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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-31 · 250 added, 251 removed, 269 unchanged (65% of the section changed)

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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 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.

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”), Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr.

Reddy’s Laboratories, Ltd.

(“DRL”), and Sun Pharmaceutical Industries Limited (“Sun Pharma”).

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.

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.

(“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.

CKPT, “Checkpoint”), Journey Medical Corporation (Nasdaq:

To date, three partner companies are publicly-traded, and four subsidiaries have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.

(“AstraZeneca”), Sentynl Therapeutics, Inc.

(“Sentynl”), Axsome Therapeutics, Inc.

(“Axsome”), and Sun Pharma.

Our subsidiaries and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are:

Journey Medical Corporation (Nasdaq:

DERM, “Journey” or “JMC”), Mustang Bio, Inc.

MBIO, “Mustang”), Avenue Therapeutics, Inc.

ATXI, “Avenue”), Baergic Bio, Inc.

(“Baergic,” a subsidiary of Avenue), Cellvation, Inc.

ATXI, “Avenue”), Cellvation, Inc.

(“Cellvation”), Cyprium Therapeutics, Inc.

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(“Oncogenuity”) and Urica Therapeutics, Inc.

Checkpoint Therapeutics, Inc.

(“Checkpoint”), previously a partner company of ours, was acquired by Sun Pharma in May 2025.

Baergic Bio, Inc.

(“Baergic”), previously a subsidiary of Avenue, was acquired by Axsome in November 2025.

Recent Events

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● For the years ended December 31, 2025 and 2024, total net revenue was $63.3 million and $57.7 million, respectively, which includes net product revenue from Journey’s commercial portfolio of $61.2 million and $55.1 million, respectively.

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.

● For the year ended December 31, 2025, other revenue included $1.4 million related to Avenue’s termination of its license agreement with AnnJi Pharmaceutical Co.

(“AnnJi”), and $0.6 million related to Journey’s supply of Amzeeq to Cutia for commercial use and sales-based royalties on Cutia’s net sales of Amzeeq.

● In January 2026, we announced the FDA approval of ZYCUBO (copper histidinate, also known as CUTX-101) for the treatment of Menkes Disease in pediatric patients.

Our subsidiary, Cyprium, is eligible to receive commercial milestones and royalties on net sales of ZYCUBO from Sentynl, and was also transferred a Rare Pediatric Disease Priority Review Voucher (“PRV”) from Sentynl subsequent to the approval, which was sold for $205 million in gross proceeds.

● Also in January 2026, Sun Pharma announced the commercial availability of UNLOXCYT (cosibelimab-ipdl), for the treatment of advanced cutaneous squamous cell carcinoma (“acSCC”) in adults who are not candidates for curative surgery or radiation.

● 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.

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.

and UNLOXCYT (cosibelimab-ipdl), for acSCC by 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.

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.

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.

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.

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.

Reddy’s Laboratories Ltd.

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.

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.

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.

● In November 2024, Journey announced that the FDA approved Emrosi for the treatment of inflammatory lesions of rosacea in adults, and Journey subsequently launched Emrosi in March 2025.

● Emrosi was developed for the treatment of rosacea at our partner company, Journey, in collaboration with DRL.

Commercial and Approved Products

UNLOXCYT™ (cosibelimab-ipdl, anti-PD-L1 antibody)

● In May 2025, our former subsidiary, Checkpoint, was acquired by Sun Pharma for $4.10 per share in cash plus a contingent value right of up to $0.70 per share upon the achievement of EU approval of Checkpoint’s principal drug product candidate.

Fortress received $28.0 million and is eligible for a 2.5% royalty on net sales of UNLOXCYT as well as up to $4.8 million upon achievement of the contingent value right.

● On December 13, 2024, Checkpoint received approval from the FDA for UNLOXCYT (cosibelimab-ipdl), for the treatment of metastatic or locally advanced cSCC in adults who are not candidates for curative surgery or radiation.

● UNLOXCYT was sourced by Fortress and developed at Checkpoint, which was acquired by Sun Pharma in May 2025.

ZYCUBO (copper histidinate injection for Menkes disease, also referred to as CUTX-101)

● On January 13, 2026, we announced the FDA approved ZYCUBO (copper histidinate, also referred to as CUTX-101) for the treatment of Menkes disease in pediatric patients.

A PRV was issued in connection with FDA approval and, pursuant to the transaction with Sentynl, was transferred to Cyprium.

On February 22, 2026, Cyprium entered into a definitive asset purchase agreement pursuant to which Cyprium agreed to sell the PRV for $205 million, which was paid upon the closing of the sale as announced on March 30, 2026.

● Previously, in October 2025, Cyprium announced that the FDA had issued a CRL to Sentynl for CUTX-101 (copper histidinate for Menkes disease).

The CRL noted cGMP deficiencies had been observed at the facility where CUTX-101 is manufactured and did not cite any other approvability concerns, nor did it identify any deficiencies in CUTX-101’s efficacy and safety data.

In December 2025, we announced the FDA accepted the resubmission of the NDA for CUTX-101 as a Class 1 resubmission with a new PDUFA target action date of January 14, 2026.

● In December 2023, Cyprium completed the asset transfer of CUTX-101 to Sentynl.

Sentynl is obligated under the applicable agreement to use commercially reasonable efforts to develop and commercialize CUTX-101.

Additionally, Cyprium is eligible to receive up to $128 million in aggregate sales milestones and royalties on net sales of ZYCUBO ranging from 3% to 12.5% on tiered annual net sales.

● 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)

Late Stage Product Candidates

CAEL-101 (light chain fibril-reactive monoclonal antibody for AL amyloidosis)

● On October 5, 2021, AstraZeneca acquired Caelum Biosciences, Inc.

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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:

● There are two ongoing global Phase 3 pivotal studies of CAEL-101 (also known as anselamimab) for Mayo Stage IIIa and Mayo Stage IIIb amyloid light-chain amyloidosis (“AL amyloidosis”), known as Cardiac Amyloid Reaching for Extended Survival (“CARES”) (ClinicalTrials.gov identifiers:

NCT04512235 and NCT04504825 ).

( Information on clinicaltrials.gov does not constitute part of this Annual Report on Form 10-K.) .

● CAEL-101 (also known as anselamimab) was sourced by Fortress and was developed by Caelum (founded by Fortress) until the acquisition by AstraZeneca of Caelum in October 2021 .

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.

● On July 16, 2025, AstraZeneca announced an update from its Cardiac Amyloid Reaching for the CARES Phase 3 clinical program showing that anselamimab did not achieve statistical significance for the primary endpoint compared to placebo in patients with Mayo stages IIIa and IIIb AL amyloidosis.

The primary endpoint was defined as a hierarchical combination of time to all-cause mortality (“ACM”) and frequency of cardiovascular hospitalizations (“CVH”).

All patients in the clinical program received background standard of care for plasma cell dyscrasia.

AstraZeneca stated that anselamimab showed highly clinically meaningful improvement in time to ACM and frequency of CVH in a prespecified subgroup of patients, compared to placebo (although AstraZeneca did not further characterize this subgroup).

AstraZeneca also reported that anselamimab was well tolerated, with the majority of events balanced between the anselamimab treatment arm and the placebo arm.

AstraZeneca indicated that the company plans to submit the pre-specified subgroup analysis from the CARES trials with regulatory authorities.

In January 2026, the European Medicines Agency (“EMA”) disclosed that an approval application for anselamimab for the treatment of adult patients with kappa light chain amyloidosis was being reviewed.

● CAEL-101 was sourced by Fortress and was developed by Caelum (founded by Fortress) until the acquisition by AstraZeneca of Caelum in October 2021 .

Dotinurad (urate transporter (URAT1) inhibitor for gout)

● In October 2025, Urica announced that Crystalys Therapeutics, Inc.

(“Crystalys”), in which Urica maintains an equity position, announced a $205 million Series A financing to support the advancement of global Phase 3 clinical studies evaluating dotinurad for the treatment of gout.

● Also in October 2025, Urica announced the first patients were dosed in two randomized, double-blind, multicenter global Phase 3 trials, (ClinicalTrials.gov identifiers:

the RUBY study (NCT07089875) and the TOPAZ study (NCT07089888)) evaluating dotinurad, a next-generation, once daily oral, URAT1 inhibitor with potential for best-in-class safety and efficacy for the treatment of gout.

