Fortress Biotech Reports Second Quarter 2024 Financial Results and Recent Corporate Highlights
August 13 2024 - 4:05PM
Fortress Biotech, Inc. (Nasdaq: FBIO) (“Fortress”), an innovative
biopharmaceutical company focused on acquiring and advancing assets
to enhance long-term value for shareholders through product
revenue, equity holdings and dividend and royalty revenue, today
announced financial results and recent corporate highlights for the
second quarter ended June 30, 2024.
Lindsay A. Rosenwald, M.D., Fortress’ Chairman,
President and Chief Executive Officer, said, “We had a very
productive first half of the year and we anticipate an exciting
second half, as we have a New Drug Application (“NDA”) and a
Biologics License Application (“BLA”) on file with the U.S. Food
and Drug Administration (“FDA”) from our diversified portfolio,
both with PDUFA goal dates in the fourth quarter, including DFD-29
for rosacea and cosibelimab for metastatic and locally advanced
cutaneous squamous cell carcinoma (“cSCC”). Our late-stage
candidates could generate up to three regulatory approvals in the
next 12 months and a potential fourth BLA submission as early as
2025. Additionally, we had a solid second quarter 2024 of product
revenue from our marketed dermatology products of $14.9 million,
representing growth of approximately 15% compared to first quarter
2024 product revenues of $13.0 million. We continue to prioritize
the development of our candidates and the expansion of our business
for long-term success. This involves business development efforts
and the growth of additional revenue streams, all aimed at
benefiting our shareholders. Our business model provides the
potential for significant growth as we acquire new assets and our
subsidiary and partner companies grow in value, allowing for the
opportunity to collect diversified cashflows such as royalties,
milestones, product revenues, cash and stock dividends and through
meaningful monetizations.”
Recent Corporate
Highlights1:
Regulatory Updates
- In March 2024, the FDA accepted the
NDA for DFD-29 (Minocycline Hydrochloride Modified Release
Capsules, 40 mg) and set a PDUFA goal date of November 4,
2024. If approved, DFD-29 has the potential to be the new
treatment paradigm for the millions of patients suffering from
inflammatory lesions and erythema of rosacea. Both double blinded,
randomized controlled DFD-29 Phase 3 clinical trials achieved their
co-primary and all secondary endpoints with subjects completing the
16-week treatment with no significant safety issues. DFD-29
demonstrated statistical superiority compared to both Oracea
capsules and placebo for Investigator’s Global Assessment (IGA)
treatment success and the reduction in the total inflammatory
lesion count in both clinical trials. Additionally, DFD-29 showed
significantly superior reduction in Clinicians Erythema Assessment
compared to placebo in both of the Phase 3 clinical trials. DFD-29
is currently in development at our partner company, Journey Medical
Corporation (Nasdaq: DERM) (“Journey Medical”).
- In July 2024, the FDA accepted the
BLA resubmission for cosibelimab, our investigational anti-PD-L1
antibody, as a treatment for patients with metastatic or locally
advanced cSCC who are not candidates for curative surgery or
radiation, and set a PDUFA goal date of December 28, 2024. In June
2024, we reached alignment with the FDA on our BLA resubmission
strategy for cosibelimab and announced the resubmission of the BLA
in July 2024. Cosibelimab is currently in development at our
partner company, Checkpoint Therapeutics, Inc. (Nasdaq: CKPT)
(“Checkpoint”).
Clinical Updates
- In May 2024, we announced that the
last patient had completed dosing in a Phase 1b/2a study evaluating
AJ201 in the U.S. for the treatment of spinal and bulbar muscular
atrophy (“SBMA”), also known as Kennedy’s Disease. SBMA is a
debilitating rare genetic neuromuscular disease primarily affecting
men. Topline data for the Phase 1b/2a clinical trial of AJ201 to
treat SBMA are currently expected in the second half of 2024. A
webcast replay of the Key Opinion Leader event that took place in
April 2024 highlighting expert perspectives on SBMA is available on
the Events page of Avenue’s website at https://avenuetx.com/. AJ201
is currently in development at our partner company, Avenue
Therapeutics, Inc. (Nasdaq: ATXI) (“Avenue”).
