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Fortress Biotech, Inc.

FBIO
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Business Summary

Fortress Biotech, Inc. (Fortress) is a 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 streams. The company collaborates with universities, research institutes, and pharmaceutical companies to identify and evaluate promising products and product candidates for potential acquisition. Fortress then leverages its expertise to help its subsidiaries and partner companies achieve their goals, including through strategic arrangements like joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. Three of its partner companies are publicly traded, and four subsidiaries have consummated strategic partnerships with industry leaders such as AstraZeneca plc, Sentynl Therapeutics, Inc., Axsome Therapeutics, Inc., and Sun Pharmaceutical Industries Limited .

Fortress operates in highly competitive segments of the biotechnology and biopharmaceutical markets, facing competition from commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and research institutions. Many competitors possess significantly greater financial, product development, manufacturing, and marketing resources. The dermatology market, where Fortress's partner Journey Medical Corporation (Journey) sells marketed products, is highly fragmented with numerous mid-size and smaller companies. Key competitors in dermatology include Galderma Laboratories, Almirall, Leo Pharma, Mayne Pharma, Botanix Pharmaceuticals, and Ortho Dermatologics .

The core business model involves acquiring and in-licensing intellectual property for product candidates, then leveraging internal expertise and strategic partnerships to advance these assets through development and commercialization. Revenue is generated primarily from product sales through its partner company Journey, as well as from collaboration revenue, royalties, and milestone payments from strategic partnerships and asset divestitures. The business model also includes equity holdings in partner companies, which can generate value through public trading or acquisition events .

Journey Medical Corporation markets several FDA-approved branded dermatology products in the United States. These include Emrosi (Minocycline Hydrochloride Extended-Release Capsules, 40mg) for inflammatory lesions of rosacea, approved in November 2024 and launched in March 2025; Qbrexza, a medicated cloth towelette for primary axillary hyperhidrosis; Accutane, an oral isotretinoin drug for severe recalcitrant nodular acne; Amzeeq (minocycline topical foam, 4%) for inflammatory lesions of non-nodular moderate to severe acne vulgaris; Zilxi (minocycline topical foam, 1.5%) for inflammatory lesions of rosacea; Exelderm Cream and Solution, a broad-spectrum antifungal; Targadox, an oral doxycycline drug for adjunctive therapy for severe acne; and Luxamend, a water-based emulsion for superficial wounds and burns . Emrosi has Orange Book-listed patents extending through January 2039 . Four of Journey's marketed products, Accutane, Targadox, Exelderm, and Luxamend, do not have patent protection .

In terms of pipeline, Fortress has several product candidates in various stages of development. Helocyte is developing Triplex (cytomegalovirus vaccine and immunotherapy), currently in multiple ongoing Phase 1 and Phase 2 trials for solid organ transplant, stem cell transplant, HIV, and oncology indications . CAEL-101 (light chain fibril-reactive monoclonal antibody for AL amyloidosis), developed by former subsidiary Caelum in collaboration with AstraZeneca, is in two Phase 3 trials for Mayo Stage IIIa and IIIb AL amyloidosis . Urica's dotinurad, a URAT1 inhibitor for gout, has obtained regulatory approval in Japan, China, Philippines, and Thailand, and is now in global Phase 3 clinical studies under Crystalys Therapeutics, Inc. . Mustang Bio is developing MB-101 (IL13Rα2 CAR T Cell Program for Glioblastoma) and MB-108 (HSV-1 Oncolytic Virus C134 for recurrent GBM), with a combination therapy, MB-109, in preclinical stages . Avenue Therapeutics is developing IV tramadol for post-operative acute pain, which is currently awaiting financing for a Phase 3 safety study . Avenue also recently licensed ATX-04 (clenbuterol) for lysosomal storage diseases, with an initial focus on Pompe disease .

