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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-03-28 · 1442 added, 692 removed, 1099 unchanged (66% of the section changed)

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Directors, Executive Officers and Corporate Governance

Information required by this item is incorporated by reference from the information contained under the sections “Corporate Governance,” “Code of Business Conduct and Ethics,” and “Our Executive Officers” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

The information under the heading “Executive Officers of Fortress” in Part I of this Annual Report on Form 10-K is also incorporated herein by reference.

The following table sets forth certain information regarding our executive officers and directors, including their ages as of the date of this Form 10-K.

Rosenwald, M.D.

Chairman of the Board of Directors, President and Chief Executive Officer

Chief Financial Officer and Head of Corporate Development

Executive Vice Chairman, Strategic Development

Jimmie Harvey, Jr., M.D.

Malcolm Hoenlein

Dov Klein, CPA

Lucy Lu, M.D.

Rosenwald, M.D.

has served as a member of the Company’s Board of Directors since October 2009 and as Chairman, President and Chief Executive Officer of the Company since December 2013.

Rosenwald also currently serves as a member of the board of directors of Fortress partner companies Avenue (OTC:

ATXI), Checkpoint (Nasdaq:

CKPT), Mustang (Nasdaq:

MBIO) and Journey (Nasdaq:

Additionally, Dr.

Rosenwald serves as a member of the board of directors of each of Fortress’ private subsidiaries (and has so served in each case since company inception).

From 1991 to 2008, Dr.

Rosenwald served as the Chairman of Paramount BioCapital, Inc.

Over the past 30 years, Dr.

Rosenwald has acted as a biotechnology entrepreneur and has been involved in the founding, recapitalization and sale of numerous public and private biotechnology and life science companies.

He received his B.S.

in finance from Pennsylvania State University and his M.D.

from Temple University School of Medicine.

David Jin h as served as our Chief Financial Officer since August 2022 and as Head of Corporate Development since May 2020.

He also serves on the Board of Directors of Mustang (Nasdaq:

MBIO) and as Interim Chief Financial Officer and Chief Operating Officer of Avenue (OTC:

ATXI) (both Fortress partner companies).

Previously, he was on the investment team in the Private Equity & Real Assets group at Barings, Director of Corporate Development at Sorrento Therapeutics, Vice President of Healthcare Investment Banking at FBR & Co., and was in the management consulting group at IMS Health (now IQVIA).

He holds a B.S.

in Industrial Engineering & Management Sciences with a double-major in Mathematical Methods in the Social Sciences from Northwestern University.

Weiss has served as our Executive Vice Chairman, Strategic Development since February 2014.

He currently serves as a member of the board of directors of several of our partner companies, including as Chairman of the Board of Directors of Checkpoint (Nasdaq:

CKPT) and Executive Chairman of the Board of Directors of Mustang (Nasdaq:

Since December 2011, Mr.

Weiss has served in multiple capacities at TG Therapeutics, Inc.

TGTX), a related party, and is currently its Executive Chairman, Chief Executive Officer and President.

Weiss founded Access Oncology, which was later acquired by Keryx Biopharmaceuticals (Nasdaq:

KERX) in 2004.

Following the merger, Mr.

Weiss remained as CEO of Keryx.

He began his professional career as a lawyer with Cravath, Swaine & Moore LLP.

Weiss earned his B.S.

in Finance from The University of Albany and his J.D.

from Columbia Law School .

Jimmie Harvey, Jr., M.D.

has served as a member of the Board of Directors since December 2008.

Harvey founded Birmingham Hematology and Oncology Associates, L.L.C.

(now Alabama Oncology, L.L.C.), a private medical company located in Birmingham, Alabama.

Harvey served as President of Alabama Oncology, LLC until 2020.

Harvey has experience in clinical trial execution and management and was a principal investigator in two trials, one investigating a novel monoclonal antibody and the other investigating a small molecule used to treat immunologic malignancies.

Harvey holds a B.A.

in chemistry from Emory University and received his M.D.

from Emory University School of Medicine.

Harvey completed his medical oncology training at the Vincent T.

Lombardi Cancer Center at Georgetown University.

Harvey’s medical background, including his oncology expertise, the Board of Directors believes that Dr.

Harvey has the appropriate set of skills to serve as a member of the Board in light of the Company’s business and structure.

Malcolm Hoenlein has served as a member of the Board of Directors since February 2014.

From 1986 to 2021, Mr.

Hoenlein served as Executive Vice Chairman of the Conference of Presidents of Major American Jewish Organizations, the coordinating body on international and national concerns for 51 national American Jewish organizations and since 2021 continues as Vice Chairman Emeritus.

Previously, he served as the founding Executive Director of the Jewish Community Relations Council of Greater New York.

Prior to that, he was the founding Executive Director of the New York Conference on Soviet Jewry.

A National Defense Fellow at the Near East Center of the University of Pennsylvania, Mr.

Hoenlein taught International Relations in the Political Science Department and served as a Middle East specialist at the Foreign Policy Research Institute.

In addition, he served on the editorial staff of ORBIS, the Journal of World Affairs.

He serves currently as a director of Nanox Imaging Plc.

and Bonus BioGroup.

He previously served as a director for DarioHealth Corp, WellSense Technology, Delek Oil, Eco-Fusion North America, Inc., Powermat USA, and Bank Leumi USA.

Hoenlein has a B.A.

in Political Science from Temple University and an M.A.

in International Relations from the University of Pennsylvania, as well as an Hon.

from Touro College, an Hon.

from Yeshiva University, an Hon.

from Temple University and an Hon.

from Bar Ilan University.

Hoenlein’s demonstrated sound business judgment and leadership and management experience, the Board of Directors believes that Mr.

Hoenlein has the appropriate set of skills to serve as a member of the Board in light of the Company’s business and structure.

Dov Klein, CPA , has served as a member of the Board of Directors since July 2015.

From January 2016 through December 31, 2020, Mr.

Klein was an audit partner at Marks Paneth LLP, a certified public accounting and consulting firm.

Effective January 1, 2021, Mr.

Klein is a retired partner of Marks Paneth LLP.

Prior to 2016, Mr.

Klein was an audit partner at RSSM CPA LLP, a certified public accounting and strategic advisory firm, which he joined in 2001.

His practice focused on audits and reviews and compilation of financial statements for clients in various industries.

Klein has also consulted on matters in litigation and conducted financial due diligence in mergers and acquisitions as well as business planning for growing businesses.

Klein has been a certified public accountant since 1978 and is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.

Klein received his BSc in Accounting from Brooklyn College, The City University of New York.

Jay Lobell has served as a member of the Board of Directors since June 2006.

Lobell is President of GMF Capital, LLC which he co-founded in January 2016.

Lobell was also a founder of Beech Street Capital, LLC, a real estate lending company, serving as its Vice Chairman from December 2009 until the company’s sale to Capital One Financial Corporation in November 2013.

From January 2005 to December 2009, Mr.

Lobell served as President and Chief Operating Officer of Paramount Biosciences, LLC, or PBS, a private biotechnology investment and development company.

In that capacity, he had substantial responsibility for the assembly and oversight of companies PBS founded and incubated, including the Company.

Lobell currently serves on the board of directors of several private companies, including Sava Senior Care, where he has served since September 2013, Tender Touch Rehabilitation Services, where he has served since October 2014, and Pardes Biosciences, where he has served since January 2021.

Lobell was a partner in the law firm Covington & Burling LLP from October 1996 through January 2005, where he advised companies and individuals as a member of the firm’s securities litigation and white collar defense practice group.

Lobell received his B.A.

(summa cum laude, Phi Beta Kappa) from The City University of New York and his J.D.

from Yale Law School, where he was senior editor of The Yale Law Journal.

Lorenz, J.D ., has served as a member of the Board of Directors since August 2019.

Lorenz has over 25 years of experience guiding and implementing investment strategies across public and private companies.

Since 2021, Mr.

Lorenz has served as a Director at Adventus Capital Partners.

Since 2015, Mr.

Lorenz has been Chief Investment Officer, Senior Vice President, Treasury & Private Investments at the Katz Group in the family office of Daryl Katz, which has operations in sports and entertainment, real estate, and public and private investments.

Lorenz works directly with the principal of the Katz Group to oversee the design, implementation, and monitoring of the overall investment strategy for public and private passive investments.

Prior to joining the Katz Group, Mr.

Lorenz was Director, Ultra High Net Worth (“UHNW”) Private Client Business at Credit Suisse Securities, LLC from 2009 - 2015, where he was selected to expand Credit Suisse’s UHNW private client business into Canada.

From 2004 to 2009, Mr.

Lorenz was the Director, UHNW Management Group at UBS Financial Services, Inc., where he was a key contributor to the formation and development of the company’s first dedicated UBS UHNW office.

Earlier in his career, he held positions of increasing responsibility at Merrill Lynch Pierce Fenner & Smith, Inc.

and the Office of the Comptroller of the Currency, an independent bureau within the U.S.

Department of the Treasury that charters, regulates and supervises all national banks and thrift institutions.

Lorenz holds a J.D.

from George Mason University Antonin Scalia Law School, an M.B.A.

from Benedictine University and a B.S.

in economics from Illinois State University.

Lucy Lu, M.D.

, has served as a member of the Board of Directors since December 2022.

She previously served as the Executive Vice President and Chief Financial Officer of the Company from February 2012 to June 2017 and the President and Chief Executive Officer of Avenue Therapeutics, Inc.

ATXI) from July 2017 until March 2022.

Prior to working in the biotech industry, Dr.

Lu had 10 years of experience in healthcare-related equity research and investment banking.

Additionally, Dr.

Lu has served as a member of the Board of Directors of Veru, Inc.

where she is the Chair of the Audit Committee and serves on the Compensation Committee, since 2021, a position she also held from 2016 to 2018, and has served as a member of the Board of Directors of Iventiva S.A.

From February 2007 through January 2012, Dr.

Lu was a senior biotechnology equity analyst with Citigroup Investment Research.

From 2004 until joining Citigroup, she was with First Albany Capital, serving as Vice President from April 2004 until becoming a Principal of the firm in February 2006.

Lu holds an M.D.

degree from the New York University School of Medicine and an M.B.A.

from the Leonard N.

Stern School of Business at New York University.

Lu obtained a B.A.

from the University of Tennessee’s College of Arts and Science.

Family Relationships

There is no family relationship between and among any of our executive officers or directors.

Board Structure and Leadership

Our Bylaws provide that our Board shall consist of between one and nine directors, and such number of directors within this range may be determined from time to time by resolution of our board of directors or our stockholders.

Currently, we have eight directors.

The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as the Board believes that it is in the best interests of the Company to make that determination based on the direction of the Company and the current membership of the Board.

The Board has determined that having a director who is also the Chief Executive Officer serve as the Chairman is in the best interest of the Company’s stockholders at this time.

During 2024, our Board held ten meetings.

During 2024, each director attended at least 88% of the meetings of the Board and the meetings of those committees on which each director served, in each case during the period that such person was a director.

Our directors are expected to attend each Annual Meeting of Stockholders.

Director Independence

Fortress adheres to the corporate governance standards adopted by The Nasdaq Stock Market LLC (“Nasdaq”).

Nasdaq rules require our Board to make an affirmative determination as to the independence of each director.

Consistent with these rules, our Board completed its annual review of director independence on March 27, 2025.

During the review, our Board considered relationships and transactions during 2024 and during the past three fiscal years between each director or any member of his or her immediate family, on the one hand, and the Company and our partner companies and affiliates, on the other hand.

The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.

Based on this review, our Board determined that Dr.

Harvey and Messrs.

Hoenlein, Klein, Lobell, and Lorenz are independent under the criteria established by Nasdaq and our Board.

Board Committees

The permanent committees established by our Board are the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, descriptions of which are set forth in more detail below.

Audit Committee

The Audit Committee currently consists of Messrs.

Klein (chair) and Lobell, and Dr.

During 2024, the Audit Committee held four meetings.

The duties and responsibilities of the Audit Committee are set forth in the Charter of the Audit Committee which was recently reviewed by our Audit Committee.

Our Audit Committee determined that no revisions needed to be made to the charter at this time.

A copy of the Charter of the Audit Committee is available on our website, located at www.fortressbiotech.com , under the Investors – Governance – Governance Documents section.

Among other matters, the duties and responsibilities of the Audit Committee include reviewing and monitoring our financial statements and internal accounting procedures, the selection of our independent registered public accounting firm and consulting with and reviewing the services provided by our independent registered public accounting firm.

Our Audit Committee has sole discretion over the retention, compensation, evaluation and oversight of our independent registered public accounting firm.

The SEC and Nasdaq have established rules and regulations regarding the composition of audit committees and the qualifications of audit committee members.

Our Board of Directors has examined the composition of our Audit Committee and the qualifications of our Audit Committee members in light of the current rules and regulations governing audit committees.

Based upon this examination, our Board of Directors has determined that each member of our Audit Committee is independent and is otherwise qualified to be a member of our Audit Committee in accordance with the rules of the SEC and Nasdaq.

Additionally, the SEC requires that at least one member of the Audit Committee have a “heightened” level of financial and accounting sophistication.

Such a person is known as the “audit committee financial expert” under the SEC’s rules.

Our Board has determined that Mr.

Klein is an “audit committee financial expert,” as the SEC defines that term, and is an independent member of our Board of Directors and our Audit Committee.

Please see Mr.

Klein’s biography in “Item 10.

Directors, Executive Officers, and Corporate Governance” for a description of his relevant experience.

Compensation Committee

The Compensation Committee held one meeting and took action by unanimous consent one time during 2024.

The Compensation Committee currently consists of Messrs.

Lobell (chair), Klein and Dr.

The duties and responsibilities of the Compensation Committee are set forth in its charter.

A copy of the charter of the Compensation Committee is available on the Company’s website, located at www.fortressbiotech.com, under the Investors — Governance — Governance Documents section.

As discussed in its charter, among other things, the duties and responsibilities of the Compensation Committee include annually evaluating the performance of the Chief Executive Officer and our other executive officers, determining the overall compensation of the Chief Executive Officer and our other executive officers and administering all executive compensation programs, including, but not limited to, our incentive and equity-based plans.

The Compensation Committee also reviews and discusses with management the compensation disclosures in our proxy statement and reviews and approves the say on pay and frequency proposals to be periodically included in our proxy statement.

The Compensation Committee applies discretion in the determination of individual executive compensation packages to ensure compliance with the Company’s compensation philosophy.

The Chief Executive Officer makes recommendations to the Compensation Committee with respect to the compensation packages for officers other than himself.

The Compensation Committee may delegate its authority to grant awards to certain employees, and within specified parameters under the Compensation Committee Charter, to a special committee consisting of one or more directors who may but need not be officers of the Company.

Nasdaq has established rules and regulations regarding the composition of compensation committees and the qualifications of compensation committee members.

Our Board of Directors has examined the composition of our Compensation Committee and the qualifications of our Compensation Committee members in light of the current rules and regulations governing compensation committees.

Based upon this examination, our Board of Directors has determined that each member of our Compensation Committee is independent and is otherwise qualified to be a member of our Compensation Committee in accordance with such rules.

Nominating Committee

The Nominating and Corporate Governance Committee is currently composed of Messrs.

Lobell (chair), Hoenlein and Klein.

The functions of the Nominating and Corporate Governance Committee include, among other things:

● making recommendations to the Board of Directors regarding the size and composition of the Board of Directors;

● developing minimum qualifications for director candidates and evaluating such candidates in such a manner as the Nominating and Corporate Governance Committee deems appropriate;

● except where otherwise required, selecting candidates for election to the Board of Directors and to fill any vacancies on the Board of Directors, such selected candidates to then be voted by the Board of Directors;

● establishing procedures for the nomination process;

● establishing and administering periodic assessment procedures relating to the performance of the Board of Directors as a whole and its individual members;

● making recommendations to the Board of Directors regarding corporate governance matters and practices, including formulating and periodically reviewing corporate governance guidelines to be adopted by the Board of Directors.

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for establishing the qualifications for director candidates.

The Committee does not have a formal policy on Board of Directors candidate qualifications.

It may consider those factors it deems appropriate in evaluating director nominees made either by the Board of Directors or stockholders, including judgment, skill, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skills relative to other Board of Directors’ members, specialized knowledge or experience, and diversity.

Depending upon the current needs of the Board of Directors, certain factors may be weighed more or less heavily than others.

In considering candidates for the Board of Directors, the directors evaluate the entirety of each candidate’s credentials and do not currently have any specific minimum qualifications that must be met.

The directors will consider candidates from any reasonable source, including current Board of Directors’ members, stockholders, professional search firms or other persons.

The directors will not evaluate candidates differently based on who made the recommendation.

Our policy describing our director nomination process is included in our Nominating and Corporate Governance Committee Charter, which is available on the Company’s website, located at www.fortressbiotech.com , under the Investors — Governance — Governance Documents section.

We believe that the current process in place functions effectively to select director nominees who will be valuable members of our Board of Directors.

We identify potential nominees to serve as directors through a variety of business contacts, including current executive officers, directors, community leaders and stockholders.

We may, to the extent appropriate, retain a professional search firm or other advisors to identify potential nominees.

We will also consider candidates recommended by stockholders for nomination to our Board.

A stockholder who wishes to recommend a candidate for nomination to our Board must submit such recommendation to our General Counsel and Corporate Secretary, Sam Berry, at our offices located at 1111 Kane Concourse Suite 301, Bay Harbor Islands, FL 33154.

Any recommendation must be received not less than 45 calendar days nor more than 75 calendar days before the anniversary date of the previous year’s annual meeting.

All stockholder recommendations of candidates for nomination for election to our Board must be in writing and must set forth the following:

(i) the candidate’s name, age, business address, and other contact information, (ii) the number of shares of common stock beneficially owned by the candidate, (iii) the date or dates such shares were acquired and the investment intent of such acquisition, (iv) a complete description of the candidate’s qualifications, experience, background and affiliations, as would be required to be disclosed in the proxy statement pursuant to Schedule 14A under the Exchange Act, (v) a written statement by the candidate in which he or she consents to being named in the proxy statement as a nominee and to serve as director if elected, and (vi) the name and address of the stockholder(s) of record making such a recommendation.

We believe that our Board as a whole should encompass a range of talent, skill, and expertise enabling it to provide sound guidance with respect to our operations and interests.

Our independent directors evaluate all director candidates by reviewing their biographical information and qualifications.

If the independent directors determine that a candidate is qualified to serve on our Board, such candidate is interviewed by at least one of the independent directors and our Chief Executive Officer.

Other members of the Board also have an opportunity to interview qualified candidates.

The independent directors then determine, based on the background information and the information obtained in the interviews, whether to recommend to the Board that the candidate be nominated for approval by the stockholders to fill a directorship.

With respect to an incumbent director whom the independent directors are considering as a potential nominee for re-election, the independent directors review and consider the incumbent director’s service during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Board.

The manner in which the independent directors evaluate a potential nominee does not differ based on whether the candidate is recommended by our directors or stockholders.

We consider the following qualifications, among others, when making a determination as to whether a person should be nominated to our Board:

the independence of the director nominee;

the director nominee’s character and integrity;

financial literacy;

level of education and business experience, including experience relating to biopharmaceutical companies;

whether the director nominee has sufficient time to devote to our Board;

and the director nominee’s commitment to represent the long-term interests of our stockholders.

We review candidates in the context of the current composition of the Board and the evolving needs of our business.

We believe that each of the current members of our Board (all of whom are director nominees) has the requisite business, biopharmaceutical, financial or managerial experience to serve as a member of the Board, as described above in their biographies under the heading “Our Board of Directors.” We also believe that each of the current members of our Board has other key attributes that are important to an effective board, including integrity, high ethical standards, sound judgment, analytical skills, and the commitment to devote significant time and energy to service on the Board and its committees.

Code of Business Conduct and Ethics

We have adopted the Code of Business Conduct and Ethics, or the Code, which applies to all of our directors, officers and employees, including our principal executive officer and principal financial officer.

The Code includes guidelines dealing with the ethical handling of conflicts of interest, compliance with federal and state laws, financial reporting, and our proprietary information.

The Code also contains procedures for dealing with and reporting violations of the Code.

We have posted our Code of Business Conduct and Ethics under the Investors — Governance — Governance Documents section of the Company’s website, located at www.fortressbiotech.com .

Any changes to or waivers of the Code of Ethics will be posted at that website.

Insider Trading Policy Prohibiting Hedging and Speculative Trading

We maintain an insider trading policy (“Insider Trading Policy”) that governs the purchase, sale and other dispositions of our securities by the Company, directors, officers and employees.

Our Insider Trading Policy is designed to promote compliance with insider trading laws, rules and regulations and any applicable listing standards.

Additionally, pursuant to our Insider Trading Policy, our officers, directors, and employees are prohibited from engaging in speculative trading, including hedging transactions or short sale transactions with respect to Company securities.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors, executive officers, and beneficial owners of more than ten percent of our common stock to file reports with the SEC indicating their holdings of and transactions in our equity securities, and to provide copies of such reports to us.

Based solely on a review of our records, publicly available information, and written representations by the persons required to file such reports, we believe that during the fiscal year ended December 31, 2024, there were no Section 16(a) filings that were untimely.

Executive Compensation

Information required by this item is incorporated by reference from the information contained under the sections “Executive Compensation,” and “Director Compensation” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Named Executive Officers

As determined in accordance with SEC rules, our “named executive officers” (“NEOs”), which include all executive officers serving during 2024, are the individuals set forth below:

Rosenwald, M.D., our Chairman, President and Chief Executive Officer;

● David Jin, our Chief Financial Officer and Head of Corporate Development;

Weiss, our Executive Vice Chairman, Strategic Development

The following table sets forth information concerning compensation paid by the Company and its consolidated subsidiaries to our NEOs for their services rendered in all capacities during the years ended December 31, 2024, and 2023.

Summary Compensation Table

Compensation (2)

Name and principal position(s)

Rosenwald, M.D.

Chairman, President and

Chief Executive Officer

Chief Financial Officer and

Head of Corporate Development

Executive Vice Chairman,

Strategic Development

(1) Represents the aggregate grant date fair value of equity-based awards granted by the Company and its consolidated subsidiaries, computed in accordance with FASB Accounting Standards Codification Topic 718, Stock Compensation, as modified or supplemented (“FASB ASC Topic 718”), as described in Note 13.

In accordance with the terms of the LTIP (as defined below), on January 1, 2025, Dr.

Rosenwald and Mr.

Weiss were each awarded 454,163 shares of restricted common stock of the Company (or one percent (1%) of the total outstanding shares of the Company) for their performance in 2024.

Jin was awarded 1,000,000 Restricted Stock Units of the Company and 65,000 Restricted Stock Units of Avenue for his roles as Interim Chief Operating Officer, Chief Financial Officer and Corporate Secretary of Avenue.

Additionally, Dr.

Rosenwald received 82,051 restricted shares of Checkpoint common stock, 9,728 restricted shares of Journey common stock, and 30,000 options in respect of Avenue common stock for his role on the Board of Directors of those companies for the year ended December 31, 2024.

Weiss received 82,051 restricted shares of Checkpoint common stock in his capacity as Chairman of the Board of Checkpoint for the year ended 2024.

(2) All Other Compensation for 2024 for Dr.

Rosenwald comprises $50,000 in cash fees from each of Checkpoint, Mustang, and Journey for his service on the Boards of Directors of those companies for the year ended December 31, 2024.

All Other Compensation for 2024 for Mr.

Weiss, in each case to an LLC wholly-owned by Mr.

Weiss, comprises $60,000 cash fees received for his service as Chairman of the Board of Checkpoint, and $60,000 in cash fees received for his service as Chairman of the Board and Executive Chairman of Mustang.

All Other Compensation for 2024 for Mr.

Jin comprises Company matching 401(k) contributions of $14,467.

(3) This amount represents an discretionary bonus awarded by the Compensation Committee to Mr.

Jin in January 2025.

Although this bonus was not awarded until 2025, it relates to services performed in 2023 and we have therefore restated Mr.

Jin’s 2023 compensation to include it.

Other than the addition of this bonus amount, no other changes have been made to Mr.

Jin’s previously reported 2023 compensation.

Summary of Material Components of Compensation Program

The Company believes in providing its executive management team a competitive total compensation package featuring a combination of elements.

The executive compensation programs are designed to achieve the following objectives:

● reward performance;

● attract, motivate and retain executives of outstanding ability and potential;

● ensure that executive compensation is rationally related to building stockholder value.

The Board of Directors believes that the Company’s executive compensation programs should include short- and long-term components, including cash and equity-based compensation, and should reward consistent performance that meets or exceeds expectations.

Base Salaries

Base salaries for the Company’s executives are initially established through arm’s-length negotiation at the time the executive is hired, taking into account such executive’s qualifications, experience, prior salary, the scope of his or her responsibilities, and competitive market compensation paid by other companies for similar positions within the industry.

Base salaries are reviewed annually, typically in connection with the annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance, and experience.

While other of the Company’s executives are paid salaries typical within the industry for persons of their experience and expertise, Dr.

Rosenwald and Mr.

Weiss have elected to largely forego the payment of salary from the Company.

Annual Discretionary Bonuses

In addition to the payment of base salaries, the Company believes that discretionary bonuses can play an important role in providing appropriate incentives to its executives to achieve the Company’s strategic objectives.

However, for 2024, no annual bonuses were paid to our executive officers.

Amended and Restated Long Term Incentive Plan

The Fortress Biotech, Inc.

Amended and Restated Long Term Incentive Plan (the “LTIP”) is designed to compensate Dr.

Rosenwald and Mr.

Weiss based on their responsibilities and for their contributions to the successful achievement of certain corporate goals and objectives of the Company.

The LTIP awards are intended to enable each executive to share in the successes and risks of the Company.

Eligible participants in the LTIP include Dr.

Rosenwald, Mr.

Weiss, or any limited liability company or limited partnership owned and controlled by Dr.

Rosenwald or Mr.

Weiss, provided such entity has a bona fide service provider relationship with the Company (“Eligible Entities” and together with Dr.

Rosenwald and Mr.

Weiss, the “LTIP Participants”).

On January 1 of each year, until and including 2025, the LTIP entitles the Company to grant restricted shares of common stock of the Company to each of the LTIP Participants equal to up to one percent (1%) of the total outstanding shares of common stock of the Company, such actual amount to be based upon the achievement of the goals and objectives of each individual as set by the Compensation Committee for the preceding year.

In the case of the LTIP Participants, such goals and objectives include, among other things:

the Company’s in-licensing of new medical technologies of substantial promise;

operational and cash management;

the Company’s issuance of new debt securities;

the Company’s achievement of developmental, regulatory and clinical milestones in respect of its in-licensed technologies;

the recruitment and retention of personnel;

share price performance;

trading volume of the Company’s public securities;

and the overall positioning of the Company within its relevant market.

Restricted shares granted under the LTIP vest upon (i) the Company achieving a specified increase in market capitalization since the grant date and (ii) the participant remaining in service with the Company until (or being involuntarily terminated prior to) July 16, 2025.

The award would also vest upon a change in control of the Company before July 16, 2025, provided the eligible participant remains in service with the Company until the date of such transaction.

If the restricted shares do not vest as described above, they will be subject to a repurchase option by the Company at a nominal price for 90 days following the earlier of July 16, 2025 or the participant’s voluntary separation from service with the Company.

In addition, pursuant to the LTIP, upon the formation of each new subsidiary of the Company, the LTIP Participants are to each receive five percent (5%) of the total outstanding shares of common stock of the subsidiary.

Retirement Plans

We maintain a tax-qualified retirement plan (the “401(k)”) plan for eligible employees, including our named executive officers.

