Fortress Biotech Reports Third Quarter 2022 Financial Results and Recent Corporate Highlights

Dr. Rosenwald continued, “Urica Therapeutics initiated a Phase 1 clinical trial of dotinurad, which we are developing for the treatment of gout and possibly other hyperuricemic conditions. Our cell and gene therapy partner company, Mustang Bio, announced that the first patient was treated in its multicenter Phase 1/2 clinical trial to evaluate the safety and efficacy of MB-106, a first-in-class CD20-targeted, autologous CAR T cell therapy for the treatment of relapsed or refractory B-cell non-Hodgkin lymphomas (“B-NHL”) and chronic lymphocytic leukemia (“CLL”). Additionally, MB-106 data from the ongoing Phase 1/2 clinical trial underway at Fred Hutchinson Cancer Center (“Fred Hutch”) continue to demonstrate a high rate of complete, durable responses and a favorable safety profile across a wide range of hematologic malignancies, including a 100% complete response rate in patients with Waldenstrom macroglobulinemia (“WM”), a rare form of B-NHL, for which we were granted Orphan Drug Designation. MB-106 also shows potential to treat patients in an outpatient setting and provides an option for patients treated previously with CD19-targeted CAR T cell therapy.”

Dr. Rosenwald concluded, “Looking ahead, we have several near-term milestones planned including the announcement of early results from the Mustang Bio-sponsored Phase 1/2 clinical trial of MB-106 and Checkpoint Therapeutics’ planned Biologics License Application (“BLA”) submission of cosibelimab for both metastatic and locally advanced cutaneous squamous cell carcinoma indications. In the first half of 2023, we anticipate Phase 1 data from the dotinurad clinical trial and topline data from the two DFD-29 Phase 3 clinical trials for the treatment of papulopustular rosacea. In 2023, we also expect the first data publication of Mustang's novel in vivo CAR T platform technology which has the potential to transform oncology therapy through our collaboration with the Mayo Clinic. Additionally, in 2023, we expect to complete the rolling submission of the New Drug Application (“NDA”) for CUTX-101 for the treatment of Menkes disease. We believe this ongoing progress shows the efficiency of Fortress’ model and its ability to advance potentially meaningful treatments while continuing to build long-term value for our shareholders.”    

Recent Corporate Highlights2:

Marketed Dermatology Products and Product Candidates

Cosibelimab (Anti-PD-L1 Antibody for Solid Tumors)

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

CUTX-101 (Copper Histidinate for Menkes disease)

IV Tramadol

Triplex (Cytomegalovirus (“CMV”) Vaccine)

Dotinurad (Urate Transporter (URAT1) Inhibitor)

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

MB-110 (Lentiviral Gene Therapy for RAG1 Severe Combined Immunodeficiency (RAG1-SCID))

General Corporate:

Financial Results:

To assist our stockholders in understanding our company, we have prepared non-GAAP financial results for the three months ended September 30, 2022 and 2021. These results exclude the operations of our four public partner companies: Avenue, Checkpoint, Journey Medical and Mustang Bio, as well as any one-time, non-recurring, non-cash transactions. The goal in providing these non-GAAP financial metrics is to highlight the financial results of Fortress’ core operations, which are comprised of our privately held development-stage entities, as well as our business development and finance functions. See “Use of Non-GAAP Measures” below.

Use of Non-GAAP Measures:
In addition to the GAAP financial measures as presented in this press release and that will be presented in our Form 10-Q for the third quarter of 2022 to be filed with the Securities and Exchange Commission (“SEC”), the Company, in this press release, has included certain non-GAAP measurements. The non-GAAP net loss attributable to common stockholders is defined by the Company as GAAP net loss attributable to common stockholders, less net losses attributable to common stockholders from our public partner companies Avenue, Checkpoint, Journey Medical and Mustang Bio (“public partner companies”), as well as our former subsidiary, Caelum. In addition, the Company has also provided a Fortress non-GAAP loss attributable to common stockholders which is a modified EBITDA calculation that starts with the non-GAAP loss attributable to common stockholders and removes stock-based compensation expense, non-cash interest expense, amortization of licenses and debt discount, changes in fair values of investment, changes in fair value of derivative liability, and depreciation expense. The Company also provides non-GAAP research and development expenses including license acquisitions, defined as GAAP research and development costs, less research and development costs of our public partner companies and non-GAAP consolidated selling, general and administrative expenses, defined as GAAP selling, general and administrative expenses, less selling, general and administrative costs of our public partner companies.

