thank you. So much for taking the question. Could you just help us clarify on the numbers, the 228 reimbursement approvals and the 35% of the 1,100 of the Fortune 2028 a subset of the 420, are they distinct populations? Just just to clarify, please?
Krish Krishnan
No, I mean let me answer that this way. The one that 35%, the Ford 20, that clearly the storefronts that we've been mentioning in the past, the two 28 talks about out of the stuff ramps we've gotten the exact number of reimbursement. And we have gotten from out we like that metric because it's a much closer indicator of net revenue in the long term. And so yes, obviously, it is a subset of all the smartphones. We've gotten sort of enter that very directly, but it's a different metric in the sense that it's a more important metric as revenue becomes a much more important part of the story going forward.
Yigal Nochomovitz
Okay, thanks. And then you referenced that I think you said 60 of the 195 were prescribed and two or more. I'm just trying to do a little math on that. It suggests that for those higher prescribers at somewhere around five patients per prescriber, is that is that the correct thinking? Or is it a different thing?
Krish Krishnan
And I think I mean, the term, it's a difficult question to answer immediate, but I think you're right. I think you're right they all we were trying to show is that people who prescribe resurrect to begin with and now getting more familiar with the drug and I repeat prescribing, and that's a good metric for us because it shows the confidence in the drug and it shows they are expanding to a broader base of patients. And there were a couple of COE.s I've mentioned this before who were positioning that let me get my other patients on drug. If I get my dominant patients on drug and see how they do and all in all the reason for that metric is to show increasing confidence of a prescriber towards continuing to prescribe regimen.
Yigal Nochomovitz
Okay. And then just one quick one on the eyedropper. Certainly very interesting early data. Can you just discuss the strategy there longer-term? Is that going to be provided as an adjunct to the topical for those that have the eye complications? Or would it be additionally priced drug separate from the cream.
Krish Krishnan
I think it's a bit too early to be very definitive on the matter, but our objective is to have a separately priced product like we do right now under a single patient, we ship that patient and makes a vial. And so our thinking is to have a separate NDC number, a separate pricing and send it along with the topical gel.
Yigal Nochomovitz
Okay. Thank you very much.
Operator
Thank you. The next question is coming from --
Suma Krishnan
I guess I just want to clarify sorry on the I and as I said, is we have a PI. and D. guidance from the agency. So this is going to be a new INDNAM. and it's going to be a BLA. So a brand new label with the new NDC code, as Krish mentioned.
Yigal Nochomovitz
Thank you.
Operator
Debjit Chattopadhyay, Guggenheim.
Debjit Chattopadhyay
Hey, you you're new to this is Robert on for Debjit. And then can you provide any color on the number of diabetes patients on therapy as of December 31 '24, and also the number of patients on therapy as of December 31. So then I have a follow-up on the ocular complications.
Krish Krishnan
No, I think for now, and I don't want to dig through the figures split out. I think for now, as we mentioned in the call it 25% of the total smartphones was were the dominant type we did not just to be clear, see any big change in the trend of the dominant position of at the moment for that.
Debjit Chattopadhyay
Thank you a lot of ocular, do you currently have 10 or more patients with complications identified people quickly be enrolled? And how long is follow-up planned for the study?
Suma Krishnan
I can answer this question. Yes. In fact, we have a lot of patients in the region in the region. The accelerating is because there is enough request for even off-label. So we want to avoid that, yes, we do have enough patients where they have a good natural history of their disease. And as you can see, it's a single-arm open-label study. So to be pretty straightforward.
Debjit Chattopadhyay
Great. Thank you.
Operator
Dae Gon Ha, Stifel.
Dae Gon Ha
Back on your line of sight for a Thanks for taking our questions and let me add my congrats on the quarter as well. Krish, just going back to the roughly one 36 start forms, are that you've reported as of February. I was just kind of curious if you could talk about the cadence of patients. I know it's kind of a combination of Q4 and a little bit of '24. I mean, you've added a lot of conviction around sort of the year end, I mean, the opportunity this year. So if you could kind of comment on that cadence and then going back to the more than [$1 billion] opportunity. You were talking about, I guess, a little early, but if you can maybe frame for us, what exactly are you thinking? Because in prior I guess, Vitaros approval, you've given some conservative estimates that you had to revise. So what should we be thinking in terms of feedback, ophthalmic solution that? Thanks so much.
Krish Krishnan
Great. And the cadence of patients just to correct you, I think 35% of 1,200. I want to be clear, that's the number of start forms. I heard a number 136 that I wasn't sure about. But that said, look at definitely the holiday period were a bit slow slows in appointments getting pushed out by a week or two economics being rescheduled. And that was a singular cadence that we observed, which is why we kind of pushed-out that stuff I'm reporting to as of February. So that's the cadence on that on the opportunity.
