Fortress Biotech, Inc.

Fortress Biotech, Inc. is a biopharmaceutical company that acquires and advances assets to enhance long-term shareholder value through product revenue, equity holdings, and dividend and royalty revenue streams. The company collaborates with universities, research institutes, and pharmaceutical companies, including City of Hope National Medical Center, Dana-Farber Cancer Institute, Nationwide Children's Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy's Laboratories, Ltd., and Sun Pharmaceutical Industries Limited ¹. Fortress leverages its expertise to help its subsidiary and partner companies, such as Journey Medical Corporation, Mustang Bio, Inc., and Avenue Therapeutics, Inc., achieve their goals, which include strategic arrangements like joint ventures, partnerships, out-licensings, sales transactions, and public and private financings ¹.

The company generates revenue through a mix of product sales, collaboration revenue, and other income. Its primary customer segments are within the dermatology market through its partner company, Journey Medical Corporation ¹. Fortress also benefits from equity holdings in its partner companies and royalty streams from divested assets or licensed products ¹.

Journey Medical Corporation markets several FDA-approved branded dermatology products in the United States. These include Emrosi (Minocycline Hydrochloride Extended-Release Capsules, 40mg) for rosacea, approved in November 2024 and launched in March 2025 ¹. Other key products are Qbrexza, a medicated cloth towelette for primary axillary hyperhidrosis; Accutane, an oral isotretinoin 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 for adjunctive therapy for severe acne; and Luxamend, a water-based emulsion for superficial wounds and burns ¹. Emrosi has Orange Book-listed patents extending through January 2039 ¹. Four of Journey's marketed products, Accutane, Targadox, Exelderm, and Luxamend, do not have patent protection ¹.

In terms of financial performance for the year ended December 31, 2025, Fortress Biotech reported total net revenue of $63.3 million ², an increase from $57.7 million in the prior year ². Product revenue, net, contributed $61.2 million ³ in 2025, up from $55.1 million in 2024 ³. Collaboration revenue was $0 in 2025, down from $1.5 million in 2024 ³. Other revenue increased to $2.0 million in 2025 from $1.0 million in 2024 ³. Cost of goods sold (excluding amortization of acquired intangible assets) remained consistent at $20.9 million in 2025 and $20.9 million in 2024 ³. Amortization of acquired intangible assets increased by $0.8 million, or 24%, to $4.3 million in 2025 from $3.4 million in 2024 ³. Research and development expenses significantly decreased by $44.7 million, or 79%, to $11.9 million in 2025 from $56.6 million in 2024 ³. Selling, general and administrative expenses increased by $8.7 million, or 10%, to $96.4 million in 2025 from $87.7 million in 2024 ³. The company reported a loss from operations of $70.2 million in 2025, an improvement from a loss of $110.4 million in 2024 ³. Net income attributable to Fortress was $6.8 million in 2025, compared to a net loss of $46.0 million in 2024 ³. Diluted EPS attributable to common stockholders was $(0.07) in 2025, compared to $(2.69) in 2024 ³. As of December 31, 2025, cash and cash equivalents totaled $79.4 million ⁴. Total notes payable, long-term, net, was $52.4 million ⁵. The accumulated deficit was $734.1 million ⁶.

Year-over-year, net product revenues increased by $6.1 million, or 11%, driven primarily by the U.S. commercial launch of Emrosi, which generated $14.7 million in incremental revenues in 2025 ³. 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 other legacy product sales due to generic competition ³. Research and development expenses decreased significantly, primarily due to the deconsolidation of Checkpoint in May 2025 and reduced costs at Urica after the transition of the dotinurad clinical program to Crystalys in July 2024 ³. Selling, general and administrative expenses increased due to higher stock-based compensation at Checkpoint and incremental operational activities for Emrosi's launch at Journey ³.

Significant operational developments during the period include the acquisition of former subsidiary Checkpoint by Sun Pharma in May 2025 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 achievement of the contingent value right ¹. In November 2024, Journey received FDA approval for Emrosi, which launched commercially in March 2025 ¹. In January 2026, the FDA approved ZYCUBO (copper histidinate) for Menkes disease, leading to the issuance of a Rare Pediatric Disease Priority Review Voucher (PRV) which Cyprium subsequently sold for $205 million in gross proceeds on March 30, 2026 ¹. Avenue Therapeutics entered into a license agreement with Duke University in February 2026 for ATX-04 (clenbuterol) for lysosomal storage diseases ¹. Mustang Bio exited its manufacturing facility lease in Worcester, Massachusetts, and sold certain fixed assets for $1.0 million in February 2025 ¹.

Fortress Biotech anticipates that its research and development costs will increase in 2026, driven by potential new in-licenses or acquisitions ³. The company believes that its current cash and cash equivalents are sufficient to fund operations for at least the next twelve months ⁴.

