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What changed in Fortress Biotech, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Fortress Biotech, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+464 added−412 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-28)

Top changes in Fortress Biotech, Inc.'s 2024 10-K

464 paragraphs added · 412 removed · 249 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

85 edited+49 added−59 removed152 unchanged
Biggest changeProduct Candidates and Other Intellectual Property Revenue Portfolio Through our partner company Journey we actively market the following branded dermatology products approved by the FDA for sale in the United States: ● Qbrexza® (a medicated cloth towelette for the treatment of primary axillary hyperhidrosis); ● Accutane® (an oral isotretinoin drug for the treatment of severe recalcitrant nodular acne); ● Amzeeq® (minocycline) topical foam, 4% (a topical formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and children nine years and older); ● Zilxi® (minocycline) topical foam, 1.5% (a topical minocycline treatment for inflammatory lesions of rosacea in adults); 7 Table of Contents ● Exelderm® Cream and Solution (a broad-spectrum antifungal intended for topical use); ● Targadox® (an oral doxycycline drug for adjunctive therapy for severe acne); and ● Luxamend® (a water-based emulsion formulated to provide an optimally moist healing environment for superficial wounds; minor cuts or scrapes; dermal ulcers; donor sites; first- and second-degree burns, including sunburns; and radiation dermatitis).
Biggest changeCommercial Products and Product Candidates Commercial and Approved Products Through our partner company Journey we market the following branded dermatology products approved by the FDA for sale in the United States: ● Emrosi TM (Minocycline Hydrochloride Extended-Release Capsules, 40mg for the treatment of inflammatory lesions of rosacea in adults): approved by the FDA in November 2024, which launched in March 2025; ● Qbrexza®: a medicated cloth towelette for the treatment of primary axillary hyperhidrosis; ● Accutane®: an oral isotretinoin drug for the treatment of severe recalcitrant nodular acne; ● Amzeeq® (minocycline topical foam, 4%): a topical formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and children nine years and older; ● Zilxi® (minocycline topical foam, 1.5%): a topical minocycline treatment for inflammatory lesions of rosacea in adults; ● Exelderm® Cream and Solution: a broad-spectrum antifungal intended for topical use; ● Targadox®: an oral doxycycline drug for adjunctive therapy for severe acne; and ● Luxamend®: a water-based emulsion formulated to provide an optimally moist healing environment for superficial wounds; minor cuts or scrapes; dermal ulcers; donor sites; first- and second-degree burns, including sunburns; and radiation dermatitis. 8 Table of Contents EMROSI (Minocycline Hydrochloride Extended-Release Capsules, 40mg) Journey received approval in November 2024 for Emrosi (also referred to as DFD-29), a 40mg minocycline hydrochloride extended release capsule for oral use indicated to treat inflammatory lesions (papules and pustules) of rosacea in adults.
In August 2022, Avenue participated in a Type A Meeting with the FDA Division of Anesthesia, Analgesia, and Addiction Products (“DAAAP”) regarding a briefing document submitted that presented a study design the Avenue believed would have the potential to address the comments and deficiencies noted in the Letter.
In August 2022, Avenue participated in a Type A Meeting with the FDA Division of Anesthesia, Analgesia, and Addiction Products (“DAAAP”) regarding a briefing document submitted that presented a study design Avenue believed would have the potential to address the comments and deficiencies noted in the Letter.
The laws that may affect our ability to operate include: ● The federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or 24 Table of Contents reward, or in return for, either (1) the referral of an individual to a person for furnishing any item or service for which payment is available under a federal health care program, or (2) the purchase, lease, order or recommendation thereof of any good, facility, service or item for which payment is available under a federal health care program; ● The False Claims Act and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment from the federal government or making or using, or causing to be made or used, a false record or statement material to a false or fraudulent claim; ● The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program, obtaining money or property of the health care benefit program through false representations or knowingly and willingly falsifying, concealing or covering up a material fact, making false statements or using or making any false or fraudulent document in connection with the delivery of, or payment for, health care benefits or services; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; ● The provision under the Affordable Care Act (“ACA”) commonly referred to as the Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies to track and annually report to CMS payments and other transfers of value provided to physicians and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in applicable manufacturers and group purchasing organizations; applicable manufacturers are also required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; and ● State law equivalents of each of the above federal laws, such as the Anti-Kickback Statute and False Claims Act, and state laws concerning security and privacy of health care information, which may differ in substance and application from state-to-state thereby complicating compliance efforts.
The laws that may affect our ability to operate include: ● The federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either (1) the referral of an individual to a person for furnishing any item or service for which payment is available under a federal health care program, or (2) the purchase, lease, order or recommendation thereof of any good, facility, service or item for which payment is available under a federal health care program; ● The False Claims Act and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment from the federal government or making or using, or causing to be made or used, a false record or statement material to a false or fraudulent claim; ● The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program, obtaining money or property of the health care benefit program through false representations or knowingly and willingly falsifying, concealing or covering up a material fact, making false statements or using or making any false or fraudulent document in connection with the delivery of, or payment for, health care benefits or services; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; ● The provision under the Affordable Care Act (“ACA”) commonly referred to as the Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies to track and annually report to CMS payments and other transfers of value provided to physicians and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in applicable manufacturers and group purchasing organizations; applicable manufacturers are also required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; and ● State law equivalents of each of the above federal laws, such as the Anti-Kickback Statute and False Claims Act, and state laws concerning security and privacy of health care information, which may differ in substance and application from state-to-state thereby complicating compliance efforts.
MB-108 (HSV-1 Oncolytic Virus C134 for recurrent GBM) MB-108 is a next-generation oncolytic herpes simplex virus (“oHSV”) in development at Mustang that is conditionally replication competent; that is, it is designed to replicate in tumor cells, but not in normal cells, thus killing the tumor cells directly through this process.
MB-108 (HSV-1 Oncolytic Virus C134 for recurrent GBM) MB-108 is a next-generation oncolytic herpes simplex virus (“oHSV”) treatment in development at Mustang that is conditionally replication competent; that is, it is designed to replicate in tumor cells, but not in normal cells, thus killing the tumor cells directly through this process.
Baergic intends to explore BAER-101 in a number of CNS disorders where patients are not adequately treated, including epilepsy and acute anxiety disorders. In August 2023, Avenue reported preclinical data for BAER-101 from an in vivo evaluation in SynapCell’s Genetic Absence Epilepsy Rate from the Strasbourg (“GAERS”) model of absence epilepsy.
Baergic intends to explore BAER-101 in a number of CNS disorders where patients are not adequately treated, including epilepsy and acute anxiety disorders. In August 2023, Avenue reported preclinical data for BAER-101 from an in vivo evaluation in SynapCell’s Genetic Absence Epilepsy Rate from Strasbourg (“GAERS”) model of absence epilepsy.
On October 21, 2021, we received a written response from the OND of the FDA stating that the OND needs additional input from an Advisory Committee in order to reach a decision on the FDRR. In February 2022, Avenue held an Advisory Committee meeting with the FDA regarding IV tramadol.
On October 21, 2021, Avenue received a written response from the OND of the FDA stating that the OND needs additional input from an Advisory Committee in order to reach a decision on the FDRR. In February 2022, Avenue held an Advisory Committee meeting with the FDA regarding IV tramadol.
Cyprium previously enrolled patients into an Intermediate-Size Patient Population Expanded Access Protocol which is now administered by Sentynl Therapeutics. Additional information on the Expanded Access study and requirements can be found on ClinicalTrials.gov using identifier NCT04074512. Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K.
Cyprium previously enrolled patients into an Intermediate-Size Patient Population Expanded Access Protocol which is now administered by Sentynl Therapeutics. Additional information on the Expanded Access study and requirements can 10 Table of Contents be found on ClinicalTrials.gov using identifier NCT04074512. Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K.
Pursuant to a contractual right exercised by Sentynl in October 2023, however, Cyprium assigned the NDA and certain other assets pertaining to the CUTX-101 program to Sentynl and received $4.5 million in connection with the closing of such transaction. Sentynl is now obligated to use commercially reasonable efforts to develop and commercialize CUTX-101, including the funding of the same.
Pursuant to a contractual right exercised by Sentynl in October 2023, Cyprium assigned the NDA and certain other assets pertaining to the CUTX-101 program to Sentynl and received $4.5 million in connection with the closing of such transaction. Sentynl is obligated to use commercially reasonable efforts to develop and commercialize CUTX-101, including the funding of the same.
MB-106 (CD20-targeted CAR T cell therapy) Mustang is currently developing MB-106 in a collaboration with Fred Hutchinson Cancer Center (“Fred Hutch”), a CD20-targeted, 3rd generation autologous CAR T-cell therapy, for patients with relapsed or refractory B-cell non-Hodgkin lymphomas (“NHL”) and chronic lymphocytic leukemia (“CLL”).
MB-106 (CD20-targeted CAR T cell therapy) Mustang is currently developing MB-106 in a collaboration with Fred Hutchinson Cancer Center (“Fred Hutch”), a CD20-targeted, 3rd generation autologous CAR T-cell therapy, for patients with relapsed or refractory B-cell non-Hodgkin lymphomas (“NHL”), chronic lymphocytic leukemia (“CLL”), and autoimmune diseases.
Available Information We and certain of our affiliates file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Available Information We and certain of our affiliates file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).
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, four partner companies are publicly-traded, and two have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.
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, four partner companies are publicly-traded, and three subsidiaries have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.
In the final part of the public meeting, the Advisory Committee voted yes or no on the following question: “Has the Applicant submitted adequate information to support the position that the benefits of their product outweigh the risks for the management of acute pain severe enough to require an opioid analgesic in an inpatient setting?” The results were 8 yes votes and 14 no votes.
In the final part of the public meeting, the Advisory Committee voted yes or no on the following question: “Has the Applicant submitted 15 Table of Contents adequate information to support the position that the benefits of their product outweigh the risks for the management of acute pain severe enough to require an opioid analgesic in an inpatient setting?” The results were 8 yes votes and 14 no votes.
Generic versions are generally significantly less expensive than branded 17 Table of Contents versions, and, where available, may be required to be utilized before or in preference to the branded version under third-party reimbursement programs, or substituted by pharmacies. Accordingly, when a branded product loses its market exclusivity, it normally faces intense price competition from generic forms of the product.
Generic versions are generally significantly less expensive than branded versions, and, where available, may be required to be utilized before or in preference to the branded version under third-party reimbursement programs, or substituted by pharmacies. Accordingly, when a branded product loses its market exclusivity, it normally faces intense price competition from generic forms of the product.
However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Orphan drug exclusivity, as described below, may offer a seven-year period of marketing exclusivity, except in certain circumstances.
However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical 24 Table of Contents studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Orphan drug exclusivity, as described below, may offer a seven-year period of marketing exclusivity, except in certain circumstances.
In July 2023, Checkpoint announced longer-term results for cosibelimab from its pivotal studies in locally advanced and metastatic cSCC. These results demonstrated a deepening of response over time, resulting in complete response rates of 26% and 13% in locally advanced and metastatic cSCC, respectively. Additionally, the confirmed ORR in metastatic cSCC increased to 50.0% based on independent central review.
In July 2023, longer-term results were announced for cosibelimab-ipdl from its pivotal studies in locally advanced and metastatic cSCC. These results demonstrated a deepening of response over time, resulting in complete response rates of 26% and 13% in locally advanced and metastatic cSCC, respectively. Additionally, the confirmed ORR in metastatic cSCC increased to 50.0% based on independent central review.
Due to these properties, OVs have been studied in combination with other treatments to enhance the effectiveness of immunotherapies. Preliminary anti-tumor activity has been observed in clinical studies administering the OV (MB-108) and CAR T cell therapy (MB-101) as single agents; however, the combination has not yet been explored.
Due to 13 Table of Contents these properties, OVs have been studied in combination with other treatments to enhance the effectiveness of immunotherapies. Preliminary anti-tumor activity has been observed in clinical studies administering the OV (MB-108) and CAR T cell therapy (MB-101) as single agents; however, the combination has not yet been explored.
On August 26, 2021, we received an Appeal Denied Letter from the Office of Neuroscience of the FDA in response to the FDRR submitted on July 27, 2021. On August 31, 2021, we submitted a FDRR with the Office of New Drugs (“OND”) of the FDA.
On August 26, 2021, Avenue received an Appeal Denied Letter from the Office of Neuroscience of the FDA in response to the FDRR submitted on July 27, 2021. On August 31, 2021, Avenue submitted a FDRR with the Office of New Drugs (“OND”) of the FDA.
The process required by the FDA before a pharmaceutical product may be marketed in the United States generally includes the following: ● completion of preclinical laboratory tests, animal studies and formulation studies according to good laboratory practices (“GLPs”) or other applicable regulations; ● submission to the FDA of an IND, which must be in effect before human clinical trials may begin in the United States; ● performance of adequate and well-controlled human clinical trials according to the FDA’s current good clinical practices (“GCPs”), to establish the safety and efficacy of the proposed pharmaceutical product for its intended use; ● submission to the FDA of an NDA or BLA for a new pharmaceutical product; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the pharmaceutical product is produced to assess compliance with the FDA’s current Good Manufacturing Practices (“cGMPs”), to assure that the facilities, methods and controls are adequate to preserve the pharmaceutical product’s identity, strength, quality and purity; ● potential FDA audit of the preclinical and clinical trial sites that generated the data in support of the NDA or BLA; and ● FDA review and approval of the NDA or BLA.
The process required by the FDA before a pharmaceutical product may be marketed in the United States generally includes the following: ● completion of preclinical laboratory tests, animal studies and formulation studies according to good laboratory practices (“GLPs”) or other applicable regulations; ● submission to the FDA of an IND, which must be in effect before human clinical trials may begin in the United States; ● performance of adequate and well-controlled human clinical trials according to the FDA’s current good clinical practices (“GCPs”), to establish the safety and efficacy of the proposed pharmaceutical product for its intended use; ● submission to the FDA of an NDA or BLA for a new pharmaceutical product; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the pharmaceutical product is produced to assess compliance with the FDA’s current Good Manufacturing Practices (“cGMPs”), to assure that the facilities, methods and controls are adequate to preserve the pharmaceutical product’s identity, strength, quality and purity; ● potential FDA audit of the preclinical and clinical trial sites that generated the data in support of the NDA or BLA; and ● FDA review and approval of the NDA or BLA. 19 Table of Contents The regulatory review and approval process is lengthy, expensive and uncertain.
To determine if the combination of both therapies will result in a synergistic effect, investigators from COH developed preclinical studies in orthotopic GBM models in nude mice. Dr. Christine Brown from City of Hope presented these preclinical studies at the American 13 Table of Contents Association for Cancer Research 2022 Annual Meeting.
To determine if the combination of both therapies will result in a synergistic effect, investigators from COH developed preclinical studies in orthotopic GBM models in nude mice. Dr. Christine Brown from City of Hope presented these preclinical studies at the American Association for Cancer Research 2022 Annual Meeting.
Pediatric Information Under the Pediatric Research Equity Act (“PREA”), NDAs and BLAs or supplements to NDAs and BLAs must contain data to assess the safety and effectiveness of the treatment for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the treatment is safe 23 Table of Contents and effective.
Pediatric Information Under the Pediatric Research Equity Act (“PREA”), NDAs and BLAs or supplements to NDAs and BLAs must contain data to assess the safety and effectiveness of the treatment for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the treatment is safe and effective.
The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or 18 Table of Contents literature and a proposed clinical protocol, to the FDA as part of the IND.
The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.
If so designated, the FDA may expedite the development and review of any subsequent original NDA for a drug that uses or incorporates the platform technology. Designated platform technology status does not ensure that a drug will be developed more quickly or receive FDA approval.
If so designated, the FDA may expedite the development and review of any subsequent original NDA for a drug that uses or incorporates 22 Table of Contents the platform technology. Designated platform technology status does not ensure that a drug will be developed more quickly or receive FDA approval.
The ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the payments received for any approved drug. Any 25 Table of Contents reduction in reimbursement from Medicare or other government healthcare programs result in a similar reduction in payments from private payors.
The ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the payments received for any approved drug. Any reduction in reimbursement from Medicare or other government healthcare programs result in a similar reduction in payments from private payors.
Employees and Human Capital Management As of December 31, 2023, we had 186 full-time employees at Fortress and our subsidiaries and partner companies. None of our employees is represented by a labor union. We have retained a number of expert advisors and consultants who help navigate us through different aspects of our business.
Employees and Human Capital Management As of December 31, 2024, we had 101 full-time employees at Fortress and our subsidiaries and partner companies. None of our employees is represented by a labor union. We have retained a number of expert advisors and consultants who help navigate us through different aspects of our business.
In the Phase 3 safety study to be conducted, patients will have access to IV hydromorphone, a Schedule II opioid, for rescue of breakthrough pain. The primary endpoint is a composite of elements indicative of respiratory depression. Avenue plans to initiate the study as soon as possible, subject to having the necessary financing.
In the Phase 3 safety study to be conducted, patients will have access to IV hydromorphone, a Schedule II opioid, for rescue of breakthrough pain. The primary endpoint is a composite of elements indicative of respiratory depression. Avenue plans to initiate the study in the future, subject to having the necessary financing.
Section 505(b)(2) of the FDCA provides an alternate regulatory pathway for approval of a new 21 Table of Contents drug by allowing the FDA to rely on data not developed by the applicant.
Section 505(b)(2) of the FDCA provides an alternate regulatory pathway for approval of a new drug by allowing the FDA to rely on data not developed by the applicant.
Triplex (cytomegalovirus (CMV) vaccine) Through our subsidiary Helocyte, we are developing Triplex, a universal recombinant Modified Vaccinia Ankara viral vector vaccine engineered to induce a rapid, robust and durable virus-specific T cell response to three immuno-dominant proteins (UL83 (pp65), UL123 (IE1), and UL122 (IE2)) linked to cytomegalovirus (“CMV”) complications in the transplant setting.
