Fortress Biotech Reports First Quarter 2017 Financial Results and Recent Corporate Highlights
May 10 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 its financial results and recent corporate
highlights for the quarter ended March 31, 2017.
Dr. Lindsay A. Rosenwald, Fortress’ Chairman,
President and Chief Executive Officer, said, “Fortress had a strong
start to 2017, with the launch of our subsidiaries Caelum
Biosciences and Cyprium Therapeutics, which we believe strengthens
our rare disease portfolio. Importantly, we announced a Cooperative
Research and Development Agreement between Cyprium and the NICHD to
advance the clinical development of Cyprium’s Phase 3 candidate
CUTX-101 in Menkes disease, a rare and devastating pediatric
illness. We also reported that Caelum announced the dosing of the
final patient in its Phase 1b study of CAEL-101 for the treatment
of AL amyloidosis, a fatal orphan disease that affects organ
function. In addition, our established subsidiaries continued to
deliver on key milestones, including Mustang Bio raising a total of
approximately $95.0 million in private placement financings to
support its CAR T pipeline. We look forward to the continued
clinical advancement of our Fortress Companies, and are evaluating
opportunities to expand our portfolio through compelling new
indications and in-licensing opportunities.”
Financial Results:
- As of March 31, 2017, Fortress’ consolidated cash and cash
equivalents totaled $134.0 million compared to $88.3 million at
December 31, 2016, an increase of $45.7 million for the quarter.
These totals exclude restricted cash of $15.9 million and cash
deposits with clearing organizations of $1.0 million.
- Net revenue totaled $44.7 million for the first quarter of
2017, compared to $0.7 million for the first quarter of 2016. Net
total revenue as of March 31, 2017 includes $2.8 million of
Fortress revenue and $41.9 million of revenue from National
Holdings Corporation (“National”), which we acquired in September
2016, with no revenue attributable to National prior to the
acquisition.
- Research and development expenses were $7.1 million for the
first quarter of 2017, of which $6.0 million was related to
Fortress Companies. This compares to $7.7 million for the first
quarter of 2016, of which $6.0 million was related to Fortress
Companies. Non-cash stock-based compensation expenses included in
research and development were $0.8 million for the first quarter of
2017, and $1.3 million for the first quarter of 2016.
- Research and development expenses from license acquisitions
totaled $1.3 million for the first quarter of 2017, compared to
$0.1 million for the first quarter of 2016.
- General and administrative expenses were $10.3 million for the
first quarter of 2017, of which $7.1 million was related to
Fortress Companies. This compares to $7.9 million for the first
quarter of 2016, of which $4.0 million was related to Fortress
Companies. Non-cash stock-based compensation expenses included in
general and administrative expenses were $2.1 million for the first
quarter of 2017, and $1.6 million for the first quarter of
2016.
- National’s operating expenses totaled $43.1 million for the
first quarter of 2017, with no expenses attributable to National
prior to our acquisition of the company in September 2016.
- Net loss attributable to common stockholders was $12.0 million,
or $0.30 per share, for the first quarter of 2017, compared to a
net loss attributable to common stockholders of $12.2 million, or
$0.31 per share, for the first quarter of 2016.
Recent Fortress Biotech and Fortress Company
Highlights:
Fortress Biotech, Inc.
- Fortress recently launched two new Fortress Companies: 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 February 2017, two continuation patents covering methods of
administration for intravenous tramadol for the treatment of acute
pain were issued by the U.S. Patent and Trademark Office
(“USPTO”).
Caelum Biosciences, Inc.
- In January 2017, Michael Spector was appointed Chief Executive
Officer and a member of the Board of Directors of Caelum.
- 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.
- In April 2017, the U.S. Department of Health & Human
Services confirmed the transfer of two U.S. Food and Drug
Administration (“FDA”) Orphan Drug Designations for CAEL‐101 from
Columbia to Caelum. The designations cover use as a therapeutic
agent for patients with AL amyloidosis and use as a radio‐imaging
agent in amyloidosis.
- In May 2017, Columbia dosed the final patient in the Phase 1b
trial of CAEL-101. Preliminary Phase 1b data are expected mid-2017,
with full data anticipated by the end of the year.
Checkpoint Therapeutics, Inc.
- In February 2017, the USPTO issued a composition of matter
patent for CK-101, an oral, third-generation epidermal growth
factor receptor (“EGFR”) inhibitor in development for the treatment
of EGFR mutation-positive non-small cell lung cancer.
- In April 2017, preclinical data on CK-101 and anti-programmed
cell death ligand-1 (“PD-L1”) antibody, CK-301, were presented in
poster sessions at the American Association for Cancer Research
Annual Meeting.
