Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 26

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 26
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growing sales of ZELSUVMI. Personnel-related expenses include salaries, incentive pay, benefits and share-based compensation
for personnel engaged in sales, marketing, regulatory, quality, medical, non-capitalizable manufacturing, finance,
information technology and administrative functions. As the majority of the Company’s contracts are short-term in
nature, sales commissions are generally recorded as selling, general and administrative expense when incurred as the
amortization period would have been less than one year.

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Non-personnel-related
expense includes: (i) selling, patient services, pharmacovigilance, marketing, advertising, travel, sponsorships and trade shows;
and (ii) other general and administrative costs, including consulting, legal, patent, insurance, accounting, information technology
and facilities.

The
Company uses a third-party logistics provider (“3PL”) to perform a full order-to-cash service, which includes warehousing
and shipping directly to its customers on its behalf. Activities performed by the 3PL are recorded in SG&A. SG&A expenses
are recognized as they are incurred.

Royalty
and/or milestone payments due to third parties under license arrangements for commercial products are expensed within SG&A
and recorded as a current liability in the periods in which the obligation is incurred.

Research
and Development Expense

Research
and development (“R&D”) expense consists of personnel and non-personnel expenses. Personnel-related expense includes
salaries, bonus, benefits and share-based compensation for personnel engaged in research and development functions. Non-personnel-related
expense includes subcontractors and materials used for R&D activities, development, clinical trials, clinical supply and distribution,
and other professional services.

R&D
expenses are recognized as they are incurred based on actual work completed through monitoring invoices received and discussions
with internal personnel and external service providers as to the progress or stage of completion of preclinical activities, clinical
studies and related supporting services for non-commercial assets.

Contingent
milestone payments due to third parties under R&D arrangements or license agreements, are expensed within R&D and recorded
as a current liability in the periods in which the obligation is incurred.

Stock-Based
Compensation

The
Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation (“ASC
718”), which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation
awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all