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Healthcare

Fortress Biotech Inc.

11/14/2025 | Press release | Distributed by Public on 11/14/2025 07:47

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q. Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Statements in this Quarterly Report on Form 10-Q that are not descriptions of historical facts are "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 (the "Exchange Act"). The words "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "might," "plans," "potential," "predicts," "should," or "will" or the negative of these terms or other comparable terminology are generally intended to identify forward-looking statements. These 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 those set forth under "Item 1A. Risk Factors" including, in particular, risks relating to:

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our growth strategy;

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financing and strategic agreements and relationships;

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our need for substantial additional funds and uncertainties relating to financings;

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uncertainty related to the timing and amounts expected to be realized from future milestone, contingent value right, royalty or similar future revenue streams, if at all;

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our ability to identify, acquire, close and integrate product candidates successfully and on a timely basis;

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our ability to attract, integrate and retain key personnel;

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the early stage of products under development;

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the results of research and development activities;

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uncertainties relating to preclinical and clinical testing;

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the ability to secure and maintain third-party manufacturing, marketing and distribution of our and our partner companies' products and product candidates;

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government regulation;

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patent and intellectual property matters; and

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competition.

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, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The information contained herein is intended to be reviewed in its totality, and any stipulations, conditions or provisos that apply to a given piece of information in one part of this Quarterly Report on Form 10-Q should be read as applying mutatis mutandis to every other instance of such information appearing herein.

Overview

Fortress Biotech, Inc. ("Fortress" or the "Company") is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holding and dividend and royalty revenue streams. Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. We have executed such arrangements in partnership with some of the world's foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center ("COH" or "City of Hope"), Dana-Farber Cancer Institute, Nationwide Children's Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy's Laboratories, Ltd., and Sun Pharmaceutical Industries Limited ("Sun Pharma").

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and finance expertise to help its subsidiaries and partner companies achieve their goals. Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. To date, three partner companies are publicly-traded, and four subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. ("AstraZeneca"), Sentynl Therapeutics, Inc. ("Sentynl"), Axsome Therapeutics, Inc. ("Axsome"), and Sun Pharma.

Our subsidiaries and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Journey Medical Corporation (Nasdaq: DERM, "Journey" or "JMC"), Mustang Bio, Inc. (Nasdaq: MBIO, "Mustang"), Avenue Therapeutics, Inc. (OTC: ATXI, "Avenue"), Cellvation, Inc. ("Cellvation"), Cyprium Therapeutics, Inc. ("Cyprium"), Helocyte, Inc. ("Helocyte"), Oncogenuity, Inc. ("Oncogenuity") and Urica Therapeutics, Inc. ("Urica"). Checkpoint Therapeutics, Inc. ("Checkpoint"), previously a partner company of ours, was acquired by Sun Pharma in May 2025. Baergic Bio, Inc. ("Baergic"), previously a subsidiary of Avenue, was acquired by Axsome in November 2025.

Recent Events

Revenue

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For the three months ended September 30, 2025 and 2024, net revenue was $17.6 million and $14.6 million, respectively, and is primarily related to the sale of Journey's marketed products.

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For the three months ended September 30, 2025, net revenue included $0.6 million related to Journey's supply of Amzeeq to Cutia Therapeutics (HK) Limited ("Cutia").

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For the nine months ended September 30, 2025 and 2024, net revenue was $47.2 million and $42.6 million, respectively, and is primarily related to the sale of Journey's marketed products.

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For the nine months ended September 30, 2025, net revenue included $1.4 million related to Avenue's termination of its license agreement with AnnJi Pharmaceutical Co. Ltd. ("AnnJi"), and $0.6 million related to Journey's supply of Amzeeq to Cutia.

Emrosi (Minocycline Hydrochloride Extended-Release Capsules, 40mg, also known as DFD-29, for the treatment of rosacea)

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In July 2025, our partner company Journey announced expanded payer coverage for Emrosi™ (Minocycline Hydrochloride Extended-Release Capsules, 40mg) where 65% of the 187 million commercial lives in the United States now have pharmacy benefit coverage for Emrosi.

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In November 2024, Journey announced that the FDA approved Emrosi for the treatment of inflammatory lesions of rosacea in adults, and Journey subsequently launched Emrosi in March 2025.

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Emrosi was developed for the treatment of rosacea at our partner company, Journey, in collaboration with Dr. Reddy's Laboratories Ltd.

Late Stage Product Candidates

UNLOXCYT™ (cosibelimab-ipdl, anti-PD-L1 antibody)

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In May 2025, our partner company, Checkpoint, was acquired by Sun Pharmaceutical Industries, Inc. ("Sun Pharma") for $4.10 per share in cash plus a contingent value right of up to $0.70 per share upon the achievement of EU approval of Checkpoint's principal drug product candidate. Fortress received $28.0 million and is eligible for a 2.5% royalty on net sales of UNLOXCYT as well as up to $4.8 million upon achievement of the contingent value right.

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On December 13, 2024, Checkpoint received approval from the FDA for UNLOXCYT (cosibelimab-ipdl), for the treatment of metastatic or locally advanced cutaneous squamous cell carcinoma ("cSCC") in adults who are not candidates for curative surgery or radiation.

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Cosibelimab was sourced by Fortress and developed at Checkpoint, which was acquired by Sun Pharma in May 2025.

Triplex (cytomegalovirus vaccine and immunotherapy)

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Triplex, a potential vaccine and immunotherapy for prevention and control of cytomegalovirus ("CMV"), is currently being studied in a Phase 2 clinical trial for adults co-infected with HIV and CMV that is now fully enrolled with topline data anticipated in early 2026. The study aims to show that vaccination with Triplex can safely elicit a CMV-specific immune response and reduce asymptomatic CMV replication in a population of people with HIV on suppressive antiretroviral therapy. The study will also evaluate whether this intervention might reduce chronic inflammation and immune activation, as compared to placebo, and thus, potentially reduce related mortality and morbidity (NCT05099965).

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In January 2025, we announced that the first patient was dosed in a multi-center, placebo-controlled, randomized Phase 2 clinical trial to evaluate Triplex when administered to human leukocyte antigen ("HLA") matched related stem cell donors to reduce CMV events in patients undergoing hematopoietic stem cell transplantation ("HSCT"). The trial is funded by a grant from the National Cancer Institute ("NCI") (NCT06059391).

