Document:

EX-10.1

 Exhibit 10.1 

FORM OF INDEMNIFICATION AGREEMENT (DIRECTORS) 

This Indemnification Agreement (Directors) (this “Agreement”) is made and entered into on
[                ], by and between Krystal Biotech, Inc., a Delaware corporation with a principal business address of 2100 Wharton Street, Suite 701, Pittsburg, PA 15203
(the “Company”), and [                ], an individual resident of the State
of [                ] with a residential address as set forth on the signature page hereto (“Indemnitee”), to be effective as of
[                ], 20[    ] (the “Effective Date”). 

Recitals 
 A.
Section 141 of the Delaware General Corporation Law provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors. 

B. Under Delaware law, a director’s right to be reimbursed for the costs of defense of criminal actions, whether such claims are asserted
under state or federal law, does not depend upon the merits of the claims asserted against the director and is separate and distinct from any right to indemnification the director may be able to establish, and indemnification of the director against
criminal fines and penalties is permitted if the director satisfies the applicable standard of conduct. 
 C. Indemnitee is a director of
the Company and his/her willingness to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him/her in accordance with the principles reflected above, to the fullest extent permitted by the laws
of the state of Delaware, and upon the other undertakings set forth in this Agreement. 
 D. Therefore, in recognition of the need to
provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s continued service as a director of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and
in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the
“Constituent Documents”), any change in the composition of the Company’s Board of Directors (the “Board”) or any change-in-control
or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancement of Expenses (as defined in Section 1(d)) to Indemnitee as set forth in this Agreement
and for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.  

E. In light of the considerations referred to in the preceding recitals, it is the Company’s intention and desire that the provisions of
this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder. 

Agreement 
 NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration the receipt and sufficiency of which is acknowledged, the parties hereby agree as follows: 

1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:  
 (a) “Change in Control” means the occurrence after the date of this
Agreement of any of the following events: 
 (i) the consummation of a reorganization, merger or consolidation, or sale or other disposition
of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, or other transaction (each, a “Business Combination”), unless, in each case, immediately following such Business

 
Combination A) all or substantially all of the beneficial owners of voting stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than
60% of the combined voting power of the then outstanding shares of voting stock of the entity resulting from such Business Combination; or 

(ii) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 

(b) “Claim” means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other party,
including without limitation any federal, state or other governmental entity, that Indemnitee determines might lead to the institution of any such claim, demand, action, suit or proceeding.  

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which
indemnification is sought by Indemnitee.  
 (d) “Expenses” means attorneys’ and experts’ fees and
expenses and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on
appeal), any Claim.  
 (e) “Incumbent Directors” means the individuals who, as of the Effective Date, are
Directors of the Company and any individual becoming a Director subsequent to the Effective Date whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is nominated for director, without objection to such nomination). 

(f) “Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or
suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee or agent of the Company or as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company,
partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent, (ii) any
actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise referred to in clause (i) of this
sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee or agent of the Company or as a current or former director, officer, employee, member, manager, trustee or agent of the Company or any other entity
or enterprise referred to in clause (i) of this sentence or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status. 

 (g) “Indemnifiable Losses” means any and all Losses relating to, arising out of or resulting from any Indemnifiable
Claim.  
 (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.  
 (i) “Losses” means any and all Expenses, damages, losses,
liabilities, judgments, fines, penalties (whether civil, criminal or other), amounts paid in settlement, and arbitration awards, including without limitation all interest, assessments and other charges paid or payable in connection with or in
respect of any of the foregoing.  

 (l) “Voting Stock” means securities entitled to vote generally in the election
of directors (or similar governing bodies).  
 2. Indemnification Obligation. Subject to Section 7, the Company
shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted by the laws of the State of Delaware in effect on the Effective Date or as such laws may from time to time hereafter be amended to increase the scope of such
permitted indemnification, against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Sections 5 and 21, Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation of such Claim.  

3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company prior to the final disposition of any
Indemnifiable Claim of any and all Expenses relating to any Indemnifiable Claim paid or incurred by Indemnitee or which Indemnitee determines are reasonably likely to be paid or incurred by Indemnitee. Indemnitee’s right to such advancement is
not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within fifteen (15) business days after any request by Indemnitee, the Company shall, in accordance with such request,
(a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest,
any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to from such Indemnifiable
Claim. In connection with any such payment, advancement or reimbursement, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the
Expenses, by or on behalf of the Indemnitee, to repay any Expenses to the extent that amounts paid, advanced or reimbursed by the Company following the final disposition of such Indemnifiable Claim. Indemnitee shall have been determined, pursuant to
Section 7, not to be entitled to indemnification hereunder.  
 4. Indemnification for Additional Expenses. The Company
shall also indemnify against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within fifteen (15) business days of such request, any Expenses paid or incurred by Indemnitee or which Indemnitee
determines he or she is reasonably likely to pay or incur in connection with any Claim by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any
other agreement or provision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company,
regardless in each case of whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be; provided, however, that Indemnitee shall return, without
interest, any such advance of Expenses (or portion thereof) which remains unspent at the final disposition of the Claim to which the advance related. In connection with any such payment, advancement or reimbursement, Indemnitee shall execute
and deliver to the Company an undertaking to repay the Expenses, which need not be secured and shall be accepted without reference to Indemnitee’s ability, to repay, to the extent that for any amounts paid, advanced or reimbursed by the
Company, Indemnitee shall have been determined, pursuant to Section 7, not to be entitled to indemnification hereunder. 
 5.
Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Loss but not for all of the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.  
 6. Procedure for Notification. To obtain
indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written request therefor, including a brief description (based upon information then available to Indemnitee)
of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of such request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable
Loss is potentially available, the Company shall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall
provide to Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between the Company and such insurers regarding the Indemnifiable Claim or Indemnifiable Loss,

 
in each case substantially concurrently with the delivery or receipt thereof by the Company. The failure by Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable
Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and such failure results in forfeiture by the Company of
substantial defenses, rights or insurance coverage. 
 7. Determination of Right to Indemnification. 

(a) To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion
thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to such Indemnifiable Claim in accordance with Section 2
and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required. 
 (b) To the extent that the provisions of
Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law that is a legally required condition
to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to such Indemnifiable Claim (a “Standard of Conduct Determination”) shall be made as follows: (i) unless a Change of Control has occurred, or
(A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be
delivered to Indemnitee; and (ii) if a Change in Control shall has occurred by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee. The Company shall indemnify and hold harmless
Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within fifteen (15) business days of such request, any and all costs and expenses (including attorneys’ and experts’ fees
and expenses) incurred by Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.  

(c) The Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 7(b) to be
made as promptly as practicable. If the person or persons determined under Section 7 to make the Standard of Conduct Determination shall not have made a determination within 30 days after the later of (A) receipt by the Company of
written notice from Indemnitee advising the Company of the final disposition of the applicable Indemnifiable Claim (the date of such receipt being the “Notification Date”) and (B) the selection of an Independent Counsel, if
such determination is to be made by Independent Counsel, then Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating thereto.  