Eligible employees may make voluntary contributions from their eligible pay and may defer up to 86% of their annual compensation, up to certain limitations imposed by the Internal Revenue Code of 1986, as amended.

We match employee contributions in an amount equal to 100% of 4% of the employee’s eligible compensation.

All such employee contributions and matching contributions are immediately and fully vested.

Equity Incentive Compensation

The Company believes that by providing its executives the opportunity to increase their ownership of Company stock, the interests of its executives will be more closely aligned with the best interests of the Company’s stockholders, encouraging long-term performance.

The stock awards enable the executive officers to participate in the appreciation of the value of the Company’s stock, while personally participating in the risks of business setbacks.

The Company grants equity awards to its executives pursuant to the Fortress Biotech, Inc.

2013 Stock Incentive Plan, as has been amended from time to time (the “2013 Plan”).

While the Company has awarded stock options to the executive officers as incentives in the past, it more recently has awarded restricted stock or restricted stock units (“RSUs”) to its executives.

These RSU or restricted stock awards generally vest in installments over a period of several years.

Several of the Company’s subsidiaries also periodically grant awards of stock options, restricted stock or RSUs to executive officers of the Company in respect of their service as officers or directors of those subsidiaries.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information regarding outstanding equity awards held by the Company’s named executive officers, in securities of the Company and its subsidiaries, as of December 31, 2024.

Option Awards

Exercisable (#)

Unexercisable (#)

Vested ($)(1)

Shares ($)(1)

Rosenwald, M.D.

(1) Based on the closing stock price on the Nasdaq Capital Market on the last trading day of the most recently completed fiscal year, as applicable, Fortress:

$3.20, Journey:

$3.91, Mustang:

$8.85 and Avenue:

(2) Represents vested options in respect of Fortress common stock.

(3) Represents restricted shares in Checkpoint that vest as follows:

4,761 restricted shares that vest on June 16, 2025;

17,483 restricted shares that vest on June 13, 2026;

32,051 restricted shares that vest on May 14, 2027;

and 50,000 shares that vest in three equal installments on the first, second and third anniversaries of the grant date of May 14, 2024.

(4) Represents restricted shares of the Company that vest if both of the following conditions are met:

(a) there is an increase in the market capitalization of the Company of at least $100,000,000 since January 1, 2023 and before July 16, 2025, and (b) the grantee (or a limited liability company or limited partnership owned by the grantee) either remains in service with the Company through July 16, 2025 or experiences an involuntary separation prior to such date.

(5) Represents options in respect of Avenue common stock, which vest (or vested) in equal installments on January 1 of each of 2024, 2025 and 2026.

(6) Represents restricted shares of the Company that vest on July 16, 2025.

(7) Represents restricted shares of the Company that vest if both of the following conditions are met:

(a) there is an increase in the market capitalization of the Company of at least $100,000,000 since January 1, 2024 and before July 16, 2025, and (b) the grantee (or a limited liability company or limited partnership owned by the grantee) either remains in service with the Company through July 16, 2025 or experiences an involuntary separation prior to such date.

(8) Represents options in respect of Avenue common stock, which vest in equal installments on January 1 of each of 2025, 2026 and 2027.

(9) Represents restricted shares in Journey that vest on July 8, 2025.

(10) Represents restricted shares in Mustang that vest as follows:

95 restricted shares that vest on June 17, 2025 and 144 restricted shares that vest on July 5, 2026.

(11) Represents options in respect of Avenue common stock, which vest (or vested) in equal installments on August 1 of each of 2023, 2024, 2025 and 2026.

(12) Represents restricted stock units in Journey which vest in equal installments on July 21 of each of 2025 and 2026.

(13) Represents options in respect of Urica common stock, which vest (or vested) in equal installments on October 10 of each of 2023, 2024, 2025 and 2026.

(14) Represents restricted stock units in Avenue that vest in equal installments on September 23 of each of 2025 and 2026.

(15) Represents deferred restricted stock units of the Company that vest in 16 equal quarterly installments through the period ending December 31, 2028.

(16) Represents deferred restricted stock units of the Company that vest in 12 equal quarterly installments through the period ending December 31, 2027.

(17) Represents deferred restricted stock units of the Company that vest in 22 equal monthly installments through the period ending October 31, 2026.

(18) Represents restricted shares of the Company that vest on December 19, 2027.

Summary of Employment or Agreements and Arrangements

Executive Employment Agreements

The Company has not entered into employment agreements with Dr.

Rosenwald, Mr.

Weiss, or Mr.

The forfeiture conditions applicable to restricted shares granted to Dr.

Rosenwald, Mr.

Weiss or related entities under the LTIP lapses upon the occurrence of a corporate transaction (as defined in the LTIP) if the eligible employee is in service on the date of the corporate transaction, or upon a termination of service other than a voluntary separation.

Clawback Policy

Pursuant to Nasdaq listing requirements, we have adopted a policy providing for the recovery of erroneously awarded incentive-based compensation received by our executive officers or the executive officers of one of our subsidiaries during an applicable recovery period (the “Clawback Policy”).

Under the Clawback Policy, in the event that financial results upon which a cash or equity-based incentive award was based becomes the subject of a financial restatement that is required because of material non-compliance with financial reporting requirements, the Compensation Committee will conduct a review of awards covered by the Clawback Policy and recoup any erroneously awarded incentive-based compensation to ensure that the ultimate award reflects the financial results as restated.

The Clawback Policy covers any cash or equity-based incentive compensation award that was paid, earned or granted to covered executive officers during the last completed three fiscal years immediately preceding the date on which we are required to prepare the accounting restatement.

Timing of Equity Awards

While we have no set policy or practice regarding the timing of stock option awards or similar instruments in relation to the disclosure of material nonpublic information, we do not time the release of material information to affect the value of stock options.

In general, the timing of stock option awards is dictated by the event or circumstance giving rise to the award and the schedules of the directors responsible for approving the award.

In 2024, options were not issued to our named executive officers during the period beginning four business days before and ending one business day after the filing of a Form 10-Q, Form 10-K or Form 8-K that discloses material nonpublic information.

If, in the future, a stock option grant is made at a time that material nonpublic information exists, the directors approving the award would be responsible for considering the anticipated effect of that information on our stock price and would take such effect into account when sizing and pricing the award .

Director Compensation

Non-employee directors are compensated pursuant to the Company’s Non-Employee Director Compensation Policy and each non-employee director is eligible to receive a board fee of $30,000 annually, payable in quarterly installments.

Audit Committee members are eligible to receive an additional committee fee of $7,500 annually, payable in quarterly installments, and the chair of the Audit Committee is eligible to receive an additional Audit Committee chair fee of $55,000 annually, payable in quarterly installments.

Compensation Committee, Nominating and Governance Committee, and Strategic Transaction Committee members are each eligible to receive an additional committee fee of $5,000 annually, payable in quarterly installments, and chairs of each of those committees are eligible to receive a committee chair fee of $10,000 annually, payable in quarterly installments.

Non-employee directors may also receive stock options, restricted stock, or a restricted stock unit grant for shares of the Company’s common stock upon appointment and on an annual basis thereafter.

Simiarly, Strategic Transaction Committee members may also receive an additional equity award upon appointment to that committee and on an annual basis thereafter.

On January 1, 2024, all non-employee directors received $10,000 worth of restricted stock and Strategic Transaction Committee members each received an additional $10,000 worth of restricted stock, with the number of shares determined in each case based on the closing price of our common stock on the last trading day prior to the grant date, and in each case vesting in three equal installments on January 1 of 2025, 2026 and 2027.

Beginning on January 1, 2025, non-employee directors are also eligible to receive, on an annual basis on each January 1, a number of shares of the Company’s common stock equal to $100,000 divided by the closing price of the Company’s common stock on the final trading day of the previous calendar year, with such shares vesting in three (3) equal tranches on each of the first three (3) anniversaries of the grant date.

Non-Qualified Deferred Compensation

On March 12, 2015, the Compensation Committee of the Board approved the Deferred Compensation Plan for Directors (the “Plan”) for non-employee directors (“Participants”).

The Plan is administered by the Compensation Committee.

Pursuant to the Plan, a Participant can defer all or a portion of such Participant’s unearned annual fees, meeting fees and committee fees, including restricted stock and restricted stock units.

Deferred cash compensation will be converted into a number of stock units, determined based upon the closing price of the Company’s common stock on the date such fees would otherwise have been payable and placed into the Participant’s deferred compensation account (“Account”).

Deferred restricted stock unit grants will be converted on a share-for-share basis on the date such restricted stock units would otherwise have been payable and placed into the Participant’s Account.

On the tenth business day of January of the year following the Participant’s separation from service on the Board due to resignation, removal, failure to be re-elected or retirement, the amount of deferred compensation in the Participant’s Account will be distributed to the Participant in a lump sum payment of a number of shares of the Company’s common stock under the Plan equal to the number of whole stock units in the Account and cash in lieu of any fractional shares.

Distributions from the Account may be accelerated in the event of the Participant’s death or upon a corporate transaction (as defined in the Plan).

Director Compensation Table

The following table and related footnotes show the compensation paid to or accrued for the benefit of the Company’s non-employee directors in the fiscal year ended December 31, 2024.

Jimmie Harvey, Jr., M.D.

Malcolm Hoenlein

Dov Klein, CPA

Lucy Lu, M.D.

Rowinsky, M.D

(1) Represents director and committee fees earned in 2024.

(2) Amounts listed represent the aggregate fair value amount computed as of the grant date of each award during 2024 in accordance with FASB ASC Topic 718, as described in Note 13.

(3) In 2024, Drs.

Harvey, Rowinsky, Lu and Mr.

Hoenlein elected to defer 100% of the value of their stock awards.

This amount was credited to each of their deferred compensation accounts, respectively.

(4) In 2024, Mr.

Klein elected to defer 80% of the value of his stock award.

This amount was credited to his deferred compensation account.

(5) In 2024, Dr.

Rowinsky earned a prorated portion of his director compensation fees through May 23, 2024, as he did not stand for reelection.

At December 31, 2024, the aggregate number of restricted stock, restricted stock units ("RSUs"), and options issued to each non-employee director that remains unvested was as follows:

Harvey, 13,332 restricted stock awards (“RSAs”);

Hoenlein, 6,666 RSAs, Mr.

Klein, 13,332 RSAs;

Lobell, 13,332 RSAs;

Lorenz, 6,666 RSAs, and Dr.

Lu, 6,666 RSAs.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item is incorporated by reference from the information contained under the sections “Stock Ownership of Our Directors, Executive Officers, and 5% Beneficial Owners,” “Outstanding Equity Awards at Fiscal Year-End,” and “Equity Compensation Plan Information” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Securities Authorized for Issuance Under Equity Compensation Plans

Our equity compensation plans consist of the Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan, the Fortress Biotech, Inc.

2013 Stock Incentive Plan, as amended, and the Fortress Biotech, Inc.

Long Term Incentive Plan, all of which were approved by our stockholders.

We do not have any equity compensation plans or arrangements that have not been approved by our stockholders.

The following table contains information about our equity compensation plans as of December 31, 2024.

Securities to be

Available for

Future Issuance

Average Exercise

Plans (Excluding

Plan Category

Rights (a) (1)

Column(a)) (3)

Equity compensation plan approved by shareholders

Equity compensation plan not approved by shareholders

(1) Includes 558,896 stock options, 176,660 deferred shares of restricted stock, 1,609,964 restricted stock units, and 1,372,666 deferred restricted stock units.

(2) Restrcted Stock Units are not included in calculation of weighted-average exercise price, as they do not have an exercise price.

(3) Includes 8,003,399 shares available in the Fortress Biotech, Inc.

2013 Stock Incentive Plan and 999,797 shares under the Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan.

Stock Ownership of Our Directors, Executive Officers, and 5% Beneficial Owners

The following table shows information, as of March 27, 2025, concerning the beneficial ownership of our common stock by:

● each person we know to be the beneficial owner of more than 5% of our common stock;

● each of our current directors;

● each of our Named Executive Officers (“NEOs”); and

● all current directors and NEOs as a group.

As of March 27, 2025, there were 29,533,840 shares of our common stock outstanding.

In order to calculate a specific stockholder’s percentage of beneficial ownership, we include in that stockholder’s calculation those shares underlying options, warrants, or restricted stock units beneficially owned by that stockholder that are vested or that will vest within 60 days of the Record Date.

Shares of restricted stock are deemed to be outstanding.

Options, warrants, or restricted stock units held by other stockholders that are not attributed to the named beneficial owner are disregarded in this calculation.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the shares of our common stock.

Unless we have indicated otherwise, each person named in the table below has sole voting power and investment power for the shares listed opposite such person’s name, except to the extent authority is shared by spouses under community property laws.

Options, Warrants

and Restricted

Name of Beneficial Owner

Rosenwald, M.D.

Jimmie Harvey, Jr., M.D.

Dov Klein, CPA

Malcolm Hoenlein

Lucy Lu, M.D.

All current executive officers (including NEOs) and directors as a group (9 persons)

(1) Includes options exercisable and restricted stock units vesting within 60 days of March 27, 2025.

(2) Includes 4,050,495 shares held directly by Dr.

Rosenwald, 11,398 shares held by Capretti Grandi LLC, and 49,524 shares held by PAB Merger LLC and 1,567,515 shares underlying warrants that are currently exercisable.

Rosenwald has voting and dispositive control over the shares held by Capretti Grandi LLC and PAB Merger LLC.

Does not include 96,919 shares of common stock held by trusts established for the benefit of Dr.

Rosenwald’s family, over which Dr.

Rosenwald does not have any voting or dispositive control.

Includes 2,332,840 shares underlying warrants that are currently exercisable

(3) Includes 147,058 shares underlying warrants that are currently exercisable.

(4) Includes 164,375 deferred restricted stock units.

Certain Relationship s and Related Transactions, and Director Independence

Information required by this item is incorporated by reference from the information contained under the sections “Related-Person Transactions,” and “Corporate Governance” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Related-Person Transactions

Since January 1, 2024, the Company has not been a party to any transaction in which the amount involved exceeded or will exceed $120,000, and in which any of its directors, named executive officers or beneficial owners of more than 5% of the Company’s capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than as set forth below and other than compensation, termination, and change-in-control arrangements, all of which are described under — “ Item 11.

Executive Compensation” above.

The written charter of the Audit Committee authorizes, and the Nasdaq Stock Market listing rules require, the Audit Committee to review and approve related-party transactions.

In reviewing related-party transactions, the Audit Committee applies the basic standard that transactions with affiliates should be made on terms no less favorable to the Company than could have been obtained from unaffiliated parties.

Therefore, the Audit Committee reviews the benefits of the transactions, terms of the transactions and the terms available from unrelated third parties, as applicable.

All transactions other than compensatory arrangements between the Company and its officers, directors, principal stockholders and their affiliates will be approved by the Audit Committee or a majority of the disinterested directors, and will continue to be on terms no less favorable to the Company than could be obtained from unaffiliated third parties.

Other Related Parties

The Company’s Chairman, President and Chief Executive Officer, individually and through certain trusts over which he has voting and dispositive control, beneficially owned approximately 21.5% and 17.2% of the Company’s issued and outstanding Common Stock as of December 31, 2024 and 2023, respectively.

The Company’s Executive Vice Chairman, Strategic Development individually owned approximately 5.4% and 7.5% of the Company’s issued and outstanding Common Stock at December 31, 2024 and 2023, respectively.

Avenue September 2023 Private Placement

In September 2023, Avenue entered into an arrangement with Fortress and Dr.

Rosenwald, the Company’s Chairman, President and Chief Executive Officer and a director on the board of directors of Avenue, pursuant to which Avenue agreed to issue and sell 767,085 shares of Avenue’s common stock, par value $0.0001 per share, for an aggregate purchase price of approximately $550,000 in a private placement transaction, in compliance with Nasdaq Listing Rule 5365(c).

Employment Arrangements with Immediate Family Members of Our Executive Officers and Directors

Joshua Rosenwald, son of Dr.

Lindsay Rosenwald, our Chairman, President and Chief Executive Officer, was employed by Fortress as a Director of Strategy to work on corporate strategy matters.

During the year ended December 31, 2023, Mr.

Joshua Rosenwald received total compensation of approximately $160,000 and left the Company in November 2023 to pursue other opportunities.

Shared Services Agreement with TGTX

In July 2015, TGTX and the Company entered into an arrangement to share the cost of certain research and development employees.

The Company’s Executive Vice Chairman, Strategic Development, is the Executive Chairman and Interim Chief Executive Officer of TGTX.

Under the terms of the agreement, TGTX will reimburse the Company for the salary and benefit costs associated with these employees based upon actual hours worked on TGTX related projects.

In connection with the shared services agreement, the Company invoiced TGTX $0.9 million and $0.4 million, and received payments of $0.9 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively.

At December 31, 2024, there was approximately $36,000 due from TGTX related to this arrangement.

Desk Share Agreement with TGTX

The desk share agreement between the Company and TGTX (the “Desk Share Agreement”), as amended, requires TGTX to pay 65% of the average annual rent of the Company’s New York, NY office space.

Additionally, the Company has reserved the right to execute desk share agreements with other third parties and those arrangements will affect the cost of the lease actually borne by the Company.

Each initial desk share agreement has a term of five years.

In connection with the Company’s Desk Share Agreement for the New York, NY office space, for the years ended December 31, 2024 and 2023, the Company paid $2.9 million and $2.8 million in rent, respectively, and invoiced TGTX approximately $1.7 million and $1.8 million respectively, for its prorated share of the rent base.

At December 31, 2023, there were no amounts due from TGTX related to this arrangement.

Shared Services Agreement with Journey

In November 2021, Journey and the Company entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees.

The Company’s Executive Chairman and Chief Executive Officer is the Executive Chairman of Journey.

Under the terms of the arrangement, Journey began reimbursing the Company for the salary and benefit costs associated with these employees based upon actual hours worked on Journey related projects following the completion of their initial public offering in November 2021.

In addition, Journey reimburses the Company for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of Journey.

For the years ended December 31, 2024 and 2023, the Company’s employees have provided services to Journey totaling approximately $38,000 and $0.1 million, respectively.

At December 31, 2024, approximately $0.6 million is due from Journey, primarily related to reimbursable expenses incurred by Fortress on behalf of Journey.

Founders Agreement and Management Services Agreement

The Company has entered into founders agreements (the “Founders Agreements”) with each of the Fortress partner companies and subsidiaries listed in the table below.

Pursuant to each Founders Agreement, in exchange for the time and capital expended in the formation of each partner company/subsidiary and the identification of specific assets the acquisition of which result in the formation of a viable emerging growth life science company, Fortress will loan each such partner company/subsidiary an amount representing the up-front fee required to acquire assets.

Each Founders Agreement has a term of 15 years, which upon expiration automatically renews for successive one-year periods unless terminated by the Company or upon a Change in Control (as defined in the Founders Agreement) occurs.

In connection with each Founders Agreement the Company received a number of either Class A Preferred shares or Class A Common Stock.

The Class A Preferred Stock or Class A Common Stock (such stock, the “Founders Stock”) is identical to common stock other than as to voting rights, conversion rights and the Payment-in-Kind (“PIK”) Dividend right (as described below).

Each share of Founders Stock is entitled to vote the number of votes that is equal to one and one-tenth (1.1) times a fraction, the numerator of which is the sum of (A) the shares of outstanding common stock and (B) the whole shares of common stock into which the shares of outstanding Founders Stock are convertible and the denominator of which is the number of shares of outstanding Founders Stock.

Thus, the Founders Stock will at all times constitute a voting majority.

Each share of Founders Stock is convertible, at the holder’s option, into one fully paid and nonassessable share of common stock of such partner company/subsidiary, subject to certain adjustments.

The holders of Founders Stock, as a class, are entitled receive on each effective date or “Trigger Date” (defined as the date that the Company first acquired, whether by license or otherwise, ownership rights to a product) of each agreement (each a “PIK Dividend Payment Date”) and on each anniversary date of such date until the date all outstanding Founders Stock is converted into common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent (2.5%) of such partner company or subsidiary’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date.

The Company has reached agreements with several of the partner companies and subsidiaries to change the PIK Dividend Interest Payment Date to January 1 of each year - a change that has not and will not result in the issuance of any additional partner company/subsidiary common stock beyond that amount to which the Company would otherwise be entitled absent such change(s).

The Company owns 100% of the Founders Stock of each partner company/subsidiary that has a Founders Agreement with the Company.

As additional consideration under the Founders Agreement, each partner company and subsidiary with which the Company has entered into a Founders Agreement will also:

(i) pay an equity fee in shares of the common stock of such partner company/subsidiary, payable within five (5) business days of the closing of any equity or debt financing for each partner company/subsidiary or any of its respective subsidiaries that occurs after the effective date of the Founders Agreement and ending on the date when the Company no longer has majority voting control in such partner company or subsidiary’s voting equity, equal to two and one-half (2.5%) of the gross amount of any such equity or debt financing;

and (ii) pay a cash fee equal to four and one-half percent (4.5%) of such partner company or subsidiary’s annual net sales, payable on an annual basis, within ninety (90) days of the end of each calendar year.

In the event of a Change in Control, each such partner company/subsidiary will pay a one-time change in control fee equal to five (5x) times the product of (A) net sales for the twelve (12) months immediately preceding the change in control and (B) four and one-half percent (4.5%).

In the case of Urica, however, the obligation to pay Fortress royalties under the Founders Agreement survives any such Change in Control.

The following table summarizes, by subsidiary, the effective date of the Founders Agreements and PIK dividend or equity fee payable to the Company in accordance with the terms of the Founders Agreements, exchange agreements (the “Exchange Agreements”) and the partner companies’/subsidiaries’ certificates of incorporation.

PIK Dividend as

Class of Stock

Partner Company/Subsidiary

Effective Date 1

capitalization

February 17, 2015

October 31, 2016

March 17, 2015

March 13, 2017

March 20, 2015

March 13, 2015

April 22, 2020 3

November 7, 2017 3

(1) Represents the effective date of each subsidiary’s Founders Agreement.

Each PIK dividend and equity fee is payable on the annual anniversary of the effective date of the original Founders Agreement or has since been amended to January 1 of each calendar year.

(2) Instead of a PIK dividend, Checkpoint pays the Company an annual equity fee in shares of Checkpoint’s common stock equal to 2.5% of Checkpoint’s fully diluted outstanding capitalization.

Under the support agreement signed by the Company in connection with Checkpoint’s pending merger with Sun Pharma, the Company also agreed to forgo any further payment, dividend or distribution, or issuance or transfer of securities by Checkpoint on or after the date of the support agreement under the Founders Agreement.

(3) Represents the Trigger Date, the date that the Fortress partner company first acquires, whether by license or otherwise, ownership rights in a product.

Equity Fees and PIK Dividends

The following table summarizes, by subsidiary, the value of the PIK dividend or equity fee recorded by the Company in accordance with the terms of the Founders Agreements, Exchange Agreements and the partner companies’/subsidiaries’ certificates of incorporation for the years ended December 31, 2024 and 2023 ($ in thousands):

Year Ended December 31,

Partner company

Management Services Agreements

The Company has entered into Management Services Agreements (the “MSAs”) with certain of its partner companies and subsidiaries.

Pursuant to each MSA, the Company’s management and personnel provide advisory, consulting and strategic services to each partner company/subsidiary that has entered into an MSA with Fortress for a period of five years (with such term automatically extending for additional five-year periods unless terminated by Fortress or the applicable partner company/subsidiary at least 90 days prior to any such initial or additional term).

Such services may include, without limitation, (i) advice and assistance concerning any and all aspects of each such company’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of each such company with accountants, attorneys, financial advisors and other professionals.

Each such partner company/subsidiary is obligated to utilize clinical research services, medical education, communication and marketing services and investor relations/public relation services of companies or individuals designated by Fortress, provided those services are offered at market prices.

However, such companies are not obligated to take or act upon any advice rendered from Fortress, and Fortress shall not be liable to any such partner company/subsidiary for its actions or inactions based upon Fortress’ advice.

Fortress and its affiliates, including all members of Fortress’ Board of Directors, have been contractually exempted from fiduciary duties to each such partner company/subsidiary relating to corporate opportunities.

The following table summarizes, by partner company/subsidiary, the effective date of the MSA and the annual consulting fee payable by the partner company/subsidiary to Fortress in quarterly installments ($ in thousands):

Year Ended December 31,

Partner Company/Subsidiary

Effective Date

February 17, 2015

October 31, 2016

March 17, 2015

March 13, 2017

March 20, 2015

March 13, 2015

February 10, 2017

November 7, 2017

Consolidated (Income)/Expense

(1) On November 13, 2024, the Company entered into a Subscription and Forgiveness Agreement with Avenue, whereby the Company agreed to convert 50% of a total of $0.5 million owed by Avenue under the MSA into newly issued common stock of Avenue and forgive the remaining 50% of the accrued balance.

Therefore, Avenue issued a total of 122,850 shares to the Company based on the closing price of $2.035 on the day prior to the execution of the agreement .

Fees and Stock Grants Received by Fortress

Fees recorded in connection with Fortress’ agreements with its subsidiaries and partner companies are eliminated in consolidation.

These include management services fees, issuance of common shares of partner companies in connection with third party raises and annual stock dividend or issuances on the anniversary date of respective Founders Agreements.

Principal Accounting Fees and Services

During the year ended December 31, 2024, KPMG LLP audited the consolidated financial statements of the Registrant and its subsidiaries.

Information required by this item is incorporated by reference from the information contained under the section “Independent Registered Public Accounting Firm Fees and Other Matters” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

For the fiscal year ended December 31, 2024 we were billed approximately $3,785,420 by KPMG in fees for the professional services rendered in connection with the audits of our annual financial statements included in our Annual Report on Form 10-K for the 2024 fiscal year, the review of our financial statements included in our Quarterly Reports on Form 10-Q for 2024, and other services provided in connection with registration statements.

In 2024, included in these fees for KPMG is $2,756,520 related to stand-alone audits and filings of certain of the Company’s partner companies and subsidiaries.

For the fiscal year ended December 31, 2023 we were billed approximately $3,292,500 by KPMG in fees for the professional services rendered in connection with the audits of our annual financial statements included in our Annual Report on Form 10-K for the 2023 fiscal year, the review of our financial statements included in our Quarterly Reports on Form 10-Q for 2023, and other services provided in connection with registration statements.

In 2023, included in these fees for KPMG is $2,405,500 related to stand-alone audits and filings of certain of the Company’s partner companies and subsidiaries.

Audit- Related Fees

During the fiscal years ended December 31, 2024 and 2023, we incurred no costs from KPMG for audit-related services reasonably related to the performance of the audits and reviews for the respective fiscal years.

During the fiscal years ended December 31, 2024 and 2023 we were billed approximately $55,229 and $65,916, respectively, from KPMG for fees for professional services rendered for tax compliance, tax advice, and tax planning services for certain of the Company’s partner companies.

All Other Fees

During the fiscal years ended December 31, 2024 and 2023 we incurred no costs from KPMG for other accounting fees not related directly to the audit for the respective fiscal years.

During the fiscal year ended December 31, 2024, certain of the Company’s partner companies and subsidiaries incurred $25,000 from BDO for other accounting fees not directly related to the audit for the respective fiscal year.

Pre-Approval of Services

Our Audit Committee has established a policy setting forth the procedures under which services provided by our independent registered public accounting firm will be pre-approved by our Audit Committee.

