Fortress Biotech Reports Second Quarter 2018 Financial Results and Recent Corporate Highlights

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NEW YORK, Aug. 09, 2018 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2018.

Lindsay A. Rosenwald, M.D., Fortress’ Chairman, President and Chief Executive Officer, said, “During the second quarter, our Fortress Company subsidiaries reported significant value-driving milestones, including positive Phase 3 data from Avenue Therapeutics’ IV tramadol, which, if approved, would be the only Schedule IV intravenous opioid in the U.S. and could replace highly addictive Schedule II narcotics in many patients with moderate to moderately severe postoperative pain. Additionally, Cyprium Therapeutics was granted FDA Fast Track Designation for its CUTX-101 Copper Histidinate injection in patients with Menkes disease, a rare pediatric disease with no FDA-approved treatments. Also during the quarter, Mustang Bio expanded its infrastructure with the launch of a proprietary 27,000 sq. ft. CAR T cell manufacturing facility that will enable us to oversee product safety from needle-to-needle and help improve supply chain efficiencies from clinical development into commercialization.”

Dr. Rosenwald continued, “We believe in the value proposition represented by our company and strive to protect the best interests of our shareholders and those of our subsidiaries.  As we continue to build long-term value, our novel and efficient business model provides benefits for all stakeholders and offers unique synergies not typical of traditional biopharma companies.”

Financial Results:

  • As of June 30, 2018, Fortress’ consolidated cash, cash equivalents, short-term investments (certificates of deposit), cash deposits with clearing organizations and restricted cash totaled $151.8 million, compared to $168.3 million as of December 31, 2017, a decrease of $16.5 million year-to-date.
  • Net revenue totaled $63.8 million for the second quarter of 2018, compared to $50.7 million for the second quarter of 2017. Total revenue as of June 30, 2018, includes $6.8 million of Fortress revenue, primarily from the sale of Journey Medical Corporation products, and $57.0 million of revenue from National Holdings Corporation1 (“National Holdings”). Total revenue as of June 30, 2017, included $4.4 million of Fortress revenue and $46.3 million of revenue from National Holdings.
  • Research and development expenses were $17.5 million for the second quarter of 2018, of which $15.1 million was related to Fortress Companies. This compares to $11.7 million for the second quarter of 2017, of which $9.5 million was related to Fortress Companies. Non-cash, stock-based compensation expenses included in research and development were $0.8 million for the second quarter of 2018, compared to $2.4 million for the second quarter of 2017.
  • Research and development expenses from license acquisitions were nominal for the second quarter of 2018, compared to $1.8 million for the second quarter of 2017.
  • General and administrative expenses were $13.1 million for the second quarter of 2018, of which $7.7 million was related to Fortress Companies. This compares to $11.1 million for the second quarter of 2017, of which $6.6 million was related to Fortress Companies. Non-cash, stock-based compensation expenses included in general and administrative expenses were $2.4 million for the second quarter of 2018, compared to $2.2 million for the second quarter of 2017.
  • National Holdings’ operating expenses totaled $56.2 million for the second quarter of 2018, compared to $48.4 million for the second quarter of 2017.
  • Net loss attributable to common stockholders was $21.6 million, or $0.50 per share, for the second quarter of 2018, compared to a net loss attributable to common stockholders of $17.4 million, or $0.43 per share, for the second quarter of 2017.  For the first six months of 2018, net loss was $42.6 million or $0.99 per share, compared to $29.3 million or $0.73 per share in the first six months of 2017.

Recent Fortress and Fortress Company Highlights:

Fortress Biotech, Inc.

  • In June 2018, data from a Phase 1 trial evaluating Fortress’ CNDO-109-activated allogeneic natural killer (NK) cells in acute myeloid leukemia (AML) patients were published in the journal Biology of Blood and Marrow Transplantation. The data demonstrated that CNDO-109-activated NK cells are safe, well tolerated and may be capable of extending complete remissions in high-risk AML patients.

Aevitas Therapeutics, Inc.

  • In August 2018, Aevitas announced that it entered a sponsored research agreement with the laboratory of Wenchao Song, Ph.D., at the University of Pennsylvania to evaluate Aevitas’ adeno-associated virus (“AAV”) gene therapy technology in Penn’s proprietary animal models of complement-mediated diseases.

Avenue Therapeutics, Inc.

  • In May 2018, Avenue announced that its first pivotal Phase 3 trial of IV tramadol achieved the primary endpoint of a statistically significant improvement in Sum of Pain Intensity Difference over 48 hours (SPID48) compared to placebo in patients with moderate to moderately severe postoperative pain following bunionectomy surgery. In addition, the trial met its key secondary endpoints and demonstrated a clear dose response. Avenue plans to initiate a second pivotal Phase 3 trial of IV tramadol in patients following abdominoplasty surgery in the second half of 2018.

Caelum Biosciences, Inc.