(d) If (i) Indemnitee shall be entitled to indemnification pursuant to Section 7(a), (ii) no determination of whether
Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition to indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been determined or deemed
pursuant to Section 7(b) or (c) to have satisfied any applicable standard of conduct under Delaware law which is a legally required condition to indemnification of Indemnitee then the Company shall pay to Indemnitee, within fifteen
(15) business days after the later of (x) the Notification Date regarding the Indemnifiable Claim giving rise to the Indemnifiable Losses and (y) the earliest date on which the applicable criterion specified in clause (i),
(ii) or (iii) is satisfied, an amount equal to such Indemnifiable Losses. 
 (e) If a Standard of Conduct Determination is to be
made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel
so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it
of the identity of the Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable, may, within five (5) business days after receiving written notice of selection from the other, deliver to the other a written
objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “Independent
Counsel” in Section 1(h), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper 

 
and timely objection, the person or firm so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit and (ii) the non-objecting party may, at its
option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding
sentences and clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no
Independent Counsel that is permitted under the foregoing provisions of this Section 7(e) to make the Standard of Conduct Determination shall have been selected within thirty (30) business days after the Company gives its initial
notice pursuant to the first sentence of this Section 7(e) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(e), as the case may be, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court
or by such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the
reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b). In the event of a proper and timely objection to the Independent Counsel selected by
either the Indemnitee or the Board of Directors, the deadlines provided under Section 7(c) shall be stayed until such objection is resolved pursuant to this Section 7. 

8. Presumption of Entitlement. In making any Standard of Conduct Determination, the person or persons making such determination shall
presume that Indemnitee has satisfied the applicable standard of conduct, and the Company may overcome such presumption only by its adducing clear and convincing evidence to the contrary. Any Standard of Conduct Determination that is adverse to
Indemnitee may be challenged by the Indemnitee in the Court of Chancery of the State of Delaware. No determination by the Company (including by its directors or any Independent Counsel) that Indemnitee has not satisfied any applicable standard of
conduct shall be a defense to any Claim by Indemnitee for indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct.  

9. No Other Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable standard of conduct or that indemnification hereunder is otherwise not
permitted.  
 10. Non-Exclusivity. The rights of Indemnitee hereunder will be in
addition to any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the Company’s jurisdiction of incorporation, any other contract or otherwise (collectively, “Other Indemnity
Provisions”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater right
hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the Effective Date, Indemnitee will be deemed to have such
greater right hereunder. The Company will not adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under this Agreement or any Other Indemnity
Provision.  
 11. Liability Insurance and Funding. For the duration of Indemnitee’s service as a director and/or
officer of the Company, and for not less than five (5) years thereafter, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be
maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company that is at least substantially comparable in scope and amount to that provided by the
Company’s current policies of directors’ and officers’ liability insurance. The Company shall provide Indemnitee with a copy of all applicable directors’ and officers’ insurance applications, binders, policy forms,
declarations, endorsements and other related materials for all such policies upon request by Indemnitee, and shall provide Indemnitee with a reasonable opportunity to review and comment on the same. Without limiting the generality or effect of the
two immediately preceding sentences, the Company shall not discontinue or substantially reduce the 

 
scope or amount of coverage from one policy period to the next (i) without the prior approval thereof by a majority vote of the Incumbent Directors, even if less than a quorum, or
(ii) if at the time that any such discontinuation or significant reduction in the scope or amount of coverage is proposed there are no Incumbent Directors, without the prior written consent of Indemnitee (which consent shall not be unreasonably
withheld or delayed). In all policies of insurance required to be procured and maintained by the Company under this Agreement, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to
the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy. The Company may, but shall not be required to, create a trust fund, grant a security interest, pay a retainer, or use other
means, including without limitation a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement.  

12. Subrogation. Except as provided in Section 14, in the event of payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the related rights of recovery of Indemnitee against other persons or entities (other than against the Fund Indemnitors, as defined below), including any entity or enterprise referred to in clause (i) of
the definition of “Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges,
related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company).  
 13. No Duplication of
Payments. Except as provided in Section 14, the Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee has otherwise actually received payment (net
of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise.  

14. Primacy of Indemnification. The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement
of expenses and/or insurance provided by a third party and certain of its affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations
to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (c) that it shall be required to advance the full
amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses and Indemnifiable Losses to the extent legally permitted and as required by the Constituent Documents (or any agreement between the Company and
Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for
contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought
indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the
Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms hereof.  

15. Defense of Claims. The Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee
would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee and that there may be one or more legal defenses
available to Indemnitee that are different from or in addition to those available to the Company, or (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then
Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim) at the Company’s expense. The Company shall not be liable to Indemnitee
under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect
any settlement of any threatened or pending Indemnifiable Claim which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee
from all liability on any claims that are the subject matter of such Indemnifiable Claim. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to
any settlement that does not provide a complete and unconditional release of Indemnitee.  

 16. Successors and Binding Agreement. 

(a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for
purposes of this Agreement), but shall not otherwise be assignable or delegable by the Company.  
 (b) This Agreement shall
inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives, executors, administrators, heirs, distributees, legatees and other successors. 

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in Sections 16(a) and 16(b). Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be
assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to
this Section 16(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred. 
 17.
Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given
when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage
prepaid or one business day after having been sent for next-day delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the Secretary of the Company) and to
Indemnitee at the addresses shown on the signature page hereto, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon
receipt.  
 18. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed
by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the
Chancery Court of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the Chancery
Court of the State of Delaware. 
 19. Validity. If any provision of this Agreement or the application of any provision hereof to any
person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstance shall not be affected, and the provision so held to be invalid,
unenforceable or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal. In the event that any court or other adjudicative body shall decline to reform any provision of this
Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the immediately preceding sentence, the parties thereto shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid,
unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal. 

 20. Miscellaneous. No provision of this Agreement may be waived, modified or discharged
unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. References to Sections are to references to Sections of this Agreement.  

21. Legal Fees and Expenses. It is the intent of the Company that Indemnitee not be required to incur legal fees and or other Expenses
associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to
Indemnitee hereunder. Accordingly, without limiting the generality or effect of any other provision hereof, if it should appear to Indemnitee that the Company has failed to comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided
or intended to be provided to Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of Indemnitee’s choice, at the expense of the Company as hereafter provided, to advise and represent
Indemnitee in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or
other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Indemnitee’s entering into an
attorney-client relationship with such counsel, and in that connection the Company and Indemnitee agree that a confidential relationship shall exist between Indemnitee and such counsel. Without respect to whether Indemnitee prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by Indemnitee in connection with any of the foregoing.  

22. Certain Interpretive Matters. No provision of this Agreement shall be interpreted in favor of, or against, either of the parties
hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof.  

23. Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of
which together shall constitute one and the same agreement. Signatures received by facsimile, PDF file or other electronic format shall be deemed to be original signatures.  

<signature page follows> 

 IN WITNESS WHEREOF, Indemnitee has executed and delivered and the Company has caused its duly authorized
representative to execute and deliver this Agreement to be effective on and as of the Effective Date. 
  

			
	 KRYSTAL BIOTECH, INC.
 a
Delaware corporation

		
	By:	 	 
	 Name:
 Title:
	 	 Krish S. Krishnan

President and Chief Executive Officer

	
	 <NAME>

		
		 	 
		 	 Signature of Director

		
		 	 
		 	 
		 	 (Address of Director)

 FORM OF INDEMNIFICATION AGREEMENT (EXECUTIVES AND KEY EMPLOYEES) 

This Indemnification Agreement (Executives and Key Employees) (this “Agreement”) is made and entered into on
[                ], by and between Krystal Biotech, Inc., a Delaware corporation with a principal business address of 2100 Wharton Street, Suite 701, Pittsburg, PA 15203
(the “Company”), and [                ], an individual resident of the State
of    [                ] with a residential address as set forth on the signature page hereto (“Indemnitee”), to be effective as of
[                ], 20[    ] (the “Effective Date”). 

Recitals 
 A. Under
Delaware law, an officer’s or employee’s right to be reimbursed for the costs of defense of any Claims, whether such Claims are asserted under state or federal law, does not depend upon the merits of the Claims asserted against the officer
or employee and is separate and distinct from any right to indemnification the officer or employee may be able to establish, and indemnification of the officer or employee against civil or criminal fines and penalties is permitted if the officer or
employee satisfies the applicable standard of conduct. 
 B. Indemnitee is an officer or employee of the Company and his/her willingness to
serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him/her in accordance with the principles reflected above, to the fullest extent permitted by the laws of the state of Delaware, and upon the
other undertakings set forth in this Agreement. 
 C. Therefore, in recognition of the need to provide Indemnitee with substantial
protection against personal liability, in order to procure Indemnitee’s continued service as an officer or employee of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide
such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “Constituent
Documents”), any change in the composition of the Company’s Board of Directors (the “Board”) or any change-in-control or business
combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancement of Expenses (as defined in Section 1(d)) to Indemnitee as set forth in this Agreement and for the
continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies. 
 D. In light of
the considerations referred to in the preceding recitals, it is the Company’s intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to
Indemnitee hereunder. 
 Agreement 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration the receipt and sufficiency of which is acknowledged, the parties
hereby agree as follows: 
 1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital letters: 
 (a) “Change in Control” means the occurrence
after the Effective Date of this Agreement of any of the following events: 
 (i) the consummation of a reorganization, merger,
consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, or other transaction (each, a “Business Combination”), unless, in each case,
immediately following such Business Combination) all or substantially all of the beneficial owners of voting stock of the Company immediately prior to 

 
such Business Combination beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding shares of voting stock of the entity resulting from such
Business Combination; or 
 (ii) approval by the stockholder of the Company of a complete liquidation or dissolution of the Company. 

(b) “Claim” means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other party,
including without limitation any federal, state or other governmental entity, that Indemnitee determines might lead to the institution of any such claim, demand, action, suit or proceeding. 

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which
indemnification is sought by Indemnitee. 
 (d) “Expenses” means attorneys’ and experts’ fees and expenses and
all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any
Claim.  
 (e) “Incumbent Directors” means the individuals who, as of the Effective Date, are Directors of
the Company and any individual becoming a Director subsequent to the Effective Date whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least
two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is nominated for director, without objection to such nomination).

 (f) “Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or
suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee, executive or agent of the Company or as a director, officer, employee, executive member, manager, trustee or agent of any other corporation,
limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company as a director, officer, employee, executive, member,
manager, trustee or agent, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise
referred to in clause (i) of this sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee or agent of the Company or as a current or former director, officer, employee, executive, member, manager,
trustee or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence of any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon
Indemnitee by reason of such status. 
 (g) “Indemnifiable Losses” means any and all Losses relating to, arising out of or
resulting from any Indemnifiable Claim. 
 (i) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters
concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement. 
 (j) “Losses” means any and all Expenses, damages,
losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), amounts paid in settlement, and arbitration awards, including without limitation all interest, assessments and other charges paid or payable in connection with or
in respect of any of the foregoing. 
 (m) “Voting Stock” means securities entitled to vote generally in the election of
directors (or similar governing bodies). 

 2. Indemnification Obligation. Subject to Section 7, the Company shall indemnify,
defend and hold harmless Indemnitee, to the fullest extent permitted by the laws of the State of Delaware in effect on the Effective Date or as such laws may from time to time hereafter be amended to increase the scope of such permitted
indemnification, against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Sections 5 and 20, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any director, officer or executive of the Company unless the Company has joined in or consented to the initiation of such Claim. 

3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company prior to the final disposition of any
Indemnifiable Claim of any and all Expenses relating to any Indemnifiable Claim paid or incurred by Indemnitee or which Indemnitee determines are reasonably likely to be paid or incurred by Indemnitee. Indemnitee’s right to such advancement is
not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within fifteen (15) business days after any request by Indemnitee, the Company shall, in accordance with such request,
(a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest,
any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to such Indemnifiable Claim.
In connection with any such payment, advancement or reimbursement, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the
Expenses, to repay any Expenses to the extent that for any amounts paid, advanced or reimbursed by the Company, Indemnitee shall have been determined, pursuant to Section 7, not to be entitled to indemnification hereunder. 

4. Indemnification for Additional Expenses. The Company shall also indemnify against and, if requested by Indemnitee, shall reimburse
Indemnitee for, or advance to Indemnitee, within fifteen (15) business days of such request, any Expenses paid or incurred by Indemnitee or which Indemnitee determines he or she is reasonably likely to pay or incur in connection with any Claim
by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect
relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless in each case of whether Indemnitee ultimately is determined to be entitled to
such indemnification, reimbursement, advance or insurance recovery, as the case may be; provided, however, that Indemnitee shall return, without interest, any such advance of Expenses (or portion thereof) which remains unspent at the final
disposition of the Claim to which the advance related. In connection with any such payment, advancement or reimbursement, Indemnitee shall execute and deliver to the Company an undertaking to repay the Expenses, which need not be secured and shall
be accepted without reference to Indemnitee’s ability, to repay, to the extent that for any amounts paid, advanced or reimbursed by the Company, Indemnitee shall have been determined, pursuant to Section 7, not to be entitled to
indemnification hereunder. 
 5. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of any Indemnifiable Loss but not for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. 