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Triplex is currently also the subject of multiple other ongoing clinical trials, including: a Phase 1/2 trial for CMV control in pediatric recipients of HSCT (NCT03354728); a Phase 1 trial of Triplex in combination with a bi-specific CMV/CD19 CAR T cell therapy for the treatment of non-Hodgkin lymphoma (NCT05432635); a Phase 2 trial for safety and effectiveness in reducing CMV complications in patients previously infected with CMV and undergoing donor hematopoietic cell transplant (NCT02506933); a Phase 1 trial of Triplex in combination with CAR T cell therapy for adults with non-Hodgkin lymphoma (NCT05801913); and a Phase 1 trial of Triplex in combination with an allogeneic anti-CD19-CAR CMV-specific T cell therapy for adults with high-risk acute lymphoblastic leukemia (NCT06735690).

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Triplex was sourced by Fortress and is currently in development at our subsidiary, Helocyte.

CAEL-101 (light chain fibril-reactive monoclonal antibody for AL amyloidosis)

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On October 5, 2021, AstraZeneca acquired Caelum Biosciences, Inc. ("Caelum"), a former subsidiary of Fortress for an upfront payment of approximately $150 million paid to Caelum shareholders, of which approximately $56.9 million was paid to Fortress. The agreement also provides for additional potential payments to Caelum shareholders totaling up to $295 million, payable upon the achievement of regulatory and commercial milestones. Fortress is eligible to receive 42.4% of all potential milestone payments, which, together with the upfront payment, would total up to approximately $182 million.

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There are two ongoing global Phase 3 pivotal studies of CAEL-101 (also known as anselamimab) for Mayo Stage IIIa and Mayo Stage IIIb amyloid light-chain amyloidosis ("AL amyloidosis"), known as Cardiac Amyloid Reaching for Extended Survival ("CARES")(ClinicalTrials.gov identifiers: NCT04512235and NCT04504825). (Information on clinicaltrials.gov does not constitute part of this Quarterly Report on Form 10-Q.).

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On July 16, 2025, AstraZeneca announced an update from its Cardiac Amyloid Reaching for the CARES Phase 3 clinical program showing that anselamimab did not achieve statistical significance for the primary endpoint compared to placebo in patients with Mayo stages IIIa and IIIb AL amyloidosis. The primary endpoint was defined as a hierarchical combination of time to all-cause mortality ("ACM") and frequency of cardiovascular hospitalizations ("CVH"). All patients in the clinical program received background standard of care for plasma cell dyscrasia. AstraZeneca stated that anselamimab showed highly clinically meaningful improvement in time to ACM and frequency of CVH in a prespecified subgroup of patients, compared to placebo (although AstraZeneca did not further characterize this subgroup). AstraZeneca also reported that anselamimab was well tolerated, with the majority of events balanced between the anselamimab treatment arm and the placebo arm. AstraZeneca indicated that the company plans to submit the pre-specified subgroup analysis from the CARES trials with regulatory authorities.

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CAEL-101 was sourced by Fortress and was developed by Caelum (founded by Fortress) until the acquisition by AstraZeneca of Caelum in October 2021.

CUTX-101 (copper histidinate for Menkes disease)

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In October 2025, Cyprium announced that the FDA had issued a Complete Response Letter ("CRL") to Sentynl for CUTX-101 (copper histidinate for Menkes disease). The CRL noted cGMP deficiencies had been observed at the facility where CUTX-101 is manufactured, and Sentynl expects to resubmit the CUTX-101 NDA shortly. The CRL did not cite any other approvability concerns, nor did it identify any deficiencies in CUTX-101's efficacy and safety data.

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In December 2023, Cyprium completed the asset transfer of CUTX-101 to Sentynl. Sentynl is obligated under the applicable agreement to use commercially reasonable efforts to develop and commercialize CUTX-101, including the funding of the same. Additionally, Cyprium remains eligible to receive up to $129 million in aggregate development and sales milestones under the Agreement and royalties on net sales of CUTX-101 ranging from 3% to 12.5% on tiered annual net sales. Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued at the NDA approval for CUTX-101.

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CUTX-101 was sourced by Fortress and was developed by Cyprium until the asset transfer in December 2023.

Early Stage Product Candidates

Dotinurad (urate transporter (URAT1) inhibitor for gout)

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In October 2025, Urica announced that Crystalys Therapeutics, Inc. ("Crystalys"), in which Urica maintains an equity position, announced a $205 million Series A financing to support the advancement of global Phase 3 clinical studies evaluating dotinurad for the treatment of gout.

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Also in October 2025, Urica announced the first patients were dosed in two randomized, double-blind, multicenter global Phase 3 trials,(ClinicalTrials.gov identifiers: the RUBY study (NCT07089875) and the TOPAZ study (NCT07089888)) evaluating dotinurad, a next-generation, once daily oral, URAT1 inhibitor with potential for best-in-class safety and efficacy for the treatment of gout.

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In July 2024, Urica entered into an asset purchase agreement, royalty agreement, and related agreements (collectively, the "Transaction Documents") with Crystalys. Crystalys is a Delaware corporation founded in 2023 and seeded by leading life

sciences institutional investors. Under the Transaction Documents, Urica transferred substantially all intellectual property rights in dotinurad to Crystalys. In return, Crystalys issued to Urica shares of its common stock equal to 35% of Crystalys' outstanding equity, including certain anti-dilution provisions through the raise of $150 million in equity securities. The Transaction Documents also granted Urica a secured 3% royalty on future net sales of dotinurad.

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Dotinurad was approved in Japan in 2020 as a once-daily oral therapy for gout and hyperuricemia.

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Dotinurad was sourced by Fortress and was in development at our Urica subsidiary until the asset was acquired by Crystalys in July 2024.

MB-109 (IL13Rα2-targeted CAR T Cells (MB-101) + HSV-1 oncolytic virus (MB-108))

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In July 2025, the FDA granted Orphan Drug Designation to Mustang for MB-101 (IL13Ra2-targeted CAR T-cells) for the treatment of recurrent diffuse and anaplastic astrocytoma and glioblastoma. MB-101 received Orphan Drug Designation on time and with a designation that is broader than the indication proposed.

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We are currently exploring with COH the launch of an investigator-sponsored single-institution trial under the COH IND to treat patients with IL13Rα2+ recurrent refractory glioblastoma ("GBM") and high-grade astrocytoma with MB-109 that could potentially be initiated in the second quarter of 2026.

