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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-28 · 315 added, 277 removed, 205 unchanged (74% of the section changed)

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These factors include, without limitation, those described under Item 1A “Risk Factors.” We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.

Please see the section of this report titled “Special Cautionary Notice Regarding Forward-Looking Statements” at the beginning of this Form 10-K.

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.

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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.

Jude Children’s Research Hospital (“St.

Jude”), Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Cincinnati Children’s Hospital Medical Center, Columbia University, the University of Pennsylvania, Mayo Foundation for Medical Education and Research (“Mayo Clinic”), AstraZeneca plc and Dr.

We have executed arrangements with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center (“COH” or “City of Hope”), Fred Hutchinson Cancer Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc and Dr.

Reddy’s Laboratories, Ltd.

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and financial expertise to help the partners achieve their goals.

Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings.

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

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 Avenue Therapeutics, Inc.

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:

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

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

ATXI, “Avenue”), Baergic Bio, Inc.

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

(“Cellvation”), Checkpoint Therapeutics, Inc.

CKPT, “Checkpoint”), Cyprium Therapeutics, Inc.

(“Cellvation”), Cyprium Therapeutics, Inc.

(“Cyprium”), Helocyte, Inc.

(“Helocyte”), Journey Medical Corporation (Nasdaq:

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

MBIO, “Mustang”), Oncogenuity, Inc.

(“Helocyte”), Oncogenuity, Inc.

(“Oncogenuity”) and Urica Therapeutics, Inc.

Aevitas Therapeutics, Inc.

(“Aevitas”) was a consolidated subsidiary company until the sale of its primary asset to 4D Molecular Therapeutics in April 2023.

Recent Events

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● For the years ended December 31, 2024 and 2023, total net revenue was $57.7 million and $84.5 million, respectively, which includes net product revenue from Journey’s commercial portfolio of $55.1 million and $59.7 million, respectively.

● In August 2023, Journey entered into an exclusive license agreement with Maruho Co., Ltd.

(“Maruho”), a Japanese company specializing in dermatology and also Journey’s exclusive licensing partner that developed and is commercializing Qbrexza (Rapifort®) in Japan.

Under the terms of the agreement, Journey Medical received a $19 million upfront payment and granted Maruho an exclusive license to develop and commercialize Qbrexza® (Rapifort) for the treatment of hyperhidrosis in additional territories in Asia (the “Territory”).

Maruho is responsible for all development and commercialization costs for the program throughout the Territory.

Total net revenue in 2023 included the receipt by Journey of a $19.0 million upfront payment for the exclusive license of certain rights relating to Qbrexza in Asia.

● In the fourth quarter of 2024, we announced the respective FDA approvals of Emrosi™ (Minocycline Hydrochloride Extended-Release Capsules, 40mg), by Journey;

and UNLOXCYT TM (cosibelimab-ipdl), for the treatment of adults in metastatic or locally advanced cutaneous squamous cell carcinoma (“cSCC”) in adults who are not candidates for curative surgery or radiation, by Checkpoint.

Late Stage Product Candidates

Cosibelimab (anti-PD-L1 antibody)

● Our partner company, Checkpoint, submitted a Biologics License Application (“BLA”) to the U.S.

Food and Drug administration (“FDA”) for cosibelimab, its investigational anti-PD-L1 antibody, as a treatment for patients with metastatic or locally advanced cutaneous squamous cell carcinoma (“cSCC”) who are not candidates for curative surgery or radiation, in January 2023.

In December 2023, the FDA issued a complete response letter (“CRL”) for the cosibelimab BLA.

The CRL only cited findings that arose during a multi-sponsor inspection of Checkpoint’s third-party contract manufacturing organization as approvability issues to address in a resubmission.

The CRL did not state any concerns about the clinical data package, safety, or labeling for the approvability of cosibelimab.

We believe we can address the feedback in a resubmission to enable marketing approval in 2024.

● In October 2023, Checkpoint announced the publication of results from the multicenter, multiregional, pivotal trial evaluating cosibelimab in patients with metastatic cSCC in the Journal for ImmunoTherapy of Cancer (JITC) , the peer-reviewed, online journal of the Society of Immunotherapy of Cancer.

The paper, entitled, “ Efficacy and Safety of Cosibelimab, an Anti–PD-L1 Antibody, in Metastatic Cutaneous Squamous Cell Carcinoma ” (doi:10.1136/jitc-2023-007637), describes safety and efficacy results from 78 patients with metastatic cSCC enrolled at clinical sites in eight countries.

● In July 2023, Checkpoint announced new, longer-term data for cosibelimab from its pivotal studies in locally advanced and metastatic cSCC.

These results demonstrate a deepening of response over time, resulting in substantially higher complete response rates than previously reported (55% objective response rate;

23% complete response rate in locally advanced cSCC and 50% objective response rate;

13% complete response rate in metastatic cSCC).

Furthermore, responses continue to remain durable over time.

● In June 2023, Checkpoint announced that new pharmacokinetic modeling data on cosibelimab supporting the extension to an every-three-week dosing regimen were presented at the Population Approach Group Europe 2023 annual meeting.

