Company: PTHS
Filing Date: 2025-09-16
Form Type: 8-K/A
Source: 0001753926-25-001500
Chunk: 155

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-09-16
Form: 8-K/A
Chunk 155
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 involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Note (2), Basis of Presentation and Significant Accounting Policies in the notes to our condensed financial statements. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

Inventory

The Company measures inventory using the first-in, first-out method and values inventory at the lower of cost or net realizable value. Inventory value includes amounts related to materials, manufacturing labor and overheads. The Company adjusts its inventory for potentially obsolete inventory. The adjustment for obsolescence is generally an estimate of the value of inventory that is expected to expire in the future based on projected sales volume and product expiration or expected sell-by dates. These assumptions require the Company to analyze the aging of and forecasted demand for its inventory and make estimates regarding future product sales.

Prior to obtaining initial regulatory approval for ZELSUVMI in January 2024, the Company expensed costs relating to production of pre-launch inventory as research and development expense in its condensed statements of operations in the period incurred. Inventory acquired and the related costs after January 5, 2024, the date of the FDA’s approval of ZELSUVMI, are capitalized.

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.
The amount of expense related to inventory write down as a result of excess, obsolescence, scrap, or other reasons is recorded
as research and development expense in the condensed statement of operations. The Company-recorded inventory write-down amounted
to $264 thousand during the three and six months ended June 30, 2025, and $248 thousand during the three and six months ended June
30, 2024. Any of such expenses incurred subsequent to the ZELSUVMI commercial launch date will be recorded as cost of sales.

Impairment of Goodwill and Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Goodwill is reviewed for impairment at the reporting unit level at least annually during the fourth quarter, or more frequently if an