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MB-101 has completed the treatment phase of the Phase 1 study in patients with IL13Rα2 recurrent/refractory malignant glioma sponsored by City of Hope (ClinicalTrials.gov identifier: NCT02208362) and is currently in three ongoing clinical trials sponsored by City of Hope for glioblastoma in adults and children (ClinicalTrials.gov identifiers: NCT04003649, NCT04661384, NCT04510051).

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MB-108 has completed a Phase 1 clinical trial in patients with recurrent GBM sponsored by the University of Alabama at Birmingham ("UAB") (ClinicalTrials.gov identifier: NCT03657576) and UAB is planning to initiate a Phase 1b study in early 2026 for the treatment of patients with recurrent malignant glioma (ClinicalTrials.gov identifier: NCT06614855).

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MB-101, MB-108, and MB-109 are currently in development at our partner company, Mustang.

MB-106 (CD20-targeted CAR T-cell therapy)

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Mustang is currently pursuing the development of MB-106,in collaboration with the Fred Hutch Cancer Center ("Fred Hutch"), for autoimmune diseases pursuant to a license agreement originally executed with Fred Hutch in 2017 (the "CD20 License").

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In September 2025, Mustang received notice from Fred Hutch of its intent to terminate the CD20 License for cause in connection with unpaid patent expenses and maintenance fees. A 90-day cure period is applicable under the CD20 License. Mustang intends to negotiate the terms of an arrangement with Fred Hutch pursuant to which the CD20 License is terminated (together with related agreements) in exchange for potential consideration remunerable to Mustang.

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MB-106 was sourced by Fortress and is currently in development at our partner company, Mustang.

BAER-101 (GABA_Aα2/3 positive allosteric modulator)

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In November 2025, Avenue announced it had entered into an agreement for Baergic to be acquired by Axsome, including the global rights to BAER-101 (also known as AZD7325), a novel oral GABAA α2,3 subtype-selective receptor positive allosteric modulator (PAM). BAER-101 was originally licensed by Baergic from AstraZeneca AB and will be referred to as AXS-17 by Axsome going forward. Axsome intends to evaluate AXS-17 as a potential treatment for epilepsy.

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BAER-101 was sourced by Fortress and was in development at Baergic, a majority-owned subsidiary of Avenue, until its sale to Axsome in November 2025.

General Corporate and Other - Public Subsidiaries

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In the quarter ended September 30, 2025, the Company received gross proceeds of $1.7 million from warrant exercises.

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In the quarter ended September 30, 2025, Journey issued approximately 1.0 million shares of common stock for net proceeds of $6.9 million under the Journey At the Market Offering ("ATM").

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In July 2025, Mustang received gross proceeds of $7.1 million from warrant exercises.

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Due to the receipt of $28 million of proceeds from the sale of Checkpoint in May 2025, the Company made payments to Oaktree comprising: $5.5 million in principal, $0.1 million in interest, and $0.3 million in Yield Protection Premium. At September 30, 2025, the outstanding principal balance of the 2024 Oaktree Note was $29.8 million.

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In June 2025, Journey Medical joined the small-cap Russell 2000® Index and the broad-market Russell 3000® Index, effective after the close of U.S. equity markets on June 27, 2025, as a result of their 2025 annual Russell Index reconstitution.

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In March 2025, Avenue received a notice from The Nasdaq Stock Market LLC that Avenue's common stock would be suspended at the open of trading on March 19, 2025. Avenue's common stock was subsequently formally delisted from the Nasdaq Capital Market in July 2025. Avenue's common stock began trading under the symbol "ATXI" on the OTC Markets

system on March 19, 2025. Avenue currently plans to continue to file its required periodic reports and other filings with the SEC.

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In February 2025, Mustang announced it had concurrently exited the lease for its manufacturing facility in Worcester, Massachusetts and sold certain fixed assets including furniture and equipment to AbbVie Bioresearch Center, Inc. for $1.0 million.

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In January 2025, Mustang effected a 1-for-50 reverse stock split to achieve compliance with the minimum bid price listing requirement of the Nasdaq Capital Market.

Critical Accounting Policies and Use of Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. Applying these principles requires our judgment in determining the appropriateness of acceptable accounting principles and methods of application in diverse and complex economic activities. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of our critical accounting estimates, see the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission ("SEC") on March 31, 2025 (the "2024 Form 10-K"). There were no material changes in our critical accounting estimates or accounting policies from December 31, 2024 other than the addition of the "Investment in Equity Securities" policy.

Accounting Pronouncements

See Note 2, "Summary of Significant Accounting Policies", to our unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Smaller Reporting Company Status

We are a "smaller reporting company," meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (x) the market value of our shares held by non-affiliates is less than $250 million or (y) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we chose to present only the two most recent fiscal years of audited financial statements in the 2024 Form 10-K, have reduced disclosure obligations regarding executive compensation and utilize certain other accommodations available to smaller reporting companies.

Basis of Presentation and Principles of Consolidation

The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company's consolidated financial statements include the results of the Company's subsidiaries for which it has voting control but does not own 100% of the outstanding equity of the subsidiaries. For consolidated entities where the Company owns less than 100% of the subsidiary, but retains voting control, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations and presents non-controlling interests as a component of stockholders' equity on its consolidated balance sheets. All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.

The following table summarizes the Company's ownership of the issued and outstanding common and preferred shares in certain consolidated Fortress subsidiaries as of the date indicated:


	September 30,
Partner Company/Subsidiary	2025
Avenue (OTC: ATXI)	10.3	%
Cellvation	79.6	%
Checkpoint¹	-	%
Cyprium	73.9	%
Helocyte	83.4	%
Journey (Nasdaq: DERM)	37.4	%
Mustang (Nasdaq: MBIO)	4.0	%
Oncogenuity	73.9	%
Urica	69.6	%

Note 1:Checkpoint was acquired in May 2025 by Sun Pharma.