● In July 2024, Urica entered into an asset purchase agreement, royalty agreement, and related agreements (collectively, the “Transaction Documents”) with Crystalys.

Crystalys is a Delaware corporation founded in 2023 and seeded by leading life sciences institutional investors.

Under the Transaction Documents, Urica transferred substantially all intellectual property rights in dotinurad to Crystalys.

In return, Crystalys issued to Urica shares of its common stock, including certain anti-dilution provisions through the raise of $150 million in equity securities, and also granted Urica a secured 3% royalty on future net sales of dotinurad.

● Dotinurad was approved in Japan in 2020 has also obtained regulatory approval in China, Philippines and Thailand.

● Dotinurad was sourced by Fortress and was in development at our Urica subsidiary until being acquired by Crystalys in July 2024.

Triplex (cytomegalovirus vaccine and immunotherapy)

● Triplex, a potential vaccine and immunotherapy for prevention and 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 first half of 2026.

The study aims to show that vaccination with Triplex can safely elicit a CMV-specific immune response and reduce asymptomatic CMV replication in a population of people with HIV on suppressive antiretroviral therapy.

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The trial is funded by a grant from the National Cancer Institute (“NCI”) (NCT06059391).

● In May 2024, we announced that the first patient was dosed in a multi-center, placebo-controlled, randomized Phase 2 study of Triplex in patients undergoing liver transplantation.

The trial is funded by a grant from the National Institutes of Health’s National Institute of Allergy and Infectious Diseases (“NIH/NIAID”) that could provide over $20 million in non-dilutive funding and will be conducted in up to 20 nationally recognized transplant centers in the United States (NCT06075745).

● Triplex is currently also the subject of multiple other ongoing clinical trials, including:

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and a Phase 1 trial of Triplex in combination with an allogeneic anti-CD19-CAR CMV-specific T cell therapy for adults with high-risk acute lymphoblastic leukemia (NCT06735690).

● In 2023, Helocyte additionally entered into an option agreement with City of Hope for exclusive worldwide rights to a novel bispecific CMV/HIV CAR T cell therapy (optionally for use in combination with Triplex), which is currently the subject of a Phase 1 trial in adults living with HIV-1 (see NCT06252402 ).

● Triplex was sourced by Fortress and is currently in development at our subsidiary, Helocyte.

Early Stage Product Candidates

Dotinurad (urate transporter (URAT1) inhibitor for gout)

● In July 2024, Urica entered into an asset purchase agreement, royalty agreement, and related agreements (collectively, the “Transaction Documents”) with Crystalys Therapeutics, Inc.

(“Crystalys”).

Crystalys is a Delaware corporation founded in 2023 and seeded by leading life sciences institutional investors.

Under the Transaction Documents, Urica transferred substantially all intellectual property rights in dotinurad, its URAT1 inhibitor product candidate that is in development for the treatment of gout, to Crystalys.

In return, Crystalys issued to Urica shares of its common stock equal to 35% of Crystalys’ outstanding equity including certain anti-dilution provisions through the raise of $150 million in equity securities.

The Transaction Documents also granted Urica a secured 3% royalty on future net sales of dotinurad, as well as a right to receive nominal cash reimbursement payments for certain clinical and development costs incurred by Urica related to dotinurad.

● Dotinurad was approved in Japan in 2020 as a once-daily oral therapy for gout and hyperuricemia.

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 November 2024, Mustang announced that the FDA granted Orphan Drug Designation to Mustang for MB-108, a HSV-1 oncolytic virus, for the treatment of malignant glioma.

In July 2025, we announced that the FDA granted Orphan Drug Designation to Mustang for MB-101 for the treatment of recurrent diffuse and anaplastic astrocytoma (astrocytomas) and glioblastoma.

● 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.

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In the cohort with dual intratumoral (ICT) / intraventricular (ICV) delivery and an optimized manufacturing process there was a ~70% improvement in median overall survival (10.2 months) compared to the expected survival rate of six months in this patient population.

● We are currently exploring with COH to conduct an investigator-sponsored single-institution trial under the COH IND to treat patients with IL13Rα2+ recurrent GBM and high-grade astrocytoma with MB-109 that could potentially be initiated in the fourth quarter of 2025.

● Mustang is currently exploring with COH an investigator-sponsored single-institution trial under the COH IND to treat patients with IL13Rα2+ recurrent GBM and high-grade astrocytoma with MB-109 that could potentially be initiated in the second quarter of 2026.

● MB-101, MB-108, and MB-109 are currently in development at our partner company, Mustang.

MB-106 (CD20-targeted CAR T cell therapy)

● In March 2024, Mustang announced an expansion into autoimmune diseases with MB-106, a personalized CD20-targeted, 3rd-generation autologous CAR T-cell therapy.

Planning for a proof-of concept Phase 1 investigator-sponsored clinical trial evaluating MB-106 in autoimmune diseases is underway.

● In June 2024, we announced that updated data for MB-106 showed a favorable safety and efficacy profile in patients with Waldenstrom macroglobulinemia (“WM”), a rare form of blood cancer.

There was an ORR of 90% in the cohort with durable responses observed, including three complete responses (“CR”), two very good partial responses (“VGPR”), and four partial responses, and one patient remaining in complete remission at 31 months.

● MB-106 was sourced by Fortress and is currently in development at our partner company, Mustang.

ATX-04 (clenbuterol)

● On February 18, 2026, our partner company Avenue entered into a license agreement with Duke University (“Duke”), whereby Avenue obtained an exclusive worldwide license (the "ATX-04 License") from Duke to certain patents and know-how pertaining to clenbuterol for the treatment of lysosomal storage diseases.

● ATX-04 is a selective β2-adrenergic agonist with human proof-of-concept data demonstrating improved muscle function and enhanced response to enzyme replacement therapy.

Avenue intends to advance ATX-04 through a late-stage clinical development program leveraging existing human safety and efficacy data, with an initial focus on treating Pompe disease as an adjunct to enzyme replacement therapy.

● ATX-04 is in development at our partner company, Avenue.

Other Product Candidates

AJ201 (Nrf1 and Nrf2 activator, androgen receptor degradation enhancer)

● In May 2024, we announced that the last patient completed dosing in a Phase 1b/2a study, which is evaluating AJ201 in the U.S.

for the treatment of spinal and bulbar muscular atrophy, also known as Kennedy’s Disease.

Kennedy’s Disease is a debilitating rare genetic neuromuscular disease primarily affecting men.

● AJ201 was sourced by Fortress and is currently in development at our partner company, Avenue.

● On March 3, 2025, Avenue received a “notice of intent to terminate” letter from AnnJi Pharmaceutical Co.

Ltd., the licensor of AJ201, with respect to the license agreement under which Avenue was granted rights to the product candidate;

Avenue believes that the grounds for termination stated in the purported termination notice are without merit and intends to avail itself of the dispute resolution procedures set forth in the AJ201 license agreement.

● In March 2025, Avenue received a “notice of intent to terminate” letter from AnnJi, the licensor of AJ201, with respect to the license agreement under which Avenue was granted rights to the product candidate.

● In April 2025, Avenue and AnnJi entered into a License Termination and Program Transfer Agreement, pursuant to which the license agreement and related agreements were terminated and the program was returned to AnnJi, with AnnJi paying $1.6 million net of withholding to Avenue.

Avenue is eligible to receive milestone payments, royalties on AJ201, and sublicensing revenue from AnnJi.

● AJ201 was sourced by Fortress and was previously in development at our partner company, Avenue.

BAER-101 (GABAA α2/3 positive allosteric modulator)

● In November 2025, Avenue announced it had entered into an agreement for Baergic to be acquired by Axsome, including the global rights to BAER-101 (also known as AZD7325), a novel oral GABAA α2,3 subtype-selective receptor positive allosteric modulator (“PAM”).

BAER-101 was originally licensed by Baergic from AstraZeneca AB and will be referred to as AXS-17 by Axsome going forward.

Axsome intends to evaluate AXS-17 as a potential treatment for epilepsy.

