Pelthos Therapeutics Inc. filed a Form 8-K on October 30, 2026, disclosing that it entered into an Agreement and Plan of Merger with Castle Creek Biosciences, Inc. on that same date, outlining a two-step merger structure and contingent consideration tied to the development of D-Fi.

Key Highlights

  • Merger structure: Castle Creek Biosciences will first merge into Pelthos subsidiary Merger Sub, then immediately merge into Merger Sub II, resulting in Castle Creek becoming a wholly owned subsidiary of Pelthos.
  • Upfront share consideration: Castle Creek stockholders will receive an aggregate of 5,200,000 shares of Pelthos Common Stock (par value $0.0001 per share) at the closing of the First Merger, with 10% held in escrow for two years to secure indemnification obligations.
  • Contingent Shares: An additional 5,800,000 shares of Pelthos Common Stock will be issued if FDA approval of D-Fi is received on or prior to March 31, 2036, subject to reduction of 5% per complete calendar quarter elapsed after March 31, 2031 and on or before the approval date.
  • Milestone Payments: Up to $300.0 million in total milestone payments are structured across five triggers, including $50.0 million upon a specified clinical milestone for D-Fi on or before June 30, 2029, and up to $75.0 million upon D-Fi net sales reaching $500.0 million in any trailing twelve-month period.
  • PRV Interest: Castle Creek stockholders will retain the right to 80% of net proceeds from any FDA priority review voucher granted in connection with D-Fi approval.
  • Post-closing ownership: According to the filing, Castle Creek stockholders are expected to own approximately 32.5% and Pelthos securityholders approximately 67.5% of Pelthos Common Stock on a fully diluted basis immediately following the First Merger, excluding Contingent Shares and before giving effect to the PIPE Financing.
  • Tax treatment: The Mergers are intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, according to the filing.

Pelthos and Castle Creek Merger Terms: Structure, Consideration, and Conditions

According to the Form 8-K filed by Pelthos Therapeutics Inc. (NYSE American:PTHS) on October 30, 2026, the company entered into an Agreement and Plan of Merger with Castle Creek Biosciences, Inc., a Delaware corporation, on that date. The transaction involves two merger subsidiaries: Credit Card Merger Sub, Inc. and Credit Card Merger Sub II, LLC, both wholly owned subsidiaries of Pelthos. Paragon Biosciences, LLC is named as the Securityholder Representative. The filing also notes this 8-K is intended to simultaneously satisfy the filing obligation as a written communication pursuant to Rule 425 under the Securities Act.

The filing discloses that the upfront merger consideration consists of 5,200,000 shares of Pelthos Common Stock allocated among Castle Creek stockholders based on deemed liquidation event provisions of Castle Creek's certificate of incorporation. Beyond that, the agreement provides for contingent consideration in the form of Contingent Shares (up to 5,800,000 shares of Pelthos Common Stock conditioned on FDA approval of D-Fi), five Milestone Payments totaling up to $300.0 million linked to clinical and commercial benchmarks for D-Fi, and PRV Interest equal to 80% of net proceeds from any FDA priority review voucher. The filing states that the amount and composition of milestone or priority review voucher payments may be adjusted to include shares of Pelthos Common Stock to preserve the intended tax treatment, subject to a share cap.

The merger is subject to several closing conditions, including written consent approval from requisite Castle Creek stockholders, approval of the Pelthos Common Stock issuance by NYSE American under Sections 710 through 713, filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Pelthos filing a registration statement on Form S-4 with the SEC. The filing states that outstanding Merger Partner Options will be terminated immediately prior to the Initial Effective Time, and unexercised Merger Partner Warrants will be treated in accordance with their terms and thereafter terminated.

What Was Disclosed

Pelthos Therapeutics disclosed entry into a merger agreement with Castle Creek Biosciences on October 30, 2026, covering a two-step merger structure, 5,200,000 upfront shares, up to $300.0 million in milestone payments, up to 5,800,000 contingent shares tied to D-Fi FDA approval, and 80% PRV Interest for Castle Creek stockholders.