Results of Operations

Comparison of Three Months Ended September 30, 2025 and 2024


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Revenue
Product revenue, net	$	17,025	$	14,629	$	2,396	16	%
Other revenue		606		-		606	100	%
Net revenue		17,631		14,629		3,002	21	%

Operating expenses
Cost of goods sold - (excluding amortization of acquired intangible assets)		5,755		4,471		1,284	29	%
Amortization of acquired intangible assets		1,064		814		250	31	%
Research and development		208		9,446		(9,238)	(98)	%
Selling, general and administrative		17,415		21,993		(4,578)	(21)	%
Total operating expenses		24,442		36,724		(12,282)	(33)	%
Loss from operations		(6,811)		(22,095)		15,284	(69)	%

Other income (expense)
Interest income		736		589		147	25	%
Interest expense and financing fee		(2,742)		(6,209)		3,467	(56)	%
Gain (loss) on common stock warrant liabilities		(2)		19		(21)	(111)	%
Other income		17,672		1,071		16,601	1,550	%
Total other income (expense)		15,664		(4,530)		20,194	(446)	%
Income (loss) before income tax expense		8,853		(26,625)		35,478	(133)	%

Income tax expense		26		69		(43)	(62)	%
Net income (loss)		8,827		(26,694)		35,521	(133)	%

Attributable to non-controlling interests		(2,977)		13,827		(16,804)	(122)	%
Net income (loss) attributable to Fortress	$	5,850	$	(12,867)	$	18,717	(145)	%

Revenue


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Revenue
Product revenue, net	$	17,025	$	14,629	$	2,396	16	%
Other revenue		606		-		606	100	%
Net revenue	$	17,631	$	14,629	$	3,002	21	%

For the three months ended September 30, 2025 we generated $17.0 million of net product revenue related to the sale of Journey's branded and generic products as compared to $14.6 million for the three months ended September 30, 2024. This includes $4.9 million of net product revenue related to the U.S. commercial launch of Emrosi for the three months ended September 30, 2025, offset by a decrease in Accutane revenue as a result of lower sales volume driven by recent market competition. Other revenue for the three months ended September 30, 2025 consists of revenue recognized by Journey related to the supply of Amzeeq to Cutia.

Cost of Goods Sold - (excluding amortization of acquired intangible assets)


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Cost of goods sold - (excluding amortization of acquired intangible assets)	$	5,755	$	4,471	$	1,284	29	%

We incurred $5.8 million and $4.5 million of costs of goods sold in connection with the sale of Journey's branded and generic products for the quarters ended September 30, 2025 and 2024, respectively. Cost of goods sold increased by $1.3 million, or 29% quarter-over-quarter, due to an increase in product-related cost of goods, including royalties, related to the incremental revenue from Emrosi.

Amortization of acquired intangible assets

Amortization of acquired intangible assets increased by $0.3 million, or 31%, to $1.1 million for the three-month period ended September 30, 2025, from $0.8 million for the three-month period ended September 30, 2024, driven by the addition of the Emrosi acquired intangible asset upon Journey's payment to DRL of the milestone payment triggered by the FDA's approval of Emrosi in November 2024.

Research and Development Expenses

Research and development ("R&D") costs primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for upfront and milestone license fees, costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, laboratory costs and other supplies.

The table below provides a summary of research and development by entity, for the periods presented:


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Research & development
Fortress¹	$	77	$	(146)	$	223	(153)	%
Avenue		177		2,327		(2,150)	(92)	%
Checkpoint²		-		6,366		(6,366)	(100)	%
JMC		287		842		(555)	(66)	%
Mustang		(333)		57		(390)	(684)	%
Total research and development expense	$	208	$	9,446	$	(9,238)	(98)	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Note 2: Checkpoint was deconsolidated as of May 2025 due to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The decrease in R&D spending of $9.2 million, or 98%, for the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 is primarily a result of the decreased R&D spend at Checkpoint of $6.4 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma, and the $2.2 million, or 95%, decrease at Avenue, which is primarily attributable to a decrease in pre-clinical and clinical development costs for AJ201, prior to its sale to AnnJi in April 2025. Journey's decrease of $0.6 million, or 66%, is due to costs incurred in the quarter ended September 30, 2024 related to the launch and commercialization of Emrosi. The decrease at Mustang of $0.4 million, or 684%, is due to a $0.3 million decrease in rent expense due to the termination of the Worcester facility lease, and a $0.1 million decrease in personnel costs related to reductions in employee headcount. Mustang continues to negotiate settlements of aged payables, and recognized savings of approximately $0.6 million, which resulted in a credit for research and development expenses during the three months ended September 30, 2025. This credit is not indicative of Mustang's research and development expenses going forward.

The table below provides a summary by entity of noncash, stock-based compensation expense included in R&D expense for the periods presented:


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Stock-based compensation - research & development
Fortress¹	$	120	$	444	$	(324)	(73)	%
Avenue		31		89		(58)	(65)	%
Checkpoint²		-		543		(543)	(100)	%
JMC		-		150		(150)	(89)	%
Mustang		1		(10)		10	(103)	%
Total stock-based compensation expense - research and development	$	152	$	1,216	$	(1,064)	(88)	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Note 2: Checkpoint was deconsolidated as of May 2025 due to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The decrease in stock-based compensation of $1.1 million, or 88%, in the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 is primarily due to the decrease at Checkpoint of $0.5 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Fortress and private subsidiaries of $0.3 million, or 73%, is due to $0.4 million recognized by Urica in the quarter ended September 30, 2024 related to the vesting of outstanding equity grants as a result of the transaction with Crystalys.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of personnel-related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in R&D expenses.

The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:


		Three Months Ended September 30,			Change
($ in thousands)	2025		2024		$		%
Selling, general & administrative
Fortress¹	$	3,857	$	5,010	$	(1,153)	(23)	%
Avenue		547		829		(282)	(34)	%
Checkpoint²		-		3,358		(3,358)	(100)	%
JMC		12,054		11,396		658	6	%
Mustang		957		1,400		(443)	(32)	%
Total selling, general & administrative expense	$	17,415	$	21,993	$	(4,578)	(21)	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Note 2: Checkpoint was deconsolidated as of May 2025 due to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

For the three months ended September 30, 2025, the decrease in selling, general and administrative expenses of $4.6 million, or 21%, is primarily a result of the decreased expense at Checkpoint of $3.4 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Fortress of $1.2 million, or 23%, is due primarily to decreased stock compensation expense related to the vesting in July of a series of grants made under the Fortress Biotech, Inc. Long Term Incentive Plan.. The increased spend at Journey of $0.7 million, or 6%, is due to the incremental operating activities related to the launch and commercialization of Emrosi.