For the year ended December 31, 2025, Fortress reported total net revenue of $63.3 million , compared to $57.7 million in 2024 . Product revenue, net, from Journey's commercial portfolio was $61.2 million in 2025 and $55.1 million in 2024 . Other revenue in 2025 included $1.4 million from Avenue's license termination with AnnJi Pharmaceutical Co. Ltd. and $0.6 million from Journey's supply of Amzeeq to Cutia and sales-based royalties . Cost of goods sold (excluding amortization of acquired intangible assets) was $20.9 million in 2025 and $20.9 million in 2024 . Amortization of acquired intangible assets increased to $4.3 million in 2025 from $3.4 million in 2024 . Research and development (R&D) expenses decreased significantly to $11.9 million in 2025 from $56.6 million in 2024 . Selling, general and administrative expenses were $96.4 million in 2025 compared to $87.7 million in 2024 . The company reported a loss from operations of $70.2 million in 2025 , an improvement from a loss of $110.4 million in 2024 . Net income attributable to Fortress was $6.8 million in 2025 , a substantial improvement from a net loss of $46.0 million in 2024 . Diluted EPS was $(0.07) in 2025 compared to $(2.69) in 2024 . Cash and cash equivalents stood at $79.4 million as of December 31, 2025 , up from $57.3 million as of December 31, 2024 . Total notes payable, long-term, net, was $52.4 million in 2025 compared to $58.0 million in 2024 .

Net product revenues increased by $6.1 million, or 11%, from $55.1 million in 2024 to $61.2 million in 2025 . This increase was primarily driven by $14.7 million in incremental revenues from the U.S. commercial launch of Emrosi in 2025 . This was partially offset by a $6.5 million decrease in Accutane revenue due to lower sales volume from market competition, and a decrease in Journey's legacy product sales due to generic competition . R&D expenses decreased by $44.7 million, or 79%, from $56.6 million in 2024 to $11.9 million in 2025 . This was largely due to the deconsolidation of Checkpoint in May 2025, which reduced its R&D expense by $25.4 million , and a $9.4 million decrease in Journey's R&D costs after Emrosi's FDA approval in November 2024 . Mustang's R&D spending decreased by $9.9 million, or 118%, due to reduced costs related to a terminated transaction, outside services, sponsored research, and clinical trials, and recognized savings of approximately $2.1 million from negotiating settlements of aged payables . Selling, general and administrative expenses increased by $8.7 million, or 10%, from $87.7 million in 2024 to $96.4 million in 2025 , primarily due to increased stock-based compensation at Checkpoint and incremental operational activities for Emrosi's launch at Journey .

During the reported period, several significant operational developments occurred. In May 2025, Checkpoint Therapeutics, Inc. was acquired by Sun Pharma for $4.10 per share in cash plus a contingent value right of up to $0.70 per share, with Fortress receiving $28.0 million and eligibility for a 2.5% royalty on net sales of UNLOXCYT and up to $4.8 million upon EU approval . In November 2024, Journey received FDA approval for Emrosi, which subsequently launched commercially in March 2025 . In January 2025, the FDA accepted the New Drug Application (NDA) for Cyprium's CUTX-101 (now ZYCUBO) for priority review for Menkes disease, with a PDUFA target action date of September 30, 2025 . Although a Complete Response Letter was issued in October 2025 due to cGMP deficiencies, the NDA resubmission was accepted in December 2025 with a new PDUFA date of January 14, 2026 . On January 13, 2026, ZYCUBO was approved by the FDA, and a Rare Pediatric Disease Priority Review Voucher (PRV) was issued and subsequently sold by Cyprium for $205 million on March 30, 2026 . In November 2025, Avenue's subsidiary Baergic Bio, Inc. was acquired by Axsome for an upfront payment of $0.3 million (less transaction fees) and additional contingent consideration, with Avenue eligible to receive approximately 74% of future payments and royalties . Mustang Bio exited its leased manufacturing facility in Worcester, Massachusetts, and sold certain fixed assets for $1.0 million in February 2025 .

Business Outlook

Management anticipates that research and development costs will increase in 2026, driven by potential new in-licenses or acquisitions . Additionally, selling, general and administrative expenses are expected to remain flat or increase in 2026 .