The results support the comparability of cosibelimab 800 mg every-two-week and 1200 mg every-three-week dosing regimens.

● A resubmission of the cosibelimab BLA is expected in 2024.

● Cosibelimab was sourced by Fortress and is currently in development at Checkpoint.

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.

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 December 2023, our subsidiary, Cyprium completed the asset transfer of CUTX-101 to Sentynl.

Sentynl is obligated under the 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 as follows:

(i) 3% of annual net sales up to $75 million;

(ii) 8.75% of annual net sales between $75 million and $100 million;

and (iii) 12.5% of annual net sales in excess of $100 million.

● 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.

● The CUTX-101 rolling NDA submission is ongoing and is expected to be completed by Sentynl in 2024.

● CUTX-101 was sourced by Fortress and was developed by Cyprium until the asset transfer in December 2023.

DFD-29 (modified release oral minocycline for the treatment of rosacea)

● In January 2024, Journey submitted an NDA to the FDA seeking approval for DFD-29 (minocycline hydrochloride modified release capsules, 40 mg) for the treatment of inflammatory lesions and erythema of rosacea in adults.

If approved, DFD-29 has the potential to become the only oral, systemic therapy to address both inflammatory lesions and erythema (redness) from rosacea.

Journey announced on March 18, 2024 that the FDA accepted the NDA and assigned a Prescription Drug User Fee Act (“PDUFA”) goal date of November 4, 2024.

● In October 2023, Journey announced data from a comparative bioavailability study of DFD-29 demonstrating systemic exposure of DFD-29 was significantly lower than that of Solodyn® (minocycline hydrochloride extended-release tablets, 105mg) and that DFD-29 was safe and well tolerated throughout the study.

● In July 2023, Journey announced positive topline data from the two DFD-29 Phase 3 clinical trials (MVOR-1 & MVOR-2) for the treatment of rosacea and achievement of co-primary and all secondary endpoints and subjects completed the 16-week treatment with no significant safety issues.

DFD-29 demonstrated statistical superiority compared to Oracea® and placebo for Investigator’s Global Assessment (“IGA”) treatment success and the reduction in total inflammatory lesion count in both studies.

In November 2023, Journey also announced data for the secondary endpoint relating erythema assessment, in which DFD-29 showed significantly superior reduction in Clinicians Erythema Assessment (“CEA”) compared to placebo in both trials.

In January 2024, Journey also announced results from the Phase 3 studies (MVOR-1 & MVOR-2) for DFD-29 on a secondary endpoint related to erythema (redness) assessment.

DFD-29 showed significantly superior reduction in CEA compared to placebo in both MVOR-1 and MVOR-2 clinical trials.

● In June 2023, Journey announced positive topline data from the Phase 1 clinical trial assessing the impact of DFD-29 on the microbial flora of healthy adults and also evaluated the safety and tolerability of DFD-29.

The study achieved all primary objectives and no significant safety issues were noted during the study.

The results indicate that DFD-29 can be safely used for up to 16 weeks with no significant risk of microbiota suppression or development of resistance.

CAEL-101 (monoclonal antibody for AL amyloidosis)

● CAEL-101 was sourced by Fortress in 2017 and was developed by Caelum until it was acquired by AstraZeneca o n October 5, 2021.

AstraZeneca acquired Caelum for an upfront payment of approximately $150 million paid to Caelum shareholders, of which approximately $56.9 million was paid to Fortress, which was net of the ten percent escrow holdback amount and other miscellaneous transaction expenses.

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

(“Caelum”), a former subsidiary of Fortress for an upfront payment of approximately $150 million paid to Caelum shareholders, of which approximately $56.9 million was paid to Fortress.

The agreement also provides for additional potential payments to Caelum shareholders totaling up to $295 million, payable upon the achievement of regulatory and commercial milestones.

Fortress is eligible to receive 42.4% of all proceeds of the transaction, including approximately $148 million to Fortress, with $31.8 million upon BLA approval.

● There are two ongoing Phase 3 studies of CAEL-101 for AL amyloidosis.

Fortress is eligible to receive 42.4% of all potential milestone payments, which together with the upfront payment, would total up to approximately $182 million.

● There are two ongoing global Phase 3 studies of CAEL-101 for Mayo Stage IIIa and Mayo Stage IIIb AL amyloidosis.

(ClinicalTrials.gov identifiers:

NCT04512235 and NCT04504825 ).

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

● In January 2024, Avenue reached a final agreement with the FDA on the Phase 3 safety study protocol for IV tramadol and statistical analysis approach, including the primary endpoint which will be a composite of elements indicative of opioid-induced respiratory depression.

● The final non-inferiority safety study is designed to assess the risk of opioid-induced respiratory depression related to opioid stacking on IV tramadol compared to IV morphine.

The study will randomize approximately 300 post-bunionectomy patients to IV tramadol or IV morphine for pain relief administered during a 48-hour post-operative period.

Patients will have access to IV hydromorphone, a Schedule II opioid, for rescue of breakthrough pain.