Cyprium Therapeutics, Inc.
- In March 2017, Lung Yam, M.D., Ph.D., was appointed Chief
Executive Officer and a member of the Board of Directors of
Cyprium.
- 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 National Institutes of Health (“NIH”), to advance the
clinical development of Phase 3 candidate CUTX-101 (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 the adeno-associated virus (“AAV”)-based gene therapy
AAV-ATP7A to deliver working copies of the copper transporter that
is defective in Menkes patients. AAV-ATP7A will be used in
combination with CUTX-101.
Mustang Bio, Inc.
- From October 2016 to March 2017, Mustang closed on a total of
approximately $95.0 million in private placement financings, prior
to fees and expenses.
- In April 2017, Mustang appointed Manuel Litchman, M.D., as
President and Chief Executive Officer, as well as a member of the
Board of Directors.
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 subsidiary
companies, also known as Fortress Companies. 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
SUBSIDIARIES |
Condensed Consolidated Balance
Sheets |
($ in thousands except for share and per share
amounts) |
(Unaudited) |
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
134,037 |
|
|
$ |
88,294 |
|
Accounts receivable |
|
|
1,368 |
|
|
|
1,830 |
|
Cash deposits with clearing organizations |
|
|
1,030 |
|
|
|
1,030 |
|
Receivables from broker-dealers and clearing organizations |
|
|
2,858 |
|
|
|
3,357 |
|
Forgivable loans receivable |
|
|
1,528 |
|
|
|
1,712 |
|
Securities owned, at fair value |
|
|
1,206 |
|
|
|
2,357 |
|
Inventory |
|
|
204 |
|
|
|
203 |
|
Other receivables - related party |
|
|
1,034 |
|
|
|
1,790 |
|
Prepaid expenses and other current assets |
|
|
8,542 |
|
|
|
9,061 |
|
Total current assets |
|
|
151,807 |
|
|
|
109,634 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
7,386 |
|
|
|
7,376 |
|
Restricted cash |
|
|
15,860 |
|
|
|
15,860 |
|
Long-term investments, at fair value |
|
|
746 |
|
|
|
1,414 |
|
Intangible assets |
|
|
17,077 |
|
|
|
17,408 |
|
Goodwill |
|
|
18,645 |
|
|
|
18,645 |
|
Other
assets |
|
|
390 |
|
|
|
394 |
|
Total assets |
|
$ |
211,911 |
|
|
$ |
170,731 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
24,864 |
|
|
$ |
23,871 |
|
Accrued commissions and payroll payable |
|
|
10,190 |
|
|
|
11,940 |
|
Contingent consideration payable |
|
|
623 |
|
|
|
424 |
|
Deferred clearing and marketing credits |
|
|
943 |
|
|
|
995 |
|
Securities sold, not yet purchased, at fair value |
|
|
1 |
|
|
|
298 |
|
Warrants issuable - National |
|
|
10,096 |
|
|
|
14,359 |
|
Interest payable |
|
|
89 |
|
|
|
88 |
|
Interest payable - related party |
|
|
96 |
|
|
|
77 |
|
Notes payable, short-term |
|
|
2,105 |
|
|
|
1,000 |
|
Subsidiary convertible note, short-term, at fair value |
|
|
3,147 |
|
|
|
1,031 |
|
Contingently issuable liabilities |
|
|
- |
|
|
|
1,682 |
|
Derivative warrant liability |
|
|
402 |
|
|
|
481 |
|
Other current liabilities |
|
|
244 |
|
|
|
319 |
|
Total current liabilities |
|
|
52,800 |
|
|
|
56,565 |
|
|
|
|
|
|
|
|
|
|
Notes
payable, long-term (net of debt discount of $2,549 and $2,009 at
March 31, 2017 and December 31, 2016, respectively) |
|
|
26,137 |
|
|
|
22,528 |
|
Subsidiary convertible note, long-term, at fair value |
|
|
1,637 |
|
|
|
3,656 |
|
Other
long-term liabilities |
|
|
5,020 |
|
|
|
5,014 |
|
Total liabilities |
|
|
85,594 |
|
|
|
87,763 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Convertible Preferred stock, $.001 par value, 129,767 Series C
shares authorized, 0 shares issued and outstanding as of March 31,
2017 and December 31, 2016, respectively |
|
|
- |
|
|
