Pelthos Therapeutics Inc. (PTHS) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call presents a mixed picture. Financial performance shows strong initial demand but also significant losses. Product development highlights reliance on a few products, with risks in commercialization. Market strategy lacks clarity, and financial health is strained by recent financing. Shareholder returns were not discussed. Q&A reveals cautious optimism but also management's reluctance to provide specifics. Overall, the sentiment is neutral, with potential for both positive and negative outcomes depending on execution and market conditions.

Key Financial Performance

Net Product Revenue $7.1 million for Q3 2025, driven by strong initial demand for ZELSUVMI. This is the first full quarter of commercial operations.

Operating Loss $15.4 million for Q3 2025. The loss reflects the costs associated with the launch of ZELSUVMI and other operational expenses.

GAAP Net Loss $16.2 million for Q3 2025, representing $5.30 per basic and diluted common share. On an as-converted basis, this is a loss of $1.83 per share.

Non-GAAP Net Loss $9.6 million for Q3 2025 after removing noncash and unusual items. This is $3.14 per basic and diluted common share, or $1.08 per share on an as-converted basis.

Cost of Goods Sold (COGS) $2.3 million for Q3 2025, including a fair value step-up of inventory due to the merger. Normalized COGS is expected to be lower after running through the current inventory.

Gross-to-Net (GTN) Adjustments 25.3% for Q3 2025, reflecting distribution costs, Medicaid discounts, payer contracts, and co-pay card programs. Expected to stabilize in the mid- to high 30% range by Q1 2026.

Cash and Accounts Receivable $14.2 million in cash and $8 million in accounts receivable as of September 30, 2025.

Inventory Channel Approximately 4 weeks of inventory on hand at the end of Q3 2025. Future quarters are expected to maintain 3-4 weeks of inventory.

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Operating Highlights

Launch of ZELSUVMI: Pelthos launched ZELSUVMI, a novel topical nitric oxide releasing product for treating molluscum contagiosum (MC) in patients aged one year and older. It is the first FDA-approved at-home treatment for MC.

Acquisition of Xepi: Pelthos acquired Xepi, an FDA-approved topical treatment for Impetigo, addressing antibiotic-resistant skin infections. This complements ZELSUVMI and leverages the existing commercial infrastructure.

Market expansion for ZELSUVMI: ZELSUVMI has been added to Medicaid formularies in New York, Texas, and Alabama without prior authorization requirements. The company is expanding its sales force by 14 representatives to cover additional metropolitan areas.

Revenue and financial performance: Generated $7.1 million in net product revenue in Q3 2025, with a GAAP net loss of $16.2 million. The company expects to achieve cash flow breakeven by the end of 2026.

Manufacturing capabilities: Pelthos owns a purpose-built manufacturing facility for ZELSUVMI's active pharmaceutical ingredient, ensuring control over production and intellectual property.

Strategic focus on pediatric dermatology: Pelthos is building a portfolio of topical treatments for cutaneous infections, focusing on pediatric dermatology with products like ZELSUVMI and Xepi.

Expansion of intellectual property: The company has patent protection for ZELSUVMI until mid-2035, with potential extension to Q3 2037, ensuring a competitive advantage.

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Risk or Challenges

Financial Performance: The company reported a net loss of $16.2 million for Q3 2025, with an operating loss of $15.4 million. Despite strong initial sales of ZELSUVMI, the company is not yet profitable and expects to achieve cash flow breakeven only by the end of 2026.

Revenue Dependency: The company's revenue is heavily dependent on the success of ZELSUVMI, its first commercial product. Any issues with its adoption, competition, or regulatory challenges could significantly impact financial performance.

Manufacturing Risks: Pelthos owns and operates a purpose-built manufacturing facility for ZELSUVMI's active pharmaceutical ingredient. Any disruptions in manufacturing or supply chain could adversely affect product availability and revenue.

Regulatory and Payer Landscape: While ZELSUVMI has been added to some Medicaid formularies, the company has not initiated any commercial payer contracts. Future changes in payer policies or regulatory hurdles could impact product accessibility and revenue.

Sales Force Expansion: The company plans to expand its sales force by 14 additional representatives. This expansion involves costs and risks, including the potential for underperformance in new territories.