A major growth area for Fortress is the potential for future payments and royalties from its divested and licensed assets. Following the FDA approval of ZYCUBO (copper histidinate) for Menkes disease in January 2026, Cyprium is eligible to receive up to $128 million in aggregate sales milestones from Sentynl, along with tiered royalties on net sales of ZYCUBO ranging from 3% to 12.5% on annual net sales ¹. Additionally, Cyprium sold the associated Rare Pediatric Disease Priority Review Voucher (PRV) for $205 million in gross proceeds on March 30, 2026, with Fortress expecting to receive at least $100.0 million from Cyprium through future dividends and intercompany agreements ¹. Another growth vector is the 2.5% royalty on net sales of UNLOXCYT (cosibelimab-ipdl) that Fortress is eligible to receive following the acquisition of Checkpoint by Sun Pharma in May 2025, along with up to $4.8 million upon achievement of a contingent value right related to EU approval ¹.

In terms of operational outlook, Fortress expects selling, general and administrative expenses to remain flat or increase in 2026 ³. The company's strategy involves leveraging its business, scientific, regulatory, legal, and financial expertise to help its subsidiaries and partner companies achieve their goals, including assessing a broad range of strategic arrangements to accelerate and provide additional funding for research and development ¹. This includes joint ventures, partnerships, out-licensings, sales transactions, and public and private financings ¹.

Planned capital allocation includes seeking additional funding through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or other sources of financing ⁴. The company received $2.6 million in gross proceeds from warrant exercises in 2025 ¹. Journey Medical Corporation also issued and sold approximately 2.6 million shares of common stock for net proceeds of $16.4 million in 2025 under its at-the-market offering programs ⁴.

Fortress Biotech faces significant risks, including the inherent uncertainties of drug development, with most product candidates in early stages requiring substantial capital and regulatory approvals, and a low success rate for commercialization ²⁸. The extensive and costly regulatory process, including potential delays from FDA policy changes or government shutdowns, could prevent or delay commercialization ²⁹. Clinical trials may be delayed or terminated due to various factors, including patient recruitment issues, ambiguous results, or manufacturing problems, increasing costs and jeopardizing regulatory approval ³⁰. Competition from companies with greater resources could limit commercial opportunities, especially as some of Journey's products lack patent protection or face generic competition, which can lead to significant price reductions and lost sales ⁴¹. The company has a history of operating losses, with a $734.1 million accumulated deficit as of December 31, 2025, and expects these losses to continue, requiring substantial additional capital that may not be available on favorable terms ³⁶. Debt obligations, including a $52.4 million outstanding balance as of December 31, 2025, impose restrictive covenants, such as maintaining minimum liquidity of $7.0 million and Journey's consolidated minimum net sales of $60.0 million by December 31, 2025, increasing to $80.0 million by December 31, 2026, with failure to comply potentially leading to default and acceleration of debt ³⁵. The company has paused dividend payments on its Series A Preferred Stock since July 5, 2024, making it ineligible to file new short-form registration statements on Form S-3, which could increase the cost and time required for future capital raises ³⁹. Reliance on third-party manufacturers and CROs for development and supply introduces risks of delays, non-compliance, and potential outsized liability due to unfavorable contractual terms ⁴⁹. Intellectual property protection is uncertain, with risks of patent challenges, litigation, and the inability to prevent competitors from commercializing similar products ⁵³. Changes in U.S. government policy, such as drug pricing reforms under the Inflation Reduction Act of 2022, could negatively impact pricing, reimbursement, and market access ⁴³. 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 of system failures, data loss, and financial harm ⁶⁴.

Management emphasizes a strategy of acquiring and advancing assets to enhance long-term shareholder value through product revenue, equity holdings, and dividend and royalty revenue streams. They highlight collaborations with leading institutions and pharmaceutical companies to identify and evaluate promising product candidates ¹. Management also focuses on leveraging its expertise to help subsidiaries and partner companies achieve their goals through strategic arrangements, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings ¹. A key strategic priority is the continued development and commercialization of its product portfolio, as evidenced by the recent FDA approval of Emrosi for rosacea and its commercial launch in March 2025 ¹. Another priority is maximizing value from its pipeline assets, as demonstrated by the FDA approval of ZYCUBO for Menkes disease and the subsequent sale of its associated PRV for $205 million in gross proceeds ¹. Management also highlights the importance of strategic partnerships, such as the acquisition of Checkpoint by Sun Pharma, which provides Fortress with a 2.5% royalty on net sales of UNLOXCYT and up to $4.8 million in contingent value rights ¹. The company acknowledges that research and development costs are expected to increase in 2026 with potential new in-licenses or acquisitions ³, and selling, general and administrative expenses are expected to remain flat or increase ³.