Triplex (cytomegalovirus (CMV) vaccine) Through our subsidiary Helocyte, we are developing Triplex, a universal recombinant Modified Vaccinia Ankara viral vector vaccine engineered to induce a rapid, robust and durable virus-specific T cell response to three immuno-dominant proteins (UL83 (pp65), UL123 (IE1), and UL122 (IE2)) linked to cytomegalovirus (“CMV”).
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 financial expertise to help the partners achieve their goals.
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 financial expertise to help its subsidiaries and partner companies achieve their goals.
The FDA assigned a PDUFA goal date of April 12, 2021 for the resubmitted NDA for IV Tramadol. On June 14, 2021, we announced that we had received a second CRL. We submitted a formal dispute resolution request (“FDRR”) with the Office of Neuroscience of the FDA on July 27, 2021.
The FDA assigned a PDUFA goal date of April 12, 2021 for the resubmitted NDA for IV Tramadol. On June 14, 2021, Avenue announced that the receipt of a second CRL. Avenue submitted a formal dispute resolution request (“FDRR”) with the Office of Neuroscience of the FDA on July 27, 2021.
This means that, subsequent to approval, the FDA may not approve any other applications to market the same drug that designated orphan use, except in 22 Table of Contents limited circumstances, for seven years.
This means that, subsequent to approval, the FDA may not approve any other applications to market the same drug that designated orphan use, except in limited circumstances, for seven years.
The NDA holder or patent owner may then initiate a patent infringement lawsuit in response to notice of the Paragraph IV certification.
The NDA holder or patent owner may then initiate a patent infringement lawsuit in response to 23 Table of Contents notice of the Paragraph IV certification.
Having optimized MB-101 dose, schedule, route of administration and T cell selection in a completed Phase 1 trial, ongoing COH sponsored studies include: ● MB-101 with or without nivolumab and ipilimumab in treating patients with recurrent or refractory glioblastoma (currently enrolling patients; ClinicalTrials.gov Identifier: NCT04003649); and ● MB-101 in treating patients with recurrent or refractory glioblastoma with a substantial component of leptomeningeal disease (currently enrolling patients; ClinicalTrials.gov Identifier: NCT04661384).
Having optimized MB-101 dose, schedule, route of administration and T cell selection in a completed Phase 1 trial, ongoing COH sponsored studies include: ● MB-101 with or without nivolumab and ipilimumab in treating patients with recurrent or refractory glioblastoma (currently enrolling patients; ClinicalTrials.gov Identifier: NCT04003649); ● MB-101 in treating patients with recurrent or refractory glioblastoma with a substantial component of leptomeningeal disease (currently enrolling patients; ClinicalTrials.gov Identifier: NCT04661384); and ● MB-101 in treating children with recurrent or refractory IL13Rα2 positive brain tumors (currently enrolling patients; ClinicalTrials.gov Identifier: NCT04510051) sponsored by COH.
The trial is being conducted by the AIDS Clinical Trials Group and is funded by the National Institute of Allergy and Infectious Disease, part of the National Institutes of Health.
The trial is being conducted by the AIDS Clinical Trials Group and is funded by the National Institute of Allergy and Infectious Disease, part of the National Institutes of Health ( ClinicalTrials.gov Identifier: NCT05099965).
Other Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice, the DEA and individual United States Attorney offices within the Department of Justice, and state and local governments.
In addition to federal scheduling, some drugs may be subject to state-controlled substance regulation and thus more extensive requirements than those determined by the DEA and FDA. 25 Table of Contents Other Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice, the DEA and individual United States Attorney offices within the Department of Justice, and state and local governments.
The RAG1-SCID program has been granted Orphan Drug Designation by the European Medicines Agency. BAER-101 (GABA A α2/3 positive allosteric modulator) Through Avenue’s subsidiary Baergic, we are developing BAER-101, a high affinity, selective modulator of the gamma-aminobutyric acid (“GABA”) A, which is a receptor system with differential binding and modulatory properties dependent on the particular GABA A subtype.
BAER-101 (GABA A α2/3 positive allosteric modulator) Through Avenue’s subsidiary Baergic, we are developing BAER-101, a high affinity, selective modulator of the gamma-aminobutyric acid (“GABA”) A, which is a receptor system with differential binding and modulatory properties dependent on the particular GABA A subtype.
As used throughout this filing, the words “we”, “us” and “our” may refer to Fortress individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.
(“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). As used throughout this filing, the words “we”, “us” and “our” may refer to Fortress individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our product candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the United States and abroad.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our product candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the United States and abroad. However, patent protection may not afford us with complete protection against competitors who seek to circumvent our patents.
When patents covering certain of our products (if applicable) expire or are successfully challenged through litigation or in U.S. Patent and Trademark Office (“USPTO”) proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products (if applicable) expires or is otherwise lost, we may face generic competition as a result.
Patent and Trademark Office (“USPTO”) proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products (if applicable) expires or is otherwise lost, we may face generic competition as a result.
The cohort met its primary endpoint, with cosibelimab demonstrating a confirmed overall response (“ORR”) of 47.4% (95% CI: 36.0, 59.1) based on independent central review of 78 patients enrolled in the metastatic cSCC cohort using RECIST 1.1.
The cohort met its primary endpoint, with cosibelimab-ipdl demonstrating a confirmed ORR of 47.4% (95% CI: 36.0, 59.1) based on independent central review of 78 patients enrolled in the metastatic cSCC cohort using Response Evaluation Criteria in Solid Tumors version 1.1 (“RECIST 1.1”).
Under the terms of the agreement, Aevitas is eligible to receive cash payments from 4DMT totaling up to $140 million in potential late-stage development, regulatory and sales milestones.
Under the terms of the agreement, Aevitas is eligible to receive cash payments from 4DMT totaling up to $140 million in potential late-stage development, regulatory and sales milestones. A range of single-digit royalties on net sales are also payable.
MB-101 (IL13R α 2 CAR T Cell Program for Glioblastoma) Mustang is also currently developing MB-101 for malignant brain tumors, including glioblastoma (“GBM”). MB-101 is an optimized CAR T product targeting IL13Rα2 on the surface of the malignant cells and incorporates enhancements in CAR T design and T cell engineering to improve antitumor potency and T cell persistence.
MB-101 is an optimized CAR T product targeting IL13Rα2 on the surface of the malignant cells and incorporates enhancements in CAR T design and T cell engineering to improve antitumor potency and T cell persistence.
AJ201 is currently being studied in a Phase 1b/2a multicenter, randomized, double-blind clinical trial at six clinical sites across the U.S. for the treatment of spinal and bulbar muscular atrophy (“SBMA”), also known as Kennedy’s Disease ( ClinicalTrials.gov Identifier: NCT05517603). Enrollment was completed in January 2024, with topline data anticipated in the second quarter of 2024.
AJ201 is currently being studied in a Phase 1b/2a multicenter, randomized, double-blind clinical trial at six clinical sites across the U.S. for the treatment of spinal and bulbar muscular atrophy (“SBMA”), also known as Kennedy’s Disease ( ClinicalTrials.gov Identifier: NCT05517603). Enrollment was completed in January 2024. Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K.
Checkpoint believes that olafertinib has the potential to be effective in this population as a monotherapy or in combination with other anti-tumor immune response potentiating compounds. Olafertinib has FDA Orphan Drug Designation for the treatment of EGFR mutation-positive NSCLC. In September 2018, Checkpoint announced preliminary interim safety and efficacy data from the ongoing Phase 1 clinical trial.
Checkpoint believes that olafertinib has the potential to be effective in this population as a monotherapy or in combination with other anti-tumor immune response potentiating compounds. Olafertinib has FDA Orphan Drug Designation for the treatment of EGFR mutation-positive NSCLC.
Intellectual Property Generally Our goal is to obtain, maintain and enforce patent protection for our product candidates, formulations, processes, methods and any other proprietary technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in other countries.
Oncogenuity is seeking to optimize lead candidates targeting genetically driven cancers, including KRAS G12D, and other genetic disorders. 17 Table of Contents Intellectual Property Generally Our goal is to obtain, maintain and enforce patent protection for our product candidates, formulations, processes, methods and any other proprietary technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in other countries.
CUTX-101 (copper histidinate injection for Menkes disease) Our partner company Cyprium was previously developing CUTX-101, a copper histidinate injection for the treatment of Menkes disease.
Late Stage Product Candidates CUTX-101 (copper histidinate injection for Menkes disease) Our subsidiary Cyprium was previously developing CUTX-101, a copper histidinate injection for the treatment of Menkes disease.
(“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”), respectively. Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are Avenue Therapeutics, Inc. (Nasdaq: ATXI, “Avenue”), Baergic Bio, Inc. (“Baergic,” a subsidiary of Avenue), Cellvation, Inc. (“Cellvation”), Checkpoint Therapeutics, Inc. (Nasdaq: CKPT, “Checkpoint”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc.
(“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”). Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Checkpoint Therapeutics, Inc. (Nasdaq: CKPT, “Checkpoint”), Journey Medical Corporation (Nasdaq: DERM, “Journey” or “JMC”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc. (OTC: ATXI, “Avenue”), Baergic Bio, Inc. (“Baergic,” a subsidiary of Avenue), Cellvation, Inc.
ONCOlogues (Oligonucleotide Platform) Our subsidiary Oncogenuity is developing a delivery platform that allows peptic nucleic acids to enter a cell membrane and nucleus, displace the targeted mutant DNA strand, and prevent mutant mRNA transcription. Oncogenuity is seeking to optimize lead candidates targeting genetically driven cancers, including KRAS G12D, and other genetic disorders.
ONCOlogues (Oligonucleotide Platform) Our subsidiary Oncogenuity is developing a delivery platform that allows peptic nucleic acids to enter a cell membrane and nucleus, displace the targeted mutant DNA strand, and prevent mutant mRNA transcription.
AVTS-001 Gene Therapy In April 2023, we announced the execution of an asset purchase agreement, pursuant to which 4D Molecular Therapeutics (“4DMT”) acquired Aevitas’ proprietary rights to its short-form human complement factor H (“sCFH”) asset for the treatment of complement-mediated diseases.
Kaler, M.D., M.P.H., to fund the completion of preclinical studies, manufacturing, and preparation of an IND application for a first-in-human clinical trial. 16 Table of Contents AVTS-001 Gene Therapy In April 2023, we announced the execution of an asset purchase agreement, pursuant to which 4D Molecular Therapeutics (“4DMT”) acquired Aevitas’ proprietary rights to its short-form human complement factor H (“sCFH”) asset for the treatment of complement-mediated diseases.
The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. 20 Table of Contents The FDA may give a priority review designation to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.
The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors.
The agreement also provides for additional potential payments to Caelum shareholders totaling up to $350 million, payable upon the achievement of regulatory and commercial milestones. Fortress is eligible to receive 42.4% of all possible proceeds of the transaction, including approximately $148 million to Fortress, with $31.8 million upon BLA approval.
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 possible potential milestone payments, which together with the upfront payment, would total up to approximately $182 million.
Furthermore, responses continue to remain durable over time with the median duration of response not yet reached in either group. Updated safety data across 247 patients enrolled and treated with cosibelimab in all cohorts of the ongoing study remain consistent with those previously reported. Based on these results, Checkpoint submitted a Biologics License Application (“BLA”) to the U.S.
Updated safety data across 247 patients enrolled and treated with cosibelimab-ipdl in all cohorts of the ongoing study remain consistent with those previously reported. ​ Based on these results, Checkpoint submitted a Biologics License Application (“BLA”) to the FDA in January 2023.
In March 2024, Cyprium announced a $4.1 million grant from the National Institute of Neurological Disorders and Stroke (“NINDS”) of the NIH was awarded to the Research Institute at Nationwide Children’s Hospital and Principal Investigator, Stephen G. Kaler, M.D., M.P.H., to fund the completion of preclinical studies, manufacturing, and preparation of an IND application for a first-in-human clinical trial.
In March 2024, Cyprium announced a $4.1 million grant from the National Institute of Neurological Disorders and Stroke (“NINDS”) of the NIH was awarded to the Research Institute at Nationwide Children’s Hospital and Principal Investigator, Stephen G.
Special FDA Expedited Review and Approval Programs The FDA has various programs, including fast track designation, accelerated approval, priority review and breakthrough therapy designation, that are intended to expedite or simplify the process for the development and FDA review of drugs that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.
The FDA also may require Phase 4 testing, risk minimization action plans and surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. 21 Table of Contents Special FDA Expedited Review and Approval Programs The FDA has various programs, including fast track designation, accelerated approval, priority review and breakthrough therapy designation, that are intended to expedite or simplify the process for the development and FDA review of drugs that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.
The final planned MB-101 trial will be in combination with the HSV-1 oncolytic virus (MB-108) in treating patients with recurrent or refractory glioblastoma and anaplastic astrocytoma.
Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K. The final planned MB-101 trial will be in combination with the HSV-1 oncolytic virus (MB-108) in treating patients with recurrent or refractory glioblastoma and anaplastic astrocytoma.
In June 2022, Checkpoint announced interim results from another cohort of this study with cosibelimab administered as a fixed dose of 800 mg every two weeks in patients with locally advanced cSCC that are not candidates for curative surgery or radiation.
In June 2022, interim results were announced from another cohort of this study with cosibelimab-ipdl administered as a fixed dose of 800 mg every two weeks in patients with locally advanced cSCC that are not candidates for curative surgery or radiation in which cosibelimab-ipdl demonstrated a confirmed ORR of 54.8% (95% CI: 36.0, 72.7) based on independent central review of 31 patients enrolled in the cohort.
Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued if 9 Table of Contents the NDA for CUTX-101 is approved. The CUTX-101 rolling NDA submission is ongoing and is expected to be completed by Sentynl in 2024.
Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued if the NDA for CUTX-101 is approved.
A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines.
The FDA may give a priority review designation to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists. A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines.
The SEC also maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding our Company and other companies that file materials with the SEC electronically. Copies of our and certain of our affiliates’ reports on Form 10-K, Forms 10-Q and Forms 8-K may be obtained, free of charge, electronically through our website at www.fortressbiotech.com.
Copies of our and certain of our affiliates’ reports on Form 10-K, Forms 10-Q and Forms 8-K may also be obtained, free of charge, electronically through our website at www.fortressbiotech.com.
Triplex is currently the subject of four, grant-funded trials in various clinical settings including: adults undergoing stem cell transplant; adults co-infected with CMV and Anti-Human Immunodeficiency Virus (“HIV”); and in combination with a CAR T cell therapy for adults with non-Hodgkin lymphoma (“NHL”). Helocyte secured an exclusive, worldwide license to Triplex from COH in April 2015.
As of March 2025, Triplex is currently the subject of multiple, ongoing trials in various clinical settings including: patients undergoing stem cell transplant; adults co-infected with CMV and Anti-Human Immunodeficiency Virus (“HIV”); and in combination with a CAR T cell therapy for adults with non-Hodgkin lymphoma (“NHL”) or acute lumphoblastic leukemia (“ALL”).
Cyprium entered into a license agreement with Eunice Kennedy Shriver National Institute of Child Health and Human Development to acquire the global rights to develop and commercialize AAV-ATP7A gene therapy.
Preclinical Product Candidates AAV-ATP7A Gene Therapy Through our subsidiary Cyprium, we are developing adeno-associated virus (“AAV”)-based gene therapy (“AAV-ATP7A”) for the treatment of Menkes disease. Cyprium entered into a license agreement with Eunice Kennedy Shriver National Institute of Child Health and Human Development to acquire the global rights to develop and commercialize AAV-ATP7A gene therapy.
AJ201 (Nrf1 and Nrf2 activator, androgen receptor degradation enhancer) In February 2023, Avenue announced the license of intellectual property rights underlying AJ201 from AnnJi Pharmaceutical Co. Ltd.
Planning for the aforementioned Phase 1 investigator-sponsored clinical trial in autoimmune diseases is in progress, with initiation of the trial planned for 2025. AJ201 (Nrf1 and Nrf2 activator, androgen receptor degradation enhancer) In February 2023, Avenue announced the license of intellectual property rights underlying AJ201 from AnnJi Pharmaceutical Co. Ltd (“AnnJi”).
The principal purpose of our equity incentive plan is to attract, retain, and motivate selected employees, consultants, and directors through the granting of share-based compensation awards and cash-based bonus awards. Executive Officers of Fortress The following table sets forth certain information about our executive officers as of December 31, 2023. Name Age Position Lindsay A.
The principal purpose of our equity incentive plan is to attract, retain, and motivate selected employees, consultants, and directors through the granting of share-based compensation awards and cash-based bonus awards.
Similarly, an IRB or ethics committee can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s or ethics committee’s requirements or if the pharmaceutical product has been associated with unexpected serious harm to patients. 19 Table of Contents Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the pharmaceutical product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
Similarly, an IRB or ethics committee can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s or ethics committee’s requirements or if the pharmaceutical product has been associated with unexpected serious harm to patients.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggests a significant risk for human subjects.
These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication and may be required by the FDA after it has been approved, and is on the market, as an ongoing condition of approval. 20 Table of Contents Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggests a significant risk for human subjects.
In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act or the civil monetary penalties statute.
In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act or the civil monetary penalties statute. 26 Table of Contents Many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.
However, patent protection may not afford us with complete protection against competitors who seek to circumvent our patents. 16 Table of Contents We also depend upon the skills, knowledge, experience and know-how of our management and research and development personnel, as well as that of our advisers, consultants and other contractors.