The table below provides a summary by entity of noncash, stock-based compensation expense included in selling, general and administrative expense for the periods presented:


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Stock-based compensation - Selling, general and administrative
Fortress¹	$	1,037	$	2,505	$	(1,468)	(59)	%
Avenue		132		242		(110)	(45)	%
Checkpoint²		-		1,068		(1,068)	(100)	%
JMC		1,854		1,490		364	24	%
Mustang		22		52		(30)	(58)	%
Total stock-based compensation expense - selling, general and administrative	$	3,045	$	5,357	$	(2,312)	(43)	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Note 2: Checkpoint was deconsolidated as of May 2025 due to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The decrease in stock-based compensation of $2.3 million, or 43%, for the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 is primarily due to the decrease at Checkpoint of $1.1 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Fortress of $1.5 million, or 59%, is related to the vesting in July of a series of grants made under the Fortress Biotech, Inc. Long Term Incentive Plan.

Other income (expense)


	Three Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Other income (expense)
Interest income	$	736	$	589	$	147	25	%
Interest expense and financing fee		(2,742)		(6,209)		3,467	(56)	%
Gain (loss) on common stock warrant liabilities		(2)		19		(21)	(111)	%
Other income		17,672		1,071		16,601	1550	%
Total other income (expense)	$	15,664		(4,530)	$	20,194	(446)	%

Total other income (expense) increased $20.2 million, or 446%, from expense of $4.5 million for the quarter ended September 30, 2024 to income of $15.7 million for the quarter ended September 30, 2025. The increase is due to an increase in the fair value of Urica's equity interest in Crystalys of $15.1 million and the reversal of the liability associated with Urica's repurchase obligation of $2.6 million during the three months ended September 30, 2025 (see Note 3 to the unaudited condensed consolidated financial statements). The decrease in interest expense and financing fee of $3.5 million, or 56%, for the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 is attributable to a loss on extinguishment of debt of $3.6 million recognized in the quarter ended September 30, 2024 related to the Company's extinguishment of the 2020 Oaktree Note.

Comparison of Nine Months Ended September 30, 2025 and 2024


	Nine Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Revenue
Product revenue, net	$	45,173	$	42,514	$	2,659	6	%
Revenue - related party		-		41		(41)	(100)	%
Other revenue		2,010		-		2,010	100	%
Net revenue		47,183		42,555		4,628	11	%

Operating expenses
Cost of goods - (excluding amortization of acquired intangible assets)		15,484		16,199		(715)	(4)	%
Amortization of acquired intangible assets		3,193		2,443		750	31	%
Research and development		12,268		46,941		(34,673)	(74)	%
Selling, general and administrative		81,670		60,867		20,803	34	%
Asset impairment		-		2,649		(2,649)	(100)	%
Total operating expenses		112,615		129,099		(16,484)	(13)	%
Loss from operations		(65,432)		(86,544)		21,112	(24)	%

Other income (expense)
Interest income		1,848		2,157		(309)	(14)	%
Interest expense and financing fee		(8,065)		(10,933)		2,868	(26)	%
Loss on common stock warrant liabilities		(399)		(578)		179	(31)	%
Gain from deconsolidation of subsidiary		27,127		-		27,127	100	%
Other income		17,599		1,334		16,265	1219	%
Total other income (expense)		38,110		(8,020)		46,130	(575)	%
Loss before income tax expense		(27,322)		(94,564)		67,242	(71)	%

Income tax expense (refund)		196		(24)		220	(917)	%
Net loss		(27,518)		(94,540)		67,022	(71)	%

Attributable to non-controlling interests		38,270		55,308		(17,038)	(31)	%
Net income (loss) attributable to Fortress	$	10,752	$	(39,232)	$	49,984	(127)	%


	Nine Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Revenue
Product revenue, net	$	45,173	$	42,514	$	2,659	6	%
Revenue - related party		-		41		(41)	(100)	%
Other revenue		2,010		-		2,010	100	%
Net revenue	$	47,183		42,555	$	4,628	11	%

For the nine months ended September 30, 2025 we generated $45.2 million of net revenue related to the sale of Journey's branded and generic products as compared to $42.5 million for the nine months ended September 30, 2024. The nine months of 2025 includes $9.7 million of net product revenue related to the U.S. commercial launch of Emrosi, offset by a decrease in Accutane revenue as a result of lower sales volume driven by recent market competition. Other revenue for the nine months ended September 30, 2025 consists of revenue recognized by Avenue related to the AnnJi license termination and program transfer of $1.4 million and revenue recognized by Journey related to the supply of Amzeeq to Cutia for $0.6 million.

Cost of Goods Sold - (excluding amortization of acquired intangible assets)

Nine Months Ended September 30,

Change

($ in thousands)

2025

2024

Cost of goods sold - (excluding amortization of acquired intangible assets)

15,484

16,199

(715)

(4)

We incurred $15.5 million and $16.2 million of costs of goods sold in connection with the sale of Journey's branded and generic products for the nine months ended September 30, 2025 and 2024, respectively. Cost of goods sold decreased by $0.7 million, or 4%, year-over-year, related to product sales mix, driven mainly by the decrease in Accutane revenue, which has a higher cost to Journey than Emrosi, as well as lower inventory obsolescence costs in the nine month period ended September 30, 2025.

Amortization of acquired intangible assets

Amortization of acquired intangible assets increased by $0.8 million, or 31%, to $3.2 million for the nine-month period ended September 30, 2025, from $2.4 million for the nine-month period ended September 30, 2024, driven by the addition of the Emrosi acquired intangible asset upon Journey's payment to DRL of the milestone payment triggered by the FDA's approval of Emrosi in November 2024.

Research and Development Expenses

The table below provides a summary of research and development by entity, for the periods presented:


	Nine Months Ended
	September 30,				Change
($ in thousands)	2025		2024		$		%
Research & development
Fortress¹	$	1,586	$	3,658	$	(2,072)	(57)	%
Avenue		780		6,080		(5,300)	(87)	%
Checkpoint²		10,775		19,343		(8,568)	(44)	%
Journey		326		9,639		(9,313)	(97)	%
Mustang		(1,199)		8,221		(9,420)	(115)	%
Total research & development expense	$	12,268	$	46,941	$	(34,673)	(74)	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Note 2: Checkpoint expenses are for the five-month period ending May 2025, due to the deconsolidation of Checkpoint as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

