Company: PTHS
Filing Date: 2025-05-27
Form Type: DEFM14C
Source: 0001140361-25-020509
Chunk: 98

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-27
Form: DEFM14C
Chunk 98
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 rights, including patents, litigation matters and its ability to obtain patent protection for its technologies; |

| • | significant lawsuits, including patent or stockholder litigation; |

| • | variations in its financial results or those of companies that are perceived to be similar to it; |

| • | changes in the structure of healthcare payment systems; |

| • | market conditions in the pharmaceutical and biotechnology sectors; |

| • | general economic, industry and market conditions; and |

| • | the other factors described in this “Risk Factors” section. |

The stock markets have experienced extreme volatility in recent years that has been unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of Channel common stock. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company. Any litigation of this type brought against Channel could result in substantial costs and a diversion of its management’s attention and resources, which would harm its business, results of operations, financial condition and cash flows.

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**Channel may incur significant costs from class action litigation due to its expected stock volatility.**

Channel’s stock price may fluctuate for many reasons, including as a result of public announcements regarding Channel’s strategic updates or the development efforts of current or future collaborators or competitors, the addition or departure of its key personnel, variations in its quarterly operating results and changes in market valuations of biopharmaceutical and biotechnology companies.

This risk is especially relevant to Channel because biopharmaceutical and biotechnology companies have experienced significant stock price volatility in recent years. When the market price of a stock has been volatile, as Channel’s stock price may be, holders of that stock have occasionally brought securities class action litigation against it that issued the stock. If any of the Channel stockholders were to bring a lawsuit of this type against Channel, even if the lawsuit was without merit, it could result in substantial costs incurred defending the lawsuit and diversion of the time, attention and resources of the Channel board of directors and management, which could significantly harm its profitability and reputation.

**Channel has broad discretion in the use of its cash and may not use them effectively.**

**Channel management will have broad discretion in the application of its cash and could spend the proceeds in ways that do not improve its results of operations or enhance the value of Channel common stock. The failure by Channel’s management to apply these funds effectively could result in financial losses that could have a material adverse effect on