FBIO

Business Context and Reporting Period

Fortress Biotech, Inc. (FBIO) is a biopharmaceutical company focused on acquiring and advancing assets through its subsidiaries and partner companies. The primary revenue generator is its partner company, Journey Medical Corporation (Journey), which markets dermatology products including Emrosi, Qbrexza, and Accutane. This report covers the quarterly period ended September 30, 2025.

Key strategic developments during the period include the deconsolidation of Checkpoint Therapeutics following its acquisition by Sun Pharma in May 2025, and the termination of a license agreement with AnnJi Pharmaceutical by partner company Avenue Therapeutics.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Shift: The Company reported a net income of $8.8 million for Q3 2025, a significant turnaround from a net loss of $26.7 million in Q3 2024. This was driven primarily by a $27.1 million gain from the deconsolidation of Checkpoint Therapeutics and a $15.1 million increase in the fair value of Urica's equity interest in Crystalys.
• Revenue Growth: Net revenue increased 21% year-over-year in Q3 2025, largely due to the commercial launch of Emrosi ($4.9 million in Q3 revenue) and other revenue from the supply of Amzeeq to Cutia Therapeutics.
• Expense Reduction: Operating expenses decreased 33% year-over-year in Q3 2025. Research and Development (R&D) expenses dropped 98% to $0.2 million, primarily due to the deconsolidation of Checkpoint and reduced development costs at Avenue following the termination of the AnnJi agreement.
• Debt Repayment: Proceeds from the Checkpoint sale were used to make a mandatory prepayment of $5.5 million on the Oaktree Note, reducing the outstanding principal balance.

Guidance, Outlook, and Risks

Management Commentary and Outlook: Management believes current cash and cash equivalents ($38.6 million for the Parent Entity) are sufficient to fund operations for at least the next 12 months. The Company continues to rely on product revenue from Journey, equity holdings, and potential monetization of assets. No specific financial guidance was provided for future periods.

Key Risks and Contingencies:

• Financing Constraints: The Company paused dividends on its Series A Preferred Stock in July 2024. Consequently, it is currently ineligible to use Form S-3 for short-form registration statements, limiting its ability to raise capital efficiently until dividends are resumed and accrued amounts are paid.
• Debt Covenants: The Company must maintain minimum liquidity of $7.0 million and ensure Journey's product net sales meet a trailing 12-month minimum of $50.0 million (increasing to $80.0 million over time). Failure to comply could trigger an event of default.
• Product Dependence: A significant portion of revenue relies on Journey's products, some of which face generic competition (e.g., Accutane) or lack patent protection.
• Regulatory Uncertainty: The Company faces risks regarding the "Give Kids a Chance Act" extension for Priority Review Vouchers (PRV) and potential delays in FDA approvals for product candidates like CUTX-101.

Investor Verification Checklist

• Dividend Status: Verify the status of the paused Series A Preferred Stock dividends and the timeline for resumption to regain Form S-3 eligibility.
• Debt Covenant Compliance: Monitor Journey's trailing 12-month net sales to ensure they meet the $50.0 million (and increasing) threshold required by the Oaktree credit agreement.
• Emrosi Commercialization: Track the sales performance and payer coverage expansion of Emrosi, which is the primary driver of recent revenue growth.
• Checkpoint Monetization: Confirm the realization of contingent value rights (CVRs) from the Sun Pharma acquisition, which could provide up to $0.70 per share upon EU approval milestones.
• Liquidity Runway: Assess the burn rate of the Parent Entity versus the $38.6 million cash balance to validate the 12-month liquidity assertion.