● Avenue is eligible to receive approximately 74% of all future payments and royalties payable to the former stockholders of Baergic including development and commercial milestones and a tiered mid-to-high single-digit royalty on potential global net sales of AXS-17.

● BAER-101 was sourced by Fortress and was in development at Baergic, a majority-owned subsidiary of Avenue, until its sale to Axsome in November 2025.

General Corporate and Other – Fortress

● In March 2025, Fortress and Checkpoint announced the entry into agreement for Checkpoint to be acquired by Sun Pharmaceutical Industries, Inc.

(“Sun Pharma”) for $4.10 per share in cash plus a contingent value right of up to $0.70 per share upon the achievement of EU approval for Checkpoint’s UNLOXCYT product candidate.

Fortress also entered into a royalty agreement with Checkpoint and Sun Pharma pursuant to which Fortress is eligible to receive a royalty of 2.5% on worldwide net sales of UNLOXCYT.

● In July 2024, Fortress’ Board of Directors paused the payment of dividends on the Company’s 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) until further notice.

The pausing of these dividends will defer approximately $0.7 million in cash dividend payments each month.

The Board intends to revisit its decision regarding the monthly dividend regularly and will assess the profitability and cash flow of the Company to determine whether and when the pause should be lifted.

● In July 2024, Fortress announced the reduction of total debt outstanding and the entry into a new $50 million term loan with Oaktree Capital Management with a maturity in 2027.

The Company borrowed $35.0 million under the agreement on the closing date and is able to draw up to an additional $15.0 million at the lenders’ discretion to support future business development activities .

In connection with the new term loan, Fortress repaid the prior $50 million term loan with Oaktree.

● Throughout 2024, Fortress raised total net proceeds of approximately $21.1 million through equity offerings.

● In the year ended December 31, 2025, the Company received gross proceeds of $2.6 million from warrant exercises.

● Due to the receipt of $28 million of proceeds from the sale of Checkpoint in May 2025, the Company made payments to Oaktree comprising:

$5.5 million in principal, $0.1 million in interest, and $0.3 million in Yield Protection Premium (as defined in the New Oaktree Agreement).

At December 31, 2025, the outstanding principal balance of the 2024 Oaktree Note was $29.8 million.

● On February 22, 2026, Cyprium entered into a definitive asset purchase agreement (the “PRV APA”) pursuant to which Cyprium agreed to sell the PRV that was originally issued in connection with the FDA’s approval of ZYCUBO (copper histidinate, formerly known as CUTX-101) for the treatment of Menkes disease in pediatric patients and that was transferred to Cyprium prior to the entry into the PRV APA for $205 million.

On March 30, 2026, the Company and Cyprium announced the closing of the PRV APA transaction.

● The Company owns the majority of Cyprium’s outstanding common stock, on an as-converted basis, and expects to receive its pro rata share of future dividends from Cyprium following the closing of the PRV APA.

In total, the Company expects to receive an aggregate of at least $100.0 million from Cyprium pursuant to potential future dividends and intercompany agreements, including amounts owed by Cyprium to the Company through intercompany debt, interest and accrued expenses.

General Corporate and Other – Public Subsidiaries

● In March 2025, Checkpoint announced that it had entered into an agreement to be acquired by Sun Pharmaceutical Industries, Inc.

(“Sun Pharma”) for $4.10 per share in cash plus a contingent value right of up to $0.70 per share upon the achievement of EU approval.

The closing of the transaction is subject to various conditions including the approval by requisite majorities at a meeting of Checkpoint’s stockholders.

We expect the transaction to close in the second quarter of 2025, although there can be no assurance that the transaction closes in a timely manner, or at all.

Additionally, due to uncertainties as to the timing of the completion of the acquisition, uncertainties as to whether Checkpoint’s stockholders will vote to approve the transaction, the possibility that competing offers will be made and the possibility that various closing conditions for the transaction may not be satisfied or waived, Fortress may not realize the anticipated benefits of the proposed transaction in the time frame expected, or at all.

● In March 2025, Avenue (ATXI) received a notice from The Nasdaq Stock Market LLC that Avenue’s common stock would be suspended at the open of trading on March 19, 2025.

● In the year ended December 31, 2025, Journey received approximately $16.4 million in net proceeds under the Journey At the Market Offering program.

● In July 2025, Mustang received gross proceeds of $7.1 million from warrant exercises.

● In June 2025, Journey Medical joined the small-cap Russell 2000 Index and the broad-market Russell 3000 Index, effective after the close of U.S.

equity markets on June 27, 2025, as a result of their 2025 annual Russell Index reconstitution.

● In March 2025, Avenue received a notice from The Nasdaq Stock Market LLC that Avenue’s common stock would be suspended at the open of trading on March 19, 2025.

Avenue’s common stock was subsequently formally delisted from the Nasdaq Capital Market in July 2025.

Avenue’s common stock began trading under the symbol “ATXI” on the OTC Markets system on March 19, 2025.

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● In January 2025, Mustang effected a 1-for-50 reverse stock split to achieve compliance with the minimum bid price listing requirement of the Nasdaq Capital Market.

● In July 2024, Journey entered into an amendment of its existing credit facility with SWK, increasing the amount of the facility from $20 million to $25 million.

● In April 2024, Avenue effected a 1-for-75 reverse stock split to achieve compliance with the minimum bid price listing requirement of the Nasdaq Capital Market.

● In April 2024, Mustang’s board of directors approved a reduction in its workforce of approximately 81% of its employee base in order to reduce costs and preserve capital;

the reduction occurred primarily in April 2024 and was substantially complete in the second quarter of 2024.

● Throughout 2024, Checkpoint raised total net proceeds of approximately $32.8 million through equity offerings and the exercise of existing warrants .

Subsequently, Checkpoint raised $36.0 million through the exercise of warrants in March 2025.

● Throughout 2024, Mustang raised total net proceeds of approximately $11.2 million through equity offerings and the exercise of existing warrants.

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

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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.

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.

The note proceeds were allocated between the 2024 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 2024 Oaktree Note.

The discount is being amortized utilizing the effective interest method over the term of the 2024 Oaktree Note, which was approximately 11.6% at December 31, 2025.

Accrued Research and Development Expense

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Partner Company/Subsidiary

Checkpoint (Nasdaq:

Journey (Nasdaq:

Mustang (Nasdaq:

In May 2025, our former subsidiary, Checkpoint, was acquired by Sun Pharma.

Results of Operations

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Interest expense and financing fee

Gain (loss) on common stock warrant liabilities

Other income (expense)

Total other expense

Loss on common stock warrant liabilities

Gain from deconsolidation of subsidiary

Total other income (expense)

Loss before income tax expense

Income tax expense

net loss attributable to non-controlling interest

Net loss attributable to Fortress

Income tax expense (benefit)

Attributable to non-controlling interests

Net income (loss) attributable to Fortress

Year Ended December 31,

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Other revenue

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.

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.

For the year ended December 31, 2024, net product revenues decreased by $4.5 million, or 8%, to $55.1 million for the year ended December 31, 2024, from $59.7 million for the year ended December 31, 2023.

The decrease is primarily due to overall higher managed care rebate costs across Journey’s product portfolio and lower unit volumes, mainly from Journey’s legacy products, Targadox, Ximino and Exelderm, driven specifically by continued generic competition for Targadox.

In addition, Amzeeq net product revenues decreased by approximately $1.2 million, due to both higher managed care rebates and decreased unit sales volumes from 2023.

Increases in unit sales volumes for Qbrexza, Accutane and Zilxi were offset by higher rebate costs compared to 2023.

For the year ended December 31, 2025, we generated $63.3 million of net revenue, of which $61.2 million relates to product revenue derived from Journey’s sales of branded and generic products, and $2.0 million in other revenue comprises $1.4 million related to Avenue’s termination of its license agreement with AnnJi, and $0.6 million related to Journey’s supply of Amzeeq to Cutia for commercial use and sales-based royalties on Cutia’s net sales of Amzeeq.

JMC began supplying Amzeeq to Cutia in August 2025 under an agreement with Cutia.

