Item 5. Other Information
ITEM 5. OTHER INFORMATION
Insider Trading Arrangements
On June 14, 2024 , Krish Krishnan , our Chief Executive Officer and Chairman of our Board of Directors , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 100,000 shares of our Common Stock until September 13, 2025 .
On June 14, 2024 , Suma Krishnan , our President, R&D and a member of our Board of Directors , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 100,000 shares of our Common Stock until September 13, 2025 .
Executive Change in Control Severance Plan
On August 2, 2024, upon recommendation of the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”), the Board adopted the Krystal Biotech, Inc. Executive Change in Control Severance Plan (the “Change in Control Plan”), covering eligible executives, including each of the Company’s named executive officers, Krish S. Krishnan, Chairman and Chief Executive Officer, Suma M. Krishnan, Founder and President, R&D, and Kathryn A. Romano, Chief Accounting Officer (each a “Participant”).
Pursuant to the Change in Control Plan, upon a termination of a Participant’s employment (i) by the Company without Cause or (ii) due to a Participant’s resignation for Good Reason (each as defined in the Change in Control Plan) that occurs within the 24-month period following the consummation of a Change in Control (as defined in the Change in Control Plan), Participants are entitled to receive: (A) accrued amounts, including unpaid salary and reimbursement for all incurred but unreimbursed expenses through the date of the Participant’s termination of employment, and (B) subject to the Participant’s execution of a release of claims and compliance with restrictive covenant obligations: (1) a lump sum cash payment equal to the sum of the Participant’s base salary and target annual cash bonus (or, if greater, the average of the annual cash bonus earned for the three fiscal years preceding the year in which termination occurs) multiplied by the multiple applicable for such Participant (2.0 for each of Mr. Krishnan and Ms. Krishnan, and 1.5 for all other named executive officers); (2) a cash payment equal to the Participant’s target annual bonus for the calendar year in which termination occurs, prorated to reflect the number of days the Participant remained employed in such calendar year; (3) payment of any unpaid annual cash bonus earned for the year prior to the year in which termination occurs; (4) Company-paid (or reimbursed) healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA) or other applicable law for up to 24 months following the date of termination of the employment of Mr. Krishnan or Ms. Krishnan (18 months for other named executive officers); and (5) treatment of outstanding equity awards as set forth under the Krystal Biotech, Inc. 2017 IPO Stock Incentive Plan (the “Stock Incentive Plan”). The Change in Control Plan contains a modified cutback provision whereby payments payable to a Participant may be reduced if doing so would put the Participant in a more advantageous after-tax position than if payments were not reduced and the Participant became subject to excise taxes under Section 4999 of the Internal Revenue Code of 1986, as amended.
The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the Change in Control Plan, a copy of which is filed as Exhibit 10.1 to this Form 10-Q and incorporated herein by reference.
Amendment to the Krystal Biotech, Inc. 2017 IPO Stock Incentive Plan
On August 2, 2024, upon recommendation of the Compensation Committee, the Board approved an amendment (the “Amendment”) to the Stock Incentive Plan. The Amendment provides that in the event of a Change in Control (as defined in the Stock Incentive Plan) in which outstanding equity awards under the Stock Incentive Plan are assumed or replaced by a successor entity on the same terms and conditions as the original awards (such awards, “Assumed or Replaced Awards”), such Assumed or Replaced Awards shall not vest solely as a result of the Change in Control. The Amendment further provides that outstanding equity awards under the Stock Incentive Plan will immediately vest and be exercisable, and any restrictions then in force will lapse: (i) if a successor entity fails to assume or replace an outstanding equity award under the Stock Incentive Plan on the same terms and conditions as the original awards, or (ii) with respect to Assumed or Replaced Awards, upon a
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participant’s termination of employment without Cause (as defined in the Stock Incentive Plan) that occurs within the 24-month period following the consummation of a Change in Control.
The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.2 to this Form 10-Q and incorporated herein by reference.
ITEM 6. EXHIBITS
Exhibit
Number
10.1 K rystal Biotech, Inc. Executive Change in Control Severance Plan
10.2 F irst Amendment to the Krystal Biotech, Inc. 2017 IPO S tock Incentive Plan
31.1 Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
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 Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 Inline XBRL (Extensible Business Reporting Language). The following materials from this Quarterly Report on Form 10-Q for the period ended June 30, 2024, are formatted in Inline XBRL: (i) consolidated balance sheets of Krystal Biotech, Inc., (ii) consolidated statements of operations of Krystal Biotech, Inc., (iii) consolidated statements of operations and comprehensive income/(loss) of Krystal Biotech, Inc., (iv) consolidated statements of changes in equity of Krystal Biotech, Inc., (v) consolidated statements of cash flows of Krystal Biotech, Inc. and (vi) notes to condensed consolidated financial statements of Krystal Biotech, Inc. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
KRYSTAL BIOTECH, INC.
(Registrant)
Date: August 5, 2024
By: /s/ Krish S. Krishnan
Krish S. Krishnan
President and Chief Executive Officer
(Principal executive officer)
Date: August 5, 2024
By: /s/ Kathryn A. Romano
Kathryn A. Romano
Chief Accounting Officer
(Principal financial and accounting officer)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.