We also depend upon the skills, knowledge, experience and know-how of our management and research and development personnel, as well as that of our advisers, consultants and other contractors.
CK-103 (BET Inhibitor) Checkpoint is currently developing CK-103, a novel, selective and potent small molecule inhibitor of bromodomain and extra-terminal (“BET”) bromodomains. Checkpoint plans to develop CK-103 for the treatment of various advanced and metastatic solid tumor cancers, including, but not limited to, those associated with elevated c-Myc expression.
Checkpoint plans to develop CK-103 for the treatment of various advanced and metastatic solid tumor cancers, including, but not limited to, those associated with elevated c-Myc expression. Checkpoint entered into an exclusive license agreement with Jubilant Biosys Limited to develop and commercialize novel compounds that inhibit BET bromodomains on a worldwide basis.
GBM is the most common brain and central nervous system (“CNS”) cancer, accounting for 49% of malignant primary brain and CNS tumors, 54% of all gliomas, and 16% of all primary brain and CNS tumors. More than 14,490 new glioblastoma cases were predicted in the U.S. for 2023.
GBM is the most common brain and central nervous system (“CNS”) cancer, accounting for approximately 52% of malignant primary brain and CNS tumors and approximately 14% of all primary brain and CNS tumors. On average during 12 Table of Contents the years 2017 through 2021, more than 13,000 new cases of GBM were diagnosed per year in the U.S.
Accordingly, we face pressure to continually seek out technological innovations and to market our products effectively. Our major competitors in dermatology, including Galderma Laboratories, Almirall, Ortho-Dermatologics, Mayne Pharmaceuticals, Sun Pharma, Leo Pharma, and Arcutis Biotherapeutics, among others, vary depending on therapeutic and product category, dosage strength and drug-delivery systems, among other factors.
Our major competitors in dermatology, including Galderma Laboratories, Almirall, Ortho-Dermatologics, Mayne Pharmaceuticals, Sun Pharma, Leo Pharma, and Arcutis Biotherapeutics, among others, vary depending on therapeutic and product category, dosage strength and drug-delivery systems, among other factors. 18 Table of Contents Generic Competition Our partner company Journey faces increased competition from manufacturers of generic pharmaceutical products, who may submit applications to FDA seeking to market generic versions of Journey’s products.
CAEL-101 (monoclonal antibody for AL amyloidosis) Our former subsidiary Caelum, in collaboration with AstraZeneca plc (“AstraZeneca”), is working to develop a novel, first-in-class monoclonal antibody called CAEL-101 for the treatment of amyloid light chain (“AL”) amyloidosis. CAEL-101 is designed to improve organ function by reducing or eliminating amyloid deposits in the tissues and organs of patients with AL amyloidosis.
CAEL-101 is designed to improve organ function by reducing or eliminating amyloid deposits in the tissues and organs of patients with AL amyloidosis.
In January 2022, Checkpoint announced top-line results from a cohort of this study with cosibelimab administered as a fixed dose of 800 mg every two weeks in patients with metastatic cutaneous squamous cell carcinoma (“cSCC”).
The primary endpoint is objective response rate (“ORR”), and secondary endpoints include duration of response, progression-free survival (“PFS”), and overall survival. In January 2022, top-line results were announced from a cohort of this study with cosibelimab-ipdl administered as a fixed dose of 800 mg every two weeks in patients with metastatic cSCC.
Currently, Checkpoint has completed the required CMC, pharmacology and toxicology activities that it believes will support an IND application filing.
Checkpoint entered into a Sublicense Agreement with TGTX to develop and commercialize CK-103 in the field of hematological malignancies. Checkpoint retains the right to develop and commercialize CK-103 in solid tumors. Currently, Checkpoint has completed the required CMC, pharmacology and toxicology activities that it believes will support an IND application filing.
The CRL only cited findings that arose during a multi-sponsor inspection of our third-party contract manufacturing organization as approvability issues to address in a resubmission. The CRL did not state any concerns about the clinical data package, safety, or labeling.
On December 15, 2023, the FDA issued a complete response letter (“CRL”) citing only findings that arose during a multi-sponsor inspection of Checkpoint’s third-party contract manufacturing organization as approvability issues to address in a resubmission.
AJ201 has been granted Orphan Drug Designation by the FDA for the indications of SBMA, Huntington’s Disease, and Spinocerebellar Ataxia. MB-117 (Ex vivo Lentiviral Gene Therapy for Newly Diagnosed X-linked Severe Combined Immunodeficiency (“XSCID”)) and MB-217 (Ex vivo Lentiviral Gene Therapy for Previously Transplanted XSCID) In partnership with St.
AJ201 has been granted Orphan Drug Designation by the FDA for the indications of SBMA, Huntington’s Disease, and Spinocerebellar Ataxia.
Fortress works in concert with our extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. We have executed 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”), Fred Hutchinson Cancer Center, St.
Fortress works in concert with our extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition.
The company believes this data set could ultimately be used to support approval of Triplex in this setting and the trial is expected to commence in 2024. Early and Mid-Stage Product Candidates Dotinurad (urate transporter (URAT1) inhibitor for gout) Through our partner company Urica, in May 2021, we acquired an exclusive license from Fuji Yakuhin Co. Ltd.
Early and Mid-Stage Product Candidates Dotinurad (urate transporter (URAT1) inhibitor for gout) Through our subsidiary Urica Therapeutics, Inc. (“Urica”), we acquired an exclusive license from Fuji Yakuhin Co. Ltd. (“Fuji”) to develop a URAT1 inhibitor product candidate in development for the treatment of gout, dotinurad, in North America, Europe, the Middle East and North Africa.
Generic Competition Our partner company Journey faces increased competition from manufacturers of generic pharmaceutical products, who may submit applications to FDA seeking to market generic versions of Journey’s products. In connection with these applications, the generic drug companies may seek to challenge the validity and enforceability of our patents through litigation.
In connection with these applications, the generic drug companies may seek to challenge the validity and enforceability of our patents through litigation. When patents covering certain of our products (if applicable) expire or are successfully challenged through litigation or in U.S.
Helocyte secured an exclusive, worldwide license to Triplex from COH in April of 2015. Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K.
Helocyte has an exclusive, worldwide license to Triplex from COH. Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K. Solid organ transplant In May 2024, Helocyte announced that the first patient was dosed in a multi-center, placebo-controlled, randomized Phase 2 study of Triplex for control of CMV in patients undergoing liver transplantation.
In December 2021, Helocyte announced that a Phase 2 double-blind, randomized, placebo-controlled clinical trial was initiated to evaluate the safety and efficacy of Triplex, a CMV vaccine, in eliciting a CMV-specific immune response and reducing CMV replication in people living with HIV.
The trial is funded by a grant from the National Cancer Institute (“NCI”) (ClinicalTrials.gov Identifier: NCT06059391). ​ Helocyte anticipates that its Phase 2 multicenter, double-blind, randomized, placebo-controlled study measuring the safety and effectiveness of Triplex in reducing CMV complications in patients previously infected with CMV and undergoing donor hematopoietic cell transplant to be completed in the second half of 2025 ( ClinicalTrials.gov Identifier: NCT02506933). ​ Additionally, Helocyte is recruiting for a Phase 1/2 trial to study side effects and dosage for Triplex in treating pediatric patients with positive cytomegalovirus who are undergoing donor stem cell transplant ( ClinicalTrials.gov Identifier: NCT03354728). ​ HIV In December 2021, Helocyte announced that a Phase 2 double-blind, randomized, placebo-controlled clinical trial was initiated to evaluate the safety and efficacy of Triplex, a CMV vaccine, in eliciting a CMV-specific immune response and reducing CMV replication in people living with HIV.
A range of single-digit royalties on net sales are also payable. 15 Table of Contents Prior to the agreement with 4DMT, Aevitas licensed the sCFH asset from the University of Pennsylvania and also collaborated with University of Massachusetts Medical to optimize AAV constructs.
Prior to the agreement with 4DMT, Aevitas licensed the sCFH asset from the University of Pennsylvania and also collaborated with University of Massachusetts Medical to optimize AAV constructs. CK-103 (BET Inhibitor) Checkpoint is currently developing CK-103, a novel, selective and potent small molecule inhibitor of bromodomain and extra-terminal (“BET”) bromodomains.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe SUPPORT for Patients and Communities Act added to the definition of covered recipient practitioners including physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives effective in 2022; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Biggest changeSpecifically, the anti- bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing 58 Table of Contents of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person; enforcement actions may be brought by the Department of Justice or the SEC; legislation has expanded the SEC’s power to seek disgorgement in all FCPA cases filed in federal court and extended the statute of limitations in SEC enforcement actions in intent-based claims, such as those under the FCPA, from five years to ten years; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
If our products are not included within an adequate number of formularies or adequate reimbursement levels are not provided, or if those policies increasingly favor generic products, this could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
If our products are not included within an adequate number of formularies or adequate reimbursement levels are not provided, or if those policies increasingly favor generic products, this could have a material adverse effect on our business and financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
The types of disputes that may arise between us and the third parties from whom we license intellectual property include, but are not necessarily limited to: ● the scope of rights granted under such license agreements and other interpretation-related issues; ● the extent to which our technologies and processes infringe on intellectual property of the licensor that is not subject to such license agreements; ● the scope and interpretation of the representations and warranties made to us by our licensors, including those pertaining to the licensors’ right title and interest in the licensed technology and the licensors’ right to grant the licenses contemplated by such agreements; 51 Table of Contents ● the sublicensing of patent and other rights under our license agreements and/or collaborative development relationships, and the rights and obligations associated with such sublicensing, including whether or not a given transaction constitutes a sublicense under such license agreement; ● the diligence and development obligations under license agreements (which may include specific diligence milestones) and what activities or achievements satisfy those diligence obligations; ● whether or not the milestones associated with certain milestone payment obligations have been achieved or satisfied; ● the applicability or scope of indemnification claims or obligations under such license agreements; ● the permissibility and advisability of, and strategy regarding, the pursuit of potential third-party infringers of the intellectual property that is the subject of such license agreements; ● the calculation of royalty, milestone, sublicense revenue and other payment obligations under such license agreements; ● the extent to which rights, if any, are retained by licensors under such license agreements; ● whether or not a material breach has occurred under such license agreements and the extent to which such breach, if deemed to have occurred, is or can be cured within applicable cure periods, if any; ● disputes regarding patent filing and prosecution decisions, as well as payment obligations regarding past and ongoing patent expenses; ● intellectual property rights resulting from the joint creation or use of intellectual property (including improvements made to licensed intellectual property) by our and our partners’ licensors and us and our partners; and ● the priority of invention of patented technology.
The types of disputes that may arise between us and the third parties from whom we license intellectual property include, but are not necessarily limited to: ● the scope of rights granted under such license agreements and other interpretation-related issues; ● the extent to which our technologies and processes infringe on intellectual property of the licensor that is not subject to such license agreements; ● the scope and interpretation of the representations and warranties made to us by our licensors, including those pertaining to the licensors’ right title and interest in the licensed technology and the licensors’ right to grant the licenses contemplated by such agreements; ● the sublicensing of patent and other rights under our license agreements and/or collaborative development relationships, and the rights and obligations associated with such sublicensing, including whether or not a given transaction constitutes a sublicense under such license agreement; ● the diligence and development obligations under license agreements (which may include specific diligence milestones) and what activities or achievements satisfy those diligence obligations; ● whether or not the milestones associated with certain milestone payment obligations have been achieved or satisfied; ● the applicability or scope of indemnification claims or obligations under such license agreements; ● the permissibility and advisability of, and strategy regarding, the pursuit of potential third-party infringers of the intellectual property that is the subject of such license agreements; 53 Table of Contents ● the calculation of royalty, milestone, sublicense revenue and other payment obligations under such license agreements; ● the extent to which rights, if any, are retained by licensors under such license agreements; ● whether or not a material breach has occurred under such license agreements and the extent to which such breach, if deemed to have occurred, is or can be cured within applicable cure periods, if any; ● disputes regarding patent filing and prosecution decisions, as well as payment obligations regarding past and ongoing patent expenses; ● intellectual property rights resulting from the joint creation or use of intellectual property (including improvements made to licensed intellectual property) by our and our partners’ licensors and us and our partners; and ● the priority of invention of patented technology.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include, but are not necessarily limited to: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, 56 Table of Contents maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, which requires manufacturers of certain drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made to “covered recipients,” which include physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals) and applicable manufacturers.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include, but are not necessarily limited to: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, which requires manufacturers of certain drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made to “covered recipients,” which include physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals) and applicable manufacturers.
Acquisitions of, joint ventures with and investments in other companies involve numerous risks, including, but not necessarily limited to: ● risk of entering new markets in which we have little to no experience; ● diversion of financial and managerial resources from existing operations; ● successfully negotiating a proposed acquisition or investment timely and at a price or on terms and conditions favorable to us; ● the impact of regulatory reviews on a proposed acquisition or investment; ● the outcome of any legal proceedings that may be instituted with respect to the proposed acquisitions or investment; ● with respect to an acquisition, difficulties in integrating operations, technologies, services and personnel; and ● potential inability to maintain relationships with customers of the companies we may acquire or invest in. 43 Table of Contents If we fail to properly evaluate potential acquisitions, joint ventures or other transaction opportunities, we might not achieve the anticipated benefits of any such transaction, we might incur higher costs than anticipated, and management resources and attention might be diverted from other necessary or valuable activities.
Acquisitions of, joint ventures with and investments in other companies involve numerous risks, including, but not necessarily limited to: ● risk of entering new markets in which we have little to no experience; ● diversion of financial and managerial resources from existing operations; ● successfully negotiating a proposed acquisition or investment timely and at a price or on terms and conditions favorable to us; ● the impact of regulatory reviews on a proposed acquisition or investment; ● the outcome of any legal proceedings that may be instituted with respect to the proposed acquisitions or investment; ● with respect to an acquisition, difficulties in integrating operations, technologies, services and personnel; and ● potential inability to maintain relationships with customers of the companies we may acquire or invest in. 44 Table of Contents If we fail to properly evaluate potential acquisitions, joint ventures or other transaction opportunities, we might not achieve the anticipated benefits of any such transaction, we might incur higher costs than anticipated, and management resources and attention might be diverted from other necessary or valuable activities.
The stock prices of our securities may experience substantial volatility as a result of a number of factors, including, but not necessarily limited to: ● announcements we make regarding our current product candidates, acquisition of potential new product candidates and companies and/or in-licensing through multiple partners/affiliates; ● sales or potential sales of substantial amounts of our Common Stock; ● issuance of debt or other securities; ● our delay or failure in initiating or completing pre-clinical or clinical trials or unsatisfactory results of any of these trials; ● announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions; ● developments concerning our licensors and/or product manufacturers; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the pharmaceutical or biotechnology industries; 60 Table of Contents ● governmental regulation and legislation; ● unstable regional political and economic conditions; ● variations in our anticipated or actual operating results; and ● change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations.
The stock prices of our securities may experience substantial volatility as a result of a number of factors, including, but not necessarily limited to: ● announcements we make regarding our current product candidates, acquisition of potential new product candidates and companies and/or in-licensing through multiple partners/affiliates; ● sales or potential sales of substantial amounts of our Common Stock; ● issuance of debt or other securities; ● our delay or failure in initiating or completing pre-clinical or clinical trials or unsatisfactory results of any of these trials; ● announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions; ● developments concerning our licensors and/or product manufacturers; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the pharmaceutical or biotechnology industries; 62 Table of Contents ● governmental regulation and legislation; ● unstable regional political and economic conditions; ● variations in our anticipated or actual operating results; and ● change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations.
The degree of market acceptance of any approved products would depend on a number of factors, including, but not necessarily limited to: ● the efficacy and safety as demonstrated in clinical trials; ● the timing of market introduction of such products as well as competitive products; ● the clinical indications for which the product is approved; ● acceptance by physicians, major operators of hospitals and clinics and patients of the product as a safe and effective treatment; ● the potential and perceived advantages of such products over alternative treatments; ● the safety of such products in a broader patient group (i.e., based on actual use); ● the availability, cost and benefits of treatment, in relation to alternative treatments; ● the availability of adequate reimbursement and pricing by third parties and government authorities; ● changes in regulatory requirements by government authorities for such products; ● the product labeling or product insert required by the FDA or regulatory authority in other countries, including any contradictions, warnings, drug interactions, or other precautions; ● changes in the standard of care for the targeted indications for our product candidate or future product candidates, which could reduce the marketing impact of any labeling or marketing claims that we could make following FDA approval; ● relative convenience and ease of administration; ● the prevalence and severity of side effects and adverse events; ● the effectiveness of our sales and marketing efforts; and ● unfavorable publicity relating to the product.
The degree of market acceptance of any approved products would depend on a number of factors, including, but not necessarily limited to: ● the efficacy and safety as demonstrated in clinical trials; ● the timing of market introduction of such products as well as competitive products; ● the clinical indications for which the product is approved; ● acceptance by physicians, major operators of hospitals and clinics and patients of the product as a safe and effective treatment; ● the potential and perceived advantages of such products over alternative treatments; ● the safety of such products in a broader patient group (i.e., based on actual use); 54 Table of Contents ● the availability, cost and benefits of treatment, in relation to alternative treatments; ● the availability of adequate reimbursement and pricing by third parties and government authorities; ● changes in regulatory requirements by government authorities for such products; ● the product labeling or product insert required by the FDA or regulatory authority in other countries, including any contradictions, warnings, drug interactions, or other precautions; ● changes in the standard of care for the targeted indications for our product candidate or future product candidates, which could reduce the marketing impact of any labeling or marketing claims that we could make following FDA approval; ● relative convenience and ease of administration; ● the prevalence and severity of side effects and adverse events; ● the effectiveness of our sales and marketing efforts; and ● unfavorable publicity relating to the product.