6. Procedure for Notification. To obtain indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable
Loss, Indemnitee shall submit to the Company a written request therefor, including a brief description (based upon information then available to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of such
request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such
Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, and
copies of all subsequent correspondence between the Company and such insurers regarding the Indemnifiable Claim or Indemnifiable Loss, in each case substantially concurrently with the delivery or receipt thereof by the Company. The failure by
Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of

 
such Indemnifiable Claim or Indemnifiable Loss and such failure results in forfeiture by the Company of substantial defenses, rights or insurance coverage. 

7. Determination of Right to Indemnification. 

(a) To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion
thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to such Indemnifiable Claim in accordance with Section 2
and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required. 
 (b) To the extent that the provisions of
Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law that is a legally required condition
to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to such Indemnifiable Claim (a “Standard of Conduct Determination”) shall be made as follows: (i) unless a Change of Control has occurred,
(A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board or (B) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall
be delivered to Indemnitee; and (ii) if a Change in Control shall has occurred by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee. The Company shall indemnify and hold harmless
Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within fifteen (15) business days of such request, any and all costs and expenses (including attorneys’ and experts’ fees
and expenses) incurred by Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination. 
 (c) The
Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 7(b) to be made as promptly as practicable. If the person or persons determined under Section 7 to make the Standard of
Conduct Determination shall not have made a determination within thirty (30) days after the later of (A) receipt by the Company of written notice from Indemnitee advising the Company of the final disposition of the applicable Indemnifiable
Claim (the date of such receipt being the “Notification Date”) and (B) the selection of an Independent Counsel, if such determination is to be made by Independent Counsel, then Indemnitee shall be deemed to have satisfied the
applicable standard of conduct; provided that such thirty (30) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person or persons making such determination in good faith requires
such additional time to obtain or evaluate information relating thereto. 
 (d) If (i) Indemnitee shall be entitled to indemnification
pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition to indemnification of Indemnitee hereunder against any Indemnifiable
Losses, or (iii) Indemnitee has been determined or deemed pursuant to Section 7(b) or (c) to have satisfied any applicable standard of conduct under Delaware law which is a legally required condition to indemnification of Indemnitee,
then the Company shall pay to Indemnitee, within fifteen (15) business days after the later of (y) the Notification Date regarding the Indemnifiable Claim giving rise to the Indemnifiable Losses and (z) the earliest date on which the
applicable criterion specified in clause (i), (ii) or (iii) is satisfied, an amount equal to such Indemnifiable Losses. 
 (e) If
a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him or
her of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall
give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable, may, within five (5) business days after receiving written notice of selection from
the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the
definition of “Independent Counsel” in Section 1(i), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as
Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent 

 
Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit and (ii) the non-objecting party
may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two
immediately preceding sentences and clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative
selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 7(e) to make the Standard of Conduct Determination shall have been selected within thirty (30) business days after the Company gives its
initial notice pursuant to the first sentence of this Section 7(e) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(e), as the case may be, either the Company or Indemnitee may petition the Court of
Chancery of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by
the Court or by such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all
of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b). In the event of a proper and timely objection to the Independent Counsel selected
by either the Indemnitee or the Board of Directors, the deadlines provided under Section 7(c) shall be stayed until such objection is resolved pursuant to this Section 7. 

8. Presumption of Entitlement. In making any Standard of Conduct Determination, the person or persons making such determination shall
presume that Indemnitee has satisfied the applicable standard of conduct, and the Company may overcome such presumption only by its adducing clear and convincing evidence to the contrary. Any Standard of Conduct Determination that is adverse to
Indemnitee may be challenged by the Indemnitee in the Court of Chancery of the State of Delaware. No determination by the Company (including by its directors or any Independent Counsel) that Indemnitee has not satisfied any applicable standard of
conduct shall be a defense to any Claim by Indemnitee for indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct. 

9. No Other Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable standard of conduct or that indemnification hereunder is otherwise not
permitted. 
 10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to
any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the Company’s jurisdiction of incorporation, any other contract or otherwise (collectively, “Other Indemnity Provisions”);
provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater right hereunder and (b) to the
extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the Effective Date, Indemnitee will be deemed to have such greater right hereunder. The
Company will not adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under this Agreement or any Other Indemnity Provision. 

11. Liability Insurance and Funding. For the duration of Indemnitee’s service as a director and/or officer of the Company, and for
not less than five (5) years thereafter, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of
directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of
directors’ and officers’ liability insurance. The Company shall provide Indemnitee with a copy of all applicable directors’ and officers’ insurance applications, binders, policy forms, declarations, endorsements and other related
materials for all such policies upon request by Indemnitee, and shall provide Indemnitee with a reasonable opportunity to review and comment on the same. Without limiting the generality or effect of the two immediately preceding sentences, the
Company shall not discontinue or substantially reduce the scope or amount of coverage from one policy period to the next (i) without the prior approval thereof by a majority vote of the Incumbent Directors, even if less than a quorum, or
(ii) if at the time that any such discontinuation or 

 
significant reduction in the scope or amounts of coverage is proposed there are no Incumbent Directors, without the prior written consent of Indemnitee (which consent shall not be unreasonably
withheld or delayed). In all policies of insurance required to be procured and maintained by the Company under this Agreement, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to
the same limitations, as are accorded to the Company’s directors, officers and employees most favorably insured by such policy. The Company may, but shall not be required to, create a trust fund, grant a security interest, pay a retainer, or
use other means, including without limitation a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement. In no event shall the Company’s
compliance with the terms of this Section 11 or the maintenance of any insurance of any kind be construed to relieve the Company of its obligations to indemnify or advance Expenses to Indemnitee as required by this Agreement. In the event of a
Change in Control or the Company’s becoming insolvent (including being placed into receivership or entering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies then maintained by the
Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter. 

12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of
the related rights of recovery of Indemnitee against other persons or entities, including any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all
papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company). 

13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of
any Indemnifiable Losses to the extent Indemnitee has otherwise actually received payment (net of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise. 

14. Defense of Claims. The Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee
would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee and that there may be one or more legal defenses
available to Indemnitee that are different from or in addition to those available to the Company, or (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then
Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim) at the Company’s expense. The Company shall not be liable to Indemnitee
under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect
any settlement of any threatened or pending Indemnifiable Claim which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from
all liability on any claims that are the subject matter of such Indemnifiable Claim. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to any
settlement that does not provide a complete and unconditional release of Indemnitee. 
 15. Successors and Binding Agreement. 

(a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, 

 
reorganization or otherwise (and such successor will thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or delegable by the
Company. 
 (b) This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives,
executors, administrators, heirs, distributees, legatees and other successors. 
 (c) This Agreement is personal in nature and neither of
the parties shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 15(a) and 15(b). Without limiting the generality or effect of the foregoing,
Indemnitee’s right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and,
in the event of any attempted assignment or transfer contrary to this Section 15(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred. 

16. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five
(5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid or one (1) business day after having been sent for next-day
delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the Secretary of the Company) and to Indemnitee at the addresses shown on the signature page hereto, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt. 

17. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the Chancery Court of the
State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the Chancery Court of the State of
Delaware. 
 18. Validity. If any provision of this Agreement or the application of any provision hereof to any person or
circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstance shall not be affected, and the provision so held to be invalid, unenforceable
or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal. In the event that any court or other adjudicative body shall decline to reform any provision of this Agreement held to be
invalid, unenforceable or otherwise illegal as contemplated by the immediately preceding sentence, the parties shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise
illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal. 

19. Miscellaneous. No provision of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge
is agreed to in writing signed by Indemnitee and the Company. No waiver by either party at any time of any breach by the other party or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement. References to Sections are to references to Sections of this Agreement. 
 20.
Legal Fees and Expenses. It is the intent of the Company that Indemnitee not be required to incur legal fees and or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. Accordingly, without limiting the generality or effect of any other provision hereof, if it
should appear to Indemnitee that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any 

 
action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or
intended to be provided to Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of Indemnitee’s choice, at the expense of the Company as hereafter provided, to advise and represent
Indemnitee in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, executive,
stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Indemnitee’s entering
into an attorney-client relationship with such counsel, and in that connection the Company and Indemnitee agree that a confidential relationship shall exist between Indemnitee and such counsel. Without respect to whether Indemnitee prevails, in
whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by Indemnitee in connection with any of the foregoing. 

21. Certain Interpretive Matters. No provision of this Agreement shall be interpreted in favor of, or against, either of the parties by
reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. 

22. Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of
which together shall constitute one and the same agreement. Signatures received by facsimile, PDF file or other electronic format shall be deemed to be original signatures. 

<signature page follows> 

 IN WITNESS WHEREOF, Indemnitee has executed and delivered and the Company has caused its duly authorized
representative to execute and deliver this Agreement to be effective on and as of the Effective Date. 
  

			
	 KRYSTAL BIOTECH, INC.
 a
Delaware corporation

		
	By:	 	 
		
	Name:	 	 
		
	Title:	 	 

 
			
	
	
[                   
                 ]

		
	Signature:	 	 
		
	Street Address:	 	 
		
	 City, State ZIP:EX-10.5

Table of Contents

 Exhibit 10.5 

KRYSTAL BIOTECH, LLC 

2016 Equity Incentive Plan 

Adopted on October 1, 2016 

Table of Contents

 TABLE OF CONTENTS 

 

									
	 	 	 	  	 	  	Page	 
			
	SECTION 1	 	ESTABLISHMENT AND PURPOSE.	  	 	1	 
			
	SECTION 2	 	ADMINISTRATION.	  	 	1	 
			
	SECTION 3	 	ELIGIBILITY.	  	 	1	 
			
	SECTION 4	 	AWARDS SUBJECT TO PLAN.	  	 	1	 
		 	 (a)
	  	Initial Authorization.	  	 	1	 
		 	 (b)
	  	Additional Incentive Units.	  	 	1	 
			
	SECTION 5	 	TERMS AND CONDITIONS OF AWARDS. 	  	 	2	 
		 	 (a)
	  	Award Agreement.	  	 	2	 
		 	 (b)
	  	Number of Incentive Units.	  	 	2	 
		 	 (c)
	  	Vesting.	  	 	2	 
		 	 (d)
	  	Profits Interest Hurdle.	  	 	2	 
		 	 (e)
	  	Restrictions on Transfer of Incentive Units.	  	 	2	 
		 	 (f)
	  	Non-vested Awards.	  	 	2	 
		 	 (g)
	  	Withholding Taxes.	  	 	2	 
		 	 (h)
	  	No Rights as an Incentive Unit Member.	  	 	3	 
		 	 (i)
	  	IRS Form W-8 or Form W-9	  	 	3	 
		 	 (j)
	  	LLC Agreement.	  	 	3	 
		 	 (k)
	  	Modification and Assumption of Incentive Units.	  	 	3	 
			
	SECTION 6	 	ADJUSTMENT OF UNITS; COMPANY EVENTS. 	  	 	3	 
		 	 (a)
	  	General.	  	 	3	 
		 	 (b)
	  	Company Events with respect to Units	  	 	4	 
		 	 (c)
	  	Company Event with respect to Options	  	 	5	 
		 	 (d)
	  	Reservation of Rights.	  	 	5	 
			
	SECTION 7	 	OPTION EXERCISE. 	  	 	5	 
		 	 (a)
	  	Exercise Price	  	 	5	 
		 	 (b)
	  	Consideration	  	 	5	 
		 	 (c)
	  	Taxes	  	 	6	 
		 	 (d)
	  	Procedure for Exercise; Rights as a Member.	  	 	6	 
			
	SECTION 8	 	CONDITIONS TO ISSUANCE. 	  	 	6	 
		 	 (a)
	  	Compliance with Law	  	 	6	 
		 	 (b)
	  	Other	  	 	6	 
			
	SECTION 9	 	NO RETENTION RIGHTS. 	  	 	6	 
			
	SECTION 10	 	DURATION AND AMENDMENTS. 	  	 	7	 
		 	 (a)
	  	Term of the Plan	  	 	7	 
		 	 (b)
	  	Right to Amend or Terminate the Plan	  	 	7	 
		 	 (c)
	  	Effect of Amendment or Termination	  	 	7	 
			
	SECTION 11	 	DISTRIBUTIONS AND ALLOCATIONS.	  	 	7	 
			
	SECTION 12	 	INCORPORATION.	  	 	7	 
			
	SECTION 13	 	NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS.	  	 	7	 
			
	SECTION 14	 	INFORMATION TO PARTICIPANTS.	  	 	7	 
			
	SECTION 15	 	UNFUNDED OBLIGATION.	  	 	8	 
			
	SECTION 16	 	CONSTRUCTION.	  	 	8	 
			
	SECTION 17	 	NONEXCLUSIVITY OF THE PLAN.	  	 	8	 
			
	SECTION 18	 	INFORMATION TO PARTICIPANTS.	  	 	8	 
			
	SECTION 19	 	DEFINITIONS.	  	 	9	 

  
 -i- 

Table of Contents

 Krystal Biotech, LLC 2016 Equity Incentive Plan 

Adopted on October     , 2016 

SECTION 1 ESTABLISHMENT AND PURPOSE. 

The purpose of the Plan is to offer selected persons a proprietary interest in the success of the Company, or to increase such interest, by the
grant of Awards. In the event any term or provision of this Plan conflicts with the LLC Agreement, the terms and provisions of the LLC Agreement shall govern. 

Capitalized terms are defined in Section 19. 

SECTION 2 ADMINISTRATION. 

The Plan will be administered by the Board of Managers, who shall have full authority and discretion to take any actions it deems necessary or
advisable for the administration of the Plan. All decisions, interpretations and other actions of the Board of Managers shall be final and binding on all Participants. 

