Full Press Release Details
| (Unaudited) June 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,817 | $ | - | ||||
| Accounts receivable, net | 48 | - | ||||||
| Inventory | 7,091 | 4,526 | ||||||
| Prepaid expenses and other current assets | 1,189 | 798 | ||||||
| Total current assets | 11,145 | 5,324 | ||||||
| Intangible assets, net | - | 9,802 | ||||||
| Goodwill | 6,604 | 6,604 | ||||||
| Property and equipment, net | 10,633 | 11,483 | ||||||
| Operating lease right-of-use assets, net | 3,452 | 3,646 | ||||||
| Other assets | 529 | 501 | ||||||
| Total assets | $ | 32,363 | $ | 37,360 | ||||
| LIABILITIES AND PARENT COMPANY NET INVESTMENT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 993 | $ | 1,712 | ||||
| Accrued expenses | 10,432 | 2,041 | ||||||
| Short-term Bridge loan | 6,053 | - | ||||||
| Operating lease liabilities, current portion | 626 | 617 | ||||||
| Deferred revenue, current portion | 1,072 | 1,178 | ||||||
| Total current liabilities | 19,176 | 5,548 | ||||||
| Deferred revenue, net of current portion | 1,763 | 2,246 | ||||||
| Deferred income tax liability | - | 85 | ||||||
| Operating lease liabilities, net of current portion | 2,940 | 3,117 | ||||||
| Other long-term liabilities | 17,441 | 15,939 | ||||||
| Total liabilities | 41,320 | 26,935 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Parent company net investment: | ||||||||
| Parent company net investment | (8,957 | ) | 10,425 | |||||
| Total parent company net investment | (8,957 | ) | 10,425 | |||||
| Total liabilities and parent company net investment | $ | 32,363 | $ | 37,360 |
accompanying notes are an integral part of these condensed financial statements.
Statements of Operations
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | $ | 317 | $ | 219 | $ | 611 | $ | 437 | ||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 3,938 | 2,288 | 6,670 | 5,617 | ||||||||||||
| Selling, general and administrative | 12,384 | 3,174 | 16,646 | 7,087 | ||||||||||||
| Amortization of intangibles | - | 178 | 162 | 357 | ||||||||||||
| Total operating expenses | 16,322 | 5,640 | 23,478 | 13,061 | ||||||||||||
| Operating loss | (16,005 | ) | (5,421 | ) | (22,867 | ) | (12,624 | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense | (930 | ) | (380 | ) | (1,556 | ) | (750 | ) | ||||||||
| Other income (expense) | (26 | ) | 2 | (49 | ) | (4 | ) | |||||||||
| Total other income (expense), net | (956 | ) | (378 | ) | (1,605 | ) | (754 | ) | ||||||||
| Loss before income tax | (16,961 | ) | (5,799 | ) | (24,472 | ) | (13,378 | ) | ||||||||
| Income tax benefit (expense) | - | 59 | - | 136 | ||||||||||||
| Net loss | $ | (16,961 | ) | $ | (5,740 | ) | $ | (24,472 | ) | $ | (13,242 | ) |
accompanying notes are an integral part of these condensed financial statements.
Statements of Changes in Parent Company Net Investment
| Parent company net investment | ||||
| Balance as of January 1, 2025 | $ | 10,425 | ||
| Net loss | (7,511 | ) | ||
| Parent allocation of share-based compensation | 1,348 | |||
| Transfer of intangible asset to parent company | (9,640 | ) | ||
| Net transfers from parent company | 7,778 | |||
| Balance as of March 31, 2025 | 2,400 | |||
| Net loss | (16,961 | ) | ||
| Parent allocation of share-based compensation | 1,744 | |||
| Net transfers from parent company | 3,860 | |||
| Balance as of June 30, 2025 | $ | (8,957 | ) | |
| Balance as of January 1, 2024 | $ | 9,294 | ||
| Net loss | (7,502 | ) | ||
| Parent allocation of share-based compensation | 981 | |||
| Net transfers from parent company | 6,921 | |||
| Balance as of March 31, 2024 | 9,694 | |||
| Net loss | (5,740 | ) | ||
| Parent allocation of share-based compensation | 883 | |||
| Net transfers from parent company | 5,786 | |||
| Balance as of June 30, 2024 | $ | 10,623 |
accompanying notes are an integral part of these condensed financial statements.