Any of these scenarios could impact the commercial prospects for one or more of our current or future product candidates. The extensive regulation to which our product candidates are subject may be costly and time consuming, cause anticipated delays, and/or prevent the receipt of the required approvals for commercialization.
Any of these scenarios could impact the commercial prospects for one or more of our current or future product candidates. The extensive regulation to which our product candidates are subject may be costly and time consuming, cause anticipated or unanticipated delays, and/or prevent the receipt of the required approvals for commercialization.
We anticipate that our expenses will increase substantially if: ● one or more of our development-stage product candidates is approved for commercial sale and we decide to commercialize such product(s) ourselves, due to the need to establish the necessary commercial infrastructure to launch and commercialize this product without substantial delays, including hiring sales and marketing personnel 34 Table of Contents and contracting with third parties for manufacturing, testing, warehousing, distribution, cash collection and related commercial activities; ● we are required by the FDA or a foreign regulatory authority to perform studies in addition to those currently expected; ● there are any delays in completing our clinical trials or the development of any of our product candidates; ● we execute other collaborative, licensing or similar arrangements, depending on the timing of payments we may make or receive under these arrangements; ● there are variations in the level of expenses related to our future development programs; ● we become involved in any product liability or intellectual property infringement lawsuits; and ● there are any regulatory developments affecting our competitors’ product candidates.
We anticipate that our expenses will increase substantially if: ● one or more of our development-stage product candidates is approved for commercial sale and we decide to commercialize such product(s) ourselves, due to the need to establish the necessary commercial infrastructure to launch and commercialize this product without substantial delays, including hiring sales and marketing personnel and contracting with third parties for manufacturing, testing, warehousing, distribution, cash collection and related commercial activities; ● we are required by the FDA or a foreign regulatory authority to perform studies in addition to those currently expected; ● there are any delays in completing our clinical trials or the development of any of our product candidates; ● we execute other collaborative, licensing or similar arrangements, depending on the timing of payments we may make or receive under these arrangements; ● there are variations in the level of expenses related to our future development programs; ● we become involved in any product liability or intellectual property infringement lawsuits; and ● there are any regulatory developments affecting our competitors’ product candidates.
The PTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first inventor-to-file provisions, only became effective on March 16, 2013.
The PTO developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first inventor-to-file provisions, only became effective on March 16, 2013.
Any security breach or other event leading to the loss or damage to, or unauthorized access, use, alteration, disclosure, or dissemination of, personal information, including personal information regarding clinical trial subjects, contractors, directors, or employees, our intellectual property, proprietary business information, or other confidential or proprietary 58 Table of Contents information, could directly harm our reputation, enable competitors to compete with us more effectively, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, or otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information.
Any security breach or other event leading to the loss or damage to, or unauthorized access, use, alteration, disclosure, or dissemination of, personal information, including personal information regarding clinical trial subjects, contractors, directors, or employees, our intellectual property, proprietary business information, or other confidential or proprietary 60 Table of Contents information, could directly harm our reputation, enable competitors to compete with us more effectively, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, or otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information.
The breach of any such provisions (even, potentially, in an immaterial manner) could result in an event of default under the Oaktree Agreement, the announcement and impact of which could have a negative impact on the trading prices of our securities.
The breach of any other such provisions (even, potentially, in an immaterial manner) could result in an event of default under the Oaktree Agreement, the announcement and impact of which could have a negative impact on the trading prices of our securities.
Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts. 42 Table of Contents Certain of our officers and directors serve in similar roles at our partner companies, subsidiaries, related parties and/or other entities with which we transact business or in which we hold significant minority ownership positions, which could result in conflicts of interests relating to ongoing and future relationships and transactions with these parties.
Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts. 43 Table of Contents Certain of our officers and directors serve in similar roles at our partner companies, subsidiaries, related parties and/or other entities with which we transact business or in which we hold significant minority ownership positions, which could result in conflicts of interests relating to ongoing and future relationships and transactions with these parties.
This includes Russia’s February 2022 invasion of Ukraine, the conflict between Israel and the Hamas and Hezbollah extremist groups, recent attacks by armed groups on cargo ships in the Red Sea, and tensions across the Taiwan Strait.
This includes Russia’s February 2022 invasion of Ukraine, the conflict between Israel and the Hamas and Hezbollah extremist groups, attacks by armed groups on cargo ships in the Red Sea, and tensions across the Taiwan Strait.
If a third party claims that we or any of our licensors, suppliers or collaborators infringe the third party’s intellectual property rights, we may have to, among other things: ● obtain additional licenses, which may not be available on commercially reasonable terms, if at all; ● abandon an infringing product candidate or redesign products or processes to avoid infringement, which may demand substantial funds, time and resources and which may result in inferior or less desirable processes and/or products; 50 Table of Contents ● pay substantial damages, including the possibility of treble damages and attorneys’ fees, if a court decides that the product or proprietary technology at issue infringes on or violates the third party’s rights; ● pay substantial royalties, fees and/or grant cross-licenses to our product candidates; and/or ● defend litigation or administrative proceedings which may be costly regardless of outcome, and which could result in a substantial diversion of financial and management resources.
If a third party claims that we or any of our licensors, suppliers or collaborators infringe the third party’s intellectual property rights, we may have to, among other things: ● obtain additional licenses, which may not be available on commercially reasonable terms, if at all; ● abandon an infringing product candidate or redesign products or processes to avoid infringement, which may demand substantial funds, time and resources and which may result in inferior or less desirable processes and/or products; ● pay substantial damages, including the possibility of treble damages and attorneys’ fees, if a court decides that the product or proprietary technology at issue infringes on or violates the third party’s rights; ● pay substantial royalties, fees and/or grant cross-licenses to our product candidates; and/or ● defend litigation or administrative proceedings which may be costly regardless of outcome, and which could result in a substantial diversion of financial and management resources.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. 59 Table of Contents Employee, consultant, or third-party misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation, as well as civil and criminal liability.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. 61 Table of Contents Employee, consultant, or third-party misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation, as well as civil and criminal liability.
In addition, if such transactions are not completed for any reason, the market price of our Common Stock may reflect a market assumption that such transactions will occur, and a failure to complete such transactions could result in a negative perception by the market of us generally and a decline in the market price of our Securities. 41 Table of Contents We act, and are likely to continue acting, as guarantor and/or indemnitor of the obligations, actions or inactions of certain of our subsidiaries and partner companies.
In addition, if such transactions are not completed for any reason, the market price of our Common Stock may reflect a market assumption that such transactions will occur, and a failure to complete such transactions could result in a negative perception by the market of us generally and a decline in the market price of our Securities. 42 Table of Contents We act, and are likely to continue acting, as guarantor and/or indemnitor of the obligations, actions or inactions of certain of our subsidiaries and partner companies.
Later discovery of previously unknown problems with products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as: ● restrictions on product manufacturing, distribution or use; ● restrictions on the labeling or marketing of a product; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters, untitled letters, or Form 483s; ● recalls or other withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● fines; ● suspension or withdrawal of marketing or regulatory approvals; ● refusal to permit the import or export of products; ● product seizure or detentions; ● injunctions or the imposition of civil or criminal penalties; and ● adverse publicity.
Later discovery of previously unknown problems with products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in actions such as: ● restrictions on product manufacturing, distribution or use; 56 Table of Contents ● restrictions on the labeling or marketing of a product; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters, untitled letters, or Form 483s; ● recalls or other withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● fines; ● suspension or withdrawal of marketing or regulatory approvals; ● refusal to permit the import or export of products; ● product seizure or detentions; ● injunctions or the imposition of civil or criminal penalties; and ● adverse publicity.
If we or our suppliers, third-party contractors, clinical investigators or collaborators are slow to adapt, or are unable to adapt, to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, we or our collaborators may be subject to the actions listed above, including losing marketing approval for product candidates when 55 Table of Contents and if any of them are approved, resulting in decreased revenue from milestones, product sales or royalties, which would have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
If we or our suppliers, third-party contractors, clinical investigators or collaborators are slow to adapt, or are unable to adapt, to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, we or our collaborators may be subject to the actions listed above, including losing marketing approval for product candidates when and if any of them are approved, resulting in decreased revenue from milestones, product sales or royalties, which would have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
Clinical trial interruptions may delay our plans for clinical development and approvals for our product candidates, which could increase costs and jeopardize our ability to commence product sales and generate.
Clinical trial interruptions may delay our plans for clinical development and approvals for our product candidates, which could increase costs and jeopardize our ability to commence product sales and generate revenues.
Collaborative relationships with third parties could cause us to expend significant resources and/or incur substantial business risk with no assurance of financial return. We anticipate substantial reliance on strategic collaborations for marketing and commercializing our existing product candidates and we may rely even more on strategic collaborations for R&D of other product candidates.
Collaborative relationships with third parties could cause us to expend significant resources and/or incur substantial business risk with no assurance of financial return. We anticipate substantial reliance on strategic collaborations for marketing and commercializing our existing product candidates, if approved, and we may rely even more on strategic collaborations for R&D of other product candidates.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50-percentage- point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use all of its pre-change NOLs and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an 63 Table of Contents “ownership change” (generally defined as a greater than 50-percentage- point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use all of its pre-change NOLs and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
Our dependence on third parties to manufacture and supply clinical trial materials, as well as our planned dependence on third party manufacturers for any products that may be approved, may adversely affect our ability to develop and commercialize products in a timely or cost-effective manner, or at all.
Our dependence on third parties to manufacture and supply clinical trial materials, as well as our planned dependence on third party manufacturers for any product candidates that may be approved, may adversely affect our ability to develop and commercialize products in a timely or cost-effective manner, or at all.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. Item 1B.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
Depending on the terms of such arrangements, we may be contractually obligated to pay substantial amounts to third parties, or issue a substantially dilutive number of shares of our Common Stock, based on the actions or inactions of our subsidiaries and/or partner companies, regulatory agencies or other third parties.
Depending on the terms of such arrangements, we may be contractually obligated to pay substantial amounts to third parties, or issue a substantially dilutive number of shares of our capital stock, based on the actions or inactions of our subsidiaries and/or partner companies, regulatory agencies or other third parties.
In addition, if we are unable to raise additional capital when needed, we might have to delay, curtail or eliminate one or more of our R&D programs and commercialization efforts and potentially change our growth strategy, which would have a material adverse effect on our business, financial 36 Table of Contents condition, cash flows and results of operations and could cause the market value of our Securities to decline.
In addition, if we are unable to raise additional capital when needed, we might have to delay, curtail or eliminate one or more of our R&D programs and commercialization efforts and potentially change our growth strategy, which would have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
We have never paid cash dividends on our Common Stock, or made stock dividends, except for the dividend we pay on shares of our Series A Preferred Stock, and we currently intend to retain future earnings, if any, to fund the development and growth of our businesses, and retain our stock positions.
We have never paid cash dividends on our Common Stock, or made stock dividends, except for the dividend we previously paid on shares of our Series A Preferred Stock, and we currently intend to retain future earnings, if any, to fund the development and growth of our businesses, and retain our stock positions.
Disputes with third parties over the applicability of such “force majeure” clauses, or the enforceability of developmental milestones and related extension mechanisms in light of such business interruptions, may arise and may become expensive and time-consuming. 61 Table of Contents Our ability to use our pre-change NOLs and other pre-change tax attributes to offset post-change taxable income or taxes may be subject to limitation.
Disputes with third parties over the applicability of such “force majeure” clauses, or the enforceability of developmental milestones and related extension mechanisms in light of such business interruptions, may arise and may become expensive and time-consuming. Our ability to use our pre-change NOLs and other pre-change tax attributes to offset post-change taxable income or taxes may be subject to limitation.
On occasion, large judgments have been awarded in 54 Table of Contents class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
Adequate third-party reimbursement may not be available for our products to enable us to realize an appropriate return on our investment of our currently marketed products or those which we may acquire or develop in the future. 38 Table of Contents Managed care organizations and other third-party payors try to negotiate the pricing of medical services and products to control their costs.
Adequate third-party reimbursement may not be available for our products to enable us to realize an appropriate return on our investment of our currently marketed products or those which we may acquire or develop in the future. Managed care organizations and other third-party payors try to negotiate the pricing of medical services and products to control their costs.
Department of Health and Human Services that would require manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.
Department of Health and Human Services that would require manufacturers to charge a negotiated "maximum fair price" for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.
If any of our or our licensors’ trade secrets were to be disclosed to or independently developed by a competitor, our competitive positions would be harmed. The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
If any of our or our licensors’ trade secrets were to be disclosed to or independently developed by a competitor, our competitive positions would be harmed. 50 Table of Contents The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the timing or amount of increased expenses or when or if, we will be able to achieve profitability.
Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. 34 Table of Contents Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the timing or amount of increased expenses or when or if, we will be able to achieve profitability.
Additionally, while we may seek approval of our product candidates in combination with each other, there can be no guarantee that we will obtain coverage and reimbursement for any of our products together, or that such reimbursement will incentivize the use of our products in combination with each other as opposed to in combination with other agents which may be priced more favorably to the medical community.
Additionally, while we may 40 Table of Contents seek approval of our product candidates in combination with each other, there can be no guarantee that we will obtain coverage and reimbursement for any of our products together, or that such reimbursement will incentivize the use of our products in combination with each other as opposed to in combination with other agents which may be priced more favorably to the medical community.
We have also entered into, and may again enter into, certain arrangements with our subsidiaries, partner companies and/or third parties pursuant to which a substantial number of shares of our Common Stock may be issued.
We have also entered into, and may again enter into, certain arrangements with our subsidiaries, partner companies and/or third parties pursuant to which a substantial number of shares of our capital stock may be issued.
Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. We also may rely on the regulatory period of market exclusivity for any of our biologic product candidates that are successfully developed and approved for commercialization.
Our 51 Table of Contents competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. We also may rely on the regulatory period of market exclusivity for any of our biologic product candidates that are successfully developed and approved for commercialization.
When patents 37 Table of Contents covering certain of our products (if applicable) expire or are successfully challenged through litigation or in USPTO proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products (if applicable) expires or is otherwise lost, we may face generic competition as a result.
When patents covering certain of our products (if applicable) expire or are successfully challenged through litigation or in USPTO proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products (if applicable) expires or is otherwise lost, we may face generic competition as a result.
Any claims we assert against accused infringers could provoke these parties to assert counterclaims against us alleging invalidity of our or our licensors’ patents or that we infringe their patents; or provoke those parties to petition the PTO to institute inter partes review against the asserted patents, which may lead to a finding that all or some of the claims of the patent are invalid.
Any claims we assert against accused infringers 52 Table of Contents could provoke these parties to assert counterclaims against us alleging invalidity of our or our licensors’ patents or that we infringe their patents; or provoke those parties to petition the PTO to institute inter partes review against the asserted patents, which may lead to a finding that all or some of the claims of the patent are invalid.
If we enter into R&D collaborations during the early phases of drug development, success will, in part, depend on the performance of research collaborators. We may not directly control the amount or timing of resources devoted by research collaborators to activities related to product candidates. Research collaborators may not commit sufficient resources to our R&D programs.
If we enter into R&D collaborations during the early phases of drug development, success will, in part, depend on the performance of research collaborators. We may not directly control the amount or timing of resources devoted by research 48 Table of Contents collaborators to activities related to product candidates. Research collaborators may not commit sufficient resources to our R&D programs.
Also, a significant portion of Journey’s sales derive from products that are without patent protection and/or are or may become subject to third party generic competition; the introduction of new competitor products, or increased market share of existing competitor products, could have a significant adverse effect on our operating income.
Also, a significant portion of Journey’s sales derive from products that are without patent protection and/or are or may become subject to third party generic competition; the 38 Table of Contents introduction of new competitor products, or increased market share of existing competitor products, could have a significant adverse effect on our operating income.
On September 16, 2011, the Leahy-Smith America 49 Table of Contents Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include changes to transition from a “first-to-invent” system to a “first inventor-to-file” system and to the way issued patents are challenged.
On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include changes to transition from a “first-to-invent” system to a “first inventor-to-file” system and to the way issued patents are challenged.
In addition, our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful . 53 Table of Contents Even if approved, any product candidates that we may develop and market may be later withdrawn from the market or subject to promotional limitations.
In addition, our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful . Even if approved, any product candidates that we may develop and market may be later withdrawn from the market or subject to promotional limitations.
Our inability to generate sufficient cash flow to satisfy our debt obligations or to refinance our obligations on commercially 35 Table of Contents reasonable terms, or at all, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
Our inability to generate sufficient cash flow to satisfy our debt obligations or to refinance our obligations on commercially reasonable terms, or at all, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our Securities to decline.
Regardless of merit or eventual outcome, liability claims may result in: ● withdrawal of clinical trial participants; ● suspension or termination of clinical trial sites or entire trial programs; ● decreased demand for any product candidates or products that we may develop, license or acquire; ● initiation of investigations by regulators; ● impairment of our business reputation; ● costs of related litigation; ● substantial monetary awards to patients or other claimants; ● loss of revenues; ● reduced resources of our management to pursue our business strategy; and ● the ability to commercialize our product candidate or future product candidates, if approved.
Regardless of merit or eventual outcome, liability claims may result in: ● withdrawal of clinical trial participants; 55 Table of Contents ● suspension or termination of clinical trial sites or entire trial programs; ● decreased demand for any product candidates or products that we may develop, license or acquire; ● initiation of investigations by regulators; ● impairment of our business reputation; ● costs of related litigation; ● substantial monetary awards to patients or other claimants; ● loss of revenues; ● reduced resources of our management to pursue our business strategy; and ● the ability to commercialize our product candidate or future product candidates.
