Fortress Biotech, Inc 10-Q for FY2022 Q1

Fortress Biotech, Inc. (FBIO)

10-Q 2022-05-12 For: 2022-03-31

Added on April 08, 2026

About this 10-Q

Fortress Biotech, Inc filed this 10-Q on May 12, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $23.93M; up 106.5% from $11.59M a year earlier
Net loss: $15.76M; compared with a net loss of $8.82M a year earlier
Diluted EPS: -$0.18; compared with -$0.11 a year earlier

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Delaware	20-5157386
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


Title of Class	Trading Symbol(s)	Exchange Name
Common Stock	FBIO	Nasdaq Capital Market
9.375% Series A Cumulative Redeemable Perpetual Preferred Stock	FBIOP	Nasdaq Capital Market


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	☒
		Emerging growth company	☐



Class of Stock		Outstanding Shares as of May 9, 2022
Common Stock, $0.001 par value		107,413,121
9.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value		3,427,138


PART I.	FINANCIAL INFORMATION	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	35
Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72

SIGNATURES		74


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	March 31,		December 31,
	2022		2021

ASSETS
Current assets
Cash and cash equivalents	$	287,511	$	305,744
Accounts receivable, net		31,183		23,112
Inventory		16,137		9,862
Other receivables - related party		631		678
Prepaid expenses and other current assets		5,724		7,066
Total current assets		341,186		346,462

Property, plant and equipment, net		14,430		15,066
Operating lease right-of-use asset, net		18,565		19,005
Restricted cash		2,220		2,220
Intangible asset, net		30,457		12,552
Other assets		1,072		1,198
Total assets	$	407,930	$	396,503

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	91,268	$	90,660
Deferred revenue		2,034		2,611
Income taxes payable		346		345
Operating lease liabilities, short-term		2,129		2,104
Partner company line of credit		—		812
Partner company installment payments - licenses, short-term (net of imputed interest of $637 and $490 as of March 31, 2022 and December 31, 2021, respectively)		7,363		4,510
Total current liabilities		103,140		101,042

Notes payable, long-term (net of debt discount of $10,994 and $7,063 as of March 31, 2022 and December 31, 2021, respectively)		85,056		42,937
Operating lease liabilities, long-term		20,454		20,987
Partner company installment payments - licenses, long-term (net of imputed interest of $284 and $373 as of March 31, 2022 and December 31, 2021, respectively)		3,716		3,627
Other long-term liabilities		1,986		2,033
Total liabilities		214,352		170,626

Commitments and contingencies (Note 12)

Stockholders’ equity
Cumulative redeemable perpetual preferred stock, $.001 par value, 15,000,000 authorized, 5,000,000 designated Series A shares, 3,427,138 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively, liquidation value of $25.00 per share		3		3
Common stock, $.001 par value, 170,000,000 shares authorized, 106,321,875 and 101,435,505 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		106		101
Additional paid-in-capital		660,973		656,033
Accumulated deficit		(563,223)		(547,463)
Total stockholders' equity attributed to the Company		97,859		108,674

Non-controlling interests		95,719		117,203
Total stockholders' equity		193,578		225,877
Total liabilities and stockholders' equity	$	407,930	$	396,503


	Three Months Ended March 31,
	2022		2021
Revenue
Product revenue, net	$	20,796	$	10,719
Collaboration revenue		577		800
Revenue - related party		52		68
Other revenue		2,500		—
Net revenue		23,925		11,587

Operating expenses
Cost of goods sold - product revenue		8,203		3,908
Research and development		36,722		20,028
Research and development - licenses acquired		—		126
Selling, general and administrative		26,270		17,542
Total operating expenses		71,195		41,604
Loss from operations		(47,270)		(30,017)

Other income (expense)
Interest income		142		227
Interest expense and financing fee		(2,350)		(2,189)
Change in fair value of investments		—		5,913
Total other income (expense)		(2,208)		3,951
Net loss		(49,478)		(26,066)

