Pelthos Therapeutics Inc.PTHS
Pelthos Therapeutics Inc. Goodwill & Intangibles Disclosure
GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Company’s goodwill balance as of December 31, 2025 was $24,681. The entire goodwill balance relates to the LNHC, Inc. acquisition during the year ended December 31, 2025.
None of the goodwill is expected to be deductible for income tax purposes. All of the goodwill has been allocated to the Commercial Operations reporting unit and operating segment. See Note 3 — “Acquisition of LNHC, Inc.” for detail.
Biofrontera Asset Purchase Agreement
On November 6, 2025, the Company entered into an Asset Purchase Agreement (the “Biofrontera Asset Purchase Agreement”) with Biofrontera Inc., a Delaware corporation (“Biofrontera”), pursuant to which Biofrontera sold all of its right, title and interest in (i) XEPI, (ii) all of the assets of Biofrontera pertaining to the manufacture, sale and distribution of XEPI, (iii) all intellectual property of Biofrontera relating to XEPI, including, without limitation (A) certain patent and patent applications, including all specifically associated goodwill and (B) trademarks and trademark applications, including all specifically associated goodwill (iv) all preclinical data, records and reports relating to XEPI; (v) certain contracts related to XEPI; (vi) all of the licenses and agreements to which seller is a party pertaining to the manufacture, sale and distribution of XEPI; and (vii) to the extent transferable in accordance with applicable laws, all regulatory filing related to XEPI.
The aggregate purchase price payable by the Company to Biofrontera for the acquired assets will not exceed $10,000 and will consist of (i) a cash payment of $3,000; (ii) a cash payment of $1,000 following the availability of certain commercial quantities of XEPI, subject to certain conditions; and (iii) two contingent milestone payments of $3,000 due upon generating two separate net sales achievements of XEPI.
In connection with the acquisition of XEPI, the Company simultaneously entered into a standard third-party manufacturing services agreement in the ordinary course.
Ferrer License Agreement
On November 6, 2025, the Company entered into a License and API Supply Agreement (the “Ferrer License Agreement”) with Ferrer Internacional, S.A. (“Ferrer”) and Interquim, S.A.U. (“Interquim”). Pursuant to the Ferrer License Agreement, Ferrer will grant the Company an exclusive, sublicensable, royalty-bearing license to manufacture and commercialize XEPI in the Territory, as well as an exclusive, royalty-free sublicensable license to use Ferrer’s trademarks for the purpose of marketing, distributing, promoting and selling XEPI. Ferrer will supply analytical test methods and other testing know-how required to perform testing as required by applicable regulatory authorities.
Interquim will act as the supplier to the Company of XEPI in the Territory. Pursuant to the Ferrer License Agreement, the Company has agreed to order from Interquim certain minimum amounts of XEPI based on 24-month forecasts provided by the Company, of which the first 8 months of such forecasts are considered binding. The Company is required to purchase 100% of its requirements for XEPI from Interquim at a specified price during the term of the Ferrer License Agreement.
The initial term of the Ferrer License Agreement is for an initial twelve-year period following the commercial launch of XEPI and is automatically renewed thereafter for successive one-year periods unless the Company provides notice of termination to Ferrer at least 3 months before the end of then-current term. The Ferrer License Agreement is otherwise terminated in accordance with the termination provisions provided therein.
The Ferrer License Agreement contains certain representations, warranties, limitations of liabilities, confidentiality and indemnity obligations and other provisions customary for an agreement of its type.
The aggregate transaction price payable by the Company to Ferrer includes: (i) an upfront payment of $1,200, payable upon the Company’s receipt of the initial quantity of API purchased pursuant to an initial purchase of API, once it is determined that the API strictly complies with all of the requirements and representations and warranties of the Ferrer License Agreement; and (ii) an on-going royalty of 7% based on net sales of the XEPI. In addition, the Company also
executed a work order related to an initial supply of API in an amount of $456. This upfront purchase will be accounted for as a separate transaction.