  • In June 2018, Caelum announced a complete analysis of cardiac data from a Phase 1b trial of CAEL-101 (mAb 11-1F4) for the treatment of relapsed or refractory amyloid light chain (“AL”) amyloidosis demonstrating CAEL-101’s potential to improve myocardial function as assessed by global longitudinal strain and generate a sustained decrease in N-terminal pro-brain natriuretic peptide levels in AL amyloidosis patients experiencing cardiac involvement. The data were presented by Columbia University at the American Society of Echocardiography 29th Annual Scientific Sessions.             

Checkpoint Therapeutics, Inc.

  • In April 2018, preclinical data was presented on Checkpoint’s BET inhibitor, CK-103, at the American Association for Cancer Research (AACR) Annual Meeting. CK-103 demonstrated combinatorial effects in an in vivo model with anti-PD-1 antibodies, which may support the development of CK-103 as an anti-cancer agent alone and in combination with Checkpoint’s anti-PD-L1 antibody CK-301.

Cyprium Therapeutics, Inc.

  • In July 2018, Cyprium announced that the U.S. Food and Drug Administration (FDA) granted Fast Track Designation to CUTX-101, a product candidate for patients diagnosed with classic Menkes disease who have not demonstrated significant clinical progression.

Mustang Bio, Inc.

  • In May 2018, Mustang announced the publication of preclinical data in JCI Insight demonstrating that glioblastoma‐targeted CD4+ CAR T cells mediate superior antitumor activity over CD8+ CAR T cells. The data, published by research partner City of Hope, will be applied in the ongoing Phase 1 trial of Mustang’s IL13Rα2‐specific CAR T MB‐101 in glioblastoma.
  • In June 2018, Mustang opened a proprietary CAR T cell therapy manufacturing facility at UMass Medicine Science Park in Worcester, Mass. The facility will support the clinical development and commercialization of Mustang’s CAR T product candidates and enable proprietary cell therapy research.
  • Also in June 2018, Mustang was added to the Russell 2000®, 3000® and Microcap® Indexes.
  • In July 2018, Mustang completed a pre-Investigational New Drug (pre-IND) meeting with the FDA for MB-102 (CD123 CAR T). Based on the meeting, Mustang expects to file an IND in the fourth quarter of 2018 to support a Phase 1/2 trial of MB-102 in AML, blastic plasmacytoid dendritic cell neoplasm and high-risk myelodysplastic syndrome.             

About Fortress Biotech
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 licensing arrangements, 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 Statements
This 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 may be required by law.

Company Contact:
Jaclyn Jaffe
Fortress Biotech, Inc.
(781) 652-4500
ir@fortressbiotech.com

Investor Relations Contact:
Jeremy Feffer
Managing Director, LifeSci Advisors, LLC
(212) 915-2568
jeremy@lifesciadvisors.com

Media Relations Contact:
Laura Bagby
6 Degrees
(312) 448-8098
lbagby@6degreespr.com

__________________________

[1] Fortress acquired approximately 56 percent of National Holdings in September 2016.

 
FORTRESS BIOTECH, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 ($ in thousands except for share and per share amounts)
 
             
  June 30,     December 31,    
  2018     2017    
  (Unaudited)          
ASSETS            
Current assets            
Cash and cash equivalents $   98,591     $   113,915    
Accounts receivable   5,321       7,758    
Short-term investments (certificates of deposit)   35,000       36,002    
Cash deposits with clearing organizations   836       1,041    
Receivables from broker-dealers and clearing organizations   11,412       7,395    
Forgivable loans receivable   1,598       1,616    
Securities owned, at fair value   3,812       1,985    
Inventory   299       171    
Other receivables - related party   775       618    
Prepaid expenses and other current assets   13,880       12,680    
Total current assets   171,524       183,181    
             
Property and equipment, net    14,163       9,513    
Restricted cash   17,389       17,387    
Long-term investments, at fair value    565       1,390    
Intangible assets   13,614       15,223    
Goodwill   18,645       18,645    
Other assets   966       611    
Total assets $   236,866     $   245,950    
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities            
Accounts payable and accrued expenses $   38,126     $   36,127    
Accounts payable and accrued expenses - related party   73       222    
Accrued commissions and payroll payable   10,652       10,065    
Deferred clearing and marketing credits   681       786    
Securities sold, not yet purchased, at fair value   8       151    
Warrants issued - National   -       5,597    
Interest payable   1,143       887    
Interest payable - related party   94       97    
Notes payable, short-term (net of debt discount of $0 and $973 at June 30, 2018 and December 31, 2017,
respectively)		   -       8,528    
Subsidiary convertible note, short-term, at fair value   10,573       4,700    
Deferred revenue   650       -    
Derivative warrant liability   -       87    
Other current liabilities   158       181    
Total current liabilities   62,158       67,428    
             