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

The tables below provide a reconciliation from GAAP to non-GAAP measures: For the three months ended September 30, For the nine months ended September 30,($ in thousands except for share and per share amounts) 2022 20211 2022 20211 Net loss attributable to common stockholders $(22,511) $(20,781) $(59,627) $(33,138)Net loss attributable to common stockholders - Avenue2 (254) (196) (1,143) (636)Net loss attributable to common stockholders - Checkpoint3 (1,900) (2,126) (7,420) (4,995)Net loss attributable to common stockholders - Journey Medical4 (6,017) (12,863) (11,581) (26,605)Net loss attributable to common stockholders - Mustang Bio5 (2,365) (3,085) (6,281) (8,499)Non-GAAP (loss) income attributable to common stockholders $(11,975) $(2,511) $(33,202) $7,597 Stock based compensation 4,096 2,587 9,763 7,363 Non-cash interest 4 14 12 37 Amortization of debt discount 364 72 1,125 975 Depreciation 93 78 291 356 Increase in fair value of investment in Caelum6 - (8,376) - (39,294)Realization in Caelum investment6 - 56,860 - 56,860 Fortress non-GAAP (loss) income attributable to common stockholders $(7,418) $48,724 $(22,011) $33,894 Per common share - basic and diluted: Net loss attributable to common stockholders (GAAP) $(0.25) $(0.26) $(0.68) $(0.41)Non-GAAP net loss attributable to common stockholders $(0.13) $(0.03) $(0.38) $0.09 Fortress non-GAAP loss attributable to common stockholders $(0.08) $0.60 $(0.25) $0.42 Weighted average common shares outstanding - basic and diluted 89,424,947 81,348,243 88,291,970 81,056,165                  

Reconciliation to non-GAAP research and development and general and administrative costs: For the quarter ended September 30, For the nine months ended September 30,($ in thousands) 2022 20211 2022 20211 Research and development2 $29,903 $28,080 $99,755 $85,811 Less: Research and development - Avenue 194 278 2,153 864 Research and development - Checkpoint 8,866 9,384 35,589 20,795 Research and development - Journey Medical 2,812 794 6,687 14,566 Research and development - Mustang Bio3 15,334 14,651 46,537 38,046 Non-GAAP research and development costs $2,697 $2,973 $8,789 $11,540 Selling, general and administrative $30,139 $22,221 $85,457 $59,145 Less: General and administrative - Avenue 469 594 1,978 1,960 General and administrative - Checkpoint4 1,695 1,759 5,604 5,109 Selling, general and administrative - Journey Medical 15,575 10,755 45,481 24,776 General and administrative - Mustang Bio5 3,246 2,226 8,524 6,522 Non-GAAP selling, general and administrative costs $9,154 $6,887 $23,870 $20,778                  

About Fortress Biotech
Fortress Biotech, Inc. (“Fortress”) is an innovative biopharmaceutical company focused on acquiring, developing and commercializing high-potential marketed and development-stage drugs and drug candidates. The company has eight marketed prescription pharmaceutical products and over 30 programs in development at Fortress, at its majority-owned and majority-controlled partners and subsidiaries and at partners and subsidiaries it founded and in which it holds significant minority ownership positions. Such product candidates span six large-market areas, including oncology, rare diseases and gene therapy, which allow it to create value for shareholders. Fortress advances its diversified pipeline through a streamlined operating structure that fosters efficient drug development. The Fortress model is driven by a world-class business development team that is focused on leveraging its significant biopharmaceutical industry expertise to further expand the company’s portfolio of product opportunities. Fortress has established partnerships with some of the world’s leading academic research institutions and biopharmaceutical companies to maximize each opportunity to its full potential, including AstraZeneca plc, City of Hope, Fred Hutchinson Cancer Research Center, St. Jude Children’s Research Hospital, Nationwide Children’s Hospital and Sentynl Therapeutics, Inc. For more information, visit www.fortressbiotech.com.

Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. As used below and throughout this press release, the words “we”, “us” and “our” may refer to Fortress individually or together with one or more partner companies, as dictated by context. Such statements include, but are not limited to, any statements relating to our growth strategy and product development programs, ability to generate shareholder value, ability of our products to receive necessary approvals, including FDA, ability of our products and therapies to help treat patients and any other statements that are not historical facts. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. Factors that could cause actual results to differ materially from those currently anticipated include: risks relating to our growth strategy; our ability to obtain, perform under and maintain financing and strategic agreements and relationships; risks relating to the results of research and development activities; uncertainties relating to preclinical and clinical testing; risks relating to the timing of starting and completing clinical trials, including disruptions that may result from hostilities in Europe; our dependence on third-party suppliers; risks relating to the COVID-19 outbreak and its potential impact on our employees’ and consultants’ ability to complete work in a timely manner and on our ability to obtain additional financing on favorable terms or at all; our ability to attract, integrate and retain key personnel; the early stage of products under development; our need for substantial additional funds; government regulation; patent and intellectual property matters; competition; our compliance with applicable Nasdaq listing standards; as well as other risks described in our SEC filings. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Company Contact:
Jaclyn Jaffe
Fortress Biotech, Inc.
(781) 652-4500
ir@fortressbiotech.com