XEPI Transaction
The Biofrontera Asset Purchase Agreement and the Ferrer License Agreement were entered into in contemplation of each other to achieve a combined commercial effect. Additionally, the execution of the Biofrontera Asset Purchase Agreement was contingent upon the execution of the Ferrer License Agreement. As such, the Biofrontera Asset Purchase Agreement and the Ferrer License Agreement are combined and accounted for as a single transaction (the “XEPI Transaction”).
The Company determined that the acquired assets associated with the XEPI Transaction do not meet the definition of a business and should be accounted for as an asset acquisition.
The following table summarizes the consideration for the XEPI Transaction for the year ended December 31, 2025:
| Consideration Type | Counterparty | Contractual Amount | Allocated Purchase Price | |||||||||||||||||
| Upfront Payment - Asset Purchase Agreement | Biofrontera | $ | 3,000 | $ | 3,000 | |||||||||||||||
| Contingent Consideration - Achievement of Commercial Quantities | Biofrontera | 1,000 | 1,000 | |||||||||||||||||
| Contingent Consideration - Achievement of Sales Based Milestones | Biofrontera | 6,000 | — | |||||||||||||||||
| Contingent Consideration - Acceptance of Initial API Purchase | Ferrer | 1,200 | 1,200 | |||||||||||||||||
| Xepi Transaction - Transaction Expenses | Various | 880 | 880 | |||||||||||||||||
| $ | 12,080 | $ | 6,080 | |||||||||||||||||
| Royalty Payments on Net Sales of Xepi | Ferrer | 7 | % | — | % | |||||||||||||||
The XEPI Transaction intangible asset will be amortized over the 6-year expected useful life of the intellectual property, which is determined based on the last to expire patent underlying the XEPI intellectual property. The Company will assess the remaining useful life of the intangible assets each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.
As of the closing date of the XEPI Transaction, the Company determined that the contingent payments are both considered probable and reasonably estimable and will recognize the fair value of the liabilities as part of the cost of the asset acquisition. The Company determined that the full $1,000 and $1,200 contractual values are expected to be paid to Biofrontera and Ferrer, respectively, and therefore recorded the initial liability at $2,200. The Company also believes $2,200 approximates the fair value of the obligation as the Company is expected to receive the API and achieve commercial quantities within one year of the closing date. Given the initial probability of being met, any adjustments to present value are therefore deemed immaterial. As such, the Company recorded $2,200 of contingent consideration within current liabilities on its consolidated balance sheets as of December 31, 2025.
XEGLYZE Asset Purchase Agreement
On November 20, 2025, the Company entered into a Downpayment Agreement for XEGLYZE assets purchase (the “Downpayment Agreement”) with Hatchtech Pty Ltd. (“Hatchtech”) to purchase the right, title and interest in XEGLYZE, an FDA-approved Abametapir lotion treatment for head lice infestation in humans. The purchase includes all assets of the seller pertaining to the associated product intellectual property, preclinical data, associated regulatory materials, and all inventory and other tangible personal property and materials used or held for use in connection with the Product. On December 23, 2025, Pelthos and Hatchtech entered into an Asset Purchase Agreement (the “XEGLYZE Asset Purchase Agreement”) for the transferred assets.
As outlined by the Downpayment Agreement, the Company was to pay Hatchtech a total purchase price of $1,800 of which, $450 was made as a down payment on November 20, 2025 upon execution of the Downpayment Agreement. On December 29, 2025, the date of closing of the acquisition, the Company paid the remaining $1,350 to Hatchtech.
Though the XEGLYZE Asset Purchase Agreement referenced tangible assets, including inventory, components, packaging, supplies, equipment, machinery, tooling, computers, hardware, furniture, and fixtures related to the Product, no
tangible assets were transferred to the Company. Additionally, no liabilities were assumed by the Company as a result of the XEGLYZE Asset Purchase Agreement. The Company will be responsible for all future liabilities that arise on or after the closing date, directly or indirectly.