- The Phase 2 clinical trial of
Triplex, a cytomegalovirus vaccine, for adults co-infected with
Human Immunodeficiency Virus (“HIV”) and CMV is now fully enrolled
with topline data anticipated in the fourth quarter of 2024. The
study aims to show that vaccination with Triplex can safely elicit
a CMV-specific immune response and reduce asymptomatic CMV
replication in a population of people with HIV on suppressive
antiretroviral therapy. The study will also evaluate whether this
intervention might reduce chronic inflammation and immune
activation, as compared to placebo, and thus, potentially reduce
related mortality and morbidity. Triplex is currently in
development at our subsidiary company, Helocyte, Inc.
- In May 2024, we announced that the
first patient was dosed in a multi-center, placebo-controlled,
randomized Phase 2 study of Triplex, a vaccine for control of CMV,
in patients undergoing liver transplantation. The trial will enroll
up to 416 CMV seronegative prospective liver transplant recipients
and will be conducted across up to 20 nationally recognized
transplant centers in the U.S. The trial is funded by a grant from
the National Institute of Allergy and Infectious Diseases of the
National Institutes of Health that could provide over $20 million
in non-dilutive funding. We believe this data set could ultimately
be used to support the approval of Triplex in this setting.
Other Updates
- In July 2024, we announced a
collaboration to explore the combined therapeutic potential of
cosibelimab, our anti-PD-L1 antibody, with GC Cell’s Immuncell-LC,
an innovative autologous Cytokine Induced Killer (“CIK”) T cell
therapy composed of cytotoxic T lymphocytes and natural killer T
cells.
- In July 2024, our majority owned
and controlled subsidiary company, Urica Therapeutics, Inc.
(“Urica”), entered into an asset purchase agreement, royalty
agreement, and related agreements (collectively, the “Transaction
Documents”) with Crystalys Therapeutics, Inc. (“Crystalys”).
Crystalys is a Delaware corporation incorporated in 2022 and seeded
by leading life sciences institutional investors. Under the
Transaction Documents, Urica transferred rights to its URAT1
inhibitor product candidate in development for the treatment of
gout, dotinurad, and related intellectual property, licenses and
agreements to Crystalys. In return, Crystalys issued to Urica
shares of its common stock equal to 35% of Crystalys’ outstanding
equity. The Transaction Documents also grant Urica a securitized
three percent (3%) royalty on future net sales of dotinurad to be
paid by Crystalys, as well as the right to receive nominal cash
reimbursement payments for certain clinical and development costs
incurred by Urica related to dotinurad.
- In October 2023, we announced an
exclusive worldwide option agreement with City of Hope (“COH”) to
license certain intellectual property relating to a CMV/HIV
bi-specific Chimeric Antigen Receptor (“CAR”) (collectively,
CMV/HIV-CAR) T cell program for the treatment of adults living with
HIV, optionally in combination with Triplex. Additionally, the
California Institute for Regenerative Medicine awarded a $11.3
million grant to COH to fund a Phase 1 clinical trial involving the
CMV/HIV-CAR T. In preclinical studies, administration of the
bi-specific CAR T cells followed by administration of a CMV vaccine
successfully eradicated HIV, including from latent reservoirs.
Commercial Product Updates
- Journey Medical’s total net
revenues for the second quarter ended June 30, 2024 were $14.9
million, compared to total net revenues of $13.0 million for the
first quarter ended March 31, 2024.
General Corporate:
- In April 2024, Avenue announced the
exercise of warrants for $4.4 million in gross proceeds and a
1-for-75 reverse split of its issued and outstanding common
stock.
- In May and June 2024, Mustang Bio
raised approximately $6.5 million across two offerings of its
common stock and warrants.
- In July 2024, Checkpoint raised $12
million in a registered direct offering priced at-the-market under
Nasdaq rules.
- In July 2024, Fortress’ Board of
Directors paused the payment of dividends on the Company’s 9.375%
Series A Cumulative Redeemable Perpetual Preferred Stock (the
“Series A Preferred Stock”) until further notice. The Company
believes pausing the dividend is in the best interest of the
Company and its stakeholders to maintain financial flexibility
ahead of potentially significant inflection points. Dividends on
the Series A Preferred Stock accrue in accordance with their terms;
the pausing of these dividends will defer approximately $0.7
million in cash dividend payments each month. The Board intends to
revisit its decision regarding the monthly dividend regularly and
will assess the profitability and cash flow of the Company to
determine whether and when the suspension should be lifted.