A major growth area for Fortress is the potential for significant cash proceeds from the sale of Cyprium's Rare Pediatric Disease Priority Review Voucher (PRV). Following the FDA approval of ZYCUBO (copper histidinate) for Menkes disease on January 13, 2026, a PRV was issued and transferred to Cyprium. On February 22, 2026, Cyprium entered into a definitive asset purchase agreement to sell this PRV for gross proceeds of $205 million, with the closing announced on March 30, 2026 . Cyprium is obligated to pay 20% of these proceeds to the Eunice Kennedy Shriver National Institute of Child Health and Human Development . Fortress, as the majority owner of Cyprium's outstanding common stock on an as-converted basis, expects to receive its pro rata share of future dividends from Cyprium following this closing, with an aggregate expectation of at least $100.0 million from Cyprium through potential future dividends and intercompany agreements, including amounts owed via intercompany debt, interest, and accrued expenses .

Another growth vector is the commercialization of UNLOXCYT (cosibelimab-ipdl) by Sun Pharma. Following its FDA approval in December 2024 for metastatic cutaneous squamous cell carcinoma (mcSCC) or locally advanced CSCC, Sun Pharma announced the commercial availability of UNLOXCYT in the U.S. in January 2026 . Fortress is eligible to receive a 2.5% royalty on net sales of UNLOXCYT, as well as up to $4.8 million upon the achievement of EU approval . The recent approval and launch of Emrosi (Minocycline Hydrochloride Extended-Release Capsules, 40mg) by Journey in March 2025, following its FDA approval in November 2024, is also expected to contribute to future revenue . Emrosi generated incremental revenues of $14.7 million in 2025 .

In terms of operational outlook, Fortress anticipates that its current cash and cash equivalents are sufficient to fund operations for at least the next twelve months from the filing of this Annual Report on Form 10-K . The company expects to continue to spend significant amounts on its growth strategy .

Regarding capital allocation, Fortress received gross proceeds of $2.6 million from warrant exercises in 2025 . Journey received approximately $16.4 million in net proceeds from its At-the-Market Offering program in 2025 . Mustang received gross proceeds of $7.1 million from warrant exercises in July 2025 . The company's debt obligations include a $50.0 million senior secured credit agreement with Oaktree, under which $35.0 million was borrowed, and an additional $15.0 million is eligible to be drawn with lenders' consent . The maturity date for this loan was extended to June 30, 2028 . Journey also has a term loan facility with SWK Funding LLC, which was increased to $25.0 million and has a maturity date extended to June 27, 2028 .

A structural headwind is the company's ineligibility to file new short-form registration statements on Form S-3 due to the pause in dividend payments on its Series A Preferred Stock since July 5, 2024 . This may impair its ability to raise capital on favorable terms or in a timely manner, potentially increasing transaction costs and time required for public offerings . The company will regain S-3 eligibility upon paying all accumulated and newly accruing dividends and completing a fiscal year without missed dividend payments .

Risk Factors

Fortress Biotech faces material risks including the early development stage of most product candidates, which are subject to time and cost-intensive regulation and clinical testing, potentially leading to safety or efficacy concerns and failure to commercialize . The company has a history of operating losses, with approximately $70.2 million in 2025 , and expects these losses to continue, requiring substantial additional capital that may be difficult to raise . Debt obligations, totaling $52.4 million net of discount at December 31, 2025 , impose restrictive covenants, including maintaining minimum liquidity of $7.0 million (potentially reduced to $2.0 million under specific conditions) and Journey's consolidated minimum net sales amounts, which could trigger default events . A significant portion of operating income derives from Journey's dermatology products, which face risks from supply chain issues, demand fluctuations, manufacturing problems, government regulation, and increasing generic competition, with four of Journey's marketed products lacking patent protection . The company relies heavily on third parties for manufacturing, clinical trials, and development, reducing control and potentially leading to delays or increased costs . Intellectual property protection is uncertain, with risks of patent invalidation, infringement litigation, and disputes with licensors . Regulatory approval processes are lengthy, expensive, and uncertain, with potential for delays, limited indications, or post-marketing requirements . Changes in U.S. government policy, such as those related to drug pricing under the Inflation Reduction Act of 2022 or the proposed Great Healthcare Plan, could adversely affect the business . Cybersecurity threats, as evidenced by a $9.5 million wire transfer misdirection incident at Journey in 2021 (of which $4.6 million was recovered in December 2024) , pose risks to operations and data integrity.