Notes payable, long-term (net of debt discount of $1,035 and $62 at June 30, 2018 and December 31, 2017,
respectively)		   73,456       43,222    
Subsidiary convertible note, long-term, at fair value   -       10,059    
Other long-term liabilities   4,987       4,739    
Total liabilities   140,601       125,448    
             
Commitments and contingencies            
             
Stockholders' equity            
Preferred stock, $.001 par value, 15,000,000 authorized, 5,000,000 designated Series A shares 1,000,000 shares
issued and outstanding as of June 30, 2018 and December 31, 2017; liquidation value of $25.00 per share		   1       1    
Common stock, $.001 par value, 100,000,000 shares authorized, 53,987,074 and 50,991,285 shares issued and
outstanding as of June 30, 2018 and December 31, 2017, respectively		   54       51    
Common stock issuable, 259,813 and 158,015 shares as of June 30, 2018 and December 31, 2017, respectively   776       500    
Additional paid-in-capital   397,858       364,148    
Accumulated deficit   (354,756
 )      (312,127 )   
Total stockholders' equity attributed to the Company   43,933       52,573    
             
Non-controlling interests   52,332       67,929    
Total stockholders' equity   96,265       120,502    
Total liabilities and stockholders' equity $   236,866     $   245,950    
             


 
FORTRESS BIOTECH, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands except for share and per share amounts)
(Unaudited)
 
 
  Three Months Ended June 30,
 		    Six Months Ended June 30,
 		 
  2018     2017     2018     2017  
Revenue                      
Fortress                      
Product revenue, net $   6,689     $   4,054     $   12,198     $   6,139  
Revenue - from a related party   126       350       520       1,043  
Net Fortress revenue   6,815       4,404       12,718       7,182  
                       
National                      
Commissions   31,407       23,993       57,025       48,499  
Net dealer inventory gains   2,929       2,366       5,119       4,877  
Investment banking   11,037       10,592       23,741       17,653  
Investment advisory   5,197       3,490       10,530       6,875  
Interest and dividends   601       675       1,232       1,391  
Transfer fees and clearing services   1,777       1,687       4,074       4,185  
Tax preparation and accounting   3,868       3,144       4,391       4,000  
Other   203       346       429       717  
Total National revenue   57,019       46,293       106,541       88,197  
Net revenue   63,834       50,697       119,259       95,379  
                       
Operating expenses                      
Fortress                      
Cost of goods sold - product revenue   1,668       878       3,140       1,347  
Research and development   17,488       11,683       42,446       18,793  
Research and development – licenses acquired   1       1,800       98       3,094  
General and administrative   13,056       11,134       26,604       21,386  
Total Fortress operating expenses   32,213       25,495       72,288       44,620  
                       
National                      
Commissions, compensation and fees   49,345       41,762       92,906       79,020  
Clearing fees   578       618       1,321       1,356  
Communications   813       682       1,573       1,404  
Occupancy   1,141       936       2,096       1,944  
Licenses and registration   530       427       1,167       832  
Professional fees   578       991       1,971       2,254  
Interest   2       4       4       8  
Underwriting costs   42       -       187       -  
Depreciation and amortization   857       500       1,716       1,006  
Other administrative expenses   2,332       2,475       4,113       3,705  
Total National operating expenses   56,218       48,395       107,054       91,529  
Total operating expenses   88,431       73,890       179,342       136,149  
Loss from operations   (24,597
 )     (23,193
 )     (60,083
 )     (40,770
 )
                       
Other income (expenses)                      
Interest income   294       190       572       326  
Interest expense and financing fee   (2,144
 )     (1,380
 )     (4,227
 )     (2,078
 )
Change in fair value of derivative liabilities   (6,866
 )     1,452       (7,931
 )     5,794  
Change in fair value of subsidiary convertible note   (140
 )     (188
 )     110       (285
 )
Change in fair value of investments   (707
 )     157       (825
 )     (511
 )
Other loss   (118
 )     13       (112
 )     13  
Total other (expenses) income    (9,681
 )     244       (12,413
 )     3,259  
Loss before income taxes   (34,278
 )     (22,949
 )     (72,496
 )     (37,511
 )
                       
Income tax expense    1,438       -       1,438       -  
Net loss   (35,716
 )     (22,949
 )     (73,934
 )     (37,511
 )
                       
Less: net loss attributable to non-controlling interests   (14,105
 )     (5,584
 )     (31,305
 )     (8,164
 )
Net loss attributable to common stockholders $   (21,611 )   $   (17,365 )   $   (42,629 )   $   (29,347 )
                       
Basic and diluted net loss per common share $   (0.50 )   $   (0.43 )   $   (0.99 )   $   (0.73 )
                       
Weighted average common shares outstanding—basic and diluted   43,377,629       40,551,844       42,948,780       40,457,524  
                       

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Source: Fortress Biotech, Inc.

Released August 9, 2018