Look, there was some confusion when we first reported when we first reported the market opportunity, all we had was an approval in the US and it felt a bit conservative of the feedback I got was super conservative now. We're starting to see feedback from the EMA. We're starting to see feedback from the Japanese authorities, our conviction in the drug getting approved in Europe and Japan, it's definitely a lot higher than it was six months ago. And then we're also starting to align with the agency on the chronic indication in the eye and now that it's a single label study. And as Suma mentioned that our people with natural history, we feel at the moment pretty good about 50% of the ARDA patients or 25% of the total DEB patients. However, you want to look at it also adding to the market opportunity. And so we thought we'd take the moment to alleviate any confusion from prior and be very definitive on the market opportunity or be that going forward.
Dae Gon Ha
I guess just to clarify on that point, are you able to give some percentage breakdown of how much would that be from Vivek as it currently is as hydrovac or be that formulation?
Krish Krishnan
You mean the IV formulation? Look where without without the IV formulation. We believe it's north of $1 billion of the IV formulation, and this is a very premature estimate from my end, probably adds another $250 million to $300 million to the opportunity itself.
Dae Gon Ha
Excellent. Thank you very much.
Operator
Joe Pantginis, H.C. Wainwright.
Joe Pantginis
Hey, everybody. Good morning. Thanks for taking the question. Of course, congrats as well, but also Thank you, Krish, because of the the real clarity and visibility that you're providing around the launch, so we all. Appreciate that.
So I guess two questions. First, I guess when you come to the actual patients, do you have any data that you can share with us about the ranges of the treatment area sizes, number one. And then number two, I know there's great compliance so far, as you've alluded to anything you could share with us as to the reasons for patient stops. Thanks for that.
Krish Krishnan
And it's a great question, Joe. In terms of ranges and area phases, let me say, look, as the patient population grows and as the visits that weekly. We're not particularly tagging every single patient in every single day. But that said, to feedback through personal contact. We do know that there are a good number of patients treating large one sizes have a good number of patients choosing to start with the small ones moving into the large ones. We see no difference in the way the drug works between recurrent and chronic arm. And all in all, we believe that biotech has been great to point of AltaGas and one of our tenants doesn't recurring versus chronic capital and the only point of that is that we are working on not immediately but in the medium term. So it's a significant increase the dosage per vial per week that would be beneficial but that's not an immediate solution. People seem pretty happy with the drug. People seem very happy with the home dosing. I will say one of the best things we got on the label was home dosing and compliance is high because of this, we see patients unwilling to even go to a local physician to get it done on a weekly basis.
And so home dosing has really helped a lot, but a lot. And in terms of compliance load, when we look back at our clinical studies, I mean, like just before the launch or the first few months of launch compliance was very high. We expect compliance to continue to be high in 2024. But as wounds start to heal from one has to think about maybe a handful of patients are slowing down, either taking a pause and restarting or going from for two, maybe three to two vials a month. But it's not immediate. I think our original assumption of having a patient on vials for 12 months or longer as of today continues to track properly.
Joe Pantginis
Great. Thank you, really appreciate it.
Operator
Andrea Tan, Goldman Sachs.
Andrea Tan
Good morning and thanks for taking our question. Krish, could you speak a little bit more about the evolution of the competitive landscape as you see it and how you envision the treatment paradigm shifting if ABI on this graph is approved.
Krish Krishnan
Hey, on the competitive landscape, Krystal was started in 2016 when we realized that the competitive landscape was not a very commercially viable approach to treating the EP. I mean, we obviously appreciate anyone and all working in this debilitating disease. But our view right now, and this could be different since both direct have the ability to treat larger wounds. And we doubt if patients would go through the inconvenience of having to graft over and over and again in the same location and takes a certain bit of time. If you look at the convenience aspect, it gets much of Asia Pac. Obviously, it's much more convenient and amenable. So Orlando presently watching are too anxious about an autologous approach to treating the disease. At the moment, we feel them we feel that the convenience aspect of BioAg is much more. It's much more convenient now on the other current competitive environment, which is does not fundamentally address the cause of the disease or less concerned about that because at the end of the day, we believe that most patients and most physicians want an approach that fundamentally treats the nature of the disease.