Management Priorities

Management's message emphasizes a focus on acquiring and advancing assets to enhance long-term shareholder value through product revenue, equity holdings, and dividend and royalty streams, leveraging an extensive network of key opinion leaders and strategic partnerships. They highlight recent successes such as the FDA approval of Emrosi and UNLOXCYT, and the approval and subsequent sale of the PRV for ZYCUBO, which is expected to generate at least $100.0 million for Fortress from Cyprium through future dividends and intercompany agreements . Despite a history of operating losses, management believes current cash and cash equivalents are sufficient to fund operations for at least the next twelve months . Strategic priorities include continuing to fund R&D activities, which are expected to increase in 2026 with potential new in-licenses or acquisitions , and managing existing debt obligations while seeking additional financing through equity or debt, joint ventures, asset sales, or royalty financings.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Overview
  2. [2] Item 1, Business — Competition
  3. [3] Item 1, Business — Overview
  4. [4] Item 1, Business — Portfolio Highlights Commercial and Approved Products
  5. [5] Item 1, Business — EMROSI (Minocycline Hydrochloride Extended-Release Capsules, 40mg)
  6. [6] Item 1A, Risk Factors — Risks Pertaining to Our Existing Revenue Stream from Journey Medical Corporation
  7. [7] Item 1, Business — Late Stage Product Candidates
  8. [8] Item 1, Business — Late Stage Product Candidates
  9. [9] Item 1, Business — Late Stage Product Candidates
  10. [10] Item 1, Business — Early and Mid-Stage Product Candidates
  11. [11] Item 1, Business — Early and Mid-Stage Product Candidates
  12. [12] Item 1, Business — Early Stage Product Candidates
  13. [13] Item 7, MD&A — Revenue
  14. [14] Item 7, MD&A — Revenue
  15. [15] Item 7, MD&A — Revenue
  16. [16] Item 7, MD&A — Revenue
  17. [17] Item 7, MD&A — Revenue
  18. [18] Item 7, MD&A — Cost of Goods Sold
  19. [19] Item 7, MD&A — Cost of Goods Sold
  20. [20] Item 7, MD&A — Amortization of Acquired Intangible Assets
  21. [21] Item 7, MD&A — Amortization of Acquired Intangible Assets
  22. [22] Item 7, MD&A — Research and development expenses
  23. [23] Item 7, MD&A — Research and development expenses
  24. [24] Item 7, MD&A — Selling, General and Administrative Expenses
  25. [25] Item 7, MD&A — Selling, General and Administrative Expenses
  26. [26] Item 7, MD&A — Results of Operations Comparison of Years Ended December 31, 2025 and 2024
  27. [27] Item 7, MD&A — Results of Operations Comparison of Years Ended December 31, 2025 and 2024
  28. [28] Item 7, MD&A — Results of Operations Comparison of Years Ended December 31, 2025 and 2024
  29. [29] Item 7, MD&A — Results of Operations Comparison of Years Ended December 31, 2025 and 2024
  30. [30] Item 8, Consolidated Statements of Operations
  31. [31] Item 8, Consolidated Statements of Operations
  32. [32] Item 7, MD&A — Liquidity and Capital Resources
  33. [33] Item 7, MD&A — Liquidity and Capital Resources
  34. [34] Item 8, Consolidated Balance Sheets
  35. [35] Item 8, Consolidated Balance Sheets
  36. [36] Item 7, MD&A — Revenue
  37. [37] Item 7, MD&A — Revenue
  38. [38] Item 7, MD&A — Revenue
  39. [39] Item 7, MD&A — Research and development expenses
  40. [40] Item 7, MD&A — Research and development expenses
  41. [41] Item 7, MD&A — Research and development expenses
  42. [42] Item 7, MD&A — Research and development expenses
  43. [43] Item 7, MD&A — Selling, General and Administrative Expenses
  44. [44] Item 7, MD&A — Selling, General and Administrative Expenses
  45. [45] Item 1, Business — Recent Developments
