Fortress Biotech Reports Third Quarter 2020 Financial Results and Recent Corporate Highlights

Product revenue for the first nine months of 2020 increased 29% year-over-year to $30.8 million

Rolling submission of the New Drug Application for CUTX-101 is expected to begin in the first quarter of 2021 and be completed by the end of the second quarter of 2021

NEW YORK, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Fortress Biotech, Inc. (NASDAQ: FBIO) (“Fortress”), an innovative revenue-generating company focused on acquiring, developing and commercializing or monetizing promising biopharmaceutical products and product candidates cost-effectively, today announced financial results and recent corporate highlights for the third quarter ended September 30, 2020.

“The third quarter was highlighted by multiple transactions that strengthened our balance sheet. First, we received gross proceeds of approximately $12 million through our Series A perpetual preferred stock offering. Later in the quarter, we signed a $60 million refinancing agreement with Oaktree Capital Management. Moreover, we demonstrated significant top-line growth, as our net product revenue for the first nine months of 2020 increased 29% year-over-year to $30.8 million,” said Lindsay A. Rosenwald, M.D., Fortress’ Chairman, President and Chief Executive Officer. “Based on the potential for multiple additional commercial product opportunities over the next few years, Fortress is well-positioned to drive further meaningful growth in our business.”

Dr. Rosenwald continued, “The Fortress business model, including five revenue-generating marketed products and a pipeline of over 25 development-stage programs, is uniquely structured to provide a multitude of significant catalysts in the near- and long-term. We are pleased with the ongoing momentum in each of our partnered programs, notably the positive late-stage clinical data recently reported for cosibelimab and CUTX-101, as well as promising data reported for CAEL-101 and MB-105. As we look ahead to the remainder of 2020 and early 2021, we look forward to multiple data presentations at the 62^nd American Society of Hematology (“ASH”) Annual Meeting, initiating the rolling submission of the New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for CUTX-101 for the treatment of Menkes disease, and the potential to further expand our portfolio of products and product candidates.”  

Recent Corporate Highlights¹:

Marketed Dermatology Products

• Our dermatology products are marketed by our partner company, Journey Medical Corporation (“Journey”).
• Our products generated $30.8 million in revenues in the first nine months of 2020, compared to $23.8 million in the first nine months of 2019, representing growth of 29% year-over-year. Our products generated net revenues of $9.4 million in the third quarter of 2020, compared to third quarter 2019 net revenues of $9.5 million. Sales of our products in the third quarter of 2020 were impacted by the COVID-19 pandemic. The COVID-19 pandemic caused a temporary supply shortage and impacted the ability of our sales force to make in person calls, due to states slowly opening in the third quarter of 2020.
• We expect to generate record revenues in 2020.

CUTX-101 (Copper Histidinate for Menkes disease)

Cosibelimab (Anti-PD-L1 antibody)

• In September 2020, we announced updated positive interim results from the ongoing global, open-label, multicohort, Phase 1 clinical trial of our anti-PD-L1 antibody, cosibelimab, in patients with advanced cancers, including the registration-enabling cohort of patients with metastatic cutaneous squamous cell carcinoma (“mCSCC”). Cosibelimab demonstrated a 51.4% objective response rate (“ORR”) and 13.5% complete response rate, which is nearly double the complete response rate observed at the time of previous analysis.
• The registration-enabling study in mCSCC is currently over 50% enrolled, with full enrollment anticipated in the first quarter of 2021. We are on track to report full top-line results in the second half of 2021. With a potentially favorable safety profile and a plan to commercialize at a substantially lower price, we believe cosibelimab has the potential to be a market disruptive product in the $25 billion and growing PD-(L)1 class.
• Earlier this month, we announced the expansion of a long-term manufacturing partnership for cosibelimab with Samsung Biologics. Building upon an existing contract manufacturing agreement entered into in 2017, Samsung Biologics will provide additional commercial-scale drug substance manufacturing for cosibelimab.
• This morning, we announced updated interim results from the ongoing global, open-label, multicohort Phase 1 clinical trial of cosibelimab in patients with advanced cancers, including a cohort of patients with previously untreated high PD-L1 expressing advanced non-small cell lung cancer (“NSCLC”). The updated interim results are being presented in a poster presentation at the Society for Immunotherapy of Cancer (SITC) 35th Anniversary Annual Meeting being held virtually from November 9-14, 2020. Cosibelimab demonstrated a 44.0% objective response rate and 10.3-month median progression-free survival in the NSCLC cohort. A Phase 3 registration-enabling trial is planned in first-line metastatic NSCLC.
• Cosibelimab is currently in development at our partner company, Checkpoint Therapeutics, Inc.
  