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

( 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)

● In October 2023, we announced an exclusive option agreement with COH for patent rights to use Triplex, a cytomegalovirus vaccine, in combination with cytomegalovirus (“CMV”)-specific, Anti-Human Immunodeficiency Virus (“HIV”) Chimeric Antigen Receptor (“CAR”) (collectively, CMV/HIV-CAR) T Cells for the treatment of adults living with HIV.

Additionally, the California Institute for Regenerative Medicine (“CIRM”) recently awarded an $11.3 million grant to COH to fund a Phase 1 clinical trial involving the CMV/HIV-CAR T cells.

In preclinical studies, administration of the dual-action CAR T cells followed by administration of a CMV vaccine successfully eradicated HIV, including from latent reservoirs.

● In June 2023, we announced that the National Cancer Institute awarded a $3.2 million grant to COH for clinical studies of Triplex, a CMV vaccine being developed by Helocyte and COH.

This award will fund two planned multicenter, placebo-controlled, randomized Phase 2 studies to evaluate the potential safety and immunological response of Triplex and its ability to enhance CMV-specific T cell immunity in stem cell donors to reduce the risk of CMV events in recipients of allogeneic hematopoietic cell transplant.

● Triplex is also the subject of a grant from the National Institute of Allergy and Infectious Diseases that could provide over $20 million in non-dilutive funding for a 420-patient multi-center, placebo-controlled, randomized Phase 2 study of Triplex for control of CMV in patients undergoing liver transplantation.

The trial is expected to begin enrollment this year and we believe this data set could ultimately be used to support approval of Triplex in this setting.

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

a Phase 1/2 trial for CMV control in pediatric recipients of HCT (ClinicalTrials.gov identifier:

NCT03354728 );

a Phase 2 trial for reduction in viral load of Human Immunodeficiency Virus (“HIV”) in adults co-infected with HIV and CMV (ClinicalTrials.gov identifier:

NCT05099965 );

and a Phase 1 trial of Triplex in combination with a bi-specific CMV/CD-19 Chimeric Antigen Receptor T Cell for the treatment of Non-Hodgkin Lymphoma (ClinicalTrials.gov identifier:

NCT05432635 ).

Triplex is also the subject of several planned studies, including:

a Phase 2 evaluation for CMV control in recipients of liver transplant (ClinicalTrials.gov identifier:

NCT06075745 );

a Phase 2 trial for CMV control in recipients of kidney transplant ;

and a Phase 2 trial for CMV control in recipients of stem cell transplant in which the stem cell donor is vaccinated with Triplex ( ClinicalTrials.gov identifier:

NCT06059391 ).

● The Phase 2 clinical trial of Triplex for adults co-infected with HIV and CMV is now fully enrolled with topline data anticipated in 2024.

The study aims to show that vaccination with Triplex can potentially reduce the in intensity of highly active antiretroviral therapy (“HAART”) which is used in up to 1.7 million treated HIV patients.

● 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.

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).

● 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:

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).

● 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

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

● In December 2023, Mustang announced initial data from its ongoing multicenter, open-label, non-randomized Phase 1/2 clinical trial evaluating the safety and efficacy of MB-106 CAR-T cell therapy at the 2023 American Society of Hematology (“ASH”) Annual Meeting.

Initial data show that all patients responded clinically to treatment with MB-106 (n=9);

100% overall response rate for patients with follicular lymphoma (“FL”) and Waldenstrom macroglobulinemia (“WM”).

100% of patients with FL (n=5) had a complete response;

1 very good partial response and 2 partial responses were observed in WM patients (n=3);

and the hairy cell leukemia variant (“HCL-v”) patient experienced stable disease, with prolonged, ongoing independence from blood transfusions.

Complete responses were observed in patients previously treated with CD19-targeted CAR T-cell therapy.

MB-106 was well tolerated in patients with indolent NHL, with no occurrence of cytokine release syndrome (“CRS”) above grade 1 and no immune effector cell-associated neurotoxicity syndrome (“ICANS”) of any grade.

Outpatient administration was allowed and found to be feasible.

● Mustang intends to treat the first patient in a non-randomized registrational multicenter trial in relapsed or refractory WM in the second half of 2024.

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

Dotinurad (urate transporter (URAT1) inhibitor for gout)

● In the third quarter of 2023, Urica initiated a Phase 1b clinical trial in patients with gout and hyperuricemia in the U.S.

to compare U.S.

patients’ response to dotinurad with data generated in Japan, and to assess drug-drug interactions, if any, with allopurinol.

Urica expects to announce data from this trial in the first half of 2024.

● In June 2023, Urica announced data from the Phase 1 clinical trial in healthy volunteers showed comparable pharmacokinetic, pharmacodynamic and safety profile between U.S.

and Japanese healthy subjects.

● Dotinurad (URECE® tablet) was approved in Japan in 2020 as a once-daily oral therapy for gout and hyperuricemia.

● 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.

The clinical program supporting approval included over 1,000 patients.

● Dotinurad was sourced by Fortress and is currently in development at our subsidiary, Urica.

MB-101 ( IL13Rα2 ‐ targeted CAR-T cell therapy)

● The Phase 1 clinical trial sponsored by COH for MB-101 (ClinicalTrials.gov Identifier:

NCT02208362) has completed the treatment phase, and patients continue to be assessed for long-term safety.

