Fortress Biotech Reports Financial Results for the Fourth Quarter and Full Year Ended December 31, 2016
March 16 2017 - 4:05PM
Fortress Biotech, Inc. (NASDAQ:FBIO) (“Fortress”), a
biopharmaceutical company dedicated to acquiring, developing and
commercializing novel pharmaceutical and biotechnology products,
today announced financial results and recent corporate highlights
for the fourth quarter and full year ended December 31, 2016.
Dr. Lindsay A. Rosenwald, Fortress’ Chairman,
President and Chief Executive Officer, said, “Fortress had another
productive year in 2016 and early 2017, with the launch of three
additional Fortress Company subsidiaries, Cellvation, Caelum
Biosciences, and Cyprium Therapeutics, which broaden our pipeline
in cellular therapeutics and rare disease. In addition, we
completed a tender offer purchasing a majority of National Holdings
Corporation, a full service investment banking and advisory firm,
which has a significant presence in biotechnology and the
life sciences. National presents multiple opportunities
for synergies with our core biotech drug development business. At
the same time, our established Fortress Companies have continued to
achieve significant milestones, including the publication of a case
study in The New England Journal of Medicine in which Mustang Bio’s
MB-101 CAR T therapy achieved an unprecedented complete response in
a glioblastoma patient. In 2017, we plan to continue to work with
our Fortress Companies to advance their pipelines in and toward
clinical development, and explore opportunities to strengthen our
subsidiary company portfolio.”
Financial Results:
- As of December 31, 2016, Fortress’ consolidated cash and cash
equivalents totaled $88.3 million, compared to $82.5 million as of
September 30, 2016, and $98.2 million as of December 31, 2015, an
increase of $5.8 million for the fourth quarter and a decrease of
$9.9 million year-to-date. These totals exclude restricted cash of
$15.9 million as of December 31, 2016 and September 30, 2016, and
restricted cash of $14.6 million as of December 31, 2015.
- Revenue totaled $16.5 million as of December 31, 2016, compared
to $0.9 million as of December 31, 2015. Total revenue as of
December 31, 2016 includes $6.2 million of Fortress revenue and
$10.3 million of revenue from National Holdings Corporation
(includes revenue from the date of the close of the acquisition,
September 9, 2016 through September 30, 2016).
- Research and development expenses were $29.6 million for the
year ended December 31, 2016, of which $22.6 million was related to
Fortress Companies. This compares to $18.4 million for 2015, of
which $8.4 million was related to Fortress Companies. Noncash
stock-based compensation expenses included in research and
development were $4.7 million for the year ended December 31, 2016,
and $5.8 million for 2015.
- Research and development expenses from license acquisitions
totaled $5.5 million for the year ended December 31, 2016, compared
to $11.4 million for the year ended December 31, 2015.
- General and administrative expenses were $34.0 million for the
year ended December 31, 2016, of which $15.4 million was related to
Fortress Companies. This compares to $21.6 million for 2015, of
which $6.7 million was related to Fortress Companies. Noncash
stock-based compensation expenses included in general and
administrative expenses were $7.4 million for the year ended
December 31, 2016, and $8.5 million for 2015.
- Net loss attributable to common stockholders was $55.1 million,
or $1.38 per share, for the year ended December 31, 2016, compared
to a net loss attributable to common stockholders of $48.4 million,
or $1.24 per share, for 2015.
Recent Fortress Biotech and Fortress Company
Highlights:
Fortress Biotech, Inc.
- Phase 1/2 data demonstrating CNDO-109-activated allogeneic
natural-killer cells are safe and well‐tolerated, and potentially
capable of extending complete remissions in high‐risk acute myeloid
leukemia patients were presented in May at the Innate Killer Summit
2016.
- In September 2016, Fortress, through its subsidiary FBIO
Acquisition, Inc., purchased approximately 56 percent of National
Holdings Corporation (NASDAQ:NHLD) common stock at a purchase price
of $3.25 per share in cash, for an aggregate purchase price of
approximately $22.9 million.
- Fortress recently launched three new Fortress Companies:
Cellvation, to develop cellular therapeutics for the treatment of
traumatic brain injury, Caelum Biosciences, to develop therapies
for amyloid light chain (“AL”) amyloidosis and Cyprium
Therapeutics, to develop novel therapies for the treatment of
Menkes disease and related copper metabolism disorders.
