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

3 Months Ended

Mar. 31, 2019

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 months ended March 31, 2019 and 2018:

	For the Three Months Ended March 31,
($ in thousands)	2019			2018
Employee awards	$	935		$	942
Executive awards of Fortress partner companies’ stock		352			518
Non-employee awards		(2	)		23
Fortress partner companies:
Avenue		751			349
Checkpoint		798			1,137
Mustang		432			1,995
Other		43			(169	)
Total stock-based compensation	$	3,309		$	4,795

For the three months ended March 31, 2019 and 2018, approximately $0.6 million and $2.3 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 $2.7 million and $2.5 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 partner 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, 2018		1,085,501	$	3.75	$	–		2.93
Exercised		–		–		–		–
Options vested and expected to vest at March 31, 2019		1,085,501	$	3.75	$	155,322		2.68
Options vested and exercisable		1,085,501	$	3.75	$	155,322		2.68

As of March 31, 2019, 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, 2018		12,645,982		$	2.72
Restricted stock granted		1,516,408			0.86
Restricted stock vested		(220,000	)		2.82
Restricted stock units forfeited		(43,333	)		4.56
Restricted stock units vested		(33,750	)		3.59
Unvested balance at March 31, 2019		13,865,307		$	2.51

As of

March 31, 2019

and

2018

, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $

14.8

million and $2.5 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of

5.4

years and

2.4

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, 2018		2,754,189	$	3.28	$	–		3.49
Granted		–		–		–		–
Forfeited		–		–		–		–
Outstanding as of March 31, 2019		2,754,189	$	3.28	$	24,600		3.25
Exercisable as of March 31, 2019		849,189	$	3.92	$	24,600		2.89

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 March 31, 2019, 356,507 shares have been purchased and 643,493 shares are available for future sale under the Company’s ESPP. Share-based compensation expense recorded was approximately $20,000 and $38,000, respectively, for the three months ended March 31, 2019 and 2018.

Capital Raises

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 three-month period ended March 31, 2019, the Company issued approximately 2.9 million shares of common stock at an average price of $2.14 per share for gross proceeds of $6.3 million. In connection with these sales, the Company paid aggregate fees of approximately $0.1 million.

These shares were sold pursuant to the current shelf registration statement on Form S-3; approximately $10.2 million of the shelf remains available for sale at March 31, 2019.

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 months ended March 31, 2019, Checkpoint sold a total of 90,269 shares of its common stock under the Checkpoint ATM for aggregate total gross proceeds of approximately $0.4 million at an average selling price of $4.05 per share. Pursuant to the Founders Agreement, Checkpoint issued 2,254 shares of common stock to Fortress for the ATM offering noted above.

Approximately $68.6 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.