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synopsis
Shares of Channel Therapeutics Corporation (CHRO) rocketed 61% on Thursday after the company entered into a definitive merger agreement with biopharmaceutical firm Ligand Pharmaceuticals Incorporated (LGND).
Under the agreement, Ligand’s wholly owned subsidiaries, Pelthos Therapeutics Inc. and LNHC, Inc., will combine with CHRO Merger Sub Inc., a wholly-owned subsidiary of Channel.
Channel will acquire 100% of the issued and outstanding equity interests of Pelthos Therapeutics and LNHC, and will change its name to Pelthos Therapeutics Inc.
Ligand has agreed to invest $18 million in the combined company, while a group of strategic investors led by Murchinson has agreed to invest $32 million.
The transaction is expected to close in the summer of 2025.
Once the transaction is completed, the combined company will trade on the NYSE American exchange under the ticker PTHS.
Channel, a non-opioid pain treatment therapeutics provider, stated that the combined company will initially focus on accelerating the commercialization of Pelthos’ FDA-approved Zelsuvmi topical gel for the treatment of Molluscum contagiosum infections in adults and pediatric patients aged one year and older.
Molluscum contagiosum is a poxvirus, afflicting an estimated 16.7 million people in the United States.
Ligand will be entitled to a 13% royalty on worldwide sales of Zelsuvmi, the company said.
The combined company will also retain Channel’s existing development programs for the treatment of various types of chronic pain, acute and chronic eye pain, and post-surgical nerve blocks, it added.
Channel CEO Frank Knuettel II said that the company performed “extensive due diligence” on the Zelsuvmi market opportunity.
“Strategically, it (the merger) provides the potential for near-term revenue generation from an FDA-approved drug, the opportunity to advance Channel’s existing NaV 1.7 programs, and expanded capitalization from strong, long-standing investors,” he said.
“This transaction presents a compelling opportunity to launch a commercial-ready product, with significant financial backing from Murchinson, that has the potential to deliver both near and long-term value to our shareholders,” said Ligand CEO Todd Davis.
On Stocktwits, retail sentiment around Ligand jumped further into the ‘extremely bullish’ territory over the past 24 hours coupled with a surge in message volume from ‘low’ to ‘extremely high’
LGND stock is down by about 3% this year but up by over 33% over the past 12 months.
Retail sentiment around Channel, meanwhile, jumped from ‘neutral’ to ‘extremely bullish’ territory over the past 24 hours.
CHRO stock is up by about 172% year-to-date but down by nearly 1.5% over the past 12 months.
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