CAEL-101 (Light Chain Fibril-reactive Monoclonal Antibody for AL Amyloidosis)

MB-107 and MB-207 (Lentiviral Gene Therapies for XSCID)

• In August 2020, we announced that the FDA granted Rare Pediatric Disease Designations to MB-107, a lentiviral gene therapy for the treatment of X-linked severe combined immunodeficiency (“XSCID”), also known as bubble boy disease, in newly diagnosed infants and MB-207, a lentiviral gene therapy for the treatment of patients with XSCID, who were previously treated with hematopoietic stem cell transplantation (“HSCT”) and for whom re-treatment is indicated.
• In September 2020, we announced that the FDA granted Orphan Drug Designations to MB-107 for the treatment of XSCID in newly diagnosed infants and to MB-207 for the treatment of patients with XSCID, who were previously treated with HSCT and for whom re-treatment is indicated.
• In October 2020, we in-licensed LentiBOOST™ technology from SIRION Biotech GmbH for the development of MB-207.
• MB-107 and MB-207 are currently in development at our partner company, Mustang Bio, Inc (“Mustang Bio”).

MB-102 (CD123-targeted CAR T Cell Therapy)

• In October 2020, we announced that the first patient was dosed in a Mustang-sponsored, open-label, multicenter Phase 1/2 clinical trial to evaluate the safety and efficacy of MB-102 (CD123-targeted CAR T cell therapy) in patients with relapsed or refractory blastic plasmacytoid dendritic cell neoplasm (BPDCN), acute myeloid leukemia (AML) and high-risk myelodysplastic syndrome (hrMDS).
• MB-102 is currently in development at our partner company, Mustang Bio.

MB-105 (PSCA-targeted CAR T Cell Therapy)

• In October 2020, we announced that initial Phase 1 data on MB-105, a PSCA-targeted CAR T administered systemically to patients with PSCA-positive metastatic castration-resistant prostate cancer (mCRPC), were presented by City of Hope at the virtual 27^th Annual Prostate Cancer Foundation Scientific Retreat. A 73-year-old male patient with PSCA-positive mCRPC was treated with MB-105 and lymphodepletion (a standard CAR T pre-conditioning regimen) after failing eight prior therapies. On day 28 of the patient’s treatment, MB-105 demonstrated a 94% reduction in prostate-specific antigen, near complete reduction of measurable soft tissue metastasis by computerized tomography, and improvement in bone metastases by magnetic resonance imaging.
• MB-105 is currently in development at our partner company, Mustang Bio.

MB-106 (CD20-targeted CAR T Cell Therapy)

IV Tramadol

General Corporate

• In August 2020, we raised a gross total of approximately $12 million in an underwritten public offering of our 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock.
• Also in August 2020, we announced a $60 million long-term debt refinancing agreement with Oaktree Capital Management, replacing $60 million due over the next six quarters, with the debt due in August 2025.

Financial Results:

To assist our stockholders in understanding our company, we have prepared non-GAAP financial results for the three months and nine months ended September 30, 2020 and 2019. These results exclude the operations of our three public partner companies: Avenue Therapeutics, Inc. (“Avenue”), Checkpoint Therapeutics, Inc. (“Checkpoint”) and Mustang Bio, Inc. (“Mustang”), as well as any one-time, non-recurring, non-cash transactions, such as the gain of $18.4 million we recorded in the first quarter of 2019 resulting from the deconsolidation of Caelum Biosciences, Inc. (“Caelum”). The goal in providing these non-GAAP financial metrics is to highlight the financial results of Fortress’ core operations, which are comprised of our commercial-stage business, our privately held development-stage entities, as well as our business development and finance functions.

