Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statements in the following discussion and throughout this report that are not historical in nature are “forward-looking statements.” You can identify forward-looking statements by the use of words such as “expect,” “anticipate,” “estimate,” “may,” “will,” “should,” “intend,” “believe,” and similar expressions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, those described under Item 1A “Risk Factors.” We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes. Please see the section of this report titled “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10-K. As used throughout this filing, (including in the risk factors described in Item 1A), the words “we”, “us” and “our” may refer to Fortress Biotech, Inc. individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.
The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto and other financial information appearing elsewhere in this Form 10-K. We undertake no obligation to update any forward-looking statements in the discussion of our financial condition and results of operations to reflect events or circumstances after the date of this report or to reflect actual outcomes.
Fortress Biotech, Inc. (“Fortress” or the “Company”) is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holding and dividend and royalty revenue streams. 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”), 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, 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. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc. (OTC: ATXI, “Avenue”), Cellvation, Inc. (“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). 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.
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Recent Events
Revenue Portfolio
● 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.
● 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. Ltd. (“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 (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 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.
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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.
Late Stage Product Candidates
CAEL-101 (light chain fibril-reactive monoclonal antibody for AL amyloidosis)
● On October 5, 2021, AstraZeneca acquired Caelum Biosciences, Inc. (“Caelum”), a former subsidiary of Fortress for an upfront payment of approximately $135 million paid to Caelum shareholders, of which approximately $56.9 million was paid to Fortress. The agreement also provides for additional potential payments to Caelum shareholders totaling up to $295 million, payable upon the achievement of regulatory and commercial milestones. 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 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 ).
● 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.
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● 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. The study will also evaluate whether this intervention might reduce chronic inflammation and immune activation, as compared to placebo, and thus, potentially reduce related mortality and morbidity (NCT05099965).
● In January 2025, we announced that the first patient was dosed in a multi-center, placebo-controlled, randomized Phase 2 clinical trial to evaluate Triplex when administered to human leukocyte antigen (“HLA”) matched related stem cell donors to reduce CMV events in patients undergoing hematopoietic stem cell transplantation (“HSCT”). The trial is funded by a grant from the National Cancer Institute (“NCI”) (NCT06059391).
● Triplex is currently also the subject of multiple other ongoing clinical trials, including: a Phase 1/2 trial for CMV control in pediatric recipients of HSCT (NCT03354728); a Phase 1 trial of Triplex in combination with a bi-specific CMV/CD19 CAR T cell therapy for the treatment of non-Hodgkin lymphoma (NCT05432635); a Phase 2 trial for safety and effectiveness in reducing CMV complications in patients previously infected with CMV and undergoing donor hematopoietic cell transplant (NCT02506933); a Phase 1 trial of Triplex in combination with CAR T cell therapy for adults with non-Hodgkin lymphoma (NCT05801913); 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).
● Triplex was sourced by Fortress and is currently in development at our subsidiary, Helocyte.
Early Stage Product Candidates
MB-109 (IL13Rα2-targeted CAR T Cells (MB-101) + HSV-1 oncolytic virus (MB-108))
● 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. MB-101 was well tolerated, and 50% of patients achieved stable disease or better, with two partial responses and two complete responses in high grade glioma patients. The two patients who achieved complete response both had high levels of intratumoral CD3+ T-cells pre-therapy (i.e., “hot” tumors), and their responses lasted 7.5 and 66+ months, respectively. 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.
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● 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.
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 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 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.
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● 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 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. Avenue currently plans to continue to file its required periodic reports and other filings with the SEC.
● In February 2025, Mustang announced it had concurrently exited the lease for its manufacturing facility in Worcester, Massachusetts and sold certain fixed assets including furniture and equipment to AbbVie Bioresearch Center, Inc. for $1.0 million.
● 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.
Critical Accounting Policies and Use of Estimates
Our Consolidated Financial Statements included in this Annual Report on Form 10-K include certain amounts that are based on management’s best estimates and judgments. Our significant estimates include, but are not limited to, provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, inventory realization, valuation of intangible assets, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses and contingencies. Due to the uncertainty inherent in such estimates, actual results may differ from these estimates. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
While our significant accounting policies are described in the Notes to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.
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Revenue Recognition
Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, coupons, discounts, other sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. Historically, adjustments to these estimates to reflect actual results or updated expectations have not been material to our overall business. Coupons, however, can have a significant impact on year-over-year individual product revenue growth trends. If any of our ratios, factors, assessments, experiences, or judgments are not indicative or accurate estimates of our future experience, our results could be materially affected. The potential of our estimates to vary differs by program, product, type of customer and geographic location.