- Also in July 2024, Fortress reduced
its total debt by entering into a new loan agreement maturing in
July 2027 with funds managed by Oaktree Capital Management, L.P.
(“Oaktree”), a leading global investment firm. The Company received
an initial tranche of $35 million and is eligible to draw an
additional $15 million with Oaktree’s consent. In connection with
the new loan agreement, the Company repaid its prior term loan with
Oaktree of $50 million resulting in a net paydown of $15 million of
debt excluding accrued interest and prepayment fees.
Financial Results:
- As of June 30, 2024, Fortress’
consolidated cash and cash equivalents totaled $76.2 million,
compared to $83.8 million as of March 31, 2024 and compared to
$80.9 million as of December 31, 2023, a decrease of $7.6 million
during the quarter and a decrease of $4.7 million
year-to-date.
- Fortress’ consolidated cash and
cash equivalents, totaling $76.2 million as of June 30, 2024,
includes $38.2 million attributable to Fortress and the private
subsidiaries, $4.9 million attributable to Avenue, $5.0 million
attributable to Checkpoint, $4.3 million attributable to Mustang
Bio and $23.9 million attributable to Journey Medical.
- Fortress’ consolidated cash and
cash equivalents totaled $80.9 million as of December 31, 2023,
which included $40.6 million attributable to Fortress and private
subsidiaries, $1.8 million attributable to Avenue, $4.9 million
attributable to Checkpoint, $6.2 million attributable to Mustang
Bio and $27.4 million attributable to Journey Medical.
- Fortress’ consolidated net revenue
totaled $14.9 million for the second quarter ended June 30, 2024,
most of which was generated from our marketed dermatology products.
This compares to consolidated revenue totaling $17.4 million for
the second quarter of 2023, which included $17.0 million in revenue
generated from our marketed dermatology products.
- Consolidated research and
development expenses including license acquisitions totaled $12.7
million for the second quarter ended June 30, 2024, compared to
$32.1 million for the second quarter ended June 30, 2023.
- Consolidated selling, general and
administrative costs were $20.8 million for the second quarter
ended June 30, 2024, compared to $24.4 million for the second
quarter ended June 30, 2023.
- Consolidated net loss attributable
to common stockholders was $(13.3) million, or $(0.73) per share,
for the second quarter ended June 30, 2024, compared to net loss
attributable to common stockholders of $(26.9) million, or $(3.65)
per share for the second quarter ended June 30, 2023.
About Fortress Biotech Fortress
Biotech, Inc. (“Fortress”) is an innovative biopharmaceutical
company focused on acquiring and advancing assets to enhance
long-term value for shareholders through product revenue, equity
holdings and dividend and royalty revenue. The company has seven
marketed prescription pharmaceutical products and over 20 programs
in development at Fortress, at its majority-owned and
majority-controlled partners and subsidiaries and at partners and
subsidiaries it founded and in which it holds significant minority
ownership positions. Fortress’ portfolio is being commercialized
and developed for various therapeutic areas including oncology,
dermatology, and rare diseases. Fortress’ model is focused on
leveraging its significant biopharmaceutical industry expertise and
network to further expand and advance the company’s portfolio of
product opportunities. Fortress has established partnerships with
some of the world’s leading academic research institutions and
biopharmaceutical companies to maximize each opportunity to its
full potential, including AstraZeneca, City of Hope, Fred
Hutchinson Cancer Center, Nationwide Children’s Hospital and
Sentynl. For more information, visit www.fortressbiotech.com.
Forward-Looking
StatementsStatements in this press release that are not
descriptions of historical facts are “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. The
words “anticipates,” “believes,” “can,” “continue,” “could,”
“estimates,” “expects,” “intends,” “may,” “might,” “plans,”
“potential,” “predicts,” “should,” or “will” or the negative of
these terms or other comparable terminology are generally intended
to identify forward-looking statements. These 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, financing and strategic agreements and relationships; the
ongoing UTRF litigation and our indemnification of Caelum in
connection therewith; our need for substantial additional funds and
uncertainties relating to financings; our ability to identify,
acquire, close and integrate product candidates successfully and on
a timely basis; our ability to attract, integrate and retain key
personnel; the early stage of products under development; the
results of research and development activities; uncertainties
relating to preclinical and clinical testing; our ability to obtain
regulatory approval for products under development; our ability to
successfully commercialize products for which we receive regulatory
approval or receive royalties or other distributions from third
parties; our ability to secure and maintain third-party
manufacturing, marketing and distribution of our and our partner
companies’ products and product candidates; 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 may be required by law, and we claim the protection of
the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. The information
contained herein is intended to be reviewed in its totality, and
any stipulations, conditions or provisos that apply to a given
piece of information in one part of this press release should be
read as applying mutatis mutandis to every other instance of such
information appearing herein.