• As of September 30, 2020, Fortress’ consolidated cash, cash equivalents and restricted cash totaled $220.0 million, compared to $199.9 million as of June 30, 2020 and $153.4 million as of December 31, 2019.
• Fortress’ net revenue totaled $9.5 million for the third quarter of 2020, which included $9.4 million in net revenue generated from our marketed dermatology products. This compares to net revenue totaling $9.8 million for the third quarter of 2019, which included $9.5 million in net revenue generated from our marketed dermatology products. Fortress is on track to achieve quarter-over-quarter revenue growth in the fourth quarter of 2020, however, it continues to monitor the spread of COVID-19 and assess the impact it may have on the fourth quarter of 2020.
• On a GAAP basis, consolidated research and development expenses were $13.3 million for the third quarter of 2020, compared to $14.6 million for the third quarter of 2019. On a non-GAAP basis, research and development expenses were $2.4 million for the third quarter of 2020, compared to $1.7 million for third quarter of 2019.
• On a GAAP basis, consolidated research and development expenses from license acquisitions totaled $0.5 million for the third quarter of 2020, compared to $0.7 million for the third quarter of 2019.
• On a GAAP basis, consolidated general and administrative expenses were $15.4 million for the third quarter of 2020, compared to $14.3 million for the third quarter of 2019. On a non-GAAP basis, general and administrative expenses were $11.6 million, of which $5.8 million is attributed to Journey, for the third quarter of 2020, compared to $10.4 million, of which $5.0 million is attributed to Journey, for the third quarter of 2019.
• On a GAAP basis, consolidated net loss attributable to common stockholders was $15.5 million, or $0.20 per share, for the third quarter of 2020, compared to net loss attributable to common stockholders of $12.8 million, or $0.22 per share for the third quarter of 2019.
• Fortress’ non-GAAP loss attributable to common stockholders was $5.2 million, or $0.07 per share, for the third quarter of 2020, compared to Fortress’ non-GAAP loss attributable to common stockholders of $3.2 million, or $0.06 per share, for the third quarter of 2019.
  

Use of Non-GAAP Measures:

In addition to the GAAP financial measures as presented in our Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on November 9, 2020, the Company, in this press release, has included certain non-GAAP measurements. The non-GAAP loss attributable to common stockholders is defined by the Company as GAAP net loss attributable to common stockholders, less net losses from our public partner companies Avenue, Checkpoint, and Mustang, as well as Caelum. In addition, the Company has also provided a Fortress non-GAAP loss attributable to common stockholders which is a modified EBITDA calculation that starts with the non-GAAP loss attributable to common stockholders and removes stock-based compensation expense, non-cash interest expense, amortization of licenses and debt discount, and depreciation.

Management believes these non-GAAP measures provide meaningful supplemental information regarding the Company's performance because (i) it allows for greater transparency with respect to key measures used by management in its financial and operational decision-making; (ii) it excludes the impact of non-cash or, when specified, non-recurring items that are not directly attributable to the Company's core operating performance and that may obscure trends in the Company's core operating performance; and (iii) it is used by institutional investors and the analyst community to help analyze the Company's results. However, non-GAAP loss attributable to common stockholders and any other non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Further, non-GAAP financial measures used by the Company and the manner in which they are calculated may differ from the non-GAAP financial measures or the calculations of the same non-GAAP financial measures used by other companies, including the Company's competitors.

The tables below provide a reconciliation from GAAP to non-GAAP measures:

1. Avenue net loss from their external SEC report for the three months ended September 30, 2020 and 2019 of $1.0 million and $2.2 million, respectively, net of non-controlling interest of $0.8 million and $1.7 million, respectively. Avenue net loss from their external SEC report for the nine months ended September 30, 2020 and 2019 of $4.2 million and $20.5 million, respectively, net of non-controlling interest of $3.2 million and $14.9 million, respectively.
2. Checkpoint net loss from their external SEC report of $4.9 million net of non-controlling interest of $3.2 million, MSA fee to Fortress of $0.1 million and financing fee to Fortress of $0.7 million for the three months ended September 30, 2020; and net loss of $5.2 million net of non-controlling interest of $3.5 million, MSA fee to Fortress of $0.1 million and financing fee to Fortress of $0.1 million for the three months ended September 30, 2019. Checkpoint net loss from their external SEC report of $12.9 million net of non-controlling interest of $9.0 million, MSA fee to Fortress of $0.4 million and financing fee to Fortress of $0.8 million for the nine months ended September 30, 2020; and net loss of $15.9 million net of non-controlling interest of $10.5 million, MSA fee to Fortress of $0.4 million and financing fee to Fortress of $0.2 million for the nine months ended September 30, 2019..
3. Mustang net loss from their external SEC report of $13.0 million net of non-controlling interest of $9.3 million, MSA fee to Fortress of $0.1 million and financing fee to Fortress of $0.4 million for the three months ended September 30, 2020; and net loss of $10.2 million net of non-controlling interest of $6.8 million, MSA fee to Fortress of $0.1 million for the three months ended September 30, 2019. Mustang net loss from their external SEC report of $39.4 million net of non-controlling interest of $27.0 million, MSA fee to Fortress of $0.4 million and financing fee to Fortress of $1.6 million for the nine months ended September 30, 2020; and net loss of $30.2 million net of non-controlling interest of $18.1 million, MSA fee to Fortress of $0.4 million and financing fee to Fortress of $1.7 million for the nine months ended September 30, 2019.
4. Increase in fair value of investment in Caelum Biosciences for the three months and nine months ended September 30, 2020.
5. Related to issuance of Cyprium warrant in connection with 2018 Venture Debt for the three months and nine months ended September 30, 2020.