  46. [46] Item 1, Business — Recent Developments
  47. [47] Item 1, Business — Recent Developments
  48. [48] Item 1, Business — Recent Developments
  49. [49] Item 1, Business — Recent Developments
  50. [50] Item 1, Business — Other Product Candidates
  51. [51] Item 7, MD&A — General Corporate and Other – Public Subsidiaries
  52. [52] Item 7, MD&A — Research and development expenses
  53. [53] Item 7, MD&A — Selling, General and Administrative Expenses
  54. [54] Item 7, MD&A — Recent Events Revenue Portfolio
  55. [55] Item 7, MD&A — Asset Sales
  56. [56] Item 7, MD&A — General Corporate and Other – Fortress
  57. [57] Item 7, MD&A — Recent Events Revenue Portfolio
  58. [58] Item 7, MD&A — Commercial and Approved Products
  59. [59] Item 7, MD&A — Recent Events Revenue Portfolio
  60. [60] Item 7, MD&A — Revenue
  61. [61] Item 7, MD&A — Sources of Liquidity
  62. [62] Item 1A, Risk Factors — Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities
  63. [63] Item 7, MD&A — General Corporate and Other – Fortress
  64. [64] Item 7, MD&A — General Corporate and Other – Public Subsidiaries
  65. [65] Item 7, MD&A — General Corporate and Other – Public Subsidiaries
  66. [66] Item 7, MD&A — Debt
  67. [67] Item 7, MD&A — Debt
  68. [68] Item 7, MD&A — Debt
  69. [69] Item 1A, Risk Factors — Because we have paused dividend payments on our Series A Preferred Stock, we are currently ineligible to file new short-form registration statements on Form S-3, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
  70. [70] Item 1A, Risk Factors — Because we have paused dividend payments on our Series A Preferred Stock, we are currently ineligible to file new short-form registration statements on Form S-3, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
  71. [71] Item 7, MD&A — Stock Offerings and At-The-Market Share Issuances
  72. [72] Item 1A, Risk Factors — Risks Inherent in Drug Development
  73. [73] Item 7, MD&A — Results of Operations Comparison of Years Ended December 31, 2025 and 2024
  74. [74] Item 1A, Risk Factors — We have a history of operating losses that is expected to continue, and we are unable to predict the extent of future losses, whether we will be able to sustain current revenues or whether we will ever achieve or sustain profitability.
  75. [75] Item 1A, Risk Factors — We have historically financed a significant portion of our growth and operations in part through the assumption of debt. Should an event of default occur under any applicable loan documents, our business would be materially adversely affected. Further, our current credit arrangement with Oaktree restricts our and certain of our subsidiaries’ and partner companies’ abilities to take certain actions.
  76. [76] Item 7, MD&A — Debt
  77. [77] Item 1A, Risk Factors — Risks Pertaining to Our Existing Revenue Stream from Journey Medical Corporation
  78. [78] Item 1A, Risk Factors — Risks Pertaining to Reliance on Third Parties
  79. [79] Item 1A, Risk Factors — Risks Pertaining to Intellectual Property and Potential Disputes with Licensors Thereof
  80. [80] Item 1A, Risk Factors — Risks Pertaining to the Commercialization of Product Candidates, if Approved
  81. [81] Item 1A, Risk Factors — Changes in U.S. government policy, regulation, enforcement priorities, and funding decisions could adversely affect our business, financial condition and results of operations.
  82. [82] Item 1A, Risk Factors — Our business and operations would suffer in the event of computer system failures, cyber-attacks, or deficiencies in our or third parties’ cybersecurity.
  83. [83] Item 7, MD&A — General Corporate and Other – Fortress
  84. [84] Item 7, MD&A — Sources of Liquidity
  85. [85] Item 7, MD&A — Research and development expenses

Analysis on 5/21/2026