● In March 2024, Mustang announced that Phase 1 clinical data (ClinicalTrials.gov Identifier:

NCT02208362) were published in Nature Medicine .

The data showed stable disease or better was achieved in 50% (n=29/58) of heavily pretreated patients for at least two months, with two partial responses (PR), one complete response (CR), and a second CR after additional CAR-T cycles under compassionate use.

Patients with recurrent GBM treated in the final cohort with dual intratumoral/intraventricular delivery and an optimized manufacturing process had a median overall survival of 10.2 months compared to the expected survival rate of six months in patients with recurrent GBM.

The median overall survival for all patients was eight months.

● Three additional MB-101 studies are ongoing or planned:

1) MB-101 with or without nivolumab and ipilimumab in treating patients with recurrent or refractory glioblastoma (currently enrolling;

ClinicalTrials.gov Identifier:

NCT04003649) sponsored by COH;

2) MB-101 in treating patients with recurrent or refractory glioblastoma with a substantial component of leptomeningeal disease (currently enrolling;

ClinicalTrials.gov Identifier:

NCT04661384) sponsored by COH;

and 3) MB-101 in combination with the herpes simplex virus type 1 oncolytic virus (MB-108) in treating patients with recurrent or refractory glioblastoma or high-grade astrocytoma.

● MB-101 was sourced by Fortress and is currently in development at Mustang.

MB-109 (MB-101 + MB-108 (HSV-1 oncolytic virus))

● In October 2023, Mustang announced that the FDA has accepted its IND application to initiate a Phase 1 open label, multicenter clinical trial to assess the safety, tolerability and efficacy of MB-109, a novel combination of MB-101 and MB-108 (herpes simplex virus 1 oncolytic virus), for the treatment of IL13Rα2+ recurrent glioblastoma (“rGBM”) and high-grade astrocytoma.

● MB-108 was sourced by Fortress and is currently in development at Mustang.

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

● In July 2022, Mustang announced that the first patient successfully received LV-RAG1 ex vivo lentiviral gene therapy to treat recombinase-activating gene-1 (“RAG1”) severe combined immunodeficiency (“RAG1-SCID”) in an ongoing Phase 1/2 clinical trial taking place in Europe.

● Leiden University Medical Centre is continuing to treat patients and expects to expand the trial to other centers in 2023.

● LV-RAG1 is exclusively licensed by Mustang for the development of MB-110, a first-in-class ex vivo lentiviral gene therapy for the treatment of RAG1-SCID.

● MB-110 was sourced by Fortress and is currently in development at Mustang.

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

MB-109 (IL13Rα2-targeted CAR T Cells (MB-101) + HSV-1 oncolytic virus (MB-108))

● In November 2024, we announced that the FDA granted Orphan Drug Designation for Mustang for MB-108, a herpes simplex virus type 1 (“HSV-1”) oncolytic virus, for the treatment of malignant glioma.

● In March 2024, data from the Phase 1 trial evaluating MB-101 IL13Rα2-targeted CAR T-cells in high-grade glioma were published in Nature Medicine.

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.

● 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.

● 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.

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

● In January 2024, Avenue announced that all patients have been enrolled in Avenue’s Phase 1b/2a study, which is evaluating AJ201 in the U.S.

for the treatment of spinal and bulbar muscular atrophy (“SBMA”), also known as Kennedy’s Disease.

Topline data for the Phase 1b/2a clinical trial of AJ201 in SBMA are expected in the second quarter of 2024.

● In March 2023, Avenue entered into an exclusive license agreement with AnnJi Pharmaceutical Co., Ltd.

for intellectual property related to AJ201.

SBMA is a debilitating rare genetic neuromuscular disease primarily affecting men.

● AJ201 was sourced by Fortress and is currently in development at Avenue.

BAER-101(GABA A α2/3 positive allosteric modulator)

● In December 2023, Avenue presented the preclinical in vivo data evaluating BAER-101 using the GAERS model of absence epilepsy at the American Epilepsy Society (AES) 2023 Annual Meeting.

The preclinical data demonstrated that BAER-101 significantly suppressed seizures in a translational animal model of absence epilepsy.

In an in vivo evaluation using the SynapCell’s Genetic Absence Epilepsy Rat from Strasbourg (“GAERS”) model, BAER-101 fully suppressed seizure activity with a minimal effective dose of 0.3 mg/kg, PO.

● BAER-101 was sourced by Fortress and is currently in development at Baergic, a majority-owned subsidiary of Avenue.

General Corporate and Other

● In October 2023, Fortress effected a 1-for-15 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”) which brought the Company into compliance with Nasdaq’s $1.00 per share minimum bid price requirement for continued listing.

● In May 2023, Mustang entered into an Asset Purchase Agreement with uBriGene (Boston) Biosciences, Inc.

(“uBriGene”), pursuant to which Mustang agreed to sell its leasehold interests in its cell processing facility and associated assets relating to the manufacturing and production of cell and gene therapies.

On July 28, 2023, Mustang completed the sale of all of its assets relating to its operations primarily relating to the manufacturing and production of cell and gene therapies.

The aforementioned transaction is currently under review by the U.S.