Net loss attributable to non-controlling interests		33,718		17,244
Net loss attributable to common stockholders	$	(15,760)	$	(8,822)

Net loss per common share - basic and diluted	$	(0.57)	$	(0.32)
Net loss per common share attributable to non - controlling interests - basic and diluted	$	(0.39)	$	(0.21)
Net loss per common share attributable to common stockholders - basic and diluted	$	(0.18)	$	(0.11)

Weighted average common shares outstanding - basic and diluted		86,255,142		80,851,671



	Series A Perpetual												Total
	Preferred Stock			Common Stock			Paid-In		Accumulated		Non-Controlling		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Interests		Equity
Balance as of December 31, 2021	3,427,138	$	3	101,435,505	$	101	$	656,033	$	(547,463)	$	117,203	$	225,877
Stock-based compensation expense	—		—	—		—		5,563		—		—		5,563
Issuance of common stock related to equity plans	—		—	2,469,969		3		(3)		—		—		—
Issuance of common stock for at-the-market offering, net	—		—	2,416,401		2		4,224		—		—		4,226
Preferred A dividends declared and paid	—		—	—		—		(2,008)		—		—		(2,008)
Partner company’s at-the-market offering, net	—		—	—		—		10,783		—		—		10,783
Issuance of common stock under partner company’s ESPP	—		—	—		—		116		—		—		116
Partner company’s dividends declared and paid	—		—	—		—		(187)		—		—		(187)
Partner company’s net settlement of shares withheld for taxes	—		—	—		—		(1,698)		—		—		(1,698)
Partner company’s warrants issued in conjunction with debt	—		—	—		—		384		—		—		384
Non-controlling interest in partner companies	—		—	—		—		(12,234)		—		12,234		—
Net loss attributable to non-controlling interest	—		—	—		—		—		—		(33,718)		(33,718)
Net loss attributable to common stockholders	—		—	—		—		—		(15,760)		—		(15,760)
Balance as of March 31, 2022	3,427,138	$	3	106,321,875	$	106	$	660,973	$	(563,223)	$	95,719	$	193,578


	March 31,		December 31,
($ in thousands)	2022		2021

Raw materials	$	8,357	$	5,572
Work-in-process		533		—
Finished goods		7,297		4,290
Inventory reserve		(50)		—
Total inventories	$	16,137	$	9,862


	Useful Life		March 31,		December 31,
($ in thousands)	(Years)		2022		2021


Computer equipment		3	$	743	$	739
Furniture and fixtures		5		1,387		1,387
Machinery & equipment		5		6,634		6,550
Leasehold improvements		2-15		13,175		13,175
Buildings		40		581		581
Construction in progress ¹		N/A		2,043		2,028
Total property and equipment				24,563		24,460
Less: Accumulated depreciation				(10,133)		(9,394)
Property, plant and equipment, net			$	14,430	$	15,066



($ in thousands)	Aggregate Consideration Transferred
Consideration transferred to VYNE at closing	$	20,000
Fair value of deferred cash payment due January 2023		4,740
Transaction costs		223
Total consideration transferred at closing	$	24,963


($ in thousands)	Assets Recognized
Inventory	$	6,041
Identifiable intangibles:
Amzeeq		15,162
Zilxi		3,760
Fair value of net identifiable assets acquired	$	24,963


	Estimated Useful
($ in thousands)	Lives (Years)	March 31, 2022		December 31, 2021

Intangible assets – product licenses	3 to 9	$	37,925	$	19,003
Accumulated amortization			(7,468)		(6,451)
Net intangible assets		$	30,457	$	12,552


									Total
($ in thousands)	Ximino®		Accutane®		Amzeeq®		Zilxi®		Amortization
Nine Months Ended December 31, 2022	$	764	$	710	$	1,264	$	313	$	3,051
December 31, 2023		1,019		945		1,684		418		4,066
December 31, 2024		1,019		946		1,685		417		4,067
December 31, 2025		1,019		945		1,685		418		4,067
December 31, 2026		595		157		1,684		418		2,854
Thereafter		—		—		6,739		1,671		8,410
Sub-total	$	4,416	$	3,703	$	14,741	$	3,655	$	26,515
Asset not yet placed in service:		—		—		—		—		3,942
Total	$	4,416	$	3,703	$	14,741	$	3,655	$	30,457