For the nine months ended September 30, 2025, the decrease in R&D expenses of $34.7 million, or 74%, is attributable to a decrease of $9.4 million, or 115%, at Mustang attributed to actions taken in 2024, including the reduction in the workforce, closing the MB-106 clinical trial, and the termination of Mustang's transaction with uBriGene. These activities resulted in decreased expenses of $3.2 million related to the termination of the transaction with uBriGene and the repurchase of the assets, a $2.4 million decrease in expenses related to outside services, including assay development costs; a $1.4 million reduction in clinical trial related costs, a $1.3 million decrease in sponsored research and license related expenses, a $0.7 million decrease in consulting expenses; a $0.6 million decrease in depreciation expense; offset slightly by a $1.3 million increase in personnel-related costs due to stock compensation expense credits and reversal of accrued bonus due to the April 2024 reduction in workforce, and the $0.4 million gain recognized on the termination of the Worcester facility lease. Additionally Mustang recognized savings of approximately $1.4 million on the settlement of aged payables, which resulted in a credit to research and development expenses during the nine months ended September 30, 2025. This credit is not indicative of Mustang's research and development expense going forward. Journey R&D expense decreased $9.3 million, or 97%, due to the Emrosi pre-approval expenses, milestones and fees incurred in the nine months ended September 30, 2024. R&D expense at Checkpoint decreased $8.6 million, or 44%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. R&D expense at Avenue decreased $5.3 million, or 87%, due to a $5.0 million decrease in pre-clinical and clinical development costs for AJ201 prior to entering into the termination agreement with AnnJi, a $0.1 million decrease in IV tramadol supply costs, and a $0.2 million decrease in personnel-related costs. The decrease at Fortress in R&D expenses of $2.1 million, or 57%, is primarily related to the transition of the dotinurad development program at Urica to Crystalys in July 2024.

The table below provides a summary by entity of noncash, stock-based compensation expense included in R&D expense for the periods presented:



	Nine Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Stock-based compensation - research & development
Fortress¹	$	1,371	$	1,319	$	52	4	%
Avenue		102		179		(77)	(43)	%
Checkpoint²		4,782		1,629		3,153	194	%
Journey		-		466		(466)	(100)	%
Mustang		(10)		(650)		640	(98)	%
Total stock-based compensation expense - research and development	$	6,245	$	2,943	$	3,302	112	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increase in stock-based compensation of $3.3 million, or 112%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is primarily attributed to the increase at Checkpoint of $3.2 million, or 194%, due to the vesting of all outstanding equity awards from the change of control that occurred with the sale to Sun Pharma. Stock compensation expense at Mustang reflects the expense credits due to forfeited grants from the reduction in workforce that occurred in April 2024. The decrease in stock compensation at Journey of $0.5 million, or 100%, is due to employee grants becoming fully vested in the prior year.

Selling, General and Administrative Expenses

The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:


	Nine Months Ended
	September 30,				Change
($ in thousands)	2025		2024		$		%
Selling, general & administrative
Fortress¹	$	13,986	$	14,715	$	(729)	(5)	%
Avenue		2,955		3,607		(652)	(18)	%
Checkpoint²		27,263		8,043		19,220	239	%
Journey		34,505		30,144		4,361	14	%
Mustang		2,961		4,358		(1,397)	(32)	%
Total selling, general & administrative expense	$	81,670	$	60,867	$	20,803	34	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

For the nine months ended September 30, 2025, the increase in selling, general and administrative expenses of $20.8 million, or 34%, is primarily attributable to an increase of $19.2 million, or 239%, at Checkpoint due primarily to an increase in increased stock compensation expense of $7.5 million related to the vesting of all outstanding equity awards due to the change of control that occurred with the sale to Sun Pharma, an increase in legal fees of $4.3 million and an increase of $9.5 million in other costs, which includes costs related to the transaction with Sun Pharma, such as fees to financial advisors. The increase at Journey of $4.4 million, or 14%, is due to the costs incurred related to the launch and commercialization of Emrosi. The decrease at Mustang of $1.4 million, or 32%, is due to a $0.4 million decrease in personnel costs, a $0.5 million decrease in legal and patent protection expenses, a $0.4 million decrease in consulting expenses, and a $0.3 million decrease across various other general and administrative expenses, offset by a $0.2 million increase in non-cash stock-based compensation expenses, consisting primarily of the equity fee paid to Fortress.

The table below provides a summary by entity of noncash, stock-based compensation expense included in selling, general and administrative expense for the periods presented:



	Nine Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Stock-based compensation - Selling, general and administrative
Fortress¹	$	5,670	$	6,685	$	(1,015)	(15)	%
Avenue		421		535		(114)	(21)	%
Checkpoint²		9,315		1,862		7,453	400	%
Journey		4,513		4,254		259	6	%
Mustang		116		150		(34)	(23)	%
Total stock-based compensation expense - selling, general and administrative	$	20,035		13,486	$	6,549	49	%

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress:Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increase in stock-based compensation of $6.6 million, or 49%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is primarily attributed to the increase at Checkpoint of $7.5 million, or 400%, due to the vesting of all outstanding equity awards from the change of control that occurred with the sale to Sun Pharma, partially offset by the decrease at Fortress of $1.0 million, or 15%, due to the vesting in July 2025 of a series of grants made under the Fortress Biotech, Inc. Long Term Incentive Plan.

Asset Impairment

For the nine months ended September 30, 2024, we incurred impairment charges of $2.6 million attributable to Mustang's assessment of the recoverability of its asset group consisting of leasehold improvements and associated right-of-use asset. No impairment was recorded in the nine months ended September 30, 2025.

Other income (expense)


	Nine Months Ended September 30,				Change
($ in thousands)	2025		2024		$		%
Other expense
Interest income	$	1,848	$	2,157	$	(309)	(14)	%
Interest expense and financing fee		(8,065)		(10,933)		2,868	(26)	%
Loss on common stock warrant liabilities		(399)		(578)		179	(31)	%
Gain from deconsolidation of subsidiary		27,127		-		27,127	100	%
Other income		17,599		1,334		16,265	1219	%
Total other income (expense)	$	38,110		(8,020)	$	46,130	(575)	%

Total other income (expense) increased $46.1 million, or 538%, from expense of $8.0 million for the nine months ended September 30, 2024 to income of $35.2 million for the nine months ended September 30, 2025. As a result of the merger of Checkpoint with Sun Pharma, we deconsolidated Checkpoint in May 2025, and recognized a gain from deconsolidation of approximately $27.1 million during the nine months ended September 30, 2025 (see Note 3 to the unaudited condensed consolidated financial statements). We also recognized an increase in the fair value of Urica's equity interest in Crystalys of $15.1 million and reversed the liability associated with the repurchase obligation of $2.6 million during the nine months ended September 30, 2025 (see Note 3 to the unaudited condensed consolidated financial statements). These gains were partially offset by interest expense and financing fee expenses related to Fortress' debt outstanding with Oaktree and Journey's debt outstanding with SWK. The $2.9 million, or 26%, decrease in interest expense and financing fees is attributable to a loss on extinguishment of debt of $3.6 million recognized in the nine months ended September 30, 2024 related to the Company's extinguishment of the 2020 Oaktree Note in 2024 offset by an increase of $0.4 million in interest and fees recognized in the nine months ended September 30, 2025 associated with the additional payments made to Oaktree for the Checkpoint monetization event.