Suma Krishnan
And I'm just going to add another point to add beyond that therapy. It's Keep in mind that 50% wound closure, I mean, we had a high bar of 100% wound closure. So we are seeing even that large wounds have pretty good closure. So I think, again, as Chris mentioned, easy to apply topical. We don't have to biopsy these patients these patients cannot stand any sort of pain or inflict on hospitalization, they can afford that. So I think from that perspective, because of the ease of application and good efficacy, again, we are not concerned.
Andrea Tan
And then maybe one question here on the pipeline. As you think about the upcoming data readouts that you have across the different programs, just just wondering if you could help frame expectations into each one of those and what would trigger either a go or no-go decision to bring those forward? Thanks so much.
Suma Krishnan
I mean, again for oh seven. We are excited. This finished Cohort one cohort two is, I mean, the acceleration of enrolling those patients is ongoing right now. So we are excited to move that quickly into Cohort three, we think we really believe we have all the sites that are established who can do bronchoscopy, and we have now patients identified. So we believe in 47 issued by end of the year, we'll be able to dose those patients and have some positive bronchoscopy data. But also we're working on some preclinical models, which we feel we have some promise and getting confidence to get to establish a functionality for TVN to collaborate with us. So we feel pretty positive on for oh seven for oh eight.
Again, as we mentioned we dosed our first patient. This patient was not on augmentation therapy. So again, with the biomarkers that we can, we are measuring because we want to see blood levels of A1AT and again, it's easy to measure both neutrophil elastase, binding of neutrophil elastase and sputum and see the place in plasma levels. We feel with these biomarkers will help us identify or get a faster read on for oh eight and we are very excited actually about four rate. I think with the division, the OTP. division opened to biomarker approach and for a final approval. We think with 48 We hold a good chance of getting in front of them once we have positive data to discuss a biomarker approach for grew so again for oh eight is an exciting program for us, and 77 is also exciting. I mean, we have, as Chris mentioned, been we haven't provided too many specifics, but the program with the intra-tumoral injection is moving forward. So hopefully, we'll have some outcome and data read end of the year. And of course, our lung program also, again, very excited to hopefully end of the year. It could be exciting data read on all our programs.
Operator
(Operator instructions)
Tim Lugo, William Blair.
Tim Lugo
Congratulations on the quarter and also all the clarity. Can you give us a sense of product revenue ramping through 2024? It sounded like there was some seasonality on scheduling in Q4, and we're also two thirds of the way through Q1, do you have a sense of what's going to be kind of incremental increases, at least in the near term or if there might be some lumpiness quarter to quarter.
Krish Krishnan
Tim, we're not providing any guidance to reflect the revenue had no unusual. I think a lot of that was only yes, I noticed that there's not much of a seasonality I was just pointing out that takeout transition is a one-time event. It's not a seasonal event. And with that, it's a powerful tailwind behind us.
The second, as I mentioned, I had mentioned about a handful of patients hitting the cap at the end of the year. And what we're trying to do is to kind of accrue for it as we move through the year to avoid any kind of lumpiness in Q4 one way or the other. So and that I think as more and more patients come on drug, you can start figuring out what the revenue potential of IG rating is going to be this year. But no, no comment from us.
Tim Lugo
Then, of course, if we let your question or your point of you obviously have the capability of our platform and redosing, obviously, pipeline opportunity. You've built out a number of pipeline assets. But are there any that you looked at that might have just been too expensive to run the clinicals on that you think a partner would be appropriate for and getting a sense of the kind of capacity there within the manufacturing and kind of development side?
Krish Krishnan
Yes. Look, our position on this has stayed the same for large indications, and I'll talk about alpha-1 antitrypsin. Large indications are some areas in oncology loans indication anytime in CF, we're primarily going after the null mutation. So we view it much more as a rare disease, Dan, as a really large indication, I think we are always open to partnering on large indications. The company wants to stay focused on its ability to develop, manufacture and commercialize rare diseases and definitely would like to seek partner on larger indications but we have enough capacity manufacturing wise to support any partnership, small or large with the product either in the development stage of the financial statements.
Tim Lugo
Understood. Thank you and congratulations.
Operator
Gavin Clark-Gartner, Evercore ISI.
Gavin Clark-Gartner
Hey, thanks for taking the questions. I just had a couple of clarifications. And then questions on on the 228 reimbursement approvals. Wanted to be clear, was this also through mid-February or was that at the end of December?
Krish Krishnan
It said on the deck as of February, if I'm not mistaken, and we hold to that, like, let's not I'm not trying not to get too cute between mid versus early versus late, but it was as of February.
Gavin Clark-Gartner
Okay. That's helpful. And just trying to quantify the holiday impact a little bit with the start forms coming in in January, February were those actually at a higher rate than later November December,
Krish Krishnan
Yes, it's a it was a shift, right? And so that kind of affected the rate and shifting from say middle of December until January, et cetera.