Committee on Foreign Investment in the United States (“CFIUS”), with the current review period set to conclude no later than March 28, 2024, although if CFIUS does not conclude on its review by March 28, 2024, the proceeding will transition to a second 45-day phase as CFIUS further investigates the transaction.

There can be no assurance that CFIUS will ultimately provide clearance with respect to the transaction, or what mitigating measures may be required in order to obtain such clearance.

Depending on the nature and severity of the national security risks identified, CFIUS may, among other mitigation measures, require suspension of the Transaction, require uBriGene to divest the Facility and/or other assets relating thereto, forfeit contracts that CFIUS deems to be sensitive, or require appointment of special compliance personnel or a proxy board consisting of U.S.

If CFIUS determines to require mitigating measures with respect to the Transaction, then uBriGene must comply with such measures although the Closing Date has already occurred.

● In April 2023, Aevitas entered into an asset purchase agreement for 4D Molecular Therapeutics (“4DMT”) to acquire Aevitas’ proprietary rights to its short-form human complement factor H (“sCFH”) asset for the treatment of complement-mediated diseases.

Under the terms of the agreement, 4DMT will make cash payments to Aevitas totaling up to approximately $140 million in potential late-stage development, regulatory and sales milestones.

A range of single-digit royalties on net sales are also payable.

In connection with the 4DMT APA, the Class A preferred shares of Aevitas held by the Company converted to Aevitas common shares, at which point the Company no longer maintained voting control of Aevitas.

● 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.

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.

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.

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.

● 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

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 product returns, coupons, rebates, allowances and distribution fees paid by Journey to certain wholesalers, inventory realization, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses, and contingencies.

Our significant estimates include, but are not limited to, provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, inventory realization, valuation of intangible assets, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses and contingencies.

Due to the uncertainty inherent in such estimates, actual results may differ from these estimates.

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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 IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

While our significant accounting policies are described in the Notes to our Consolidated Financial Statements included in “Part II, Item 8, Financial Statements and Supplementary Data” in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Revenue Recognition

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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 our financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.

Certain of the Company’s working capital assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current liabilities, are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature.

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

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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 Oaktree Note with detachable warrants in accordance with ASC 470, Debt .

We assessed the classification of the common stock purchase warrants issued in connection with such transaction and determined that such instruments met the criteria for equity classification.

The note proceeds were allocated between the Oaktree Note and the warrants on a relative fair value basis.

We recorded the related issue costs and value ascribed to the warrants as a debt discount of the Oaktree Note.

We 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 (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.

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Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in “Part IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K.

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

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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 IV, Item 15, Exhibits and Financial Statement Schedules ” in this Annual Report on Form 10-K.

As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K , have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our Consolidated Financial Statements located in “ Part II, Item 8, Financial Statements and Supplementary Data ” in this Annual Report on Form 10-K.

Basis of Presentation and Principles of Consolidation

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Partner Company/Subsidiary

Denotes entities that are publicly-traded.

Checkpoint (Nasdaq:

Journey (Nasdaq:

Mustang (Nasdaq:

Results of Operations

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Operating expenses

Cost of goods sold – product revenue

Cost of goods - (excluding amortization of acquired intangible assets)

Amortization of acquired intangible assets

Research and development

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Selling, general and administrative

Loss recovery

Asset impairment

Total operating expenses

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Interest expense and financing fee

Change in fair value of warrant liabilities

Gain (loss) on common stock warrant liabilities

Other income (expense)

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Other revenue

For the year ended December 31, 2023 we generated $84.5 million of net revenue, of which $59.7 million relates to the sale of Journey branded and generic products, $19.5 million of other revenue relates to Journey’s $19 million milestone payment and royalties of $0.5 million from Maruho Co., Ltd.

(“Maruho”) related to the manufacturing and marketing approval and sales of Rapifort® Wipes 2.5% in Japan, $5.2 million relates to Cyprium’s collaboration revenue with Sentynl, and $0.1 million of revenue relates to Checkpoint’s collaborative agreements with TGTX, a related party.

For the year ended December 31, 2022, we generated $75.7 million of net revenue, of which $71.0 million relates to the sale of Journey branded and generic products, $2.7 million relates to Journey’s royalties from Maruho, $1.9 million relates to Cyprium’s collaboration revenue with Sentynl and $0.2 million relates to Checkpoint’s collaborative agreements with TGTX.

For the year ended December 31, 2023, the net increase in revenue of $8.8 million or 12% is due to Journey’s $19.0 million non-refundable upfront payment from Maruho, offset by a decrease of $11.3 million or 16% of product revenue due to lower unit volumes, due to continued generic competition for Targadox and the discontinuation of Ximino in the third quarter of 2023.

Collaboration revenue related to Cyprium’s agreement with Sentynl increased $3.3 million due to the receipt of $4.5 million associated with Sentynl’s assumption of control of the CUTX-101 development program, as well as recognition of $0.7 million of deferred 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.

Cost of goods sold

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($ in thousands)

Cost of goods sold – product revenue

We had $26.7 million and $30.8 million of costs of goods sold in connection with the sale of JMC branded and generic products for the years ended December 31, 2023 and 2022, respectively.