|
- |
|
Common Stock, $.001 par value, 100,000,000 shares authorized,
50,319,919 and 48,932,023 shares issued and outstanding as of March
31, 2017 and December 31, 2016, respectively |
|
|
50 |
|
|
|
49 |
|
Additional paid-in-capital |
|
|
304,929 |
|
|
|
283,697 |
|
Accumulated deficit |
|
|
(257,233 |
) |
|
|
(245,251 |
) |
Total
stockholders' equity attributed to the Company |
|
|
47,746 |
|
|
|
38,495 |
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
78,571 |
|
|
|
44,473 |
|
Total
stockholders' equity |
|
|
126,317 |
|
|
|
82,968 |
|
Total liabilities and stockholders' equity |
|
$ |
211,911 |
|
|
$ |
170,731 |
|
FORTRESS BIOTECH, INC. AND
SUBSIDIARIES |
Condensed Consolidated Statement of
Operations |
($ in thousands except for share and per share
amounts) |
(Unaudited) |
|
|
|
|
For the Three Months Ended March
31, |
|
|
|
2017 |
|
|
2016 |
|
Revenue |
|
|
|
|
|
|
|
|
Fortress |
|
|
|
|
|
|
|
|
Product revenue, net |
|
$ |
2,085 |
|
|
$ |
383 |
|
Revenue - from a related party |
|
|
693 |
|
|
|
277 |
|
Net Fortress revenue |
|
|
2,778 |
|
|
|
660 |
|
|
|
|
|
|
|
|
|
|
National |
|
|
|
|
|
|
|
|
Commissions |
|
|
24,506 |
|
|
|
- |
|
Net dealer inventory gains |
|
|
2,511 |
|
|
|
- |
|
Investment banking |
|
|
7,061 |
|
|
|
- |
|
Investment advisory |
|
|
3,385 |
|
|
|
- |
|
Interest and dividends |
|
|
716 |
|
|
|
- |
|
Transfer fees and clearing services |
|
|
2,498 |
|
|
|
- |
|
Tax preparation and accounting |
|
|
856 |
|
|
|
- |
|
Other |
|
|
371 |
|
|
|
- |
|
Total National revenue |
|
|
41,904 |
|
|
|
- |
|
Net
revenue |
|
|
44,682 |
|
|
|
660 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Fortress |
|
|
|
|
|
|
|
|
Cost of goods sold - product revenue |
|
|
469 |
|
|
|
- |
|
Research and development |
|
|
7,110 |
|
|
|
7,736 |
|
Research and development – licenses acquired |
|
|
1,294 |
|
|
|
83 |
|
General and administrative |
|
|
10,252 |
|
|
|
7,932 |
|
Total Fortress operating expenses |
|
|
19,125 |
|
|
|
15,751 |
|
|
|
|
|
|
|
|
|
|
National |
|
|
|
|
|
|
|
|
Commissions, compensation and fees |
|
|
37,258 |
|
|
|
- |
|
Clearing fees |
|
|
738 |
|
|
|
- |
|
Communications |
|
|
722 |
|
|
|
- |
|
Occupancy |
|
|
1,008 |
|
|
|
- |
|
Licenses and registration |
|
|
405 |
|
|
|
- |
|
Professional fees |
|
|
1,263 |
|
|
|
- |
|
Interest |
|
|
4 |
|
|
|
- |
|
Depreciation and amortization |
|
|
506 |
|
|
|
- |
|
Other administrative expenses |
|
|
1,230 |
|
|
|
- |
|
Total National operating expenses |
|
|
43,134 |
|
|
|
- |
|
Total
operating expenses |
|
|
62,259 |
|
|
|
15,751 |
|
Loss
from operations |
|
|
(17,577 |
) |
|
|
(15,091 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expenses) |
|
|
|
|
|
|
|
|
Interest income |
|
|
136 |
|
|
|
75 |
|
Interest expense and financing fee |
|
|
(698 |
) |
|
|
(620 |
) |
Change in fair value of derivative liabilities |
|
|
4,342 |
|
|
|
(89 |
) |
Change in fair value of subsidiary convertible note |
|
|
(97 |
) |
|
|
- |
|
Change in fair value of investments |
|
|
(668 |
) |
|
|
(918 |
) |
Total
other income (expenses) |
|
|
3,015 |
|
|
|
(1,552 |
) |
Net loss |
|
|
(14,562 |
) |
|
|
(16,643 |
) |
|
|
|
|
|
|
|
|
|
Net
loss attributable to non-controlling interests |
|
|
(2,580 |
) |
|
|
(4,438 |
) |
Net loss attributable to common stockholders |
|
$ |
(11,982 |
) |
|
$ |
(12,205 |
) |
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per common share |
|
$ |
(0.30 |
) |
|
$ |
(0.31 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding—basic and diluted |
|
|
40,357,711 |
|
|
|
39,658,188 |
|
Contact:
Lucy Lu, M.D., 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
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