Gavin Clark-Gartner
Okay. And have there been any differences in the conversion rate or the conversion time between the Medicaid and commercial patients.
Krish Krishnan
In the back half of the question because it doesn't have a time dimension now in the past and like your 2023 are mitigated definitely took a bit longer because there was no J-code. Different states were at different points and commercial was doing pretty well. And I think right now, I wouldn't say starting now going forward, I don't see a measurable difference between the two, we do depend and in fact, on the commercial side, if you end up with a single case agreement on a patient down, it could take us longer as Medicaid. So I mean, to answer your question simply and I was thinking as I was responding, we don't see any meaningful difference in time, especially going forward as you might have seen some in the past.
Gavin Clark-Gartner
Okay, great. And then last one, I just wanted to ask what your latest expectations for value-based pricing in Europe was and thanks for taking all the questions.
Krish Krishnan
We don't know we know of we are we it's a differentiated drug. The efficacy profile is very strong. We're seeing really good demand on named patient sales from a handful of countries. Our conversations with the MAs are going well. Our job is to make a case for a we know it's going to be lower, but our job is to get to at less than a 50% discount. If we're fortunate less than like I hope I'm not confusing people there. Certainly something north of a I'll say, $15,000 per vial would be great for us.
Gavin Clark-Gartner
It makes sense. Thank you.
Operator
Josh Schimmer, Cantor.
Josh Schimmer
Great. Thanks for taking the questions. I have three quick ones. So 228 reimbursement approvals that have around 428 start forms of that 55%. And conversely, what for the remaining 45%, how many of those or what proportion of those do you expect to be able to capture with the new J codes and over what period of time as Second question is, if you can and quantify any contribution from either inventory building or named patient access in Europe.
And then last question the annual cap of $900,000 gross is that on a per patient basis or a per plan basis averaged across their population? Thank you.
Krish Krishnan
And look on the first one of our internal goal of trying to get to all of you talked about the gap between the start times and the thing we're trying to get to get all the patients in 2023 on to reimbursement by the end of Q1. That's the goal. And so I don't know, instead of answering your question as to 28 versus 28 Our internal goal is all the patients who we know of at the end of 2023. We want to mine reimbursement by the end of Q1 and in terms of them. Was there any inventory or RNPP. hardly any yet. We're just starting to get LPP. will probably get reflected more going forward.
And on the annual cap. Look, it is the overall discount. I think I've mentioned this is measured at the payer level. So it's kind of like a blended average depending on the number of patients in the plan.
Josh Schimmer
Thank you.
Operator
Ritu Baral, TD Cowen.
Ritu Baral
Hi, good morning, guys. This is Amazon Pharmacy today.
Congrats on the quarter. I have two questions. So as you see more reauthorizations taking place, could you just expand on how what the process of that and what does the prescriber need to show for a successful reauthorization. And I have a follow-up after that.
Krish Krishnan
Yes, under the re-authorization happens every six months, usually you need something called clinical notes from a physician saying that sort of Asia Pac is working some of them certified without a patient with it and some certified wanting a patient visits. And we're talking a local patient visit for the most part for the most part, and that's what it entails. So depending on the patient, it could take a certain amount of time, but usually it's pretty quick.
Ritu Baral
Got it. And then could you talk about the market research efforts in the EU ahead of a potential launch? Then like in terms of how patients are currently managed now and just to confirm now you're expecting and launched it in next year versus later this year.
Krish Krishnan
Look later, I want to be clear. It depends on when we get approved and if you saw what happened to us in the US, our work from that were always adding three months to produce a date from this point out, it appears to be the norm than anything management test. Having said that, if the launches scheduled for late in the year, let's say in December, we'd probably push it out to January. And in terms of launch plans. I think we're going to have a gentleman up the general manager in Germany at the beginning of March to build out the team. That will be the first country of launch in terms of market research, our current EU General Manager, Laura, has already been talking to physicians and centers of excellence who have really strong registry. So we feel really good about the identified patient population and a lot of home dosing. Europe is handled by the hospital. So a lot of the logistical complications you see in the US like getting home dosing in place, a finding patients are not as big issues in Europe. What is important in EU is that we get to a good place on access. If we get to a good place with respect to access to the EU launch becomes a bit simpler logistically than the US launch and kind of very similar in Japan story.
Ritu Baral
Great, very helpful.
Operator
Thank you. There were no other questions in queue at this time. This now concludes the call at this time.
Thank you all participants for joining the Krystal Biotech Fourth Quarter and Full Year 2023 earnings call. You may now disconnect.
