Pelthos and Castle Creek plan merger to target skin diseases

This transaction would add Castle Creek’s gene-modified cell therapy candidate D-Fi to Pelthos’s dermatology portfolio.

The combined company would operate as Pelthos Therapeutics and continue trading on the NYSE American under the ticker ‘PTHS’.

Approved by both companies’ boards, the deal is expected to close by the end of the first quarter of 2027, subject to customary conditions, including approval from Castle Creek shareholders.

Castle Creek shareholders would receive 5.2 million shares of Pelthos common stock when the transaction closes. The shares would represent 32.5% of Pelthos’ fully diluted shares.

They could also receive up to a further 5.8 million Pelthos shares if D-Fi receives US Food and Drug Administration (FDA) approval.

The agreement also provides for up to $300m in milestone payments, including $50m tied to specified Phase III clinical endpoints and up to $250m linked to D-Fi’s first commercial sale and certain net sales targets.

The milestone payments would be made in cash, or in cash and Pelthos shares where necessary to maintain the intended tax treatment of the deal.

Castle Creek shareholders would also be entitled to 80% of net proceeds from the sale of any priority review voucher awarded following D-Fi’s FDA approval.

Also known as dabocemagene autoficel or FCX-007, D-Fi is Castle Creek’s lead development candidate. The company plans to continue a Phase III study of the injectable treatment for dystrophic epidermolysis bullosa, a rare inherited condition associated with mutations in the COL7A1 gene.

The treatment is designed as a redosable, gene-modified cell therapy delivered through intradermal injections every other month.

Castle Creek chairman and CEO Matt Gantz said: “Joining with Pelthos will provide the commercial infrastructure to help realise the D-Fi opportunity and accelerate the pipeline of new indications from our platform.”

Castle Creek is also developing a topical formulation of D-Fi using its fibroblast technology. It is pursuing other potential applications for the technology in skin diseases, including malignancies and inflammatory conditions.

The transaction would add Castle Creek’s fibroblast-based platform to Pelthos’s existing Nitricil platform.

Scott Plesha would remain CEO of the combined company while Peter Greenleaf would become executive chair. The board would have ten directors, including two appointed by Castle Creek.