Statements of Cash Flows
| Six months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (24,472 | ) | $ | (13,242 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Parent allocation of share-based compensation | 3,092 | 1,864 | ||||||
| Accretion of interest for Reedy Creek obligation | 1,556 | 750 | ||||||
| Depreciation of property and equipment | 919 | 939 | ||||||
| Amortization of intangibles | 162 | 357 | ||||||
| Lease amortization expense | 347 | 347 | ||||||
| Inventory write-off | 264 | 248 | ||||||
| Other | 51 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (48 | ) | 3 | |||||
| Inventory | (2,829 | ) | (2,722 | ) | ||||
| Prepaid expenses | (391 | ) | (59 | ) | ||||
| Operating lease right-of-use assets | (153 | ) | (166 | ) | ||||
| Accounts payable | (719 | ) | (466 | ) | ||||
| Accrued expenses | 7,481 | 175 | ||||||
| Operating lease liabilities | (168 | ) | (146 | ) | ||||
| Deferred revenue | (589 | ) | (437 | ) | ||||
| Deferred income tax | (85 | ) | (136 | ) | ||||
| Other assets and liabilities | (82 | ) | 13 | |||||
| Net cash used in operating activities | (15,664 | ) | (12,678 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Purchases of property and equipment | (67 | ) | (29 | ) | ||||
| Net cash used in investing activities | (67 | ) | (29 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Proceeds from Pelthos investors | 6,910 | - | ||||||
| Net transfer from parent | 11,638 | 12,707 | ||||||
| Net cash provided by financing activities | 18,548 | 12,707 | ||||||
| Net increase in cash and cash equivalents | 2,817 | - | ||||||
| Cash and cash equivalents as of beginning of period | - | - | ||||||
| Cash and cash equivalents as of end of period | $ | 2,817 | $ | - | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Purchases of property and equipment with accounts payable and accrued expenses as of end of period | $ | - | $ | 3 |
accompanying notes are an integral part of these condensed financial statements.
to Condensed Financial Statements
values in thousands, except for per share amounts)
1: Organization and Nature of Operations
Inc. is a wholly-owned subsidiary of Ligand Pharmaceuticals Incorporated ("Ligand") initially incorporated for the
purpose to hold the assets and liabilities acquired from Novan, Inc. ("Novan"). On September 27, 2023, Ligand, through
LNHC, Inc., acquired certain assets and liabilities of Novan. This transaction (the "Novan Acquisition") was accounted
for by Ligand as a business combination. Novan was a medical dermatology company focused on developing and commercializing innovative
therapeutic products for skin diseases. Through its NITRICIL technology platform, Novan had concentrated on developing SB206 (berdazimer
gel, 10.3%) as a topical prescription gel for the treatment of viral skin infections, with a focus on molluscum contagiosum.
January 2023, Novan submitted a New Drug Application to the U.S. Food and Drug Administration (the "FDA") for berdazimer
gel, 10.3% as a topical treatment for molluscum contagiosum which was subsequently approved by the FDA on January 5, 2024, and
is commercially known as ZELSUVMI .
is a topical medication for the treatment of molluscum contagiosum in adults and pediatric patients one year of age or older.
The FDA approved ZELSUVMI as a novel drug for the treatment of molluscum infections. ZELSUVMI is the first and only topical prescription
medication that can be applied by patients, parents, or caregivers at home, outside of a physician's office, or other medical
setting to treat this highly contagious viral skin infection.
the date of the Novan Acquisition through March 24, 2025, LNHC held an IP portfolio that consisted of over 45 U.S. patents, 120
non-U.S. patents, and 25 pending patent applications worldwide along with substantial know-how and trade secrets. In addition
to ZELSUVMI, this IP portfolio provides material coverage for the NITRICIL platform technologies, licensed products and product
candidates. There are 14 issued U.S. patents covering ZELSUVMI which are expected to be listed in the Orange Book and which are
expected to expire beginning in 2026 and ending in 2035 (or potentially 2037 with patent extension).
March 24, 2025, LNHC assigned its rights to its IP portfolio to Ligand, and entered into an exclusive license and sublicense agreement
with Ligand, pursuant to which Ligand licensed to LNHC the intellectual property rights necessary to make, use, sell or offer
to sell ZELSUVMI for the treatment of molluscum contagiosum in humans worldwide except for Japan. In addition, on March 24, 2025,
LNHC and Ligand also entered into a Master Services Agreement under which Ligand, or related parties, may contract with LNHC for
LNHC to provide Ligand active pharmaceutical ingredients for clinical or commercial use related to NITRICIL technology. In addition,
the agreement also allows Ligand to require LNHC to provide manufacturing technology transfer services, if requested by Ligand,
for products utilizing NITRICIL technology other than ZELSUVMI for the treatment of molluscum contagiosum in humans, to a potential
third-party manufacturer.