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 $1.0 million milestone payment from Cutia that became payable to JMC upon Cutia receiving marketing approval for topical 4% minocycline foam in the People’s Republic of China.

For the year ended December 31, 2025, net product revenues increased by $6.1 million, or 11%, from $55.1 million.

The increase is primarily due to the U.S commercial launch of Emrosi generating incremental revenues of $14.7 million in 2025.

This is partially offset by a decrease in Accutane revenue of $6.5 million, as a result of lower sales volume driven by recent market competition, as well as a decrease in JMC’s sales of legacy products due to lower unit volumes driven by generic competition.

Cost of Goods Sold

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Cost of goods sold – (excluding amortization of acquired intangible assets)

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.

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.

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.

Cost of goods sold – (excluding amortization of acquired intangible assets) was consistent year over year at $20.9 million for the years ended December 31, 2025 and 2024.

Higher royalty expenses associated with incremental revenue from Emrosi in 2025 were offset by lower product costs resulting from a favorable product mix, primarily reflecting the increased sales of Emrosi in 2025.

Emrosi carries a higher gross margin than our other products, contributing to the stable overall cost of goods sold despite the increased revenues.

Amortization of Acquired Intangible Assets

Year Ended December 31,

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Amortization of acquired intangible assets

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.

Amortization of acquired intangible assets increased by $0.8 million, or 24%, to $4.3 million for the year ended December 31, 2025, from $3.4 million for the year ended December 31, 2024, driven by the addition of the Emrosi acquired intangible asset upon Journey’s payment to DRL of the milestone payment triggered by the FDA’s approval of Emrosi in November 2024.

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.

For the years ended December 31, 2024 and 2023, R&D expenses were approximately $56.6 million and $101.7 million, respectively.

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.

For the years ended December 31, 2025 and 2024, R&D expenses were approximately $11.9 million and $56.6 million, respectively, a decrease of $44.7 million or 79%.

The table below provides a summary of research and development by entity, for the years ended December 31, 2025 and 2024:

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Includes Fortress and private subsidiaries primarily funded by Fortress:

Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The decrease in R&D spending at Mustang of $33.0 million is primarily attributed to decreased expenses of $13.9 million for personnel related costs, primarily driven by the reduction in Mustang’s workforce, a decrease of $8.2 million in laboratory supply costs, including vector manufacturing costs due to the termination of the MB-106 clinical trial, a $6.1 million decrease in program-related expenses due primarily to terminated licenses and the closing the MB-106 clinical trial, a decrease of $2.9 million in consulting expenses, and a decrease of $1.8 million in other expenses, including depreciation and rent expense.

Checkpoint’s reduced R&D expense of $4.0 million is due to the costs associated with the BLA submission in 2023, including the $3.2 million PDUFA fee and a milestone payment of $2.3 million due as a result of the BLA filing, and an $8.2 million reduction in costs related to commercial manufacturing costs and inventory build, which were expensed prior to approval, to support the potential launch of cosibelimab-ipdl.

R&D at Fortress has decreased due to cost reductions at both Cyprium (CUTX-101 development program) and Urica (dotinurad clinical program) as those programs were transitioned to Sentynl and Crystalys, respectively.

R&D at Fortress is inclusive of annual PIK dividend income received from the subsidiaries (see Note 16, Related Party Transactions, 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).Journey’s increased R&D costs are due to the Emrosi FDA fee of $4.1 million paid in January 2024 (FDA approval was received in November 2024), and the $3 million milestone paid to Dr.

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.

Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Checkpoint expenses are for the five-month period ending May 30, 2025, d ue to the deconsolidation of Checkpoint on May 30, 2025 related to the Sun Pharma transaction (see Note 3, Asset Purchase and Merger Agreements, 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 ).

R&D expense at Fortress and the private subsidiaries has increased $5.6 million, or 125%, primarily because R&D at Fortress is inclusive of annual PIK dividend income received from the subsidiaries (see Note 16, Related Party Transactions, 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), and PIK income received by Fortress has decreased $8.5 million, due primarily to the deconsolidation of Checkpoint in May 2025.

This was offset in part by reduced costs at Urica of $2.7 million for the dotinurad clinical program after its transition to Crystalys in July 2024.

Checkpoint’s reduced R&D expense of $25.4 million, or 70%, is due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma.

The decrease in R&D spending at Mustang of $9.9 million, or 118%, is primarily attributed to a $3.2 million decrease in costs incurred related to the termination of the transaction with uBriGene (Boston) Biosciences, Inc.

in 2024, a $2.8 million decrease in outside service expenses and consulting, including assay development costs;

a $2.0 million decrease in sponsored research and license related expenses;

and a $1.0 million decrease in clinical trial related costs.

Mustang has been actively negotiating settlements of aged payables, and recognized savings of approximately $2.1 million, which resulted in a credit for R&D expenses during the year ended December 31, 2025.

This credit is not indicative of Mustang’s research and development expenses going forward.

Journey’s decreased R&D costs of $9.4 million, or 95%, are due to pre-approval project costs related to Emrosi incurred in 2024, which concluded following the FDA’s approval of Emrosi in November 2024.

R&D expense at Avenue decreased $5.6 million, or 84%, due to a $5.2 million decrease in pre-clinical and clinical development costs for AJ201 prior to entering into the termination agreement with AnnJi, a $0.1 million decrease in manufacturing expenses, and a $0.1 million decrease in personnel costs.

Noncash, stock-based compensation expense included in R&D for the years ended December 31, 2025 and 2024, was $6.3 million and $7.1 million, respectively, a decrease of $0.9 million, or 12%.

Year Ended December 31,

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Includes Fortress and private subsidiaries primarily funded by Fortress:

Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increase in stock-based compensation expense included in R&D for the year ended December 31, 2024 is primarily attributable to performance-based vesting of grants at Checkpoint, triggered by the FDA approval of UNLOXCYT in December 2024.

We expect research and development costs to decrease in 2025.

Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The decrease in stock-based compensation expense included in R&D for the year ended December 31, 2025 is attributable to reduced expense at Fortress of $0.4 million, or 21%, due to grants fully vested as of July 2025, performance-based vesting of grants at Checkpoint, triggered by the FDA approval of UNLOXCYT in December 2024, coupled with the deconsolidation of Checkpoint in May 2025, and the $0.6 million, or 98%, increase at Mustang due to the non-repeat of stock compensation expense credits from the April 2024 reduction in the Mustang workforce.

We expect research and development costs to increase in 2026 with potential new in-licenses or acquisitions.

Research and development – licenses acquired

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Research and development – licenses acquired

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.

There were no comparable transactions in the year ended December 31, 2024.

The decrease in research and development – licenses acquired of $0.3 million, or 100%, in 2025 is due primarily to $0.3 million incurred by Mustang in 2024 related to a milestone achievement, with no comparable expense in the year ended December 31, 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of personnel related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development expenses.

For the years ended December 31, 2024 and 2023, selling, general and administrative expenses were $87.7 million and $91.0 million, respectively.

For the years ended December 31, 2025 and 2024, selling, general and administrative expenses were $96.4 million and $87.7 million, respectively, an increase of $8.7 million, or 10%.

The table below provides a summary by entity of selling, general and administrative expenses for the years ended December 31, 2025 and 2024, respectively:

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Includes Fortress and private subsidiaries primarily funded by Fortress:

Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

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.

The decrease at Mustang is attributable to cost reduction efforts and optimization relating to personnel, consulting, and infrastructure, as well as the $1.5 million gain on sale of property and equipment recognized in 2023, and the decrease at Journey is related to continued expense management efforts resulting in cost savings of $8.7 million, offset by an increase of $3.1 million in non-cash share-based compensation due to new grants, a $1.7 million increase attributed to the commencement of launch efforts for Emrosi, and the expansion of access and coverage platforms.

These decreases were partially offset by an increase in general and administrative expenses at Checkpoint, primarily driven by the increase in stock-based compensation due to performance-based vesting.

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.

Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increase in general and administrative expenses at Checkpoint of $7.2 million, or 36%, is primarily driven by the increase in stock-based compensation due to performance-based vesting triggered by the transaction with Sun Pharma.

The increase at Journey of $4.2 million, or 10%, is primarily due to incremental operational activities related to the launch and commercialization of Emrosi.