	March 31, 2022
($ in thousands)	Ximino¹		Accutane ²		VYNE Product		Total
Partner company installment payments - licenses, short-term	$	2,000	$	1,000	$	5,000	$	8,000
Less: imputed interest		(379)		(52)		(206)		(637)
Sub-total partner company installment payments - licenses, short-term	$	1,621	$	948	$	4,794	$	7,363

Partner company installment payments - licenses, long-term	$	3,000	$	1,000	$	—	$	4,000
Less: imputed interest		(271)		(13)		—		(284)
Sub-total partner company installment payments - licenses, long-term	$	2,729	$	987	$	—	$	3,716

Total partner company installment payments - licenses	$	4,350	$	1,935	$	4,794	$	11,079


			For the Three Months Ended
	As of March 31, 2022		March 31, 2022		As of March 31, 2022
	Non-controlling interests		Net loss attributable to		Non-controlling interests		Non-controlling
($ in thousands)	equity share		non-controlling interests		in consolidated entities		ownership
UR-1	$	423	$	(315)	$	108	34.5	%
Aevitas		(5,057)		(190)		(5,247)	45.9	%
Avenue ²		3,286		(2,326)		960	82.8	%
Baergic		(2,086)		(90)		(2,176)	39.0	%
Cellvation		(1,544)		(74)		(1,618)	21.7	%
Checkpoint¹		29,839		(13,603)		16,236	80.3	%
Coronado SO		(290)		—		(290)	13.0	%
Cyprium		(2,166)		(260)		(2,426)	29.0	%
Helocyte		(5,529)		(110)		(5,639)	18.3	%
JMC		19,120		(457)		18,663	41.6	%
Mustang ²		95,305		(16,181)		79,124	81.3	%
Oncogenuity		(1,124)		(103)		(1,227)	24.9	%
Tamid		(740)		(9)		(749)	22.8	%
Total	$	129,437	$	(33,718)	$	95,719


			For the Year Ended
	As of December 31, 2021		December 31, 2021		As of December 31, 2021
	Non-controlling interests		Net loss attributable to		Non-controlling interests		Non-controlling
($ in thousands)	equity share		non-controlling interests		in consolidated entities		ownership
UR-1	$	(442)		(1,353)	$	(1,795)	34.5	%
Aevitas		(4,159)		(901)		(5,060)	45.9	%
Avenue ²		5,739		(2,909)		2,830	82.0	%
Baergic		(2,047)		(39)		(2,086)	39.0	%
Cellvation		(1,413)		(131)		(1,544)	21.7	%
Checkpoint¹		63,464		(39,226)		24,238	81.5	%
Coronado SO		(290)		—		(290)	13.0	%
Cyprium		(1,397)		(807)		(2,204)	29.8	%
Helocyte		(5,440)		(89)		(5,529)	18.3	%
JMC		23,150		(5,652)		17,498	41.6	%
Mustang ²		141,527		(48,518)		93,009	82.7	%
Oncogenuity		(627)		(497)		(1,124)	24.9	%
Tamid		(739)		(1)		(740)	22.8	%
Total	$	217,326	$	(100,123)	$	117,203


						Weighted average
				Total		remaining
		Weighted average		weighted average		contractual life
	Number of shares	exercise price		intrinsic value		(years)
Options vested and expected to vest at December 31, 2021	1,018,490	$	5.04	$	368,344	1.68
Granted	2,500		2.50		—	9.76
Expired	(255,000)		6.39		—	—
Options vested and expected to vest at March 31, 2022	765,990	$	4.44	$	—	2.16
Options vested and exercisable at March 31, 2022	705,990	$	4.44	$	—	2.16