Avenue Therapeutics, Inc.
- In 2016, Avenue completed an end of Phase 2 meeting with the
U.S. Food and Drug Administration regarding its lead candidate,
intravenous (IV) tramadol, for the management of post-operative
pain. Based on the outcome, Avenue anticipates its Phase 3 study
will consist of three trials: an efficacy and safety study in an
orthopedic model, an efficacy and safety study in a soft tissue
model and an open-label safety study. Initiation of the Phase 3
study is planned for 2017.
- In December 2016, Avenue received Notices of Allowance from the
U.S. Patent and Trademark Office for two continuation patent
applications covering methods of administration for IV Tramadol;
issuance of both patents occurred in February 2017.
Caelum Biosciences, Inc.
- In January 2017, Caelum entered into an agreement with Columbia
University (“Columbia”) to secure exclusive worldwide license
rights to CAEL-101, a chimeric fibril-reactive monoclonal
antibody.
- Interim data from the ongoing Phase 1a/1b study of CAEL-101
were presented by Columbia in December 2016 at the American Society
of Hematology’s 58th Annual Meeting. These data demonstrate
CAEL-101 is safe and well-tolerated, and 67 percent of patients
with measurable disease burden showed organ response. Full Phase
1a/1b data are expected mid-2017.
Cellvation, Inc.
- On October 31, 2016, Cellvation secured exclusive worldwide
rights to three programs for traumatic brain injury (TBI) from The
University of Texas Health Science Center at Houston: two Phase 2
programs evaluating CEVA101 cell therapy in adult and pediatric TBI
patients, and CEVA-D, a next-generation bioreactor that enhances
the anti-inflammatory potency of bone marrow-derived cells without
genetic manipulation. Data from the Phase 2 CEVA101 studies are
expected in 2019.
- Phase 1 data demonstrating CEVA101 is safe and effective in
modulating the neuroinflammatory response and reducing secondary
injury in adults with TBI were published online in November 2016 in
STEM CELLS.
Checkpoint Therapeutics,
Inc.
- In January 2016, Checkpoint announced it signed a license
agreement with Teva Pharmaceutical Industries Ltd. for the
exclusive worldwide rights to develop and commercialize CK-102,
an oral poly (ADP-ribose) polymerase (PARP) inhibitor in early
clinical development for solid tumors. A Phase 1b study is
planned to commence in the next 12 months.
- In May 2016, Checkpoint entered into an exclusive worldwide
license agreement with Jubilant Biosys Ltd. to develop and
commercialize novel compounds that inhibit the BET protein BRD4. In
connection therewith, Checkpoint sublicensed development and
commercialization rights to the compounds in hematological
malignancies to TG Therapeutics, Inc. Checkpoint retains
development and commercialization rights in solid
tumors. Checkpoint plans to submit an Investigational New Drug
(“IND”) application for a Phase 1 study in the second half
of 2017.
- In September 2016, following approval of the IND, the first
patient was dosed in the Phase 1 dose-escalation portion of a Phase
1/2 study of epidermal growth-factor receptor (“EGFR”) inhibitor
CK-101. Checkpoint expects to initiate the Phase 2 safety and
efficacy portion of the study in patients with EGFR T790M
mutation‐positive non‐small cell lung cancer in the second half of
2017.
Cyprium Therapeutics, Inc.
- In March 2017, Cyprium entered into a Cooperative Research and
Development Agreement (CRADA) with the Eunice Kennedy Shriver
National Institute of Child Health and Human Development (NICHD),
part of the NIH, to advance the clinical development of Phase 3
candidate CUTX-101, a Copper Histidinate injection, for the
treatment of Menkes disease. Also effective in March 2017, Cyprium
and the NICHD entered into a worldwide, exclusive license agreement
to develop and commercialize adeno-associated virus (AAV)-based
gene therapy, called AAV-ATP7A, to deliver working copies of the
copper transporter that is defective in Menkes patients and to be
used in combination with CUTX-101.
Helocyte, Inc.
- In February and March 2016, respectively, Helocyte entered into
investigator-initiated clinical research support agreements with
City of Hope National Medical Center to support two Phase 2 studies
of Helocyte’s immunotherapies Triplex and PepVax for
cytomegalovirus control in allogeneic hematopoietic stem-cell
transplant recipients (“HSCT”). The ongoing Phase 2 studies are
also supported by grants from the National Cancer
Institute.