The decrease in selling, general and administrative expenses at Fortress and the private subsidiaries of $1.3 million, or 7%, is primarily attributable to decreased stock compensation expense at Fortress due to fully-vested grants offset by less equity fees received from the partner companies of Fortress due to less equity offerings and warrant exercises for the public subsidiaries in 2025.

The decrease in general and administrative expenses at Avenue of $1.2 million, or 26%, is primarily due to decreased stock-based compensation expense, personnel expenses and legal expenses.

Stock-based compensation expense included in selling, general and administrative expenses in the years ended December 31, 2025 and 2024 was $22.5 million and $25.5 million, respectively, a decrease of $3.0 million, or 12%.

Year Ended December 31,

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Includes Fortress and private subsidiaries primarily funded by Fortress:

Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increase in stock-based compensation expense included in selling, general and administrative expense for the year ended December 31, 2024 is primarily attributable to performance-based vesting of grants at Checkpoint, triggered by the FDA approval of UNLOXCYT received in December 2024, and additional expense incurred at Journey related to new employee grants.

We expect selling, general and administrative expenses to remain flat or decrease in 2025.

Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The decrease in stock-based compensation expense included in selling, general and administrative expense for the year ended December 31, 2025 is primarily attributable to Long-Term Incentive Plan vesting that occurred in July 2025, decreasing Fortress’ expense by $2.5 million, or 29%.

We expect selling, general and administrative expenses to remain flat or increase in 2026.

Loss Recovery

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Journey received the $4.6 million in cash in December 2024.

There was no comparable benefit recorded in 2025.

Asset Impairment

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Asset impairment

For the year ended December 31, 2024, Mustang recorded an asset impairment of $3.7 million, comprised of $2.2 million impairment loss allocated to leasehold improvements, $0.4 million impairment related to right-of-use asset, and $1.0 million related to equipment based on an expected transaction.

For the year ended December 31, 2023, Journey recorded a charge of $3.1 million related to its write-off of Ximino, triggered by the decision to discontinue marketing of the product.

For the year ended December 31, 2024, Mustang recorded an asset impairment of $3.7 million, of which approximately $2.7 million was attributable to Mustang’s assessment of the recoverability of the asset group consisting of leasehold improvements and associated right-of-use asset, and $1.0 million related to property, plant and equipment held for sale at December 31, 2024, and subsequently sold in 2025.

There was no comparable expense in 2025.

Other Expense

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Interest expense and financing fee

Gain (loss) on common stock warrant liabilities

Other income (expense)

Total other expense

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.

Loss on common stock warrant liabilities

Gain from deconsolidation of subsidiary

Total other income (expense)

Total other income (expense) increased $46.9 million, or 461%, from expense of $10.2 million for the year ended December 31, 2024 to income of $36.7 million for the year ended December 31, 2025.

As a result of the merger of Checkpoint with Sun Pharma, we deconsolidated Checkpoint in May 2025, and recognized a gain from deconsolidation of approximately $27.1 million during the year ended December 31, 2025 (see Note 3, Asset Purchase and Merger Agreements, 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 also recognized an increase in the fair value of Urica’s equity interest in Crystalys of $15.1 million and reversed the liability associated with the repurchase obligation of $2.6 million during the year ended December 31, 2025 (see Note 3, Asset Purchase and Merger Agreements, 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).

These gains were partially offset by interest expense and financing fee expenses related to Fortress’ debt outstanding with Oaktree and Journey’s debt outstanding with SWK Funding LLC (“SWK”).

The $3.4 million, or 25%, decrease in interest expense and financing fees is attributable to a loss on extinguishment of debt of $3.6 million recognized in the year ended December 31, 2024 related to the Company’s 2024 extinguishment of its prior 2020 facility with Oaktree.

Attributable to Non-Controlling Interests

The loss attributable to non-controlling interests decreased $35.1 million, or 47%, from $74.9 million for the year ended December 31, 2025 to $39.7 million for the year ended December 31, 2025 primarily due to the sale of Checkpoint in May 2025.

Liquidity and Capital Resources

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At December 31, 2025, we had an accumulated deficit of $734.1 million primarily as a result of research and development expenses, purchases of in-process research and development and selling, general and administrative expenses.

We fund our operations through cash on hand, the sale of debt, third-party financings, and the sale of subsidiaries and partner companies.

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.

We fund our operations through cash on hand, debt issuances, third-party financings, asset sales, and the sale of subsidiaries and partner companies.

At December 31, 2025, we had cash and cash equivalents of $79.4 million of which $35.2 million relates to Fortress and the private subsidiaries (primarily funded by Fortress), $17.3 million relates to Mustang, $24.1 million relates to JMC and $2.9 million relates to Avenue.

Restricted cash relates to office leases and totals $1.2 million.

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 have funded our operations to date primarily through the sale of equity and debt securities.

We believe that our current cash and cash equivalents is sufficient to fund operations for at least the next twelve months.

We believe that our current cash and cash equivalents are sufficient to fund operations for at least the next twelve months.

Our failure to raise capital as and when needed would have a material adverse impact on our financial condition and our ability to pursue our business strategies.

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333-279516) on Form S-3, which was declared effective on May 30, 2024 (the “2024 Shelf”).

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.

As of December 31, 2025, $42.1 million of securities were available for sale under the 2024 Shelf, subject to General Instruction I.B.6.

of Form S-3, known as the “baby shelf rules,” which limit the number of securities that can be sold under registration statements on Form S-3.

However, on July 5, 2024, our board of directors paused the payment of dividends on our Series A Preferred Stock until further notice.

As a result, we are no longer eligible to use Form S-3 and have lost the ability to use the 2024 Shelf.

In September 2024, Fortress closed a registered direct offering of an aggregate of 3,939,394 shares of its common stock at a purchase price of $1.65 per share.

In a concurrent private placement, the Company also agreed to issue to the same investors that participated in the registered direct offering warrants to purchase up to 3,939,394 shares of common stock (the “Private Placement Warrants”).

The 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 issuance.

In a separate concurrent private placement, Dr.

Rosenwald, our Chairman, President and Chief Executive Officer, purchased 763,359 shares of common stock at a price of $1.84 per share, which represented the consolidated closing bid price of the Company’s common stock on the Nasdaq Capital Market on September 19, 2024, and warrants to purchase up to 763,359 shares of common stock, purchased at a price of $0.125 per warrant (the “Concurrent Private Placement Warrants”).

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.

Net proceeds to Fortress from the September 2024 registered direct offering and the concurrent private placements, after deducting the placement agent’s fees and other offering expenses and assuming no exercises of the Private Placement Warrants or the Concurrent Private Placement Warrants, were approximately $7.3 million.

The Company filed a registration statement (No.

333-282384) on Form S-1 to register the resale of the shares of Common Stock issuable upon exercise of the Private Placement Warrants and the Concurrent Private Placement Warrants, which was declared effective by the SEC on October 7, 2024.

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.

The warrants have an exercise price of $3.21 per share, were immediately exercisable, and expire five years following the date of issue.

Net proceeds to Fortress, after deducting the placement agent’s fees and other offering expenses, were approximately $10.1 million.

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”).

However, on July 5, 2024, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notice.

As a result, the Company is not currently eligible to use Form S-3 and has lost the ability to use the 2024 Shelf.

The Company will regain eligibility to use the 2024 Shelf on the date it files its Annual Report on Form 10-K, so long as it has:

(i) by that date, paid all accrued but unpaid dividends at that time and (ii) timely paid all dividends accruing since the end of the fiscal year to which such Form 10-K relates.

Because the Company is not currently eligible to use Form S-3 due to the failure to pay dividends on the Series A Preferred Stock, on April 1, 2025 the Company filed a post-effective amendment to certain prior Form S-3 registration statements to continue the registration of:

● the offer and sale by certain selling stockholders who were previously holders of shares of 8% Cumulative Redeemable Perpetual Class B Preferred Stock of Urica, of an aggregate of up to 1,987,250 shares of the Company’s common stock;

● the offer and sale of up to 5,885,000 shares underlying warrants originally issued as part of units, each consisting of one share of Common Stock and one warrant, originally registered pursuant to the prospectus filed with the SEC under November 10, 2023;

● the offer and sale of up to 3,303,305 shares underlying warrants originally issued as part of units, each consisting of one share of Common Stock and one warrant, originally registered pursuant to the prospectus filed with the SEC on December 29, 2023;

● the offer and sale by certain selling stockholders of up to 116,637 shares of Common Stock issuable upon the exercise of warrants, as amended, granted to Oaktree and its affiliates under the Prior Oaktree Agreement.