We may not be able to establish or maintain arrangements with third parties on commercially reasonable terms, or at all. If our products are not included in managed care organizations’ formularies or coverage by other organizations, our products’ utilization and market shares may be negatively impacted, which could have a material adverse effect on our business and financial condition.
We may not be able to establish or maintain arrangements with third parties on commercially reasonable terms, or at all. 39 Table of Contents If our products are not included in managed care organizations’ formularies or coverage by other organizations, our products’ utilization and market shares may be negatively impacted, which could have a material adverse effect on our business and financial condition.
These operations provide a limited basis for our stockholders and prospective investors to assess our ability to develop and commercialize potential product candidates, as well as for you to assess the advisability of investing in our securities. 45 Table of Contents We rely on third parties to conduct clinical trials.
These operations provide a limited basis for our stockholders and prospective investors to assess our ability to develop and commercialize potential product candidates, as well as for you to assess the advisability of investing in our securities. We rely on third parties to conduct clinical trials.
Each of our subsidiaries, including Journey, is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.
Each of our subsidiaries and partner companies, including Journey, is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries and partner companies.
In addition, because of the sometimes-limited number of third parties who specialize in the development, manufacture and/or supply of our clinical and preclinical materials, we are often compelled to accept contractual terms that we deem less than desirable, including without limitation as pertains representations and warranties, supply disruptions/failures, covenants and liability/indemnification.
In addition, because of the sometimes-limited number of third parties who specialize in the development, manufacture and/or supply of our clinical and preclinical materials, particularly in the development and manufacture of gene therapy products, we are often compelled to accept contractual terms that we deem less than desirable, including without limitation as pertains representations and warranties, supply disruptions/failures, covenants and liability/indemnification.
One area where service providers often have and exert leverage over us is the negotiation of liability language – specifically in broadly-scoped indemnification by us of service providers and/or the application of liability damages “caps” to certain of 47 Table of Contents such service providers’ indemnification obligations.
One area where service providers often have and exert leverage over us is the negotiation of liability language – specifically in broadly-scoped indemnification by us of service providers and/or the application of liability damages “caps” to certain of such service providers’ indemnification obligations.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted in connection with the storage or disposal of biological or hazardous materials. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted in connection with the storage or disposal of biological or hazardous materials. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, including climate-related initiatives.
Our ability to become profitable depends upon our ability to generate revenue. To date, we have not generated any revenue from our development stage products, and we do not know when, or if, we will generate any revenue from such development-stage products.
Our ability to become profitable depends upon our ability to generate revenue. To date, other than from Journey, we have not generated any revenue from our development stage products, and we do not know when, or if, we will generate any revenue from such development-stage products.
If we do not generate sufficient cash flow to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital.
If we do not generate sufficient cash flow to satisfy our debt obligations, 35 Table of Contents we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital.
In addition, principal investigators for our clinical trials may serve as scientific advisers or consultants to us from time to time and receive cash and/or equity compensation in connection with such services.
In addition, principal investigators for our clinical trials 47 Table of Contents may serve as scientific advisers or consultants to us from time to time and receive cash and/or equity compensation in connection with such services.
This 46 Table of Contents strategy necessarily relies upon clinical and pre-clinical data and other results produced or obtained by third parties, which may ultimately prove to be inaccurate or unreliable.
This strategy necessarily relies upon clinical and pre-clinical data and other results produced or obtained by third parties, which may ultimately prove to be inaccurate or unreliable.
Further, our current credit arrangement with Oaktree restricts our and certain of our subsidiaries’ and partner companies’ abilities to take certain actions. At December 31, 2023, the total amount of debt outstanding, net of the debt discount, was $60.9 million.
Further, our current credit arrangement with Oaktree restricts our and certain of our subsidiaries’ and partner companies’ abilities to take certain actions. At December 31, 2024, the total amount of debt outstanding, net of the debt discount, was $58.0 million.
During the years ended December 31, 2023 and 2022, we incurred R&D expenses of approximately $101.7 million and $134.2 million, respectively. We expect to continue to spend significant amounts on our growth strategy.
During the years ended December 31, 2024 and 2023, we incurred R&D expenses of approximately $56.6 million and $101.7 million, respectively. We expect to continue to spend significant amounts on our growth strategy.
We continue to generate operating losses in all periods including losses from operations of approximately $142.3 million and $203.6 million for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, we had an accumulated deficit of approximately $694.9 million.
We continue to generate operating losses in all periods including losses from operations of approximately $110.4 million and $142.3 million for the years ended December 31, 2024 and 2023, respectively. At December 31, 2024, we had an accumulated deficit of approximately $740.9 million.
The matter was reported to the Federal Bureau of Investigation and does not appear to have compromised any personally identifiable information or protected health information. The federal government has been able to seize a significant amount of cryptocurrency assets associated with the breach.
The matter was reported to the Federal Bureau of Investigation and does not appear to have compromised any personally identifiable information or protected health information. The federal government was able to trace and seize the fraudulently transferred cryptocurrency associated with the breach.
Provisions of our certificate of incorporation, our bylaws and Delaware law may have the effect of deterring unsolicited takeovers and/or delaying or preventing a change in control of our Company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices. 63 Table of Contents In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests.
Provisions of our certificate of incorporation, our bylaws and Delaware law may have the effect of deterring unsolicited takeovers and/or delaying or preventing a change in control of our Company or changes in our management, including 65 Table of Contents transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.
If any of our product candidates causes unacceptable adverse safety events in clinical trials, we may not be able to obtain regulatory approval or commercialize such product, preventing us from generating revenue from such products’ sale. Alternatively, even if a product candidate is approved for marketing, future adverse events could lead to the withdrawal of such product from the market.
If any of our product candidates causes unacceptable adverse safety events in clinical trials, we may not be able to obtain regulatory approval or commercialize such product, if approved, preventing us from generating revenue from such products’ sale.
Risks Pertaining to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries Our current and future relationships with customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercialize our product candidates. 57 Table of Contents Risks Pertaining to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries Our current and future relationships with customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
In addition, U.S. patent laws may change, which could prevent or limit us from filing patent applications or patent claims to protect products and/or technologies or limit the exclusivity periods that are available to patent holders, as well as affect the validity, enforceability, or scope of issued patents. 48 Table of Contents We and our licensors also rely on trade secrets and proprietary know-how to protect product candidates.
In addition, U.S. patent laws may change, which could prevent or limit us from filing patent applications or patent claims to protect products and/or technologies or limit the exclusivity periods that are available to patent holders, as well as affect the validity, enforceability, or scope of issued patents.
Risks Pertaining to Reliance on Third Parties We rely predominantly on third parties to manufacture the majority of our preclinical and clinical pharmaceutical supplies, and we expect to continue to rely heavily on such third parties and other contractors to produce commercial supplies of our product candidates and products, if approved.
As a result, our business, operations, and financial condition could be materially harmed. 45 Table of Contents Risks Pertaining to Reliance on Third Parties We rely predominantly on third parties to manufacture the majority of our preclinical and clinical pharmaceutical supplies, and we expect to continue to rely heavily on such third parties and other contractors to produce commercial supplies of our product candidates and products, if approved.
We have entered into and consummated several partnerships and/or contingent sales of our assets and subsidiaries, including an equity investment and contingent acquisition agreement between Caelum and AstraZeneca (the acquisition component of which has consummated) and a development funding and contingent asset purchase between Cyprium and Sentynl (the acquisition component of which has not yet consummated).
We have entered into and consummated several partnerships and/or contingent sales of our assets and subsidiaries, including an agreement under which Checkpoint will be acquired by Sun Pharma, an equity investment and contingent acquisition agreement between Caelum and AstraZeneca and a development funding and contingent asset purchase between Cyprium and Sentynl, of which the acquisition components of each such transaction have not yet been consummated.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the payment that we receive for any approved drug.
We also expect that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for our products and any future product candidates, if approved.
Three of our marketed products, Qbrexza, Amzeeq and Zilxi, as well as one of our product candidates, DFD-29, currently have patent protection. Three of our marketed products, Accutane, Targadox, and Exelderm, do not have patent protection or otherwise are not eligible for patent protection. Accutane currently competes in the Isotretinoin market with five other therapeutically equivalent A/B rated products.
Four of our marketed products, Qbrexza, Amzeeq, Zilxi, and Emrosi, for which we recently received FDA approval, currently have patent protection. Four of our marketed products, Accutane, Targadox, Luxamend and Exelderm, do not have patent protection or otherwise are not eligible for patent protection. Accutane currently competes in the Isotretinoin market with five other therapeutically equivalent A/B rated products.
We may be unable to generate returns for our investors if our partner companies and subsidiaries, several of which have limited or no operating history, have no commercialized revenue generating products or, if not yet profitable, cannot obtain additional third-party financing.
The terms of our existing debt arrangements, including that with Oaktree, have and will continue to inhibit our and our subsidiaries’ abilities to raise capital. 36 Table of Contents We may be unable to generate returns for our investors if our partner companies and subsidiaries, several of which have limited or no operating history, have no commercialized revenue generating products or, if not yet profitable, cannot obtain additional third-party financing.
These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. The use of artificial intelligence in the healthcare industry and challenges with properly managing its use could adversely affect our business.
Our success depends, in large part, on our ability to obtain patent protection for our product candidates and their formulations and uses. The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we will be successful in obtaining patents or what the scope of an issued patent may ultimately be.
The patent application process is subject to numerous risks and uncertainties, and there can be no 49 Table of Contents assurance that we will be successful in obtaining patents or what the scope of an issued patent may ultimately be.
Suspensions or delays in the completion of clinical testing could result in increased costs and/or delay or prevent our ability to complete development of that product candidate or generate product revenues.
Alternatively, even if a product candidate is approved for marketing, future adverse events could lead to the withdrawal of such product from the market. Suspensions or delays in the completion of clinical testing could result in increased costs and/or delay or prevent our ability to complete development of that product candidate or generate product revenues.
Especially as pertains liability and indemnification provisions, because of the frequent disparities in negotiating leverage, we are often compelled to agree to low caps on counterparty liability and/or indemnification language that could result in outsized liability to us in situations where we have zero or relatively little culpability.
Especially as pertains liability and indemnification provisions, because of the frequent disparities in negotiating leverage, we are often compelled to agree to low caps on counterparty liability and/or indemnification language that could result in outsized liability to us in situations where we have zero or relatively little culpability. 46 Table of Contents New environmental laws or regulations in the various jurisdictions in which we operate may also impose additional requirements that impact the way our products and product candidates are manufactured or packaged.
Risks Pertaining to Our Existing Revenue Stream from Journey Medical Corporation Future revenue based on sales of our dermatology products, Qbrexza, Accutane, Amzeeq, Zilxi, Targadox, Exelderm and Luxamend, may be lower than expected or lower than in previous periods.
We would expect either of these alternatives to be a more expensive method of raising additional capital and more dilutive to our stockholders relative to using a Form S-3 shelf registration statement. ​ Risks Pertaining to Our Existing Revenue Stream from Journey Medical Corporation Future revenue based on sales of our dermatology products, Qbrexza, Accutane, Amzeeq, Zilxi, Targadox, Exelderm, Luxamend and Emrosi, may be lower than expected or lower than in previous periods.
Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations and prospects. 52 Table of Contents Risks Pertaining to the Commercialization of Product Candidates If any of our product candidates are successfully developed and receive regulatory approval but do not achieve broad market acceptance among physicians, patients, healthcare payors and the medical community, the revenues that any such product candidates, if approved, generate from sales will be limited.
Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations and prospects.
On August 27, 2020, we entered into a $60 million senior secured credit agreement (the “Oaktree Agreement” and the debt thereunder, the “Oaktree Note”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”). At December 31, 2023 the amount outstanding under the Oaktree Agreement was $50 million.
On July 25, 2024, we, as borrower, entered into a $50.0 million senior secured credit agreement (the “Oaktree Agreement”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”).
We rely heavily on third parties for the development and manufacturing of products and product candidates. To date, we have engaged primarily in intellectual property acquisitions, and evaluative and R&D activities; and we have not generated any revenues from product sales (except through Journey). We have incurred significant net losses since our inception.
To date, we have engaged primarily in intellectual property acquisitions, and evaluative and R&D activities and have not generated any revenues from product sales (except through Journey). We have incurred significant net losses since our inception. As of December 31, 2024 and 2023, we had an accumulated deficit of approximately $740.9 million and $694.9 million, respectively.
In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. We do not know what impact any changes by the new presidential administration will have on our business or the business of our partners.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing conditions and other requirements.
In addition, increased Congressional scrutiny of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. We do not know what actions will be taken by the new presidential administration.
As a result, capital appreciation, if any, of our Common Stock will be the sole source of gain for holders of our Common Stock for the foreseeable future. 62 Table of Contents Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business or the business of our partners.
We may not be able to timely comply with these frameworks and, if such regulatory actions are contrary to our use of AI, would require us to expend our limited resources to adjust our use accordingly. 64 Table of Contents Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business or the business of our partners.
We do not have direct control over the process or timing of the acquisition of these raw materials by our third-party manufacturers. Moreover, we currently do not have any agreements for the commercial production of these raw materials since such agreements are entered into by our third-party manufacturers and their qualified suppliers.
Moreover, we currently do not have any agreements for the commercial production of these raw materials since such agreements are entered into by our third-party manufacturers and their qualified suppliers. Any significant delay in the supply of raw material components related to an ongoing clinical trial could considerably delay completion of our clinical trials, product testing and potential regulatory approval.
The Oaktree Agreement contains certain affirmative and negative covenants restricting our and certain of our subsidiaries’ abilities to take certain actions, especially as pertains indebtedness, liens, investments, affiliate transactions, acquisitions, mergers, dispositions, prepayment of other indebtedness, dividends and other distributions (subject in each case to exceptions).
The Oaktree Agreement contains customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur management team members have expertise in information systems, compliance and corporate governance, which we believe are disciplines that are effective in the management of the Company’s cybersecurity risk. Our management team is informed of and monitors the prevention, detection, and mitigation of cybersecurity threats and incidents. ​ ​ 65 Table of Contents
Biggest changeOur management team members have expertise in information systems, compliance and corporate governance, which we believe are disciplines that are effective in the management of the Company’s cybersecurity risk.
The Audit Committee receives periodic updates from our management team regarding the overall state of our technology management strategy and any relevant risks from cybersecurity threats and cybersecurity incidents. Our management team is responsible for assessing and managing the material risks from cybersecurity threats.
The Audit Committee receives periodic updates from our management team regarding the overall state of our technology management strategy and any relevant risks from cybersecurity threats and cybersecurity incidents. Our management team is responsible for assessing and managing the material risks from cybersecurity threats and our Chief Financial Officer leads these efforts on behalf of the management team.
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Our Chief Financial Officer is well-informed on emerging cybersecurity risks and solutions used to mitigate and remediate loss due to cybersecurity incidents and is responsible for our internal cybersecurity programs and oversight of third-party cybersecurity vendors who monitor and execute on the prevention, detection, and mitigation of cybersecurity threats and incidents. ​ ​ 67 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our existing facilities are adequate to support our current requirements and that we will be able to obtain suitable additional facilities on commercially reasonable terms if needed. ​ ​ ​ ​ ​ ​ ​ ​ Company Location Type ​ Square Footage ​ Fortress ​ Bay Harbor Islands, FL ​ Office space ​ 1,600 ​ Fortress ​ New York, NY ​ Office space ​ 23,000 ​ Fortress Waltham, MA Office space 6,100 Journey Scottsdale, AZ Office space 3,681 Mustang Worcester, MA Manufacturing, lab facility, and office space 27,043 Mustang Worcester, MA Office space 11,916 ​ ​
Biggest changeWe believe that our existing facilities are adequate to support our current requirements and that we will be able to obtain suitable additional facilities on commercially reasonable terms if needed. ​ ​ ​ ​ ​ ​ ​ ​ Company Location Type ​ Square Footage ​ Fortress ​ Bay Harbor Islands, FL ​ Office space ​ 1,600 ​ Fortress ​ New York, NY ​ Office space ​ 23,000 ​ Fortress Waltham, MA Office space 6,100 Journey Scottsdale, AZ Office space 3,801 Mustang Worcester, MA 1 Manufacturing, lab facility, and office space 27,043 Mustang Worcester, MA 2 Office space 11,916 ​ Note 1: Mustang exited the lease of its manufacturing facility in Worcester, Massachusetts in February 2025.
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Note 2: Mustang exited the sublease of its additional office space in Worcester, Massachusetts in June 2024. ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSuits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, negligence and other matters, and seeking resulting alleged damages. Item 4.
Biggest changeSuits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, negligence and other matters, and seeking resulting alleged damages. Item 4. Mine Safety Disclosures Not applicable. PART II
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Mine Safety Disclosures Not applicable. ​ ​ 66 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 66 ​ ​ ​ PART II 67 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 67 Item 6. Reserved 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 68
Biggest changeItem 4. Mine Safety Disclosures 68 ​ ​ ​ PART II 68 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 68 Item 6. Reserved 69 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 70

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable.
Biggest changeIn July 2024, the Fortress Board of Directors paused the payment of dividends on the 9.375% Series A Preferred Stock until further notice. Unregistered Sales of Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose 68 Table of Contents shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Common Stock is listed for trading on the Nasdaq Capital Market under the symbol “FBIO.” Market Information for 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock Our 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock is listed for trading on the Nasdaq Capital Market under the symbol “FBIOP.” Holders of Record As of March 27, 2024, there were approximately 432 holders of record of our Common Stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Common Stock is listed for trading on the Nasdaq Capital Market under the symbol “FBIO.” Market Information for 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock Our 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock is listed for trading on the Nasdaq Capital Market under the symbol “FBIOP.” Holders of Record As of March 27, 2025, there were approximately 394 holders of record of our Common Stock.