SECTION 3 ELIGIBILITY. 

Only Service Providers shall be eligible for the grant of Awards pursuant to this Plan. 

SECTION 4 AWARDS SUBJECT TO PLAN. 

(a) Initial Authorization. The Board is authorized to issue a number of Incentive Units under the Plan
(subject to Section 6 below), including Incentive Units to be issued on exercise of Options, equal to twenty percent (20%) or less of the aggregate total of Common Units outstanding on a Fully Diluted Basis as of the date of the proposed
grant. The Board of Managers may, in its sole discretion, issue such Incentive Units as Profits Interests hereunder. A Profits Interest shall be any Incentive Unit that, at the time it is issued, is designated as such by the Board of Managers. The
Company, during the term of the Plan, shall at all times reserve and keep available sufficient Incentive Units to satisfy the requirements of the Plan. 

(b) Additional Incentive Units. In the event that Incentive Units issued under the Plan are reacquired
by the Company, or in the event an Option expires or becomes unexercisable without having been exercised in full, such reacquired Incentive Units or the Incentive Units that underlie such expired or unexerciseable Options shall be added to the
number of Incentive Units then available for issuance under the Plan. In addition, the Company may authorize and issue under this Plan additional Incentive Units, or authorize and issue new classes of Incentive Units in the Company, in such amounts
and with such rights, preferences and privileges, and may authorize and issue Options to acquire such Incentive Units, in each case as the Board of Managers determines in its sole discretion. The Board of Managers shall be authorized to, and shall,
amend this Plan and the LLC Agreement to the extent necessary to provide for such additional Incentive Units or classes of Incentive Units. 

Table of Contents

 SECTION 5 TERMS AND CONDITIONS OF AWARDS. 

(a) Award Agreement. Each grant of an Award under the Plan shall be evidenced by an Award Agreement
between the Participant and the Company. Such Award shall be subject to all applicable terms and conditions of the Plan and LLC Agreement and may be subject to any other terms and conditions that are not inconsistent with the Plan and LLC Agreement
and that the Board of Managers deems appropriate for inclusion in an Award Agreement. The provisions of the various Award Agreements entered into under the Plan need not be identical. No Award shall be granted unless the Participant has delivered an
executed copy of the Award Agreement to the Company. 
 (b) Number of Incentive Units. Each Award
Agreement shall specify the number of Incentive Units that are being granted, or the number of Incentive Units for which an Option is exercisable. 

(c) Vesting. Each Award Agreement shall specify the vesting schedule applicable to the Award addressed
thereby. The Board of Managers shall determine the vesting provisions of any Award Agreement in its sole discretion. 
 (d) 
Profits Interest Hurdle. Each Award Agreement shall specify an appropriate Profits Interest Hurdle for the Incentive Units being issued on the basis of the Incentive Liquidation Value immediately prior to the issuance of such Incentive
Units. 
 (e) Restrictions on Transfer of Incentive Units. Any Award granted under the Plan shall be
subject to (i) the terms of the LLC Agreement and any other agreement among the Members and (ii) such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Managers may
determine. Such special restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to the restrictions that apply to holders of Units generally under the LLC Agreement or otherwise. For the avoidance of doubt,
Incentive Units issuable on exercise of an Option shall be subject to the foregoing provisions. 
 (f)
Non-vested Awards. If a Participant’s Service is terminated by the Participant or by the Company for any reason before an Award has fully vested, unless otherwise determined by the Board of Managers or
unless otherwise provided in the Participant’s Award Agreement, the Participant will forfeit all non-vested Incentive Units, or all non-vested rights to acquire Incentive Units, to the Company for no consideration without further action by the
Company. 
 (g) Withholding Taxes. As a condition to a grant of, and distributions or deliveries with
respect to, any Award, the Participant shall make such arrangements as the Board of Managers may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such grant,
distributions or deliveries. The Participant shall also make such arrangements as the Board of Managers may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the
disposition of an Award. 

  
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 (h) No Rights as an Incentive Unit Member. A Participant,
or a transferee of a Participant, shall have no rights as an Incentive Unit Member or assignee with respect to any Incentive Unit until such person has satisfied any requirements imposed on Incentive Unit Members or assignees by applicable law and
the LLC Agreement. 
 (i) IRS Form W-8 or Form W-9. Each Participant shall deliver to the Company a
duly completed and properly executed IRS Form W-8 (in the case of non-U.S. residents) or Form W-9 (in the case of U.S. citizens or residents) and such other tax forms as the Board of Managers reasonably requests. 

(j) LLC Agreement. Each Participant granted or issued Incentive Units shall agree to be bound by and
comply with the terms of the LLC Agreement. Exhibit A of the LLC Agreement shall be amended to reflect the issuance of Incentive Units to a Participant under this Plan. 

(k) Modification and Assumption of Incentive Units. The Board of Managers (or any similar body of a
successor entity or assignee of all or substantially all of the assets of the Company) may modify or assume outstanding Awards (whether granted by the Company or another issuer) and exchange any such Awards in return for the grant of a different
incentive award of comparable value. 
 SECTION 6 ADJUSTMENT OF UNITS; COMPANY EVENTS. 

(a) General. In the event of a subdivision of the outstanding Units, a combination or consolidation of
the outstanding Units into a lesser number of Units, a recapitalization, a spin-off, a reclassification, a merger or consolidation (other than a Company Event) or a similar occurrence, appropriate adjustments shall automatically be made in each of
(i) the number and kind of Incentive Units or other securities available for future grants under Section 4 and (ii) the number and kind of Incentive Units or other securities issued and outstanding hereunder or subject to Options
issued and outstanding hereunder, in each case subject to any applicable provisions of the LLC Agreement or agreement of merger or consolidation. 

  
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 (b) Company Events with respect to Units. In the event
the Company engages in a sale, distribution, transfer or other disposition of all or substantially all of the Company’s assets (or of a substantial portion of the Company’s assets not in the ordinary course of business), an acquisition of
Units by a person or group of persons acting in concert of fifty percent (50%) or more of the outstanding Units (whether by direct acquisition, merger or consolidation or otherwise), a liquidation or dissolution of the Company, or a similar
transaction (any such transaction, a “Company Event”), the outstanding Incentive Units issued hereunder (including Incentive Units outstanding following the exercise of an Option) shall be subject to the agreement governing such
Company Event and the LLC Agreement. The agreement governing the Company Event may provide for one or more of the following: 
 (i) The
continuation of such outstanding Incentive Units by the Company (if the Company is the surviving entity), including the continuation of any applicable vesting schedule. 

(ii) The conversion of such outstanding Incentive Units by the surviving entity or its parent into equity of the surviving entity or its parent
on terms equivalent to the terms applicable to the conversion of Units that are not Incentive Units issued hereunder (but taking into account any difference in value of the Incentive Units issued hereunder compared to Units not issued hereunder at
the time of the Company Event and allowing for the continuation of any existing vesting schedule with respect to such Incentive Units). 

