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