Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 111

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 111
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 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 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.

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 (ZELSUVMI), whereas Ligand will be responsible for satisfying all obligations related to the
SB204 and SB414 product candidates, if and when they are developed. Obligations under the Reedy Creek Agreement that arise from
any non-SB206 (ZELSUVMI) asset will be satisfied by Ligand. As of the July 1, 2025 Merger, the Company is obligated to pay Reedy
Creek amounts due, per the Reedy Creek Purchase Agreement, related to SB206 (commercially known as ZELSUVMI).

64

Facility Lease Agreement

On January 18, 2021, the Company entered
into a lease with an initial term expiring in 203