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

FORTRESS BIOTECH, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
($ in thousands except for share and per share amounts) September 30, December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $208,351 $305,744 Accounts receivable, net 28,533 23,112 Inventory 15,230 9,862 Other receivables - related party 153 678 Prepaid expenses and other current assets 5,727 7,066 Total current assets 257,994 346,462 Property, plant and equipment, net 13,773 15,066 Operating lease right-of-use asset, net 19,756 19,005 Restricted cash 2,220 2,220 Intangible asset, net 28,424 12,552 Other assets 1,394 1,198 Total assets $323,561 $396,503 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $93,817 $90,660 Deferred revenue 1,093 2,611 Income taxes payable — 345 Operating lease liabilities, short-term 2,271 2,104 Partner company line of credit — 812 Partner company installment payments - licenses, short-term, net 9,122 4,510 Total current liabilities 106,303 101,042 Notes payable, long-term, net 91,165 42,937 Operating lease liabilities, long-term 21,474 20,987 Partner company installment payments - licenses, long-term, net 1,374 3,627 Other long-term liabilities 1,893 2,033 Total liabilities 222,209 170,626 Stockholders’ equity Cumulative redeemable perpetual preferred stock, $0.001 par value, 15,000,000 authorized, 5,000,000 designated Series A shares, 3,427,138 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively, liquidation value of $25.00 per share 3 3 Common stock, $0.001 par value, 200,000,000 shares authorized, 108,259,353 shares issued and outstanding as of September 30, 2022; 170,000,000 shares authorized, 101,435,505 shares issued and outstanding as of December 31, 2021, respectively 108 101 Additional paid-in-capital 668,650 656,033 Accumulated deficit (607,090) (547,463)Total stockholders' equity attributed to the Company 61,671 108,674 Non-controlling interests 39,681 117,203 Total stockholders' equity 101,352 225,877 Total liabilities and stockholders' equity $323,561 $396,503        

FORTRESS BIOTECH, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
($ in thousands except for share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Revenue Product revenue, net $16,043 $19,610 $55,074 $45,617 Collaboration revenue 364 1,446 1,518 4,646 Revenue - related party 48 29 118 252 Other revenue 73 — 2,629 — Net revenue 16,528 21,085 59,339 50,515 Operating expenses Cost of goods sold - product revenue 7,221 11,167 23,057 22,559 Research and development 29,855 27,367 99,707 70,226 Research and development - licenses acquired 47 713 48 15,585 Selling, general and administrative 30,139 22,221 85,457 59,145 Wire transfer fraud loss — 9,540 — 9,540 Total operating expenses 67,262 71,008 208,269 177,055 Loss from operations (50,734) (49,923) (148,930) (126,540) Other income (expense) Interest income 419 132 711 505 Interest expense and financing fee (3,393) (4,444) (8,897) (9,393)Foreign exchange loss (21) — (21) — Change in fair value of investments — 8,376 — 39,294 Change in fair value of derivative liability — (2) — (184)Grant income 669 — 669 — Total other income (expense) (2,326) 4,062 (7,538) 30,222 Net loss (53,060) (45,861) (156,468) (96,318) Net loss attributable to non-controlling interests 30,549 25,080 96,841 63,180 Net loss attributable to common stockholders $(22,511) $(20,781) $(59,627) $(33,138) Net loss per common share - basic and diluted $(0.59) $(0.56) $(1.77) $(1.19)Net loss per common share attributable to non - controlling interests - basic and diluted $(0.34) $(0.31) $(1.10) $(0.78)Net loss per common share attributable to common stockholders - basic and diluted $(0.25) $(0.26) $(0.68) $(0.41) Weighted average common shares outstanding - basic and diluted 89,424,947 81,348,243 88,291,970 81,056,165                  

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1 Includes two trials at Caelum Biosciences; AstraZeneca’s Alexion acquired Caelum Biosciences, a company founded by Fortress, on 10/5/2021 for up to $500 million, including $150 million upfront and up to $350 million in future contingent milestone payments. Fortress received ~$56.9 million of such upfront amount and is eligible to receive ~42% of the proceeds from all future milestone payments.
2 Includes product candidates in development at Fortress, majority-owned and controlled partners and/or subsidiaries, and partners and/or subsidiaries in which Fortress holds significant minority ownership positions. As used herein, the words “we”, “us” and “our” may refer to Fortress individually or together with our affiliates, subsidiaries and partners, and the word “partner” refers to either entities that are publicly traded and in which we own or control a majority of the ownership position or third-party entities with whom we have a significant business relationship, each as dictated by context.
3 At September 30, 2022, we had cash and cash equivalents of $208.4 million, of which $61.2 million relates to Fortress and the private partner companies, primarily funded by Fortress, $20.5 million relates to Checkpoint, $91.4 million relates to Mustang Bio, $34.9 million relates to Journey Medical, and $0.2 million relates to Avenue. Restricted cash related to our leases was $2.2 million, of which $1.2 million relates to Fortress and $1.0 million relates to Mustang Bio.
4 At June 30, 2022, we had cash and cash equivalents of $248.8 million, of which $71.5 million relates to Fortress and the private partner companies, primarily funded by Fortress, $30.9 million relates to Checkpoint, $107.4 million relates to Mustang Bio, $38.1 million relates to Journey Medical, and $0.9 million relates to Avenue. Restricted cash related to our leases was $2.2 million, of which $1.2 million relates to Fortress and $1.0 million relates to Mustang Bio.