Pelthos Therapeutics Inc. (NYSE American: PTHS) has acquired the U.S. commercialization rights to Xepi® (ozenoxacin) Cream, 1%, from Biofrontera Inc. and Ferrer Internacional S.A., while simultaneously securing $18 million in private convertible notes financing. The acquisition adds a complementary dermatology product to Pelthos' portfolio, which is anchored by ZELSUVMI™ for molluscum contagiosum treatment.
Addressing Critical Unmet Need in Pediatric Dermatology
Xepi is a non-fluorinated quinolone antimicrobial indicated for the topical treatment of impetigo due to Staphylococcus aureus or Streptococcus pyogenes in adult and pediatric patients two months of age and older. The drug was developed by Ferrer and Medimetriks Pharmaceuticals and received FDA approval in 2017, marking the first new novel treatment for impetigo in more than 10 years.
Impetigo is a highly contagious bacterial skin infection that affects approximately 3 million people in the U.S. every year and is most common in children ages 2 to 5. The condition is among the most common bacterial skin infections seen in pediatric offices and spreads easily within families and in crowded settings such as schools and childcare facilities.
"As bacterial resistance continues to rise, particularly to commonly used topical antibiotics like mupirocin, the need for effective alternatives in treating impetigo has never been greater," said Lawrence A. Schachner, MD, Chair and Professor Emeritus at the University of Miami Department of Dermatology. "Xepi is one of the few treatment options for children that can act against both methicillin-resistant and mupirocin-resistant Staphylococcus aureus. We believe it is a significant therapeutic advancement for clinicians and patients facing infections that no longer respond to traditional therapies."
Strategic Acquisition Terms and Commercial Plans
Under the acquisition agreement, Pelthos will pay Biofrontera $3.0 million and Ferrer $1.2 million upfront, with additional payments based on the availability of commercial quantities of Xepi and the achievement of sales-based milestones. The company will pay royalties on U.S. net sales of Xepi to Ferrer and the investors.
Biofrontera has owned the U.S. rights to Xepi since 2019 but has not been actively promoting the product. Pelthos intends to re-launch Xepi in late 2026, leveraging its existing commercial infrastructure to promote multiple innovative brands in the pediatric and dermatology markets.
"This acquisition represents an excellent investment opportunity and marks an exciting new chapter in the Pelthos growth story," said Scott Plesha, CEO of Pelthos. "Xepi is well-positioned to address antimicrobial resistance in pediatric dermatology, and we believe it will provide physicians with an important alternative to first-line impetigo treatments."
$18 Million Convertible Notes Financing
Pelthos has closed on an $18 million convertible notes financing with existing investors, including Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) and a group of investors led by Murchinson Ltd. The Notes will be secured obligations of Pelthos and will bear interest at a rate of 8.5% per annum, payable quarterly in arrears, with maturity on November 6, 2027.
The Notes will be convertible at an initial conversion price of $34.442, representing the lower of the Official Closing Price immediately preceding the signing of the binding agreement or the average Official Closing Price for the five trading days immediately preceding the agreement signing.
The company anticipates using the proceeds to acquire and relaunch Xepi, accelerate the commercialization of ZELSUVMI, and for general working capital purposes. In addition to the Notes, investors will be entitled to a low single-digit royalty on U.S. net sales of Xepi and additional milestone payments and royalties on ZELSUVMI net sales in Japan, if approved.
"The convertible notes transaction demonstrates the ongoing confidence of our existing investors," said Frank Knuettel II, CFO of Pelthos. "The additional capital from this transaction allows us to add a complementary product to our portfolio, strengthens our balance sheet, and will help support the commercial growth of ZELSUVMI, our novel medicine for molluscum contagiosum."
