Fortress Biotech, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Stockholders’ Equity

15.

Stockholders’ Equity

Stock-based Compensation

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards and warrants for the three and six months ended June 30, 2018 and 2017:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
($ in thousands)	2018		2017		2018		2017
Employee Awards	$	1,121	$	1,150	$	2,063	$	2,424
Executive awards of Fortress Companies’ stock		444		540		962		1,096
Non-employee awards		23		23		46		36
Fortress Companies:
Avenue		322		19		671		24
Checkpoint		72		2,382		1,209		3,362
Mustang		972		397		2,966		397
Other		198		113		30		213
National		418		183		676		184
Total stock-based compensation	$	3,570	$	4,807	$	8,623	$	7,736

For the three months ended June 30, 2018 and 2017, approximately $0.8 million and $2.4 million, respectively, of stock based compensation expense was included in research and development expenses in connection with equity grants made to employees and consultants and approximately $2.8 million and $2.4 million, respectively, was included in general and administrative expenses in connection with grants made to employees, members of the board of directors and consultants.

For the six months ended June 30, 2018 and 2017, approximately $3.1 million and $3.2 million, respectively, of stock based compensation expense was included in research and development expenses in connection with equity grants made to employees and consultants and approximately $5.5 million and $4.3 million, respectively, was included in general and administrative expenses in connection with grants made to employees, members of the board of directors and consultants.

Stock Options

The following table summarizes Fortress stock option activities excluding activity related to Fortress Companies:

	Number of Shares		Weighted average exercise price		Total weighted average intrinsic value		Weighted average remaining contractual life (years)
Options vested and expected to vest at December 31, 2017		1,110,501	$	3.78	$	1,351,080		3.95
Exercised
Options vested and expected to vest at June 30, 2018		1,110,501	$	3.78	$	719,324		3.46
Options vested and exercisable		1,085,501	$	3.75	$	719,324		3.43

As of June 30, 2018, Fortress had no unrecognized stock-based compensation expense related to options.

Restricted Stock and Restricted Stock Units

The following table summarizes Fortress restricted stock awards and restricted stock units activities, excluding activities related to Fortress Companies:

	Number of Shares		Weighted average grant price
Unvested balance at December 31, 2017		11,874,034	$	2.63
Restricted stock granted		1,392,856		3.99
Restricted stock vested		(213,333)		2.76
Restricted stock units granted		405,000		4.18
Restricted stock units forfeited		(95,000)		3.49
Restricted stock units vested		(130,584)		3.45
Unvested balance at June 30, 2018		13,232,973	$	2.80

As of June 30, 2018, and 2017, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $12.4 million and $2.7 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 2.9 years and 2.3 years, respectively

Warrants

The following table summarizes Fortress warrant activities, excluding activities related to Fortress Companies:

	Number of Shares		Weighted average exercise price		Total weighted average intrinsic value		Weighted average remaining contractual life (years)
Outstanding as of December 31, 2017		2,774,189	$	3.30	$	2,204,530		4.47
Granted
Forfeited
Outstanding as of June 30, 2018		2,774,189	$	3.30	$	96,600		3.97
Exercisable as of June 30, 2018		869,189	$	3.96	$	96,600		3.56

Employee Stock Purchase Plan

Eligible employees can purchase the Company’s Common Stock at the end of a predetermined offering period at 85% of the lower of the fair market value at the beginning or end of the offering period. The ESPP is compensatory and results in stock-based compensation expense.

As of June 30, 2018, 289,359 shares have been purchased and 110,641 shares are available for future sale under the Company’s ESPP. Share-based compensation expense recorded was approximately $43,000 and $40,000, respectively for the three months ended June 30, 2018 and 2017, and was approximately $81,000 and $75,000, respectively, for the six months ended June 30, 2018 and 2017.

Capital Raises

Fortress

At the Market Offering

Pursuant to the terms of the Company’s Amended and Restated At Market Issuance Sales Agreement, or Sales Agreement, with B. Riley FBR, Inc. (“B. Riley,” f/k/a MLV & Co. LLC, and FBR Capital Markets & Co.) (the “ATM”), for the six month period ended June 30, 2018, the Company issued 1,130,835 shares of common stock at an average price of $3.60 per share for gross proceeds of $4.1 million. In connection with these sales, the Company paid aggregate fees of approximately $71,000 to B. Riley.

Fortress Companies

Checkpoint Therapeutics, Inc.

Checkpoint Public Offering of Common Stock

On March 12, 2018, Checkpoint closed an underwritten public offering in which it sold 5,290,000 shares of its common stock at a price of $4.35 per share for gross proceeds of approximately $23.0 million. Total net proceeds from this offering were approximately $20.8 million, net of underwriting discounts and estimated offering expenses of approximately $2.2 million. The shares were sold under a Registration Statement (No. 333-221493) on Form S-3, filed by Checkpoint with the Securities and Exchange Commission.

Approximately $77.0 million of the shelf remains available for sale under the Form S-3, following the March 12, 2018 offering. Checkpoint may offer the securities under the S-3 from time to time in response to market conditions or other circumstances if it believes such a plan of financing is in the best interests of its stockholders.