This post-effective amendment was declared effective by the SEC on April 2, 2025.

During the year ended December 31, 2025, the Company issued and sold approximately 0.5 million shares at an average price of $1.94 per share for gross proceeds of approximately $1.0 million under the Company’s at-the-market offering program.

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No.

333-269079) (the “Journey 2022 S-3”), which was declared effective on January 26, 2023.

The Journey 2022 S-3 covered 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.

In connection with the Journey 2022 S-3, Journey entered into a sales agreement relating to the sale of shares of Journey’s common stock in an at-the-market offering (the “Journey ATM Sales Agreement”).

In accordance with the terms of the Journey ATM Sales Agreement, Journey was able to offer and sell up to 4,900,000 shares of its common stock, par value $0.0001 per share, from time to time.

In August 2025, Journey entered into a new At Market Issuance Sales Agreement (the “Journey 2025 ATM Sales Agreement”) with B.

Riley Securities, Inc.

and Lake Street Capital Markets, LLC (each, an “Agent” and together, the “Agents”).

In accordance with the terms of the Journey 2025 ATM Sales Agreement, Journey may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

As of December 31, 2025, 750,000 shares of Journey common stock were issued and sold under the Journey 2025 ATM Sales Agreement.

For the year ended December 31, 2025, Journey issued and sold approximately 2.6 million shares of common stock for net proceeds of $16.4 million under both the Journey ATM Sales Agreement and the Journey 2025 ATM Sales Agreement.

On January 15, 2026, Journey filed a shelf registration statement on Form S-3 (File No.

333-292758) (the “Journey 2026 Shelf”), which was declared effective by the Securities and Exchange Commission on January 21, 2026.

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.

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.

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.

As of December 31, 2024, approximately $65.7 million of the securities remain available for sale through the Checkpoint 2023 S-3.

In November 2024, Checkpoint received approximately $9.2 million upon the exercise of existing Series B warrants to purchase 3,256,269 shares of Checkpoint common stock, which warrants were originally issued and sold in a registered direct offering from May 2023 with an exercise price of $2.821 per share.

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.

In addition, the offering includes 4,623,659 shares of common stock in the form of pre-funded warrants at a price of $2.0499.

In a concurrent private placement, Checkpoint issued and sold common warrants (the “Checkpoint July 2024 Common Stock Warrants”) to purchase up to 5,853,659 shares of common stock.

The Checkpoint July 2024 Common Stock Warrants have an exercise price of $2.05 per share, will be exercisable after requisite approval of Checkpoint’s stockholders is received, and have a term of exercise of five years from the issuance date.

Checkpoint also issued the placement agent warrants to purchase up to 351,220 shares of common stock with an exercise price of $2.5625 per share.

The total net proceeds from the Checkpoint July 2024 Registered Direct Offering, after deducting placement agent’s fees and other offering expenses, were approximately $11.0 million.

The shares of common stock and the shares underlying the pre-funded warrants were sold in a registered offering under the Checkpoint 2023 S-3.

In August 2024, Checkpoint filed a registration statement on Form S-3 to register the public resale of the shares of Checkpoint common stock issuable upon exercise of each of the Checkpoint July 2024 Common Stock Warrants and the placement agent warrants, which was declared effective August 30, 2024 (File No.

All of the pre-funded warrants from the Checkpoint July 2024 Registered Direct Offering have been exercised.

In January 2024, Checkpoint closed on a registered direct offering (the “Checkpoint January 2024 Registered Direct Offering”) for the issuance and sale of 1,275,000 shares of its common stock at a purchase price of $1.805 per share.

In addition, the offering includes pre-funded warrants to purchase 6,481,233 shares of common stock, which were sold at a price of $1.8049.

In a concurrent private placement, Checkpoint issued and sold common warrants (the “Checkpoint January 2024 Common Warrants”) to purchase up to 7,756,233 shares of Checkpoint common stock.

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.

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.

In March 2024, Checkpoint filed a registration statement on Form S-3 to register the public resale of the shares of Checkpoint common stock issuable upon exercise of each of the Checkpoint January 2024 Common Stock Warrants and the placement agent warrants, which was declared effective April 5, 2024 (File No.

All of the pre-funded warrants from the Checkpoint January 2024 Registered Direct Offering have been fully exercised.

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.

Through the Mustang 2021 S-3, Mustang was able to sell up to a total of $200 million of its securities.

In 2024, Mustang sold approximately $4.4 million of securities under the Mustang 2021 S-3 until Mustang’s ability to register new offers and sales of securities under such registration statement expired on May 24, 2024.

The Journey 2026 Shelf replaces the Journey 2022 S-3.

Sales under the Journey 2025 ATM Sales Agreement after the effective date will occur under the 2026 Shelf.

In January 2025, Checkpoint received approximately $2.1 million from the exercise of warrants for the issuance of 740,000 shares of common stock with an exercise price of $2.84 per share.

In March 2025, Checkpoint received approximately $36.0 million from the exercise of warrants for the issuance of 21,691,003 shares of common stock with an average exercise price of $1.66 per share.

In April 2025, Checkpoint received approximately $9.2 million from the exercise of warrants for the issuance of 3,256,269 shares of common stock with an average exercise price of $2.82 per share.

In May 2025, Checkpoint was sold to Sun Pharma in a transaction that resulted in the Company receiving $28.0 million in cash proceeds (see Note 3, Asset Purchase and Merger Agreements, 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).

On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No.

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Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities.

As of December 31, 2024, approximately $34.8 million of the Mustang 2024 S-3 remains available for sales of securities, subject to General Instruction I.B.6.

As of December 31, 2025, approximately $34.2 million of the Mustang 2024 S-3 remained available for sales of securities, subject to General Instruction I.B.6.

The ability of Mustang to register new offers and sales of securities under the Mustang 2024 S-3 expires on June 12, 2027.

On May 31, 2024, Mustang entered into an At-the-Market Offering Agreement (the “Mustang ATM”) relating to the sale of shares of common stock pursuant to the Mustang 2024 S-3.

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.

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.

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.

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.

In consideration for the immediate exercise of the existing warrants for cash, Mustang issued two new series of unregistered warrants to purchase up to an aggregate of 675,104 shares of common stock.

The new warrants have an exercise price of $13.50 per share and became exercisable commencing on the effective date of stockholder approval of the issuance of the shares issuable upon exercise of the new warrants (the “Stockholder Approval”).

One of the new series of warrants to purchase 337,552 shares of common stock has a term of five years from the Stockholder Approval, and the other new series of warrants to purchase 337,552 shares of common stock has a term of twelve months from the Stockholder Approval.

In June 2024, Mustang closed on a registered direct offering of 60,500 shares of common stock at $20.50 per share (or common stock equivalent) priced at-the-market under Nasdaq rules and pre-funded warrants to purchase up to 62,100 shares of common stock, at a price per pre-funded warrant equal to $20.495, the price per share of common stock, less $0.005.

The pre-funded warrants have an exercise price of $0.005 per share, became exercisable upon issuance and remain exercisable until exercised in full.

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.

Net proceeds were approximately $2.1 million, after placement agent’s fees and other offering expenses.

All of the 62,100 pre-funded warrants have since been exercised.

In May 2024, Mustang closed on an equity offering of 23,200 shares of common stock and pre-funded warrants to purchase up to 314,352 shares of common stock (or common stock equivalents in lieu thereof), and three series of 337,552 warrants each for a total of 1,012,656 warrants with a combined equity offering price of $11.85 per share (or per share common stock equivalent in lieu thereof) and accompanying warrants with an exercise price of $11.85 per share.

The Series A-1 warrants have a five-year term, the Series A-2 warrants have a twenty-four month term, and the Series A-3 warrants have a nine month term.

The warrants contain customary anti-dilution adjustments to the exercise price, including share splits, share dividends, rights offerings and pro rata distributions.

The net proceeds of the equity offering, after deducting the fees and expenses of the placement agent and other offering expenses payable by Mustang was approximately $3.2 million.

All of the 314,352 pre-funded warrants have since been exercised.

During the year ended December 31, 2025, Mustang issued approximately 0.1 million shares of common stock at an average price of $11.55 per share for net proceeds of $0.6 million under the Mustang ATM, after deducting aggregate fees of approximately $27,000.

In February 2025, Mustang closed on an equity offering of (i) 495,000 shares of its common stock, par value $0.0001 per share (the “Shares”), (ii) pre-funded warrants to purchase up to an aggregate of 2,162,807 shares of common stock (the “Pre-Funded Warrant Shares), (iii) Series C-1 warrants (the “Series C-1 Warrants”) to purchase up to 2,657,807 shares of common stock, and (iv) Series C-2 warrants (the “Series C-2 Warrants”) to purchase up to 2,657,807 shares of common stock.

Each Share or Pre-Funded Warrant was sold together with one Series C-1 Warrant to purchase one share of common stock and one Series C-2 Warrant to purchase one share of common stock.

The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099.

The Pre-Funded Warrants had an exercise price of $0.0001 per share, were exercisable immediately upon issuance and expired when exercised in full.

Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the “Warrant Stockholder Approval”).

The Series C-1 Warrants expire five years from Warrant Stockholder Approval and the Series C-2 Warrants expire twenty-four months from Warrant Stockholder Approval.

The net proceeds of the offering, after deducting the fees and expenses of the placement agent in the transaction, and other offering expenses payable by Mustang, but excluding the net proceeds from the exercise of the Warrants, was approximately $6.9 million.

In July 2025, the remaining approximately 0.5 million of the Pre-Funded Warrants and approximately 2.4 million of the Series C-2 Warrants were exercised.

In connection with these exercises, Mustang received approximately $7.1 million in proceeds and issued approximately 2.9 million shares of its common stock.

As of December 31, 2025, all of the Series C-1 Warrants and 284,452 of the Series C-2 Warrants remain outstanding.

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.

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) under which Avenue may offer and sell, from time to time at its sole discretion, up to $3.9 million of shares of its common stock.

The offer and sale of the shares will be made pursuant to a base prospectus forming a part of the Avenue 2021 S-3, and the related prospectus supplement dated May 10, 2024.

Avenue filed a replacement shelf registration on Form S-3 on December 4, 2024 (the “Avenue Replacement Shelf”), under the Securities Act of 1933, as amended, which was later withdrawn.

However, effective as of July 18, 2025, Avenue was formally delisted from Nasdaq with Nasdaq’s filing on that date of a Form 25 with the SEC;

Avenue is therefore ineligible to use Form S-3 and unable to use the Avenue 2021 S-3 or the Avenue Replacement Shelf.

On December 15, 2025, Avenue filed a Post-Effective Amendment No.

1 to Form S-3 on Form S-1 (File No.

333-279125), which Post-Effective Amendment was declared effective on December 16, 2025.

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) under which Avenue was then able to offer and sell, from time to time at its sole discretion, up to $3.9 million of shares of its common stock.

The offers and sales of the shares were to be made pursuant the Avenue 2021 S-3, and the related prospectus supplement dated May 10, 2024.

During the year ended December 31, 2025, Avenue issued 0.9 million shares through the Avenue ATM for net proceeds of $2.1 million.

On January 5, 2024, Avenue entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding warrants to purchase up to an aggregate of 25,871 shares of Common Stock, originally issued to the January 2023 Investor on January 31, 2023 (the “January 2023 Warrants”) and (ii) an inducement offer letter agreement (the “November 2023 Investor Inducement Letter Agreement” and, together with the January 2023 Investor Inducement Letter, the “January 2024 Warrant Inducement”) with certain investors (the “November 2023 Investors” and, together with the January 2023 Investor, the “Holders”) in connection with certain outstanding warrants to purchase up to an aggregate of 194,667 shares of Common Stock, originally issued to the November 2023 Investors on November 2, 2023 (the “November 2023 Warrants” and, together with the January 2023 Warrants, the “Existing Warrants”).

The January 2023 Warrants had an exercise price of $116.25 per share, and the November 2023 Warrants had an exercise price of $22.545 per share.

Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $22.545 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for Avenue’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of Avenue Common Stock and (y) Series B Warrants to purchase up to 220,538 shares of Avenue Common Stock.

The net proceeds to Avenue from the exercise of the warrants was approximately $4.5 million, after deducting placement agent fees and estimated offering costs, but without giving effect to the exercise of the Series A Warrants and Series B Warrants issued in the January 2024 Warrant Inducement.

Also in April 2024, Avenue entered into definitive agreements for the immediate exercise of certain of its existing outstanding warrants to purchase an aggregate of 689,680 shares of Avenue’s common stock at a reduced exercise price of $6.20 per share (the “May 2024 Warrant Inducement”).

The exercised warrants are comprised of warrants to purchase shares of common stock originally issued by Avenue on October 11, 2022, each having an exercise price of $116.25 per share, Series A and Series B warrants to purchase shares of common stock originally issued by Avenue on November 2, 2023, each having an exercise price of $22.545 per share, and warrants to purchase shares of common stock originally issued by Avenue on January 9, 2024, each having an exercise price of $22.545 per share.

Total net proceeds to Avenue were approximately $3.7 million after deducting placement agent fees and other expenses payable by Avenue.

In consideration for the immediate exercise of the warrants for cash in the May 2024 Warrant Inducement, Avenue issued two new unregistered series of warrants (the “Avenue May 2024 Warrants”) to purchase up to a total of 1,379,360 shares of Avenue common stock for a payment of $0.125 per warrant.

The Avenue May 2024 Warrants have an exercise price of $6.20 per share, and terms of eighteen months for one series and five years for the other series.

Avenue is no longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on Nasdaq.

Oaktree Facility

On July 25, 2024, Fortress entered into a $50.0 million senior secured credit agreement (the “New Oaktree Agreement”) with a maturity date of July 25, 2027 with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”).

The Company borrowed $35.0 million under the New Oaktree Agreement on the Closing Date (the “2024 Oaktree Note”) and is eligible to draw up to an additional $15.0 million at the lenders’ discretion to support future business development activities.

The 2024 Oaktree Note replaces the 2020 Oaktree Note under which the remaining $50.0 million balance was repaid in full.

The Company recorded a loss on extinguishment of debt of approximately $3.6 million, representing unamortized debt issuance costs and inclusive of a $1.0 million prepayment fee;

the loss on extinguishment was recorded to interest expense in the consolidated statement of operations for the year ended December 31, 2024.

Under the terms of the New Oaktree Agreement, the loans have a 30-month interest-only period with a maturity date of July 25, 2027, and bear interest at an annual rate equal to the 3-month Secured Overnight Financing Rate (SOFR) plus 7.625% (subject to a 2.50% SOFR floor and a 5.75% SOFR cap).

The Company is required to make quarterly interest-only payments until the maturity date.

Fifty percent of the then-outstanding principal balance of the loans is due on March 31, 2027, with the remaining principal amount due on the maturity date.

On July 25, 2024, Fortress entered into the $50.0 million senior secured credit agreement (the “2024 Oaktree Agreement”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”).

On December 12, 2025, Fortress entered into the First Amendment to the 2024 Oaktree Agreement (“the “Oaktree First Amendment”), which provided for, among other things, an extension of the maturity date to June 30, 2028, and an adjustment to the minimum net sales covenant.

On February 22, 2026, Fortress entered into the Second Amendment to the 2024 Oaktree Agreement (the “Oaktree Second Amendment,” and together with the Oaktree First Amendment and the 2024 Oaktree Agreement, the “New Oaktree Agreement”).

The Company borrowed $35.0 million under the 2024 Oaktree Agreement on the Closing Date (the “2024 Oaktree Note”) and is eligible to draw up to an additional $15.0 million at the lenders’ discretion to support future business development activities.