Dividends on Series A Preferred Stock accrue daily and are cumulative from, and including, the date of original issue and are payable monthly at the rate of 9.375% per annum of its liquidation preference, which is equivalent to $2.34375 per annum per share. Unregistered Sales of Equity Securities None.
Dividends on Series A Preferred Stock accrue daily and are cumulative from, and including, the date of original issue and are payable monthly at the rate of 9.375% per annum of its liquidation preference, which is equivalent to $2.34375 per annum per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the Company’s basic ownership of the issued and outstanding common and preferred shares in consolidated Fortress subsidiaries: ​ ​ ​ ​ ​ ​ December 31, Partner Company/Subsidiary ​ 2023 Avenue 1 ​ 4 % Cellvation ​ 79 % Checkpoint 1 ​ 9 % Cyprium ​ 74 % Helocyte ​ 83 % Journey 1 ​ 50 % Mustang 1 ​ 19 % Oncogenuity ​ 73 % Urica ​ 68 % ​ ​ Note 1: Denotes entities that are publicly-traded. ​ 76 Table of Contents Results of Operations Comparison of Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ($ in thousands) 2023 2022 Revenue ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 59,662 ​ $ 70,995 ​ Collaboration revenue ​ ​ 5,229 ​ ​ 1,882 ​ Revenue – related party ​ 103 ​ 192 ​ Other revenue ​ ​ 19,519 ​ ​ 2,674 ​ Net revenue ​ 84,513 ​ 75,743 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Cost of goods sold – product revenue ​ 26,660 ​ 30,775 ​ Research and development ​ 101,747 ​ 134,199 ​ Research and development – licenses acquired ​ 4,324 ​ 677 ​ Selling, general and administrative ​ 94,124 ​ 113,656 ​ Total operating expenses ​ 226,855 ​ 279,307 ​ Loss from operations ​ (142,342) ​ (203,564) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ Interest income ​ 3,003 ​ 1,398 ​ Interest expense and financing fee ​ (15,315) ​ (13,642) ​ Change in fair value of warrant liabilities ​ 4,424 ​ 1,129 ​ Other income (expense) ​ ​ (3,403) ​ 1,215 ​ Total other expense ​ (11,291) ​ (9,900) ​ Loss before income tax expense ​ ​ (153,633) ​ (213,464) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ 521 ​ 449 ​ Net loss ​ (154,154) ​ (213,913) ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net loss attributable to non-controlling interest ​ 93,517 ​ 127,338 ​ Net loss attributable to Fortress ​ $ (60,637) ​ $ (86,575) ​ ​ ​ 77 Table of Contents Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2023 2022 $ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 59,662 ​ $ 70,995 ​ $ (11,333) ​ (16) % Collaboration revenue ​ ​ 5,229 ​ ​ 1,882 ​ ​ 3,347 178 % Revenue – related party ​ 103 ​ 192 ​ (89) ​ (46) % Other revenue ​ ​ 19,519 ​ ​ 2,674 ​ ​ 16,845 ​ 630 % Net revenue ​ $ 84,513 ​ 75,743 ​ $ 8,770 ​ 12 % ​ For the year ended December 31, 2023 we generated $84.5 million of net revenue, of which $59.7 million relates to the sale of Journey branded and generic products, $19.5 million of other revenue relates to Journey’s $19 million milestone payment and royalties of $0.5 million from Maruho Co., Ltd.
Biggest changeThe following table summarizes the Company’s basic ownership of the issued and outstanding common and preferred shares in consolidated Fortress subsidiaries: ​ ​ ​ ​ ​ ​ December 31, Partner Company/Subsidiary ​ 2024 Avenue (OTC: ATXI) ​ 9.2 % Cellvation ​ 79.6 % Checkpoint (Nasdaq: CKPT) ​ 8.3 % Cyprium ​ 73.1 % Helocyte ​ 83.0 % Journey (Nasdaq: DERM) ​ 44.5 % Mustang (Nasdaq: MBIO) ​ 6.3 % Oncogenuity ​ 73.5 % Urica ​ 69.6 % ​ ​ ​ ​ 78 Table of Contents Results of Operations Comparison of Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2024 2023 $ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 55,134 ​ $ 59,662 ​ $ (4,528) ​ (8) % Collaboration revenue ​ ​ 1,500 ​ ​ 5,229 ​ ​ (3,729) (71) % Revenue – related party ​ 41 ​ 103 ​ (62) ​ (60) % Other revenue ​ ​ 1,000 ​ ​ 19,519 ​ ​ (18,519) ​ (95) % Net revenue ​ 57,675 ​ 84,513 ​ (26,838) ​ (32) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods - (excluding amortization of acquired intangible assets) ​ 20,879 ​ 22,893 ​ (2,014) ​ (9) % Amortization of acquired intangible assets ​ ​ 3,424 ​ 3,767 ​ (343) ​ (9) % Research and development ​ 56,629 ​ 101,747 ​ (45,118) ​ (44) % Research and development – licenses acquired ​ 252 ​ 4,324 ​ (4,072) ​ (94) % Selling, general and administrative ​ 87,731 ​ 90,981 ​ (3,250) ​ (4) % Loss recovery ​ ​ (4,553) ​ — ​ (4,553) ​ 100 % Asset impairment ​ 3,692 ​ ​ 3,143 ​ ​ 549 ​ 17 % Total operating expenses ​ 168,054 ​ 226,855 ​ (58,801) ​ (26) % Loss from operations ​ (110,379) ​ (142,342) ​ 31,963 ​ (22) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 2,683 ​ 3,003 ​ (320) ​ (11) % Interest expense and financing fee ​ (13,527) ​ (15,315) ​ 1,788 ​ (12) % Gain (loss) on common stock warrant liabilities ​ (638) ​ 4,424 ​ (5,062) ​ (114) % Other income (expense) ​ ​ 1,318 ​ (3,403) ​ 4,721 ​ (139) % Total other expense ​ (10,164) ​ (11,291) ​ 1,127 ​ (10) % Loss before income tax expense ​ ​ (120,543) ​ (153,633) ​ 33,090 ​ (22) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ 312 ​ 521 ​ (209) ​ (40) % Net loss ​ (120,855) ​ (154,154) ​ 33,299 ​ (22) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net loss attributable to non-controlling interest ​ 74,858 ​ 93,517 ​ (18,659) ​ (20) % Net loss attributable to Fortress ​ $ (45,997) ​ $ (60,637) ​ $ 14,640 ​ (24) % ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2024 2023 $ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 55,134 ​ $ 59,662 ​ $ (4,528) ​ (8) % Collaboration revenue ​ ​ 1,500 ​ ​ 5,229 ​ ​ (3,729) (71) % Revenue – related party ​ 41 ​ 103 ​ (62) ​ (60) % Other revenue ​ ​ 1,000 ​ ​ 19,519 ​ ​ (18,519) ​ (95) % Net revenue ​ $ 57,675 ​ 84,513 ​ $ (26,838) ​ (32) % 79 Table of Contents For the year ended December 31, 2024 we generated $57.7 million of net revenue, of which $55.1 million relates to product revenue derived from Journey’s branded and generic products, $1.5 million relates to collaboration revenue from Sentynl for the NDA submission acceptance milestone relating to CUTX-101, and $1.0 million in other revenue relates to a milestone payment from Cutia related to the approval of Amzeeq in China.
We may also be required to make milestone payments and royalty payments in connection with the sale of products developed under these agreements, if approved and sold. ​ Additionally, we enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical services and products for operating purposes, which are generally terminable by us upon written notice. 85 Table of Contents Item 7A.
We may also be required to make milestone payments and royalty payments in connection with the sale of products developed under these agreements, if approved and sold. ​ Additionally, we enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical services and products for operating purposes, which are generally terminable by us upon written notice. 90 Table of Contents Item 7A.
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, four partner companies are publicly-traded, and two have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.
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, four partner companies are publicly-traded, and three subsidiaries have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1 : Quoted prices in active markets for identical assets or liabilities.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. 75 Table of Contents The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1 : Quoted prices in active markets for identical assets or liabilities.
These factors include, without limitation, those described under Item 1A “Risk Factors.” We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes. Please see the section of this report titled “Special Cautionary Notice Regarding Forward-Looking Statements” at the beginning of this Form 10-K.
These factors include, without limitation, those described under Item 1A “Risk Factors.” We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes. Please see the section of this report titled “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10-K.
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 financial expertise to help the partners achieve their goals.
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 financial expertise to help its subsidiaries and partner companies achieve their goals.
Contractual Obligations Our short-term and long-term contractual obligations as of December 31, 2023 include: ​ ● Contractual payments related to our long-term debt (see Note 9, Debt and Interest, to our Consolidated Financial Statements included in “Part IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K ); ● obligations under our leases (see Note 14, Commitments and Contingencies to our Consolidated Financial Statements ); and ● obligations under license agreements (see Note 7, License Agreements to our Consolidated Financial Statements ). ​ Under the license agreements, we are required to make milestone payments upon successful completion and achievement of certain development, regulatory and commercial milestones, the payment obligations of which are contingent upon future events, such as our achievement of specified development, regulatory and commercial milestones, and the amount, timing, and likelihood of such payments are not known.
Contractual Obligations Our short-term and long-term contractual obligations as of December 31, 2024 include: ​ ● Contractual payments related to our long-term debt (see Note 9, Debt and Interest, to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K ); ● obligations under our leases (see Note 14, Commitments and Contingencies to our Consolidated Financial Statements ); and ● obligations under license agreements (see Note 7, License Agreements to our Consolidated Financial Statements ). ​ Under the license agreements, we are required to make milestone payments upon successful completion and achievement of certain development, regulatory and commercial milestones, the payment obligations of which are contingent upon future events, such as our achievement of specified development, regulatory and commercial milestones, and the amount, timing, and likelihood of such payments are not known.
As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K , have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our Consolidated Financial Statements located in “ Part IV, Item 15, Exhibits and Financial Statement Schedules ” in this Annual Report on Form 10-K.
As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K , have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our Consolidated Financial Statements located in “ Part II, Item 8, Financial Statements and Supplementary Data ” in this Annual Report on Form 10-K.
While our significant accounting policies are described in the Notes to our Consolidated Financial Statements included in “Part IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results. ​ Revenue Recognition Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized.
While our significant accounting policies are described in the Notes to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results. ​ Revenue Recognition Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized.
For the year ended December 31, 2023, the Company issued approximately 0.2 million shares of common stock at an average price of $9.61 per share for gross proceeds of $2.2 million. In connection with these sales, the Company paid aggregate fees of $0.1 million.
For the year ended December 31, 2024, the Company issued and sold approximately 2.0 million shares of common stock at an average price of $1.98 per share for gross proceeds of $3.9 million. In connection with these sales, the Company paid aggregate fees of $0.1 million.
Level 3 : Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. 74 Table of Contents The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Level 3 : Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
Our significant estimates include, but are not limited to, provisions for product returns, coupons, rebates, allowances and distribution fees paid by Journey to certain wholesalers, inventory realization, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses, and contingencies.
Our significant estimates include, but are not limited to, provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, inventory realization, valuation of intangible assets, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses and contingencies.
Research and development expenses Research and development costs primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for licenses and milestones, 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.
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 licenses and milestones, 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. 80 Table of Contents For the years ended December 31, 2024 and 2023, R&D expenses were approximately $56.6 million and $101.7 million, respectively.
At December 31, 2023, 4,151,297 shares remain available for issuance under the Journey 2022 S-3. Checkpoint In March 2023, Checkpoint filed a shelf registration statement (File No. 333-270843) on Form S-3 (the “Checkpoint 2023 S-3”), which was declared effective May 5, 2023. Under the Checkpoint 2023 S-3, Checkpoint may sell up to a total of $150 million of its securities.
Checkpoint In March 2023, Checkpoint filed a registration statement on Form S-3 (File No. 333-270843), which was declared effective May 5, 2023 (the “Checkpoint 2023 S-3”). Under the Checkpoint 2023 S-3, Checkpoint may sell up to a total of $150 million of its securities.
Certain of our financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.
Certain of the Company’s working capital assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current liabilities, are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature.
For the year ended December 31, 2022, we generated $75.7 million of net revenue, of which $71.0 million relates to the sale of Journey branded and generic products, $2.7 million relates to Journey’s royalties from Maruho, $1.9 million relates to Cyprium’s collaboration revenue with Sentynl and $0.2 million relates to Checkpoint’s collaborative agreements with TGTX.
For the year ended December 31, 2023, we generated $84.5 million of net revenue, of which $59.7 million relates to product revenue derived from Journey’s branded and generic products, $19.5 million relates to Journey’s royalties from Maruho, $5.2 million relates to Cyprium’s collaboration revenue with Sentynl and $0.1 million relates to Checkpoint’s prior collaboration agreements with TGTX.
(“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”) a wholly owned subsidiary of Zydus Lifesciences Ltd. Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are Avenue Therapeutics, Inc. (Nasdaq: ATXI, “Avenue”), Baergic Bio, Inc. (“Baergic”, a subsidiary of Avenue), Cellvation, Inc. (“Cellvation”), Checkpoint Therapeutics, Inc. (Nasdaq: CKPT, “Checkpoint”), Cyprium Therapeutics, Inc.
(“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”) a wholly owned subsidiary of Zydus Lifesciences Ltd. Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Checkpoint Therapeutics, Inc. (Nasdaq: CKPT, “Checkpoint”), Journey Medical Corporation (Nasdaq: DERM, “Journey” or “JMC”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc.
Cost of goods sold decreased by $4.1 million, or 13% year-over-year, with t he decrease mainly due to lower-than-prior-year product royalties driven by lower sales of products from period-to-period, and a permanent contractual decrease in the Qbrexza royalty percentage from the prior-year period.
Cost of goods sold decreased by $2.0 million, or 9% year-over-year, with t he decrease mainly due to lower royalties on lower net sales, and a permanent contractual decrease in royalties owed on Qbrexza from the prior-year period.
For the years ended December 31, 2023 and 2022, selling, general and administrative expenses were $94.1 million and $113.7 million, respectively.
For the years ended December 31, 2024 and 2023, selling, general and administrative expenses were $87.7 million and $91.0 million, respectively.
Certain directors and officers of the Company participated in the offering and purchased an aggregate amount of approximately $2.9 million of units at the same purchase price. ​ Subsequent to 2023, in January 2024, Fortress closed on a registered direct offering for the issuance and sale of an aggregate of 3,303,305 shares of its common stock and warrants to purchase up to 3,303,305 shares of its common stock at a combined purchase price of $3.33 per share of common stock and accompanying warrant priced at-the-market under Nasdaq rules.
In January 2024, Fortress closed a registered direct offering of an aggregate of 3,303,305 shares of its common stock and warrants to purchase up to 3,303,305 shares of its common stock at a combined purchase price of $3.33 per share of common stock and accompanying warrant priced at-the-market under Nasdaq rules.
We have executed arrangements 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”), Fred Hutchinson Cancer Center, St. Jude Children’s Research Hospital (“St.
We have executed arrangements 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”), Fred Hutchinson Cancer Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc and Dr. Reddy’s Laboratories, Ltd.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
At December 31, 2023, we had cash and cash equivalents of $80.9 million of which $40.6 million relates to Fortress and the private partner companies, primarily funded by Fortress, $4.9 million relates to Checkpoint, $6.2 million relates to Mustang, $27.4 million relates to JMC and $1.8 million relates to Avenue.
At December 31, 2024, we had cash and cash equivalents of $57.3 million of which $20.9 million relates to Fortress and the private subsidiaries (primarily funded by Fortress), $6.6 million relates to Checkpoint, $6.8 million relates to Mustang, $20.3 million relates to JMC and $2.6 million relates to Avenue. Restricted cash primarily relates to office leases and totals $1.6 million.
Components of cash flows from publicly-traded partner companies are: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2023 ($ in thousands) Fortress 1 Avenue Checkpoint JMC Mustang Total Statement of cash flows data: ​ ​ ​ ​ ​ ​ ​ ​ Total cash (used in)/provided by: ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (26,947) ​ $ (9,451) ​ $ (47,590) ​ $ 5,240 ​ $ (49,477) ​ $ (128,225) Investing activities ​ 11 ​ (3,000) ​ — ​ (5,000) ​ 5,886 ​ (2,103) Financing activities ​ 15,648 ​ 7,526 ​ 40,450 ​ (4,804) ​ (26,081) ​ 32,739 Net increase in cash and cash equivalents and restricted cash ​ $ (11,288) ​ $ (4,925) ​ $ (7,140) ​ $ (4,564) ​ $ (69,672) ​ $ (97,589) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2022 ($ in thousands) Fortress 1 Avenue Checkpoint JMC Mustang Total Statement of cash flows data: ​ ​ ​ ​ ​ ​ Total cash (used in)/provided by: ​ ​ ​ ​ ​ ​ Operating activities ​ $ (35,651) ​ $ (7,596) ​ $ (57,554) ​ $ (13,534) ​ $ (65,066) ​ $ (179,401) Investing activities ​ 24 ​ — ​ — ​ (20,000) ​ (2,952) ​ (22,928) Financing activities ​ (621) ​ 10,541 ​ 14,887 ​ 16,456 ​ 34,056 ​ 75,319 Net increase in cash and cash equivalents and restricted cash ​ $ (36,248) ​ $ 2,945 ​ $ (42,667) ​ $ (17,078) ​ $ (33,962) ​ $ (127,010) ​ Note 1: Includes Fortress and non-public subsidiaries.