(iii) The full or partial vesting of, or the cancellation and forfeiture of, unvested Incentive Units upon the closing of the Company Event.

 (iv) The redemption of such outstanding and vested Incentive Units and a payment to the Participants equal to the amount distributable to
such Incentive Units pursuant to the LLC Agreement. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent with a fair market value equal to the amount distributable or deemed
distributable in the Company Event. Such payment may be made in installments. If no amounts would be distributable to such Incentive Units, then such Incentive Units may be cancelled without making a payment to the Participants. For purposes of this
paragraph (iv), the fair market value of any security shall be determined without regard to any vesting conditions that may apply to such security and shall be determined in good faith by the Board of Managers. 

(v) The redemption of such outstanding and unvested Incentive Units and a payment to the Participants equal to the amount distributable to such
Incentive Units pursuant to the LLC Agreement. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent with a fair market value equal to the amount distributable or deemed distributable
in the Company Event. Such payment may be made in installments and may be deferred until the date or dates when such Incentive Units would have vested. Such payment may be subject to vesting based on the Participant’s Continuous Service,
provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Incentive Units would have vested. If no amounts would be distributable to such Incentive Units, then such Incentive Units may be
cancelled without making a payment to the Participants. For purposes of this paragraph (v), the fair market value of any security shall be determined without regard to any vesting conditions that may apply to such security and shall be
determined in good faith by the Board of Managers. 
 (vi) Any combination of the foregoing. 

  
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 (c) Company Event with respect to Options. In the event
the Company engages in a Company Event, the outstanding Options granted hereunder shall be subject to the agreement governing such Company Event and the LLC Agreement. The agreement governing the Company Event may provide for one or more of the
following: 
 (i) The Assumption or Replacement of such outstanding Options. 

(ii) The full or partial vesting of, or the cancellation and forfeiture of, unvested Options upon the closing of the Company Event. 

(iii) The cashing out of such outstanding and vested Options based on the exercise price per Incentive Unit for Incentive Units issuable on
exercise of such Options and the amounts distributable to Incentive Units pursuant to the LLC Agreement. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent with a fair market value
equal to the amount distributable or deemed distributable in the Company Event. If no amounts would be distributable with respect to such Options, then such Options may be cancelled without making a payment to the Participants. For purposes of this
paragraph (iii), the fair market value of any security shall be determined without regard to any vesting conditions that may apply to such security and shall be determined in good faith by the Board of Managers. 

(iv) The cashing out of such outstanding and unvested Options based on the exercise price per Incentive Unit for Incentive Units issuable on
exercise of such Options and the amounts distributable to Incentive Units pursuant to the LLC Agreement. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent. Such payment may be made
in installments and may be deferred until the date or dates when such Options would have vested. Such payment may be subject to vesting based on the Participant’s Continuous Service, provided that the vesting schedule shall not be less
favorable to the Participant than the schedule under which such Option would have vested. If no amounts would be distributable with respect to such Options, then such Options may be cancelled without making a payment to the Participants. For
purposes of this paragraph (iv), the fair market value of any security shall be determined without regard to any vesting conditions that may apply to such security and shall be determined in good faith by the Board of Managers. 

(v) Any combination of the foregoing. 

(d) Reservation of Rights. The grant of an Award pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge, consolidate or exchange equity interests or to dissolve, liquidate, sell or transfer all or any part of
its business or assets. 
 SECTION 7 OPTION EXERCISE. 

(a) Exercise Price. The per Incentive Unit exercise price for an Option shall be not less than one
hundred percent (100%) of the Fair Market Value per Incentive Unit on the date of grant. 
 (b)
Consideration. Subject to applicable law, the consideration to be paid for the Incentive Units to be issued upon exercise of an Option, including the method of payment, shall be determined by the Board of
Managers in its sole discretion. 

  
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 (c) Taxes. Upon exercise of an Option the Company shall
withhold or collect from the Participant an amount sufficient to satisfy any applicable withholding tax obligations, including, but not limited to, at the discretion of the Board of Managers, by surrender of the whole number of Incentive Units
covered by the Option sufficient to satisfy the minimum applicable tax withholding obligations incident to the exercise of an Option (reduced to the lowest whole number of Incentive Units if such number of Incentive Units withheld would result in
withholding a fractional Incentive Unit with any remaining tax withholding settled in cash). 
 (d)
Procedure for Exercise; Rights as a Member. 
 (i) Any Option granted hereunder shall be exercisable
at such times and under such conditions as determined by the Board of Managers under the terms of the Plan and specified in the Award Agreement. Notwithstanding the foregoing, Options may not be exercised prior to the Incorporation or a Company
Event unless otherwise determined by the Board of Managers. 
 (ii) An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Incentive Units with respect to which the Option is exercised has been made. 

SECTION 8 CONDITIONS TO ISSUANCE. 

(a) Compliance with Law. Incentive Units or Options shall not be issued under the Plan unless the
issuance and delivery of such Incentive Units or Options comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, the rules and regulations promulgated thereunder, state securities laws
and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall have no obligation to effect any registration or qualification of the Incentive Units
or Options under federal or state laws. 
 (b) Other. As a condition to the issuance of Incentive
Units under the Plan, the Company may require the recipient thereof to represent and warrant at the time of any such issuance that the Incentive Units are being purchased only for investment and without any present intention to sell or distribute
such Incentive Units. The Company shall require the person receiving Incentive Units under the Plan to execute and deliver a signature page to, and agree to comply with, the provisions of the LLC Agreement and to make such representations and
warranties contained in the LLC Agreement that are required of Members of the Company. 
 SECTION 9 NO RETENTION
RIGHTS. 
 Nothing in this Plan or in any Award Agreement shall confer upon the Participant any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Related Entity employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without cause. 

  
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 SECTION 10 DURATION AND AMENDMENTS. 

(a) Term of the Plan. The Plan, as set forth herein, shall become effective as of the date hereof. The
Plan shall terminate automatically on October     , 2026. The Plan may be terminated on any earlier date pursuant to Subsection (b) below. 

(b) Right to Amend or Terminate the Plan. The Board of Managers may amend, suspend or terminate the
Plan at any time and for any reason. 
 (c) Effect of Amendment or Termination. No Awards shall be
granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan. 

SECTION 11 DISTRIBUTIONS AND ALLOCATIONS. 

Distributions and allocations to Participants with respect to their Incentive Units shall be governed by the LLC Agreement and any applicable
Award Agreement. 
 SECTION 12 INCORPORATION. 

Upon an Incorporation, all references to the number of Incentive Units issued or issuable under the Plan shall be adjusted to reflect the
conversion or exchange ratio in effect for the conversion or exchange of Incentive Units into shares of stock on consummation of the Incorporation and rounded up to the nearest whole share, and the exercise price or purchase price per Incentive Unit
under any outstanding Option immediately prior to the Incorporation shall be appropriately adjusted to take into account the conversion or exchange ratio to determine the exercise price or purchase price per share of stock subject to the Option
immediately after the Incorporation. Upon the Incorporation, all references in the Plan to Incentive Units shall automatically be converted into references to the shares of stock into which the Incentive Units are converted and all references to the
Company shall automatically be converted into references to the appropriate corporate successor thereto. 

SECTION 13 NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. 

Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed
compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted
under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended. 

SECTION 14 INFORMATION TO PARTICIPANTS. 

To the extent required by applicable law, the Company shall provide to each Participant, during the period for which such Participant has one
or more Awards outstanding, copies of financial statements at least annually. The Company shall not be required to provide such information to persons whose duties in connection with the Company assure them access to equivalent information. 

  
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 SECTION 15 UNFUNDED OBLIGATION. 

Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special
accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the
creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Board of Managers, the Company or any Related Entity and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or a Related Entity. The Participants shall have no claim against the Company or any Related Entity for any changes in the value of any assets
that may be invested or reinvested by the Company with respect to the Plan. 
 SECTION 16 CONSTRUCTION. 

Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

SECTION 17 NONEXCLUSIVITY OF THE PLAN. 

Neither the adoption of the Plan by the Board of Managers nor any provision of the Plan will be construed as creating any limitations on the
power of the Board of Managers to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of incentive awards otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases. 
 SECTION 18 INFORMATION TO PARTICIPANTS. 

Beginning on the earlier of (i) the date that the aggregate number of Participants under this Plan is five hundred (500) or more and
the Company is relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act and (ii) the date that the Company is required to deliver information to Participants pursuant to Rule 701 under the Securities Act, and until such time
as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, is no longer relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act or is no longer required to deliver information
to Participants pursuant to Rule 701 under the Securities Act, the Company shall provide to each Participant the information described in paragraphs (e)(3), (4), and (5) of Rule 701 under the Securities Act not less frequently than every six
(6) months with the financial statements being not more than 180 days old and with such information provided either by physical or electronic delivery to Participants or by written notice to Participants of the availability of the information
on an 

  
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Internet site that may be password-protected and of any password needed to access the information. The Company may request that Participants agree to keep the information to be provided pursuant
to this section confidential. If a Participant does not agree to keep the information to be provided pursuant to this section confidential, then the Company will not be required to provide the information unless otherwise required pursuant to Rule
12h-1(f)(1) under the Exchange Act or Rule 701 of the Securities Act. 
 SECTION 19 DEFINITIONS. 

Capitalized terms used in this Plan without definition shall have the meanings given to them in the LLC Agreement. As used in this Plan: 

“Assumed” (and with correlative meaning, “Assume” and “Assumption”) means either
(i) the Award is expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or its parent with appropriate adjustments
to the number and type of securities of the successor entity or its parent subject to the Award and the exercise or purchase price thereof which at least preserves the compensation element of the Award existing at the time of the assumption as
determined in accordance with the instruments evidencing the agreement to assume the Award. 
 “Award” shall mean an award
of Incentive Units or Options under the Plan and, as the context requires, the Incentive Units for which an Option is exercisable. 

“Award Agreement” means the written agreement evidencing the grant of an Award executed by the Company and the Participant,
including any amendments thereto. 
 “Code” shall mean the Internal Revenue Code of 1986, as amended. 

“Company” shall mean Dexter Edward, LLC, a Delaware limited liability company. 

“Company Event” shall have the meaning given such term in Section 6(b) of this Plan. 

“Continuous Service” means the provision of services to the Company or a Related Entity in any capacity of Service Provider to
the extent not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as a Service Provider, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or
a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as a Service Provider can be effective under applicable laws. A Participant’s Continuous Service shall be deemed to have terminated either
upon an actual termination of Continuous Service or upon the entity for which the Participant provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of
absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Service Provider, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any
capacity of Service Provider (except as otherwise provided in an Award Agreement). 

  
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 “Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 “Fair Market Value” shall have the meaning given to such term in the LLC Agreement. 

“Incentive Liquidation Value” shall have the meaning given to such term in the LLC Agreement. 

“Incentive Unit” shall mean one Incentive Unit of the Company, as defined in the LLC Agreement and as adjusted in accordance
with Section 6 (if applicable). 
 “Incorporation” means the incorporation of the Company, whether through a merger,
acquisition, exchange of equity resulting in the Company becoming a wholly-owned subsidiary of a corporation, or other transaction resulting in a corporation succeeding to all of, or a substantial portion of, the assets and liabilities of the
Company, in each case pursuant to which the existing Members of the Company substantially maintain their percentage ownership over the successor entity or entities immediately after such transaction. 

“LLC Agreement” shall mean the Amended and Restated Limited Liability Company Operating Agreement for Krystal Biotech, LLC,
dated as of October     , 2016, as amended from time to time, or any successor agreement. 

“Manager” shall mean a member of the board of managers of the Company. 

“Member” shall mean a person who is a Member of the Company pursuant to the LLC Agreement. 

“Officer” shall mean any individual who is an officer of the Company or a Related Entity. 

“Option” means an option to purchase Incentive Units pursuant to an Award Agreement granted under the Plan. 

“Participant” shall mean a person who receives an Award under this Plan. 

“Parent” shall mean any entity (other than the Company) in an unbroken chain of entities ending with the Company, if each of
the entities other than the Company owns shares, units or interests possessing fifty percent (50%) or more of the total combined voting power of all classes of shares, units or interests in one of the other entities in such chain. An entity
that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date. 

“Plan” shall mean this Krystal Biotech, LLC Equity Incentive Plan, as amended. 

“Profits Interest” shall have the meaning given to such term in the LLC Agreement. 

  
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Table of Contents

 “Profits Interest Hurdle” shall have the meaning given to such term in the LLC
Agreement. 
 “Related Entity” means any Parent or Subsidiary of the Company. 

“Replaced” (and with correlative meaning, “Replace” and “Replacement”) means the Award is
replaced with a comparable award of the Company, any successor entity (if applicable) or the Parent of either of them which preserves the compensation element of such Award existing at the time of the replacement and provides for subsequent payout
in accordance with the same (or a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall be made by the Board of Managers and its determination shall be final, binding and conclusive. 

“Securities Act” shall mean the Securities Act of 1933, as amended. 

“Service” shall mean service as a Service Provider. 

“Service Provider” shall mean a Manager, Officer, employee, consultant or other service provider of the Company or any Related
Entity. 
 “Subsidiary” means any entity (other than the Company) in an unbroken chain of entities beginning with the
Company, if each of the entities other than the last entity in the unbroken chain owns shares, units or interests possessing fifty percent (50%) or more of the total combined voting power of all classes of shares, units or interests in one of
the other entities in such chain. An entity that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 

  
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