Company Contact:Jaclyn JaffeFortress Biotech,
Inc.(781) 652-4500ir@fortressbiotech.com
Media Relations Contact:Tony Plohoros6
Degrees(908) 591-2839tplohoros@6degreespr.com
FORTRESS BIOTECH, INC. AND
SUBSIDIARIESUnaudited Condensed Consolidated
Balance Sheets ($ in thousands except for share
and per share amounts)
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2024 |
|
2023 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
76,201 |
|
|
$ |
80,927 |
|
Accounts receivable, net |
|
|
10,465 |
|
|
|
15,222 |
|
Inventory |
|
|
9,687 |
|
|
|
10,206 |
|
Other receivables - related party |
|
|
224 |
|
|
|
167 |
|
Prepaid expenses and other current assets |
|
|
4,649 |
|
|
|
10,500 |
|
Assets held for sale |
|
|
2,209 |
|
|
|
— |
|
Total current assets |
|
|
103,435 |
|
|
|
117,022 |
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
|
3,546 |
|
|
|
6,505 |
|
Operating lease right-of-use
asset, net |
|
|
14,626 |
|
|
|
16,990 |
|
Restricted cash |
|
|
2,063 |
|
|
|
2,438 |
|
Intangible assets, net |
|
|
18,658 |
|
|
|
20,287 |
|
Other assets |
|
|
3,357 |
|
|
|
4,284 |
|
Total
assets |
|
$ |
145,685 |
|
|
$ |
167,526 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
68,921 |
|
|
$ |
73,562 |
|
Income taxes payable |
|
|
806 |
|
|
|
843 |
|
Common stock warrant liabilities |
|
|
172 |
|
|
|
886 |
|
Operating lease liabilities, short-term |
|
|
2,481 |
|
|
|
2,523 |
|
Partner company convertible preferred shares, short-term, net |
|
|
— |
|
|
|
3,931 |
|
Partner company installment payments - licenses, short-term,
net |
|
|
3,000 |
|
|
|
3,000 |
|
Other short-term liabilities |
|
|
163 |
|
|
|
163 |
|
Total current liabilities |
|
|
75,543 |
|
|
|
84,908 |
|
|
|
|
|
|
|
|
Notes payable, long-term,
net |
|
|
67,007 |
|
|
|
60,856 |
|
Operating lease liabilities,
long-term |
|
|
15,934 |
|
|
|
18,282 |
|
Other long-term
liabilities |
|
|
1,799 |
|
|
|
1,893 |
|
Total
liabilities |
|
|
160,283 |
|
|
|
165,939 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
(deficit) |
|
|
|
|
|
|
Cumulative redeemable perpetual
preferred stock, $0.001 par value, 15,000,000 authorized, 5,000,000
designated Series A shares, 3,427,138 shares issued and outstanding
as of June 30, 2024 and December 31, 2023,
respectively, liquidation value of $25.00 per share |
|
|
3 |
|
|
|
3 |
|
Common stock, $0.001 par value,
200,000,000 shares authorized, 22,587,038 and 15,093,053 shares
issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively |
|
|
23 |
|
|
|
15 |
|
Additional paid-in-capital |
|
|
739,086 |
|
|
|
717,396 |
|
Accumulated deficit |
|
|
(721,235 |
) |
|
|
(694,870 |
) |
Total stockholders' equity
attributed to the Company |
|
|
17,877 |
|
|
|
22,544 |
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
(32,475 |
) |
|
|
(20,957 |
) |
Total stockholders' equity
(deficit) |
|
|
(14,598 |
) |
|
|
1,587 |
|
Total liabilities and
stockholders' equity (deficit) |
|
$ |
145,685 |
|
|
$ |
167,526 |
|
|
|
|
|
|
|
|
|
|
FORTRESS BIOTECH, INC. AND
SUBSIDIARIESUnaudited Condensed Consolidated
Statements of Operations($ in thousands except for
share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue, net |
|
$ |
14,855 |
|
|
$ |
16,961 |
|
|
$ |
27,885 |
|
|
$ |