The potential services that might be provided by our independent registered public accounting firm fall into two categories:

● Services that are permitted, including the audit of our annual financial statements, the review of our quarterly financial statements, comfort letters, related attestations, benefit plan audits and similar audit reports, financial and other due diligence on acquisitions, and federal, state, and non-US tax services;

● Services that may be permitted, subject to individual pre-approval, including compliance and internal-control reviews, indirect tax services such as transfer pricing and customs and duties, and forensic auditing;

● Services that our independent registered public accounting firm may not provide include such services as bookkeeping, certain human resources services, internal audit outsourcing, and investment or investment banking advice.

All proposed engagements of our independent registered public accounting firm, whether for audit services or permissible non-audit services, are pre-approved by the Audit Committee.

We jointly prepare a schedule with our independent registered public accounting firm that outlines services which we reasonably expect we will need from our independent

registered public accounting firm and categorize them according to the classifications described above.

Each service identified is reviewed and approved or rejected by the Audit Committee.

Exhibits and Financial Statement Schedules.

1 unchanged sentence

The following financial statements are filed as part of this report:

Reports of Independent Registered Public Accounting Firms (KPMG LLP, Short Hills, NJ;

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY;

Consolidated Balance Sheets

29 unchanged sentences

001-35366) filed with the SEC on October 10, 2023).

Third Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on August 14, 2023.

Fourth Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on June 25, 2024.

Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 10 (file No.

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Description of Securities of Fortress Biotech, Inc.*

Exhibit Title

Form of Amended and Restated Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on June 16, 2023).

Exhibit Title

Form of Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (file No.

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001-35366) filed with the SEC on January 3, 2024).

Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.9 of the Registrant’s Form 10 (file No.

000-54463) filed with the SEC on July 15, 2011).

Form of Warrant issued to certain affiliates of Oaktree Fund Administration, LLC on July 25, 2024 (incorporated by reference to Exhibit 4.8 of the Registrant’s Registration Statement on Form S-1 (Reg.

33-282384) filed with the SEC on September 27, 2024).

Form of PIPE Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on September 23, 2024).

Amended and Restated Consulting Agreement, entered into as of January 1, 2019, by and between the Registrant and Eric Rowinsky (incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K (file No.

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001-35366) filed with the SEC on March 18, 2015).#

Fortress Biotech, Inc.

Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.38 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on June 12, 2017).#

Amendment to Fortress Biotech, Inc.

Amendment to Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan (incorporated by reference to Exhibit A of the Registrant’s Schedule 14A (file No.

001-35366) filed with the SEC on April 30, 2018).#

Amendment to the Fortress Biotech, Inc.

Amendment to the Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on June 23, 2023).#

Amendment to the Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on May 29, 2024).#

Exhibit Title

Fortress Biotech, Inc.

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001-35366) filed with the SEC on June 12, 2017).#

Exhibit Title

Development, Option and Stock Purchase Agreement by and among Caelum Biosciences, Inc., Alexion Pharmaceuticals, Inc., Fortress Biotech, Inc., and the several shareholders of Caelum Biosciences, Inc., dated January 30, 2019 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q (file No.

Amendment to the Fortress Biotech, Inc.

Amended and Restated Long Term Incentive Plan (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on May 29, 2024).#

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001-35366) filed with the SEC on June 23, 2023).#

Credit Agreement entered into by and among Fortress Biotech, Inc.

the lenders from time to time party thereto, and Oaktree Fund Administration, LLC on August 27, 2020 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q (file No.

001-35366) filed with the SEC on November 9, 2020) .

Amendment to the Fortress Biotech, Inc.

2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on May 29, 2024).#

Restricted Stock Unit Award Agreement between Fortress Biotech, Inc.

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001-35366) filed with the Sec on December 19, 2022).#

Form of Securities Purchase Agreement, dated November 10, 2023, by and among the Registrant and the purchasers party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on November 14, 2023).

Form of Securities Purchase Agreement, dated December 29, 2023, by and among the Registrant and the purchasers party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on January 3, 2024).

Form of Placement Agency Agreement, dated November 10, 2023, by and among the Registrant and Roth Capital Partners, LLC (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on November 14, 2023).

Placement Agency Agreement, dated December 29, 2023, by and among the Registrant and Roth Capital Partners, LLC (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on January 3, 2024).

Exhibit Title

At Market Issuance Sales Agreement between the Company and Cantor Fitzgerald & Co., Oppenheimer & Co.

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001-35366) filed with the SEC on May 29, 2020) .

Form of Securities Purchase Agreement, dated September 19, 2024, by and among the Company and the purchasers party thereto (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on September 23, 2024).

Placement Agent Agreement entered into by and between the Company and the Placement Agent, dated September 19, 2024 (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K (file No.

001-35366) filed with the SEC on September 23, 2024).

Exhibit Title

Credit Agreement entered into by and among Fortress Biotech, Inc., the lenders from time to time party thereto, and Oaktree Fund Administration, LLC on July 25, 2024 (incorporated by reference to Exhibit 10.34 to the Registrant’s Registration Statement on Form S-1 (Reg.

33-282384) filed with the SEC on September 27, 2024).

Asset Purchase Agreement, dated as of July 15, 2024, between Urica Therapeutics, Inc.

and Crystalys Therapeutics, Inc.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file No.

001-35366) filed with the SEC on November 14, 2024).***

Royalty Agreement, dated as of July 15, 2024, between Urica Therapeutics, Inc.

and Crystalys Therapeutics, Inc.

(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file No.

001-35366) filed with the SEC on November 14, 2024).***

Fortress Biotech, Inc.

and Subsidiaries Insider Trading Policy.*

Subsidiaries of the Registrant.*

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Certification of Chairman, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification of the of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification of Chairman, President and Chief Executive Officer pursuant to 18 U.S.C.

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Clawback Policy of Fortress Biotech, Inc.

(incorporated by reference to Exhibit 97.1 of the Registrant’s Annual Report on Form 10-K (file No.

001-35366) filed with the Sec on March 28, 2024).

Inline XBRL Instance Document.*

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**Furnished herewith.

***Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

Form 10-K Summary

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Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firms ( KPMG LLP , Short Hills, NJ ;

Report of Independent Registered Public Accounting Firm ( KPMG LLP , New York, NY ;

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

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We have audited the accompanying consolidated balance sheets of Fortress Biotech, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

generally accepted accounting principles.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.

Evaluation of accrued coupon liability

As discussed in Note 10 of the consolidated financial statements, the Company accrues for coupons on products for certain qualified commercially-insured parties.

At December 31, 2023, the Company recorded $9,987 thousand in accrued coupon and rebates, which included the accrued coupon liabilities.

The Company estimates the amount of its expected coupon redemptions for product that is still in the distribution channel and records the estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company’s accrued coupon liability is primary based on historical company coupon redemption costs, cost per coupon claim, and estimates of product remaining in the distribution channel.

We identified the evaluation of the accrued coupon liability as a critical audit matter.

There was a high degree of auditor judgment required in the evaluation of certain assumptions used in the determination of the accrued coupon liability, including the estimation of product in the distribution channel, coupon redemption costs, and the cost per coupon claims.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design of certain internal controls over the Company’s accrued coupon process, including a control over the assumptions.

We performed a risk assessment procedure to assess the sensitivity of changes in the estimate of distribution channel inventory on the accrued coupon liability.

We tested the sales data and coupon redemption data used by management to calculate coupon redemption costs and cost of coupon claims by comparing the data to historical information.

We developed an expectation of the accrued coupon liability based on an independent estimate of the product in the distribution channel and we compared our expectation to the Company’s accrued coupon liability.

Accounting for and fair value of the warrant inducement transaction

As discussed in Notes 6 and 13 to the financial statements, in October 2023, Checkpoint Therapeutics, Inc.

(Checkpoint), a consolidated subsidiary of the Company, entered into an inducement offer letter agreement with a holder of certain existing warrants.

As part of the inducement, Checkpoint issued new unregistered Series A and Series B warrants.

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

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

Prior to the inducement, some of the existing warrants were liability classified and accounted for at fair value.

At the date of the inducement, the Company revalued the existing liability classified warrants which resulted in a loss on common stock warrant liabilities.

The other existing warrants, which were equity classified, were revalued to calculate the difference in fair value as a result of the change in exercise price, which was recorded as a deemed dividend.

The Company also calculated the fair value of the Series A and Series B warrants and allocated that fair value to the existing warrants on a weighted basis.

The Company used the Black-Scholes model to determine the estimated fair value of the warrants.

We identified the evaluation of the Company’s accounting for the inducement transaction and the determination of the fair value of the warrants as a critical audit matter.

Specifically, challenging and complex auditor judgment and specialized skills and knowledge were required in evaluating 1) the application of the relevant accounting guidance for equity and liability classified warrants and 2) the estimated fair value of the warrants due to the degree of subjectivity associated with the volatility assumption.

Sufficiency of audit evidence over the classification of warrants issued

As discussed in Notes 2, 9 and 13 to the consolidated financial statements, the Company issued warrants in 2024 in connection with certain equity offerings, private placements, and the New Oaktree Agreement (the 2024 warrants).

These warrants were equity-classified and recorded as a component of additional paid-in capital at the time of issuance.

As of December 31, 2024, the Company has $763.6 million of additional paid-in capital.

We identified the evaluation of the sufficiency of audit evidence over the classification of the 2024 warrants as a critical audit matter.

Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgement because of the volume of the 2024 warrants issued by the Company and certain of its partner companies.

This included determining the 2024 warrants on which procedures were performed and the supervision and review of those procedures.

The following are the primary procedures we performed to address this critical audit matter.

We inspected the Company’s accounting analysis for the transaction.

We involved professionals with specialized skills and knowledge, who assisted in inspecting the underlying agreements to understand the relevant terms and conditions of the transaction and evaluating whether the Company’s accounting for the transaction is in accordance with the relevant accounting guidance.

We also involved valuation professionals with specialized skills and knowledge who assisted in:

● developing an independent expectation of the volatility assumption based on consideration of implied share price volatility information

● developing an independent range of the fair value of the warrant liability for the December 2022 warrants, the fair value of the February 2023 equity classified warrants, and the fair value of both the Series A and Series B

warrants as of the inducement date using publicly available market data and the independently developed volatility assumption

● comparing the independently developed ranges of the fair value to the respective fair value of the warrant liability and the equity classified awards determined by the Company.

We applied auditor judgment to determine the nature and extent of procedures to be performed over the classification of the 2024 warrants, including the determination of the 2024 warrants issued by the Company and certain of its partner companies on which procedures were to be performed.

For a selection of the 2024 warrants, we evaluated the terms and conditions of the warrant agreements and assessed the appropriateness of management’s interpretation and application of the relevant accounting literature.

We assessed the sufficiency of audit evidence obtained related to the classification of the 2024 warrants by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2021.

Short Hills, New Jersey

New York, New York

March 31, 2025

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Prepaid expenses and other current assets

Assets held for sale

Total current assets

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Restricted cash

Intangible asset, net

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

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Partner company convertible preferred shares, short-term, net

Partner company line of credit

Partner company installment payments - licenses, short-term, net

Other short-term liabilities

Partner company installment payments - licenses, short-term

Other current liabilities

Total current liabilities

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Operating lease liabilities, long-term

Partner company installment payments - licenses, long-term, net

Other long-term liabilities

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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

1 unchanged sentence

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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Net loss attributable to Fortress

Preferred A dividends declared and paid

Preferred A dividends declared and paid and/or cumulated, and Fortress' share of subsidiary deemed dividends

Net loss attributable to common stockholders

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Issuance of common stock related to equity plans

Issuance of stock for public offerings, net

Issuance of common stock under ESPP

Issuance of stock for equity offerings, net

Warrant issued in conjunction with debt

Issuance of common stock for at-the-market offering, net

Warrant charge in conjunction with Oaktree debt

Common shares issued for dividend on partner company's convertible preferred shares

Payment of Series A perpetual preferred stock dividends

Exercise of warrants for cash

Partner companies’ proceeds from stock and warrants, net

Common shares issued for exchange of partner company's convertible preferred shares

Warrants issued in conjunction with exchange of partner company's convertible preferred shares

Preferred A dividends declared and paid

Partner companies’ offerings, net

Partner companies' at-the-market offering, net

Partner company’s exercise of options for cash

Issuance of common stock under partner company’s ESPP

Partner company’s dividends declared and paid

Partner company’s redemption of preferred shares

Issuance of partner company’s common shares for research and development expenses

Deconsolidation/dissolution of partner companies

Exercise of warrants for cash

Exercise of partner company options and warrants for cash, net

Non-controlling interest in subsidiaries

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Issuance of common stock related to equity plans

Issuance of stock for public offerings, net

Issuance of common stock for at-the-market offering, net

Warrant charge in conjunction with Oaktree debt

Common shares issued for dividend on partner company's convertible preferred shares

Payment of Series A perpetual preferred stock dividends

Partner company’s offering, net

Exercise of warrants for cash

Partner companies’ proceeds from stock and warrants, net

Partner companies' at-the-market offering, net

Partner company’s exercise of options for cash

Issuance of common stock under partner company’s ESPP

Partner company’s dividends declared and paid

Partner company’s exercise of options for cash

Partner company’s exercise of warrants for cash

Partner company’s reclassification of warrant liability to equity

Partner company’s repurchase of stock

Partner company’s stock adjustment

Partner company’s net settlement of shares withheld for taxes

Partner company’s warrants issued in conjunction with debt

Partner company’s retained earnings adjustment

Partner company’s redemption of preferred shares

Issuance of partner company’s common shares for research and development expenses

Deconsolidation/dissolution of partner companies

Non-controlling interest in subsidiaries

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Depreciation expense

(Gain) loss on sale of property and equipment

Loss on disposal of property and equipment

Bad debt expense

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Accounts payable and accrued expenses

Deferred revenue

Income taxes payable

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Cash Flows from Investing Activities:

Purchase of research and development licenses

Acquired intangible assets

Purchase of property and equipment

Proceeds from sale of property and equipment

Acquisition of VYNE products

Acquired intangible assets

Purchase of research and development licenses

Net cash used in investing activities

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Payment of Series A perpetual preferred stock dividends

Proceeds from issuance of common stock for public offering, net

Proceeds from issuance of common stock for equity offerings, net

Proceeds from issuance of common stock for at-the-market offering, net

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Partner company’s redemption of preferred shares

Proceeds from partner companies' sale of stock and warrants, net

Proceeds from partner companies' equity offerings and warrant exercises, net

Proceeds from partner companies' at-the-market offering, net

Proceeds from exercise of partner companies’ options and warrants, net

Partner company’s net settlement of shares withheld for taxes

Partner company's cash payout for reverse stock split fractional shares

Payment of partner company's repurchase of stock

Payment of partner company's deferred financing cost

Proceeds from exercise of partner company's options, net

Repayment of Oaktree Note and debt issuance costs

Repayment of partner company installment payments - licenses

Proceeds from partner company convertible preferred shares

Stock and warrants issued for exchange of partner company preferred shares

Payment of debt issuance costs associated with partner company convertible preferred shares

Proceeds from partner companies' long-term debt, net

Proceeds from long-term debt, net

Proceeds from partner company's long-term debt, net

Repayment of partner companies' long-term debt

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Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents and restricted cash

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

Cash and cash equivalents and restricted cash at beginning of period

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Supplemental disclosure of non-cash financing and investing activities:

Conversion of partner company annual maintenance fee to a promissory note

Partner company's unpaid intangible assets

Unpaid partner company’s debt offering cost

Exchange of partner company convertible preferred shares for common shares

Fair value of assets received by partner company in repurchase transaction

Fair value of supplies received by partner company expensed to research and development

Partner company accounts receivable write-off related to repurchase transaction

Partner company accounts payable write-off related to repurchase transaction

Partner company's deferred purchase consideration

Unpaid partner company’s offering cost

Partner company’s retained earning adjustment

Partner company’s reclassification of warrant liability to equity

Partner company derivative warrant liability associated with partner company convertible preferred shares

Partner company's warrants issued in conjunction with debt

Warrants issued in conjunction with debt

Unpaid debt offering cost

Unpaid research and development licenses acquired

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Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition.

The Company has executed such arrangements in partnership 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, St.

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.

The Company has executed such arrangements in partnership with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center, 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 finance 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 three have consummated strategic partnerships with industry leaders, including 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, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc.

(“AstraZeneca”) and Sentynl Therapeutics, Inc.

Our subsidiaries 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.

As used throughout this filing, the words “we”, “us” and “our” may refer to Fortress individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.

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The context in which any such term is used throughout this document, however, may dictate a different construal from the foregoing.

Reverse Stock Split

On October 9, 2023, Fortress filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, as amended, to effect the 1 -for-15 Reverse Stock Split of the Company’s shares of Common Stock (the “Reverse Stock Split”).

The Reverse Stock Split was approved on August 10, 2023, by the Company’s Board of Directors and by the Company’s stockholders at a special meeting held on October 9, 2023.

As a result of the Reverse Stock Split, every 15 shares of the Company’s pre-reverse split Common Stock was combined and reclassified as one share of Common Stock.

The proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Split, other than as the result of payment for fractional shares.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would otherwise have held a fractional share of Common Stock received a cash payment in lieu thereof.

In addition, there was no change to the authorized capital of the Company as a result of the reverse Stock Split and the number of authorized shares of common stock remained 200,000,000 .

All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented.

Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock and warrants outstanding at October 10, 2023, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants.

Liquidity and Capital Resources

Since inception, the Company’s operations have been financed primarily through the sale of equity and debt securities, from the sale of subsidiaries/partner companies, and the proceeds from the exercise of warrants and stock options.

The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses for the next several years as it continues to fully develop and prepare regulatory filings and obtain regulatory approvals for its existing and new product candidates.

The parent Company’s current cash and cash equivalents of $ 40.6 million are sufficient to fund the parent entity and private subsidiary operations for at least the next 12 months.

However, the Company will need to raise additional funding through strategic relationships, public or private equity or debt financings, sale of a partner companies, grants or other arrangements to develop and prepare regulatory filings and obtain regulatory approvals for the existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for the potential products, sales and marketing capabilities.

The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur losses from operations for the next several years as it continues to develop and commercialize its existing and new product candidates.

The Company is also required to comply with the financial covenants in its loan agreement as described in Note 9.

Current cash and cash equivalents of $ 20.9 million for Fortress and private subsidiaries primarily funded by Fortress (“Parent Entity”) are considered sufficient to fund the Parent Entity’s operations for at least 12 months following the date of filing of the Company’s Annual Report on 10-K.

However, the Company will need to raise additional funding through strategic relationships, public or private equity or debt financings, sale of partner companies including Checkpoint as discussed in Note 20, grants or other arrangements to develop and prepare regulatory filings and obtain regulatory approvals for the existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for the potential products, sales and marketing capabilities.

If such funding is not available or not available on terms acceptable to the Company, the Company’s current development plans and plans for expansion of its general and administrative infrastructure may be curtailed.

Fortress also has the ability, subject to limitations imposed by Rule 144 of the Securities Act of 1933 and other applicable laws and regulations, to raise money from the sale of common stock of the public companies in which it has ownership positions.

Fortress also has the ability, subject to

limitations imposed by Rule 144 of the Securities Act of 1933 and other applicable laws and regulations, to raise money from the sale of common stock of the public companies in which it has ownership positions.

Summary of Significant Accounting Policies

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All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period classification.

The Company has historically included amortization of acquired intangible assets within cost of goods sold on the consolidated statement of operations.

For the years ended December 31, 2024 and 2023, “Costs of goods sold – product revenue” as presented in the consolidated statement of operations was disaggregated into “Costs of goods sold – (excluding amortization of acquired intangible assets)” and “Amortization of acquired intangible assets”.

This presentation has been conformed for all previous periods presented and has no impact on previously reported financial results.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.

The Company’s significant estimates include, but are not limited to, provisions for product returns, coupons, rebates, chargebacks, discounts, allowances and distribution fees paid by Journey to certain wholesalers, 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.

The Company’s 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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Many of the Company’s products sold are subject to a variety of deductions.

Revenues are recorded net of provisions for variable consideration, including coupons, chargebacks, wholesaler fees, prompt pay discounts, specialty pharmacy discounts, managed care rebates, product returns, government rebates and other deductions customary to the pharmaceutical industry.

Revenues are recorded net of provisions for variable consideration, including coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, and other deductions customary to the pharmaceutical industry.

Accruals for these provisions are presented in the consolidated financial statements as reductions to gross sales in determining net sales and as a contra asset within accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash).

Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions.

Amounts recorded for revenue deductions can result from a series of judgements about future events and uncertainties and can rely on estimates

and assumptions.

The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated:

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Coupons are processed and redeemed at the time of prescription fulfilment by the pharmacy.

The majority of the coupon reserve accrual at the end of the period reflects expected redemptions for product in the distribution channel.

The expected accrual reserve requires us to estimate the distribution channel inventory at period end, the expected redemption rates, and the cost per coupon claim that the Company expects to receive.

The estimate of product remaining in the distribution channel is comprised of estimated inventory at the wholesaler as well as an estimate of inventory at the specialty pharmacies, which the Company estimates based upon historical ordering patterns.

The estimate of product remaining in the distribution channel is comprised of estimated inventory at the wholesaler as well as an estimate at the specialty pharmacies, which the Company estimates based upon historical ordering patterns.

The estimated redemption rate is based on historical redemptions as a percentage of units sold.

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The Company estimates products returns as a percentage of sales to its customers.

The rate is estimated by using historical sales information, including its visibility and estimates into the inventory remaining in the distribution channel.

Collaboration Revenue

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The Company estimates the amount of effort to be expended, including the time it will take to complete the activities, or the costs that may be incurred in a given period, relative to the estimated total effort or costs to satisfy the performance obligation.

This results in a percentage that is multiplied by the transaction price to determine the amount of revenue the Company recognizes each period.

This results in a percentage that is multiplied by the transaction price to determine the amount of revenue the Company recognizes each period subject to the constraint on

variable consideration.

This approach requires the use of estimates and judgement.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

Certain of the Company’s 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.

Segment Reporting

The Company operates in two operating and reportable segments, Dermatology Product Sales and Pharmaceutical and Biotechnology Product Development.

The Company evaluates the performance of each segment based on operating profit or loss.

There is no inter-segment allocation of interest expense and income taxes.

The Company views its operations and manages its business in segments that align with the Company’s public subsidiaries with Fortress being comprised of the parent entity and the private subsidiaries, including intersegment revenue consisting of various fees paid by the subsidiaries to Fortress that are eliminated in consolidation.

Each public subsidiary is a biopharmaceutical company focused on acquiring, developing, and commercializing assets in different therapeutic and disease areas.

The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

The CODM reviews profit and loss information for each segment to assess the performance of the Company and each of its public subsidiaries.

The accounting policies of the segments are the same as those described in this Note 2.

See Note 18 for segment information.

Cash and Cash Equivalents

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The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are currently adequately protected against credit risk.

At times, portions of the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (FDIC) limits, though the Company customarily invests a significant portion of its cash in Certificate of Deposit Account Registry Service (“CDARS”) accounts to maximize FDIC insurance coverage across its holdings.

At times, portions of the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed

Federal Deposit Insurance Corporation (“FDIC”) limits, though the Company customarily invests a significant portion of its cash in Insured Cash Sweep (“ICS”) accounts to maximize FDIC insurance coverage across its holdings.

As of December 31, 2024, the Company had not experienced losses on these accounts, and management believes the Company is not exposed to significant risk on such accounts.

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Treasury obligations and government agency securities.

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Property and Equipment

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Leasehold improvements are amortized over the shorter of the estimated useful lives or the term of the respective leases.

Assets Held for Sale

Assets held for sale represent assets that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification (“ASC”) 360, “Long-lived Assets.” As of December 31, 2024, there were $ 1.2 million of lab and cell processing equipment, furniture and fixtures and computer equipment that are recorded as assets held for sale.

The effect of suspending depreciation on the assets held for sale is immaterial to the results of operations.

The assets held for sale are part of Mustang’s repurchase of assets from uBriGene (Boston) Biosciences, Inc.

(“uBriGene”) (see Note 3).

Intangible Assets

The Company’s finite-lived intangible assets consist of intangible assets acquired by Journey.

Intangible assets are reported at cost, less accumulated amortization.

Intangible assets are reported at cost, less accumulated amortization and impairments.

Intangible assets with finite lives are amortized over their estimated useful lives, which represents the estimated life of the product.

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Potential milestone payments for achieving sales targets or regulatory development milestones are recorded when it is probable of achievement.

Upon a milestone payment being achieved, the milestone payment will be capitalized and amortized over the remaining useful life for approved products and expensed for milestones prior to FDA approval.

Royalty payments are recorded as cost of goods sold as sales are recognized.

Upon a milestone being achieved, the milestone payment will be capitalized and amortized over the remaining useful life for approved products and expensed for milestones prior to FDA approval.

Royalty payments for approved products are recorded as cost of goods sold as sales are recognized.

Impairment of Long-Lived Assets

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Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the long-lived asset in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value.

An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount.

The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows.

During the year ended December 31, 2023, Journey recorded an intangible asset impairment charge of $ 3.1 million during the year ended December 31, 2023.

This non-cash charge was recorded to selling, general and administrative expenses on the consolidated statements of operations.

The Company did not record any impairment loss on long-lived assets for the year ended December 31, 2022.

If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value.

An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount.

The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

During the year ended December 31, 2024, Mustang recorded an asset impairment charge of $ 3.7 million (see Note 5).

During the year ended December 31, 2023, Journey recorded an asset impairment charge of $ 3.1 million (see Note 8).

Restricted Cash

The Company records cash held in trust or pledged to secure certain debt obligations as restricted cash.

As of December 31, 2023, the Company had $ 2.4 million of restricted cash representing pledges to secure letters of credit in connection with certain office leases and an undertaking posted by Cyprium to secure potential damages in an injunctive proceeding.

As of December 31, 2022, the Company had $ 2.7 million of restricted cash representing pledges to secure letters of credit in connection with certain office leases.

As of December 31, 2024 and 2023, the Company had $ 1.6 million and $ 2.4 million, respectively, of restricted cash representing

pledges to secure letters of credit in connection with certain office leases and an undertaking posted by Cyprium to secure potential damages in an injunctive proceeding.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash from the consolidated balance sheets to the consolidated statements of cash flows as of the dates presented:

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Accounts Receivable, Net

The Company’s accounts receivable consists of amounts due from customers to Journey related to dermatological product sales and have standard payment terms.

The Company’s accounts receivable consists of amounts due from customers to Journey related to dermatological product sales and have payment terms.

For certain customers, the accounts receivable for the customer are net of prompt payment or specialty pharmacy discounts.

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Accordingly, the total purchase price for the licenses acquired is reflected in research and development – licenses acquired in the Company’s Consolidated Statements of Operations.

Accrued Research and Development Expense

The Company records accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are significant components of research and development expenses.

A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers.

Costs incurred under agreements with these third parties are accrued based on estimates of actual work completed in accordance with the respective agreements.

Estimated costs are determined through discussions with internal personnel and external service providers as to the progress, or stage of completion or actual timeline (start-date and end-date) of the services and the agreed-upon fees to be paid for such services.

Payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses until the services are rendered.

If the actual timing of the performance of services or the level of effort varies from the estimate, accrued expenses or prepaid expenses are adjusted accordingly, which impact research and development expenses.

Estimates are not expected to be materially different from amounts actually incurred, understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

Contingencies

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If a loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

The Company and its subsidiaries have issued freestanding warrants to purchase shares of common stock in connection with financing activities (see Note 13) and accounts for them in accordance with applicable accounting guidance as either liabilities or as equity instruments depending on the specific terms of the warrant agreements.

Warrants classified as liabilities are remeasured each period they are outstanding.

Any resulting gain or loss related to the change in the fair value of the warrant liability is recognized in change in fair value of warrant liabilities (see Note 6), a component of other income (loss), in the consolidated statements of operations.