Components of cash flows from publicly-traded partner companies are: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2024 ($ in thousands) Fortress 1 Avenue Checkpoint JMC Mustang Total Statement of cash flows data: ​ ​ ​ ​ ​ ​ ​ ​ Total cash (used in)/provided by: ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (19,527) ​ $ (9,026) ​ $ (31,101) ​ $ (9,127) ​ $ (11,410) ​ $ (80,191) Investing activities ​ — ​ — ​ — ​ (15,000) ​ — ​ (15,000) Financing activities ​ (231) ​ 9,837 ​ 32,777 ​ 16,993 ​ 11,265 ​ 70,641 Net increase (decrease) in cash and cash equivalents and restricted cash ​ $ (19,758) ​ $ 811 ​ $ 1,676 ​ $ (7,134) ​ $ (145) ​ $ (24,550) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2023 ($ in thousands) Fortress 1 Avenue Checkpoint JMC Mustang Total Statement of cash flows data: ​ ​ ​ ​ ​ ​ Total cash (used in)/provided by: ​ ​ ​ ​ ​ ​ Operating activities ​ $ (26,947) ​ $ (9,451) ​ $ (47,590) ​ $ 5,240 ​ $ (49,477) ​ $ (128,225) Investing activities ​ 11 ​ (3,000) ​ — ​ (5,000) ​ 5,886 ​ (2,103) Financing activities ​ 15,648 ​ 7,526 ​ 40,450 ​ (4,804) ​ (26,081) ​ 32,739 Net decrease in cash and cash equivalents and restricted cash ​ $ (11,288) ​ $ (4,925) ​ $ (7,140) ​ $ (4,564) ​ $ (69,672) ​ $ (97,589) ​ Note 1: Includes Fortress and non-public subsidiaries.
A substantial portion of our ongoing research and development activities is conducted by third-party service providers. We accrue the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements.
We accrue the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements.
This shelf registration statement 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.
Journey In December 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079 ), which was declared effective in January 2023 (the “Journey 2022 S-3”). This shelf registration statement 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.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in “Part IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K. ​ 75 Table of Contents 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.
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.
The agreement also provides for additional potential payments to Caelum shareholders totaling up to $350 million, payable upon the achievement of regulatory and commercial milestones.
(“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.
Issuance of Debt and Equity Fortress and its partner companies and subsidiaries issue complex financial instruments which include equity and/or debt features. We analyze each instrument under ASC 480, Distinguishing Liabilities from Equity, ASC 815, Derivatives and Hedging and, ASC 470, Debt , in order to establish whether such instruments include any embedded derivatives.
We analyze each instrument under ASC 480, Distinguishing Liabilities from Equity, ASC 815, Derivatives and Hedging and, ASC 470, Debt , in order to establish whether such instruments include any embedded derivatives. We accounted for the debt with Oaktree with detachable warrants in accordance with ASC 470, Debt .
The warrants have an exercise price of $3.21 per share, are immediately exercisable, and will expire five years following the date of issue.
The Concurrent Private Placement Warrants have an exercise price of $1.84 per share, are exercisable commencing six months from the date of issuance, and will expire five and one-half years following the date of issue.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. 76 Table of Contents ​ 77 Table of Contents Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
We expect research and development costs to remain flat or decrease modestly in 2024. ​ 79 Table of Contents Research and development – licenses acquired ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2023 2022 $ % Research and development – licenses acquired ​ $ 4,324 ​ $ 677 ​ $ 3,647 ​ 539 % ​ The increase in research and development – licenses acquired of $3.6 million in 2023 is due primarily to $4.2 million paid for Avenue’s license from AnnJi for AJ201.
Research and development – licenses acquired ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2024 2023 $ % Research and development – licenses acquired ​ $ 252 ​ $ 4,324 ​ $ (4,072) ​ (94) % ​ The decrease in research and development – licenses acquired of $4.1 million in 2024 is due primarily to $4.2 million paid by Avenue to AnnJi for the AJ201 license in 2023.
Liquidity and Capital Resources Sources of Liquidity At December 31, 2023, we had an accumulated deficit of $694.9 million primarily as a result of research and development expenses, purchases of in-process research and development and selling, general and administrative expenses. ​ 81 Table of Contents We will require 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 will require 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.
For the year ended December 31, 2023, Journey issued approximately 0.7 million shares of common stock at an average price of $6.189 per share for gross proceeds of $4.6 million under the Journey ATM. In connection with these sales, Journey paid aggregate fees of $0.1 million.
During the year ended December 31, 2024, Mustang issued approximately 0.1 million shares of common stock at an average price of $18.78 per share for net proceeds of $2.5 million under the Mustang ATM, after deducting aggregate fees of approximately $0.1 million.
Cost of goods sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2023 2022 $ % Cost of goods sold – product revenue ​ $ 26,660 ​ $ 30,775 ​ $ (4,115) ​ (13) % ​ We had $26.7 million and $30.8 million of costs of goods sold in connection with the sale of JMC branded and generic products for the years ended December 31, 2023 and 2022, respectively.
Cost of goods sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ($ in thousands) 2024 2023 $ % Cost of goods sold – (excluding amortization of acquired intangible assets) ​ $ 20,879 ​ $ 22,893 ​ $ (2,014) ​ (9) % ​ We had $20.9 million and $22.9 million of costs of goods sold in connection with JMC branded and generic product revenue for the years ended December 31, 2024 and 2023, respectively.
We accounted for the Oaktree Note with detachable warrants in accordance with ASC 470, Debt . We assessed the classification of the common stock purchase warrants issued in connection with such transaction and determined that such instruments met the criteria for equity classification.
We assessed the classification of the common stock purchase warrants issued in connection with such transactions and determined that such instruments met the criteria for equity classification. The note proceeds were allocated between the 2024 Oaktree Note (as defined below) and the warrants on a relative fair value basis.
Other expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ ($ in thousands) 2023 2022 $ % Other income (expense) ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ $ 3,003 ​ $ 1,398 ​ $ 1,605 ​ 115 % Interest expense and financing fee ​ (15,315) ​ (13,642) ​ (1,673) ​ 12 % Change in fair value of warrant liabilities ​ 4,424 ​ 1,129 ​ 3,295 ​ 292 % Other income (expense) ​ ​ (3,403) ​ 1,215 ​ (4,618) ​ (380) % Total other expense ​ $ (11,291) ​ (9,900) ​ $ (1,391) ​ 14 % ​ Total other income (expense) increased $1.4 million, or (14)%, from expense of $9.9 million for the year ended December 31, 2022 to expense of $4.7 million for the year ended December 31, 2023, primarily due to the increase in change in fair value of warrant liabilities associated with warrants related to financings at Avenue and Checkpoint of $9.9 million, and an increase in interest income of $1.6 million, offset by an increase of $1.7 million in interest expense and financing fees due to costs associated with debt payoff at Journey and Mustang, and an increase of $4.6 million in other expense in the year ended December 31, 2023 due primarily to $4.1 million associated with the deconsolidation and dissolution of partner companies.
Other expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ($ in thousands) 2024 2023 $ % Other expense ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ $ 2,683 ​ $ 3,003 ​ $ (320) ​ (11) % Interest expense and financing fee ​ (13,527) ​ (15,315) ​ 1,788 ​ (12) % Gain (loss) on common stock warrant liabilities ​ (638) ​ 4,424 ​ (5,062) ​ (114) % Other income (expense) ​ ​ 1,318 ​ (3,403) ​ 4,721 ​ (139) % Total other expense ​ $ (10,164) ​ (11,291) ​ $ 1,127 ​ (10) % ​ ​ 83 Table of Contents Total other expense decreased $1.1 million, or 10%, from expense of $11.3 million for the year ended December 31, 2023 to expense of $10.2 million for the year ended December 31, 2024, primarily due to the increase in expense related to the change in fair value of warrant liabilities associated with warrants related to financings at Avenue and Checkpoint of $5.1 million, partially offset by a decrease of $1.8 million in interest expense and financing fees due to costs associated with debt payoff at Journey and Mustang incurred in 2023 related to East West Bank and Runway debt, respectively, and a decrease of $4.7 million in other expense in the year ended December 31, 2024 due primarily to $4.1 million expense associated with the deconsolidation and dissolution of partner companies incurred in 2023, as compared to $1.1 million gain on extinguishment of debt recognized at Journey in the year ended December 31, 2024.
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 as follows: (i) 3% of annual net sales up to $75 million; (ii) 8.75% of annual net sales between $75 million and $100 million; and (iii) 12.5% of annual net sales in excess of $100 million.
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.
Stock based compensation expense included in selling, general and administrative expenses in the years ended December 31, 2023 and 2022 was $13.8 million and $18.5 million, respectively. ​ 80 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ($ in thousands) 2023 2022 $ % Stock-based compensation - Selling, general and administrative ​ ​ ​ ​ ​ Fortress ​ $ 8,320 ​ $ 11,060 ​ $ (2,740) ​ (25) % Partner Companies: ​ ​ ​ ​ ​ ​ ​ Avenue ​ 707 ​ 352 ​ 355 ​ 101 % Checkpoint ​ 1,728 ​ 2,036 ​ (308) ​ (15) % JMC ​ ​ 2,494 ​ ​ 4,352 ​ ​ (1,858) ​ (42) % Mustang ​ 435 ​ 700 ​ (265) ​ (38) % Other 1 ​ 108 ​ 44 ​ 64 ​ 145 % Total stock-based compensation expense - selling, general and administrative ​ $ 13,792 ​ 18,544 ​ $ (4,752) ​ (26) % ​ Note 1: Includes the following subsidiaries: Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Stock-based compensation expense included in selling, general and administrative expenses in the years ended December 31, 2024 and 2023 was $25.5 million and $13.8 million, respectively. ​ 82 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ($ in thousands) 2024 2023 $ % Stock-based compensation - Selling, general and administrative ​ ​ ​ ​ ​ Fortress 1 ​ $ 8,737 ​ $ 8,428 ​ $ 309 ​ 4 % Avenue ​ 967 ​ 707 ​ 260 ​ 37 % Checkpoint ​ 10,004 ​ 1,728 ​ 8,276 ​ 479 % JMC ​ ​ 5,590 ​ ​ 2,494 ​ ​ 3,096 ​ 124 % Mustang ​ 200 ​ 435 ​ (235) ​ (54) % Total stock-based compensation expense - selling, general and administrative ​ $ 25,498 ​ 13,792 ​ $ 11,706 ​ 85 % ​ Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
The shares of Checkpoint common stock issuable upon exercise of the warrants were registered pursuant to effective registration statements on Form S-3 (File No. 333-251005) and Form S-3 (File No. 333-270474), respectively.
The issuance or resale of the shares of common stock issuable upon exercise of the existing warrants are registered pursuant to an effective registration statement filed by Mustang on Form S-1 (File No. 333-278006).
In a concurrent private placement, Mustang issued and sold 2,588,236 unregistered warrants to purchase shares of common stock. The unregistered warrants have an exercise price of $1.58, were exercisable immediately upon issuance and will expire five and one-half years following the issuance date.
The Checkpoint January 2024 Common Warrants are exercisable immediately upon issuance and will expire five years following the issuance date and have an exercise price of $1.68 per share. Checkpoint also issued the placement agent warrants to purchase up to 465,374 shares of common stock with an exercise price of $2.2563 per share.
Investing Activities Net cash used by investing activities for the year ended December 31, 2022 of $22.9 million decreased $20.8 million to net cash used by investing activities of $2.1 million for the year ended December 31, 2023. The change is primarily due to Journey’s purchase of the VYNE Therapeutics, Inc.
Investing Activities Net cash used by investing activities for the year ended December 31, 2023 of $2.1 million increased $12.9 million to $15.0 million for the year ended December 31, 2024. The change is due to Journey’s payment of the $15 million milestone due to Dr. Reddy in December 2024 triggered by the FDA approval of Emrosi.
Risk Factors—Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities.” Stock Offerings and At-The-Market Share Issuances We fund our operations through cash on hand, the sale of debt, third-party financings, and the sale of partner companies.
We fund our operations through cash on hand, the sale of debt, third-party financings, and the sale of subsidiaries and partner companies.
The decrease is primarily due to the repayment of partner company debt of $81.3 million, partially offset by proceeds from the issuance of common stock in public offerings of $22.1 million, and proceeds from new partner company debt of $14.5 million.
The increase is primarily due to proceeds from long term debt of $33.7 million, the issuance of common stock in public offerings of $17.4 million and at-the-market offerings, net of $3.7 million, proceeds from partner company offerings and warrant exercises of $49.7 million, and proceeds from partner company at-the-market offerings, net of $12.0 million, partially offset by repayment of debt of $51 million in the year ended December 31, 2024.
Of the $20 million, $15 million was funded upon closing, and t he remaining $5.0 million may be drawn upon request by Journey within the first 12 months following credit agreement execution . ​ Cash Flows The following table summarizes our cash flows during the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ($ in thousands) 2023 2022 Change Total cash (used in)/provided by: ​ ​ ​ Operating activities ​ $ (128,225) ​ $ (179,401) ​ $ 51,176 Investing activities ​ (2,103) ​ (22,928) ​ 20,825 Financing activities ​ 32,739 ​ 75,319 ​ (42,580) Net increase in cash and cash equivalents and restricted cash ​ $ (97,589) ​ $ (127,010) ​ $ 29,421 ​ Operating Activities Net cash used in operating activities decreased $51.2 million from the year ended December 31, 2022 to the year ended December 31, 2023.
Cash Flows The following table summarizes our cash flows during the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ($ in thousands) 2024 2023 Change Total cash (used in)/provided by: ​ ​ ​ Operating activities ​ $ (80,191) ​ $ (128,225) ​ $ 48,034 Investing activities ​ (15,000) ​ (2,103) ​ (12,897) Financing activities ​ 70,641 ​ 32,739 ​ 37,902 Net decrease in cash and cash equivalents and restricted cash ​ $ (24,550) ​ $ (97,589) ​ $ 73,039 ​ Operating Activities Net cash used in operating activities decreased by $48.0 million from the year ended December 31, 2023 to the year ended December 31, 2024.
Fortress is eligible to receive 42.4% of all proceeds of the transaction, including approximately $148 million to Fortress, with $31.8 million upon BLA approval. ● There are two ongoing Phase 3 studies of CAEL-101 for AL amyloidosis.
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. ● There are two ongoing global Phase 3 studies of CAEL-101 for Mayo Stage IIIa and Mayo Stage IIIb AL amyloidosis. (ClinicalTrials.gov identifiers: NCT04512235 and NCT04504825 ).
The total gross proceeds from the offering were approximately $10.0 million with net proceeds of approximately $8.9 million after deducting placement agent fees and other transaction costs.
The net proceeds to Mustang from the exercise of the existing warrants were approximately $3.6 million, after deducting placement agent fees and offering expenses payable by Mustang of $0.4 million.
The total gross proceeds from the offering were approximately $11.1 million with net proceeds of approximately $10.0 million after deducting approximately $1.1 million in commissions and other transaction costs. ​ Mustang In April 2021, Mustang filed a shelf registration statement on Form S-3 (File No. 333-255476) which was declared effective in May 2021 (the “Mustang 2021 S-3”).
All of the pre-funded warrants from the Checkpoint January 2024 Registered Direct Offering have been fully exercised. ​ Mustang On April 23, 2021, Mustang filed a shelf registration statement on Form S-3 (File No. 333-255476) (the “Mustang 2021 S-3”), which was declared effective on May 24, 2021.
(“Aevitas”) was a consolidated subsidiary company until the sale of its primary asset to 4D Molecular Therapeutics in April 2023. 68 Table of Contents Recent Events Revenue Portfolio ● For the years ended December 31, 2023 and 2022, total net revenue was $84.5 million and $75.7 million, respectively, which includes net product revenue from Journey’s commercial portfolio of $59.7 million and $71.0 million, respectively. ● In August 2023, Journey entered into an exclusive license agreement with Maruho Co., Ltd.
(“Urica”). ​ 70 Table of Contents Recent Events Revenue Portfolio ● For the years ended December 31, 2024 and 2023, total net revenue was $57.7 million and $84.5 million, respectively, which includes net product revenue from Journey’s commercial portfolio of $55.1 million and $59.7 million, respectively.
In October 2023, Mustang closed on the October 2023 Registered Direct Offering with a single institutional accredited investor for the issuance and sale of an aggregate of (i) 920,000 shares of its common stock and (ii) pre-funded warrants to purchase up to 1,688,236 shares of its common stock at a purchase price of $1.70 per share and $1.699 per pre-funded warrant in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market LLC.
The shares of common stock issuable upon the exercise of the warrants were registered under the Checkpoint 2023 S-3. ​ In July 2024, Checkpoint closed on a registered direct offering (the “Checkpoint July 2024 Registered Direct Offering”) for the issuance and sale of an aggregate of 1,230,000 shares of its common stock at a purchase price of $2.05 per share.
Triplex is also the subject of several planned studies, including: a Phase 2 evaluation for CMV control in recipients of liver transplant (ClinicalTrials.gov identifier: NCT06075745 ); a Phase 2 trial for CMV control in recipients of kidney transplant ; and a Phase 2 trial for CMV control in recipients of stem cell transplant in which the stem cell donor is vaccinated with Triplex ( ClinicalTrials.gov identifier: NCT06059391 ). ● The Phase 2 clinical trial of Triplex for adults co-infected with HIV and CMV is now fully enrolled with topline data anticipated in 2024.
Triplex (cytomegalovirus (CMV) vaccine) ​ ● Triplex, a potential vaccine for 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 the third quarter of 2025.
Under the Mustang 2021 S-3, Mustang may sell up to a total of $200.0 million of its securities. During the year ended December 31, 2023, Mustang issued approximately 0.1 million shares of common stock at an average price of $3.15 per share for gross proceeds of $0.2 million under the ATM Agreement.
For the year ended December 31, 2024, Journey issued approximately 1.6 million shares of common stock at an average price of $5.19 per share for net proceeds of $7.9 million after deducting aggregate fees of $0.2 million. At December 31, 2024, 2,586,987 shares remain available for issuance under the Journey 2022 S-3.