Product Portfolio Risks: The company is heavily reliant on ZELSUVMI and the newly acquired Xepi. Delays or challenges in the commercialization of Xepi could impact the company's growth strategy.

Debt and Financing: The company recently closed an $18 million convertible notes financing, which adds financial obligations, including interest payments and royalties. This could strain financial resources if revenue growth does not meet expectations.

Market Competition: ZELSUVMI is the first FDA-approved at-home treatment for molluscum contagiosum, but the company faces potential competition from other treatments or new market entrants.

Legacy Programs: The company has legacy clinical-stage programs for pain treatment that are not a current focus. These programs require funding, which could divert resources from core commercial activities.

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Guidance & Outlook

Cash flow breakeven: The company expects to achieve cash flow breakeven from operations before the end of 2026, driven by the strong growth rate of ZELSUVMI and a focus on responsible spending.

Sales force expansion: Pelthos plans to expand its sales force by adding 14 additional sales representatives in large metropolitan areas not currently covered. These new hires are expected to be fully trained and operational by mid-January 2026, aiming to accelerate the growth of ZELSUVMI.

Revenue growth: The company projects a significant increase in net revenue for Q4 2025 compared to Q3 2025, supported by strong sales trends and an annual gross revenue run rate of approximately $52 million as of late October 2025.

Product launch and market penetration: Pelthos anticipates continued strong growth for ZELSUVMI, aiming to make it the first-line treatment of choice for molluscum contagiosum (MC). The company also plans to introduce sales of Xepi, a complementary product, in late 2026.

Manufacturing and intellectual property: Pelthos owns a purpose-built manufacturing facility for ZELSUVMI's active pharmaceutical ingredient and has patent protection extending to mid-2035, with a potential extension to Q3 2037. This provides a lengthy runway for revenue generation.

Gross-to-net (GTN) adjustments: The company expects GTNs to stabilize in the mid- to high 30% range by Q1 2026, up from 25.3% in Q3 2025.

Inventory management: Pelthos plans to maintain 3-4 weeks of inventory on hand throughout the distribution system for future quarters.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:How many unique prescribers are there, and how many are writing multiple prescriptions? What portion of target accounts does this cover?

A:There are 1,169 unique prescribers. About 60% have written one prescription, nearly 500 have written two or three, and three doctors have written between 22 to 27 prescriptions. The current sales force covers about 8,000 target accounts, with plans to expand to 10,000.

Q:How does the holiday season impact patient visits and prescriptions?

A:The holiday season may soften growth slightly as patients need to visit offices to get prescriptions, and offices are often closed during holidays. However, the impact varies by holiday.

Q:What is the refill rate for the first set of tubes, and how many units are typically prescribed?

A:The first set of tubes covers 30 days for up to 40 lesions. If therapy extends to 12 weeks, about three units are needed. Some prescriptions include more than one unit, reducing the need for refills. The current refill rate is approximately 1.2 units, which may increase over time.

Q:How many of the 50 sales reps are profitable, and what are the expectations for the additional 14 reps? Is there an opportunity for price increases?

A:The sales force is showing strong growth and profitability, justifying the addition of 14 reps to cover large metropolitan areas currently without coverage. The company believes the product is priced correctly but is open to responsible price increases in the future, though no specifics were disclosed.

Q:Is there seasonality in the diagnosis and treatment of molluscum? What is the peak sales guidance?

A:There is no significant seasonality in molluscum diagnosis and treatment, though there may be slight increases during back-to-school periods. The company maintains a base case of $175 million peak revenue by 2028 but is not revising this guidance yet.

Q:Are there plans for additional acquisitions similar to Xepi?

A:The Xepi acquisition is highly complementary to ZELSUVMI, targeting the same audience. The company is evaluating other opportunities, including leveraging the NitroCil platform for external genital warts and other indications.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the profitability of individual sales reps and the exact timeline for the additional 14 reps to become profitable. They also did not disclose specifics on potential price increases or additional acquisitions beyond general evaluations.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

PTHS Transcript

Pelthos Therapeutics Inc. (PTHS) Q3 2025 Earnings Call Transcript

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