		Weighted
		average grant
	Number of shares	price
Unvested balance at December 31, 2021	18,060,000	$	2.64
Restricted stock granted	2,375,972		2.50
Restricted stock vested	(135,000)		2.71
Restricted stock units granted	375,602		2.75
Restricted stock units forfeited	(23,750)		3.49
Restricted stock units vested	(93,060)		3.55
Unvested balance at March 31, 2022	20,559,764	$	2.62


				Total weighted		Weighted average
				average		remaining
	Number of	Weighted average		intrinsic		contractual life
	shares	exercise price		value		(years)
Outstanding as of December 31, 2021	4,505,621	$	3.20	$	68,800	3.93
Expired	(87,946)		3.70		—
Outstanding as of March 31, 2022	4,417,675	$	3.19	$	—	3.76
Exercisable as of March 31, 2022	4,370,621	$	3.23	$	—	3.61


		PIK Dividend as
		a % of fully
		diluted
		outstanding		Class of Stock
Partner Company	Effective Date ¹	capitalization		Issued
Aevitas	July 28, 2017	2.5	%	Common Stock
Avenue	February 17, 2015	0.0	%²	Common Stock
Baergic	December 17, 2019 ⁴	2.5	%	Common Stock
Cellvation	October 31, 2016	2.5	%	Common Stock
Checkpoint	March 17, 2015	0.0	%³	Common Stock
Cyprium	March 13, 2017	2.5	%	Common Stock
Helocyte	March 20, 2015	2.5	%	Common Stock
Mustang	March 13, 2015	2.5	%	Common Stock
Oncogenuity	April 22, 2020 ⁴	2.5	%	Common Stock
UR-1	November 7, 2017 ⁴	2.5	%	Common Stock


		Annual MSA Fee
Partner company	Effective Date	(Income)/Expense
Aevitas	July 28, 2017	$	500
Avenue ¹	February 17, 2015		—
Baergic	March 9, 2017		500
Cellvation	October 31, 2016		500
Checkpoint	March 17, 2015		500
Cyprium	March 13, 2017		500
Helocyte	March 20, 2015		500
Mustang	March 13, 2015		1,000
Oncogenuity	February 10, 2017		500
UR-1	November 7, 2017		500
Fortress			(5,000)
Consolidated (Income)/Expense		$	—


			Pharmaceutical
			and
($ in thousands)	Dermatology		Biotechnology
	Products		Product
Three Months Ended March 31, 2022	Sales		Development		Consolidated
Net revenue	$	23,296	$	629	$	23,925
Cost of goods - product revenue		(8,203)		—		(8,203)
Research and development		(1,266)		(35,456)		(36,722)
Selling, general and administrative		(14,715)		(11,555)		(26,270)
Other expense		(386)		(1,822)		(2,208)
Income tax (expense) benefit¹		(104)		104		—
Segment loss	$	(1,378)		(48,100)	$	(49,478)


	Three Months Ended
	March 31,				% of total
($ in thousands)	2022		2021		2022		2021
Research & Development
Fortress	$	788	$	647	2	%	3	%
Partner Companies:
Avenue		1,808		258	5	%	1	%
Checkpoint		14,670		4,213	40	%	21	%
JMC		1,266		—	3	%	—	%
Mustang		16,166		11,562	44	%	58	%
Other¹		2,024		3,348	6	%	17	%
Total Research & Development Expense	$	36,722	$	20,028	100	%	100	%



	Three Months Ended March 31,				Change
($ in thousands)	2022		2021		$		%
Revenue
Product revenue, net	$	20,796	$	10,719	$	10,077	94	%
Collaboration revenue		577		800		(223)	(28)	%
Revenue – related party		52		68		(16)	(23)	%
Other revenue		2,500		—		2,500	100	%
Net revenue		23,925		11,587		12,338	106	%