The Company accounts for its leases under ASC 842, Leases .

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In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components.

The Company continues to account for leases in the prior period consolidated financial statements under ASC Topic 840, Leases .

Issuance of Debt and Equity

Fortress and its partner companies and subsidiaries issue complex financial instruments which include equity and/or debt features.

We analyze each instrument under ASC 480, Distinguishing Liabilities from Equity, ASC 815, Derivatives and Hedging and, ASC 470, Debt , in order to establish whether such instruments should be classified as debt or equity in the financial statements, and whether they include any embedded derivatives.

We accounted for the debt with Oaktree with detachable warrants in accordance with ASC 470, Debt , and 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 Oaktree note and the warrants on a relative fair value basis.

The Company recorded the related issue costs and value ascribed to the warrants as a debt discount of the 2024 Oaktree Note (see Note 9).

The discount is being amortized utilizing the effective interest method over the term of the 2024 Oaktree Note, which is approximately 15.39 % at December 31, 2024.

Stock-Based Compensation

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The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense.

As of December 31, 2023 and December 31, 2022, the Company accrued interest related to uncertain tax positions of $ 0.1 million and approximately $ 32,000 , respectively.

As of December 31, 2024 and December 31, 2023, the Company accrued interest related to uncertain tax positions of $ 0.2 million and $ 0.1 million, respectively.

Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Net Loss Per Common Share

Basic and diluted net loss per share attributed to common stockholders is calculated by dividing the net loss attributed to Fortress (less the Series A Preferred Dividend) by the weighted-average number of shares of Common Stock outstanding during the period, not including unvested restricted stock, and without consideration for Common Stock equivalents.

Basic and diluted net loss per share attributed to common stockholders is calculated by dividing the net loss attributed to Fortress (less the Series A Preferred Dividend declared and paid and/or cumulated, and Fortress’ share of subsidiary deemed dividends) by the weighted-average number of shares of Common Stock outstanding during the period, not including unvested restricted stock, and without consideration for other potentially dilutive securities.

Diluted net loss per share is the same as the basic loss per share due to net losses incurred in all periods.

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The Company records net loss attributable to non-controlling interests in its consolidated statements of operations and presents non-controlling interests as a component of stockholders’ equity on its consolidated balance sheets.

All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on a quarterly calculation of ownership interests for each relevant subsidiary.

All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss

attributable to non-controlling interest, which is based on a quarterly calculation of ownership interests for each relevant subsidiary.

Subsidiary preferred shares and Class A common shares, if issued, are included in the ownership calculation on a 1 :1 basis consistent with how the relevant contractual agreements provide for the allocation and distribution of earnings.

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Only preferred stock and Class A common stock held by Fortress have majority voting rights, which rights would terminate upon conversion into common stock.

The Company allocates the subsidiaries’ net loss/income to the non-controlling interest on a quarterly basis, and the

calculation of non-controlling interest ownership percentage is determined as the average of the prior quarter and the current quarter’s non-controlling ownership interest.

The Company allocates the subsidiaries’ net loss/income to the non-controlling interest on a quarterly basis, and the calculation of non-controlling interest ownership percentage is determined as the average of the prior quarter and the current quarter’s non-controlling ownership interest.

The Company continually assesses whether changes to existing relationships or future transactions may result in the consolidation or deconsolidation of subsidiaries and/or partner companies .

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This guidance is effective for fiscal years, beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption will be permitted.

The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

The Company adopted this new standard for its consolidated financial statements for the year ended December 31, 2024.

The Company’s adoption of this guidance resulted in increased disclosures in the notes to the financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The update will be effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

The Company is currently evaluating the impact of the new standard on its consolidated financial statement disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires new financial statement disclosures in tabular format, in the notes to financial statements, of specified information about certain costs and expenses.

The amendments in this update do not change or remove current expense disclosure requirements.

The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of the new standard on its financial statement disclosures.

Asset Purchase Agreements

Agreement with 4DMT

On April 21, 2023, Aevitas entered into an Asset Purchase Agreement (the “4DMT APA”) with 4DMT under which 4DMT acquired 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 4DMT APA, 4DMT will make cash payments totaling up to $ 140 million if certain late-stage development, regulatory and sales milestones are met with respect to sCFH.

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

The aforementioned payments are payable solely to Aevitas, and 4DMT will be responsible for license payment obligations to the licensor of sCFH, University of Pennsylvania.

4DMT is not a related party to the Company and has assumed all ongoing and future development costs.

The fair value of the interest in Aevitas retained by the Company of $ 2.6 million was based on the risk-adjusted present value of the aforementioned potential cash payments (see Note 6).

In connection with the 4DMT APA, the 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.

As a result, the Company deconsolidated its holdings in Aevitas.

In connection with this transaction, the Company recorded a loss on deconsolidation of Aevitas of $ 3.4 million during the year ended December 31, 2023 in other expense in the Consolidated Statement of Operations.

Agreements with uBriGene (Boston) Biosciences, Inc.

On May 18, 2023, Mustang entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with uBriGene, as amended by a first amendment thereto, dated June 29, 2023, and further amended by a second amendment thereto, dated as of July 28, 2023 (collectively the “Amended Asset Purchase Agreement”), pursuant to which Mustang agreed, subject to the terms and conditions therein, to sell its leasehold interest in its cell processing facility located in Worcester, MA (the “Facility”) and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility to uBriGene.

On July 28, 2023, the closing date, pursuant to the terms and conditions of the Amended Asset Purchase Agreement, Mustang completed the sale of Mustang’s assets primarily relating to the manufacturing and production of cell and gene therapies to uBriGene for base consideration of $ 6.0 million.

Mustang recorded a gain of $ 1.5 million in connection with the sale of the assets and recorded approximately $ 0.3 million of the base consideration as deferred income, to be recognized upon the transfer of the lease.

Certain assets, including Mustang’s lease of the Facility and related contracts did not transfer to uBriGene on the Closing date.

uBriGene will be obligated to pay to Mustang a contingent amount of $ 5.0 million less certain severance obligations and payments payable in connection with the transfer of certain contracts related to the transferred assets, if Mustang, within two years of the closing date:

(i) completes one or more issuances of equity securities in an aggregate gross amount equal to or greater than $ 10.0 million after the closing and (ii) obtains consent of the landlord to the proposed lease transfer within two years after the closing date.

The Asset Purchase Agreement contemplates that Mustang will seek to procure the consent and approval of the landlord of the Facility, WCS-377 Plantation Street, Inc.

(the “Landlord”), and the Landlord informed Mustang that it will not consider the lease transfer request until receipt of the final determination letter from with the U.S.

Committee on Foreign Investment in the United States (“CFIUS”), although there can be no guarantee that, even if CFIUS does approve the below-described Facility Transaction, the Landlord will approve the lease transfer.

In connection with the sale of its leasehold interest in the Facility and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility (the “Facility Transaction”) to uBriGene and an indirect, wholly owned subsidiary of uBriGene (Jiangsu) Biosciences Co., Ltd., a Chinese contract development and manufacturing organization, Mustang and uBriGene previously submitted a voluntary notice with CFIUS.

The current 45-day review period will conclude no later than March 28, 2024.

If CFIUS does not conclude its review by March 28, 2024, the proceeding will transition to a subsequent 45-day phase as CFIUS further investigates the Transaction.

Unless and until the lease is transferred to uBriGene, Mustang will retain its facility lease and facility personnel, and will continue to occupy the leasehold premises and manufacture there its lead product candidates, including MB-106.

As contemplated by the Amended Asset Purchase Agreement, on the Closing Date, Mustang and uBriGene entered into a Manufacturing Services Agreement (the “Manufacturing Services Agreement”).

Under the Manufacturing Services Agreement, Mustang contracted uBriGene to manufacture Mustang’s lead product candidates, including MB-106, and Mustang committed to spend at least $ 8 million over a period of two years after the closing of the transaction to purchase manufacturing and related services (the “Manufacturing Services”) from uBriGene (the “Minimum Commitment”).

Mustang paid uBriGene 25 % of the Minimum Commitment at the time of signing of the Manufacturing Services Agreement and will pay the remainder of the Minimum Commitment over the following two years .

Subject to Mustang’s payment of its Minimum Commitment, uBriGene will provide to Mustang a manufacturing rebate, payable in cash at the end of the second year of the Manufacturing Services Agreement term, for any amounts paid for Manufacturing Services in excess of the Minimum Commitment (but in no event will such rebate exceed $ 3 million).

In connection with the Manufacturing Services Agreement, Mustang will provide uBriGene with the customary licenses to use intellectual property rights specific to Mustang’s cell and gene therapies to the extent reasonably necessary for uBriGene’s performance under the Manufacturing Services Agreement.

Mustang intends to expense manufacturing costs under the Manufacturing Services Agreement and the sub-contracting Manufacturing Services Agreement, pursuant to which uBriGene contracted with Mustang to perform the Manufacturing Services to be performed by uBriGene under the Manufacturing Services Agreement and account for reimbursed costs associated with the agreements as an offset to such expense.

For the year ended December 31, 2023, Mustang has expensed $ 4.1 million of manufacturing costs under the Manufacturing Services Agreement.

In addition, as contemplated by the Asset Purchase Agreement, on the closing date, Mustang and uBriGene entered into a sub-contracting Manufacturing Services Agreement (the “Sub-Contracting CDMO Agreement”).

Under the terms of the Sub-Contracting CDMO Agreement, Mustang will manufacture its lead product candidates, including MB-106, and may from time to time manufacture other products as requested by uBriGene.

In addition, under the Sub-Contracting CDMO Agreement, Mustang and uBriGene agreed to establish a joint steering committee comprising two representatives from each of Mustang and uBriGene to review, discuss and decide on operational matters relating to the services to be performed by Mustang under such agreement, including matters relating to expenses.

For the year ended December 31, 2023, Mustang received $ 2.4 million in reimbursed costs and has a receivable of $ 3.2 million associated with the Sub-Contracting CDMO Agreement.

Because the Facility was not assigned to uBriGene within 120 days following July 28, 2023, so long as the lease has not been so assigned, uBriGene may deliver a notice to Mustang indicating its intention to enter into good faith negotiations (the “Repurchase Notice”) to provide for Mustang to repurchase the associated assets relating to the manufacturing and production of cell and gene therapies at the Facility, re-assume the transferred liabilities and resume all transferred operations.

Upon receipt of such Repurchase Notice, Mustang and uBriGene have agreed to use our best commercial efforts to negotiate in good faith the terms of any such Repurchase Transaction.

On May 18, 2023, Mustang entered into an Asset Purchase Agreement (the “Original Asset Purchase Agreement”) with uBriGene, pursuant to which Mustang agreed to sell its leasehold interest in its cell processing facility located in Worcester,

Massachusetts (the “Facility”), and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility to uBriGene (the “Transaction”).

Mustang and uBriGene subsequently entered into Amendment No.

1 to the Original Asset Purchase Agreement, dated as of June 29, 2023 (“Amendment No.

1”), and Amendment No.

2 to the Original Asset Purchase Agreement, dated as of July 28, 2023 (“Amendment No.

2,” and together with the Original Asset Purchase Agreement and Amendment No.

1, the “Prior Asset Purchase Agreement”).

On July 28, 2023, pursuant to the Prior Asset Purchase Agreement, Mustang completed the sale of all of its assets that primarily relate to the manufacturing and production of cell and gene therapies at the Facility (such operations, the “Transferred Operations” and such assets, the “Transferred Assets”) to uBriGene for upfront consideration of $ 6 million cash (the “Base Amount”).

The Transferred Assets included all of Mustang’s assets, except for Mustang’s lease and related leasehold improvements of the Facility and contracts that are primarily used in the Transferred Operations.

Mustang recorded a gain of $ 1.4 million in connection with the sale of the Transferred Assets and recorded approximately $ 0.3 million of the base consideration as deferred income, that was to be recognized upon the transfer of the lease.

In connection with the Prior Asset Purchase Agreement, Mustang and uBriGene submitted a voluntary joint notice to the U.S.

Committee on Foreign Investment in the United States (“CFIUS”).

Following CFIUS’s review and subsequent investigation of the transactions related to the Prior Asset Purchase Agreement, on May 13, 2024, Mustang, together with uBriGene and CFIUS, executed a National Security Agreement (the “NSA”), pursuant to which Mustang and uBriGene agreed to abandon the transactions related to the Prior Asset Purchase Agreement and the agreements entered into in connection therewith.

The NSA obligated uBriGene and Mustang to terminate agreements between the two parties, including the Manufacturing Services Agreement, Quality Services Agreement, and Subcontracting CDMO Agreement.

In addition, uBriGene must sell, or otherwise dispose of, the equipment assets purchased within 180 days after the execution of the NSA.

June 2024 Repurchase of Assets

On June 27, 2024 (the “Effective Date”), Mustang entered into an Asset Purchase Agreement (the “Repurchase Agreement”) with uBriGene, pursuant to which Mustang agreed, subject to the terms and conditions set forth therein, to repurchase the Transferred Assets, primarily lab equipment and supplies (collectively, the “Repurchased Assets”).

Pursuant to the terms of the Repurchase Agreement, Mustang and uBriGene also terminated existing manufacturing and services agreements.

As consideration for the Repurchase Agreement, Mustang has agreed to pay to uBriGene a total purchase price (the “Purchase Price”) of $ 1.4 million, consisting of (i) an upfront payment of $ 0.1 million due within five ( 5 ) business days of the Effective Date and a (ii) subsequent amount of $ 1.3 million due on the date that is twelve ( 12 ) months after the closing date (the “Deferred Amount”).

In the event that as of the original (or any extended) date on which the Deferred Amount is payable, Mustang has, as of the date of the public reporting of its then-most recent quarterly audited or unaudited financial statements, net assets below $ 20 million, then Mustang may, upon written notice to uBriGene, elect to delay its payment obligation of the Deferred Amount by an additional six ( 6 ) months, with no limit on the number of such extensions available to Mustang.

Notwithstanding the foregoing, if Mustang has not paid the Deferred Amount in full as of the date that is twelve ( 12 ) months after closing of the Repurchase Agreement, any amounts that remain outstanding will accrue interest at a rate of 5 % per annum beginning on the date that is twelve ( 12 ) months after closing and until the Deferred Amount is paid in full.

Additionally, in connection with the termination of the agreements described above under the Repurchase Agreement, Mustang agreed to forgive a net receivable from uBriGene of approximately $ 3.3 million, comprised of outstanding receivables of $ 6.9 million and payables of $ 3.6 million, resulting in total purchase consideration in the Repurchase Transactions of approximately $ 4.7 million.

The upfront payment of $ 0.1 million was paid in July 2024, and as of December 31, 2024, the $ 1.3 million Deferred Amount was recorded in Accrued Expenses - Other (see Note 10).

Mustang allocated the total purchase consideration of $ 4.7 million to the Repurchased Assets on a relative fair value basis.

Mustang used a third-party to perform a valuation of the repurchased equipment, which resulted in a fair value less costs to sell of approximately $ 2.2 million.

The remaining purchase consideration of $ 2.5 million was allocated to the supplies repurchased.

The supplies repurchased with no alternative future use were recognized as research and development expense in an amount of $ 2.2 million.

Repurchased supplies with an alternative future use of $ 0.3 million were also recognized in research and development expense, as Mustang does not have plans to resume operations in the facility, and

it intends to dispose of the supplies in a single transaction with the equipment.

Mustang concluded that the disposal group, which includes the repurchased equipment assets and associated supplies with an aggregate value of approximately $ 2.2 million, met the criteria to be classified as held for sale at the date of acquisition.

As of December 31, 2024, the disposal group continues to be held for sale at an approximate value of $ 1.2 million (see Note 5).

Agreement with Sentynl

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The Approval Deadline Transfer obligated Sentynl to pay Cyprium $ 4.5 million in connection with the Closing, which was received by Cyprium in December 2023 and recorded as collaboration revenue by Fortress in its consolidated statements of operations for the year ended December 31, 2023.

There are no further obligations required by Cyprium in regards to the $ 4.5 million.

There were no further obligations required by Cyprium in regards to the $ 4.5 million.

Following such Closing, Sentynl is obligated to use commercially reasonable efforts to develop and commercialize CUTX-101, including the funding of the same.

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As of the date of the Approval Deadline Transfer, the revenue related to the upfront payment has been fully recognized.

For the years ended December 31, 2023 and 2022, the Company recognized revenue from this arrangement of $ 0.7 million and $ 1.9 million, respectively.

For the year ended December 31, 2023, the Company recognized revenue from this arrangement of $ 0.7 million.

In December 2024, the NDA for CUTX-101 was accepted by the FDA.

The NDA, which has been granted Priority Review, has an assigned Prescription Drug User Fee Act (“PDUFA”) target action date of September 30, 2025.

Cyprium received a milestone payment of $ 1.5 million from Sentynl that was due upon NDA acceptance, which was recorded as collaboration revenue by Fortress in its Consolidated Statements of Operations for the year ended December 31, 2024.

Urica Therapeutics, Inc.

Agreement with Crystalys Therapeutics, Inc (“Crystalys”)

On July 15, 2024, Urica entered into an asset purchase agreement (the “APA”), royalty agreement (the “Royalty Agreement”), and related agreements (collectively, the “Transaction Documents”) with Crystalys, a Delaware corporation incorporated in 2022 and seeded by life sciences institutional investors.

Under the Transaction Documents, Urica sold the rights to its URAT1 inhibitor product candidate (see Note 7) in development for the treatment of gout, dotinurad, and related intellectual property, licenses and agreements to Crystalys.

In return, Crystalys issued to Urica shares of its common stock equal to 35 % of Crystalys’ outstanding equity.

Urica’s equity position cannot be reduced below 15 % of Crystalys’ fully-diluted equity capitalization until it raises $ 150 million in equity securities.

The Transaction Documents also grant Urica a secured three percent ( 3 %) royalty on future net sales of dotinurad to be paid by Crystalys, as well as the right to receive $ 0.6 million cash reimbursement for certain clinical and development costs incurred by Urica related to dotinurad.

Urica has the right to appoint one director to the board of directors of Crystalys, as well as an additional board observer.

Crystalys is obliged to use commercially reasonable efforts to develop and commercialize dotinurad.

The APA also gives Urica the right, but not the obligation, to repurchase the sold assets for a repurchase price not to exceed $ 6.4 million plus accrued interest;

in the event that Crystalys has not consummated a qualified financing of at least $ 120 million before January 8, 2026.

Urica recorded a liability for the $ 0.6 million received, which will be accreted up to the repurchase price over the term of the repurchase option, and will not recognize an asset for its ownership interest received in Crystalys until the expiration of the repurchase option.

Accordingly, for the year ended December 31, 2024, Urica recorded accretion of $ 0.7 million of the repurchase option price, booked to interest expense in the condensed consolidated statement of operations.

Agreement with 4DMT

Under the terms of the 4DMT APA, 4DMT will make cash payments totaling up to $ 140 million if certain late-stage development, regulatory and sales milestones are met with respect to sCFH.

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

The aforementioned payments are payable solely to Aevitas, and 4DMT will be responsible for license payment obligations to the licensor of sCFH, University of Pennsylvania.

4DMT is not a related party to the Company and has assumed all ongoing and future development costs.

The fair value of the interest in Aevitas retained by the Company of $ 2.6 million was based on the risk-adjusted present value of the aforementioned potential cash payments (see Note 6).

In connection with the 4DMT APA, the 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.

As a result, the Company deconsolidated its holdings in Aevitas.

Agreements with InvaGen

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Under the Avenue SRA, Avenue agreed to pay InvaGen seven and a half percent ( 7.5 %) of the proceeds from future financings, up to $ 4 million.

In connection with the closing of financings that occurred in 2023 and 2022, Avenue made payments totaling $ 0.5 million to InvaGen.

In connection with funds raised in 2024 and 2023 (see Note 13), Avenue made payments totaling $ 0.7 million and $ 0.5 million, respectively, to InvaGen.

Inventory consisted of the following:

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Furniture and fixtures

Machinery & equipment

Leasehold improvements

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Total property and equipment

Impairment - Leasehold Improvements

Accumulated depreciation

Property, plant and equipment, net

Property and equipment, net

Fortress’ depreciation expense for the years ended December 31, 2024 and 2023 was $ 1.0 million and $ 2.2 million, respectively, and was recorded in research and development, and selling, general and administrative expense in the Consolidated Statements of Operations.

Impairment of Long-Lived Assets

During the year ended December 31, 2024, Mustang concluded it had a triggering event requiring assessment of impairment for certain leasehold improvements and the related right-of-use asset.

Mustang assessed the carrying value of the asset group consisting of the leasehold improvements and right-of-use asset in accordance with ASC 360, given the significant changes to Mustang’s operations, operating cash and the repurchase of equipment.

The assessment of the recoverability of the asset group concluded that there was impairment on the carrying value of the asset group of approximately $ 2.6 million, which was allocated on a pro rata basis using the relative carrying amounts of the assets.

Approximately $ 2.2 million of the impairment loss was allocated to leasehold improvements, with the remaining $ 0.4 million allocated to the right-of-use asset.

At December 31, 2024, Mustang assessed the remaining improvements, right-of-use asset, and property, plant and equipment held for sale for impairment and concluded that the property, plant and equipment held for sale were impaired, based primarily on offers received from third parties.

As such, Mustang recorded an additional impairment charge of $ 1.0 million for the property, plant and equipment held for sale.

See Note 8 for asset impairment of $ 3.1 million recognized in the year ended December 31, 2023.

Fair Value Measurements

Fair Value of Aevitas

The Company valued its retained investment in Aevitas, as part of the deconsolidation of its holdings (see Note 3) in accordance with ASC Topic 820, Fair Value Measurements and Disclosures , and estimated the fair value to be $ 2.6 million based on a per share value of $ 0.328 .

The Company valued its retained investment in Aevitas, which is accounted for as an equity method investment for which the Company elected the fair value option, and estimated the fair value to be $ 2.6 million based on a per share value of $ 0.328 .

The following inputs were utilized to derive the value:

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Common Stock Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity .

For warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

($ in thousands)

Balance at December 31, 2022

Checkpoint Series A & B common stock warrants

Checkpoint placement agent warrants

Avenue common stock warrants

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Change in fair value of common stock warrants - Checkpoint

Change in fair value of placement agent warrants - Urica

Exercise of common stock warrants - Checkpoint

Balance at December 31, 2023

Avenue common stock warrants

Urica placement agent warrants

Change in fair value of common stock warrants - Avenue

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Change in fair value of placement agent warrants - Urica

Exercise of common stock warrants - Checkpoint

Exercise of common stock warrants - Avenue

Exchange of common stock warrants - Urica

Balance at December 31, 2024

On December 16, 2022, Checkpoint closed on an offering for the sale of shares of its common stock and pre-funded warrants as part of a registered direct offering (the “December 2022 Registered Direct Offering”).

The common stock and the pre-funded warrants were sold together with December 2022 Common Stock Warrants and placement agent warrants.

Net proceeds to Checkpoint from the December 2022 Registered Direct Offering were $ 6.7 million after deducting commissions and other transaction costs (see Note 13).

Checkpoint deemed the December 2022 common warrants and placement agent warrants to be classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside its control.

The common warrants and placement agent warrants were recorded at the time of closing at a fair value, determined by using the Black-Scholes model.

As the total fair value of the common stock warrant liability exceeded the total net proceeds, no proceeds were allocated to the common stock and pre-funded warrants issued as part of this transaction.

Checkpoint revalued the December 2022 common warrants and placement agent warrants at December 31, 2022 resulting in a fair value of $ 11.2 million.

Checkpoint also revalued the December 2022 Common Stock Warrants and December 2022 Placement Agent Warrants at each reporting period in 2023, resulting in gains throughout the year.

In February 2023, Checkpoint closed on an offering for the sale of shares of its common stock and pre-funded warrants as part of a registered direct offering (the “February 2023 Registered Direct Offering”).

The common stock and pre-funded warrants were sold together with February 2023 Common Stock Warrants and placement agent warrants (collectively, the “February 2023 Common Stock Warrants”).

The total gross proceeds from the February 2023 Registered Direct Offering were approximately $ 7.5 million with net proceeds of approximately $ 6.7 million after deducting approximately $ 0.8 million in commissions and other transaction costs.

The February 2023 Common Stock Warrants and placement agent warrants met the criteria for equity classification.

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

The exercised warrants included the December 2022 Common Stock Warrants with an original exercise price of $ 4.075 per share and the February Common Stock Warrants with an original exercise price of $ 5.00 per share.

These warrants were issued as part of the December 2022 Registered Direct Offering and February 2023 Registered Direct Offering.

As part of the October 2023 Inducement, Checkpoint agreed to issue new unregistered Series A Warrants to purchase up to 6,325,354 shares of Common Stock and new unregistered Series B Warrants to purchase up to 6,325,354 shares of Common Stock (the October 2023 Common Stock Warrants”).

Checkpoint also issued the placement agent warrants to purchase up to 379,521 shares of common stock with an exercise price of $ 2.20 per share.

The total gross proceeds from the October 2023 Inducement 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.

The October 2023 Common Stock Warrants and placement agent warrants met the criteria for equity classification.

The December 2022 Common Stock Warrants, which were liability classified, were revalued on October 4, 2023 using Black-Scholes Model to calculate the difference in fair value as a result of the change in exercise price.

The difference in fair value of $ 1.2 million was recorded as a loss on common stock warrant liabilities in the Consolidated Statements of Operations.

The issuance of the October 2023 Common Stock Warrants was also considered as part of the cost of the inducement and were valued using Black-Scholes Model and allocated between the December 2022 Common Stock Warrants and The February 2023 Common Stock Warrants on a weighted basis.

The approximately $ 7.7 million allocated to the December 2022 Common Stock Warrants was recorded as loss on common stock warrant liabilities in the Consolidated Statements of Operations with a corresponding offset to additional paid-in-capital.

The February 2023 Common Stock Warrants, which were equity classified and treated under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity , were revalued using Black-Scholes Model to calculate the difference in fair value as a result of the change in exercise price.

The difference in fair value of $ 1.1 million was deemed to be a dividend and recorded to additional paid-in-capital by Checkpoint because Checkpoint had an accumulated deficit on the exercise date.

The approximately $ 6.3 million allocated to the February 2023 Common Stock Warrants from the issuance of the October 2023 Common Stock Warrants was also deemed to be a dividend and recorded to additional paid-in-capital by Checkpoint because Checkpoint had an accumulated deficit on the exercise date.

On December 16, 2022, Checkpoint closed on an offering for the sale of shares of its common stock and pre-funded warrants (the “Checkpoint December 2022 Registered Direct Offering”).

The common stock and the pre-funded warrants were sold together with December 2022 Common Stock Warrants.

Checkpoint also issued the placement agent warrants to purchase up to 104,046 shares of common stock with an exercise price of $ 5.406 per share (the “December 2022 Placement Agent Warrants”).

Checkpoint deemed the December 2022 Common Stock Warrants and December 2022 Placement Agent Warrants to be classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside its control.

The December 2022 Common Warrants and December 2022 Placement Agent Warrants were recorded at the time of closing at a fair value, determined by using the Black-Scholes Model.

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

Included in the exercise were the entirety of the December 2022 Common Stock Warrants.

Checkpoint revalued the December 2022 Common Stock Warrants on October 4, 2023, resulting in a fair value of $ 3.1 million.

Checkpoint also revalued the December 2022 Common Stock Warrants and December 2022 Placement Agent Warrants at each reporting period in 2023, and the decrease in the fair value of the common stock warrant liability throughout the year resulted in an offsetting gain on common stock warrant liabilities in the Statements of Operations.

