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

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

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 nine months ended September 30, 2018 and 2017:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
($ in thousands)	2018		2017		2018		2017
Employee Awards	$	1,012	$	1,104	$	3,075	$	3,528
Executive awards of Fortress Companies’ stock		446		546		1,408		1,642
Non-employee awards		24		24		70		60
Fortress Companies:
Avenue		371		246		1,043		269
Checkpoint		1,128		910		2,336		4,271
Mustang		922		834		3,888		1,231
Caelum		152		427		92		427
Other		51		93		141		308
National		929		129		1,605		312
Total stock-based compensation	$	5,035	$	4,313	$	13,658	$	12,048

For the three months ended September 30, 2018 and 2017, approximately $1.8 million and $1.6 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 $3.2 million and $2.7 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 nine months ended September 30, 2018 and 2017, approximately $4.9 million and $4.8 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 $8.7 million and $7.2 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 September 30, 2018		1,110,501	$	3.78	$	87,132		3.21
Options vested and exercisable		1,085,501	$	3.75	$	87,132		3.18

As of September 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

unit awards

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		430,000			4.03
Restricted stock units forfeited		(426,978	)		4.05
Restricted stock units vested		(516,732	)		3.56
Unvested balance at September 30, 2018		12,539,847		$	2.74

As of September 30, 2018, and 2017, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $9.8 million and $1.7 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 3.6 years and 2.0 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
Forfeited		(20,000	)		5.72		-		-
Outstanding as of September 30, 2018		2,754,189		$	3.28	$	13,800		3.75
Exercisable as of September 30, 2018		849,189		$	3.92	$	13,800		3.39

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 September 30, 2018, 289,359 shares have been purchased and 710,641 shares are available for future sale under the Company’s ESPP. Share-based compensation expense recorded was approximately $52,000 and $52,000, respectively, for the three months ended September 30, 2018 and 2017, and was approximately $0.1 million and $0.1 million, respectively, for the nine months ended September 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 nine month period ended September 30, 2018, the Company issued 2,668,756 shares of common stock at an average price of $2.61 per share for gross proceeds of $7.0 million. In connection with these sales, the Company paid aggregate fees of approximately $0.2 million.

Fortress Companies

Checkpoint Therapeutics, Inc.

Checkpoint At the Market

Offering

In November 2017, Checkpoint filed a shelf registration statement on Form S-3 (the "

Checkpoint

S-3"), which was declared effective in December 2017. Under the

Checkpoint

S-3, Checkpoint may sell up to a total of $100 million of its securities. In connection with the

Checkpoint

S-3, Checkpoint entered into an At-the-Market Issuance Sales Agreement (the "

Checkpoint

ATM") with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co. Inc. and H.C. Wainwright & Co., LLC (each an "Agent" and collectively, the "Agents"), relating to the sale of shares of common stock. Under the

Checkpoint

ATM, Checkpoint pays the Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.

During the three and nine months ended September 30, 2018, Checkpoint sold a total of 1,841,774 shares of its common stock under the

Checkpoint

ATM for aggregate total gross proceeds of approximately $8.0 million at an average selling price of $4.33 per share, resulting in net proceeds of approximately $

7.7

million after deducting commissions and other transactions costs.

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 the Checkpoint S-3.

Approximately $69.0 million of the shelf remains available for sale under the

Checkpoint

S-3, following the

offerings noted above.

Checkpoint may offer the securities under the

Checkpoint

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.