Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 36

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 36
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 licensed products in the licensed territory.
Under the terms of the Amended Sato Agreement, Novan also had exclusive rights to certain intellectual property that may be developed
by Sato in the future, which Novan could choose to use for its own development and commercialization of SB204 or SB206 outside
of Japan.

The
term of the Amended Sato Agreement (and the period during which Sato must pay royalties under the amended license agreement) expires
on the twentieth anniversary of the first commercial sale of a licensed product in the licensed field in the licensed territory
(adjusted from the tenth anniversary of the first commercial sale in the Sato Agreement). The term of the Amended Sato Agreement
may be renewed with respect to a licensed product by mutual written agreement of the parties for additional two-year periods following
expiration of the initial term. All other material terms of the Sato Agreement remain unchanged by the Sato Amendment.

Sato
is responsible for funding the development and commercial costs for the program that are specific to Japan. Novan was obligated
to perform certain oversight, review and supporting activities for Sato, including: using commercially reasonable efforts to obtain
marketing approval of SB204 and SB206 in the United States and sharing all future scientific information Novan may obtain during
the term of the Amended Sato Agreement pertaining to SB204 and SB206; and participating in a joint committee that oversees, reviews
and approves Sato’s development and commercialization activities under the Amended Sato Agreement. Additionally, Novan has
granted Sato the option to use the Novan’s trademarks in connection with the commercialization of licensed products in the
licensed territory for no additional consideration, subject to the Novan’s approval of such use.

July
1, 2025 Merger

Prior
to the Merger on July 1, 2025, on March 24, 2025, LNHC assigned the Sato Agreement to Ligand, however, LNHC assumed certain contractual
liabilities and obligations under the Sato Agreement and certain ancillary and supportive agreements related to the Sato Agreement.
In consideration of LNHC addressing these contractual obligations, Ligand is obligated to pass-through all future payments received
from Sato to LNHC.

    24

As
such, the Company has assessed the accounting treatment historically used by LNHC and has continued to account for the Sato Agreement
per ASC 606, as the Company’s rights and obligations have effectively remained unchanged despite the assignment of