Since the December 2022 Placement Agent Warrants issued in the December 2022 Registered Direct Offering were not included in the October 2023 Inducement and have not been exercised, they will continue to be revalued at each reporting period for as long as

they remain outstanding.

Checkpoint revalued the warrants at December 31, 2024 and 2023, resulting in a fair value of approximately $ 0.2 million and $ 0.1 million, respectively.

($ in thousands)

Common Stock Warrant liabilities at December 31, 2022

Issuance of Checkpoint common warrants

Issuance of placement agent warrants

Change in fair value of common stock warrant liabilities

Exercise of common stock warrants

Common Stock Warrant liabilities at December 31, 2023

Change in fair value of common stock warrant liabilities

Exercise of common stock warrants

Common Stock Warrant liabilities at December 31, 2024

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Exercise price

Expected life

Expected life in years

Risk-free rate

Avenue issued freestanding warrants to purchase shares of its common stock in connection with financing activities in October 2022 (the “October 2022 Warrants”) and January 2023 (the “January 2023 Warrants”, collectively the “Avenue Warrants”) (see Note 13).

The Avenue Warrants are classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside of its control.

The October 2022 Warrants were valued using the Monte Carlo simulation approach.

In connection with the Avenue January 2023 Registered Direct Offering (see Note 13) in January 2023, the down-round price protection feature was triggered and the exercise price for the October 2022 Warrants was permanently adjusted to $ 116.25 , which was the offering price for the Avenue Registered Offering in January 2023.

The Black-Scholes model was used to value the October 2022 Warrants and January 2023 Warrants as of December 31, 2023.

For the year ended December 31, 2023, the decrease in the fair value of the Avenue Warrants resulted in a decrease in common stock warrant liabilities of $ 4.3 million, with an offsetting gain recorded in the Statements of Operations.

The Black-Scholes model was used to value the October 2022 Warrants and January 2023 Warrants as of December 31, 2024 and 2023.

For the years ended December 31, 2024 and 2023, the decrease in the fair value of the Avenue Warrants resulted in a decrease in common stock warrant liabilities of $ 0.2 million and $ 4.3 million, respectively, with an offsetting gain recorded in the Statements of Operations.

($ in thousands)

Common stock warrant liabilities at December 31, 2021

Issuance of Avenue common warrants

Avenue common stock warrant liabilities at December 31, 2022

Issuance of common warrants

Change in fair value of common stock warrant liabilities

Common Stock Warrant liabilities at December 31, 2022

Issuance of Avenue common warrants

Avenue common stock warrant liabilities at December 31, 2023

Exercise of Avenue common warrants

Change in fair value of common stock warrant liabilities

Common Stock Warrant liabilities at December 31, 2023

Avenue common stock warrant liabilities at December 31, 2024

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Avenue warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

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Expected volatility

Urica’s contingently issuable placement agent warrants were issued in connection with Urica’s first close of their preferred offering in December 2022 (see Note 9).

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring Urica’s warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

Urica’s outstanding contingently issuable placement agent warrants were exchanged at the time of the exchange of the Urica 8 % Cumulative Convertible Class B Preferred Stock on June 27, 2024 (see Note 9) for 202,834 warrants to purchase Fortress common stock at an exercise price of $ 1.68 .

The Fortress common stock warrants have a five-year life, expiring on June 27, 2029.

The Company determined the placement agent warrants met the criteria for equity classification.

At December 31, 2024 and 2023, the value of Urica’s contingent payment warrant was nil and $ 0.2 million, respectively, and was recorded on the consolidated balance sheet.

Risk-free interest rate

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Expected volatility

At December 31, 2023 and 2022, the value of Urica’s contingent payment warrant was $ 0.2 million and $ 0.1 million, respectively, and was recorded on the consolidated balance sheet.

License Agreements

In accordance with ASC 730-10-25-1, Research and Development , costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached commercial feasibility and has no alternative future use.

The licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and has no alternate use.

Expense recognized was $ 4.3 million (primarily Avenue) and $ 0.7 million, for the years ended December 31, 2023 and 2022, respectively.

The purchase prices of the licenses acquired were classified as research and development-licenses acquired in the consolidated statements of operations.

The purchase prices of the licenses acquired is classified as research and development-licenses acquired in the consolidated statements of operations and for the years ended December 31, 2024 and 2023, expense recognized was $ 0.3 million and $ 4.3 million, respectively.

Emrosi (also known as DFD-29)

In June 2021, Journey entered a license, collaboration, and assignment agreement (the “Emrosi Agreement”) to obtain global rights for the development and commercialization of Emrosi TM (Minocycline Hydrochloride Extended-Release Capsules, 40mg), for the treatment of rosacea with Dr.

Reddy’s Laboratories, Ltd (“DRL”);

provided, that DRL retained certain rights to the program in select markets including Brazil, Russia, India and China.

Pursuant to the terms and conditions of the Emrosi Agreement, Journey paid $ 10.0 million.

In addition, Journey paid two developmental milestones in 2024.

In April 2024 Journey paid a $ 3.0 milestone to DRL, based on FDA acceptance of the NDA application for Emrosi, and in December of 2024 Journey paid a $ 15.0 million milestone payment to DRL, which was triggered by the FDA marketing 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 (see Note 8).

Pursuant to the Emrosi Agreement, Journey may be required to pay additional contingent regulatory, commercial, and corporate-based milestone payments, totaling up to $ 150.0 million.

Journey is required to pay royalties ranging from approximately ten percent to fourteen percent on net sales of Emrosi, subject to certain possible reductions.

In March 2021, Journey executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc., a subsidiary of Eli Lilly and Company (“Dermira”).

Pursuant to the terms of the Qbrexza APA, Journey acquired the rights to Qbexza® (glycopyrronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients nine years of age or older from Dermira, Inc., Journey paid the upfront fee of $ 12.5 million to Dermira.

In addition, Journey is obligated to pay Dermira up to $ 144 million in the aggregate upon the achievement of certain sales milestones.

The royalty structure for the agreement is tiered with royalties for the first two years ranging approximately 40 % to 30 %.

Thereafter for a period of eight years royalties are approximately 12 % to 19 %.

Royalty amounts are subject to certain reductions in the event there is loss of exclusivity.

On August 31, 2023, Journey entered into a license agreement (the “New License Agreement”) with Maruho, whereby Journey agreed to grant an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis, in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”).

Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory and the amendment to the royalty payments associated with the Japanese license, Maruho paid $ 19.0 million to Journey as a non-refundable upfront payment.

Prior to the date of the New License Agreement, Journey and Maruho were party to an existing exclusive amended and restated license agreement (the “First A&R License Agreement”), under which Maruho acquired exclusive license rights to Qbrexza® in Japan.

In connection with Journey’s entry into the New License Agreement, Journey and Maruho also entered into the Second Amended and Restated Exclusive License Agreement (the “Second A&R License Agreement”), which supersedes the First A&R License Agreement.

The Second A&R License Agreement contains modifications that remove Maruho’s obligation to pay Journey royalties on its net sales of Rapifort® (the Japanese equivalent of Qbrexza®) in Japan for sales occurring after October 1, 2023 and removes Maruho’s obligation to pay $ 10 million to Journey in the event that Maruho achieves net sales of at least ¥ 4 billion (yen) of Rapifort® during a single fiscal year.

All other remaining potential milestone payment obligations, which aggregate to $ 45 million, remain in full force and effect.

Journey recognized $ 19.0 million as other revenue in the consolidated statements of operations during the year ended December 31, 2023.

In July 2020, Journey entered into an exclusive license and supply agreement for Accutane (the “Accutane Agreement”) with DRL.

Pursuant to the Accutane Agreement, Journey paid $ 5.0 million.

Three additional milestone payments totaling $ 17.0 million are contingent upon the achievement of certain net sales milestones.

Journey is required to pay royalties in an amount equal to a low-double digit percentage of net sales.

The term of the Accutane Agreement is ten years and renewable upon mutual agreement.

Each party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events.

Journey may also terminate the Accutane Agreement without cause upon 180 days written notice to DRL.

In January 2022, Journey entered into an Asset Purchase Agreement (the “Vyne APA”) with Vyne Therapeutics, Inc.

(“Vyne”) to acquire Vyne’s Molecule Stabilizing Technology TM franchise (the “Acquisition”) for an upfront payment of $ 20.0 million and an additional $ 5.0 million payment on the one-year anniversary of the closing of the Acquisition.

The Vyne APA also provides for contingent net sales milestone payments:

in the first calendar year in which annual sales reach each of $ 100 million, $ 200 million, $ 300 million, $ 400 million and $ 500 million, Journey will be required to make a one-time payment of $ 10 million, $ 20 million, $ 30 million, $ 40 million and $ 50 million, respectively, in that year only, per product, totaling up to $ 450 million.

In addition, Journey will pay Vyne 10 % of any upfront payment received by Journey from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the Vyne APA.

There are no subsequent milestone payments or royalties beyond the aforementioned payments.

The Acquisition included two FDA-approved products (Amzeeq® and Zilxi®), and a development-stage dermatology program (FCD105), along with the Molecule Stabilizing Technology proprietary platform.

Part of the Vyne APA was Journey’s assumption of a license agreement with Cutia Therapeutics (HK) Limited, a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).

Pursuant to the Cutia Agreement, Cutia was granted an exclusive license to obtain regulatory approval of and commercialize Amzeeq (topical 4% minocycline foam) and Zilxi (topical 1.5% minocycline foam) in mainland China, Taiwan, Hong Kong and Macau.

Journey has agreed to supply the finished Licensed Products to Cutia for clinical and commercial use at an agreed price.

On November 11, 2024, Cutia received marketing approval for topical 4% minocycline foam from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China (the “PRC”).

The approval triggered a $ 1.0 million milestone payment to Journey.

The $ 1.0 million milestone payment was recorded as a component of other revenue in the Company’s Consolidated Statements of Operations for the year ended December 31, 2024.

In July 2019, Journey entered into an asset purchase agreement for Ximino® (the “Ximino APA”) with Sun Pharmaceutical Industries, Inc.

Pursuant to the Ximino APA, total consideration was $ 9.4 million, with an upfront payment of $ 2.4 million paid in 2019.

Pursuant to the terms of the Ximino APA, the remaining $ 7.0 million was due on the second anniversary and for the next four anniversaries of the Ximino APA thereafter.

No additional licensing or milestone payments were required.

Journey commenced sales of this product in August 2019, and discontinued selling Ximino in September 2023.

In August 2024, Journey executed a settlement agreement with Sun for amounts owed under the Ximino APA (see Note 9).

On February 28, 2023, Avenue entered into a license agreement with AnnJi Pharmaceutical Co.

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for the treatment of SBMA, also known as Kennedy's Disease.

Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidates, Avenue agreed to pay $ 3.0 million, of which $ 2.0 million was paid on April 27, 2023 and $ 1 million was paid on September 8, 2023.

Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidates, Avenue agreed to pay $ 3.0 million, which was paid in the year ended December 31, 2023.

The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel.

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In connection with the signing of the AnnJi License Agreement, Avenue issued 11,089 shares of its common stock to AnnJi (“First Tranche Shares”) and recognized expense of $ 0.9 million;

and issued 276,652 shares of common stock (“Second Tranche Shares”), recorded at a fair value of $ 0.3 million, on September 26, 2023 upon enrollment of the eighth patient in the ongoing Phase 1b/2a SBMA clinical trial.

and issued 3,688 shares of common stock (“Second Tranche Shares”) and recognized expense of $0.3 million paid on September 26, 2023 upon enrollment of the eighth patient in the ongoing Phase 1b/2a SBMA clinical trial.

Avenue and AnnJi entered into a Subscription Agreement, dated as of February 28, 2023, that provided for the issuance of First Tranche Shares which were issued March 30, 2023.

In the event that the common stock of Avenue ceases to be traded on a national securities exchange, AnnJi has the right to sell the common stock of Avenue back to Avenue at a price of $ 2.10 per share, subject to the terms of the AnnJi License Agreement.

All other remaining potential milestone payment obligations, which aggregate to $ 45 million, remain in full force and effect.

Journey recognized $ 19.0 million as other revenue in the consolidated statements of operations during the year ended December 31, 2023.

In June 2021, Journey entered a license, collaboration, and assignment agreement (the “DFD-29 Agreement”) to obtain global rights for the development and commercialization of a late-stage development modified release oral minocycline for the treatment of rosacea (“DFD-29”) with Dr.

Reddy’s Laboratories, Ltd (“DRL”);

provided, that DRL retained certain rights to the program in select markets including Brazil, Russia, India and China.

Pursuant to the terms and conditions of the DFD-29 Agreement, Journey paid $ 10.0 million.

Based on the development and commercialization of DFD-29, additional contingent regulatory and commercial milestone payments totaling up to $ 158.0 million may also become payable by Journey.

Journey is required to pay royalties ranging from approximately ten percent to fifteen percent on net sales of the DFD-29 product, subject to certain reductions.

Additionally, Journey was required to fund and oversee the Phase 3 clinical trials beginning upon the license of DFD-29 in 2021.

The Phase 3 clinical trials substantially concluded in July 2023 upon Journey’s receipt of positive topline results from the trials.

From inception to date Journey has incurred approximately $ 23.8 million in costs associated with the development of DFD-29.

On March 31, 2021, Journey acquired global rights to Qbrexza®, a prescription cloth towelette to treat primary axillary hyperhidrosis in patients nine years of age or older.

Journey is obligated to pay Dermira up to $ 144 million in the aggregate upon the achievement of certain sales milestones.

The royalty structure for the agreement is tiered with royalties for the first two years ranging from approximately 40 % to 30 %.

Thereafter for a period of eight years royalties are approximately 12.0 % to 19.0 %.

Royalty amounts are subject to 50 % diminution in the event of loss of exclusivity due to generic competition.

In the event that the common stock of Avenue ceases to be traded on a national securities exchange, AnnJi has the right to

sell the common stock of Avenue back to Avenue at a price of $ 2.10 per share, subject to the terms of the AnnJi License Agreement.

On March 3, 2025, Avenue received a “notice of intent to terminate” letter from AnnJi with respect to the AnnJi License Agreement;

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 AnnJi License Agreement.

In May 2021, Urica entered into an exclusive license agreement with Fuji to develop dotinurad in North America, Europe, and the UK.

Dotinurad is approved for the treatment of gout and hyperuricemia in Japan.

The license agreement includes contingent regulatory and commercial milestone payments totaling up to $ 88 million with subsequent sales royalties ranging from approximately 7 % to approximately 10 % payable on net sales of dotinurad.

Urica paid a $ 3.0 million milestone payment in December 2021 upon IND submission of dotinurad.

In December 2022 Urica Therapeutics expanded its exclusive license agreement with Fuji for the development of dotinurad to include the Middle East and North Africa (“MENA”) and Turkey territories.

In December 2022 Urica expanded its exclusive license agreement with Fuji for the development of dotinurad to include the Middle East and North Africa (“MENA”) and Turkey territories.

The amendment to the exclusive license agreement included a one-time license amendment payment of $ 0.3 million.

In July 2024, Urica sold the rights to dotinurad to Crystalys (see Note 3).

Partner Companies and Subsidiaries

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The Company’s finite-lived intangible assets consist of intangible assets acquired by Journey.

During the year ended December 31, 2023, Journey experienced lower net product revenues and gross profit levels for its Ximino products.

Based on these results, Journey revised the financial outlook and plans for its Ximino products.

Journey assessed the revised forecast for Ximino and determined that this constituted a triggering event and the results of the analysis indicated the carrying amount was not expected to be recovered.

Journey recorded an intangible asset impairment charge of $ 3.1 million during the year ended December 31, 2023.

This non-cash charge was recorded to selling, general and administrative expenses on the consolidated statements of operations.

The Company did not record any impairment loss on long-lived assets for the year ended December 31, 2022.

Agreement with VYNE Therapeutics Inc.

In January 2022, Journey entered into an agreement with VYNE Therapeutics, Inc.

(“VYNE”) to acquire two FDA-Approved Topical Minocycline Products, Amzeeq (minocycline) topical foam, 4%, and Zilxi (minocycline) topical foam, 1.5%, and a Molecule Stabilizing Technology TM proprietary platform from VYNE for an upfront payment of $ 20.0 million and an additional $ 5.0 million payment on the one-year anniversary of the closing (the “VYNE Product Acquisition Agreement”).

This expanded Journey’s product portfolio to eight marketed branded dermatology products.

Journey also acquired certain associated inventory.

The VYNE Product Acquisition Agreement also provides for contingent net sales milestone payments.

In the first calendar year in which annual sales reach each of $ 100 million, $ 200 million, $ 300 million, $ 400 million and $ 500 million, a one-time payment of $ 10 million, $ 20 million, $ 30 million, $ 40 million and $ 50 million, respectively, will be paid in that year only, per product, totaling up to $ 450 million.

In addition, Journey will pay VYNE 10 % of any upfront payment received by Journey from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the VYNE Product Acquisition Agreement.

The following table summarizes the aggregate consideration transferred for the assets acquired by Journey in connection with the VYNE Product Acquisition Agreement:

($ in thousands)

Aggregate Consideration Transferred

Consideration transferred to VYNE at closing

Fair value of deferred cash payment due January 2023

Transaction costs

Total consideration transferred at closing

The fair value of the deferred cash payment was accreted to the $ 5.0 million January 2023 cash payment over a one-year period through interest expense.

Journey made the $ 5.0 million deferred cash payment in January 2023.

The following table summarizes the assets acquired in the VYNE Product Acquisition Agreement:

($ in thousands)

Assets Recognized

Identifiable intangibles:

Fair value of net identifiable assets acquired

The intangible assets were valued using an income approach, while the inventory was valued using a final sales value less cost to dispose approach.

In July 2020, Journey entered into an exclusive license and supply agreement for Accutane (the “Accutane Agreement”) with DRL.

Pursuant to the Accutane Agreement, Journey agreed to pay $ 5.0 million, comprised of an upfront payment of $ 1.0 million paid upon execution, with additional milestone payments totaling $ 4.0 million.

To date, Journey has paid all milestone payments.

Three additional milestone payments totaling $ 17.0 million are contingent upon the achievement of certain net sales milestones.

Journey is required to pay royalties in an amount equal to a low-double-digit percentage of net sales.

The term of the Accutane Agreement is ten years and renewable upon mutual agreement.

Each party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events.

Journey may also terminate the Accutane Agreement without cause upon 180 days written notice to DRL.

The table below provides a summary of intangible assets as of December 31, 2024 and 2023, respectively:

Estimated Useful

Year Ended December 31,

($ in thousands)

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Accumulated amortization

Impairment loss

Accumulated Impairment loss

Net intangible assets

The Company’s amortization expense for the years ended December 31, 2024 and 2023 was approximately $ 3.4 million and $ 3.8 million, respectively.

Amortization expense is recorded as a component of cost of goods sold in the Company’s consolidated statements of operations.

In the fourth quarter of 2024, the FDA approved Journey’s Emrosi for the treatment of inflammatory lesions of rosacea in adults.

The approval triggered a $ 15.0 million milestone payment to DRL, which Journey capitalized as an acquired intangible asset.

During the year ended December 31, 2023, Journey experienced lower net product revenues and gross profit levels for its Ximino products.

Based on these results, Journey revised the financial outlook and plans for its Ximino products.

Journey recorded an intangible asset impairment charge of $ 3.1 million during the year ended December 31, 2023.

This non-cash charge was recorded to operating expenses on the Consolidated Statements of Operations.

The future amortization of these intangible assets is as follows:

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December 31, 2028

December 31, 2029

Asset not yet placed in service

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Total debt consists of the following:

Interest rate at

($ in thousands)

Interest rate

December 31, 2024

2024 Oaktree Note

2020 Oaktree Note

August - 2025

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December - 2027

EWB Term Loan

January - 2026

Discount on notes payable

Total notes payable

On August 27, 2020 (the “Oaktree Closing Date”), Fortress, as borrower, entered into the $ 60.0 million senior secured credit agreement with Oaktree (the “Oaktree Agreement” and the debt thereunder, the “Oaktree Note”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”) .

The Oaktree Note bears interest at a fixed annual rate of 11.0 %, payable quarterly and maturing on the fifth anniversary of the Oaktree Closing Date, August 27, 2025 , the (“Maturity Date”).

The Company is required to make quarterly interest-only payments until the Maturity Date, at which point the outstanding principal amount is due.

The Company may voluntarily prepay the Oaktree Note at any time subject to a Prepayment Fee.

The Company is also required to make mandatory prepayments of the Oaktree Note under various circumstances.

No mandatory prepayments were required in the years ended December 31, 2023 or 2022.

No amounts paid or prepaid may be reborrowed without Oaktree consent.

The Oaktree Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, affiliate transactions, investments, acquisitions, mergers, dispositions, prepayment of permitted indebtedness, and dividends and other distributions, subject to certain exceptions.

These affirmative and negative covenants apply in different instances to Fortress itself, its private subsidiaries, its public subsidiaries, or certain combinations of the foregoing.

The limitations on dividends and other distributions have the practical effect of preventing any further issuances by the Company or its private subsidiaries of equity securities with cash dividends or redemption features.

In addition, the Oaktree Agreement contains certain financial covenants, including, among other things, (i) maintenance of minimum liquidity and (ii) a minimum revenue test that requires Journey’s annual revenue to be equal to or to exceed annual revenue projections set forth in the agreement.

Failure by the Company or Journey, as applicable, to comply with the financial covenants will result in an event of default, subject to certain cure rights of the Company.

The Company was in compliance with all applicable covenants under the Oaktree Note as of December 31, 2023.

The Oaktree Agreement contains customary events of default, in certain circumstances subject to customary cure periods.

These events of default apply in different instances to Fortress itself, its private subsidiaries, its public subsidiaries, or a certain combination of the foregoing.

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

The Oaktree Agreement grants a security interest in favor of the Agent, for the benefit of the lenders, in substantially all of the Company’s assets (consisting principally of the Company’s shareholdings in, and in some cases debt owing from, its subsidiaries and partner companies) as collateral securing the Company’s obligations under the Oaktree Agreement, except for:

(i) certain interests in controlled foreign corporation subsidiaries of the Company;

(ii) the Company’s holdings in Avenue;

and (iii) those portions of the Company’s holdings in certain subsidiaries and partner companies that are encumbered by pre-existing equity pledges to certain of the Company’s officers.

None of Fortress’ subsidiaries or partner companies is a party to the Oaktree Agreement, and the collateral package does not include the assets of any such subsidiaries or partner companies.

Pursuant to the terms of the Oaktree Agreement, on the Oaktree Closing Date the Company paid Oaktree an upfront commitment fee equal to 3 % of the $ 60.0 million, or $ 1.8 million.

In addition, the Company paid a $ 35,000 Agency fee to the Agent, which was due on the Oaktree Closing Date and will be due annually, together with fees of $ 2.5 million directly to third parties involved in the transaction, and issued warrants to Oaktree and certain of its affiliates to purchase up to 116,624 shares of common stock of the Company (see Note 13) with a relative fair value of $ 4.4 million.

The Company recorded the fees totaling $ 8.7 million ($ 1.8 million to Oaktree, $ 2.5 million of expenses paid to third-parties and $ 4.4 million representing the relative fair value of the Oaktree Warrants) to debt discount, to be amortized over the term of the Oaktree Note.

For the years ended December 31, 2023 and 2022, the Company amortized $ 2.1 million and $ 1.5 million, respectively, of debt discount associated with the Oaktree Note.

As of December 31, 2024, the carrying value of the 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.

2024 Oaktree Note

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 (as defined below) in which the remaining $ 50.0 million balance was repaid in full.

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).

At December 31, 2024, the interest rate applicable to the 2024 Oaktree Note was 12.23 %.

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

Subject to prior written notice by the Company, to repay any amounts due prior to the maturity date, the Company must pay the sum of (A) the aggregate principal amount of the Loans being prepaid, (B) any accrued but unpaid interest on the principal amount of the Loans being prepaid, (C) any applicable Yield Protection Premium (as defined in the New Oaktree Agreement) and (D) if applicable, other unpaid amounts then due and owing pursuant to the New Oaktree Agreement and the other loan documents (such aggregate amount, the “Prepayment Price”);

provided that each partial prepayment of the principal amount of the Loans shall be in an aggregate amount of at least $ 5.0 million and

integral multiples of $ 1.0 million in excess thereof.

The Company is required to make mandatory prepayments of the Loans with net cash proceeds from (i) certain casualty events, (ii) certain monetization events, including, among other things, certain asset sales and the sale(s) of priority review vouchers by certain subsidiaries of the Company, and the receipt by the Company of any dividend or other distributions in cash from any of its subsidiaries in excess of $ 5.0 million other than in connection with certain monetization events, (iii) debt issuances that are not permitted, and (iv) failure to comply with certain covenants.

The lenders may elect to receive warrants to purchase common stock of the Company as an alternative to cash prepayments in some situations where a mandatory prepayment would otherwise be required.

No mandatory prepayments were required for the year ended December 31, 2024.

The New Oaktree Agreement contains customary representations and warranties and 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 (“the “Liquidity Requirement”), 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 New Oaktree Agreement (the “Minimum Net Sales Test”), subject to certain exclusions.

Due to the approval of Emrosi, the minimum net sales amount will increase by $ 7.5 million each quarter, beginning in the third quarter of 2025, provided that the minimum net sales amount will in no event exceed $ 80.0 million.

Both the Minimum Net Sales Test and the Liquidity Requirement will be reduced to $ 0 while the outstanding principal balance is less than or equal to $ 10.0 million.

The Liquidity Requirement decreases to $ 5.0 million while the outstanding principal balance is between $ 10.0 million and $ 25.0 million.

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 capital, 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, the Agent 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 New Oaktree Agreement.

Also in connection with the New Oaktree Agreement, the Company granted warrants to the lenders to purchase up to 506,390 shares of the Company’s common stock at a purchase price of $ 2.0735 per share (the “Warrants”), later reduced to $ 1.65 per share in connection with the financing consummated by the Company in September 2024 (see note 13).

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

The exercise price of the Warrants will also be adjusted if, while the Warrants are outstanding, the Company engages in any transaction involving the issuance or sale of shares of Common Stock or equivalent securities at an effective price per share less than the exercise price of the Warrant then in effect (such lower price, the “Base Share Price”).

In such case, the exercise price of the Warrants will be reduced to equal the Base Share Price.

In connection with the financing consummated by the Company in September 2024, the Warrants had their exercise price reduced to $ 1.65 per share.

The Warrants are exercisable from July 25, 2024 and will expire on July 25, 2031 and may be net exercised for no cash payment at the holder’s election.

The Company filed a registration statement to register the resale of the shares of Company common stock issuable upon exercise of the Warrants (see Note 13).

The Company was in compliance with all applicable covenants under the New Oaktree Agreement as of December 31, 2024.

2020 Oaktree Note

On July 25, 2024, the Company’s $ 50.0 million outstanding balance of the senior secured credit agreement with Oaktree (the “Prior Oaktree Agreement”) and the debt thereunder, the “2020 Oaktree Note”) was terminated upon receipt by Oaktree of a payoff amount of $ 51.4 million from the Company comprised of principal, interest and the applicable final payment amount.

The payoff of the 2020 Oaktree Note was treated as a debt extinguishment, as the 2024 Oaktree Note originated from a fund group different from the Prior Oaktree Agreement.

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.

The Company had entered the Prior Oaktree Agreement in August 2020.

The Prior Oaktree Agreement contained customary representations and warranties and customary affirmative and negative covenants as well as certain financial covenants, including, among other things, (i) maintenance of minimum liquidity and (ii) a minimum revenue test that required Journey’s annual revenue to be equal to or to exceed annual revenue projections set forth in the Prior Oaktree Agreement.

Failure by the Company or Journey, as applicable, to comply with the Prior Oaktree Agreement covenants would result in an event of default, subject to certain cure rights of the Company.

The Company was required to make quarterly interest-only payments until the fifth anniversary of the closing date of the 2020 Oaktree Note, August 27, 2025 , at which point the outstanding principal amount would have been due.

The Company could have voluntarily prepaid the 2020 Oaktree Note at any time subject to a prepayment fee.

The Company was required to make mandatory prepayments of the 2020 Oaktree Note under various circumstances as defined in the Prior Oaktree Agreement

SWK Term Loan

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On the SWK Closing Date, Journey drew $ 15 million.

The remaining $ 5.0 million may be drawn upon request by Journey within 12 months after the SWK Closing Date.

Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027 unless the Credit Facility is otherwise terminated pursuant to the terms of the Credit Agreement.

The Term Loans accrue interest which is payable quarterly in arrears.

The Term Loans bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5 %) plus 7.75 %.

The interest rate resets quarterly.

Beginning in February 2026, Journey 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.

If the total revenue of Journey, measured on a trailing twelve-month basis, is greater than $ 70.0 million as of December 31, 2025, principal repayment is not required until February 2027, at which point Journey is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 15 % of the principal amount of funded Term Loans.

On June 26, 2024, Journey drew the remaining $ 5.0 million under the Credit Facility.

On July 9, 2024, Journey entered into the Amendment to the Credit Agreement with SWK.

The 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 in the Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to Journey receiving approval on or before June 30, 2025.

Journey drew on the remaining $ 5.0 million relating to the FDA approval of Emrosi on November 25, 2024.

Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027.

The Term Loans accrue interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5 %) plus 7.75 % and interest is payable quarterly and resets quarterly.

Beginning in February 2026, Journey 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, with any remaining principal balance due on the maturity date.

If the total revenue of Journey, measured on a trailing twelve-month basis, is greater than $ 70.0 million as of December 31, 2025, the principal repayment start date is extended from February 2026 to February 2027, at which point Journey is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 15 % of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date.

Journey may at any time prepay the outstanding principal balance of the Term Loans in whole or in part.

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The amortization of the discount is accounted for as interest expense in the Consolidated Statement of Operations.

The effective interest rate on the SWK Term Loan for the fiscal year ended December 31, 2023 was 15.1 %.

The effective interest rate on the SWK Term Loan as of December 31, 2024 was 14.8 %.

The SWK Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of Journey.

12 unchanged sentences

IDB Letters of Credit

The Company has letters of credit (“LOC”) with one of its commercial banks, IDB Bank (“IDB”), of approximately $ 2.4 million and $ 2.7 million as of December 31, 2023 and December 31, 2022, respectively, securing rent deposits for lease facilities and an undertaking posted by Cyprium to secure potential damages in an injunctive proceeding.

The Company has letters of credit (“LOC”) with one of its commercial banks, IDB Bank (“IDB”), of approximately $ 1.6 million and $ 2.4 million as of December 31, 2024 and 2023, respectively, securing rent deposits for lease facilities and an undertaking posted by Cyprium relating to an injunctive proceeding.

The Company’s LOC’s are secured by cash, which is included in restricted cash on the Company’s Consolidated Balance Sheet .

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A non-cash contingent warrant value of $ 0.1 million was also recorded in debt discount (see Note 6).

Dividends on the Urica Preferred Stock are payable monthly by Fortress in shares of Fortress Common Stock based upon a 7.5 % discount to the average trading price over the 10-day period preceding the dividend payment date.

Dividends are recorded as interest expense.

For the year ended December 31, 2023, the Company recorded expense of $ 0.3 million associated with the Urica dividends owed on the outstanding Urica Preferred Stock.

The shares mandatorily convert into Urica common stock upon either:

(i) a qualified financing pursuant to which Urica raises at least $ 20 million in aggregate gross proceeds;

or (ii) a sale of Urica (in each case, at a 20 % discount to the lowest price per share at which Urica common stock is issued/sold in such transaction).

Additionally, in the event that neither such a qualified financing nor a sale of Urica has occurred prior to June 27, 2024, then each holder of Urica Preferred Stock is eligible to receive, at Fortress’ election, one of:

(x) a cash payment equal to the product of the Subscription Price and the number of shares of Urica Preferred Stock held by such holder;

(y) a number of shares of Fortress common stock equal to the Fortress Share Exchange Amount;

or (z) a combination of the foregoing (in each case plus cash in lieu of any fractional shares, plus cash in lieu of accumulated and unpaid dividends otherwise payable in Fortress shares up to the conversion/exchange date).

The Urica Preferred Shares have no voting rights and have liquidation rights on parity with all equity securities issued by Urica, and junior to all equity securities issued by Urica with terms outlining senior rank and current and future indebtedness.

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Accordingly, the Company determined liability classification is appropriate and as such, this instrument was accounted for as a liability.

Harley Capital LLC (“Harley”) was the primary placement agent for the Urica Offering and received a 10 % fee on gross proceeds raised, plus either warrants to purchase 10 % of the Urica common stock into which the Urica Preferred Stock converts (in the event of a sale of Urica or a qualified financing) or 10 % of the Company common stock for which the Urica Preferred Stock is exchanged (in the event neither a sale of Urica nor a qualified financing occurs), in addition to reimbursement of legal and other expenses (see Note 6).

Harley Capital LLC (“Harley”) was the primary placement agent for the Urica Offering and received a 10 % cash fee on gross proceeds raised, plus either warrants to purchase 10 % of the Urica common stock into which the Urica Preferred Stock converts (in the event of a sale of Urica or a qualified financing) or 10 % of the Company common stock for which the Urica Preferred Stock is exchanged (in the event neither a sale of Urica nor a qualified financing occurs), in addition to reimbursement of legal and other expenses (see Note 6).

Dividends on the Urica Preferred Stock were payable monthly by Fortress in shares of Fortress Common Stock based upon a 7.5 % discount to the average trading price over the 10-day period preceding the dividend payment date.

Dividends were recorded as interest expense.

For the years ended December 31, 2024 and 2023, the Company recorded expense of $ 0.1 million and $ 0.3 million, respectively, associated with the Urica dividends paid on the outstanding Urica Preferred Stock.

The shares mandatorily converted into Urica common stock upon either:

(i) a qualified financing pursuant to which Urica raises at least $ 20 million in aggregate gross proceeds;

or (ii) a sale of Urica.

Additionally, in the event that neither such a qualified financing nor a sale of Urica had occurred prior to June 27, 2024, then each holder of Urica Preferred Stock was eligible to receive, at Fortress’ election, one of:

(x) a cash payment equal to the product of the Subscription Price and the number of shares of Urica Preferred Stock held by such holder;

(y) a number of shares of Fortress common stock equal to the Fortress Share Exchange Amount;

or (z) a combination of the foregoing.

On June 27, 2024, as neither a qualified financing nor a sale of Urica occurred, Fortress elected to exchange the outstanding shares of Urica Preferred Stock, which was recorded as a liability, into 2,028,345 shares of Fortress common stock.

Ximino Settlement

In August 2024, Journey executed a settlement agreement (the “Settlement Agreement”) to settle the $ 3.0 million of license installment payments Journey owed to Sun associated with the Ximino APA.

Pursuant to the Settlement Agreement, Journey agreed to settle the total outstanding obligation owed to Sun for a total of $ 1.9 million, payable in three installments:

1) $ 0.6 million upon execution of the Settlement Agreement, 2) $ 0.6 million on December 1, 2024, and 3) $ 0.6 million on January 15, 2025.

Journey accounted for the settlement of the license installment payment as a $ 1.1 million gain on extinguishment of debt in the Condensed Consolidated Statements of Operations for the year ended December 31, 2024.

Interest Expense

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($ in thousands)

2024 Oaktree Note

2020 Oaktree Note 1

Partner company convertible preferred shares

1 unchanged sentence

Partner company notes payable 3

Partner company contingent call option accretion 4

Total Interest Expense and Financing Fee

Imputed interest expense related to Ximino, Accutane, Anti-itch product license and VYNE product licenses (see Note 8);

includes loss on extinguishment of $ 2.8 million recorded by Mustang related to payoff of the Runway Note on April 11, 2023 .

Includes loss on extinguishment of debt of $ 3.6 million related to the payoff of the 2020 Oaktree Note on July 25, 2024.

Imputed interest expense related to Ximino, Accutane, Anti-itch product license and VYNE product licenses (see Note 8) for the year ended December 31, 2023.

Includes loss on extinguishment of debt of $ 2.8 million recorded by Mustang related to payoff of the Runway Note on April 11, 2023.

Relates to Urica’s optional repurchase obligation to Crystalys (see Note 3).

Accounts Payable and Accrued Expenses

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Research and development

Research and development - license maintenance fees

Research and development - milestones

Accrued royalties payable

1 unchanged sentence

Return reserve

Accrued interest

Total accounts payable and accrued expenses

Other includes approximately $ 1.3 million of accrued consideration for the Mustang Repurchase Agreement with uBriGene, see Note 3.

Non-Controlling Interests

On April 21, 2023, Aevitas ceased to be a controlled Fortress entity and as such is no longer consolidated (see Note 3).

Fortress’ ownership in Baergic was transferred to Avenue as of November 7, 2022 (see Note 14).

Tamid was dissolved in the year ended December 31, 2023 due to inactivity.

The Company’s ownership interest in its consolidated subsidiaries in 2023 was similar to 2022, except for Checkpoint which decreased from 18 % to 9 % and Journey, which decreased from 56 % to 50 %.

The Company’s ownership interest in its consolidated subsidiaries in 2024 was similar to 2023, except for Avenue, which increased from 4 % to 9.2 % due to the acquisition of additional common shares (see Note 16);

Journey, which decreased from 50 % to 44.5 % due to dilution from the issuance of equity securities (see Note 13) and Mustang, which decreased from 19 % to 6.3 % due to dilution from the issuance of equity securities (see Note 13).

Net Loss per Common Share

Basic and diluted net loss per share attributed to common stockholders is calculated by dividing the net loss attributed to Fortress (less the Series A Preferred dividends) by the weighted-average number of shares of Common Stock outstanding during the period, not including unvested restricted stock, and without consideration for Common Stock equivalents.

Diluted net loss per share is the same as the basic loss per share due to net losses in all periods.

The Company updated its presentation of net loss attributable to common stockholders and its net loss per share as an immaterial correction to reflect the preferred stock dividend of $ 2.0 million per quarter.

The statement of changes in stockholders’ equity (deficit) and statement of cash flows reflected the dividend and as such are not impacted by this change in presentation.

For the year ended December 31, 2022, in addition to being retroactively adjusted to give effect to the Reverse Stock Split (see Note 1), the net loss attributable to Fortress increased from ($ 86.6 ) million to ($ 94.6 ) million and the net loss per share increased from ($ 14.61 ) to ($ 15.97 ) per share to reflect the preferred stock dividend.

The Series A Preferred dividends included in the net loss per share calculation include dividends paid as well as dividends cumulated (but undeclared) (see Note 13).

For the years ended December 31, 2024 and 2023, the effect on the net loss per share calculation from Series A Preferred dividends was $ 8.0 million and $ 8.0 million, respectively, and deemed dividends were $ 1.9 million and $ 0.7 million, respectively.

The following shares of potentially dilutive securities, weighted during the years ended December 31, 2024 and 2023 have been excluded from the computations of diluted weighted average shares outstanding as the effect of including such securities would be anti-dilutive:

Year Ended December 31,

Warrants to purchase Common Stock

Options to purchase Common Stock

Unvested Restricted Stock

Unvested Restricted Stock Units

Unvested Restricted Stock and deferred Restricted Stock

Unvested Restricted Stock units and deferred Restricted Stock units

Stockholders’ Equity

Reverse Stock Split

The Reverse Stock Split was approved on August 10, 2023, by the Company’s Board of Directors and by the Company’s stockholders at a special meeting held on October 9, 2023.

As a result of the Reverse Stock Split, every 15 shares of the Company’s pre-reverse split Common Stock was combined and reclassified as one share of Common Stock.

The proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Split, other than as the result of payment for fractional shares.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would otherwise have held a fractional share of Common Stock received a cash payment in lieu thereof.

All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

Fortress’ Certificate of Incorporation, as amended, authorizes the Company to issue 200,000,000 shares of $ 0.001 par value Common Stock of which 27,908,839 and 15,093,053 shares of Common Stock were outstanding as of December 31, 2024 and 2023, respectively.

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The first dividend on Series A Preferred Stock sold in the offering was payable on December 31, 2017 (in the amount of $ 0.299479 per share) to the holders of record of the Series A Preferred Stock at the close of business on December 15, 2017 and thereafter for each subsequent quarter in the amount of $ 0.5839375 per share.

On July 5, 2024, Fortress announced that the Company’s Board of Directors had decided to pause the monthly dividend of $ 0.1953125 per share of the Series A Preferred Stock.

In accordance with the terms of the Series A Preferred Stock, dividends on the Series A Preferred Stock will continue to accrue and cumulate until such dividends are authorized or declared.

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.

The Company recorded approximately $ 4.0 million and $ 8.0 million of dividends in Additional Paid in Capital on the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.

At December 31, 2024, the Company had total undeclared dividends of approximately $ 4.0 million, which represents the cumulated (but undeclared) dividends due to Series A Preferred shareholders on December 31, 2024.

Dividends in arrears that have not been declared by the Board of Directors are not recorded in the condensed consolidated balance sheets but are reflected in the net loss attributable to common shareholders (see Note 12).

No Maturity Date or Mandatory Redemption

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The Series A Preferred Stock may be redeemed in whole or in part (at the Company’s option) any time on or after December 15, 2022, upon not less than 30 days nor more than 60 days ’ written notice by mail prior to the date fixed for redemption thereof, for cash at a redemption price equal to $ 25.00 per share, plus any accumulated and unpaid dividends to, but not including, the redemption date.

As of December 31, 2023, no Series A Preferred Stock shares have been redeemed.

During the year ended December 31, 2024, no Series A Preferred Stock shares were redeemed.

Special Optional Redemption

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Stock-Based Compensation

As of December 31, 2023, the Company had four equity compensation plans:

As of December 31, 2024, the Company had three equity compensation plans:

the Fortress Biotech, Inc.

2007 Stock Incentive Plan, the Fortress Biotech, Inc.

2013 Stock Incentive Plan, as amended (collectively, the “Plans”), the Fortress Biotech, Inc.

2012 Employee Stock Purchase Plan (the “ESPP”) and the Fortress Biotech, Inc.

2013 Stock Incentive Plan, as amended, the Coronado Biosciences, Inc.

2012 Employee Stock Purchase Plan (the “ESPP”) (collectively, the “Plans”) and the Fortress Biotech, Inc.

Long Term Incentive Plan (the “LTIP”).

In the years ended December 31, 2024 and 2023, the Company’s Board of Directors and stockholders approved increases of 11.0 million and 0.5 million shares, respectively, to the Plans, bringing the aggregate total of authorized shares available under the Plans to 13.1 million shares.

A total of 1,858,879 shares have been granted under the Plans, net of cancellations, and 74,454 shares remained available for issuance as of December 31, 2023.

A total of 4.1 million shares have been granted under the Plans, net of cancellations, and 9.0 million shares remained available for issuance as of December 31, 2024.

Certain partner companies have their own equity compensation plan under which shares are granted to eligible employees, directors and consultants in the form of restricted stock, stock options, and other types of grants of stock of the respective partner company’s common stock.

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Checkpoint Therapeutics, Inc.

Amended and Restated 2015 Stock Plan

Amended and Restated 2015 Incentive Plan

Cyprium Therapeutics, Inc.

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Incentive and non-statutory stock options are granted pursuant to option agreements adopted by the plan administrator.

Options generally have 10-year contractual terms and vest in three equal annual installments commencing on the grant date.

The Company estimates the fair value of stock option grants using a Black-Scholes option pricing model.

In applying this model, the Company uses the following assumptions:

Options generally have 10-year contractual terms.

The Company and its subsidiaries and partner companies estimate the fair value of stock option grants using a Black-Scholes option pricing model.

In applying this model, the following assumptions are used:

● Risk-Free Interest Rate :

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● Volatility :

The Company utilizes the trading history of its Common Stock to determine the expected stock price volatility for its Common Stock.

The trading history of common stock is used to determine the expected stock price volatility.

● Expected Term :

Due to the limited exercise history of the Company’s stock options, the Company determined the expected term based on the Simplified Method under SAB 107 and the expected term for non-employees is the remaining contractual life for both options and warrants.

Due to the limited exercise history of the Company’s and its subsidiaries’ and partner companies’ stock options, the expected term was determined based on the Simplified Method under SAB 107 and the expected term for non-employees is the remaining contractual life for both options and warrants.

● Expected Dividend Rate :

The Company has not paid and does not anticipate paying any cash dividends in the near future on its common stock.

Neither the Company, nor its subsidiaries and partner companies, have paid and none anticipate paying any cash dividends in the near future on their common stock.

The fair value of each option award was estimated on the grant date using the Black-Scholes option-pricing model and expensed under the straight-line method.

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards and warrants for the years ended December 31, 2023 and 2022:

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs, restricted stock and restricted stock unit awards for the years ended December 31, 2024 and 2023:

Year Ended December 31,

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Employee and non-employee awards

Executive awards of Fortress Companies' stock

Executive awards

Partner Companies:

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Options vested and exercisable at December 31, 2024

During the years ended December 31, 2023 and 2022, there were no exercises of stock options.

During the years ended December 31, 2024 and 2023, there were no exercises of Fortress stock options.

The Company used the Black-Scholes option pricing model for determining the estimated fair value of stock-based compensation related to stock options.

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Expected volatility

As of December 31, 2023, the Company had no unrecognized stock-based compensation expense related to options.

As of December 31, 2024, Fortress had $0.4 million of unrecognized stock-based compensation expense related to Fortress stock options, which is expected to be recognized over a weighted-average period of 3.2 years.

As of December 31, 2024, on a consolidated basis, the Company had $ 1.0 million of unrecognized stock-based compensation expense related to stock options of Fortress and subsidiaries, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock

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Restricted stock awards and restricted stock unit awards are expensed under the straight-line method over the vesting period.

Expense for awards with performance-based vesting criteria will be measured and recorded if and when it becomes probable that the milestone will be achieved.

Expense for awards with performance-based vesting criteria are measured and recorded if and when it becomes probable that the milestone will be achieved.

During 2024, the Company granted 0.5 million restricted shares of its Common Stock to executives and directors of the Company and 2.1 million restricted stock units to employees and non-employees of the Company.

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The total fair value of restricted stock units and awards that vested during the years ended December 31, 2024 and 2023 was $ 5.8 million and $ 9.6 million, respectively.

As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to all unvested restricted stock and restricted stock unit awards of $ 10.6 million and $ 1.4 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 1.6 years and 1.7 years, respectively.

This amount does not include restricted stock units which are performance-based and vest upon achievement of certain corporate milestones.

As of December 31, 2024, Fortress had unrecognized stock-based compensation expense related to all unvested Fortress restricted stock and Fortress restricted stock unit awards of $ 4.2 million and $ 4.8 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 0.8 years and 3.4 years, respectively.

As of December 31, 2024, on a consolidated basis, the Company had unrecognized stock-based compensation expense related to all unvested restricted stock and restricted stock unit awards of Fortress and subsidiaries of $9.5 million and $10.4 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 1.3 years and 2.5 years, respectively.

These amounts does not include restricted stock units which are performance-based and vest upon achievement of certain corporate milestones.

Stock-based compensation for these awards will be measured and recorded if and when it is probable that the milestone will be achieved.

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On March 12, 2015, the Company’s Compensation Committee approved the Deferred Compensation Plan allowing all non-employee directors the opportunity to defer all or a portion of their fees or compensation, including restricted stock and restricted stock units.

During the year ended December 31, 2023 and 2022, certain non-employee directors elected to defer an aggregate of approximately 27,000 and 22,000 restricted stock awards, respectively, under this plan.

During the years ended December 31, 2024 and 2023, certain non-employee directors elected to defer an aggregate of approximately 25,000 and 27,000 restricted stock awards, respectively, under this plan.

Employee Stock Purchase Plan

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As of December 31, 2024, 0.1 million shares have been purchased and 1.0 million shares are available for future sale under the Company’s ESPP.

The Company recognized share-based compensation expense of approximately $ 11,000 and $ 0.1 million for the years ended December 31, 2023 and 2022, respectively.

The Company recognized share-based compensation expense of approximately $ 0.1 million and $ 0.1 million for the years ended December 31, 2024 and 2023, respectively.

The following table summarizes Fortress warrant activities, excluding activities related to partner companies:

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Outstanding as of December 31, 2024

Outstanding as of December 31, 2023

Exercisable as of December 31, 2024

In connection with the Oaktree Note (see Note 9), the Company had issued warrants to Oaktree and certain of its affiliates to purchase up to approximately 0.1 million shares of Common Stock at a purchase price of $ 48.00 per share (the “Oaktree Warrants”).

Oaktree is entitled to additional warrants if at any time prior to the expiration of the Oaktree Warrants the Company issues equity, warrants or convertible notes (collectively known as “Security Instruments”) at a price that is less than 95 % of the market price of the Company’s Common Stock on the trading day prior to the issuance of the Security Instruments.

In connection with the 2024 Oaktree Note (see Note 9), the Company issued warrants to Oaktree and certain of its affiliates to purchase up to approximately 0.5 million shares of Common Stock at a purchase price of $ 2.0735 per share (the “2024 Oaktree Warrants”).

Oaktree is entitled to a reduction in exercise price if, at any time prior to the expiration of the 2024 Oaktree Warrants, the Company issues equity, warrants or convertible notes (collectively known as “Security Instruments”) at a price that is less than 95 % of the market price of the Company’s Common Stock on the trading day prior to the issuance of the Security Instruments.

As a result of the September 2024 registered direct offering (see Note 13), the exercise price on the 2024 Oaktree warrants was lowered to $ 1.65 per share, and approximately $ 20,000 was recorded to interest expense.

The Company evaluated the accounting treatment of the 2024 Oaktree Warrants and determined that the 2024 Oaktree warrants should be classified in stockholders’ equity.

As such, the Company used a Black-Scholes model to value the Oaktree Warrants.

Utilizing the following inputs:

term of 7 years, volatility of 90.52 %, risk-free rate of return of 4.18 % yielding a value of $ 1.1 million and was recorded as a component of Stockholders’ Equity in the Company’s Condensed Consolidated Balance Sheet.

In connection with the 2020 Oaktree Note (see Note 9), in August 2020 the Company had issued warrants to Oaktree and certain of its affiliates to purchase up to approximately 0.1 million shares of Common Stock at an exercise price of $ 8.14 per share (the “Oaktree Warrants”).

The Oaktree Warrants expire on August 27, 2030 and may be net exercised at the holder’s election.

As a result of the September 2024 registered direct offering (see Note 13), the Company issued an additional 14,450 warrants to Oaktree and adjusted the exercise price of the Oaktree Warrants to $ 7.2392 , and recorded the resulting expense of $ 27,000 to interest expense.

The Company filed registration statement No.

333-249983 on Form S-3 to register the resale of the shares of Common Stock issuable upon exercise of the Oaktree Warrants that was declared effective by the SEC on November 20, 2020.

On June 13, 2023, the Company entered into a Letter Agreement (the “Letter Agreement”) by and among the Company, Oaktree and certain of its affiliates, pursuant to which the Company agreed to lower the exercise price of the existing warrants to $ 8.136 per share (adjusted for the Reverse Stock Split) and issue amended and restated warrants reflecting the new exercise price (the “Amended and Restated Warrants”), as consideration for the warrant holders’ agreement to permit the Company and/or certain of its subsidiaries to take certain actions.

The Amended and Restated Warrants are exercisable on or after June 13, 2023 and expire August 27, 2030.

The Oaktree Warrants were reported as a component of additional paid in capital within Stockholders’ equity, and the value ascribed to the warrants was recorded as debt discount of the Oaktree Note and is amortized utilizing the effective interest method over the term of the Oaktree Note.

The modification of the warrants resulted in a change in value of $ 0.3 million which was recorded as interest expense in the condensed consolidated statement of operations for the year ended December 31, 2023.

Long-Term Incentive Program (“LTIP”)

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

Amended and Restated Long-Term Incentive Program (“LTIP”)

On July 15, 2015, the stockholders approved the LTIP for the Company’s Chairman, President and Chief Executive Officer, Dr.

Rosenwald, and Executive Vice Chairman, Strategic Development, Mr.

The LTIP consists of a program to grant equity interests in the Company and in the Company’s subsidiaries, and a performance-based bonus program that is designed to result in performance-based compensation that is deductible without limit under Section 162(m) of the Internal Revenue Code of 1986, as amended.

The LTIP consists of a program to grant equity interests in the Company and in the Company’s subsidiaries, and a performance-based bonus program that is designed to compensate LTIP participants based on their responsibilities and for their contributions to the successful achievement of certain corporate goals and objectives of the Company.

On January 1, 2024 and 2023, the Compensation Committee granted 216,465 and 81,286 shares each to Dr.

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These equity grants, made in accordance with the LTIP, represent 1 % of total outstanding shares of the Company as of the dates of such grants.

The shares will vest in full if the employee is either in the service of the Company as an employee, Board member or consultant (or any combination of the foregoing) on the tenth anniversary of the LTIP, or the eligible employee has had an involuntary Separation from Service (as defined in the LTIP).

The only other vesting condition – one based on achievement of an increase in the Company’s market capitalization – has already been achieved, with respect to each annual award under the LTIP.

The shares awarded under the LTIP will also vest in full (and the Company’s repurchase option on each tranche of shares granted thereunder will accordingly lapse) upon the occurrence of a Corporate Transaction (as defined in the LTIP) if the eligible employee is in service to the Company on the date of such Corporate Transaction.

Restricted shares granted under the LTIP vest upon (i)(A) the Company achieving a specified increase in market capitalization since the grant date and (B) the participant remaining in service with the Company until (or being involuntarily terminated prior to) July 16, 2025, or (ii) a change in control of the Company, provided the eligible participant remains in service with the Company until the date of such transaction.

If the restricted shares have not vested in accordance with the preceding sentence, they will be subject to a repurchase option by the Company at a nominal price for 90 days following the earlier of July 16, 2025 or the participant’s voluntary separation from service with the Company.

The fair value of each grant on the grant date was approximately $ 0.7 million for the 2024 grant and $ 0.8 million for the 2023 grant.

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Capital Raises

On July 23, 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").

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

The Company’s shelf registration statement (File No.

333-238327) on Form S-3 filed in 2020 expired on May 26, 2023.

On May 17, 2024, the Company filed a shelf registration statement (File No.

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

As of December 31, 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, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notices.

As a result, the Company is no longer eligible to use Form S-3 and has lost the ability to use the 2024 Shelf.

Common Stock At the Market Offering

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.

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

For the year ended December 31, 2022, the Company issued approximately 0.3 million shares of common stock at an average price of $ 22.58 per share for gross proceeds of $ 6.2 million.

In connection with these sales, the Company paid aggregate fees of $ 0.2 million.

February 2023 Registered Direct Offering and Concurrent Private Placement

On February 10, 2023, the Company completed a registered direct offering of Common Stock pursuant to which it issued and sold approximately 1.1 million shares of its common stock at a purchase price of $ 12.53 (as adjusted for the Reverse Stock Split) per share and secured approximately $ 13.2 million in net proceeds after deducting offering expenses.

The Company also simultaneously closed on a concurrent private placement with investors in the registered direct offering, for the pro rata rights to acquire, in the aggregate, securities exercisable into approximately 3.5 % of the outstanding shares of common stock in each of the Company’s next 20 new operating subsidiaries (the “Contingent Subsidiary Securities”).