Reconciliation to non-GAAP research and development and general and administrative costs:

1. Excludes $62,500 and $62,500 of Fortress MSA expense for the three months ended September 30, 2020 and 2019, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively.
   
   
2. Excludes $0.1 million of Fortress MSA expense and $0.7 million Fortress financing fee for the three months ended September 30, 2020; and $0.1 million of Fortress MSA expense and $0.1 million Fortress financing fee for the three months ended September 30, 2019. Excludes $0.4 million of Fortress MSA expense and $0.8 million Fortress financing fee for the nine months ended September 30, 2020; and $0.4 million of Fortress MSA expense and $0.2 million Fortress financing fee for the nine months ended September 30, 2019.
   
   
3. Excludes $62,500 of Fortress MSA expense and $0.4 million Fortress financing fee for the three months ended September 30, 2020; and $62,500 of Fortress MSA expense for the three months ended September 30, 2019. Excludes $0.2 million of Fortress MSA expense and $1.6 million Fortress financing fee for the nine months ended September 30, 2020; and $0.2 million of Fortress MSA expense and $1.7 million Fortress financing fee for the nine months ended September 30, 2019.
   

About Fortress Biotech
Fortress Biotech, Inc. (“Fortress”) is an innovative biopharmaceutical company that was ranked number 10 in Deloitte’s 2019 Technology Fast 500™, an annual ranking of the fastest-growing North American companies in the technology, media, telecommunications, life sciences and energy tech sectors, based on percentage of fiscal year revenue growth over a three-year period. Fortress is focused on acquiring, developing and commercializing high-potential marketed and development-stage drugs and drug candidates. The company has five marketed prescription pharmaceutical products and over 25 programs in development at Fortress, at its majority-owned and majority-controlled partners and at partners it founded and in which it holds significant minority ownership positions. Such product candidates span six large-market areas, including oncology, rare diseases and gene therapy, which allow it to create value for shareholders. Fortress advances its diversified pipeline through a streamlined operating structure that fosters efficient drug development. The Fortress model is driven by a world-class business development team that is focused on leveraging its significant biopharmaceutical industry expertise to further expand the company’s portfolio of product opportunities. Fortress has established partnerships with some of the world’s leading academic research institutions and biopharmaceutical companies to maximize each opportunity to its full potential, including Alexion Pharmaceuticals, Inc., AstraZeneca, City of Hope, Fred Hutchinson Cancer Research Center, InvaGen Pharmaceuticals Inc. (a subsidiary of Cipla Limited), St. Jude Children’s Research Hospital and Nationwide Children’s Hospital. 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. As used below and throughout this press release, the words “we”, “us” and “our” may refer to Fortress individually or together with one or more partner companies, as dictated by context. 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; risks relating to the COVID-19 outbreak and its potential impact on our employees’ and consultants’ ability to complete work in a timely manner and on our ability to obtain additional financing on favorable terms or at all; 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, 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 press release should be read as applying mutatis mutandis to every other instance of such information appearing herein.

Company Contacts:
Jaclyn Jaffe and William Begien
Fortress Biotech, Inc.
(781) 652-4500
ir@fortressbiotech.com

Investor Relations Contact:
Daniel Ferry
LifeSci Advisors, LLC
(617) 430-7576
daniel@lifesciadvisors.com

Media Relations Contact:
Tony Plohoros
6 Degrees
(908) 591-2839
tplohoros@6degreespr.com

______________________
¹ Includes product candidates in development at Fortress, majority-owned and controlled partners and partners in which Fortress holds significant minority ownership positions. As used herein, the words “we”, “us” and “our” may refer to Fortress individually or together with our affiliates and partners, as dictated by context.