- From June to November 2016, Helocyte closed on sales of
convertible promissory notes raising aggregate gross proceeds of
approximately $4.4 million.
- Phase 1 data demonstrating Triplex is safe, well-tolerated and
highly immunogenic at multiple dose levels in healthy volunteers
were published in December 2016 online in Blood. These data
supported the initiation of the Phase 2 study of Triplex in HSCT
patients, which is expected to be fully enrolled by the second half
of 2017.
Journey Medical Corporation
(JMC)
- In January 2016, JMC entered into two licensing agreements with
third parties for the distribution of the first two products in the
company’s dermatology franchise: Luxamend®, a prescription wound
cream, and Ceracade®, an emollient for the treatment of various
types of dermatitis. Sales commenced for Luxamend® and Ceracade® in
April 2016 and June 2016, respectively.
- U.S. sales commenced in October 2016 for JMC’s Targadox® brand
of oral antibiotic, indicated for the treatment of severe
acne.
Mustang Bio, Inc.
- A case study demonstrating Mustang’s MB-101 (IL13Rα2-specific
CAR T cells) achieved a complete response in a glioblastoma patient
enrolled in the Phase 1 study was published in the December 29
edition of The New England Journal of Medicine. Additional
preclinical and Phase 1 data on MB-101 were presented at the
American Society of Gene and Cell Therapy 19th Annual Meeting in
May 2016, and the 21st Annual Meeting and Education Day of the
Society for Neuro-Oncology in November 2016.
- From October 2016 to January 2017, Mustang closed on a total of
approximately $94.5 million in a private placement financing, prior
to fees and expenses.
About Fortress BiotechFortress
Biotech, Inc. (“Fortress”) is a biopharmaceutical company dedicated
to acquiring, developing and commercializing novel pharmaceutical
and biotechnology products. Fortress develops and commercializes
products both within Fortress and through certain of its subsidiary
companies, also known as Fortress Companies. Additionally, Fortress
recently acquired a controlling interest in National Holdings
Corporation (NASDAQ:NHLD), a diversified independent brokerage
company (together with its subsidiaries, “NHLD”). In addition to
its internal development programs, Fortress leverages its
biopharmaceutical business expertise and drug development
capabilities and provides funding and management services to help
the Fortress Companies achieve their goals. Fortress and the
Fortress Companies may seek licensings, acquisitions, partnerships,
joint ventures and/or public and private financings to accelerate
and provide additional funding to support their research and
development programs. For more information, visit
www.fortressbiotech.com.
Forward-Looking StatementsThis
press release may contain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as amended. Such
statements include, but are not limited to, any statements relating
to our growth strategy and product development programs and any
other statements that are not historical facts. Forward-looking
statements are based on management’s current expectations and are
subject to risks and uncertainties that could negatively affect our
business, operating results, financial condition and stock price.
Factors that could cause actual results to differ materially from
those currently anticipated include: risks relating to our growth
strategy; our ability to obtain, perform under and maintain
financing and strategic agreements and relationships; risks
relating to the results of research and development activities;
uncertainties relating to preclinical and clinical testing; risks
relating to the timing of starting and completing clinical trials;
our dependence on third-party suppliers; our ability to attract,
integrate, and retain key personnel; the early stage of products
under development; our need for substantial additional funds;
government regulation; patent and intellectual property matters;
competition; as well as other risks described in our SEC filings.
We expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward looking statements
contained herein to reflect any change in our expectations or any
changes in events, conditions or circumstances on which any such
statement is based, except as required by law.