Fair Value Measurement
The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1 :
Quoted prices in active markets for identical assets or liabilities.
Level 2 :
Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3 :
Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Certain of the Company’s working capital assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current liabilities, are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature. The carrying value of our notes payable approximates their fair value as the interest rate is variable and approximates the market rate for loans with similar terms and risk characteristics.
Issuance of Debt and Equity
Fortress and its partner companies and subsidiaries issue complex financial instruments which include equity and/or debt features. We analyze each instrument under ASC 480, Distinguishing Liabilities from Equity, ASC 815, Derivatives and Hedging and, ASC 470, Debt , in order to establish whether such instruments include any embedded derivatives.
We accounted for the debt with Oaktree with detachable warrants in accordance with ASC 470, Debt . 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 and the warrants on a relative fair value basis.
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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
We record accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are significant components of research and development expenses. A substantial portion of our ongoing research and development activities is conducted by third-party service providers. We accrue the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements. We determine the estimated costs through discussions with internal personnel and external service providers as to the progress, or stage of completion or actual timeline (start-date and end-date) of the services and the agreed-upon fees to be paid for such services. Payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses until the services are rendered.
If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust accrued expenses or prepaid expenses accordingly, which impact research and development expenses. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Smaller Reporting Company Status
We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K , have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our Consolidated Financial Statements located in “ Part II, Item 8, Financial Statements and Supplementary Data ” in this Annual Report on Form 10-K.
Basis of Presentation and Principles of Consolidation
The Company’s Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s Consolidated Financial Statements include the results of the Company’s subsidiaries for which it has voting control but does not own 100% of the outstanding equity of the subsidiaries. For consolidated entities where the Company owns less than 100% of the subsidiary, but retains voting control, the Company records net loss attributable to non-controlling interests in its Consolidated Statements of Operations and presents non-controlling interests as a component of stockholders’ equity on its Consolidated Balance Sheets. All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.
The following table summarizes the Company’s basic ownership of the issued and outstanding common and preferred shares in consolidated Fortress subsidiaries:
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December 31,
Partner Company/Subsidiary
2025
Avenue (OTC: ATXI)
10.3
%
Cellvation
80.0
%
Checkpoint 1
—
%
Cyprium
73.9
%
Helocyte
83.4
%
Journey (Nasdaq: DERM)
36.3
%
Mustang (Nasdaq: MBIO)
4.0
%
Oncogenuity
73.9
%
Urica
70.4
%
Note 1: In May 2025, our former subsidiary, Checkpoint, was acquired by Sun Pharma.
Results of Operations
Comparison of Years Ended December 31, 2025 and 2024
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Revenue
Product revenue, net
$
61,239
$
55,134
$
6,105
11
%
Collaboration revenue
—
1,500
(1,500)
(100)
%
Revenue – related party
—
41
(41)
(100)
%
Other revenue
2,023
1,000
1,023
102
%
Net revenue
63,262
57,675
5,587
10
%
Operating expenses
Cost of goods - (excluding amortization of acquired intangible assets)
20,924
20,879
45
0
%
Amortization of acquired intangible assets
4,258
3,424
834
24
%
Research and development
11,901
56,629
(44,728)
(79)
%
Research and development – licenses acquired
—
252
(252)
(100)
%
Selling, general and administrative
96,400
87,731
8,669
10
%
Loss recovery
—
(4,553)
4,553
(100)
%
Asset impairment
—
3,692
(3,692)
(100)
%
Total operating expenses
133,483
168,054
(34,571)
(21)
%
Loss from operations
(70,221)
(110,379)
40,158
(36)
%
Other income (expense)
Interest income
2,485
2,683
(198)
(7)
%
Interest expense and financing fee
(10,106)
(13,527)
3,421
(25)
%
Loss on common stock warrant liabilities
(398)
(638)
240
(38)
%
Gain from deconsolidation of subsidiary
27,127
—
27,127
100
%
Other income
17,578
1,318
16,260
1234
%
Total other income (expense)
36,686
(10,164)
46,850
(461)
%
Loss before income tax expense
(33,535)
(120,543)
87,008
(72)
%
Income tax expense (benefit)
(620)
312
(932)
(299)
%
Net loss
(32,915)
(120,855)
87,940
(73)
%
Attributable to non-controlling interests
39,730
74,858
(35,128)
(47)
%
Net income (loss) attributable to Fortress
$
6,815
$
(45,997)
$
52,812
(115)
%
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Revenue
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Revenue
Product revenue, net
$
61,239
$
55,134
$
6,105
11
%
Collaboration revenue
—
1,500
(1,500)
(100)
%
Revenue – related party
—
41
(41)
(100)
%
Other revenue
2,023
1,000
1,023
102
%
Net revenue
$
63,262
57,675
$
5,587
10
%
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 $6.5 million, as a result of lower sales volume driven by recent market competition, as well as a decrease in JMC’s sales of legacy products due to lower unit volumes driven by generic competition.
Cost of Goods Sold
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Cost of goods sold – (excluding amortization of acquired intangible assets)
$
20,924
$
20,879
$
45
0
%
Cost of goods sold – (excluding amortization of acquired intangible assets) was consistent year over year at $20.9 million for the years ended December 31, 2025 and 2024. Higher royalty expenses associated with incremental revenue from Emrosi in 2025 were offset by lower product costs resulting from a favorable product mix, primarily reflecting the increased sales of Emrosi in 2025. Emrosi carries a higher gross margin than our other products, contributing to the stable overall cost of goods sold despite the increased revenues.
Amortization of Acquired Intangible Assets
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Amortization of acquired intangible assets
$
4,258
$
3,424
$
834
24
%
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.
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Research and development expenses
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 $44.7 million or 79%. The table below provides a summary of research and development by entity, for the years ended December 31, 2025 and 2024:
Year Ended
December 31,
Change
($ in thousands)
2025
2024
$
%
Research & development
Fortress 1
$
1,125
$
(4,443)
$
5,568
(125)
%
Avenue
1,037
6,645
(5,608)
(84)
%
Checkpoint 2
10,775
36,152
(25,377)
(70)
%
Journey
480
9,857
(9,377)
(95)
%
Mustang
(1,516)
8,418
(9,934)
(118)
%
Total research & development expense
$
11,901
$
56,629
$
(44,728)
(79)
%
Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Note 2: 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.
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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 $0.9 million, or 12%.
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Stock-based compensation - research & development
Fortress 1
$
1,371
$
1,746
$
(375)
(21)
%
Avenue
124
269
(145)
(54)
%
Checkpoint 2
4,782
5,248
(466)
(9)
%
Journey
—
508
(508)
(100)
%
Mustang
(10)
(650)
640
(98)
%
Total stock-based compensation expense - research and development
$
6,267
$
7,121
$
(854)
(12)
%
Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Note 2: 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 ).
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 $0.6 million, or 98%, increase at Mustang due to the non-repeat of stock compensation expense credits from the April 2024 reduction in the Mustang workforce.
We expect research and development costs to increase in 2026 with potential new in-licenses or acquisitions.
Research and development – licenses acquired
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Research and development – licenses acquired
$
—
$
252
$
(252)
(100)
%
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, 2025 and 2024, selling, general and administrative expenses were $96.4 million and $87.7 million, respectively, an increase of $8.7 million, or 10%. The table below provides a summary by entity of selling, general and administrative expenses for the years ended December 31, 2025 and 2024, respectively:
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Year Ended
December 31,
Change
($ in thousands)
2025
2024
$
%
Selling, general & administrative
Fortress 1
$
17,371
$
18,691
$
(1,320)
(7)
%
Avenue
3,450
4,638
(1,188)
(26)
%
Checkpoint 2
27,263
20,063
7,200
36
%
Journey
44,368
40,204
4,164
10
%
Mustang
3,948
4,135
(187)
(5)
%
Total selling, general & administrative expense
$
96,400
$
87,731
$
8,669
10
%
Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Note 2: 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 ).
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 $3.0 million, or 12%.
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Stock-based compensation - Selling, general and administrative
Fortress 1
$
6,189
$
8,737
$
(2,548)
(29)
%
Avenue
541
967
(426)
(44)
%
Checkpoint 2
9,315
10,004
(689)
(7)
%
Journey
6,288
5,590
698
12
%
Mustang
139
200
(61)
(31)
%
Total stock-based compensation expense - selling, general and administrative
$
22,472
25,498
$
(3,026)
(12)
%
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Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.
Note 2: 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 ).
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
Journey recorded a loss recovery benefit to income of $4.6 million in connection with the recovery of funds related to a previously disclosed cybersecurity incident in September 2021. Journey received the $4.6 million in cash in December 2024. There was no comparable benefit recorded in 2025.
Asset Impairment
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Asset impairment
$
—
$
3,692
$
(3,692)
(100)
%
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 $1.0 million related to property, plant and equipment held for sale at December 31, 2024, and subsequently sold in 2025. There was no comparable expense in 2025.