The Contingent Subsidiary Securities will only be issued to the extent such a new operating subsidiary first consummates a specified corporate development transaction within the next five years , and will be exercisable immediately upon issuance, with an exercise period of 10 years , at an exercise price equal to the fair market value of one share of common stock of the subsidiary on the date of the corporate development transaction.

The Company’s stockholders approved the issuance of the rights and Contingent Subsidiary Securities at a special meeting of stockholders on April 10, 2023, as required by Nasdaq Listing Rule 5635.

November 2023 Public Offering

In November 2023, Fortress 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.

For the year ended December 31, 2024, the Company issued approximately 2.0 million shares of common stock at an average price of $ 1.98 per share for net proceeds of $ 3.8 million after deducting aggregate fees of $ 0.1 million.

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 net proceeds of $ 2.2 million after deducting aggregate fees of $ 0.1 million.

Equity Offerings and Private Placements

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, the Company’s 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 connection with the financing consummated by the Company in September 2024, the 5,885,000 warrants issued in the November 2023 equity offering (the “November 2023 Warrants”) had their exercise price reduced to $ 1.65 per share.

The November 2023 Warrants contained a one-time exercise price adjustment provision that reduced the exercise price upon the next equity financing at a price lower than the exercise price at issuance which was $ 1.70 per share.

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.

Journey 2022 Shelf Registration Statement and At the Market Offering (the “Journey ATM”)

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

333-269079 ), which was declared effective by the SEC on January 26, 2023.

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.

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

The Journey 2022 S-3 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.

In connection with the Journey 2022 S-3, Journey has entered into the Sales Agreement with B.

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Riley acting as Journey’s agent or principal.

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 under the Journey ATM 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.

Checkpoint 2020 and 2023 Shelf Registration Statements and At the Market Offering

In March 2023, the Checkpoint 2023 S-3 (File No.

333-270843), which was declared effective May 5, 2023.

Checkpoint 2023 Shelf Registration Statements

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.

There were no sales under the Checkpoint 2020 ATM in the year ended December 31, 2023.

During the year ended December 31, 2022, Checkpoint sold a total of 532,816 shares of common stock under the Checkpoint 2020 ATM for aggregate total gross proceeds of approximately $ 10.1 million at an average selling price of $ 18.99 per share, resulting in net proceeds of approximately $ 9.9 million after deducting commissions and other transaction costs.

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

Checkpoint Registered Direct Offerings

In 2023, Checkpoint made 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 December 2022, Checkpoint closed on the December 2022 Registered Direct Offering with a single institutional investor for the issuance and sale of 950,000 shares of its common stock and 784,105 pre-funded warrants for one share of Checkpoint’s common stock.

The common stock and the pre-funded warrants were sold together with Series A warrants to purchase up to 1,734,105 shares of common stock and Series B warrants to purchase up to 1,734,105 shares of common stock, at a purchase price of $ 4.325 per share of common stock.

The Series A warrants will expire in five years and the Series B warrants will expire in eighteen months, and both have an exercise price of $ 4.075 per share.

Net proceeds from the registered direct offering were $ 6.7 million and allocated to the common stock warrant liabilities (see Note 6).

Pursuant to the Founders Agreement, Checkpoint issued to Fortress 2.5 % of the aggregate number of shares of Checkpoint common stock issued in the offerings noted above.

Accordingly, Checkpoint issued 398,660 shares and 56,671 shares to Fortress for the year ended December 31, 2023 and 2022, respectively.

Mustang 2020 and 2021 Shelf Registration Statements and At-the-Market Offering

On April 23, 2021, Mustang filed a shelf registration statement (File No.

333-255476) on Form S-3 (the “Mustang 2021 S-3”), which was declared effective on May 24, 2021.

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

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

On July 2018, Mustang entered into an At-the-Market Issuance Sales Agreement (the “Mustang ATM”) relating to the sale of shares of common stock pursuant to the Mustang 2021 S-3.

Under the Mustang ATM, Mustang pays the Agents a commission rate of up to 3.0 % of the gross proceeds from the sale of any shares of common stock.

On April 14, 2023, the Mustang ATM was amended to add the limitations imposed by General Instruction I.B.6 to Form S-3.

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.

During the year ended December 31, 2022, Mustang issued approximately 0.5 million shares of common stock at an average price of $ 12.61 per share for gross proceeds of $ 6.6 million under the Mustang ATM.

In connection with these sales, Mustang paid aggregate fees of approximately $ 0.1 million for net proceeds of approximately $ 6.5 million.

Mustang Registered Direct Offering

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 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 rsale 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 fully 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 for sale 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.

Mustang 2021 Shelf Registration Statement and At-the-Market Offering

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.

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.

During the year ended December 31, 2023, Mustang issued approximately 1,000 shares (adjusted for reverse split) of common stock at an average price of $ 158.07 per share for net proceeds of $ 0.2 million under the Mustang ATM.

Mustang Registered Direct and Equity Offerings, Warrant Inducement and Private Placement

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, prior to 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 will be 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 $ 0.00 5.

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 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.

Pursuant to the terms of the Second Amended and Restated Founders Agreement, Mustang owes to Fortress 2.5 % of the aggregate number of shares of Mustang common stock issued in the offerings noted above.

Accordingly, Mustang recorded the value of 1,297 as shares issuable at December 31, 2023 and issued 13,131 common shares to Fortress for the year ended December 31 2022.

Avenue Registered Direct, Private Placement and PIPE

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 (the “November 2023 Offering”).

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.

In January 2024, Avenue entered into an inducement offer letter agreement with certain investors in the November 2023 Offering who agreed to exercise certain outstanding November 2023 Warrants to purchase up to an aggregate of 14,600,000 shares of Avenue common stock at their exercise price of $ 0.3006 per share (see Note 20).

In connection with the Avenue September 2023 Private Placement (see Note 16), Avenue entered into a registration rights letter agreement (the “Avenue Registration Rights Letter Agreement”) with Fortress and the Company’s Chairman, President and Chief Executive Officer, a director on the board of directors of Avenue (the “Avenue Private Placement Investors”).

Avenue will file, on or prior to September 8, 2024, a resale registration statement to register the resale of the Avenue September 2023 Private Placement Shares.

In January 2023, Avenue agreed to issue and sell (i) 448,000 shares of Avenue’s common stock at a price per share of $ 1.55 , and (ii) pre-funded warrants to purchase 1,492,299 shares of common stock, at a price equal to the price per share, less $ 0.001 (the “Avenue January 2023 Registered Direct Offering”).

The Avenue Pre-Funded Warrants had an exercise price of $ 0.001 per share.

Also in January 2023, Avenue entered into a private placement offering (“Avenue January 2023 Private Placement”) of January 2023 Warrants to purchase 1,940,299 shares of Avenue common stock, each with an exercise price of $ 1.55 per share.

Avenue agreed to issue and sell the January 2023 Warrants at an offering price of $ 0.125 per January 2023 Warrant to purchase one share of Avenue common stock.

The gross proceeds across the Avenue January 2023 Registered Direct Offering and the Avenue January 2023 Private Placement were $ 3.2 million and net proceeds were $ 2.8 million.

On October 11, 2022, Avenue announced the closing of an underwritten public offering of 3,636,365 common and pre-funded units.

Each unit consists of one share of common stock or one pre-funded warrant and one warrant to purchase one share of common stock.

Each unit was sold for a purchase price of $ 3.30 per common unit (or $ 3.2999 per pre-funded unit after reducing $ 0.0001 attributable to the exercise price of the pre-funded warrants).

Avenue also simultaneously closed on the sale of an additional 545,454 warrants to purchase common stock, which were sold pursuant to a partial exercise of the underwriter’s over-allotment option.

Avenue received net proceeds of approximately $ 10.3 million at closing, before giving effect to any warrant exercises.

This transaction, along with Avenue’s repurchase of 100 % of the Avenue shares held by InvaGen for a purchase price of $ 3.0 million in October 2022 (see Note 3), resulted in the November 2022 consummation of the Contribution Agreement between Fortress and Avenue (see Note 16).

Accordingly, Mustang issued 23,450 common shares to Fortress for the year ended December 31, 2024.

Avenue 2021 Shelf Registration Statement and At-the-Market Offering

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 $ 2.2 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.

Avenue 2024 Warrant Exercises and Private Placement

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.

The fair value of the Series A Warrants and Series B Warrants was allocated between the January 2023 Warrants and the November 2023 Warrants on a weighted basis, with approximately $ 0.6 million allocated to the January 2023 Warrants and recorded to loss on common stock warrant liabilities in the condensed consolidated statement of operations, and the approximately $ 4.3 million allocated to the November 2023 Warrants deemed to be a dividend.

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.

The fair value of the Avenue May 2024 Warrants of approximately $ 4.5 million is deemed to be a dividend.

Pursuant to the Founders Agreement, Avenue issued to Fortress 2.5 % of the aggregate number of shares of Avenue common stock issued in the offerings noted above.

Accordingly, Avenue issued 52,419 shares and recorded 415,718 shares issuable for the year ended December 31, 2023, and recorded 90,909 shares issuable to Fortress for the year ended December 31, 2022.

Accordingly, Avenue issued 43,772 shares to Fortress for the year ended December 31, 2024.

Commitments and Contingencies

The Company’s lease portfolio includes leases for our corporate headquarters, office spaces, and a cell manufacturing facility.

Most of the Company’s lease liabilities result from the lease of its New York City, NY office, which expires in 2031 and Mustang’s Worcester, MA cell processing facility lease, which expires in 2026 .

Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

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The Company does not act as a lessor or have any leases classified as financing leases.

For the year ended December 31, 2024, Mustang identified triggering events that required an impairment of the asset group consisting of its right-of-use asset and associated leasehold improvements, and the impairment loss was allocated to leasehold improvements and the right-of-use assets based on the relative arrying amounts of the assets (see Note 5), with $ 0.4 million of the impairment allocated to the right-of-use asset group.

At December 31, 2024, the Company had operating lease liabilities of $ 17.4 million and right of use assets of $ 13.9 million, which are included in the Company’s Consolidated Balance Sheet.

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Caelum Biosciences, Inc.

(“Caelum”), a former subsidiary of Fortress that was sold to AstraZeneca’s Alexion (“Alexion”) in October 2021, is the defendant in a lawsuit brought by The University of Tennessee Research Foundation (“UTRF”) captioned as University of Tennessee Research Foundation v.

(“Caelum”), a former subsidiary of Fortress that was sold to AstraZeneca’s Alexion Pharmaceuticals, Inc.

subsidiary (“Alexion”) in October 2021, was the defendant in a lawsuit brought by The University of Tennessee Research Foundation (“UTRF”) captioned as University of Tennessee Research Foundation v.

Caelum Biosciences, Inc.

19-cv-00508, which is pending in the United States District Court for the Eastern District of Tennessee (the “UTRF Litigation”).

UTRF brought claims against Caelum, for, inter alia , tortious interference and trade secret misappropriation.

UTRF primarily alleges that Caelum unauthorizedly used non-patent trade secrets owned by UTRF in the development of Caelum’s 11-1F4 monoclonal antibody, known as CAEL-101.

Under the agreement pursuant to which Alexion acquired Caelum (as amended, the “DOSPA”), Fortress has indemnification obligations of Caelum under certain circumstances, including for certain of Caelum’s legal expenses and potential damages arising out of the UTRF Litigation (with such indemnification capped in the aggregate as to Fortress at the amount of Caelum acquisition proceeds received by Fortress and which, at Caelum’s election, may be satisfiable in the form of offsets against future amounts that Caelum may owe Fortress under the DOSPA).

Caelum is defending the UTRF Litigation, with Fortress participating in such defense and maintaining a consent right over any potential settlements.

Caelum’s legal fees and costs in defending the UTRF Litigation are being reimbursed by Fortress by distribution from a $15 million escrow account established concurrently with the acquisition of Caelum;

Fortress considers the amount remaining in escrow to be in excess of the amount of its anticipated out-of-pocket indemnifiable costs and damages in the UTRF Litigation and therefore has not accrued any liability pertaining to this indemnity.

Caelum and Fortress both believe the UTRF Litigation is without merit and intend to continue defending it vigorously (including exhausting all appeals if applicable).

Caelum’s motion for summary judgment on all claims is currently pending, and a trial is scheduled for September 2024 with respect to any of UTRF’s claims that may survive summary judgment.

19-cv-00508, which was formerly pending in the United States District Court for the Eastern District of Tennessee (the “UTRF Litigation”).

UTRF brought claims against Caelum, for, inter alia , trade secret misappropriation.

UTRF primarily alleged that Caelum unauthorizedly used non-patent trade secrets owned by UTRF in the development of Caelum’s 11-1F4 monoclonal antibody, known as CAEL-101.

Under the agreement pursuant to which Alexion acquired Caelum (as amended, the “DOSPA”), Fortress had certain indemnification obligations of Caelum pertaining to the UTRF litigation and maintained a consent right over any potential settlements of the UTRF litigation by Caelum.

On September 16, 2024, Caelum and UTRF entered into a stipulation with the court pursuant to which UTRF’s claims were dismissed without prejudice;

on October 16, 2024, Caelum and UTRF entered into a definitive settlement agreement (the “UTRF-Caelum Settlement Agreement”) pursuant to which UTRF’s claims were dismissed with prejudice and Caelum agreed to make an upfront payment and additional potential milestone-based payments to UTRF.

Fortress and the other sellers under the DOSPA are explicit releasees and third party beneficiaries under the UTRF-Caelum Settlement Agreement.

In connection with the execution of the UTRF-Caelum Settlement Agreement, Caelum, Alexion and Fortress

entered into an amendment to the DOSPA (the “DOSPA Amendment”), which, inter alia :

(1) terminated any continuing indemnification by Fortress and the other sellers under the DOSPA in respect of the UTRF Litigation;

(2) reduced the amounts of the potential future earn-out payments potentially owing to the sellers under the DOSPA (including Fortress) from an aggregate amount up to $ 350 million to an aggregate amount up to $ 295 million;

(3) released to Caelum all amounts remaining in an escrow fund that had been established at the time of the Alexion acquisition to backstop potential indemnifiable damages, including those incurring under the UTRF Litigation (with 100 % of such released amount constituting reimbursement for legal fees and other expenses incurred by Caelum in defending the UTRF Litigation);

and (4) memorialized Fortress’ consent for Caelum to settle the UTRF Litigation.

Neither the UTRF-Caelum Settlement Agreement nor the DOSPA Amendment implicates any out-of-pocket payment by Fortress or any other seller under the DOSPA.

Fortress remains eligible to receive approximately $ 19 million upon regulatory approval of CAEL-101 and approximately $ 125 million in the aggregate across all remaining regulatory and sales milestones.

Journey Loss Recovery

In September 2021, Journey was the victim of a business email compromise cybersecurity incident, that affected its accounts payable function and led to approximately $ 9.5 million in wire transfers being misdirected to fraudulent accounts.

Journey recorded the loss as a separate component of operating expenses in its 2021 consolidated financial statements.

The FBI was able to trace and seize a portion of the fraudulently transferred cryptocurrency.

Subsequently, pursuant to a stipulation and order signed by Journey on September 19, 2024, the United Stated District Court Southern District of New York through the United States Marshalls recovered funds of approximately $ 4.6 million on December 4, 2024.

The proceeds from the recovery were recorded and classified within Journey’s Consolidated Statements of Operations as a separate component of operating expenses, consistent with the initial recognition of the loss in 2021.

Employee Benefit Plan

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Related Party Transactions

The Company’s Chairman, President and Chief Executive Officer, individually and through certain trusts over which he has voting and dispositive control, beneficially owned approximately 17.2 % and 10.5 % of the Company’s issued and outstanding Common Stock as of December 31, 2023 and 2022, respectively.

The Company’s Executive Vice Chairman, Strategic Development individually owns approximately 7.5 % and 11.2 % of the Company’s issued and outstanding Common Stock at December 31, 2023 and 2022, respectively.

Avenue September 2023 Private Placement

In September 2023, Avenue entered into an unwritten agreement with the Avenue Private Placement Investors, pursuant to which Avenue agreed to issue and sell 767,085 shares (the “Avenue September 2023 Private Placement Shares”) of Avenue common stock for an aggregate purchase price of approximately $ 550,000 in a private placement transaction (the “Avenue September 2023 Private Placement).

The Avenue common shares were purchased by the Avenue Private Placement Investors at a price per Avenue September 2023 Private Placement Share of $ 0.717 , which was the “consolidated closing bid price” of the Avenue common stock on Nasdaq as of September 7, 2023, in compliance with Nasdaq Listing Rule 5365(c).

The net proceeds to Avenue from the Avenue September 2023 Private Placement were approximately $ 550,000 .

Avenue did not incur any underwriting or placement agent fees associated with the Avenue September 2023 Private Placement.

Avenue intends to use the net proceeds from the Avenue September 2023 Private Placement for working capital and other general corporate purposes.

Shared Services Agreement with TGTX

In July 2015, TGTX and the Company entered into an arrangement to share the cost of certain research and development employees.

The Company’s Executive Vice Chairman, Strategic Development, is Executive Chairman and Interim Chief Executive Officer of TGTX.

Under the terms of the Agreement, TGTX will reimburse the Company for the salary and benefit costs associated with these employees based upon actual hours worked on TGTX related projects.

In connection with the shared services agreement, the Company invoiced TGTX $ 0.4 million and $ 0.4 million, and received payments of $ 0.4 million and $ 0.4 million for the years ended December 31, 2023 and 2022, respectively.

Desk Share Agreement with TGTX

The Desk Share Agreement with TGTX, as amended, requires TGTX to pay 65 % of the average annual rent.

Additionally, the Company has reserved the right to execute desk share agreements with other third parties and those arrangements will affect the cost of the lease actually borne by the Company.

Each initial Desk Share Agreement has a term of five years .

In connection with the Company’s Desk Share Agreement with TGTX for the New York, NY office space, for the years ended December 31, 2023 and 2022, the Company had paid $ 2.8 million and $ 2.7 million in rent, respectively, and invoiced TGTX approximately $ 1.8 million and $ 1.9 million respectively, for their prorated share of the rent base.

At December 31, 2023, there were no amounts due from TGTX related to this arrangement.

From 2018 until 2022, TGTX employees occupied desks in the Waltham, MA office under the Desk Share Agreement.

TGTX paid their share of the rent based on actual percentage of the office space occupied on a month by month basis.

For the year ended December 31, 2022, the Company had paid approximately $ 0.2 million in rent for the Waltham, MA office, and invoiced TGTX approximately $ 0.1 million.

The Desk Share Agreement with TGTX terminated on December 31, 2022.

Checkpoint Collaborative Agreements with TGTX

Checkpoint has entered into various agreements with TGTX to develop and commercialize certain assets in connection with its licenses, including a collaboration agreement for some of the Dana Farber licensed antibodies, and a sublicense agreement for the Jubilant family of patents.

Checkpoint believes that by partnering with TGTX to develop these compounds in therapeutic areas outside of its business focus, it may substantially offset its preclinical costs and milestone costs related to the development and marketing of these compounds in solid tumor indications.

Effective September 30, 2023, Checkpoint and TGTX agreed to mutually terminate both the collaboration agreement and the sublicense agreement.

Shared Services Agreement with Journey

In November 2021, Journey and the Company entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees.

The Company’s Executive Chairman and Chief Executive Officer is the Executive Chairman of Journey.

In addition, Journey reimburses the Company

for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of Journey.

For the year ended December 31, 2023 and 2022, the Company’s employees have provided services to Journey totaling approximately $ 0.1 million and $ 0.1 million, respectively.

At December 31, 2023, approximately $ 0.2 million is due from Journey related to this arrangement.

Contribution Agreement with Avenue

On May 11, 2022, the Company entered into a stock contribution agreement (the “Contribution Agreement”) with Avenue, pursuant to which the Company agreed to transfer ownership of 100 % of its shares (common and preferred) in Baergic to Avenue.

Under the Contribution Agreement, the Company also agreed to assign to Avenue certain intercompany agreements existing between Fortress and Baergic, including a Founders Agreement, by and between Fortress and Baergic, dated as of March 9, 2017, and Management Services Agreement, by and between Fortress and Baergic, dated as of March 9, 2017.

Consummation of the transactions contemplated by the Contribution Agreement was subject to the satisfaction of certain conditions precedent, including, inter alia:

(i) the closing of an equity financing by Avenue resulting in gross proceeds of at least $ 7.5 million, (ii) the agreement by minority Avenue shareholder InvaGen to (A) have 100 % of its shares in Avenue repurchased by Avenue and (B) terminate certain of the agreements to which it was party with Avenue and/or the Company in connection with InvaGen’s 2019 equity investment in Avenue, which eliminated certain negative consent rights of InvaGen over Avenue and restore certain rights and privileges of Fortress in Avenue;

and (iii) the sustained listing of Avenue’s common stock on the Nasdaq Capital Market.

On October 11, 2022, Avenue announced the closing of an underwritten public offering in which it received net proceeds of approximately $ 10.4 million (see Note 13).

The offering, together with the October 2022 repurchase of Avenue common shares held by InvaGen, resulted in the consummation of the Contribution Agreement in November 2022 (see Note 3).

As a result, Baergic became a majority-controlled and owned subsidiary company of Avenue.

Cyprium 9.375 % Series A Cumulative Redeemable Perpetual Preferred Stock Dividend Obligation

Pursuant to a private placement in August 2020, Cyprium sold shares of its 9.375 % Series A Cumulative Redeemable Perpetual Preferred Stock (“Cyprium PPS”);

as of December 31, 2023, there are 300,600 shares of Cyprium PPS outstanding.

Pursuant to the terms of the Cyprium PPS, shareholders on the record date are entitled to receive a monthly cash dividend of $ 0.19531 per share which yields an annual dividend of $ 2.34375 per share.

The Cyprium PPS will automatically be redeemed upon the first (and only the first) bona fide, arm’s-length sale of a Priority Review Voucher (a “PRV Sale”) issued by the FDA in connection with the approval of CUTX-101, a product candidate previously developed by Cyprium.

Upon the PRV Sale, each share of Cyprium PPS will be automatically redeemed in exchange for a payment equal to twice the $ 25.00 liquidation preference, plus accumulated and unpaid dividends to, but excluding, the redemption date.

An optional exchange for Fortress Series A Preferred Stock is available after 24 months from the issuance date so long as a sale of the PRV has not occurred.

Additionally, if a PRV Sale has not occurred by September 30, 2024, the Cyprium PPS is either automatically exchanged for Fortress Series A Preferred Stock or cash at the discretion of Fortress.

The Cyprium PPS is fully and unconditionally guaranteed by Fortress.

Founders Agreement and Management Services Agreement

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Each Founders Agreement has a term of 15 years , which upon expiration automatically renews for successive one-year periods unless terminated by the Company or a Change in Control (as defined in the Founders Agreement) occurs.

In connection with each Founders Agreement the Company receives 250,000 Class A Preferred shares (except for that with Checkpoint, in which the Company holds Class A Common Stock).

The Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) is identical to common stock other than as to voting rights, conversion rights and the Payment-in-Kind (“PIK”) Dividend right (as described below).

Each share of Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) is entitled to vote the number of votes that is equal to one and one-tenth (1.1) times a fraction, the numerator of which is the sum of (A) the shares of outstanding common stock and (B) the whole shares of common stock into which the shares of outstanding Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) are convertible and the denominator of which is the number of shares of outstanding Class A Preferred Stock (Class A Common Stock with respect to Checkpoint).

Thus, the Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) will at all times constitute a voting majority.

Each share of Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) is convertible, at the holder’s option, into one fully paid and nonassessable share of common stock of such partner company/subsidiary, subject to certain adjustments.

The holders of Class A Preferred Stock (and the Class A Common Stock with respect to Checkpoint), as a class, are entitled receive on each effective date or “Trigger Date” (defined as the date that the Company first acquired, whether by license or otherwise, ownership rights to a product) of each agreement (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) is converted into common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent ( 2.5 %) of such partner company or subsidiary’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date.

Each Founders Agreement has a term of 15 years , which upon expiration automatically renews for successive one-year periods unless terminated by the Company or upon a Change in Control (as defined in the Founders Agreement) occurs.

In connection with each Founders Agreement the Company received a number of either Class A Preferred shares or Class A Common Stock – see Note 20).

Thus, the Founders Stock will at all times constitute a voting majority.

Each share of Founders Stock is convertible, at the holder’s option, into one fully paid and nonassessable share of common stock of such partner company/subsidiary, subject to certain adjustments.

a “PIK Dividend Payment Date”) and on each anniversary date of such date until the date all outstanding Founders Stock is converted into common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent ( 2.5 %) of such partner company or subsidiary’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date.

The Company owns 100 % of the Class A Preferred Stock (Class A Common Stock with respect to Checkpoint) of each partner company/subsidiary that has a Founders Agreement with the Company.

The Company owns 100 % of the Founders Stock of each partner company/subsidiary that has a Founders Agreement with the Company.

As additional consideration under the Founders Agreement, each partner company and subsidiary with which the Company has entered into a Founders Agreement will also:

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In the case of Urica, however, the obligation to pay Fortress royalties under the Founders Agreement would survive any such Change in Control.

The following table summarizes, by subsidiary, the effective date of the Founders Agreements and PIK dividend or equity fee payable to the Company in accordance with the terms of the Founders Agreements, Exchange Agreements and the partner companies’/subsidiaries’ certificates of incorporation.

PIK Dividend as

Class of Stock

Partner Company/Subsidiary

Effective Date 1

capitalization

February 17, 2015

December 17, 2019 5

October 31, 2016

March 17, 2015

March 13, 2017

March 20, 2015

March 13, 2015

April 22, 2020 5

November 7, 2017 5

Represents the effective date of each subsidiary’s Founders Agreement.

Each PIK dividend and equity fee is payable on the annual anniversary of the effective date of the original Founders Agreement or has since been amended to January 1 of each calendar year.

Pursuant to the terms of the agreement between Avenue and InvaGen Pharmaceuticals, Inc.

during the term of the Avenue SPMA PIK dividends were not be paid or accrued.

Upon the repurchase of the securities held by InvaGen, such PIK dividends have resumed.

Pursuant to the Share Contribution Agreement between Fortress and Avenue, under which Baergic became a majority-controlled and owned subsidiary of Avenue, Fortress also assigned to Avenue the Founders Agreement previously between Fortress and Baergic, such that Baergic’s annual PIK dividend is now payable to Avenue.

Instead of a PIK dividend, Checkpoint pays the Company an annual equity fee in shares of Checkpoint’s common stock equal to 2.5 % of Checkpoint’s fully diluted outstanding capitalization.

Represents the Trigger Date, the date that the Fortress partner company first acquires, whether by license or otherwise, ownership rights in a product.

The following table summarizes, by subsidiary, the PIK dividend or equity fee recorded by the Company in accordance with the terms of the Founders Agreements, Exchange Agreements and the partner companies’/subsidiaries’ certificates of incorporation for the years ended December 31, 2023 and 2022 ($ in thousands):

In the case of Urica, however, the obligation to pay Fortress royalties under the Founders Agreement survives any such Change in Control.

The following table summarizes, by subsidiary, the PIK dividends, annual equity fees, and equity fees recorded by the Company in accordance with the terms of the Founders Agreements, Exchange Agreements and the partner companies’/subsidiaries’ certificates of incorporation for the years ended December 31, 2024 and 2023 ($ in thousands):

Year Ended December 31,

Partner company

Management Services Agreements

The Company has entered into Management Services Agreements (the “MSAs”) with certain of its partner companies and subsidiaries.

