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Item 9A. Controls and Procedures

2024-02-26 compared with 2023-02-27 · 29 added, 19 removed, 184 unchanged (21% of the section changed)

26 unchanged sentences

Changes in Internal Control over Financial Reporting

In 2021, we implemented the first phase of our enterprise resource planning software, Microsoft Dynamics D365 (“Dynamics”), as part of a plan to integrate and upgrade our systems and processes.

The implementation of this software is scheduled to continue in phases over a number of years as the Company grows and as we move towards commercialization of our initial product candidate, B-VEC.

As the phased implementation of this system occurs, we expect certain changes to our processes and procedures which, in turn, will result in changes to our internal control over financial reporting.

We expect Dynamics to continue to strengthen our internal financial controls.

Management will continue to evaluate and monitor our internal controls as processes and procedures in each of the affected areas evolve.

As we are still in the process of implementing these additional phases, no change in our internal control over financial reporting occurred during the year ended December 31, 2022.

Other than as discussed above, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022 the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 27, 2023 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

11 unchanged sentences

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

14 unchanged sentences

Information required by this Item is hereby incorporated by reference to our 2024 Definitive Proxy Statement, which will be filed prior to April 30, 2024.

Principal Accounting Fees and Services.

Principal Accountant Fees and Services.

Information required by this Item is hereby incorporated by reference to our 2024 Definitive Proxy Statement, which will be filed prior to April 30, 2024.

Exhibits, Financial Statement Schedules.

Exhibits and Financial Statement Schedules.

(a) List the following documents filed as a part of the report:

16 unchanged sentences

333-227632), as filed with the SEC on October 1, 2018)

4.3* Description of Common Stock

10.1# Indemnification Agreement by and between Krystal Biotech, Inc.

Description of Common Stock (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K, as filed with the SEC on F ebruary 27, 2023)

10.1# Form of Indemnification Agreement by and between Krystal Biotech, Inc.

and each of its directors and executive officers (incorporated by reference to Exhibit 10.1 to the Company’s Amendment No.

13 unchanged sentences

10.5# Executive Employment Agreement, effective May 3, 2021 by and between Krystal Biotech, Inc.

and Andy Orth

and Andy Orth (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K, as filed with the SEC on February 28, 2022)

10.6# Krystal Biotech, Inc.

24 unchanged sentences

10.12 Investors’ Rights Agreement, dated as of August 7, 2017, by and among Krystal Biotech, Inc.

and the investors listed on Schedule A thereto (incorporated by reference to Exhibit 10.9 to Form S-1 (Reg.

and the investors listed on Schedule A thereto (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (Reg.

333-220085), as filed with the SEC on August 21, 2017)

10 unchanged sentences

and Krystal Biotech, Inc.

( incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K, as filed with the SEC on F ebruary 2 8 , 202 2 )

10.17 Seventh amendment to Lease Agreement, dated as of May 11, 2021, by and between Wharton Lender Associates, L.P.

and Krystal Biotech, Inc.

(incorporated by reference to Exhibit 10.1 8 to the Company's Annual Report on Form 10-K, as filed with the SEC on F ebruary 28, 2022)

10.18 Eighth amendment to Lease Agreement, dated as of July 21, 2021, by and between Wharton Lender Associates, L.P.

and Krystal Biotech, Inc.

(incorporated by reference to Exhibit 10.1 9 to the Company's Annual Report on Form 10-K, as filed with the SEC on F ebruary 28, 2022)

10.19 Ninth amendment to Lease Agreement, dated as of January 4, 2022, by and between Wharton Lender Associates, L.P.

and Krystal Biotech, Inc.

(incorporated by reference to Exhibit 10.

20 to the Company's Annual Report on Form 10-K, as filed with the SEC on F ebruary 28, 2022)

10.20 Purchase and Sale Agreement, dated January 29, 2021, by and between Krystal Biotech, Inc.

4 unchanged sentences

Form of Krystal Biotech, Inc.

2017 IPO Stock Incentive Plan Notice of Restricted Stock Award and Restricted Stock Award Agreement

2017 IPO Stock Incentive Plan Notice of Restricted Stock Award and Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K, as filed with the SEC on February 27, 2023)

Form of Time-Based Restricted Stock Unit Award Agreement under the 2017 IPO Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on May 8 , 202 3 )

Form of Performance-Based Restricted Stock Unit Award Agreement under the 2017 IPO Stock Incentive Plan (incorporated by reference to Exhibit 10.

2 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on May 8, 2023)

Securities Purchase Agreement, by and among Krystal Biotech, Inc.

and the institutional investors listed on the signature pages thereto, dated as of May 21, 2023 ( incorporated by reference to Exhibit 1 0 .1 to the Company’s Current Report on Form 8-K, as filed with the SEC on May 2 2 , 202 3 )

Registration Rights Agreement, by and among Krystal Biotech, Inc.

and the institutional investors listed on the signature pages thereto, dated as of May 21, 2023 ( incorporated by reference to Exhibit 10 .

2 to the Company’s Current Report on Form 8-K, as filed with the SEC on May 22, 2023)

16.1 Letter to Securities and Exchange Commission from Mayer Hoffman McCann P.C.

5 unchanged sentences

31.2* Certification of Periodic Report by Chief Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1* Certification of Chief Executive Officer and C h ief Accounting Officer Pursuant to 18 U.S.C.

32.1* Certification of Chief Executive Officer and Chief Accounting Officer Pursuant to 18 U.S.C.

Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Executive Incentive Compensation Recoupment Policy

101 (i) XBRL Instance Document, (ii) XBRL Taxonomy Extension Schema Document, (iii) XBRL Taxonomy Extension Calculation Linkbase Document, (iv) XBRL Taxonomy Extension Definition Linkbase Document, (v) XBRL Taxonomy Extension Label Linkbase Document, (vi) XBRL Taxonomy Extension Presentation Linkbase Document.

4 unchanged sentences

The Company has elected to not include a summary.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pittsburgh, State of Pennsylvania, on February 27, 2023.

KRYSTAL BIOTECH, INC.

21 unchanged sentences

Rand Sutherland

/s/ Catherine Mazzacco

Director February 26, 2024

Catherine Mazzacco

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures