DEF 14A of Krystal Biotech, Inc., Apr 4, 2024

DEF 14A of Krystal Biotech, Inc.

Filed Apr 4, 2024 · FY20230001711279-24-000013

Open on EDGAR

  1. PROPOSAL 1: ELECTION OF CLASS I DIRECTORS

    PROPOSAL 1: ELECTION OF CLASS I DIRECTORS Our Board of Directors is divided into three classes of directors, each serving staggered three-year terms. The Board is currently comprised of nine directors, three of whom have terms expiring at the Annual Meeting. The nominees, each of whom is currently serving as a Class I director, have been recommended by the Board for re-election to serve as directors for three-year terms until the 2027 Annual Meeting and until their successors are duly elected and qualified. The Board knows of no reason why the nominees would be unable to serve as a director. If the nominees are unavailable for election or service, the Board may designate a substitute nominee and the persons designated as proxy holders on the proxy card will vote for the substitute nominee recommended by the Board. Under these circumstances, the Board may also, as permitted by our bylaws, decrease the size of the Board.

  2. Nominees for Election for a Three-Year Term Expiring at the 2027 Annual Meeting

    Nominees for Election for a Three-Year Term Expiring at the 2027 Annual Meeting The following table sets forth the name and age of each nominee for Class I director, indicating all positions and offices with us currently held by the director.

  3. Nominees for Election for a Three-Year Term Expiring at the 2027 Annual Meeting

    | Name | Age(1) | Title | Director Since | | Suma M. Krishnan | 59 | Founder and President, R&D | 2016 | | Julian S. Gangolli | 66 | Director | 2019 | | Catherine Mazzacco | 59 | Director | 2023 |

  4. Nominees for Election for a Three-Year Term Expiring at the 2027 Annual Meeting

    (1) Age as of April 4, 2024. Set forth below are descriptions of the backgrounds and principal occupations of each of Ms. Krishnan, Mr. Gangolli, and Ms. Mazzacco. Suma M. Krishnan (59) is our founder and President, R&D and has served as a director since our inception. Prior to being named as our President, R&D in February 2022, Ms. Krishnan served as our Chief Operating Officer. Ms. Krishnan has over two decades of experience in drug development. She previously served as Senior Vice President and head of the Human Therapeutics Division, as well as Senior Vice President of Regulatory Affairs at Intrexon Corporation from 2012 to 2016. She previously served as Senior Vice President, Product Development at Pinnacle Pharmaceuticals, Inc. from 2009 to 2011. Prior to joining Pinnacle, Ms. Krishnan was Vice President, Product Development at New River Pharmaceuticals, Inc. from 2002 until its acquisition by Shire plc in 2007. Prior to New River, Ms. Krishnan held roles of increasing responsibility at Pfizer, Inc.; the Weinberg Group, a pharmaceutical and environmental consulting firm; and Janssen Pharmaceuticals, Inc. Ms. Krishnan received an M.S. in Organic Chemistry from Villanova University, an M.B.A. from Institute of Management and Research (India) and an undergraduate degree in Organic Chemistry from Ferguson University (India). Ms. Krishnan is the spouse of Krish S. Krishnan, our Chairman and Chief Executive Officer. We believe that Ms. Krishnan’s extensive knowledge of our gene therapy products and proprietary platform and her significant drug development experience stretching over two decades qualifies her to serve as a member of our Board. Julian S. Gangolli (66) has served as a member of our Board since March 2019 and is Chair of the Nominating and Corporate Governance Committee and a member of the Compensation Committee and the Audit Committee. He was President, North America of Greenwich Biosciences, a GW Pharmaceuticals PLC company, from May 2015 to May 2019. Prior to joining GW Pharmaceuticals, Mr. Gangolli spent 17 years at Allergan, Inc., including serving as President of the North American Pharmaceutical division from January 2004 to May 2015. Prior to Allergan, Mr. Gangolli served in sales and marketing positions at VIVUS, Inc., Syntex Pharmaceuticals, Inc., and Ortho-Cilag Pharmaceuticals Ltd. Mr. Gangolli is a director of Revance Therapeutics, Inc. (NASDAQ: RVNC) and Outlook Therapeutics, Inc. (NASDAQ: OTLK). Mr. Gangolli received a BSc (Honors) degree in Applied Chemistry and Business Studies from Kingston University in England. We believe that Mr. Gangolli’s extensive experience in the pharmaceutical industry, including the commercialization of numerous products, qualifies him to serve as a member of our Board. Catherine Mazzacco (59) has served as a member of our Board since March 2023 and is a member of the Nominating and Corporate Governance Committee and Commercial Advisory Committee. Ms. Mazzacco was CEO & President of LEO Pharma, a privately owned global pharmaceutical company, and a member of the Board of Directors from August 2019 to November 2021. Prior to this role, Ms. Mazzacco was Senior Vice President, Global Commercial Operations, Life Sciences Division at GE HealthCare, a leading global medical technology, pharmaceutical diagnostics and life sciences company, from February 2018 to May 2019. Before joining GE HealthCare, Ms. Mazzacco spent over 25 years at Abbott Laboratories, a major multinational publicly traded healthcare company where she held several global senior operational and strategic leadership roles, including Vice President, Global Commercial Operations, Abbott Vision Division from 2011 to 2017. Ms. Mazzacco is a Member of the Supervisory Board and Remuneration & Nomination Committee of Servier SAS, a privately owned global pharmaceutical company. Ms. Mazzacco is also a member of the Board of Directors, Audit Committee and Chair of the Commercial Strategy Committee of Sight Sciences, Inc. (NASDAQ: SGHT), an eyecare technology company. Ms. Mazzacco holds a BSE, Engineering, Option Biotechnology from the University of Compiègne in France. We believe that Ms. Mazzacco’s deep healthcare knowledge as well as her extensive international, commercial, operational and transformation expertise qualifies her to serve as a member of our Board. Directors are elected by plurality vote. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote. THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES SET FORTH ABOVE.

  5. Continuing Directors

    Continuing Directors Class II Directors with Terms Expiring at the 2025 Annual Meeting of Stockholders Daniel S. Janney (58) has served as a member of our Board since November 2016 and is chairman of the Compensation Committee and a member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Janney is a Managing Director at Alta Partners, a life sciences venture capital firm, which he joined in 1996. Prior to joining Alta, from 1993 to 1996, he was a Vice President in Montgomery Securities’ healthcare and biotechnology investment banking group, focusing on life sciences companies. Mr. Janney is a director of several companies, including Allakos, Inc. (NASDAQ: ALLK), Be Biopharma, DEM BioPharma, Inc., Edgewood Oncology, and Lassen Therapeutics. He holds a Bachelor of Arts in History from Georgetown University and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles. We believe Mr. Janney’s experience working with and serving on the boards of directors of life sciences companies and his experience working in the venture capital industry with a focus on the life sciences industry qualifies him to serve as a member of our Board. Dino A. Rossi (69) has served as a member of our Board since June 2017 and is Chair of the Audit Committee and a member of the Compensation Committee. Mr. Rossi was previously employed by Balchem Corporation, where he served as Executive Chairman from September 2015 to December 2016, Chief Executive Officer and President from October 1997 to April 2015, Chief Financial Officer from April 1996 to January 2004 and Treasurer from June 1996 to June 2003. Prior to Balchem, Mr. Rossi held senior finance and administration positions with Norit Americas Inc. and Oakite Products Inc. Mr. Rossi is also a director of Polytek Development Corporation. Previously, Mr. Rossi served on the boards of directors of Chroma Color Concentrates, Fenzi Holdings SPV S.p.A., Elite Comfort Solutions and Scientific Learning Corporation. Mr. Rossi holds a BS in Accounting from West Virginia University. We believe that Mr. Rossi’s extensive leadership experience as an executive officer of a publicly traded company, as well as his financial expertise, qualifies him to serve as a member of our Board. E. Rand Sutherland, MD (54) has served as a member of our Board since January 2022 and is a member of the Audit Committee. Dr. Sutherland was Chief Executive Officer of Seeker Biologics, a privately-held biotechnology company discovering and developing targeted therapies for the treatment of autoimmune diseases. Prior to joining Seeker Biologics, Dr. Sutherland was President of Translate Bio, where he was responsible for research and development, corporate development, portfolio strategy and program management, from March 2021 until the company’s acquisition in September 2021. Prior to joining Translate Bio, he served in research and development and medical affairs roles at Sanofi, including as Senior Vice President and Global Head of Medical Affairs for Sanofi Genzyme from 2018 to 2021, and as Vice President and Global Head of Rare Diseases Development for Sanofi from 2016 to 2018. From 2014 to 2016, he served as Global Clinical Head for dupilumab/Dupixent® in Immunology Development at Sanofi. Previously, Dr. Sutherland was Professor of Medicine at the University of Colorado and Chief of Pulmonary and Critical Care Medicine at National Jewish Health in Denver, where he cared for patients and led an NIH-funded translational research program in severe asthma. Dr. Sutherland holds a BA with honors from Oberlin College, an MPH from the Harvard School of Public Health, and an MD with honors from the University of Chicago. Dr. Sutherland is an independent director of Vanqua Bio, Inc. and Allakos Inc. (NASDAQ: ALLK). He completed his post-doctoral training in Internal Medicine at the University of California, San Francisco, where he also served as Chief Medical Resident, followed by a fellowship in Pulmonary and Critical Care Medicine at the University of Colorado. We believe that Dr. Sutherland’s scientific and professional background qualifies him to serve as a member of our Board. Class III Directors with Terms Expiring at the 2026 Annual Meeting of Stockholders Krish S. Krishnan (59) has served as our President and Chief Executive Officer and Chairman of our Board since our inception. Mr. Krishnan previously served as Chief Operating Officer of Intrexon Corporation (NYSE: XON) from 2011 to 2016, and as Chief Executive Officer and President of Pinnacle Pharmaceuticals, Inc. from 2009 to 2011. He also served as Chief Financial Officer and Chief Operating Officer of New River Pharmaceuticals, Inc. from 2004 to 2007 (previously listed on NASDAQ prior to its acquisition by Shire plc in 2007) and was a member of its board of directors from 2003 until 2007. He served as a Senior Managing Director of Third Security, LLC between 2001 and 2008 and as a board member of Biotie Therapies Oyj (BTH1V: Helsinki) between 2008 and 2009. He served as Managing Principal at Ariba before joining Third Security and served with the management consulting firm A.T. Kearney, where he advised Fortune 50 companies on business strategy. Mr. Krishnan started his career as an engineer with E.I. Dupont de Nemours in Wilmington, Delaware. He received a B.S. in Mechanical Engineering from the Indian Institute of Technology, an M.S. in Engineering from the University of Toledo, and an M.B.A. in Finance from The Wharton School at the University of Pennsylvania. Mr. Krishnan is the spouse of Suma Krishnan, our Founder and President, R&D. We believe that Mr. Krishnan’s role as our principal executive officer and his extensive business experience, including significant pharmaceutical industry experience, qualifies him to serve as a member of our Board. Kirti Ganorkar (57) has served as a member of our Board since September 2017. Mr. Ganorkar is currently the Chief Executive Officer - India Business of Sun Pharmaceutical Laboratories Ltd. which is a subsidiary of Sun Pharma Industries Ltd., a multinational pharmaceutical company and the largest pharmaceutical company headquartered in India. Mr. Ganorkar joined Sun Pharma in 1996 and has worked in several roles during his time there, most recently as head of Global Business Development & Portfolio Management. Prior to Sun Pharma, Mr. Ganorkar worked for German Remedies as a senior product manager, and with Rallis India Ltd. and Sudarshan Chemical Industries prior to that. Mr. Ganorkar has a Bachelor of Technology degree in chemical engineering from Nagpur University and an MBA in marketing management from Poona University. We believe that Mr. Ganorkar’s broad experience in the pharmaceutical industry qualifies him to serve as a member of our Board.

  6. Continuing Directors

    Christopher Mason, MD, PhD, FRCS, FRSB, FMedSci (66) has served as a member of our Board since January 2021 and is Chair of the Science and Technology Committee. Dr. Mason is the Founder of Sun Vectors, Inc. and has served as a director and its Chief Executive Officer since August 2022. Dr. Mason is the Founder of AVROBIO, Inc. and served as its Chief Scientific Officer from July 2015 to June 2022. Dr. Mason has been on the faculty of the Advanced Centre for Biochemical Engineering, University College London since 1999, including Full Professor of Regenerative Medicine Bioprocessing (2008-2017), and Full Professor of Cell and Gene Therapy since 2017. Dr. Mason also has served as founder and director of London Regenerative Medicine Network Ltd., a director of OriBiotech Ltd. and a director of the Alliance for Regenerative Medicine since February 2008, September 2015, and October 2021, respectively. He previously served as founder and a director of Stem Cell Translation Ltd. from October 2006 to March 2018 and served as a trustee of the British Neurological Research Trust from May 2012 to May 2016 and the UK Stem Cell Foundation from September 2010 to May 2016. Dr. Mason earned an MBBS (MD) from the United Medical and Dental Schools of Guy’s and St. Thomas’s Hospitals (now King’s College London), a BSc (Hons) in Clinical Sciences from the Imperial College London (St. Mary’s Hospital Medical School / Royal Postgraduate Medical School), and a PhD from Advanced Center for Biochemical Engineering, University College London. He is an elected Fellow of the Academy of Medical Sciences, Royal College of Surgeons of England, Royal College of Surgeons in Ireland, and Royal Society of Biology. We believe that Dr. Mason’s scientific and professional background, especially his extensive experience in gene therapy, qualifies him to serve as a member of our Board.

  7. Director Compensation

    Director Compensation The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding compensation paid to our independent, non-employee directors for their Board and Board committee service. For the fiscal year ended December 31, 2023, as compensation for serving on the Board, each of our independent directors was eligible to receive: (1) an annual cash fee of $40,000 for serving as a member of our Board; (2) an annual cash fee of $17,000 for the Audit Committee Chair, an annual cash fee of $12,500 for the Compensation Committee Chair, and an annual cash fee of $10,000 for the Nominating and Corporate Governance Committee Chair; and (3) annual cash fees for service as a non-Chair member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of $8,500, $6,250 and $5,000, respectively. Mr. Janney, our lead independent director, received an additional cash retainer of $24,000. When our Board established the Science and Technology Committee and the Commercial Advisory Committee, it approved an annual cash fee for independent directors serving on those committees of $8,000 for the Chair of each committee and an annual cash fee of $5,000 for non-chair members. These cash fees are payable in quarterly installments on a prorated basis. We also reimburse our directors for reasonable travel and related fees and expenses incurred in connection with their participation in Board or Board committee meetings and other related activities, such as site visits in which they engage as directors. For the fiscal year ended December 31, 2023, our independent director compensation program included an initial grant of options for 13,600 shares of our Common Stock for each director upon their initial election to the Board. Such initial option grant vests in 36 equal monthly installments starting on the first monthly anniversary of the grant. Our 2023 independent director compensation program also included an annual grant of options to each independent director for 6,800 shares of our Common Stock following the annual stockholder meeting. Such annual option grant vests in 12 equal monthly installments starting on the first monthly anniversary of the grant. Mr. Krishnan and Ms. Krishnan do not receive any additional compensation for their service on the Board, the Science and Technology Committee, or the Commercial Advisory Committee. In February 2024, the Compensation Committee reviewed the independent, non-employee director compensation program, receiving input from the Compensation Committee’s independent compensation consultant regarding market practices and the competitiveness of the independent, non-employee director compensation program in relation to the general market and the Company’s peer group. Based on its review of the independent, non-employee director compensation program, the Compensation Committee recommended and the Board approved the following changes to the independent, non-employee director compensation program effective March 1, 2024: •The annual cash fee for serving as a member of our Board was increased to $50,000; •The annual cash fee for the Audit Committee Chair was increased to $20,000, and the annual cash fee for a member of the Audit Committee was increased to $10,000; •The annual cash fee for the Compensation Committee Chair was increased to $20,000, and the annual cash fee for a member of the Compensation Committee was increased to $10,000; •The annual cash fee for our lead independent director was increased to $27,500; •The initial grant of stock options for each independent, non-employee director upon their initial election to the Board was decreased to a grant of stock options for 10,000 shares of our Common Stock; and •The annual grant of stock options for each independent, non-employee director was decreased to a grant of stock options for 5,000 shares of our Common Stock. The annual cash fee for the Nominating and Corporate Governance Committee Chair and members remained unchanged at $10,000 and $5,000, respectively.

  8. Director Compensation Table

    Director Compensation Table The following table provides information on the compensation of our directors for the fiscal year ended December 31, 2023, other than Mr. Krishnan and Ms. Krishnan, each of whom received no separate compensation for their service as directors. For information related to the compensation of Mr. Krishnan and Ms. Krishnan, please refer to “Compensation of Named Executive Officers—Summary Compensation Table.”

  9. Director Compensation Table

    | Name | Fees Paid in Cash | Option Awards (1) | All Other Compensation | Total | | Daniel S. Janney | $90,000 | $520,317 | $— | $610,317 | | Dino A. Rossi(2) | $64,500 | $520,317 | $— | $584,817 | | Kirti Ganorkar(3) | $— | $— | $— | $— | | Julian S. Gangolli | $64,750 | $520,317 | $— | $585,067 | | Christopher Mason | $48,000 | $520,317 | $— | $568,317 | | E. Rand Sutherland(4) | $50,125 | $520,317 | $— | $570,442 | | Catherine Mazzacco(5) | $41,111 | $893,321 | $— | $934,432 |

  10. Director Compensation Table

    (1)Represents the grant date fair value of the option awards. The options vest monthly ranging from one year to three years. (2)Mr. Rossi stepped down from the Nominating and Corporate Governance Committee in March 2023, when Ms. Mazzacco joined the Nominating and Corporate Governance Committee, and his director compensation was pro-rated. (3)Mr. Ganorkar has declined to receive any compensation for his service as a director. (4)Mr. Sutherland joined the Audit Committee in March 2023, and his director compensation was pro-rated. (5)Ms. Mazzacco joined the Board in March 2023, and her 2023 director compensation was pro-rated.

  11. Executive Compensation Design

    Executive Compensation Design We structure the annual compensation of our Named Executive Officers using three principal elements: base salary, performance-based annual cash bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards. The design of our executive compensation program is influenced by a variety of factors, with the primary goals being to align the interests of our Named Executive Officers and stockholders and to link pay with performance. We emphasize the use of equity awards to provide incentives for our Named Executive Officers to focus on the growth of our overall enterprise value and, correspondingly, to create value for our stockholders. The longer-term nature of these equity awards mirror our long-term investment in bringing new therapies to market, and incentivize continuity of leadership over the long-term. For 2023, our long-term incentive compensation awards granted to our Named Executive Officers consisted of stock options and PSUs. Our Board and the Compensation Committee believe that options to purchase shares of our Common Stock are a key tool in serving to align the interests of our Named Executive Officers and our stockholders. In 2023, the Compensation Committee introduced PSU awards as part of our long-term incentive compensation opportunities to further align the interests of our Named Executive Officers with our stockholders. We believe our equity awards facilitate retention and align the interests of our Named Executive Officers’ with those of our stockholders by allowing them to participate in our longer-term success and the intended appreciation of our stock price. Stock options are inherently performance based, and link executive pay to stockholder return. With stock options, our Named Executive Officers will receive value from their awards only if the market price of our Common Stock increases above the exercise price and remains above the exercise price as the stock options vest, which focuses our Named Executive Officers on long-term stockholder value creation. Stock options do not offer downside protection, and, thus, will not provide value to our Named Executive Officers if the market price of our Common Stock is below the exercise price. PSUs provide for alignment of our Named Executive Officers’ compensation with the Company’s performance. PSUs are also only eligible to vest if the Compensation Committee determines that specific objectives have been achieved, which may include financial, commercial, clinical, regulatory, operational, and/or business development objectives. Accordingly, PSUs provide incentives that (i) are tied to the Company’s performance and (ii) encourage our Named Executive Officers to continue providing services to us through the vesting period, and both of these components align the interests of our Named Executive Officers with those of our stockholders. In 2021, our long-term incentive compensation opportunities included RSAs. RSAs provide our Named Executive Officers with an economic benefit equal to the portion of the RSA that vests annually. This provides incentives for our Named Executive Officers to continue to create stockholder value over time and with the downside protection that the RSA will retain some value, it also provides an incentive for our Named Executive Officers to continue providing services to us through the vesting period. We have not adopted formal policies or guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation or among different forms of non-cash compensation. As described below, the Compensation Committee considers a variety of factors in determining the appropriate yearly mix among such compensatory elements.

  12. Compensation-Setting Process

    Compensation-Setting Process Role of Compensation Committee The Compensation Committee discharges the responsibilities of our Board relating to the compensation of our Named Executive Officers and the non-employee members of our Board. The Compensation Committee has the overall responsibility for overseeing our compensation and benefits policies and overseeing and evaluating the compensation plans, policies, and practices applicable to our Named Executive Officers. In carrying out its responsibilities, the Compensation Committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies and makes decisions that it believes further our philosophy or align with developments in best compensation practices, and reviews the performance of our Named Executive Officers when making decisions with respect to their compensation. The Compensation Committee’s authority, duties, and responsibilities are further described in its charter, which is available on our website at www.krystalbio.com under “Corporate Governance” on the “Investors” page. The Compensation Committee retains an independent compensation consultant (as described below) to provide support in its review and assessment of our executive compensation program; however, the Compensation Committee exercises its own judgment in making final decisions with respect to the compensation of our Named Executive Officers. The Compensation Committee reviews our executive compensation program annually. As part of this review process, the Compensation Committee applies the objectives described above within the context of our overall compensation philosophy while simultaneously considering the compensation levels needed to ensure our executive compensation program remains competitive based on input from and market data provided by the Compensation Committee’s compensation consultant. The Compensation Committee also evaluates whether we are meeting our retention objectives and the potential cost of replacing key Named Executive Officers. Setting Target Total Direct Compensation Each year, typically during the first quarter of the fiscal year, the Compensation Committee conducts a review of our Named Executive Officers’ compensation arrangements. As part of this review, the Compensation Committee evaluates the base salary levels, performance-based annual cash bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers and all related performance criteria. The Compensation Committee does not establish a specific target for formulating the target total direct compensation opportunities of our Named Executive Officers. Instead, it evaluates both performance and compensation to ensure that the compensation provided to our Named Executive Officers is competitive relative to the compensation paid by similar companies in the biotechnology and pharmaceuticals sectors, with particular emphasis on our peer companies, as described below. In making decisions about the compensation of our Named Executive Officers, the members of the Compensation Committee rely primarily on their general experience and subjective considerations of various factors, including the following: • our executive compensation program objectives; • our performance against the financial, operational, and strategic objectives established by the Compensation Committee; • each individual Named Executive Officer’s knowledge, skills, experience, qualifications, and tenure relative to other similarly situated executives at the companies in our compensation peer group and/or the proprietary database of the Compensation Committee’s independent compensation consultant; • the scope of each Named Executive Officer’s role and responsibilities compared to other similarly situated executives at the companies in our compensation peer group and/or the proprietary database of the Compensation Committee’s independent compensation consultant; • the prior performance of each individual Named Executive Officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or functions and work as part of a team, all of which reflect our core values; • the potential of each individual Named Executive Officer to contribute to our long-term financial, operational, and strategic objectives; • our CEO’s compensation relative to that of our other Named Executive Officers, and compensation parity among our executive officers; • the compensation practices of our compensation peer group and the companies in selected broad-based compensation surveys and the positioning of each Named Executive Officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and • the recommendations of our CEO with respect to the compensation of our other Named Executive Officers. These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunities for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable. The Compensation Committee does not weigh these factors in any predetermined manner, nor does it apply any formulas in developing its compensation decisions. In making compensation decisions, the members of the Compensation Committee consider these factors in light of the members individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each Named Executive Officer, and business judgment. The Compensation Committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or to make specific compensation decisions with respect to our Named Executive Officers. Instead, in making its determinations, the Compensation Committee reviews information summarizing the compensation paid at a representative group of peer companies, the extent to which the executive positions at these companies are considered comparable to our positions and informative of the competitive environment and more broad-based compensation surveys. Broad-based compensation surveys allow the Compensation Committee to gain a general understanding of market compensation levels. Role of Management In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, market compensation data, and management’s perspective on compensation matters. The Compensation Committee solicits and reviews our CEO’s proposals with respect to program structures, as well as his recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our other Named Executive Officers based on his evaluation of their performance for the prior year.

  13. Compensation-Setting Process

    At the beginning of each year, our CEO reviews the performance of our other Named Executive Officers, including each such individual’s level of success in accomplishing the business objectives established for him or her for the prior year and his or her overall performance during that year, and then shares these reviews with, and makes recommendations to, the Compensation Committee. The CEO’s recommendations include a recommendation for each element of compensation, as the elements are described above. The annual business objectives for each Named Executive Officer are developed through mutual discussion and agreement between our CEO and the Named Executive Officers and take into account our business objectives, which are reviewed with the Compensation Committee. The Compensation Committee reviews and discusses the CEO’s proposals and recommendations with our CEO and considers them as one factor in determining and approving the compensation of our other Named Executive Officers. Our CEO also attends meetings of our Board and the Compensation Committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation. Role of Compensation Consultant The Compensation Committee has the sole authority to retain an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program. The Compensation Committee also has the authority to approve the consultant’s reasonable fees and other retention terms. The compensation consultant reports directly to the Compensation Committee and its chair, and serves at the discretion of the Compensation Committee, which reviews the engagement annually. In 2023, the Compensation Committee engaged Compensia, Inc. (“Compensia”), a national compensation consulting firm, to serve as its compensation consultant to advise on executive compensation matters, including competitive market pay practices for our Named Executive Officers, and with the selection of our compensation peer group. During 2023, Compensia provided various services including the following: • the review, analysis, and recommended updating of our compensation peer group; • the review and analysis of the base salary levels, performance-based annual cash bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers against competitive market data based on the companies in our compensation peer group and Compensia's proprietary database; • consultation with the Compensation Committee chair; and • support on other ad hoc matters throughout the year. Compensia also coordinated with our management for data collection and informal market comparisons for our Named Executive Officers. In 2023, Compensia did not provide any other services to us. The Compensation Committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that such compensation consultant provided, the quality of those services and the fees associated with the services provided during 2023. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the NASDAQ Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the Compensation Committee has determined that no conflict of interest was raised as a result of the work performed by Compensia. Competitive Positioning The Compensation Committee believes that peer group comparisons are useful guides to evaluate the competitiveness of our executive compensation program and related policies and practices. For purposes of assessing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of biotechnology and pharmaceutical companies that are similar to us in terms of market capitalization and stage of development. The competitive data drawn from this compensation peer group is one of several factors that the Compensation Committee considers in making its decisions with respect to the compensation of our Named Executive Officers. The compensation peer group for 2023, which was updated in December 2022 with the assistance of Compensia, to analyze the compensation of our Named Executive Officers was comprised of publicly traded biotechnology and pharmaceutical companies against which we compete for executive talent. In identifying and selecting the companies to comprise the compensation peer group, Compensia considered the following primary criteria: • similar industry – companies with a primary focus in the biotechnology and pharmaceutical sectors; • similar market capitalization – within a range of ~0.33x to ~3.0x of our then-market capitalization of approximately $2.0 billion; • FDA Phase – companies pending FDA approval, or early commercial (<$250 million revenue); and •Refinement criteria – gene/cell therapy, or orphan designation/rare disease – to help identify those companies most similar to us. After evaluating the 2022 peer companies against these criteria, the Compensation Committee replaced 10 of the companies in our peer group, as being below our market capitalization range, outside our phase of development, or having been acquired. The compensation peer group for 2023 pay decisions consisted of the following companies:

  14. Compensation-Setting Process

    The Compensation Committee used data drawn from the companies in our compensation peer group, as well as data drawn from Compensia’s proprietary database, to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including base salary, target performance-based annual cash bonus opportunities, and long-term incentive compensation opportunities. The Compensation Committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.

  15. Compensation Elements

    Compensation Elements Generally, our executive compensation program consists of three principal elements – base salary, performance-based annual cash bonus opportunity, and long-term incentive compensation in the form of equity awards. It also includes participation in our broad-based health and welfare benefit programs.

  16. Compensation Elements

    | Element | Type of Element | Compensation Element | Objective | | Base Salary | Fixed | Cash | Designed to attract and retain executives by providing fixed compensation amounts that are competitive in the market and reward performance | | Performance-Based Annual Cash Bonuses | Variable | Cash | Designed to motivate our executives to achieve annual business, financial, strategic and individual objectives and provide financial incentives when we meet or exceed these annual objectives | | Long Term Incentive Compensation | Variable | Equity Awards | Designed to align the interests of our executives and our stockholders by motivating them to create sustainable long-term stockholder value |

  17. Compensation Elements

    (1) Mr. Orth resigned from his position in August 2023. His annualized salary for 2023 was $470,833. The base salaries paid to our Named Executive Officers during 2023 are set forth in the “Summary Compensation Table” below. Performance-Based Annual Cash Bonuses We provide our Named Executive Officers with the opportunity to earn annual cash bonuses that are intended to encourage the achievement of corporate performance goals, which could include goals related to commercializing our products, advancing our clinical pipeline, building our research and development and manufacturing infrastructure, strategic initiatives, financial performance, and growing and sustaining the Company. Cash bonuses for our Named Executive Officers other than our CEO for 2023 were based 75% on our corporate performance and 25% on individual performance. The cash bonus for our CEO was based 100% on our corporate performance. The corporate performance multiplier is based on the degree to which the Company’s objectives have been achieved during the relevant year; this multiplier is determined by the Compensation Committee and for 2023 could have ranged from 0 to 125% of target. The individual performance multiplier is based on the degree to which each employee’s individual objectives have been achieved during the relevant year; this multiplier is approved by the Compensation Committee for each of our Named Executive Officers and for 2023 could have ranged from 0 to 120% of target. To be eligible to receive an annual cash bonus payment, a Named Executive Officer must be employed by us through the time of the bonus payment. Target Annual Cash Bonus Opportunities In February 2023, the Compensation Committee reviewed the target annual cash bonus opportunities of our Named Executive Officers as part of its annual review of our executive compensation program. For purposes of this review, the Compensation Committee took into consideration a competitive market analysis prepared by Compensia and the recommendations of our CEO (except with respect to his own target annual cash bonus opportunity), as well as the other factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. The target annual cash bonus opportunities of our Named Executive Officers for 2023, both as a percentage of annual base salary and in dollars are set forth below.

  18. Compensation Elements

    | Named Executive Officer | 2023 Target Annual Cash Bonus Opportunity (as a percentage of base salary) | 2023 Target Annual Cash Bonus Opportunity | | Mr. Krishnan | 65% | $487,500 | | Ms. Krishnan | 50% | $292,500 | | Ms. Romano | 50% | $200,000 | | Mr. Orth | 50% | $237,500 |

  19. Compensation Elements

    Corporate Performance Goals Corporate performance goals for our annual cash bonus opportunity were approved by the Compensation Committee in February 2023 and related to operational and strategic objectives that were important to us, including commercializing VYJUVEK, advancing our clinical pipeline, and corporate goals. These corporate performance goals include highly-sensitive competitive data, and we do not disclose the specific goals or targets because we believe that such disclosure would result in competitive harm to us. The Compensation Committee purposely set these goals at challenging levels. Annual Cash Bonus Payments In January 2024, the Compensation Committee evaluated our actual performance against the corporate performance goals and determined that we had achieved such goals at 100% of their target level, resulting in a corporate performance multiplier of 100%. In addition, our CEO assessed the individual performance of each of our other Named Executive Officers and provided these assessments to the Compensation Committee. The Compensation Committee reviewed our CEO's assessments and determined that, each of Suma Krishnan and Kathryn Romano had achieved 120% of their target individual performance goals. Mr. Orth resigned from his position in August 2023 and was not eligible to receive an annual cash bonus for his service in 2023. In view of such achievement, the Compensation Committee determined to make annual cash bonus payments to our Named Executive Officers as follows:

  20. Compensation Elements

    | Named Executive Officer | 2023 Target Annual Cash Bonus Opportunity (as a percentage of base salary) | 2023 Target Annual Cash Bonus Opportunity | Corporate Performance Multiplier (75% of Annual Cash Bonus) | Individual Performance Multiplier (25% of Annual Cash Bonus) | 2023 Actual Annual Cash Bonus Payment | Payment Percentage | | Mr. Krishnan(1) | 65% | $487,500 | 100% | N/A | $487,500 | 100% | | Ms. Krishnan | 50% | $292,500 | 100% | 120% | $307,125 | 105% | | Ms. Romano | 50% | $200,000 | 100% | 120% | $210,000 | 105% |

  21. Compensation Elements

    (1) Mr. Krishnan’s annual cash bonus payment was based 100% on our corporate performance. The annual bonuses awarded to our Named Executive Officers for 2023 are set forth in the “Summary Compensation Table” below. Long-Term Equity Incentive Compensation As a biotechnology company that encounters significant competition for qualified personnel, long-term incentive compensation plays a critical role in our ability to attract, hire, motivate, and reward qualified and experienced executives. The use of long-term incentive compensation in the form of equity awards is necessary for us to compete for qualified executives without significantly increasing cash compensation and is the most important element of our executive compensation program. We use equity awards to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our Common Stock and, thereby, to align their interests with the interests of our stockholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create value for our stockholders. Equity awards that vest over time also help us retain our Named Executive Officers in a highly competitive market. In 2023, we used options to purchase shares of our Common Stock and PSUs that are settled in shares of our Common Stock to motivate and reward our Named Executive Officers for long-term increases in the value of our Common Stock. The Compensation Committee believes that because stock options provide an economic benefit only in the event that our stock price increases over the exercise price of the option, these awards align the interests of our Named Executive Officers with those of our stockholders. PSU awards granted to our Named Executive Officers vest only after the achievement of specified performance objectives approved by the Compensation Committee, which are set at challenging levels. Accordingly, the Compensation Committee believes that PSU awards provide meaningful incentives to our Named Executive Officers to increase the value of our stock over time. In addition, the vesting feature of PSU grants contributes to retention of our Named Executive Officers by providing an incentive to our Named Executive Officers to remain employed with us during the vesting period. The Compensation Committee determined that the equity mix for our Named Executive Officers’ 2023 equity awards (through stock options and PSUs) was appropriate to ensure that the compensation of our Named Executive Officers remains tied to stock performance and achievement of meaningful corporate goals and that it also promotes retention. In 2023, the Compensation Committee did not apply a rigid formula in determining the size of the equity awards to be granted to our Named Executive Officers. Instead, in making these decisions, the Compensation Committee exercised its judgment as to the amount of the awards after considering a competitive market analysis prepared by Compensia, the outstanding equity holdings of each Named Executive Officer (including the current economic value of his or her unvested equity holdings and the ability of these unvested holdings to satisfy our retention objectives), the proportion of our total shares of our Common Stock outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the annual burn rate ranges of the companies in our compensation peer group, the potential voting power dilution to our stockholders in relation to the median practice of the companies in our compensation peer group, and the other factors described in “Compensation-Setting Process — Setting Target Total Direct Compensation” above. Based upon these factors, the Compensation Committee determined the size of each award at levels it considered appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value. In February 2023, as part of its annual review of our executive compensation program, and after taking into consideration a competitive market analysis prepared by Compensia and the recommendations of our CEO (except with respect to his own equity award), as well as the factors described in the preceding paragraph, the Compensation Committee granted our Named Executive Officers options to purchase shares of our common stock and PSUs, as follows.

  22. Compensation Elements

    | Named Executive Officer | Stock Option (number of shares) | Performance-Based Restricted Stock Units | Aggregate Grant Date Fair Value of Equity Awards | | Mr. Krishnan | 50,000 | 25,000 | $4,900,261 | | Ms. Krishnan | 30,000 | 15,000 | $2,940,156 | | Ms. Romano | 20,000 | 10,000 | $1,960,104 | | Mr. Orth(1) | 20,000 | 10,000 | $1,960,104 |

  23. Compensation Elements

    (1)Mr. Orth resigned from his position in August 2023 and all of the equity awards granted to him in 2023 were forfeited. The PSUs granted to our Named Executive Officers on February 28, 2023 could be earned in full or in part upon the achievement during the year ending December 31, 2023, of some or all of the performance criteria that were weighted and approved the Compensation Committee. The performance criteria included specific commercial and regulatory targets concerning VYJUVEK/B-VEC and the commercial launch of VYJUVEK in the United States. We do not disclose the specific 2023 PSU performance criteria due to commercial sensitivity and competitive concerns. The Compensation Committee purposely set the performance criteria at challenging levels. To the extent that some or all of the performance criteria were not achieved during the year ending December 31, 2023, the corresponding amount of PSUs would have been forfeited. The 2023 PSU performance criteria were achieved and, accordingly, one-half of the PSUs granted in 2023 vested on February 28, 2024, the first anniversary of the grant date, and the other one-half of the PSUs granted in 2023 will vest on February 28, 2025, the second anniversary of the grant date, subject to continued employment by the Named Executive Officer through each applicable vesting date. The options granted to our Named Executive Officers to purchase shares of our Common Stock vest (and become exercisable) over a four-year period, with 25% vesting each year and the first annual vesting date occurring on February 28, 2024. The vesting of the options is contingent on the Named Executive Officer’s continued employment with or service to us through each applicable vesting date. The equity awards granted to our Named Executive Officers during 2023 are set forth in the “Summary Compensation Table” and the “Grants of Plan-Based Awards Table” below. Health and Welfare Benefits Our Named Executive Officers are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried U.S. employees. These benefits include medical, dental, and vision insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits. We also maintain a Section 401(k) retirement plan (the “Section 401(k) Plan”) that provides eligible employees, including our Named Executive Officers, with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees are able to participate in the Section 401(k) Plan as of the first day of the month following the date they meet the plan’s eligibility requirements. Participants are able to defer up to 100% of their eligible compensation subject to applicable annual limits under the Internal Revenue Code (the “Code”). Currently, we match up to 100% of a participant’s first 3% and up to 50% of the next 2% of their eligible contributions to the Section 401(k) Plan. All participants’ interests in their contributions and the Company’s matching contributions to the Section 401(k) Plan are 100% vested when contributed. We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Perquisites and Other Personal Benefits Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not generally provide perquisites or other personal benefits to our Named Executive Officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2023, our Named Executive Officers did not receive perquisites or other personal benefits that were, in the aggregate, greater than $10,000 per individual, except for reimbursement of up to $10,000 per month for our CEO’s and Ms. Krishnan’s living expenses in connection with working at our corporate headquarters in Pittsburgh, Pennsylvania and matching contributions for the Section 401(k) Plan. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.

  24. Summary Compensation Table

    Summary Compensation Table The following table sets forth a summary of all compensation earned, awarded or paid, as applicable, to our Named Executive Officers in the fiscal years ended December 31, 2023, 2022 and 2021.

  25. Summary Compensation Table

    | Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) (1) | All Other Compensation ($) | Total ($) | | Krish S. Krishnan | 2023 | 733,333 | 487,500 | 2,047,750(2) | 2,852,511 | 102,800(3) | 6,223,894 | | Chair and Chief Executive Officer | 2022 | 644,845 | 325,000 | — | 2,189,636 | 96,986(4) | 3,256,467 | | | 2021 | 580,997 | 309,535 | 3,218,708(5) | 3,123,339 | 118,400(6) | 7,350,978 | | Kathryn A. Romano | 2023 | 391,667 | 210,000 | 819,100(2) | 1,141,004 | 13,200(7) | 2,574,971 | | Chief Accounting Officer | 2022 | 341,667 | 175,000 | — | 2,189,636 | 12,200(7) | 2,718,503 | | | 2021 | 283,333 | 157,500 | 1,546,242(5) | 1,500,427 | 11,600(7) | 3,499,102 | | Suma M. Krishnan | 2023 | 575,000 | 307,125 | 1,228,650(2) | 1,711,506 | 13,200(7) | 3,835,481 | | President, R&D | 2022 | 514,833 | 262,500 | — | 2,189,636 | 12,590(7) | 2,979,559 | | | 2021 | 453,359 | 243,600 | 2,240,473(5) | 2,174,089 | 11,600(7) | 5,123,121 | | Andrew C. Orth(8) | 2023 | 276,515 | — | 819,100(9) | 1,141,004(10) | 27,709(7) | 2,264,328 | | Chief Commercial Officer | 2022 | 445,833 | 202,500 | — | 2,189,636 | 12,200(7) | 2,850,169 | | | 2021 | 283,333 | 130,508 | — | 8,579,300 | 9,917(7) | 9,003,058 |

  26. Summary Compensation Table

    (1)Represents the grant-date fair value of the option award. The options vest in four equal annual installments. For information regarding assumptions underlying the valuation of equity awards, see Note 9 to our consolidated financial statements for the year ended December 31, 2023. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the Named Executive Officers upon the exercise of the stock options or any sale of the underlying shares of our Common Stock. (2)Represents the grant-date fair value of the PSUs awarded. The PSUs vest in two equal annual installments (i.e., 50% on February 28, 2024 and 50% on February 28, 2025) subject to the prior achievement of performance criteria described above in Compensation Elements — Long-Term Equity Incentive Compensation. (3)$89,600 represents reimbursement for living expenses and $13,200 represents the employer matching contribution to the executive’s Section 401(k) Plan contributions. (4)$84,786 represents reimbursement for apartment rental payments and $12,200 represents the employer matching contribution to the executive’s Section 401(k) Plan contributions. (5)Represents the grant-date fair value of the restricted stock award. The restricted stock award vests in four equal annual installments with the first installment having vested on February 26, 2022. (6)$106,800 represents reimbursement for apartment rental payments and $11,600 represents the employer matching contribution to the executive’s Section 401(k) Plan contributions. (7)Represents the employer matching contribution to the executive’s Section 401(k) Plan contributions. (8)Mr. Orth resigned from his position in August 2023. He was not entitled to and did not receive any severance or other benefits in connection with his resignation. Mr. Orth’s 2023 salary reflects the amount he earned and was paid in 2023. Mr. Orth was not eligible to receive an annual cash bonus for his service in 2023. Mr. Orth was appointed as Chief Commercial Officer of the Company in May 2021. His salary and bonus for 2021 were pro-rated to reflect his partial year of service. (9)Represents the grant-date fair value of the PSUs awarded. The PSUs vest in two equal annual installments (i.e., 50% on February 28, 2024 and 50% on February 28, 2025) subject to the prior achievement of performance criteria described above in Compensation Elements — Long-Term Equity Incentive Compensation. Mr. Orth resigned from his position with the Company in August 2023 and his PSUs were forfeited. (10)Represents the grant-date fair value of Mr. Orth’s option award. The options vest in four equal annual installments with the first installment vesting on February 28, 2024, subject to continued employment by Mr. Orth through each applicable vesting date. Mr. Orth resigned from his position in August 2023 and none of his 2023 option award vested or will vest.

  27. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table shows information regarding grants of plan-based awards during the fiscal year ended December 31, 2023 to the Company’s Named Executive Officers.

  28. Grants of Plan-Based Awards

    | Name | Grant Date | All other stock awards: Number of shares of stock or units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Stock and Option Awards (1) | Grant Date Fair Value of Stock and Option Awards (2) | | Krish S. Krishnan | 2/28/2023 | 25,000(3) | — | $— | $2,047,750 | | | 2/28/2023 | — | 50,000(4) | $81.91 | $2,852,511 | | Kathryn A. Romano | 2/28/2023 | 10,000(3) | — | $— | $819,100 | | | 2/28/2023 | — | 20,000(4) | $81.91 | $1,141,004 | | Suma M. Krishnan | 2/28/2023 | 15,000(3) | — | $— | $1,228,650 | | | 2/28/2023 | — | 30,000(4) | $81.91 | $1,711,506 | | Andrew C. Orth | 2/28/2023 | 10,000(3) | — | $— | $819,100 | | | 2/28/2023 | — | 20,000(4) | $81.91 | $1,141,004 |

  29. Grants of Plan-Based Awards

    (1)The exercise price of these stock options is equal to the closing price of our common stock on NASDAQ on the grant date. (2)Amounts represent the grant date fair value of the Named Executive Officer’s PSUs and stock options awards calculated in accordance with FASB ASC 718. The grant date fair value of our stock options is calculated using a Black-Scholes valuation model. (3)PSUs subject to performance-based criteria and time-based vesting described in the footnotes to the Outstanding Equity Awards at Fiscal Year End December 31, 2023 table below. (4)Options subject to time-based vesting criteria described in the footnotes to the Outstanding Equity Awards at Fiscal Year End December 31, 2023 table below.

  30. Outstanding Equity Awards at Fiscal Year-End December 31, 2023

    Outstanding Equity Awards at Fiscal Year-End December 31, 2023 The following table presents information about our Named Executive Officers’ outstanding equity awards as of December 31, 2023. Following his resignation from his position in August 2023, Mr. Orth forfeited all of his unvested stock options and PSUs because those awards were incapable of vesting. As of December 31, 2023, Mr. Orth did not have any outstanding equity awards.

  31. Outstanding Equity Awards at Fiscal Year-End December 31, 2023

    | | Option Awards(1) | | | | Stock Awards(1) | | | Name | Number of securities underlying unexercised options (#) (exercisable) | Number of securities underlying unexercised options (#) (unexercisable) | Option exercise price | Option expiration date | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested | | Krish S. Krishnan | 30,600 | 30,600(2) | $78.89 | 2/25/2031 | | | | | 12,500 | 37,500(3) | $63.55 | 2/27/2032 | | | | | — | 50,000(4) | $81.91 | 2/27/2033 | | | | | | | | | 20,400(5) | $2,530,824 | | | | | | | 25,000(6) | $3,101,500 | | Kathryn A. Romano | — | 12,500(7) | $52.26 | 1/30/2030 | | | | | 14,700 | 14,700(2) | $78.89 | 2/25/2031 | | | | | — | 37,500(3) | $63.55 | 2/27/2032 | | | | | — | 20,000(4) | $81.91 | 2/27/2033 | | | | | | | | | 9,800(5) | $1,215,788 | | | | | | | 10,000(6) | $1,240,600 | | Suma M. Krishnan | 21,300 | 21,300(2) | $78.89 | 2/25/2031 | | | | | 12,500 | 37,500(3) | $63.55 | 2/27/2032 | | | | | — | 30,000(4) | $81.91 | 2/27/2033 | | | | | | | | | 14,200(5) | $1,761,652 | | | | | | | 15,000(6) | $1,860,900 |

  32. Outstanding Equity Awards at Fiscal Year-End December 31, 2023

    (1)All stock options, restricted stock awards, and PSUs were granted under our 2017 IPO Stock Incentive Plan. The market value of the restricted stock awards and PSUs are based on the closing price of $124.06 per share for our Common Stock on December 29, 2023, as reported on NASDAQ. (2)Represents options to purchase shares of our Common Stock granted on February 26, 2021. The options vest in four equal annual installments beginning on February 26, 2022, subject to continued service with us through each applicable vesting date. (3)Represents options to purchase shares of our Common Stock granted on February 28, 2022. The shares underlying these options vest in four equal annual installments beginning on February 28, 2023, subject to continued service with us through each applicable vesting date. (4)Represents options to purchase shares of our Common Stock granted on February 28, 2023. The shares underlying these options vest in four equal annual installments beginning on February 28, 2024, subject to continued service with us through each applicable vesting date. (5)Represents restricted stock awards that vest in four equal annual installments beginning on February 26, 2022, subject to continued service with us through each applicable vesting date. (6)Represents PSUs that vest in two equal annual installments beginning on February 28, 2024, subject to continued service with us through each applicable vesting date and the prior achievement of performance criteria described above in Compensation Elements — Long-Term Equity Incentive Compensation. (7)Represents options to purchase shares of our Common Stock granted on January 31, 2020. The shares underlying these options vest in four equal annual installments beginning on January 31, 2021, subject to continued service with us through each applicable vesting date.

  33. Option Exercises and Stock Vested

    Option Exercises and Stock Vested Our Named Executive Officers acquired the following shares of our Common Stock during the year ended December 31, 2023, upon the vesting of restricted stock awards and exercise of stock options:

  34. Option Exercises and Stock Vested

    | | Option awards | | Stock awards | | | | Name | Number of shares acquired on exercise | Value realized on exercise(1) | Number of shares acquired on vesting | Value realized on vesting(2) | | | Krish S. Krishnan | — | $— | 10,200 | | 800,292 | | Kathryn A. Romano | 50,000 | $2,348,054 | 4,900 | | 384,454 | | Suma M. Krishnan | — | $— | 7,100 | | 557,066 | | Andrew C. Orth | 115,000 | $6,703,822 | — | | — |

  35. Option Exercises and Stock Vested

    (1)The value realized when the stock options were exercised represents the excess of the fair market value of our Common Stock at the time of exercise over the exercise price of the stock options. (2)The value realized on vesting of the restricted stock award is based on the closing price of $78.46 per share for our common stock on February 24, 2023 (the restricted stock award vested on February 26, 2023), as reported on NASDAQ.

  36. CEO Pay Ratio

    CEO Pay Ratio Our compensation and benefits philosophy and the overall structure of our compensation and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. We strive to ensure the pay of each of our employees reflects the level of their job impact and responsibilities and is competitive within our peer group. Compensation rates are benchmarked and are generally set to be market-competitive. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop and contribute. Under rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (the “CEO Pay Ratio”). The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio. We identified the median employee using our employee population on December 31, 2023 (including all employees (except our CEO), whether employed on a full-time, part-time, or temporary basis). We identified the median employee using the employee’s annual total compensation in accordance with the requirements of the Summary Compensation table as of December 31, 2023 for all active employees as of that date. We did not perform adjustments to the compensation paid to part-time employees to calculate what they would have been paid on a full-time basis. In identifying the median employee, we did not exclude workers in non-U.S. countries and did not make any cost-of-living adjustments. Our median employee compensation for 2023 as calculated using Summary Compensation Table requirements was $216,129. Our Chief Executive Officer’s 2023 compensation as reported in the Summary Compensation Table was $6,223,894. Therefore, our CEO Pay Ratio is approximately 28.8 to 1. This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither the Compensation Committee nor management of the Company used the CEO Pay Ratio measure in making compensation decisions.

  37. Pay Versus Performance

    Pay Versus Performance We are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Compensation of Named Executive Officers – Compensation Discussion and Analysis.” The FDA approved our first product, VYJUVEK, in May 2023, and we subsequently initiated our U.S. commercial launch of VYJUVEK and booked our first revenue from product sales in mid-2023. Therefore, 2023 was an inflection point for the Company as we transitioned from a company with a research and development focus to a commercial company. When the 2023 incentive compensation program was approved, we were a clinical stage company and, therefore, we focused our incentive compensation programs and practices for 2023 on operational and strategic rather than financial measures of performance. Accordingly, we have not included a “Company-Selected Measure” in the Pay Versus Performance table below or a list of financial performance measures as we did not use any financial performance measures to link 2023 compensation actually paid to Company performance.

  38. Pay Versus Performance

    | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(3) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Losses) (in thousands)(7) | | | | | | | Total Shareholder Return(5) | Peer Group Total Shareholder Return(6) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | 2023 | $6,223,894 | $11,691,488 | $2,891,594 | $1,369,806 | $224.07 | $115.17 | $10,932 | | 2022 | $3,256,467 | $4,302,713 | $2,849,410 | $3,909,078 | $143.08 | $111.02 | $(139,975) | | 2021 | $7,350,978 | $6,803,554 | $5,875,094 | $6,229,932 | $126.28 | $124.74 | $(69,570) | | 2020 | $763,773 | $763,773 | $1,298,268 | $1,364,719 | $108.30 | $126.00 | $(32,167) |

  39. Pay Versus Performance

    (1)The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Krishnan (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. For 2021, 2022, and 2023, refer to “Compensation of Named Executive Officers – Summary Compensation Table” in this Proxy Statement and for 2020, refer to the Summary Compensation Table in our definitive proxy statement filed on Form DEF 14A with the SEC on April 4, 2023. (2)The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Krishnan, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Krishnan during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Krishnan’s total compensation for each year to determine the compensation actually paid:

  40. Pay Versus Performance

    | Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Compensation Actually Paid to PEO | | 2023 | $6,223,894 | $(4,900,261) | $10,367,855 | $11,691,488 | | 2022 | $3,256,467 | $(2,189,636) | $3,235,882 | $4,302,713 | | 2021 | $7,350,978 | $(6,342,047) | $5,794,623 | $6,803,554 | | 2020 | $763,773 | $— | $— | $763,773 |

  41. Pay Versus Performance

    (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

  42. Pay Versus Performance

    | Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $7,517,625 | $2,993,526 | $— | $(143,296) | $— | $— | $10,367,855 | | 2022 | $2,762,886 | $614,495 | $— | $(141,499) | $— | $— | $3,235,882 | | 2021 | $5,794,623 | $— | $— | $— | $— | $— | $5,794,623 | | 2020 | $— | $— | $— | $— | $— | $— | $— |

  43. Pay Versus Performance

    (3)The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (“NEOs”) as a group (excluding Mr. Krishnan, who has served as our CEO since the Company’s inception) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Krishnan) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, 2022, and 2021, Suma M. Krishnan, Kathryn A. Romano and Andrew C. Orth; and (ii) for 2020, Suma M. Krishnan and Kathryn A. Romano. (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Krishnan), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Krishnan) during the applicable year. Average Compensation Actually Paid to Non-PEO NEOs for 2023 is less than the reported Average Summary Compensation for Non-PEO NEOs due to Mr. Orth’s resignation in August 2023. His resignation resulted in forfeiture and cancellation of all of his unvested equity awards which resulted in a negative equity award value and decrease in Average Compensation Actually Paid. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Krishnan) for each year to determine the compensation actually paid, using the same methodology described above in Note 2:

  44. Pay Versus Performance

    | Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $2,891,594 | $(2,286,788) | $765,000 | $1,369,806 | | 2022 | $2,849,410 | $(2,189,636) | $3,249,304 | $3,909,078 | | 2021 | $5,875,094 | $(5,346,844) | $5,701,682 | $6,229,932 | | 2020 | $1,298,268 | $(573,561) | $640,012 | $1,364,719 |

  45. Pay Versus Performance

    The amounts deducted or added in calculating the total average equity award adjustments are as follows:

  46. Pay Versus Performance

    | Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $2,505,875 | $1,660,270 | $— | $(822,345) | $(2,578,800) | $— | $765,000 | | 2022 | $2,762,886 | $670,436 | $— | $(184,019) | $— | $— | $3,249,304 | | 2021 | $5,555,821 | $119,739 | $— | $26,121 | $— | $— | $5,701,682 | | 2020 | $640,012 | $— | $— | $— | $— | $— | $640,012 |

  47. Pay Versus Performance

    (5) Cumulative Total Shareholder Return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. For each of the periods presented, the Company did not pay any dividends. (6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: NASDAQ Biotech Index. (7) Other than 2023, the Company reported net losses for the applicable years as it was a clinical stage biotechnology company without any commercialized products. Financial Performance Measures As described in greater detail in “Compensation of Named Executive Officers – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. At the start of 2023 and when the performance measures for the NEOs 2023 incentive compensation were approved, we were a clinical stage biotechnology company without any revenue. Accordingly, financial performance measures were not used by the Company to link executive compensation actually paid to the Company’s NEOs to the Company’s performance. Therefore, the Company has not included a Company-Selected Measure or any financial performance measures in the Pay versus Performance disclosure. Analysis of the Information Presented in the Pay Versus Performance Table As described in more detail in the section “Compensation of Named Executive Officers – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several non-financial performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s non-financial performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR The following graph demonstrates the amount of compensation actually paid (CAP) to Mr. Krishnan and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Krishnan) and the Company’s cumulative TSR over the four years presented in the table. Cumulative TSR is calculated using a $100 initial investment on January 1, 2020. Compensation Actually Paid and Net Income (Loss) As a clinical stage biotechnology company without any commercialized products during 2020, 2021, and 2022, the Company reported net losses for such years. The FDA approved our first product, VYJUVEK, in May 2023, and we subsequently initiated our U.S. commercial launch of VYJUVEK and booked our first revenue from product sales in mid-2023, and we reported net income for 2023. The Company did not use financial performance measures to link executive compensation actually paid to the Company’s NEOs to Company performance during the applicable years in the Pay Versus Performance Table. As a result, the amount of compensation actually paid to Mr. Krishnan and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Krishnan) does not align with the Company’s Net Income (Loss) over the four years presented in the table. Cumulative TSR of the Company and Cumulative TSR of the Peer Group As demonstrated by the following graph, the Company’s cumulative TSR over the four-year period presented in the table was 124.1%, while the cumulative TSR of the peer group presented for this purpose, the NASDAQ Biotech Index, was 15.2%. TSR is calculated using a $100 initial investment on January 1, 2020. The Company’s cumulative TSR outperformed the NASDAQ Biotech Index as of the end of the four years presented in the table. For more information regarding the Company’s performance and the companies that the Compensation Committee considers when determining executive compensation, refer to “Compensation of Named Executive Officers – Compensation Discussion and Analysis.”