The Company determined that the acquired assets associated with the XEGLYZE Asset Purchase Agreement do not meet the definition of a business and should be accounted for as an asset acquisition. The Company acquired the XEGLYZE intellectual property rights including all patents, trade names, trademarks, know-how, technical data, and all other XEGLYZE proprietary and intellectual property rights, which are recognized as a single intangible asset. The total purchase price of $1,817, will be allocated to the XEGLYZE intangible asset, including $17 for transaction costs.
The intangible asset will be amortized over the 9-year expected useful life of the intellectual property, which is determined based on the expiration date of the patent underlying the XEGLYZE intellectual property. The Company will assess the remaining useful life of the intangible assets each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.
Intangible Assets
The Company’s definite-lived intangible assets balance as of December 31, 2025 was $39,470.
The following table presents both definite and indefinite lived intangible assets as of December 31, 2025, comprised primarily of acquired product rights related to the LNHC, Inc. acquisition, as discussed in Note 3 — “Acquisition of LNHC, Inc.” and the asset acquisitions of XEPI and XEGLYZE in the fourth quarter of 2025, described above:
| Initial Carrying Value | Impairment | Accumulated Amortization | Net Book Value | Remaining Useful Life (Years) | ||||||||||||||||||||||
| Definite-lived intangible assets | ||||||||||||||||||||||||||
| Developed technology | $ | 32,200 | $ | — | $ | (1,326) | $ | 30,874 | 11.67 | |||||||||||||||||
| Amended Sato license | 1,000 | (285) | (70) | 645 | 2.25 | |||||||||||||||||||||
| Xepi | 6,080 | — | (147) | 5,933 | 6.08 | |||||||||||||||||||||
| Xeglyze | 1,817 | — | (5) | 1,812 | 8.97 | |||||||||||||||||||||
| Website development | 214 | — | (8) | 206 | 3.11 | |||||||||||||||||||||
| Total definite-lived intangible assets | $ | 41,311 | $ | (285) | $ | (1,556) | $ | 39,470 | ||||||||||||||||||
| Indefinite-lived intangible assets | ||||||||||||||||||||||||||
| Goodwill | 24,681 | — | — | 24,681 | ||||||||||||||||||||||
| Total goodwill and other identifiable intangible assets | $ | 65,992 | $ | (285) | $ | (1,556) | $ | 64,151 | ||||||||||||||||||
Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful life of the respective asset. The Company’s amortization expense was $1,556 for the year ended December 31, 2025.
For the year ended December 31, 2025, the Company recorded an impairment of its Sato license intangible asset, that was recorded as part of the LNHC, Inc. acquisition on July 1, 2025, in an amount of $285. This impairment was solely related to the change of the expected future cash flows due to the Company based on changes in its rights given as part of the Convertible Securities Purchase Agreement, described in Note 7 — “Notes Payable”. The Company recorded no other impairment of goodwill or other intangible assets during the year ended December 31, 2025.
The following table represents annual amortization of definite lived intangible assets for the next five fiscal years, and thereafter:
| Developed Technology | Amended Sato License | Xepi | Xeglyze | Website Development | Total | ||||||||||||||||||||||||||||||
| 2026 | $ | 2,645 | $ | 286 | $ | 975 | $ | 202 | $ | 66 | $ | 4,174 | |||||||||||||||||||||||
| 2027 | 2,645 | 286 | 975 | 202 | 66 | 4,174 | |||||||||||||||||||||||||||||
| 2028 | 2,645 | 73 | 978 | 203 | 66 | 3,965 | |||||||||||||||||||||||||||||
| 2029 | 2,645 | — | 975 | 202 | 8 | 3,830 | |||||||||||||||||||||||||||||
| 2030 | 2,645 | — | 975 | 202 | — | 3,822 | |||||||||||||||||||||||||||||
| 2031 and thereafter | 17,649 | — | 1,055 | 801 | — | 19,505 | |||||||||||||||||||||||||||||
| Total amortization | $ | 30,874 | $ | 645 | $ | 5,933 | $ | 1,812 | $ | 206 | $ | 39,470 | |||||||||||||||||||||||
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.