Other Expense
Year Ended December 31,
Change
($ in thousands)
2025
2024
$
%
Other expense
Interest income
$
2,485
$
2,683
$
(198)
(7)
%
Interest expense and financing fee
(10,106)
(13,527)
3,421
(25)
%
Loss on common stock warrant liabilities
(398)
(638)
240
(38)
%
Gain from deconsolidation of subsidiary
27,127
—
27,127
100
%
Other income
17,578
1,318
16,260
1234
%
Total other income (expense)
$
36,686
(10,164)
$
46,850
(461)
%
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.
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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
Sources of Liquidity
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, 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 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. We may seek funds through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or through other sources of financing. See “Item 1A. Risk Factors—Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities.”
Stock Offerings and At-The-Market Share Issuances
On May 17, 2024, the Company filed a shelf registration statement (File No. 333-279516) on Form S-3, which was declared effective on May 30, 2024 (the “2024 Shelf”). 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, 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; and
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● 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.
Journey
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. 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.
Checkpoint
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).
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Mustang
On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “Mustang 2024 S-3”), which was declared effective on June 12, 2024. Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities. 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. of Form S-3. 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, 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.
Avenue
In December 2021, Avenue filed a shelf registration statement (File No. 333-261520) on Form S-3 (the “Avenue 2021 S-3”), which was declared effective on December 10, 2021. 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. Avenue is no longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on Nasdaq.
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Debt
Oaktree Facility
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 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.
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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.
SWK Facility
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. On the SWK Closing Date, Journey drew $15 million. On June 26, 2024, Journey drew the remaining $5.0 million under the Credit Facility. On July 9, 2024, Journey entered into an Amendment to the Credit Agreement with SWK. This amendment increased the original principal amount of the Credit Facility from $20.0 million to $25.0 million. The $5.0 million of additional principal added was contractually required to be drawn upon FDA approval of Emrosi, subject to Journey receiving approval on or before June 30, 2025. Journey received FDA approval for Emrosi on November 4, 2024 and drew on the remaining $5.0 million on November 25, 2024. 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 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.
Asset Sales
On February 22, 2026, Cyprium entered into a definitive asset purchase agreement to sell its PRV (the “PRV APA”) for gross proceeds of $205 million upon the closing of the transaction. Cyprium is obligated to pay 20% of the PRV APA proceeds to the Eunice Kennedy Shriver National Institute of Child Health and Human Development, an institute of the National Institutes of Health. The PRV APA contains customary representations, warranties, covenants and indemnification provisions, in each case subject to certain limitations. On March 30, 2026, the Company and Cyprium announced the closing of the PRV APA transaction.
Cash Flows
The following table summarizes our cash flows during the periods indicated:
Year Ended December 31,
($ in thousands)
2025
2024
Change
Total cash (used in)/provided by:
Operating activities
$
(65,777)
$
(80,191)
$
14,414
Investing activities
10,121
(15,000)
25,121
Financing activities
77,442
70,641
6,801
Net increase (decrease) in cash and cash equivalents and restricted cash
$
21,786
$
(24,550)
$
46,336
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 $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.
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Investing Activities
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 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 $33.8 million.
Components of cash flows from publicly-traded partner companies are:
For the Year Ended December 31, 2025
($ in thousands)
Fortress 1
Avenue
Checkpoint 2
Journey
Mustang
Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities
$
6,915
$
(1,833)
$
(53,154)
$
(12,441)
$
(5,264)
$
(65,777)
Investing activities
8,956
—
—
—
1,165
10,121
Financing activities
(2,714)
2,094
47,310
16,226
14,526
77,442
Net increase (decrease) in cash and cash equivalents and restricted cash
$
13,157
$
261
$
(5,844)
$
3,785
$
10,427
$
21,786
For the Year Ended December 31, 2024
($ in thousands)
Fortress 1
Avenue
Checkpoint
Journey
Mustang
Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities
$
(19,527)
$
(9,026)
$
(31,101)
$
(9,127)
$
(11,410)
$
(80,191)
Investing activities
—
—
—
(15,000)
—
(15,000)
Financing activities
(231)
9,837
32,777
16,993
11,265
70,641
Net increase (decrease) in cash and cash equivalents and restricted cash
$
(19,758)
$
811
$
1,676
$
(7,134)
$
(145)
$
(24,550)
Note 1: Includes Fortress and non-public subsidiaries.
Note 2: 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
Our short-term and long-term contractual obligations as of December 31, 2025 include:
● Contractual payments related to our long-term debt (see Note 9, Debt and Interest, to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K );
● obligations under our leases (see Note 14, Commitments and Contingencies, to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K ); and
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● 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. We may also be required to make milestone payments and royalty payments in connection with the sale of products developed under these agreements, if approved and sold.
Additionally, we enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical services and products for operating purposes, which are generally terminable by us upon written notice.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item is set forth in the Consolidated Financial Statements and notes thereto beginning at page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.