Pelthos Therapeutics to Combine With Castle Creek Biosciences; Stock Falls 43%

What happened

Pelthos Therapeutics Inc., a Durham, North Carolina-based company that sells FDA-approved prescription skin treatments, announced on October 30, 2026 that it has signed a definitive agreement to combine with Castle Creek Biosciences, a privately held late-stage developer of redosable gene therapies, according to a Form 425 filed with the SEC that day.

The filing reproduces two communications Pelthos sent that morning: an email to all employees from CEO Scott Plesha and a note to healthcare professionals from Plesha and Chief Commercial Officer Sai Rangarao. Both point to a press release announcing the transaction.

Pelthos shares closed at $9.40, down 43.17% from the prior close of $16.54, on volume of 242,000 shares, about 5.4 times the average, according to the price data.

The two companies

Pelthos describes three novel FDA-approved products in its portfolio and says it is preparing 2027 launches of XEPI for impetigo and XEGLYZE for head lice, alongside continued commercialization of ZELSUVMI for molluscum contagiosum.

Castle Creek's lead asset is D-Fi (dabocemagene autoficel, also called FCX-007), a gene therapy candidate for dystrophic epidermolysis bullosa (DEB), a rare skin-blistering disease. The employee email says DEB 'has few options today,' and the healthcare-professional email notes D-Fi has received Orphan Drug Designation from the FDA.

What the filings say about the deal

The emails do not disclose the purchase price, exchange ratio or financing terms. They say only that the transaction is expected to close by the end of the first quarter of 2027 and that Pfelthos will file a registration statement on Form S-4 containing an information statement and prospectus.

On leadership: Plesha will continue as CEO of the combined company and the current Pelthos management team will lead it. Peter Greenleaf will serve as Executive Chair. The combined board will have 10 directors, two designated by Castle Creek.

The combined company intends to keep the Pelthos Therapeutics name. Until closing, the filing says, the two companies will operate independently.

The filing does not say why Pelthos shares fell. The forward-looking statement section lists, among other risks, the possibility that announcements relating to the transaction 'could have adverse effects on the market price of Pelthos's common stock.' It also refers to a 'concurrent private financing' that may not be consummated, without giving its size or terms.

What this means

A Form 425 is filed under Rule 425 of the Securities Act of 1933. It is the channel companies use to publicly disclose written communications about a pending merger or acquisition, such as employee memos, investor presentations or website posts. It is not the merger agreement itself and does not register the shares to be issued.

The document that will lay out the deal terms is a Form S-4 registration statement, which the filing says Pelthos intends to file. For a stock-for-stock combination, the S-4 contains the information statement and prospectus given to shareholders, including the exchange ratio and the background to the negotiations. That document has not been filed yet.

Two terms in the filing are worth unpacking. 'Orphan Drug Designation' is an FDA status for drugs aimed at rare diseases; it comes with incentives such as market exclusivity, but it is not an approval. 'Redosable' means the gene therapy can be given more than once, which the filing presents as a distinguishing feature of Castle Creek's platform.

Because Pelthos is the filer and the combined company keeps its name and CEO, this is structured as Pelthos acquiring Castle Creek, with Castle Creek securityholders receiving Pelthos stock. The one-third Castle Creek board representation (two of ten seats) is consistent with that structure, though the filing does not state the ownership split.

The next scheduled step is the Form S-4 and the shareholder communication process around it. The filing gives no closing date beyond 'by the end of the first quarter of 2027,' and notes that closing depends on regulatory clearances and the concurrent private financing.