Liquidity and Capital Resources

Sources of Liquidity

At September 30, 2025, we had an accumulated deficit of $730.1 million, primarily as a result of R&D expenses, purchases of in-process research and development and selling, general and administrative expenses.

We fund our operations through cash on hand, the sale of debt and equity securities, third-party financings, out-licensing of drug product and drug product candidates and the sale of subsidiaries and partner companies. At September 30, 2025, we had cash and cash equivalents of $86.2 million, of which $38.6 million relates to Fortress and private subsidiaries primarily funded by Fortress, $19.0 million relates to Mustang, $24.9 million relates to Journey, and $3.7 million relates to Avenue. Restricted cash at September 30, 2025, was $1.2 million, which relates to certain office leases held by Fortress.

We may require significant additional financing to fully develop and prepare regulatory filings and obtain regulatory approvals for our existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for our potential products, and sales and marketing capabilities. We have funded our operations to date primarily through the sale of equity and debt securities, third-party financings, out-licensing of drug product and drug product candidates and the sales of subsidiaries and partner companies. We believe that our current cash and cash equivalents are sufficient to fund operations for at least the next twelve months. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition and our ability to pursue our business strategies. We may seek funds through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or through other sources of financing. See "Item 1A. Risk Factors-Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities."

Stock Offerings and At-The-Market Share Issuances

On May 17, 2024, the Company filed a shelf registration statement (File No. 333-279516) on Form S-3, which was declared effective on May 30, 2024 (the "2024 Shelf"). As of September 30, 2025, $42.1 million of securities were available for sale under the 2024 Shelf, subject to General Instruction I.B.6. of Form S-3, known as the "baby shelf rules," which limit the number of securities that can be sold under registration statements on Form S-3. However, on July 5, 2024, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notices. As a result, the Company is not currently eligible to use Form S-3 and has lost the ability to use the 2024 Shelf. The Company will regain eligibility to use the 2024 Shelf on the date it files its Annual Report on Form 10-K, so long as it has: (i) by that date, paid all accrued but unpaid dividends at that time and (ii) timely paid all dividends accruing since the end of the fiscal year to which such Form 10-K relates.

Because the Company is not currently eligible to use Form S-3 due to the failure to pay dividends on the Series A Preferred Stock, on April 1, 2025 the Company filed a post-effective amendment to certain prior Form S-3 registration statements to continue the registration of:

●

the offer and sale by certain selling stockholders who were previously holders of shares of 8% Cumulative Redeemable Perpetual Class B Preferred Stock of Urica, of an aggregate of up to 1,987,250 shares of the Company's common stock;

●

the offer and sale of up to 5,885,000 shares underlying warrants originally issued as part of units, each consisting of one share of Common Stock and one warrant, originally registered pursuant to the prospectus filed with the SEC under November 10, 2023;

●

the offer and sale of up to 3,303,305 shares underlying warrants originally issued as part of units, each consisting of one share of Common Stock and one warrant, originally registered pursuant to the prospectus filed with the SEC on December 29, 2023; and

●

the offer and sale by certain selling stockholders of up to 116,637 shares of Common Stock issuable upon the exercise of warrants, as amended, granted to Oaktree and its affiliates under the Prior Oaktree Agreement.

This post-effective amendment was declared effective by the SEC on April 2, 2025.

During the nine months ended September 30, 2025, the Company issued and sold approximately 0.5 million shares at an average price of $1.94 per share for gross proceeds of approximately $1.0 million under the Company's at-the-market offering program.

Journey

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079) (the "Journey 2022 S-3"), which was declared effective on January 26, 2023. The Journey 2022 S-3 covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of Journey's common stock, preferred stock, debt securities, warrants, and units. In connection with the Journey 2022 S-3, Journey entered into a sales agreement relating to the sale of shares of Journey's common stock in an at-the-market offering (the "Journey ATM Sales Agreement"). In accordance with the terms of the Journey ATM Sales Agreement, Journey may offer and sell up to 4,900,000 shares of its common stock, par value $0.0001 per share, from time to time. For the nine months ended September 30, 2025, Journey issued and sold approximately 1.8 million shares of common stock for net proceeds of $10.9 million under the Journey ATM Sales Agreement.

In August 2025, Journey executed a new At Market Issuance Sales Agreement (the "Journey 2025 ATM Sales Agreement") with B. Riley Securities, Inc. and Lake Street Capital Markets, LLC (each, an "Agent" and together, the "Agents"). In accordance with the terms of the Sales Agreement, Journey may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal. Journey has not yet issued any shares under the Journey 2025 ATM Sales Agreement.

Checkpoint

In January 2025, Checkpoint received approximately $2.1 million from the exercise of warrants for the issuance of 740,000 shares of common stock with an exercise price of $2.84 per share.

In March 2025, Checkpoint received approximately $36.0 million from the exercise of warrants for the issuance of 21,691,003 shares of common stock with an average exercise price of $1.66 per share.

In April 2025, Checkpoint received approximately $9.2 million from the exercise of warrants for the issuance of 3,256,269 shares of common stock with an average exercise price of $2.82 per share.

Mustang

On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No. 333-279891) (the "Mustang 2024 S-3"), which was declared effective on June 12, 2024. Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities. As of September 30, 2025, approximately $34.2 million under the Mustang 2024 S-3 remains available for sales of securities, subject to General Instruction I.B.6. of Form S-3.

On May 31, 2024, Mustang entered into an At-the-Market Offering Agreement (the "Mustang ATM") relating to the sale of shares of common stock pursuant to the Mustang 2024 S-3. During the nine months ended September 30, 2025, Mustang issued and sold approximately 54,000 shares through the Mustang ATM for net proceeds of approximately $0.6 million.

