Corporate recombinations include $50M, new life for Durham’s Pelthos
By Jim Shamp | This article originally via NCBiotech's blog
There’s strength in numbers in the global pharmaceutical marketplace, so a small Durham pharmaceutical company is adding numbers to launch its novel prescription drug that won federal marketing approval last year.
Pelthos Therapeutics, a Durham-based wholly owned subsidiary of Ligand Pharmaceuticals (Nasdaq: LGND), is combining with Channel Therapeutics (NYSE American: CHRO) to help with the launch of Pelthos’ drug ZELSUVMI.
The deal, expected to close by the end of this summer, also includes $50 million in equity capital raised from a group of strategic investors led by Murchinson.
Novan, a spinout from the University of North Carolina at Chapel Hill, developed Pelthos’ drug ZELSUVMI. Novan went bankrupt in 2023 before it could commercialize its proprietary nitric oxide-based technology. So Pelthos bought the rights to the drug and ushered it through the 2024 approval by the U.S. Food and Drug Administration (FDA).
The combined company will operate under Pelthos Therapeutics Inc. and trade on the NYSE American exchange under the ticker PTHS. It will initially focus on accelerating the commercialization of ZELSUVMI (berdazimer), the only prescription topical gel that patients over the age of one year can use at home to treat the viral skin infection Molluscum contagiosum (commonly called molluscum).
Molluscum: a common, troublesome skin infection
Molluscum is a poxvirus and one of the most common skin infections seen by dermatologists, pediatric dermatologists, and pediatricians, afflicting an estimated 16.7 million people in the United States alone.
Molluscum infections spread to others through contact with infected people or contaminated objects like towels, toys, furniture, swimming pools, and other surfaces. Children are the most vulnerable to molluscum infections. Adults with weakened immune systems or who are sexually active with a molluscum-infected partner are also particularly vulnerable.
Molluscum infections typically bring raised, flesh-colored or red bumps that can appear anywhere on the body, including the face, hands, trunk, genitals, back of the knees, armpits, and other sensitive areas. People with molluscum may suffer discomfort from itching, secondary bacterial infections from scratching, or atopic dermatitis, as well as immense social stigma from having visible molluscum lesions, which typically last for months and frequently last for years.
“There is a significant unmet medical need for an easy-to-use, safe, and efficacious treatment option for molluscum that can be applied by patients, parents, or caregivers at home via prescription,” said Scott Plesha, CEO of Pelthos.
“We believe ZELSUVMI will complement pediatric and adult dermatologists’, general pediatricians’, and all other health care providers’ current efforts to treat molluscum while reducing the need for repeated invasive in-office procedures and the associated wait times needed to treat this highly infectious disease. Having commercialized both dermatology and pain management products, I am excited to lead the combined company into this next growth phase.”
Ligand is headquartered in Jupiter, Fla., and Channel is based in Freehold, N.J.
CEOs applaud the transaction’s benefits
“This transaction presents a compelling opportunity to launch a commercial-ready product, with significant financial backing from Murchinson, that has the potential to deliver both near- and long-term value to our shareholders,” said Todd Davis, CEO of Ligand.
“We executed a complex restructuring to acquire the Pelthos assets, incubated the technology that became ZELSUVMI, achieved FDA approval for this first-in-class medication, and assembled a world-class team, to bring this therapy to market. Our ability to identify highly differentiated assets and execute customized transactions to maximize their value with equity and royalty rights distinguishes Ligand’s business model and value creation strategy.”
Frank Knuettel II, CEO of Channel, commented, “We are very excited about the merger with Pelthos. We have performed extensive due diligence on the ZELSUVMI market opportunity and their team and operations, and we believe this is an extraordinary opportunity for current Channel shareholders. Strategically, it provides the potential for near-term revenue generation from an FDA-approved drug, the opportunity to advance Channel’s existing NaV 1.7 programs, and expanded capitalization from strong, long-standing investors.”
Details of the agreement
Under the terms of the merger agreement, Channel will acquire 100% of the issued and outstanding equity interests of Pelthos, and will change its name to Pelthos Therapeutics Inc. In connection with the transaction, Ligand has agreed to invest $18 million in the combined company and the Investor Group has agreed to invest $32 million for a total of $50 million.
Upon completion of the transaction, Plesha will become CEO of the combined company, and Knuettel will become CFO. The board of directors will consist of Plesha, two independent directors, Peter Greenleaf and Matt Pauls, two board members appointed by Ligand, and an additional two independent directors who are reasonably acceptable to Murchinson, both of whom are current Channel board members.