Cost of goods sold decreased by $4.1 million, or 13% year-over-year, with t he decrease mainly due to lower-than-prior-year product royalties driven by lower sales of products from period-to-period, and a permanent contractual decrease in the Qbrexza royalty percentage from the prior-year period.

Cost of goods sold – (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.

Year Ended December 31,

($ in thousands)

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.

Research and development expenses

Research and development costs primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for licenses and milestones, costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, laboratory costs and other supplies.

For the years ended December 31, 2023 and 2022, research and development expenses were approximately $101.7 million and $134.2 million, respectively.

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.

The table below provides a summary of research and development by entity, for the years ended December 31, 2024 and 2023:

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Research & development

Subsidiaries/Partner Companies:

Total research & development expense

Includes the following subsidiaries:

Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The decrease in research and development spending at Mustang is due to a review of its portfolio of product candidates to determine the future strategy of its programs and the proper allocation of resources, which led to the discontinuation of development of MB-102 (CD123), MB-103 (HER2), MB-104 (CS1) and MB-105 (PSCA) programs, comprising a portion of Mustang’s portfolio of CAR T therapies being developed in partnership with COH, in addition to costs offset by reimbursements received from uBriGene through a subcontracting agreement.

Journey’s decreased research and development costs are due to lower clinical trial expenses to develop DFD-29, as the project winds down and eventually concludes.

Potential FDA approval for DFD-29 is expected in the second half of 2024.

Checkpoint’s decrease in research and development spending of $7.8 million is attributable to a $6.6 million decrease in manufacturing costs and a $5.6 million decrease in clinical costs, offset by an increase in regulatory costs of $0.8 million, due to the PDUFA fee to the FDA for the BLA filing for cosibelimab, and $2.3 million in license fees due upon the FDA filing acceptance of the BLA.

Avenue’s increase in research and development in 2023 is primarily attributable to clinical costs related to the Phase 1b/2a of AJ201 for the treatment of SBMA, also known as Kennedy’s disease.

The decrease in “Other” is attributable to a decrease of $1.3 million in costs incurred by Cyprium for the CUTX-101 development program as it was assumed by Sentynl, a decrease of $0.4 million for Aevitas development since the deconsolidation of that subsidiary due to the transaction with 4DMT, offset by an increase of $1.7 million of costs incurred by Urica for the dotinurad clinical program.

Noncash, stock-based compensation expense included in research and development for the years ended December 31, 2023 and 2022, was $3.2 million and $4.4 million, respectively.

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.

Year Ended December 31,

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Stock-based compensation - research & development

Partner Companies:

Total stock-based compensation expense - research and development

Includes the following subsidiaries:

Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

We expect research and development costs to remain flat or decrease modestly in 2024.

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.

Research and development – licenses acquired

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Research and development – licenses acquired

The increase in research and development – licenses acquired of $3.6 million in 2023 is due primarily to $4.2 million paid for Avenue’s license from AnnJi for AJ201.

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.

Selling, General and Administrative Expenses

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Selling, general & administrative

Subsidiaries/Partner Companies:

Total selling, general & administrative expense

Includes an asset impairment charge of $3.1 million in the year ended December 31, 2023 for the Ximino product line.

Includes the following subsidiaries:

Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

For the year ended December 31, 2023, the decrease in selling, general and administrative expenses of $19.0 million or 17% is primarily attributable to decreased expenses at Journey related to their expense reduction efforts in sales and marketing, as JMC began a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs to better align costs to their revenue-generating capabilities.

JMC’s cost reductions were offset slightly by a loss on impairment of intangible assets of $3.1 million related to the impairment of Ximino as a result of lower net product revenues and gross profit levels.

JMC discontinued Ximino in September 2023.

The decrease in selling, general and administrative costs at Fortress and Mustang is attributable to cost reduction efforts and optimization relating to personnel, consulting, and infrastructure.

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.

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Stock-based compensation - Selling, general and administrative

Partner Companies:

Total stock-based compensation expense - selling, general and administrative

Includes the following subsidiaries:

Aevitas (until April 2023), Baergic (until November 2022), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

We expect selling, general and administrative expenses to remain flat or decrease modestly in 2024.

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.

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.

Asset Impairment

Year Ended December 31,

($ in thousands)

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.

Other expense

Year Ended December 31,

($ in thousands)

Other income (expense)

Other expense

Interest income

Interest expense and financing fee

Change in fair value of warrant liabilities

Gain (loss) on common stock warrant liabilities

Other income (expense)

Total other expense

Total other income (expense) increased $1.4 million, or (14)%, from expense of $9.9 million for the year ended December 31, 2022 to expense of $4.7 million for the year ended December 31, 2023, primarily due to the increase in change in fair value of warrant liabilities associated with warrants related to financings at Avenue and Checkpoint of $9.9 million, and an increase in interest income of $1.6 million, offset by an increase of $1.7 million in interest expense and financing fees due to costs associated with debt payoff at Journey and Mustang, and an increase of $4.6 million in other expense in the year ended December 31, 2023 due primarily to $4.1 million associated with the deconsolidation and dissolution of partner companies.

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.

