Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 88

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 88
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and Collaboration Revenues

The
Company has one agreement related to a license of intellectual property to a third party. Per Accounting Standards Codification
(“ASC”) 606, Revenue from Contracts with Customers, the Company determines if there are distinct performance obligations
identified in the arrangement. The Company recognizes revenues from non-refundable, upfront fees allocated to the license when
the license is transferred to the customer and the customer is able to use and benefit from the license.

License
and collaboration revenues for the three and nine months ended September 30, 2025, respectively, were $0.3 million. This revenue
is related to recognition of deferred revenue from a collaboration agreement with Sato Pharmaceutical Co., Ltd. (“Sato Agreement”).

For
information about the Sato Agreement, see Note 1 — “Sato Agreement” in the notes to our condensed consolidated
financial statements.

Cost
of Goods Sold

Cost
of goods sold includes direct and indirect costs related to the manufacture, production, packaging, and distribution of the Company’s
commercial products. These costs primarily consist of manufacturing costs, including allocated overhead, supply costs, third-party
logistics and distribution expenses, quality control and assurance costs, and freight and shipping charges incurred in fulfilling
customer orders.

Additionally,
the Company’s product is subject to strict quality control and monitoring that is performed throughout the manufacturing
process, including release of work-in-process to finished goods. In the event that certain batches or units of product do not
meet quality specifications, the Company records a write-down of any potential unmarketable inventory to its estimated net realizable
value.

For
the three and nine months ended September 30, 2025, respectively, cost of goods sold was $2.3 million, including $0.8 million
of write-offs of in-process material. The increase for both periods is due to the commercial launch of ZELSUVMI, which was announced
on July 10, 2025.

The
following table sets forth our cost of goods sold for the three and nine months ended September 30, 2025 and 2024 (in thousands):

    For
    the Three months Ended September 30,  
    Change  
    For
    the Nine months Ended September 30,  
    Change 

    2025  
    2024  
    $  
    2025  
    2024  
    $ 

    Cost
    of goods