Pursuant to each MSA, the Company’s management and personnel provide advisory, consulting and strategic services to each such partner company/subsidiary for an initial period of five ( 5 ) years (with such initial terms automatically renewing for successive five-year periods unless terminated by the Company or the partner company/subsidiary on at least 90 days’ notice prior to the expiration of any such five-year period).

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Effective Date

July 28, 2017

February 17, 2015

March 9, 2017

October 31, 2016

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Consolidated (Income)/Expense

Aevitas was deconsolidated in April 2023 as a result of the Asset Purchase Agreement with 4DMT (see Note 3).

Fees and Stock Grants Received by Fortress

Avenue’s MSA fee for 2024 was subject to a Subscription and Forgiveness Agreement signed in November 2024.

Fees and Stock Issuances Received by Fortress

Fees recorded in connection with Fortress’ agreements with its subsidiaries and partner companies are eliminated in consolidation.

Shared Services Agreement with TGTX

In July 2015, TGTX and the Company entered into an arrangement to share the cost of certain research and development employees.

The Company’s Executive Vice Chairman, Strategic Development, is Executive Chairman and Interim Chief Executive Officer of TGTX.

Under the terms of the Agreement, TGTX will reimburse the Company for the salary and benefit costs associated with these employees based upon actual hours worked on TGTX related projects.

In connection with the shared services agreement, for the years ended December 31, 2024 and 2023, the Company invoiced TGTX $ 0.9 million and $ 0.4 million, respectively.

At December 31, 2024, there was approximately $ 36,000 due from TGTX related to this arrangement.

Desk Share Agreement with TGTX

The Desk Share Agreement between the Company and TGTX, as amended, requires TGTX to pay 65 % of the average annual rent for the Company’s New York, NY office space.

Additionally, the Company has reserved the right to execute desk share agreements with other third parties and those arrangements will affect the cost of the lease actually borne by the Company.

Each initial Desk Share Agreement has a term of five years .

In connection with the Company’s Desk Share Agreement with TGTX for the New York, NY office space, for the years ended December 31, 2024 and 2023, the Company had paid $ 2.9 million and $ 2.8 million in rent, respectively, and invoiced TGTX approximately $ 1.7 million and $ 1.8 million respectively, for their prorated share of the rent base.

At December 31, 2024, there were no amounts due from TGTX related to this arrangement.

Avenue Subscription and Forgiveness Agreement

On November 13, 2024, the Company entered into a Subscription and Forgiveness Agreement with Avenue, whereby the Company agreed to convert 50 % of a total of $ 0.5 million owed by Avenue under the MSA into newly issued common stock of Avenue and forgive the remaining 50 % of the accrued balance.

Therefore, Avenue issued a total of 122,850 shares to the Company based on the closing price of $ 2.035 on the day prior to the execution of the agreement.

Avenue September 2023 Private Placement

In September 2023, Avenue entered into an arrangement with Fortress and Dr.

Rosenwald (Dr.

Rosenwald and Fortress, together, the “Avenue Private Placement Investors”), pursuant to which Avenue agreed to issue and sell 10,227 shares of Avenue common stock for an aggregate purchase price of approximately $ 550,000 in a private placement transaction.

The Avenue common shares were purchased at a price per share of $ 53.775 , by the Avenue Private Placement Investors, which was the “consolidated closing bid price” of the Avenue common stock on Nasdaq as of September 7, 2023, in compliance with Nasdaq Listing Rule 5365(c).

The net proceeds to Avenue from the private placement were approximately $ 550,000 .

Board Services Agreement

In December 2016, Checkpoint entered into an advisory agreement effective January 1, 2017 with Caribe BioAdvisors, LLC (“Caribe”), owned by Michael S.

Weiss, to provide the advisory services of Mr.

Weiss as Chairman of the Board.

Pursuant to the agreement, Caribe will be paid an annual cash fee of $ 60,000 , in addition to any and all annual equity incentive grants paid to members of the board.

In June 2023, Mr.

Weiss assigned the agreement with Checkpoint to Hawkins BioVentures, LLC, also owned by Michael Weiss.

For the years ended December 31, 2024 and 2023, Checkpoint recognized approximately $ 153,000 and $ 110,000 in expenses related to the advisory agreement, including approximately $ 93,000 and $ 50,000 in expenses related to annual equity incentive grants.

In January 2017, Mustang entered into an advisory agreement effective January 1, 2017 with Caribe BioAdvisors, LLC, owned by Michael S.

Weiss, to provide the advisory services of Mr.

Weiss as Chairman of the Board.

Pursuant to the agreement, Caribe will be paid an annual cash fee of $ 60,000 , in addition to any and all annual equity incentive grants paid to members of the board.

For the years ended December 31, 2024 and 2023, Mustang recognized approximately $ 60,000 and $ 110,000 in expenses related to the advisory agreement, respectively, including $ 50,000 in expenses related to annual equity incentive grants in 2023.

Checkpoint Collaborative Agreements with TGTX

Checkpoint previously entered into various agreements with TGTX to develop and commercialize certain assets in connection with its licenses, including a collaboration agreement for some of the Dana Farber licensed antibodies, and a sublicense agreement for the Jubilant family of patents.

Effective September 30, 2023, Checkpoint and TGTX agreed to mutually terminate both the collaboration agreement and the sublicense agreement.

Shared Services Agreement with Journey

In November 2021, Journey and the Company entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees.

The Company’s Executive Chairman and Chief Executive Officer is the Executive Chairman of Journey.

Under the terms of the arrangement, Journey reimburses the Company for the salary and benefit costs associated with these employees based upon actual hours worked on Journey-related projects.

In addition, Journey reimburses the Company for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of Journey.

For the year ended December 31, 2024 and 2023, the Company’s employees have provided services to Journey totaling approximately $ 38,000 and $ 0.1 million, respectively.

At December 31, 2024, approximately $ 0.6 million is due from Journey, primarily related to reimbursable expenses incurred by Fortress on behalf of Journey.

Cyprium 9.375 % Series A Cumulative Redeemable Perpetual Preferred Stock Dividend Obligation

Pursuant to a private placement in August 2020, Cyprium sold shares of its 9.375 % Series A Cumulative Redeemable Perpetual Preferred Stock (“Cyprium PPS”);

as of December 31, 2024, there are 320,000 shares of Cyprium PPS outstanding.

The Cyprium PPS is fully and unconditionally guaranteed by Fortress.

If a PRV Sale has not occurred by March 31, 2026 (the “Exchange Date), the Cyprium PPS will automatically be exchanged for Fortress Series A Preferred Stock or cash, at the discretion of Fortress.

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

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The table below sets forth a reconciliation of the beginning and ending amount of unrecognized tax benefits:

For the year ended December 31, 2022, the company added $ 3.2 million of unrecognized tax benefits.

For the year ended December 31, 2024, the company has $ 3.2 million of unrecognized tax benefits.

If the $ 3.2 million of unrecognized tax benefits is recognized, approximately $ 0.7 million would affect the effective tax rate.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s recognized tax positions will significantly increase or decrease within the next 12 months.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s recognized tax positions

will significantly increase or decrease within the next 12 months.

At this time, the estimate of the range of the reasonably possible outcomes cannot be made.

The Company classifies interest and penalties related to uncertain tax positions as income tax expense.

The Company has accrued for $ 0.1 million and approximately $ 32,000 of such interest as of December 31, 2023 and 2022, respectively.

The Company has accrued for $ 0.2 million and approximately $ 0.1 million of such interest as of December 31, 2024 and 2023, respectively.

No penalties have been accrued for.

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Segment Information

The Company operates in two reportable segments, Dermatology Product Sales and Pharmaceutical and Biotechnology Product Development.

The accounting policies of the Company’s segments are the same as those described in Note 2.

The following tables summarize, for the periods indicated, operating results from continued operations by reportable segment:

Pharmaceutical

Biotechnology

The Company’s reportable segments for operating income (loss) for the years ending December 31, 2024 and 2023 consist of the following:

Year Ended December 31, 2024

Cost of goods - product revenue

Product revenue, net

Collaboration revenue

Revenue - related party

Other revenue

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

Amortization of acquired intangible assets

Research and development

Research and development - licenses acquired

Selling, general and administrative

Other expense

Income tax expense

Pharmaceutical

Biotechnology

Loss recovery

Asset impairment

Total operating expenses

Loss from operations

Interest Income

Interest expense and financing fee

(Gain) loss on common stock warrant liabilities

Other income (expense)

Total other income (expense)

Loss before income tax expense

Income tax expense benefit

Segment net loss

Net loss attributable to NCI

Net loss attributable to Fortress

Intersegment activity 2 :

Research and development

Selling, general and administrative

Other Significant Items:

Depreciation expense

Additions to intangible assets

Segment Assets

Stock-based compensation - research & development

Stock-based compensation - Selling, general and administrative

Includes Fortress and private subsidiaries primarily funded by Fortress, including Cellvation, Cyprium, Helocyte, Oncogenuity and Urica;

and intercompany eliminations.

Intersegment activity consists of PIK Dividends and MSA and equity fees paid by the subsidiaries to Fortress, see Note 16.

Year Ended December 31, 2023

Cost of goods - product revenue

Product revenue, net

Collaboration revenue

Revenue - related party

Other revenue

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

Amortization of acquired intangible assets

Research and development

Research and development - licenses acquired

Selling, general and administrative

Other expense

Asset impairment

Total operating expenses

Loss from operations

Interest Income

Interest expense and financing fee

Gain (loss) on common stock warrant liabilities

Other (Income) expense

Total other (Income) expense

Loss before income tax expense

Income tax (expense) benefit

The following tables summarize, for the periods indicated, total assets by reportable segment:

Pharmaceutical

($ in thousands)

Biotechnology

December 31, 2023

Intangible assets, net

Tangible assets

Total segment assets

Pharmaceutical

($ in thousands)

Biotechnology

December 31, 2022

Intangible assets, net

Tangible assets

Total segment assets

Segment net loss

Net loss attributable to NCI

Net loss attributable to Fortress

Intersegment Activity 2 :

Research and development

Research and development - licenses acquired

Selling, general and administrative

Other Significant Items:

Depreciation expense

Segment assets

Stock-based compensation - research & development

Stock-based compensation - Selling, general and administrative

Includes Fortress and private subsidiaries primarily funded by Fortress:

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

and intercompany eliminations.

Intersegment activity consists of PIK Dividends and MSA and equity fees paid by the subsidiaries to Fortress, see Note 16 .

Revenues from Contracts and Significant Customers

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All of Journey’s product revenues are recorded in the U.S.

During 2023, Journey received a one-time upfront license payment totaling $ 19.0 million from Maruho Ltd., its exclusive licensing partner in Japan (“Maruho”), under the license agreement Journey entered into with Maruho, dated August 31, 2023 (the “New License Agreement”) in which it granted Maruho exclusive rights to Qbrexza in Korea and other Asian countries.

The Company’s collaboration revenue is from Cyprium’s agreement with Sentynl (see Note 3).

The Company’s related party revenue is from Checkpoint’s collaborations with TGTX (see Note 16).

The Company’s revenue - related party is from Checkpoint’s collaborations with TGTX (see Note 16).

The table below summarizes the Company’s revenue for the years ended December 31, 2024 and 2023:

Year Ended December 31,

($ in thousands)

Other / legacy product revenue

Collaboration revenue

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Total net revenue

Other revenue for the year ended December 31, 2023, includes royalties on sales of Rapifort® Wipes 2.5% (“Rapifort”) in Japan, from Maruho, Journey’s exclusive out-licensing partner in Japan, and also reflects a net $ 19.0 million payment from Maruho under the New License Agreement.

Other revenue for the year ended December 31, 2022, included a net $ 2.5 million milestone payment from Maruho Co., Ltd, upon receipt of marketing and manufacturing approval for Rapifort, as well as $ 0.2 million in royalties from Maruho on sales of Rapifort in Japan.

Other revenue for the year ended December 31, 2024, reflects a $ 1.0 million milestone payment from Cutia triggered by the marketing approval Cutia received in the fourth quarter of 2024 for topical 4% minocycline foam in China (see Note 7) .

Other revenue for the year ended December 31, 2023 , includes $ 0.5 million of royalties on sales of Rapifort in Japan from our licensing partner Maruho, from Maruho, and also reflects a net $ 19.0 million payment from Maruho under the New License Agreement (see Note 7).

Significant Customers

For the years ended December 31, 2023 and 2022, none of Journey’s Dermatology Products customers accounted for more than 10.0% of its total gross product revenue.

For the year ended December 31, 2023, one of Journey’s customers accounted for more than 10% of its total accounts receivable balance at 13 %.

For the year ended December 31, 2022, two of Journey’s Dermatology Products customers accounted for more than 10% of its total accounts receivable balance at 16.7 % and 10.4 %.

For the years ended December 31, 2024 and 2023, none of Journey’s Dermatology Products customers individually accounted for more than 10.0% of its total gross product revenue.

For the year ended December 31, 2024, one of Journey’s Dermatology Products customers accounted for more than 10% of its total accounts receivable balance at 10.3 %.

For the year ended December 31, 2023, one of Journey’s Dermatology Products customers accounted for more than 10% of its total accounts receivable balance at 13.0 %.

Subsequent Events

January 2024 Private Placement - Avenue

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 1,940,299 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 “Inducement Letters”) 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 14,600,000 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 $ 1.55 per share, and the November 2023 Warrants had an exercise price of $ 0.3006 per share.

Pursuant to the Inducement Letters, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $ 0.3006 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $ 0.3006 , in each case in consideration for Avenue’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 16,540,299 shares of Avenue Common Stock and (y) Series B Warrants to purchase up to 16,540,299 shares of Avenue Common Stock.

The gross proceeds to Avenue from the exercise of the warrants is approximately $ 5.0 million, before deducting placement agent fees and estimated offering costs.

Registered Direct Offering – Checkpoint

In January 2024, Checkpoint closed on a registered direct offering (the “January 2024 Registered Direct Offering”) with a single institutional investor for the issuance and sale of 1,275,000 shares of its common stock and 6,481,233 Pre-Funded Warrants.

Each Pre-Funded Warrant was exercisable for one share of Checkpoint common stock.

The Checkpoint common stock and the Pre-Funded Warrants were sold together with common stock warrants (the “January 2024 Common Warrants”) to purchase up to 7,756,233 shares of Checkpoint common stock, at a purchase price of $ 1.805 per share of common stock and $ 1.8049 per Pre-Funded Warrant.

The Pre-Funded Warrants are funded in full at closing except for a nominal exercise price of $ 0.0001 and are exercisable commencing on the closing date and will terminate when such Pre-Funded Warrants are exercised in full.

The 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 January 2024 Registered Direct Offering were $ 12.8 million after deducting commissions and other transaction costs.

As of March 19, 2024, 2,661,233 Pre-Funded warrants from the January 2024 Registered Direct Offering were fully exercised.

Nasdaq Hearing Panel Meeting - Avenue

On February 15, 2024, Avenue met with the Nasdaq Hearings Panel regarding the outstanding Nasdaq deficiencies and on March 11, 2024, the Nasdaq Hearings Panel informed Avenue that it granted Avenue's request for an extension until May 20, 2024 to demonstrate compliance with the Stockholders' Equity Requirement and Minimum-Bid Price Requirement.

Avenue is considering all options available to it to regain compliance with these rules;

however, there can be no assurance that Avenue will be able to evidence compliance with the Stockholders' Equity Requirement and the Minimum-Bid Price Requirement within the extension period granted by the Panel.

Registered Direct Offering – Fortress

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.

Net proceeds to Fortress, after deducting the placement agent’s fees and other offering expenses, were approximately $ 10.2 million.

As a result of the foregoing transactions and as of the date of this filing, the Company believes it has stockholders’ equity of at least $2.5 million and therefore satisfies the minimum Nasdaq listing requirement set forth in Nasdaq Listing Rule 5550(b)(1).

Checkpoint Merger Agreement

On March 9 , 2025, Checkpoint entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sun Pharmaceutical Industries, Inc., a Delaware corporation (“Sun Pharma” or “Parent”), and Snoopy Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”).

The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Parent, Merger Sub and Checkpoint will effect

a merger of Merger Sub with and into Checkpoint (the “Merger”), with Checkpoint continuing as the surviving corporation of the Merger and a wholly owned subsidiary of Parent.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock and each share of Class A common stock of Checkpoint (collectively, the “Shares”) (including each unvested Checkpoint restricted share) outstanding immediately prior to the Effective Time will be canceled and cease to exist and be converted into the right to receive (i) $ 4.10 in cash, without interest (the “Common Cash Amount”), and (ii) one non-tradable contingent value right (a “CVR”), which will represent the right to receive a contingent cash payment of up to $ 0.70 upon the achievement of specified milestones, subject to and in accordance with the terms and conditions set forth in a Contingent Value Rights Agreement, substantially in the form attached as Exhibit B to the Merger Agreement (the “CVR Agreement”), as further described below (the foregoing clauses (i) and (ii), the “Merger Consideration”), in each case subject to applicable withholding taxes.

Consummation of the Merger is subject to customary closing conditions, including, but not limited to:

(i) the adoption of the Merger Agreement and approval of the Merger by (a) the affirmative vote of the holders of at least a majority of the outstanding Shares beneficially owned by Checkpoint stockholders other than (1) Fortress and its controlled affiliates (other than Checkpoint ), (2) the members of the Checkpoint board of directors (the “Checkpoint Board ”) (and their controlled affiliates, if any) and (3) any person that Checkpoint has determined to be an “officer” of Checkpoint within the meaning of Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) (the “Unaffiliated Checkpoint Stockholders”), and (b) the affirmative vote of the holders of a majority in voting power of outstanding the Shares;

(ii) expiration or early termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, without the imposition of any burdensome condition;

(iii) absence of any law or order prohibiting or making illegal the consummation of the Merger ;

and (iv) no Checkpoint material adverse effect having occurred that is continuing.

The consummation of the Merger is also conditioned upon each of the Support Agreement , the Transition Services Agreement , the Royalty Agreement , and the CVR Agreement (in each case, as defined below) being in full force and effect.

The Merger Agreement contains customary representations, warranties and covenants made by each of Parent, Checkpoint and Merger Sub, including, among others customary covenants regarding the operation of the business of Checkpoint prior to the Effective Time , and “no-shop” restrictions regarding certain alternative acquisition proposals or discussions with third parties.

The Merger Agreement includes customary termination rights for the parties, including that, subject to certain limitations, Checkpoint or Parent may terminate the Merger Agreement prior to the Effective Time if:

(i) a governmental body issues or enacts a final and non-appealable order, injunction or other legal requirement prohibiting or making illegal the consummation of the Merger, (ii) if the Effective Time has not occurred on or prior to 11:59 p.m.

Eastern Time on September 5, 2025 or (iii) the stockholders of Checkpoint fail to adopt the Merger Agreement by the requisite majorities at a meeting of Checkpoint’s stockholders at which a vote on the Merger is conducted.

Checkpoint may terminate the Merger Agreement in certain additional limited circumstances, including to allow Checkpoint to enter into an agreement providing for an alternative acquisition transaction that constitutes a Superior Proposal (as defined in the Merger Agreement).

Parent may terminate the Merger Agreement in certain additional limited circumstances, including if the Checkpoint Board , or any committee thereof, including the Special Committee of the Checkpoint Board, withdraws, withholds, amends or qualifies or modifies, in each case, in a manner adverse to Parent or Merger Sub, its recommendation that the stockholders of Checkpoint vote to adopt the Merger Agreement and approve the Merger.

Upon termination of the Merger Agreement under certain specified circumstances, Checkpoint will be required to pay Parent a termination fee (the “Checkpoint Termination Fee”) of $ 12.5 million .

Specifically, the Checkpoint Termination Fee is payable if (i) the Merger Agreement is terminated in certain circumstances;

(ii) prior to such termination (but after the date of the Merger Agreement) a bona fide proposal for an alternative acquisition transaction has been publicly disclosed or otherwise made to the Checkpoint Board and not publicly withdrawn (if made publicly);

and (iii) within one year of such termination, Checkpoint subsequently consummates an alternative acquisition transaction or enters into a definitive agreement providing for an alternative acquisition transaction and such transaction is ultimately consummated.

The Checkpoint Termination Fee will also be payable if the Merger Agreement is terminated:

(a) by Parent, if Checkpoint Board , or any committee thereof, including the Special Committee of the Checkpoint Board, withdraws, withholds, amends or qualifies or modifies, in each case, in a manner adverse to Parent or Merger Sub, its recommendation that the stockholders of Checkpoint vote to adopt the Merger Agreement and approve the Merger;

or (b) by Checkpoint in order to enter into an agreement providing for an alternative acquisition transaction that constitutes a Superior Proposal.

CVR Agreement

Pursuant to the Merger Agreement, as of or prior to the Effective Time, Parent and a rights agent (the “Rights Agent”) will enter into the CVR Agreement governing the terms of the CVRs issued in connection with the Merger.

The Rights Agent will maintain an up-to-date register of the holders of CVRs (the “Holders”).

Holders shall not be permitted to transfer the CVRs (subject to certain limited exceptions as set forth in the CVR Agreement).

Each CVR represents the right to receive one of the following contingent cash payments, without interest, subject to any applicable withholding taxes (such applicable payment, the “Milestone Payment”), conditioned upon the achievement of the corresponding milestone condition within the following specified time periods:

(i) $ 0.70 , if the Milestone (as defined below) is first achieved on or prior to the date that is 12 months prior to Milestone Deadline Date (as defined below) and the applicable regulatory approval provides for a dosing schedule of once every three weeks,

(ii) $ 0.45 , if the Milestone is first achieved on or prior to the date that is 12 months prior to the Milestone Deadline Date and the applicable regulatory approval provides for a dosing schedule that is more frequent than once every three weeks,

(iii) $ 0.45 , if the Milestone is first achieved after the date that is 12 months prior to the Milestone Deadline Date but on or prior to the Milestone Deadline Date, and the applicable regulatory approval provides for a dosing schedule of once every three weeks, or

(iv) $ 0.20 , if the Milestone is first achieved after the date that is 12 months prior to the Milestone Deadline Date but on or prior to the Milestone Deadline Date, and the applicable regulatory approval provides for a dosing schedule that is more frequent than once every three weeks.

As used in the CVR Agreement, (a) the “Milestone Deadline Date” means the date that is 36 months after the date on which a marketing authorization application or equivalent for cosibelimab receives a positive validation outcome by the European Medicines Agency (the “EMA”) and (b) the “Milestone” means the receipt of regulatory approval of (i) cosibelimab in the European Union pursuant to the centralized approval procedure or (ii) any of Germany, France, Italy, Spain or the United Kingdom.

Parent (directly or through its affiliates) is obligated to use, and to obligate its licensees to use, certain specified commercially reasonable efforts to (i) file a marketing authorization application for cosibelimab with the EMA within 12 months of the Closing Date or, to the extent any feedback or communications from, or expectations or requirements of, the EMA (including additional trial requirements) make it impracticable or inadvisable to file such marketing authorization application within such time period, as promptly thereafter as practicable, and (ii) achieve the Primary Milestone (as defined in the CVR Agreement) in its then-maximum value as promptly as practicable (including timely filing any appeals and curing any deficiencies identified in a relevant marketing authorization application by the relevant regulatory authority).

Parent’s obligations to use such commercially reasonable efforts terminates on the earlier of (a) the Milestone Deadline Date and (b) the achievement of the Milestone.

There can be no assurance that the Milestone will be achieved on or before the Milestone Deadline Date, or that any Milestone Payments will be made.

Support Agreement

Concurrently with the execution of the Merger Agreement , Checkpoint entered into a Support Agreement (the “ Support Agreement ”) with Parent and Fortress.

Under the terms of the Support Agreement, Fortress has agreed to, among other

things, during the term of the Support Agreement , (i) vote its Shares in favor of the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated by the Merger Agreement , and against any acquisition proposal or any action, proposal, agreement, transaction or arrangement that is intended, or would reasonably be expected, to result in a material breach of a covenant, representation or warranty or any obligation of Checkpoint under the Merger Agreement or any of the conditions to Checkpoint ’s obligations under the Merger Agreement not being fulfilled or satisfied, (ii) not transfer its Shares (subject to certain exceptions), and (iii) waive and not to exercise any appraisal rights in respect of such Shares that may arise with respect to the Merger and not to commence or participate in, any class action or legal action (a) challenging the validity of, or seeking to enjoin or delay the operation of any provision of the Merger Agreement or (b) with respect to claims against the Checkpoint Board , or any committee thereof, Parent of Merger Sub relating to the Merger Agreement or the transactions contemplated thereby.

Under the Support Agreement , subject to the occurrence of the Effective Time , Fortress also agreed to forgo any further payment, dividend or distribution, or issuance or transfer of securities by Checkpoint on or after the date of the Support Agreement pursuant to the Amended and Restated Founders Agreement, dated as of July 11, 2016, between Fortress and Checkpoint and certain other agreements between Fortress and Checkpoint.

The Support Agreement also includes certain representations and warranties and covenants of Fortress to Parent, including certain restrictive covenants that apply to Fortress following the Effective Time .

As of March 9, 2025, Fortress beneficially owned an aggregate of approximately 11.2 % of the outstanding Shares (consisting of 6,222,249 shares of common stock and 700,000 shares of Class A common stock) and controlled a majority of the outstanding voting power of Checkpoint ’s capital stock through its ownership of all outstanding shares of Checkpoint ’s Class A common stock.

The Support Agreement will terminate upon termination of the Merger Agreement , the Effective Time and certain other specified events.

Royalty Agreement

Concurrently with the execution of the Merger Agreement , Checkpoint entered into a Royalty Agreement (the “ Royalty Agreement ”) with Parent and Fortress pursuant to which following, and subject to the occurrence of, the Effective Time, Fortress will receive a royalty interest right based on worldwide net sales of certain products of Checkpoint and Parent.

The royalty interest right represents the right to receive quarterly cash payments of 2.5 % of net sales of such products during the time period set forth in the Royalty Agreement.

Transition Services Agreement

Pursuant to the Merger Agreement, as of or prior to the Effective Time, Checkpoint and Fortress will enter into a Transition Services Agreement (the “Transition Services Agreement”), pursuant to which, from and after the Effective Time, Fortress would provide Checkpoint with certain transition services as set forth in the Transition Services Agreement, for the period of time and in exchange for the compensation set forth therein.

March 2025 Warrant Exercise – Checkpoint

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

February 2025 Public Offering - Mustang

In February 2025, Mustang closed on an equity offering of 2,657,807 shares of common stock (or common stock equivalent in lieu thereof ) and Series C-1 warrants to purchase up to 2,657,807 shares of common stock and Series C-2 warrants to purchase up to 2,657,807 shares of common stock at a combined public offering price of $ 3.01 per share (or per common stock equivalent in lieu thereof).

The warrants have an exercise price of $ 3.01 per share and will be exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the warrants.

The Series C-1 warrants will expire five years from the date of stockholder approval and the Series C-2 warrants will expire twenty-four months from the date of stock holder approval.

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 were $ 6.9 million.

Lease Amendment – Mustang

In February 2025, Mustang concurrently exited the lease of its manufacturing facility in Worcester, Massachusetts, relocating their corporate headquarters to 95 Sawyer Road, Waltham, Massachusetts, and divested certain fixed assets including furniture and equipment to AbbVie Bioresearch Center, Inc.

for $ 1.0 million.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

17 unchanged sentences

( Principal Financial Officer and Principal Accounting Officer )

Rowinsky, M.D.

Vice Chairman of the Board of Directors

March 28, 2024

Rowinsky, M.D.

/s/ Michael S.

15 unchanged sentences

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 9A. Controls and Procedures