The decrease is primarily attributable to the decrease in net loss of $59.8 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, and the net decrease in cash from changes in operating assets and liabilities of $11.9 million offset by the increase in loss from deconsolidation and dissolution of subsidiaries of $4.1 million and a $3.1 million asset impairment loss.
The decrease is primarily attributable to the decrease in net loss of $33.3 million, the increase of $15.6 million in stock-based compensation expense, the one-time loss recovery payment of $4.6 million received by Journey from their previously disclosed September 2021 cybersecurity incident, the net decrease in cash from changes in operating assets and liabilities of $4.4 million offset by the decrease in loss from deconsolidation and dissolution of subsidiaries of $4.1 million and a $2.8 million decrease in research and development – licenses acquired expense due to Avenue’s license purchase in 2023.
The discount is being amortized utilizing the effective interest method over the term of the Oaktree Note, which is approximately 16.13% at December 31, 2023. Accrued Research and Development Expense We record accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are significant components of research and development expenses.
Accrued Research and Development Expense We record accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are significant components of research and development expenses. A substantial portion of our ongoing research and development activities is conducted by third-party service providers.
The total gross proceeds from the offering were approximately $5.0 million with net proceeds of approximately $3.8 million after deducting commissions and other transaction costs, before giving effect to any exercises of the November 2023 Warrants. ​ In January 2023, Avenue entered into an agreement with a single institutional investor for the sale of 1,940,299 shares of common stock and pre-funded warrants for gross proceeds of approximately $3.0 million.
Net proceeds to Checkpoint from the Checkpoint January 2024 Registered Direct Offering were $12.6 million after deducting commissions and other transaction costs. The offer and sale of the shares of common stock and the shares underlying the pre-funded warrants were registered under the Checkpoint 2023 S-3.
Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued at the New Drug Application (“ NDA”) approval for CUTX-101. 69 Table of Contents ● The CUTX-101 rolling NDA submission is ongoing and is expected to be completed by Sentynl in 2024. ● CUTX-101 was sourced by Fortress and was developed by Cyprium until the asset transfer in December 2023. ​ DFD-29 (modified release oral minocycline for the treatment of rosacea) ● In January 2024, Journey submitted an NDA to the FDA seeking approval for DFD-29 (minocycline hydrochloride modified release capsules, 40 mg) for the treatment of inflammatory lesions and erythema of rosacea in adults.
Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued at the New Drug Application (“NDA”) approval for CUTX-101. ● CUTX-101 was sourced by Fortress and was developed by Cyprium until the asset transfer in December 2023. ​ CAEL-101 (monoclonal antibody for AL amyloidosis) ● On October 5, 2021, AstraZeneca acquired Caelum Biosciences, Inc.
Noncash, stock-based compensation expense included in research and development for the years ended December 31, 2023 and 2022, was $3.2 million and $4.4 million, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ($ in thousands) 2023 2022 $ % Stock-based compensation - research & development ​ ​ ​ ​ Fortress ​ $ 1,624 ​ $ 1,592 ​ $ 32 2 % Partner Companies: ​ ​ ​ ​ ​ ​ Avenue ​ 199 ​ 297 ​ (98) (33) % Checkpoint ​ 1,169 ​ 888 ​ 281 32 % JMC ​ ​ 112 ​ ​ 73 ​ ​ 39 ​ 54 % Mustang ​ 133 ​ 1,583 ​ (1,450) (92) % Other 1 ​ 0 ​ 10 ​ (10) (100) % Total stock-based compensation expense - research and development ​ $ 3,237 ​ 4,443 ​ $ (1,206) (27) % Note 1: Includes the following subsidiaries: Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Reddy’s Laboratories, Ltd triggered by the FDA’s acceptance of the Emrosi NDA in March 2024, offset by lower clinical trial expenses to develop Emrosi, as the clinical phase of the project has concluded. ​ Noncash, stock-based compensation expense included in R&D for the years ended December 31, 2024 and 2023, was $7.1 million and $3.2 million, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ($ in thousands) 2024 2023 $ % Stock-based compensation - research & development ​ ​ ​ ​ Fortress 1 ​ $ 1,746 ​ $ 1,624 ​ $ 122 7 % Avenue ​ 269 ​ 199 ​ 70 35 % Checkpoint ​ 5,248 ​ 1,169 ​ 4,079 349 % JMC ​ ​ 508 ​ ​ 112 ​ ​ 396 ​ 353 % Mustang ​ (650) ​ 133 ​ (783) (589) % Total stock-based compensation expense - research and development ​ $ 7,121 ​ $ 3,237 ​ $ 3,884 120 % Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
The table below provides a summary of research and development by entity, for the years ended December 31, 2023 and 2022: ​ 78 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ Change ​ ($ in thousands) 2023 2022 ​ $ % Research & development ​ ​ ​ ​ Fortress ​ ​ $ 2,172 ​ $ 2,360 $ (188) ​ (8) % Subsidiaries/Partner Companies: ​ ​ ​ ​ ​ ​ ​ ​ ​ Avenue ​ ​ 5,426 ​ 2,381 3,045 ​ 128 % Checkpoint ​ ​ 40,147 ​ 47,940 (7,793) ​ (16) % JMC ​ ​ ​ 7,540 ​ ​ 10,943 ​ ​ (3,403) ​ (31) % Mustang ​ ​ 38,830 ​ 62,030 (23,200) ​ (37) % Other 1 ​ ​ 7,632 ​ 8,545 (913) ​ (11) % Total research & development expense ​ ​ $ 101,747 ​ $ 134,199 $ (32,452) ​ (24) % ​ Note 1: Includes the following subsidiaries: Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
The table below provides a summary of research and development by entity, for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ Change ​ ($ in thousands) 2024 2023 ​ $ % Research & development ​ ​ ​ ​ Fortress 1 ​ ​ $ (4,443) ​ $ 3,996 $ (8,439) ​ (211) % Avenue ​ ​ 6,645 ​ 6,131 514 ​ 8 % Checkpoint ​ ​ 36,152 ​ 43,566 (7,414) ​ (17) % JMC ​ ​ ​ 9,857 ​ ​ 7,541 ​ ​ 2,316 ​ 31 % Mustang ​ ​ 8,418 ​ 40,513 (32,095) ​ (79) % Total research & development expense ​ ​ $ 56,629 ​ $ 101,747 $ (45,118) ​ (44) % ​ Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
The note proceeds were allocated between the Oaktree Note and the warrants on a relative fair value basis. We recorded the related issue costs and value ascribed to the warrants as a debt discount of the Oaktree Note.
We recorded the related issue costs and value ascribed to the warrants as a debt discount of the 2024 Oaktree Note (as defined below). The discount is being amortized utilizing the effective interest method over the term of the Oaktree Note, which is approximately 15.39% at December 31, 2024.
Net proceeds to Fortress, after deducting the placement agent’s fees and other offering expenses, were approximately $10.2 million. 82 Table of Contents Journey In December 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079 ), which was declared effective in January 2023 (the “Journey 2022 S-3”).
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. As of December 31, 2024, approximately $3.9 million of the securities were available for sale under the Avenue 2021 S-3, subject to General Instruction I.B.6. of Form S-3.
As part of the inducement, Checkpoint agreed to issue new unregistered Series A Warrants to purchase up to 6,325,354 shares and new unregistered Series B Warrants to purchase up to 6,325,354 shares of Checkpoint Common Stock. The Series A and B warrants are exercisable immediately upon issuance with an exercise price of $1.51 per share.
In a concurrent private placement, Mustang also agreed to issue and sell unregistered warrants to purchase up to 62,100 shares of its common stock, with an exercise price of $20.495 per share, exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the warrants and will expire five years from the date of such stockholder approval.
In connection with the 4DMT APA, the Class A preferred shares of Aevitas held by the Company converted to Aevitas common shares, at which point the Company no longer maintained voting control of Aevitas. ​ ​ 73 Table of Contents Critical Accounting Policies and Use of Estimates Our consolidated financial statements included in this Annual Report on Form 10-K include certain amounts that are based on management’s best estimates and judgments.
Subsequently, Mustang raised net proceeds of $6.9 million in a public offering in February 2025. ● Throughout 2024, Avenue raised total net proceeds of approximately $9.8 million through equity offerings and the exercise of existing warrants. ● Throughout 2024, Journey Medical raised total net proceeds of approximately $7.9 million through equity offerings. ​ Critical Accounting Policies and Use of Estimates Our consolidated financial statements included in this Annual Report on Form 10-K include certain amounts that are based on management’s best estimates and judgments.
For the year ended December 31, 2023, the decrease in selling, general and administrative expenses of $19.0 million or 17% is primarily attributable to decreased expenses at Journey related to their expense reduction efforts in sales and marketing, as JMC began a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs to better align costs to their revenue-generating capabilities.
For the year ended December 31, 2024, the decrease in selling, general and administrative expenses of $3.3 million, or 4%, is primarily attributable to decreased expenses at Fortress relating to general operational cost reductions and lower legal expenses incurred by private subsidiaries.
Total gross proceeds were $33.6 million, with net proceeds of $30.4 million. ​ In October 2023, Checkpoint entered into an inducement offer letter agreement with a holder of certain of its existing warrants to exercise for cash an aggregate of 6,325,354 warrants for shares of Checkpoint’s common stock at a reduced exercise price of $1.76 per share.
In October 2024, Mustang entered into a definitive agreement for the exercise of certain existing warrants to purchase an aggregate of 337,552 shares of its common stock having an exercise price of $11.85 per share, originally issued in May 2024.
DFD-29 demonstrated statistical superiority compared to Oracea® and placebo for Investigator’s Global Assessment (“IGA”) treatment success and the reduction in total inflammatory lesion count in both studies. In November 2023, Journey also announced data for the secondary endpoint relating erythema assessment, in which DFD-29 showed significantly superior reduction in Clinicians Erythema Assessment (“CEA”) compared to placebo in both trials.
Emrosi demonstrated statistically significant superiority over both the current standard-of-care treatment, Oracea® 40mg capsules, and placebo for Investigator’s Global Assessment treatment success as well as the reduction in total inflammatory lesion count in both studies.
For the year ended December 31, 2023, the net increase in revenue of $8.8 million or 12% is due to Journey’s $19.0 million non-refundable upfront payment from Maruho, offset by a decrease of $11.3 million or 16% of product revenue due to lower unit volumes, due to continued generic competition for Targadox and the discontinuation of Ximino in the third quarter of 2023.
These decreases were offset, in part, by an increase in product-related cost of goods sold of $0.5 million as a result of product mix, mainly driven by the higher Accutane net product revenue from 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ December 31, ​ Change ​ ($ in thousands) 2024 2023 $ % Amortization of acquired intangible assets ​ $ 3,424 ​ $ 3,767 ​ $ (343) ​ (9) % ​ Amortization of acquired intangible assets decreased by $0.3 million, or 9%, to $3.4 million for the year ended December 31, 2024, from $3.8 million for the year ended December 31, 2023 due to the discontinuation of Ximino in the third quarter of 2023.
Dotinurad was efficacious and well-tolerated in more than 500 Japanese patients treated for up to 58 weeks in Phase 3 clinical trials. The clinical program supporting approval included over 1,000 patients. ● Dotinurad was sourced by Fortress and is currently in development at our subsidiary, Urica.
Dotinurad was efficacious and well-tolerated in more than 500 Japanese patients treated for up to 58 weeks in Phase 3 clinical trials. ● Dotinurad was sourced by Fortress and was in development at our Urica subsidiary until being acquired by Crystalys in July 2024. ​ ​ MB-109 (IL13Rα2-targeted CAR T Cells (MB-101) + HSV-1 oncolytic virus (MB-108)) ​ ● In November 2024, we announced that the FDA granted Orphan Drug Designation for Mustang for MB-108, a herpes simplex virus type 1 (“HSV-1”) oncolytic virus, for the treatment of malignant glioma. ● In March 2024, data from the Phase 1 trial evaluating MB-101 IL13Rα2-targeted CAR T-cells in high-grade glioma were published in Nature Medicine.
Journey announced on March 18, 2024 that the FDA accepted the NDA and assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of November 4, 2024. ● In October 2023, Journey announced data from a comparative bioavailability study of DFD-29 demonstrating systemic exposure of DFD-29 was significantly lower than that of Solodyn® (minocycline hydrochloride extended-release tablets, 105mg) and that DFD-29 was safe and well tolerated throughout the study. ● In July 2023, Journey announced positive topline data from the two DFD-29 Phase 3 clinical trials (MVOR-1 & MVOR-2) for the treatment of rosacea and achievement of co-primary and all secondary endpoints and subjects completed the 16-week treatment with no significant safety issues.
Journey announced the launch of Emrosi in March 2025. ● The approval of Emrosi is supported by positive data from Journey’s two Phase 3 clinical trials for the treatment of rosacea. The Phase 3 clinical trials met all co-primary and secondary endpoints, and subjects completed the 16-week treatment with no significant safety issues.
Removed
Jude”), Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Cincinnati Children’s Hospital Medical Center, Columbia University, the University of Pennsylvania, Mayo Foundation for Medical Education and Research (“Mayo Clinic”), AstraZeneca plc and Dr. Reddy’s Laboratories, Ltd.
Added
(OTC: ATXI, “Avenue”), Baergic Bio, Inc. (“Baergic,” a subsidiary of Avenue), Cellvation, Inc. (“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc.
Removed
(“Cyprium”), Helocyte, Inc. (“Helocyte”), Journey Medical Corporation (Nasdaq: DERM, “Journey” or “JMC”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). Aevitas Therapeutics, Inc.
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Total net revenue in 2023 included the receipt by Journey of a $19.0 million upfront payment for the exclusive license of certain rights relating to Qbrexza in Asia. ● In the fourth quarter of 2024, we announced the respective FDA approvals of Emrosi™ (Minocycline Hydrochloride Extended-Release Capsules, 40mg), by Journey; and UNLOXCYT TM (cosibelimab-ipdl), for the treatment of adults in metastatic or locally advanced cutaneous squamous cell carcinoma (“cSCC”) in adults who are not candidates for curative surgery or radiation, by Checkpoint. ​ Late Stage Product Candidates UNLOXCYT™ (cosibelimab-ipdl, anti-PD-L1 antibody) ● On December 13, 2024, our partner company, 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. ● In September 2024, Checkpoint presented longer-term data from our pivotal trial of cosibelimab during the European Society for Medical Oncology (“ESMO”) Congress 2024.
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(“Maruho”), a Japanese company specializing in dermatology and also Journey’s exclusive licensing partner that developed and is commercializing Qbrexza (Rapifort®) in Japan. Under the terms of the agreement, Journey Medical received a $19 million upfront payment and granted Maruho an exclusive license to develop and commercialize Qbrexza® (Rapifort) for the treatment of hyperhidrosis in additional territories in Asia (the “Territory”).
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Longer-term results for cosibelimab presented at the ESMO Congress demonstrate a deepening of response over time, with higher objective response and complete response rates than initially observed at the primary analyses. ● In July 2024, Checkpoint announced a collaboration to explore the combined therapeutic potential of cosibelimab with GC Cell’s Immuncell-LC, an innovative autologous Cytokine Induced Killer (“CIK”) T cell therapy composed of cytotoxic T lymphocytes and natural killer T cells. ● UNLOXCYT was sourced by Fortress and developed at Checkpoint. ​ Emrosi ( Minocycline Hydrochloride Extended-Release Capsules, 40mg, also known as DFD-29, for the treatment of rosacea) ● In November 2024, Journey announced that the FDA approved Emrosi™ (Minocycline Hydrochloride Extended-Release Capsules, 40mg) for the treatment of inflammatory lesions of rosacea in adults.
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Maruho is responsible for all development and commercialization costs for the program throughout the Territory. Late Stage Product Candidates Cosibelimab (anti-PD-L1 antibody) ● Our partner company, Checkpoint, submitted a Biologics License Application (“BLA”) to the U.S.
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Results from Journey’s two Phase 3 clinical trials for Emrosi were published in JAMA Dermatology in March 2025. ● In October 2024, data assessing the dermal and systemic pharmacokinetics (“PK”) of oral DFD-29 (versus oral doxycycline 40 mg capsules (Oracea) in healthy subjects were presented at the 44th Fall Clinical Dermatology Conference.
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Food and Drug administration (“FDA”) for cosibelimab, its investigational anti-PD-L1 antibody, as a treatment for patients with metastatic or locally advanced cutaneous squamous cell carcinoma (“cSCC”) who are not candidates for curative surgery or radiation, in January 2023. In December 2023, the FDA issued a complete response letter (“CRL”) for the cosibelimab BLA.
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DFD-29 40mg showed higher dermal concentration than doxycycline from Day 1 onward at a similar dose, which may translate into a clinically meaningful impact for treating patients with rosacea. ● Emrosi (DFD-29) was developed for the treatment of rosacea at our partner company, Journey, in collaboration with Dr.
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The CRL only cited findings that arose during a multi-sponsor inspection of Checkpoint’s third-party contract manufacturing organization as approvability issues to address in a resubmission. The CRL did not state any concerns about the clinical data package, safety, or labeling for the approvability of cosibelimab.
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Reddy’s Laboratories Ltd. ​ ​ 71 Table of Contents CUTX-101 (copper histidinate injection for Menkes disease) ​ ● In January 2025, our subsidiary Cyprium announced that the FDA had accepted the NDA for CUTX-101 (copper histidinate for Menkes disease) for priority review with a target action date of September 30, 2025. ● In December 2023, Cyprium completed the asset transfer of CUTX-101 to Sentynl, a wholly owned subsidiary of Zydus Lifesciences Ltd.

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