|
|
|
|
FORTRESS BIOTECH, INC. AND
SUBSIDIARIESConsolidated Balance
Sheets ($ in thousands except for share and
per share amounts) |
|
|
|
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
88,294 |
|
|
$ |
98,182 |
|
Accounts
receivable |
|
|
1,830 |
|
|
|
- |
|
Cash
deposits with clearing organizations |
|
|
1,030 |
|
|
|
- |
|
Receivables from broker-dealers and clearing organizations |
|
|
3,357 |
|
|
|
- |
|
Forgivable loans receivable |
|
|
1,712 |
|
|
|
- |
|
Securities owned, at fair value |
|
|
2,357 |
|
|
|
- |
|
Inventory |
|
|
203 |
|
|
|
- |
|
Other
receivables - related party |
|
|
1,790 |
|
|
|
156 |
|
Prepaid
expenses and other current assets |
|
|
9,061 |
|
|
|
1,599 |
|
Total
current assets |
|
|
109,634 |
|
|
|
99,937 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
7,376 |
|
|
|
309 |
|
Restricted cash |
|
|
15,860 |
|
|
|
14,586 |
|
Long-term investments,
at fair value |
|
|
1,414 |
|
|
|
2,485 |
|
Intangible asset -
license |
|
|
17,408 |
|
|
|
1,250 |
|
Goodwill |
|
|
18,645 |
|
|
|
- |
|
Other assets |
|
|
394 |
|
|
|
43 |
|
Total
assets |
|
$ |
170,731 |
|
|
$ |
118,610 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
24,295 |
|
|
$ |
10,438 |
|
Accrued
commissions and payroll payable |
|
|
11,940 |
|
|
|
- |
|
Deferred
clearing and marketing credits |
|
|
995 |
|
|
|
- |
|
Securities sold, not yet purchased, at fair value |
|
|
298 |
|
|
|
- |
|
Warrants
issuable - National |
|
|
14,359 |
|
|
|
- |
|
Interest
payable |
|
|
88 |
|
|
|
27 |
|
Interest
payable - related party |
|
|
77 |
|
|
|
- |
|
Notes
payable, short-term |
|
|
1,000 |
|
|
|
- |
|
Subsidiary convertible note, short-term, at fair value |
|
|
1,031 |
|
|
|
- |
|
Contingently issuable liabilities |
|
|
1,682 |
|
|
|
- |
|
Derivative warrant liability |
|
|
481 |
|
|
|
114 |
|
Other
current liabilities |
|
|
319 |
|
|
|
- |
|
Total
current liabilities |
|
|
56,565 |
|
|
|
10,579 |
|
|
|
|
|
|
|
|
|
|
Notes payable,
long-term (net of debt discount of $2,009 and $835 at December 31,
2016 and December 31, 2015, respectively) |
|
|
22,528 |
|
|
|
23,174 |
|
Subsidiary convertible
note, long-term, at fair value |
|
|
3,656 |
|
|
|
- |
|
Other long-term
liabilities |
|
|
5,014 |
|
|
|
584 |
|
Total
liabilities |
|
|
87,763 |
|
|
|
34,337 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
|
|
|
Convertible Preferred
stock, $.001 par value, 129,767 Series C shares authorized, 0
shares issued and outstanding as of December 31, 2016 and December
31, 2015, respectively |
|
|
- |
|
|
|
- |
|
Common Stock, $.001 par
value, 100,000,000 shares authorized, 48,932,023 and 47,147,032
shares issued and outstanding as of December 31, 2016 and December
31, 2015, respectively |
|
|
49 |
|
|
|
47 |
|
Additional
paid-in-capital |
|
|
283,697 |
|
|
|
246,955 |
|
Accumulated
deficit |
|
|
(245,251 |
) |
|
|
(190,156 |
) |
Total stockholders'
equity attributed to the Company |
|
|
38,495 |
|
|
|
56,846 |
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests |
|
|
44,473 |
|
|
|
27,427 |
|
Total stockholders'
equity |
|
|
82,968 |
|
|
|
84,273 |
|
Total
liabilities and stockholders' equity |
|
$ |
170,731 |
|
|
$ |
118,610 |
|
|
|
|
|
|
|
|
|
|
|
|
FORTRESS BIOTECH, INC. AND
SUBSIDIARIESConsolidated Statement of
Operations ($ in thousands except for share
and per share amounts) |
|
|
|
|
|
For the Years Ended December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Fortress |
|
|
|
|
|
|
|
|
|
|
|
|
Product
revenue, net |
|
$ |
3,587 |
|
|
$ |
273 |
|
|
$ |
- |
|
Revenue -
from a related party |
|
|
2,570 |
|
|
|
590 |
|
|
|
- |
|
Total
Fortress revenue |
|
|
6,157 |
|
|
|
863 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National |
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
|
|
5,388 |
|
|
|
- |
|
|
|
- |
|
Net
dealer inventory gains |
|
|
253 |
|
|
|
- |
|
|
|
- |
|
Investment banking |
|
|
2,829 |
|
|
|
- |
|
|
|
- |
|
Investment advisory |
|
|
904 |
|
|
|
- |
|
|
|
- |
|
Interest
and dividends |
|
|
155 |
|
|
|
- |
|
|
|
- |
|
Transfer
fees and clearing services |
|
|
386 |
|
|
|
- |
|
|
|
- |
|
Tax
preparation and accounting |
|
|
338 |
|
|
|
- |
|
|
|
- |
|
Other |
|
|
70 |
|
|
|
- |
|
|
|
- |
|
Total
National revenue |
|
|
10,323 |
|
|
|
- |
|
|
|
- |
|
Total revenue |
|
|
16,480 |
|
|
|
863 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Fortress |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold – product revenue |
|
|
790 |
|
|
|
- |
|
|
|
- |
|
Research
and development |
|
|
29,602 |
|
|
|
18,402 |
|
|
|
10,239 |
|
Research
and development – licenses acquired |
|
|
5,532 |
|
|
|
11,408 |
|
|
|
- |
|
General
and administrative |
|
|
34,003 |
|
|
|
21,584 |
|
|
|
10,413 |
|
Total
Fortress operating expenses |
|
|
69,927 |
|
|
|
51,394 |
|
|
|
20,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National |
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, compensation and fees |
|
|
10,414 |
|
|
|
- |
|
|
|
- |
|
Clearing
fees |
|
|
144 |
|
|
|
- |
|
|
|
- |
|
Communications |
|
|
177 |
|
|
|
- |
|
|
|
- |
|
Occupancy |
|
|
193 |
|
|
|
- |
|
|
|
- |
|
Licenses
and registration |
|
|
147 |
|
|
|
- |
|
|
|
- |
|
Professional fees |
|
|
327 |
|
|
|
- |
|
|
|
- |
|
Interest |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
Depreciation and amortization |
|
|
545 |
|
|
|
- |
|
|
|
- |
|
Other
administrative expenses |
|
|
315 |
|
|
|
- |
|
|
|
- |
|
Total
National operating expenses |
|
|
12,263 |
|
|
|
- |
|
|
|
- |
|
Total operating
expenses |
|
|
82,190 |
|
|
|
51,394 |
|
|
|
20,652 |
|
Loss from
operations |
|
|
(65,710 |
) |
|
|
(50,531 |
) |
|
|
(20,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
298 |
|
|
|
245 |
|
|
|
662 |
|
Interest
expense and financing fee |
|
|
(3,690 |
) |
|
|
(1,484 |
) |
|
|
(1,338 |
) |
Change in
fair value of derivative liabilities |
|
|
(1,039 |
) |
|
|
(438 |
) |
|
|
- |
|
Change in
fair value of subsidiary convertible note |
|
|
(78 |
) |
|
|
- |
|
|
|
- |
|
Change in
fair value of investments |
|
|
(1,071 |
) |
|
|
(1,675 |
) |
|
|
942 |
|
Total other
expenses |
|
|
(5,580 |
) |
|
|
(3,352 |
) |
|
|
266 |
|
Net
loss |
|
|
(71,290 |
) |
|
|
(53,883 |
) |
|
|
(20,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net loss
attributable to non-controlling interests |
|
|
16,195 |
|
|
|
5,455 |
|
|
|
- |
|
Net loss
attributable to common stockholders |
|
$ |
(55,095 |
) |
|
$ |
(48,428 |
) |
|
$ |
(20,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per common share |
|
$ |
(1.38 |
) |
|
$ |
(1.24 |
) |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding—basic and diluted |
|
|
39,962,657 |
|
|
|
39,146,589 |
|
|
|
36,323,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Lucy Lu, MD, Executive Vice President & Chief Financial Officer
Fortress Biotech, Inc.
781-652-4500; ir@fortressbiotech.com
Fortress Biotech Media Relations
Laura Bagby
6 Degrees
(312) 448-8098; lbagby@6degreespr.com
Fortress Biotech (NASDAQ:FBIO)
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Fortress Biotech (NASDAQ:FBIO)
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