Fortress Biotech(FBIO) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, total net revenue was $14.6 million, a decrease from $34.8 million for the same period in 2023, primarily due to a one-time $19.0 million payment from Maruho in 2023[194] - For the nine months ended September 30, 2024, total net revenue was $42.6 million, down from $64.6 million in 2023, with net product revenue predominantly from Journey's dermatology portfolio[194] - In Q3 2024, the company reported net revenue of $14.6 million, a decrease of $20.1 million or 58% compared to $34.8 million in Q3 2023[215] - For the nine months ended September 30, 2024, the company generated $42.6 million in net revenue, a decrease of $22.0 million or 34% compared to $64.6 million in the same period of 2023[232] Product Revenue - Product revenue decreased by $0.7 million or 4%, primarily due to a $0.6 million decrease in net product revenue from legacy products[216] - Qbrexza net product revenue increased by $1.7 million or 29% to $7.6 million in Q3 2024, driven by additional volume from marketing efforts and expanded access[216] - Product revenue decreased by $1.9 million or 4% to $42.5 million, while collaboration revenue dropped to zero from $546,000 in the prior year[231] Operating Expenses - Operating expenses for Q3 2024 totaled $36.7 million, a reduction of $11.8 million or 24% from $48.5 million in Q3 2023[214] - Total operating expenses decreased by $58.2 million or 31% to $129.1 million from $187.3 million in the prior year[230] - Selling, general and administrative expenses decreased by $10.6 million, or 15%, from $71.5 million in 2023 to $60.9 million in 2024[244] - Fortress's selling, general and administrative expenses decreased by $3.9 million, or 22%, from $17.8 million in 2023 to $14.0 million in 2024[242] - JMC's selling, general and administrative expenses decreased by $3.9 million, or 12%, from $34.1 million in 2023 to $30.1 million in 2024[242] Research and Development - Research and development expenses decreased by $10.8 million or 53% to $9.4 million in Q3 2024 compared to $20.3 million in Q3 2023[214] - Research and development expenses were approximately $46.9 million for the nine months ended September 30, 2024, down 46% from $87.7 million in 2023[236] - The company expects research and development costs to remain lower in 2024 due to portfolio optimization and assets completing pivotal trials[240] - The decrease in research and development spending at Mustang was primarily due to a reduction in personnel-related costs of $12.5 million and a $7.4 million reduction in lab supplies[237] Net Loss - The company reported a net loss attributable to Fortress of $12.9 million in Q3 2024, an increase of $7.8 million or 155% from a net loss of $5.0 million in Q3 2023[214] - The net loss attributable to Fortress was $39.2 million, an improvement of $12.1 million or 24% compared to a net loss of $51.4 million in the same period of 2023[230] - The company reported a loss from operations of $86.5 million, which is an improvement of $36.2 million or 29% compared to a loss of $122.7 million in the previous year[230] Cash Flow and Financing - Cash and cash equivalents as of September 30, 2024, totaled $58.9 million, with Fortress holding $25.6 million[250] - Net cash used in operating activities decreased by $26.0 million from $93.3 million in 2023 to $67.3 million in 2024[252] - Net decrease in cash and cash equivalents was $22.4 million in 2024, compared to a decrease of $106.2 million in 2023[252] - Financing activities provided $44.8 million in 2024, a significant increase compared to a cash outflow of $10.9 million in 2023[252] - The company raised gross proceeds of $12 million in a registered direct offering in July 2024[206] Stock-Based Compensation - Total stock-based compensation expense increased by $2.5 million, or 23%, from $11.0 million in 2023 to $13.5 million in 2024[246] - Stock-based compensation expense in research and development increased by $361, or 42%, from $855 in Q3 2023 to $1.2 million in Q3 2024[222] - Stock-based compensation expense in selling, general and administrative increased by $1.8 million, or 52%, from $3.5 million in Q3 2023 to $5.4 million in Q3 2024[227] Legal and Compliance - The company’s disclosure controls and procedures were evaluated as effective as of September 30, 2024[282] - No changes in internal control over financial reporting occurred during the most recent quarter that materially affected internal controls[283] - There are no reportable events or material developments regarding legal proceedings for the quarter ended September 30, 2024[284] - The company may be subject to litigation in the ordinary course of business, but no material adverse effects on financial condition are expected[284] Product Development and Approvals - Cosibelimab's Biologics License Application is under FDA review with a PDUFA goal date of December 28, 2024, following positive long-term data presented at the ESMO Congress 2024[195] - Emrosi (DFD-29) received FDA approval for treating rosacea, with initial supply expected in late Q1 or early Q2 2025, supported by successful Phase 3 clinical trials[196] - Triplex, a CMV vaccine, is in a Phase 2 clinical trial with topline data expected in Q4 2024, funded by a NIH/NIAID grant potentially exceeding $20 million[199]