Liquidity and Capital Resources

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At December 31, 2024, we had an accumulated deficit of $740.9 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 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.

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Stock Offerings and At-The-Market Share Issuances

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

At December 31, 2023, we had cash and cash equivalents of $80.9 million of which $40.6 million relates to Fortress and the private partner companies, primarily funded by Fortress, $4.9 million relates to Checkpoint, $6.2 million relates to Mustang, $27.4 million relates to JMC and $1.8 million relates to Avenue.

Restricted cash related to an undertaking posted by Cyprium to secure potential damages in an injunctive proceeding and our office leases is $2.4 million.

In July 2021, the Company filed a shelf registration statement (File No.

333-255185) on Form S-3, which was declared effective on July 30, 2021 (the "2021 Shelf").

For the year ended December 31, 2023, the Company issued approximately 0.2 million shares of common stock at an average price of $9.61 per share for gross proceeds of $2.2 million.

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”).

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.

Approximately $100.1 million of securities remain available for sale under the 2021 Shelf as of December 31, 2023.

The amount of securities we are able to sell pursuant to the registration statement on Form S-3 may be limited to an aggregate of one-third of our public float.

See “Item 1A.

Risk Factors – We may need substantial additional funding and may be unable to raise capital when needed, which may force us to delay, curtail or eliminate one or more of our R&D programs, commercialization efforts or planned acquisitions and potentially change our growth strategy.”

In February 2023, the Company completed a registered direct offering of common stock priced At-the-Market under Nasdaq rules pursuant to which it issued and sold 1.1 million shares of its common stock at a purchase price of $12.53 per share (as adjusted for the Reverse Stock Split) and secured approximately $13.3 million in net proceeds after deducting estimated offering expenses.

This included a concurrent private placement with investors in the registered direct offering for the pro rata rights to acquire securities exercisable into common stock in certain future operating subsidiaries that consummate a specified corporate development transaction within the next five years.

In November 2023, the Company closed on a public offering of the issuance and sale of an aggregate of 5,885,000 units at a purchase price of $1.70 per unit.

Each unit consists of (i) one share of common stock, and (ii) one warrant to purchase one share of common stock, exercisable immediately upon issuance at a price of $1.70 per share and expiring five years following the issuance date.

The total gross proceeds from the offering were approximately $10.0 million with net proceeds of approximately $8.9 million after deducting placement agent fees and other transaction costs.

Certain directors and officers of the Company participated in the offering and purchased an aggregate amount of approximately $2.9 million of units at the same purchase price.

Subsequent to 2023, in January 2024, Fortress closed on a registered direct offering for the issuance and sale of an aggregate of 3,303,305 shares of its common stock and warrants to purchase up to 3,303,305 shares of its common stock at a combined purchase price of $3.33 per share of common stock and accompanying warrant priced at-the-market under Nasdaq rules.

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

As of December 31, 2024, $43.1 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.

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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, 2023, Journey issued approximately 0.7 million shares of common stock at an average price of $6.189 per share for gross proceeds of $4.6 million under the Journey ATM.

In connection with these sales, Journey paid aggregate fees of $0.1 million.

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 shelf registration statement (File No.

333-270843) on Form S-3 (the “Checkpoint 2023 S-3”), which was declared effective May 5, 2023.

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, 2023, approximately $91.7 million of the securities remains available for sale through the Checkpoint 2023 S-3.

In 2023, Checkpoint closed on registered direct offerings in February, April, May and July and sold a total of 6,957,186 shares of common stock and 2,663,903 pre-funded warrants at prices ranging from $3.07 to $5.25.

All pre-funded warrants were exercised in 2023.

Each of these offerings included Series A warrants with a five-year term and Series B warrants with an 18-month term.

Total Series A warrants were 9,621,089 and total Series B warrants were 9,621,089 with exercise prices ranging from $2.82 to $5.00.

Total gross proceeds were $33.6 million, with net proceeds of $30.4 million.

In October 2023, Checkpoint entered into an inducement offer letter agreement with a holder of certain of its existing warrants to exercise for cash an aggregate of 6,325,354 warrants for shares of Checkpoint’s common stock at a reduced exercise price of $1.76 per share.

The warrants were issued to the holder on December 16, 2022 with an exercise price of $4.075 per share and on February 22, 2023 with an exercise price of $5.00 per share as part of registered direct offerings.

The shares of Checkpoint common stock issuable upon exercise of the warrants were registered pursuant to effective registration statements on Form S-3 (File No.

333-251005) and Form S-3 (File No.

333-270474), respectively.

As part of the inducement, Checkpoint agreed to issue new unregistered Series A Warrants to purchase up to 6,325,354 shares and new unregistered Series B Warrants to purchase up to 6,325,354 shares of Checkpoint Common Stock.

The Series A and B warrants are exercisable immediately upon issuance with an exercise price of $1.51 per share.

The Series A warrants will expire in five years and the Series B warrants will expire twenty-four months.

The total gross proceeds from the offering were approximately $11.1 million with net proceeds of approximately $10.0 million after deducting approximately $1.1 million in commissions and other transaction costs.

In April 2021, Mustang filed a shelf registration statement on Form S-3 (File No.

333-255476) which was declared effective in May 2021 (the “Mustang 2021 S-3”).

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.

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.

During the year ended December 31, 2023, Mustang issued approximately 0.1 million shares of common stock at an average price of $3.15 per share for gross proceeds of $0.2 million under the ATM Agreement.

In connection with these sales, Mustang paid aggregate fees of approximately $3,000 for net proceeds of approximately $0.2 million.

As of December 31, 2023, approximately $195.6 million of the Mustang 2021 S-3 remained available for sales of securities.

In October 2023, Mustang closed on the October 2023 Registered Direct Offering with a single institutional accredited investor for the issuance and sale of an aggregate of (i) 920,000 shares of its common stock and (ii) pre-funded warrants to purchase up to 1,688,236 shares of its common stock at a purchase price of $1.70 per share and $1.699 per pre-funded warrant in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market LLC.

In a concurrent private placement, Mustang issued and sold 2,588,236 unregistered warrants to purchase shares of common stock.

The unregistered warrants have an exercise price of $1.58, were exercisable immediately upon issuance and will expire five and one-half years following the issuance date.

The total gross proceeds from the offerings were approximately $4.4 million before deducting approximately $0.5 million in placement agency fees and offering expenses.

In November 2023, Avenue closed on a public offering of the issuance and sale of an aggregate of 16,633,400 units at a purchase price of $0.3006 per unit.

Each unit consists of (i) one share of common stock (or pre-funded warrant in lieu of), and (ii) one Series A warrant to purchase one share of common stock, exercisable immediately upon issuance at a price of $0.3006 per share and expiring five years following the issuance date, and (iii) one Series B warrant to purchase one share of common stock, exercisable immediately upon issuance at a price of $0.3006 per share and expiring eighteen months following the issuance date (in aggregate, the “November 2023 Warrants”).

The total gross proceeds from the offering were approximately $5.0 million with net proceeds of approximately $3.8 million after deducting commissions and other transaction costs, before giving effect to any exercises of the November 2023 Warrants.

In January 2023, Avenue entered into an agreement with a single institutional investor for the sale of 1,940,299 shares of common stock and pre-funded warrants for gross proceeds of approximately $3.0 million.

In a concurrent private placement, Avenue also agreed to issue to the same investor a total of 1,940,299 warrants to purchase up to one share of common stock each at an exercise price of $1.55 per share for gross proceeds of approximately $0.2 million.

Avenue received approximately $2.8 million in net proceeds across both transactions.

In December 2023, Journey announced it had entered into a credit agreement with SWK Funding LLC that provided a term loan facility in the original principal amount of $20 million.

Of the $20 million, $15 million was funded upon closing, and t he remaining $5.0 million may be drawn upon request by Journey within the first 12 months following credit agreement execution .

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.

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.

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.

During the year ended December 31, 2024, Avenue issued 0.6 million shares through the Avenue ATM for net proceeds of $1.6 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.

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.

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.

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 $50.0 million on a trailing 12-month basis, tested quarterly, which may be reduced or increased as described in the Agreement (the “Minimum Net Sales Test”), 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 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.

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”).

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.

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%.

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.

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

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Financing activities

Net increase in cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities decreased $51.2 million from the year ended December 31, 2022 to the year ended December 31, 2023.

The decrease is primarily attributable to the decrease in net loss of $59.8 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, and the net decrease in cash from changes in operating assets and liabilities of $11.9 million offset by the increase in loss from deconsolidation and dissolution of subsidiaries of $4.1 million and a $3.1 million asset impairment loss.

Net cash used in operating activities decreased by $48.0 million from the year ended December 31, 2023 to the year ended December 31, 2024.

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.

Investing Activities

Net cash used by investing activities for the year ended December 31, 2022 of $22.9 million decreased $20.8 million to net cash used by investing activities of $2.1 million for the year ended December 31, 2023.

The change is primarily due to Journey’s purchase of the VYNE Therapeutics, Inc.

(“VYNE”) product licenses of $20.0 million and Mustang’s property and equipment purchases of $2.7 million for the year ended December 31, 2022, offset by $6 million in proceeds from the sale of property and equipment recorded by Mustang for the uBriGene transaction.

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.

Financing Activities

Net cash provided by financing activities was $75.3 million for the year ended December 31, 2022, compared to $32.7 million of net cash provided by financing activities for the year ended December 31, 2023, a decrease of $42.6 million.

The decrease is primarily due to the repayment of partner company debt of $81.3 million, partially offset by proceeds from the issuance of common stock in public offerings of $22.1 million, and proceeds from new partner company debt of $14.5 million.

Net cash provided by financing activities increased $37.9 million from the year ended December 31, 2023 to the year ended December 31, 2024.

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.

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

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Financing activities

Net increase in cash and cash equivalents and restricted cash

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

For the Year Ended December 31, 2023

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Financing activities

Net increase in cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

Includes Fortress and non-public subsidiaries.

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Our short-term and long-term contractual obligations as of December 31, 2024 include:

● Contractual payments related to our long-term debt (see Note 9, Debt and Interest, to our Consolidated Financial Statements included in “Part IV, Item 15, Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K );

● 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 );

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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