29,126 |
|
Collaboration revenue |
|
|
— |
|
|
|
183 |
|
|
|
— |
|
|
|
364 |
|
Revenue - related party |
|
|
41 |
|
|
|
31 |
|
|
|
41 |
|
|
|
66 |
|
Other revenue |
|
|
— |
|
|
|
211 |
|
|
|
— |
|
|
|
259 |
|
Net revenue |
|
|
14,896 |
|
|
|
17,386 |
|
|
|
27,926 |
|
|
|
29,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold - product revenue |
|
|
6,541 |
|
|
|
7,767 |
|
|
|
13,357 |
|
|
|
14,216 |
|
Research and development |
|
|
12,671 |
|
|
|
32,139 |
|
|
|
37,495 |
|
|
|
67,415 |
|
Research and development - licenses acquired |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
4,233 |
|
Selling, general and administrative |
|
|
20,823 |
|
|
|
24,439 |
|
|
|
38,777 |
|
|
|
49,780 |
|
Asset impairment |
|
|
2,649 |
|
|
|
3,143 |
|
|
|
2,649 |
|
|
|
3,143 |
|
Total operating expenses |
|
|
42,684 |
|
|
|
67,491 |
|
|
|
92,278 |
|
|
|
138,787 |
|
Loss from operations |
|
|
(27,788 |
) |
|
|
(50,105 |
) |
|
|
(64,352 |
) |
|
|
(108,972 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
734 |
|
|
|
715 |
|
|
|
1,567 |
|
|
|
1,751 |
|
Interest expense and financing fee |
|
|
(2,122 |
) |
|
|
(6,425 |
) |
|
|
(4,724 |
) |
|
|
(10,721 |
) |
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
(512 |
) |
|
|
— |
|
|
|
6,166 |
|
Gain (loss) on common stock warrant liabilities |
|
|
70 |
|
|
|
— |
|
|
|
(597 |
) |
|
|
— |
|
Loss from deconsolidation of subsidiaries |
|
|
— |
|
|
|
(3,369 |
) |
|
|
— |
|
|
|
(3,369 |
) |
Other income (expense) |
|
|
282 |
|
|
|
395 |
|
|
|
260 |
|
|
|
699 |
|
Total other income
(expense) |
|
|
(1,036 |
) |
|
|
(9,196 |
) |
|
|
(3,494 |
) |
|
|
(5,474 |
) |
Net loss |
|
|
(28,824 |
) |
|
|
(59,301 |
) |
|
|
(67,846 |
) |
|
|
(114,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
non-controlling interests |
|
|
17,876 |
|
|
|
34,525 |
|
|
|
41,481 |
|
|
|
68,133 |
|
Net loss attributable
to Fortress |
|
$ |
(10,948 |
) |
|
$ |
(24,776 |
) |
|
$ |
(26,365 |
) |
|
$ |
(46,313 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common stockholders |
|
$ |
(13,339 |
) |
|
$ |
(26,917 |
) |
|
$ |
(31,199 |
) |
|
$ |
(50,595 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share
attributable to common stockholders - basic and diluted |
|
$ |
(0.73 |
) |
|
$ |
(3.65 |
) |
|
$ |
(1.76 |
) |
|
$ |
(7.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - basic and diluted |
|
|
18,316,874 |
|
|
|
7,377,332 |
|
|
|
17,736,299 |
|
|
|
7,086,482 |
|
|
|
|
|
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1 The development programs depicted in this press release
include product candidates in development at Fortress, at Fortress’
private subsidiaries (referred to herein as “subsidiaries”), at
Fortress’ public subsidiaries (referred to herein as “partner
companies”) and at entities with whom one of the foregoing parties
has a significant business relationship, such as an exclusive
license or an ongoing product-related payment obligation (such
entities referred to herein as “partners”). The words “we”, “us”
and “our” may refer to Fortress individually, to one or more of our
subsidiaries and/or partner companies, or to all such entities as a
group, as dictated by context.
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