2: Basis of Presentation and Significant Accounting Policies
the context otherwise requires, "LNHC" or the "Company", refers to LNHC, Inc. The Company's condensed
financial statements have been prepared on a stand-alone basis, in conformity with United States generally accepted accounting
principles ("U.S. GAAP").
Company Net Investment
Company is under the control of Ligand (commonly referred to as "Parent" or "Parent Company"). Accordingly,
the Parent Company net investment in the Company is shown in lieu of stockholder's equity in the condensed financial statements.
All significant intercompany transactions with the Parent Company are deemed to have been paid in the period the costs were incurred.
Expenses related to corporate allocations are considered to be effectively settled for cash in the condensed financial statements
at the time the transaction was recorded.
condensed financial statements include all revenues, expenses, assets and liabilities directly associated with the Company's
business activity, as well as an allocation of certain general and administrative expenses related to facilities, functions and
services provided by the Parent.
expenses have been allocated to the Company based on a relative usage of (benefit from) certain corporate divisions, or specific
corporate employees, in the Company's business. Management believes that methodology applied to the Company corporate expenses
allocations are reasonable and consistent across the Company's reporting periods.
of the allocations and estimates in the condensed financial statements are based on assumptions that management believes are reasonable.
However, the condensed financial statements included herein may not be indicative of the financial position, results of operations
and cash flows of the Company in the future or if the Company had been a separate, stand-alone publicly traded entity during the
the Novan Acquisition, LNHC was dependent upon Ligand for all of its working capital and financing requirements, as Ligand uses
a centralized approach for cash management and financing its operations. There were no cash amounts specifically attributable
to LNHC for the historical periods presented; therefore, there is no cash reflected in the condensed financial statements. Accordingly,
cash and cash equivalents have not been allocated to LNHC in the condensed financial statements. Financing transactions related
to LNHC are accounted for as a component of net Parent investment in the condensed balance sheets and as a financing activity
including an interest expense component allocation on the accompanying condensed statements of cash flows.
accompanying condensed financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business.
expects to continue to incur losses for the foreseeable future, as it continues to invest in commercialization activities for
ZELSUVMI, add operational, financial and management information systems and personnel to support Company operations and incur
additional costs associated with operating as a public company. LNHC's ability to continue its operations is dependent upon
its ability to obtain additional capital in the future and generate cash flows from operations.
on LNHC's current projections, management believes there is substantial doubt about its ability to continue to operate as
a going concern and fund its operations through at least the next twelve months following the issuance of these condensed financial
statements. While the Company completed an equity offering of $50.1 million subsequent to the end of the reporting period,
see Note (13), Subsequent Events, the Company expects that costs associated with the commercial launch of ZELSUVMI (acquired pursuant
to the Merger), in addition to other activities, will require the Company to raise additional funds. However, there is no assurance
that the Company will be able to raise such additional funds on acceptable terms, if at all. If the Company raises additional
funds by issuing securities, existing stockholders may be diluted.
accompanying condensed financial statements included in this report do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that
may result from the matters discussed herein. While the Company believes in the viability of the Company's strategy to generate
sufficient revenue, control costs, and raise additional funds, when necessary, there can be no assurances to that effect. The
Company's ability to continue as a going concern is dependent upon the ability to implement the business plan, generate
sufficient revenues, raise capital, and to control operating expenses.
preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the condensed financial statements and the reported
amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The Company measures
inventory using the first-in, first-out method and values inventory at the lower of cost or net realizable value. Inventory value
includes amounts related to materials, manufacturing labor and overheads. The Company adjusts its inventory for potentially obsolete
inventory. The adjustment for obsolescence is generally an estimate of the value of inventory that is expected to expire in the
future based on projected sales volume and product expiration or expected sell-by dates. These assumptions require the Company
to analyze the aging of and forecasted demand for its inventory and make estimates regarding future product sales.
initial regulatory approval for ZELSUVMI in January 2024, the Company expensed costs relating to production of pre-launch inventory
as research and development expense in its condensed statements of operations in the period incurred. Inventory acquired and the
related costs after January 5, 2024, the date of the FDA's approval of ZELSUVMI, are capitalized.
Company's product is subject to strict quality control and monitoring that is performed throughout the manufacturing process,
including release of work-in-process to finished goods. In the event that certain batches or units of product do not meet quality
specifications, the Company records a write-down of any potential unmarketable inventory to its estimated net realizable value.
The amount of expense related to inventory write down as a result of excess, obsolescence, scrap, or other reasons is recorded