Operating expenses
Cost of goods sold – product revenue		8,203		3,908		4,295	110	%
Research and development		36,722		20,028		16,694	83	%
Research and development – licenses acquired		—		126		(126)	(100)	%
Selling, general and administrative		26,270		17,542		8,728	50	%
Total operating expenses		71,196		41,604		29,592	71	%
Loss from operations		(47,270)		(30,017)		(17,253)	57	%

Other income (expense)
Interest income		142		227		(85)	(38)	%
Interest expense and financing fee		(2,350)		(2,189)		(161)	7	%
Change in fair value of investments		—		5,913		(5,913)	(100)	%
Total other income (expense)		(2,208)		3,951		(6,159)	(156)	%
Net Loss		(49,478)		(26,066)		(23,412)	90	%

Less: net loss attributable to non-controlling interest		33,718		17,244		16,474	96	%
Net loss attributable to common stockholders	$	(15,760)	$	(8,822)	$	(6,938)	79	%


	For the Three Months Ended March 31, 2022
($ in thousands)	Fortress¹		Avenue		Checkpoint		JMC		Mustang		Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities	$	(9,919)	$	(1,930)	$	(19,606)	$	884	$	(16,289)	$	(46,860)
Investing activities		(3)		—		—		(20,000)		(1,334)		(21,337)
Financing activities		2,030		—		6,347		11,366		30,221		49,964
Net increase in cash and cash equivalents and restricted cash	$	(7,892)	$	(1,930)	$	(13,259)	$	(7,750)	$	12,598	$	(18,233)


Exhibit Number		Exhibit Title


3.1		Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. (formerly Coronado Biosciences, Inc.) dated April 21, 2010 (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10 (file No. 001-54463) filed with the SEC on July 15, 2011).
3.2		First Certificate of Amendment of Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated May 20, 2011 (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 10 (file No. 001-54463) filed with SEC on July 15, 2011).
3.3		Second Certificate of Amendment of Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated October 1, 2013 (incorporated by reference to Exhibit 3.8 of the Registrant’s Annual Report on Form 10-K (file No. 001-35366) filed with SEC on March 14, 2014).
3.4		Third Certificate of Amendment of Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated April 22, 2015 (incorporated by reference to Exhibit 3.9 of the Registrant’s Current Report on Form 8-K (file No. 001-35366) filed with SEC on April 27, 2015).
3.5		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated June 18, 2020 (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (file No. 001-35366) filed with SEC on June 19, 2020).
3.6		Certificate of Amendment to the Certificate of Designations and Rights and Preferences of the Fortress Biotech, Inc. 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock under the Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated June 18, 2020 (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K (file No. 001-35366) filed with the SEC on June 19, 2020).

3.7		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Fortress Biotech, Inc. dated June 23, 2021 (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-K (file No. 001-35366) filed with SEC on June 23, 2021).
3.8		Second Amended and Restated Bylaws of Fortress Biotech, Inc. (formerly Coronado Biosciences, Inc.) (incorporated by reference to Exhibit 3.7 of the Registrant’s Current Report on Form 8-K (file No. 001-35366) filed with SEC on October 31, 2013).

31.1		Certification of Chairman, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chairman, President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS		Inline XBRL Instance Document.(*)

101.SCH		Inline XBRL Taxonomy Extension Schema Document.(*)

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.(*)

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.(*)

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.(*)

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.(*)
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


May 12, 2022	FORTRESS BIOTECH, INC.

	By:	/s/ Lindsay A. Rosenwald, M.D.
		Lindsay A. Rosenwald, M.D., Chairman, President and Chief Executive Officer (Principal Executive Officer)

May 12, 2022	By:	/s/ Robyn M. Hunter
		Robyn M. Hunter Chief Financial Officer (Principal Financial Officer)


Dated: May 12, 2022	By:	/s/ Lindsay A. Rosenwald, M.D.
		Lindsay A. Rosenwald, M.D.
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)


Dated: May 12, 2022	By:	/s/ Robyn M. Hunter
		Robyn M. Hunter
		Chief Financial Officer
		(Principal Financial Officer)