Pelthos-Castle Creek Merger Gives Castle Creek Shareholders 5.2 Million Shares at Closing
Key Facts
Pelthos Therapeutics and Castle Creek Biosciences announced a definitive agreement on October 30, 2026, under which Castle Creek will merge with Pelthos, according to a company press release. The agreement provides for Castle Creek shareholders to receive 5.2 million Pelthos shares at closing, equivalent to about 32.5% of its shares on a fully diluted basis. The combined company will continue operating as Pelthos Therapeutics, with its shares continuing to trade on the NYSE American under the ticker PTHS after closing. The agreement expands Pelthos’ business beyond infectious dermatology products into treatments targeting serious skin diseases, according to the company. CEO Scott Plesha said the agreement "expands our focus beyond infectious dermatology into serious diseases of the skin."
Potential consideration for Castle Creek shareholders includes up to 5.8 million additional shares upon U.S. Food and Drug Administration approval of D-Fi. The agreement also provides for milestone payments totaling up to $300 million upon reaching specified development and commercialization milestones. These payments include $50 million upon achieving specified Phase 3 clinical milestones and up to $250 million tied to the first commercial sale and net sales milestones. These terms tie part of the consideration to D-Fi’s clinical, regulatory and commercial progress, according to Pelthos’ statement. The statement does not specify a fixed total transaction value among the available facts, as some consideration depends on reaching those milestones.
D-Fi is Castle Creek’s leading research program in the deal; the company describes it as its lead therapeutic candidate for dystrophic epidermolysis bullosa and says it is conducting a registrational trial. The Phase 3 study is evaluating the treatment for both the recessive and dominant forms of the disease, according to the program’s website. The deal announcement describes D-Fi as a modified gene-cell therapy injected intradermally, with plans to continue the Phase 3 study. Pelthos says the treatment is administered through intradermal injections every two months and carries cells that produce type VII collagen. D-Fi has also received orphan drug designation for the treatment of the disease, according to the company.
Dystrophic epidermolysis bullosa is associated with mutations in the COL7A1 gene, which is responsible for type VII collagen, according to the D-Fi program website. The disease affects the recessive and dominant forms targeted by the Phase 3 study. The program gives Pelthos exposure to a clinical-stage rare dermatology asset alongside its existing commercial products, while the treatment’s approval and next development stages remain tied to study results and regulatory processes. Ligand Pharmaceuticals led a total investment of $75 million in 2025 to support the D-Fi study and committed $50 million as part of the financing. Investors in that financing receive a high single-digit royalty, according to Ligand’s disclosure.
Pelthos enters the negotiations with a commercial portfolio of three FDA-approved products: Zelsuvmi, Xepi and Xeglyze, according to its second-quarter 2026 report. Zelsuvmi net revenue rose 45% to $15.4 million in that quarter, compared with $10.7 million in the first quarter, according to the results announcement. Dispensed units totaled 11,925 across 4,571 unique prescribers, a 48% quarter-over-quarter increase in units. By contrast, the company posted a net loss of $23.4 million in the second quarter, versus $25.1 million in the first quarter. It said its cash balance was $24.2 million on June 30, 2026, and that it expects it to support its current operating plan based on its estimates.
PTHS shares closed at $16.54 on October 29, 2026, according to EL7 data. The cited market data do not include details of the daily trading range, and the closing price predates the agreement announcement dated the following day. The boards of both companies approved the deal, but closing remains subject to customary closing conditions and approval by Castle Creek shareholders. The companies expect to complete it by the end of the first quarter of 2027. Castle Creek shareholders’ transition to Pelthos share ownership, and the additional consideration tied to D-Fi milestones, therefore remain contingent on closing and the specified conditions being met.