In February 2025, Mustang closed on an equity offering of (i) 495,000 shares of its common stock, par value $0.0001 per share (the "Shares"), (ii) pre-funded warrants to purchase up to an aggregate of 2,162,807 shares of common stock (the "Pre-Funded Warrant Shares), (iii) Series C-1 warrants (the "Series C-1 Warrants") to purchase up to 2,657,807 shares of common stock, and (iv) Series C-2 warrants (the "Series C-2 Warrants")to purchase up to 2,657,807 shares of common stock. Each Share or Pre-Funded Warrant was sold together with one Series C-1 Warrant to purchase one share of common stock and one Series C-2 Warrant to purchase one share of common stock. The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099. The Pre-Funded Warrants had an exercise price of $0.0001 per share, were exercisable immediately upon issuance and expired when exercised in full. Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the "Warrant Stockholder Approval"). The Series C-1 Warrants expire five years from the date of stockholder approval and the Series C-2 Warrants expire twenty-four months from the date of stock holder approval. The warrants contain customary anti-dilution adjustments to the exercise price, including share splits, share dividends, rights offerings and pro rata distributions. The net proceeds of the offering, after deducting the fees and expenses of the placement agent in the transaction, and other offering expenses payable by Mustang, but excluding the net proceeds from the exercise of the Warrants, was approximately $6.8 million.

In July 2025, the remaining approximately 0.5 million of the Pre-Funded Warrants and approximately 2.4 million of the Series C-2 Warrants were exercised. In connection with these exercises, Mustang received approximately $7.1 million in proceeds and issued approximately 2.9 million shares of its common stock. As of September 30, 2025, all of the Series C-1 Warrants and 284,452 of the Series C-2 Warrants remain outstanding.

Avenue

In December 2021, Avenue filed a shelf registration statement (File No. 333-261520) on Form S-3 (the "Avenue 2021 S-3"), which was declared effective on December 10, 2021. Avenue filed a replacement shelf registration on Form S-3 on December 4, 2024 (the "Avenue Replacement Shelf"), which has not yet become effective under the Securities Act of 1933, as amended. However, effective as of July 18, 2025, Avenue was formally delisted from Nasdaq with Nasdaq's filing on that date of a Form 25 with the SEC; Avenue is therefore ineligible to use Form S-3 and unable to use the Avenue 2021 S-3 or the Avenue Replacement Shelf.

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the "Avenue ATM") under which Avenue may offer and sell, from time to time at its sole discretion, up to $3.9 million of shares of its common stock. The offers and sales of the shares are made pursuant the Avenue 2021 S-3, and the related prospectus supplement dated May 10, 2024. During the nine months ended September 30, 2025, Avenue issued 0.9 million shares through the Avenue ATM for net proceeds of $2.1 million. Avenue is no longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on the Nasdaq.

Cash Flows

Components of cash flows from publicly-traded partner companies comprise:


	For the Nine Months Ended September 30, 2025
($ in thousands)	Fortress¹		Avenue		Checkpoint²		Journey		Mustang		Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities	$	10,603	$	(979)	$	(53,154)	$	(6,157)	$	(3,546)	$	(53,233)
Investing activities		8,956		-		-		-		1,165		10,121
Financing activities		(2,995)		2,094		47,310		10,800		14,526		71,735
Net increase (decrease) in cash and cash equivalents and restricted cash	$	16,564	$	1,115	$	(5,844)	$	4,643	$	12,145	$	28,623

Note 1:

Includes Fortress, non-public subsidiaries and elimination entries.

Note 2: Checkpoint cash flows are for the five-month period ending May 2025, due to the deconsolidation of Checkpoint as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).


	For the Nine Months Ended September 30, 2024
($ in thousands)	Fortress¹		Avenue		Checkpoint		Journey		Mustang		Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities	$	(14,333)	$	(8,262)	$	(23,924)	$	(11,352)	$	(9,413)	$	(67,284)
Financing activities		(643)		9,076		23,699		6,374		6,329		44,835
Net increase (decrease) in cash and cash equivalents and restricted cash	$	(14,976)	$	814	$	(225)	$	(4,978)	$	(3,084)	$	(22,449)

Note 1:

Includes Fortress, non-public subsidiaries and elimination entries.

The following table summarizes our consolidated cash flows during the periods indicated:


	Nine Months Ended September 30,
($ in thousands)	2025		2024		Change
Total cash (used in)/provided by:
Operating activities	$	(53,233)	$	(67,284)	$	14,051
Investing activities		10,121		-		10,121
Financing activities		71,735		44,835		26,900
Net increase (decrease) in cash and cash equivalents and restricted cash	$	28,623	$	(22,449)	$	51,072

Operating Activities

Net cash used in operating activities decreased $14.1 million from the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2025. The decrease is due to the decrease in net loss of $67.0 million and an increase in stock-based compensation expense of $9.9 million offset by the $27.1 million gain on deconsolidation recognized related to Checkpoint, and the $15.1 million increase in the fair value of investments, as well as the $11.9 million increase resulting from changes in operating assets and liabilities.

Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 increased by $10.1 million, due to the net cash increase of $9.0 million related to the sale of Checkpoint to Sun Pharma, and Mustang's $1.2 million proceeds from the sale of its held-for-sale assets related to the exit of its manufacturing facility.

Financing Activities

Net cash provided by financing activities was $44.8 million for the nine months ended September 30, 2024, compared to $71.7 million of net cash provided by financing activities for the nine months ended September 30, 2025, an increase of $26.9 million. The increase is attributable to an increase in proceeds from partner companies' equity offerings and warrant exercises of $24.5 million and the decrease in the payments made to Oaktree of $45.5 million, partially offset by decreased proceeds from the issuance of common stock for equity offerings of the Company in the current period of $17.5 million and the decrease in proceeds from long-term debt of $33.8 million.

Contractual Obligations

We enter into contracts in the normal course of business with licensors, contract research organizations (CROs), contract manufacturing organizations (CMOs) and other third parties for the procurement of various products and services, including without limitation biopharmaceutical development, biologic assay development, commercialization, clinical and preclinical development, clinical trials management, pharmacovigilance and manufacturing and supply. These contracts typically do not contain minimum purchase commitments (although they may) and are generally terminable by us upon written notice. Payments due upon termination or cancelation/delay consist of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation; in certain cases, our contractual arrangements with CROs and CMOs include cancelation and/or delay fees and penalties.

During the nine months ended September 30, 2025, there were no material changes in our contractual obligations and commitments, including our lease obligations, as described in our 2024 Form 10-K.

Fortress Biotech Inc. published this content on November 14, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 14, 2025 at 13:47 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]