Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 41

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 41
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uscum, and advancing programmatically
such activities with respect to SB204, a once-daily, topical monotherapy being developed for the treatment of acne vulgaris, and
SB414, a topical cream-based product candidate being developed for the treatment of atopic dermatitis. If Novan were to have successfully
commercialized any such product, following regulatory approval, it was obligated to pay Reedy Creek a low single digit royalty
on net sales of such products in the United States, Mexico or Canada.

Pursuant
to the Reedy Creek Purchase Agreement, Novan was obligated to pay Reedy Creek ongoing quarterly payments, calculated based on
an applicable percentage per product of any upfront fees, milestone payments, royalty payments or equivalent payments received
by Novan pursuant to any out-license agreement for SB204, SB206 or SB414 in the United States, Mexico or Canada, net of any upfront
fees, milestone payments, royalty payments or equivalent payments paid by Novan to third parties pursuant to any agreements under
which Novan had in-licensed intellectual property with respect to such products in the United States, Mexico or Canada. The applicable
percentage used for determining the ongoing quarterly payments, applied to amounts received directly by Novan pursuant to any
out-license agreement for each product, ranges from 10% for SB206 to 20% for SB204 and SB414.

However,
the Reedy Creek Purchase Agreement provides that the applicable percentage for each product will be 25% for fees or milestone
payments received by Novan (but not royalty payments received by Novan) until Reedy Creek has received payments under the Purchase
Agreement equal to the total funding amount provided by Reedy Creek under the Purchase Agreement. If Novan decided to commercialize
any product on its own following regulatory approval, as opposed to commercializing through an out-license agreement or other
third-party arrangement, Novan will only be obligated to pay Reedy Creek a low single digit royalty on net sales of such products.

July
1, 2025 Merger

On
March 24, 2025, LNHC assigned its rights to its intellectual property portfolio to Ligand. In addition, LNHC and Ligand also entered
into an agreement that clarified the nature of on-going obligations related to the Reedy Creek Purchase Agreement. Based on that
letter agreement dated March 24, 2025, LNHC is obligated and responsible for satisfying all obligations with respect to the Reedy
Creek Purchase Agreement for SB206