The 2024 Oaktree Note replaced the Company’s prior 2020 facility with Oaktree, with respect to which the remaining $50.0 million balance was repaid in full.

Under the terms of the New Oaktree Agreement, as amended, the loans have a 41-month interest-only period with a maturity date of June 30, 2028, and bear interest at an annual rate equal to the 3-month Secured Overnight Financing Rate (“SOFR”) plus 7.625% (subject to a 2.50% SOFR floor and a 5.75% SOFR cap).

At December 31, 2025, the interest rate applicable to the 2024 Oaktree Note was 11.6%.

The Company is required to make quarterly interest-only payments until the maturity date, except 12.5% of the then-outstanding principal balance of the loans is due on September 30, 2027, 12.5% of the principal balance of the loans is due on December 30, 2027, 37.5% of the principal balance of the loans is due on March 31, 2028, with the remaining principal amount due on the maturity date.

The Company may voluntarily prepay, in whole or in part, the amounts due under the New Oaktree Agreement at any time subject to a prepayment fee.

Upon the receipt of proceeds from the sale of Checkpoint (see Note 3), the Company made payments to Oaktree comprised of:

$5.5 million in principal, $0.1 million in interest, and $0.3 million in Yield Protection Premium (as defined in the New Oaktree Agreement).

The New 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.

In addition, the New Oaktree Agreement contains certain financial covenants, including, (i) a requirement that the Company maintain a minimum liquidity of $7.0 million, which may be reduced or increased as described in the New Oaktree Agreement, and (ii) that product net sales of Journey meet a consolidated minimum net sales amount of $60.0 million as of the last day of the fiscal quarter ending December 31, 2025, $65.0 million as of the last day of the fiscal quarter ending March 31, 2026, $70.0 million as of the last day of the fiscal quarter ending June 30, 2026, $75.0 million as of the last day of the fiscal quarter ending September 30, 2026, and $80.0 million as of the fiscal quarter ending December 31, 2026 and the last day of each fiscal quarter thereafter, subject to certain exclusions.

Failure by the Company to comply with the financial covenants will result in an event of default, subject to certain cure rights of the Company with respect to the Minimum Net Sales Test.

The Minimum Net Sales Test covenant does not apply any time the outstanding principal balance of the Loan is less than or equal to $10.0 million.

Under the Oaktree Second Amendment, in the event that the outstanding principal balance of the loan is less than or equal to $15.0 million and Fortress receives the distribution of proceeds from Cyprium following the closing of the sale of the PRV by Cyprium pursuant to the PRV APA, the minimum liquidity required will be lowered to $2.0 million and the Minimum Net Sales Test will no longer apply.

The New Oaktree Agreement, contains events of default that are customary for financings of this type, in certain circumstances subject to customary cure periods.

In addition, the Company is also required to (i) raise common equity, or receive in monetizations or distributions, by the end of each calendar year prior to the maturity date, in an aggregate amount equal to the greater of $20 million or 50% of an amount set forth in an annual budget delivered to the lenders and (ii) maintain a specified minimum equity stake in Journey.

The capital raise and minimum stake covenants and financial covenants, including minimum liquidity and minimum net sales, will not apply if the outstanding principal balance of the loan is less than or equal to $10 million.

In addition, the Company is also required to (i) raise cash proceeds from the sale of common stock, or receive monetizations or distributions, by the end of each calendar year prior to the maturity date, in an aggregate amount equal to the greater of $20 million or 50% of an amount set forth in an annual budget delivered to the lenders and (ii) maintain a specified minimum equity stake in Journey.

The capital raise and minimum stake covenants and financial covenants will not apply if (i) the outstanding principal balance of the loan is less than or equal to $10 million or (ii) the outstanding principal balance of the loan is less than or equal to $15.0 million and Fortress receives the distribution of proceeds from Cyprium following the closing of the sale of the PRV by Cyprium pursuant to the PRV APA.

Following an event of default and any cure period, if applicable, Oaktree will have the right upon notice to accelerate all amounts outstanding under the New Oaktree Agreement, in addition to other remedies available to the lenders as secured creditors of the Company.

In connection with the New Oaktree Agreement, the Company granted a security interest in favor of the Agent, for the benefit of the lenders, in substantially all of the Company’s assets, subject to customary exceptions, as collateral securing the Company’s obligations under the Agreement.

On December 27, 2023 (the “SWK Closing Date”), Journey entered into a Credit Agreement with SWK Funding LLC (“SWK”).

In connection with the New Oaktree Agreement, the Company granted a security interest in favor of Oaktree, for the benefit of the lenders, in substantially all of the Company’s assets, subject to customary exceptions, as collateral securing the Company’s obligations under the New Oaktree Agreement.

On December 27, 2023 (the “SWK Closing Date”), Journey entered into a Credit Agreement with SWK.

The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million.

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Journey received FDA approval for Emrosi on November 4, 2024 and drew on the remaining $5.0 million on November 25, 2024.

Loans under the Credit Facility mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%.

On September 25, 2025, Journey entered into the Third Amendment to the SWK Credit Agreement (the “Third Amendment”).

The Third Amendment, among other things, extends the maturity date of Journey’s existing SWK Credit Facility from December 27, 2027 to June 27, 2028.

Term loans under the SWK Credit facility bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5%) plus 7.75%.

The interest rate resets quarterly.

Interest payments began in February 2024 and are paid quarterly.

Beginning in February 2026, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans.

Beginning in February 2027, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to $2.5 million per quarter, or 10% of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date.

On February 22, 2026, Cyprium entered into a definitive asset purchase agreement to sell its PRV (the “PRV APA”) for gross proceeds of $205 million upon the closing of the transaction.

Cyprium is obligated to pay 20% of the PRV APA proceeds to the Eunice Kennedy Shriver National Institute of Child Health and Human Development, an institute of the National Institutes of Health.

The PRV APA contains customary representations, warranties, covenants and indemnification provisions, in each case subject to certain limitations.

On March 30, 2026, the Company and Cyprium announced the closing of the PRV APA transaction.

The following table summarizes our cash flows during the periods indicated:

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Financing activities

Net decrease in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities decreased by $14.4 million from the year ended December 31, 2024 to the year ended December 31, 2025.

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 decrease is primarily attributable to the decrease in net loss of $87.9 million, offset by the $27.1 million gain on deconsolidation recognized related to Checkpoint, and the $15.1 million increase in the fair value of investment, as well as the $17.0 million increase resulting from changes in operating assets and liabilities.

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.

Upon the $15.0 million milestone payment, the assets that had been the subject of the exclusive license related to Emrosi, including the NDA itself, the patents and other intellectual property, were assigned to Journey.

Net cash used in investing activities for the year ended December 31, 2024 of $15.0 million increased $25.1 million to $10.1 million provided by investing activities for the year ended December 31, 2025.

The change is due to Journey’s payment of the $15 million milestone paid to DRL in December 2024 triggered by the FDA approval of Emrosi, coupled with the net cash increase of $9.0 million related to the sale of Checkpoint to Sun Pharma in May 2025, and Mustang’s $1.2 million proceeds from the sale of its held-for-sale assets related to the exit of its manufacturing facility in the year ended 2025.

Financing Activities

Net cash provided by financing activities increased $6.8 million from the year ended December 31, 2024 to the year ended December 31, 2025.

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.

The increase is attributable to an increase in proceeds from partner companies’ equity offerings and warrant exercises of $12.0 million and the decrease in the payments made to Oaktree of $45.4 million, partially offset by decreased proceeds from the issuance of common stock for equity offerings of the Company in the current period of $17.4 million and the decrease in proceeds from long-term debt of $33.8 million.

Components of cash flows from publicly-traded partner companies are:

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Financing activities

Net decrease in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Includes Fortress and non-public subsidiaries.

Checkpoint cash flows are for the five-month period ending May 2025, due to the deconsolidation of Checkpoint as of May 2025 related to the Sun Pharma transaction (see Note 3 to the consolidated financial statements).

Contractual Obligations

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● 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 );

● obligations under license agreements (see Note 7, License Agreements to our Consolidated Financial Statements ).

● obligations under our leases (see Note 14, Commitments and Contingencies, 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 license agreements (see Note 7, License Agreements, to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K ).

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis