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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35366

FORTRESS BIOTECH, INC.

(Exact name of registrant as specified in its charter)




Delaware	20-5157386
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1111 Kane Concourse Suite 301

Bay Harbor Islands, FL 33154

(Address including zip code of principal executive offices)

(781) 652-4500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Class	Trading Symbol(s)	Exchange Name
Common Stock	FBIO	Nasdaq Capital Market
9.375% Series A Cumulative Redeemable Perpetual Preferred Stock	FBIOP	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒



Class of Stock		Outstanding Shares as of May 11, 2026
Common Stock, $0.001 par value		33,219,072
9.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value		3,427,138

Table of Contents

FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	6
Item 1.	Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	49
Item 4.	Controls and Procedures	50

PART II.	OTHER INFORMATION	50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	88
Item 4.	Mine Safety Disclosures	88
Item 5.	Other Information	88
Item 6.	Exhibits	88

SIGNATURES		90

Table of Contents

SUMMARY OF RISK FACTORS

Our business is subject to risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risk factors, the risk factors described in Part 2, Item 1A, and the other reports and documents that we have filed with the Securities and Exchange Commission (“SEC”). As used below and throughout this filing (including in the risk factors described in Item 1A), the words “we”, “us” and “our” may refer to Fortress Biotech, Inc. individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.

Risks Inherent in Drug Development

●

Many of our product candidates are in early development stages and are subject to time and cost intensive regulation and clinical testing, which may result in the identification of safety or efficacy concerns. As a result, our product candidates may never be successfully developed or commercialized.

●

Our competitors may develop treatments for our products’ target indications, which could limit our product candidates’ commercial opportunity and profitability.

Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities

●

We have a history of operating losses and expect such losses to continue in the future.

●

We have funded our operations in part through the assumption of debt, and our applicable lending agreements may restrict our operations. Further, the occurrence of any default event under an applicable loan document could adversely affect our business.

●

Our research and development (“R&D”) programs will require substantial additional capital, which we may be unable to raise as needed and which may impede our R&D programs, commercialization efforts, or planned acquisitions.

●

Our board of directors has paused payments of dividends on our preferred stock, and there can be no assurance that monthly dividend payments will be resumed in a timely manner, or at all.

●

If we raise additional capital by issuing equity, equity-linked securities or securities convertible into or exercisable for equity securities, our existing stockholders will be diluted.

Risks Pertaining to Our Existing Revenue Stream from Journey Medical Corporation (“Journey”)

●

Our operating income derives primarily from the sale of our partner company Journey’s dermatology products, particularly Emrosi, Qbrexza, Accutane, Amzeeq, Zilxi, Targadox, Exelderm, and Luxamend. Any issues relating to the manufacture, sale, utilization, or reimbursement of Journey’s products (including products liability claims) could significantly impact our operating results.

●

A significant portion of Journey’s sales derive from products that are without patent protection and/or are or may become subject to third party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse effect on our operating income. Four of Journey’s marketed products, Emrosi, Qbrexza, Amzeeq and Zilxi, currently have patent protection. Four of Journey’s marketed products, Accutane, Targadox, Exelderm, and Luxamend, do not have patent protection or otherwise are not eligible for patent protection. With respect to Journey products that are covered by valid claims of issued patents, such patents may be subject to invalidation, which would harm our operating income.

●

Continued sales and coverage, including formulary inclusion without the need for a prior authorization or step edit therapy, of our products for commercial sale will depend in part on the availability of reimbursement from third-party payors, including government payors. Third-party payors are increasingly examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy, and, accordingly, significant uncertainty exists as to the reimbursement status of current and newly approved therapeutics.

●

The Company’s business may be materially adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures implemented by the U.S. and other governments.

Risks Pertaining to Our Business Strategy, Structure and Organization

●

We have entered, and will likely in the future enter, into certain collaborations or divestitures which may cause a reduction in our business’ size and scope, market share and opportunities in certain markets, or our ability to compete in certain markets and therapeutic categories.

Table of Contents

●

We and our subsidiaries and partner companies have also entered into, and intend in the future to enter into, arrangements under which we and/or they have agreed to contingent dispositions of such companies and/or their assets. The failure to consummate any such transaction may impair the value of such companies and/or assets, and we may not be able to identify or execute alternative arrangements on favorable terms, if at all. The consummation of any such arrangements with respect to certain product candidates may also result in our eligibility to receive a lower portion of sales (if any) of resulting approved products than if we had developed and commercialized such products ourselves.

●

Our growth and success depend on our acquiring or in-licensing products or product candidates and integrating such products into our businesses.

●

We may act as, and are likely to continue acting as, guarantor and/or indemnitor of certain obligations of our subsidiaries and partner companies, which could require us to pay substantial amounts in certain circumstances.

Risks Pertaining to Reliance on Third Parties

●

We rely heavily on third parties for several aspects of our operations, including manufacturing and developing product candidates, conducting clinical trials, and producing commercial product supply. Such reliance on third parties reduces our ability to control every aspect of the drug development process and may hinder our ability to develop and commercialize our products in a cost-effective and timely manner.

Risks Pertaining to Intellectual Property and Potential Disputes with Licensors Thereof

●

If we are unable to obtain and maintain patent protection for our technologies and products, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies and products similar or identical to ours, and our ability to successfully commercialize our technologies and products may be impaired.

●

We or our licensors may be subject to costly and time-consuming litigation for infringement of third-party intellectual property rights or to enforce our or our licensors’ patents.

●

Any dispute with licensors may affect our ability to develop or commercialize our product candidates.

Risks Pertaining to Generic Competition and Paragraph IV Litigation

●

Generic drug companies may submit applications seeking approval to market generic versions of our products.

●

In connection with these applications, generic drug companies may seek to challenge the validity and enforceability of our patents through litigation and/or with the United States Patent and Trademark Office (“PTO”). Such challenges may subject us to costly and time-consuming litigation and/or PTO proceedings.

●

As a result of the loss of any patent protection from such litigation or PTO proceedings, or the “at-risk” launch by a generic competitor of our products, our products could be sold at significantly lower prices, and we could lose a significant portion of product sales in a short period of time, which could adversely affect our business, financial condition, operating results and prospects.

Risks Pertaining to the Commercialization of Product Candidates, if Approved

●

If our product candidates, if approved, are not broadly accepted by the healthcare community, the revenues from any such products are likely to be limited.

●

We may not obtain the desired product labels or intended uses for product promotion, or favorable scheduling classifications desirable to successfully promote our products.

●

Even if a product candidate is approved, it may be subject to various post-marketing requirements, including studies or clinical trials, the results of which could cause such products to later be withdrawn from the market.

●

Any successful products liability claim related to any of our current or future product candidates may cause us to incur substantial liability and limit the commercialization of such products.

Risks Pertaining to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries

●

We operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations.

Table of Contents

General and Other Risks

●

We have previously failed to satisfy certain continued listing rules of The Nasdaq Stock Market LLC (“Nasdaq”), and if we again are unable to meet the continued listing requirements and/or regain compliance with such rules, our Common Stock and Preferred Stock may be subject to delisting from The Nasdaq Capital Market. The delisting of our Securities from the Nasdaq may decrease the market liquidity and market price of our Common Stock and Preferred Stock.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

($ in thousands except for share and per share amounts)


	March 31,		December 31,
	2026		2025
ASSETS
Current assets
Cash and cash equivalents	$	255,841	$	79,381
Accounts receivable, net		24,992		29,783
Inventory		9,292		9,624
Other receivables - related party		516		158
Prepaid expenses and other current assets		4,839		4,895
Total current assets		295,480		123,841

Property, plant and equipment, net		2,426		2,519
Operating lease right-of-use asset, net		11,822		12,302
Restricted cash		1,220		1,220
Equity investments, at fair value		18,707		17,660
Intangible assets, net		26,479		27,605
Other assets		740		401
Total assets	$	356,874	$	185,548

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	92,986	$	47,125
Income taxes payable		5,418		356
Common stock warrant liabilities		—		1
Operating lease liabilities, short-term		2,221		2,127
Partner company notes payable, short-term		2,500		—
Other current liabilities		268		135
Total current liabilities		103,393		49,744

Notes payable, long-term, net		36,878		52,417
Operating lease liabilities, long-term		12,028		12,672
Partner company redeemable perpetual preferred liability		—		7,085
Other long-term liabilities		2,201		1,447
Total liabilities		154,500		123,365

Commitments and contingencies (Note 14)

Stockholders’ equity (deficit)
Cumulative redeemable perpetual preferred stock, $0.001 par value, 15,000,000 authorized, 5,000,000 designated Series A shares, 3,427,138 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively, liquidation value of $25.00 per share		3		3
Common stock, $0.001 par value, 200,000,000 shares authorized, 33,186,671 and 31,364,094 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		33		31
Additional paid-in-capital		785,851		783,891
Accumulated deficit		(623,679)		(734,052)
Total stockholders' equity attributed to the Company		162,208		49,873

Non-controlling interests		40,166		12,310
Total stockholders' equity		202,374		62,183
Total liabilities and stockholders' equity	$	356,874	$	185,548

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

($ in thousands except for share and per share amounts)


	Three Months Ended March 31,
	2026		2025
Revenue
Product revenue, net	$	15,921	$	13,139
Other revenue		117		—
Net revenue		16,038		13,139

Operating expenses
Cost of goods - (excluding amortization of acquired intangible assets)		6,218		4,790
Amortization of acquired intangible assets		1,126		1,065
Research and development		540		3,938
Selling, general and administrative		15,893		25,663
Total operating expenses		23,777		35,456
Loss from operations		(7,739)		(22,317)

Other income (expense)
Interest income		570		490
Interest expense and financing fee		(3,368)		(2,805)
Gain on sale of priority review voucher, net of expenses		158,873		—
Change in fair value of partner company derivative liability		(7,085)		—
Gain (loss) on common stock warrant liabilities		1		(47)
Other income (expense)		1,042		(12)
Total other income (expense)		150,033		(2,374)
Income (loss) before income tax expense		142,294		(24,691)

Income tax expense		5,132		—
Net income (loss)		137,162		(24,691)

Attributable to non-controlling interests		(26,789)		14,107
Net income (loss) attributable to Fortress	$	110,373	$	(10,584)

Preferred A dividends declared and paid and/or cumulated, and Fortress' share of subsidiary deemed dividends		(2,008)		(2,131)
Net income (loss) attributable to common stockholders	$	108,365	$	(12,715)

Net income (loss) per common share attributable to common stockholders - basic	$	3.44	$	(0.48)
Net income (loss) per common share attributable to common stockholders - diluted	$	2.82	$	(0.48)

Weighted average common shares outstanding - basic		31,540,595		26,450,218
Weighted average common shares outstanding - diluted		38,412,716		26,450,218

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity

($ in thousands except for share amounts)

For the Three Months Ended March 31, 2026


		Series A										Additional						Total
		Preferred Stock					Common Stock					Paid-In			Accumulated			Non-Controlling			Stockholders’
		Shares		Amount			Shares		Amount			Capital			Deficit			Interests			Equity
Balance as of December 31, 2025		3,427,138		$	3		31,364,094		$	31		$	783,891		$	(734,052)		$	12,310		$	62,183
Stock-based compensation expense		—			—		—			—			1,756			—			—			1,756
Issuance of common stock related to equity plans		—			—		1,128,281			1			(1)			—			—			—
Exchange of partner company preferred shares		—			—		—			—			(165)			—			—			(165)
Issuance of common stock under partner company’s ESPP		—			—		—			—			148			—			—			148
Exercise of warrants		—			—		694,296			1			1,217			—			—			1,218
Partner company’s exercise of options for cash		—			—		—			—			72			—			—			72
Non-controlling interest in partner companies		—			—		—			—			(1,067)			—			1,067			—
Attributable to non-controlling interest		—			—		—			—			—			—			26,789			26,789
Attributable to common stockholders		—			—		—			—			—			110,373			—			110,373
Balance as of March 31, 2026		3,427,138		$	3		33,186,671		$	33		$	785,851		$	(623,679)		$	40,166		$	202,374

For the Three Months Ended March 31, 2025


		Series A																Total
		Preferred Stock					Common Stock					Paid-In			Accumulated			Non-Controlling			Stockholders’
		Shares		Amount			Shares		Amount			Capital			Deficit			Interests			Equity (Deficit)
Balance as of December 31, 2024		3,427,138		$	3		27,908,839		$	28		$	763,573		$	(740,867)		$	(24,381)		$	(1,644)
Stock-based compensation expense		—			—		—			—			6,289			—			—			6,289
Issuance of common stock related to equity plans		—			—		1,096,564			1			(1)			—			—			—
Exchange of partner company preferred shares		—			—		—			—			(150)			—			—			(150)
Issuance of common stock for at-the-market offering, net		—			—		539,563			1			1,008			—			—			1,009
Partner companies' offerings, net + warrant exercises		—			—		—			—			44,908			—			—			44,908
Partner companies' at-the-market offering, net		—			—		—			—			6,740			—			—			6,740
Issuance of common stock under partner company’s ESPP		—			—		—			—			99			—			—			99
Partner company’s dividends declared and paid		—			—		—			—			(166)			—			—			(166)
Partner company’s exercise of options for cash		—			—		—			—			75			—			—			75
Exercise of warrants for cash		—			—		10,000			—			17			—			—			17
Non-controlling interest in partner companies		—			—		—			—			(48,724)			—			48,724			—
Attributable to non-controlling interest		—			—		—			—			—			—			(14,107)			(14,107)
Attributable to common stockholders		—			—		—			—			—			(10,584)			—			(10,584)
Balance as of March 31, 2025		3,427,138		$	3		29,554,966		$	30		$	773,668		$	(751,451)		$	10,236		$	32,486

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

($ in thousands)


	Three Months Ended March 31,
	2026		2025
Cash Flows from Operating Activities:
Net income (loss)	$	137,162	$	(24,691)
Reconciliation of net income (loss) to net cash used in operating activities:
Depreciation expense		93		126
Bad debt expense		30		195
Amortization of debt discount		1,455		295
Gain on termination of partner company lease		—		(394)
Amortization of acquired intangible assets		1,126		1,065
Settlement of partner company payables		(76)		(701)
Reduction in the carrying amount of operating lease right-of-use assets		480		485
Stock-based compensation expense		1,756		6,289
Change in fair value of investment		(1,047)		—
Change in fair value of partner company derivative liability		7,085		—
Change in fair value of partner companies' warrant liabilities		(1)		47
Increase (decrease) in cash and cash equivalents resulting from changes in operating assets and liabilities:
Accounts receivable		4,761		(7,989)
Inventory		332		1,935
Other receivables - related party		(358)		(138)
Prepaid expenses and other current assets		56		2,376
Other assets		(339)		265
Accounts payable and accrued expenses		45,937		1,251
Income taxes payable		5,062		20
Lease liabilities		(550)		(589)
Other long-term liabilities		887		590
Net cash provided by (used in) operating activities		203,851		(19,563)

Cash Flows from Investing Activities:
Proceeds from sale of property and equipment		—		1,165
Net cash provided by investing activities		—		1,165

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

($ in thousands)


	Three Months Ended March 31,
	2026		2025
Cash Flows from Financing Activities:
Proceeds from issuance of common stock for at-the-market offering, net	$	—	$	1,009
Proceeds from issuance of common stock under ESPP		—		99
Exercise of warrants for cash		1,218		17
Proceeds from partner companies' ESPP		148		—
Partner company’s dividends declared and paid		—		(166)
Exchange of partner company preferred shares		(165)		(150)
Redemption of partner company preferred shares		(14,170)		—
Proceeds from partner companies' equity offerings and warrant exercises, net		—		45,218
Proceeds from partner companies' at-the-market offering, net		—		6,740
Proceeds from exercise of partner company's options, net		72		—
Repayment of Oaktree Note and debt issuance costs		(14,494)		—
Repayment of partner company installment payments - licenses		—		(625)
Net cash provided by (used in) financing activities		(27,391)		52,142
Net increase in cash and cash equivalents and restricted cash		176,460		33,744
Cash and cash equivalents and restricted cash at beginning of period		80,601		58,815
Cash and cash equivalents and restricted cash at end of period	$	257,061	$	92,559

Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,759	$	3,324

Supplemental disclosure of non-cash financing and investing activities:
Unpaid partner company’s offering cost	$	—	$	235

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Description of Business

Fortress Biotech, Inc. (“Fortress” or the “Company”) is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holding and dividend and royalty revenue streams. Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. The Company has executed arrangements in partnership with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy’s Laboratories, Ltd., and Sun Pharmaceutical Industries Limited (“Sun Pharma”).

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and financial expertise to help its subsidiaries and partner companies achieve their goals. Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. To date, three partner companies are publicly-traded, and four subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”), Sentynl Therapeutics, Inc. (“Sentynl”), Axsome Therapeutics, Inc. (“Axsome”), and Sun Pharma.

Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Journey Medical Corporation (Nasdaq: DERM, “Journey”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc. (OTC: ATXI, “Avenue”), Cellvation, Inc. (“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), LemmaTx, Inc. (“LemmaTx”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). Checkpoint Therapeutics, Inc. (“Checkpoint”), previously a partner company, was acquired by Sun Pharma in May 2025. Baergic Bio, Inc. (“Baergic”), previously a subsidiary of Avenue, was acquired by Axsome in November 2025.

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. Generally, “subsidiary” refers to a private Fortress subsidiary, “partner company” refers to a public Fortress subsidiary, and “partner” refers to an entity with whom one of the foregoing parties has a significant business relationship, such as an exclusive license or an ongoing product-related payment obligation. The context in which any such term is used throughout this document, however, may dictate a different construal from the foregoing.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

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. 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 agreements as described in Note 9. Current cash and cash equivalents as of March 31, 2026 of $209.9 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 this Quarterly Report on Form 10-Q. However, the Company may need to raise additional funding through strategic relationships, public or private equity or debt financings, sale of 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. 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.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited financial statements for the preceding fiscal year for each of Avenue, Mustang and Journey. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 31, 2026 (the “2025 Form 10-K”), from which the Company derived the balance sheet data at December 31, 2025, as well as Mustang’s Form 10-K, filed with the SEC on March 19, 2026, Avenue’s Form 10-K, filed with the SEC on March 30, 2026, and Journey’s Form 10-K, filed with the SEC on March 26, 2026.

The Company’s unaudited condensed consolidated financial statements include the results of the Company’s subsidiaries for which it has voting control but does not own 100% of the outstanding equity of the subsidiaries. For consolidated entities where the Company owns less than 100% of the subsidiary, but retains voting control, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations and presents non-controlling interests as a component of stockholders’ equity on its consolidated balance sheets. All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Use of Estimates

The preparation of the Company’s unaudited condensed 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 unaudited condensed 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 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 equity investments, 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.

Segment Reporting

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 16 for segment information.

Investment in Equity Securities

The Company invests in certain entities over which it holds significant influence but not control. Generally, such investments would be accounted for using the equity method of accounting. However, for those investments for which the Company has elected the fair value option, the Company measures such investments at fair value on the condensed consolidated balance sheet with subsequent changes in fair value recognized in other (income) expense, net on the Company’s condensed consolidated statement of operations. The Company elected the fair value option for certain investments that would otherwise have been accounted for using the equity method because the Company believes that fair value measurement provides more relevant information for users of its financial statements and is consistent with the Company’s investment strategy.

Restricted Cash

The Company records cash held in trust or pledged to secure certain debt obligations as restricted cash. As of March 31, 2026 and December 31, 2025, the Company had $1.2 million of restricted cash representing pledges to secure letters of credit in connection with certain office leases.

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


	March 31,
	2026		2025
Cash and cash equivalents	$	255,841	$	91,339
Restricted cash		1,220		1,220
Total cash and cash equivalents and restricted cash	$	257,061	$	92,559

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2025 Form 10-K.

Recently Issued Accounting Pronouncements

As of March 31, 2026, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2025 Form 10-K that affect the Company’s present or future results of operations, overall financial condition, liquidity, or disclosures upon adoption.

3. Asset Purchase and Merger Agreements

Cyprium Agreement with Sentynl

Cyprium is party to a development and asset purchase agreement with Sentynl, pursuant to which Sentynl assumed control of the development and commercialization of CUTX-101 (now marketed as ZYCUBO) in December 2023. In connection with such assumption by Sentynl, Cyprium received a $4.5 million payment and was no longer responsible for development activities. Cyprium is eligible to receive up to $128 million in aggregate sales-based milestone payments, as well as tiered royalties on net sales ranging from 3% to 12.5%.

Royalty revenue is recognized as the underlying sales occur in accordance with the sales- or usage-based royalty exception under ASC 606. For the three months ended March 31, 2026, Cyprium recognized $0.1 million in royalty revenue related to net sales of ZYCUBO.

In January 2026, the U.S. Food and Drug Administration (“FDA”) approved ZYCUBO for the treatment of Menkes disease in pediatric patients. In connection with the approval, a Rare Pediatric Disease priority review voucher (“PRV”) was issued and transferred to Cyprium.

In February 2026, Cyprium entered into an asset purchase agreement to sell the PRV (the “PRV APA”) for gross proceeds of $205 million. The transaction closed on March 30, 2026. In connection with the closing of the PRV sale, Cyprium is obligated to remit 20% of the gross proceeds, or $41 million, to the Eunice Kennedy Shriver National Institute of Child Health and Human Development (“NIH”) and 2.5% of gross proceeds, or $5.1 million, to a third-party pursuant to an agreement. These amounts are included in accrued expenses at March 31, 2026 (see Note 10). In addition, Cyprium is obligated to pay the third-party 4.0% of all royalty and milestone payments received in excess of an aggregate of $25.0 million, inclusive of certain specified prior payments.

In connection with the closing of the PRV sale, Cyprium’s preferred stock was automatically redeemed in accordance with its terms (see Note 15).

Checkpoint Transaction

In March 2025, the Company’s then-subsidiary Checkpoint entered into a merger agreement with Sun Pharma. The merger transaction under such agreement closed on May 30, 2025, resulting in the deconsolidation of Checkpoint. The Company received total cash proceeds of $28.0 million and recognized a gain on deconsolidation of $27.1 million after derecognizing Checkpoint’s net liabilities and noncontrolling interests. The Company determined that the transaction did not represent a strategic shift and therefore was not accounted for as a discontinued operation.

Pursuant to the merger, former Checkpoint shareholders received $4.10 in cash and one non-tradable contingent value right (“CVR”) per share. The CVRs entitle holders to contingent cash payments of up to $0.70 upon the achievement of specified regulatory milestones related to cosibelimab approval in certain European markets within defined time periods.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The Company accounted for the CVR as variable consideration that is constrained until the underlying milestones are achieved. As of March 31, 2026, no milestones have been met and no amounts have been recognized.

In connection with the transaction, Fortress is entitled to receive royalties equal to 2.5% of worldwide net sales of certain products under a royalty agreement with Sun Pharma. No royalty revenue was recognized during the three months ended March 31, 2026.

The Company also entered into a transition services agreement with Checkpoint, which ended in September 2025.

Urica Agreement with Crystalys Therapeutics, Inc. (“Crystalys”)

In July 2024, Urica entered into an asset purchase agreement and related agreements with Crystalys, pursuant to which Urica sold the rights to its dotinurad program and related intellectual property. In consideration, Urica received equity representing approximately 35% of Crystalys’ outstanding shares, subject to anti-dilution protections, with a minimum ownership of 15% until certain financing thresholds are met. Anti-dilution shares valued at $1.0 million were received in the three months ended March 31, 2026 (see Note 6). At March 31, 2026, Urica held approximately 15% of Crystalys’ fully diluted equity. The investment is accounted for under the equity method, for which the Company elected the fair value option.

The Company has the right to appoint a director to Crystalys’ board of directors. Urica is also entitled to a 3% secured royalty on future net sales of dotinurad; such royalties are considered variable consideration and are constrained, and no revenue has been recognized.

The agreements included a repurchase option allowing Urica to reacquire the assets for up to $6.4 million plus accrued interest. Prior to the expiration of this repurchase option, amounts received were recorded as a liability and accreted to the repurchase price, with accretion recognized as interest expense. For the quarter ended March 31, 2025, accretion of $0.7 million was included in interest expense and financing fees in the condensed consolidated statement of operations. In September 2025, upon the closing of Crystalys’ Series A financing, the repurchase option expired and the Company reversed the related $2.6 million liability, recognizing the amount as other income for the year ended December 31, 2025.

Avenue

Under a share repurchase agreement between Avenue and InvaGen Pharmaceuticals, Inc. (“InvaGen”) under which Avenue repurchased all of InvaGen’s shares in Avenue, Avenue agreed to pay InvaGen an additional amount as a contingent fee, payable in the form of seven and a half percent (7.5%) of the net proceeds of future financings, up to $4.0 million, which Avenue accounts for as a derivative. Due to the uncertainty related to future financings, the estimated fair value of the derivative is not material. Avenue recognizes changes in fair value within general and administrative expenses in the statement of operations. In connection with equity financings, in the three months ended March 31, 2025, Avenue made payments totaling $0.2 million to InvaGen. No such payments were owed or made for the quarter ended March 31, 2026. Approximately $1.4 million in aggregate has been paid by Avenue to InvaGen under the share repurchase agreement through March 31, 2026.

4. Inventory


	March 31,		December 31,
($ in thousands)	2026		2025
Finished goods	$	6,830	$	7,389
Work-in-process		584		174
Raw materials		4,258		3,057
Inventory at cost		11,672		10,620
Inventory reserve		(2,380)		(996)
Total inventories	$	9,292	$	9,624

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

5. Property and Equipment


		Useful Life			March 31,		December 31,
($ in thousands)		(Years)			2026		2025
Computer equipment			3		$	595	$	595
Furniture and fixtures			5			392		1,017
Leasehold improvements			15			5,470		5,470
Buildings			40			581		581
Total property and equipment						7,038		7,663
Impairment - Leasehold Improvements						(2,176)		(2,176)
Less: Accumulated depreciation						(2,436)		(2,968)
Property and equipment, net					$	2,426	$	2,519

Fortress' depreciation expense for the three months ended March 31, 2026 and 2025 was approximately $0.1 million and $0.1 million, respectively. Fortress’ depreciation expense is recorded in both research and development expense and selling, general and administrative expense in the condensed consolidated statement of operations.

6. Fair Value Measurements

Urica’s Equity Investment in Crystalys

Urica values its equity investment in Crystalys using a valuation technique based on significant unobservable inputs (Level 3 in the fair value hierarchy), including an option pricing model backsolve method. As of March 31, 2026, there were no changes in valuation methodology or significant assumptions from those used at December 31, 2025.

During the three months ended March 31, 2026, Urica received approximately 2.3 million additional shares in Crystalys pursuant to anti-dilution provisions, resulting in a $1.0 million increase in the carrying value of the investment. As of March 31, 2026, the total fair value of the Crystalys investment was $16.1 million. No impairments or other adjustments to fair value were recorded during the period. There are significant judgments and estimates inherent in the determination of the fair value, such as those regarding the selection of comparable companies used in estimating volatility, and the probability of possible future events. Such estimates involve inherent uncertainties and the application of significant judgment. Changes in judgements could have a material impact on our results of operations.

Fair Value of Aevitas

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 using level 3 inputs to be $2.6 million. The Company has not recognized any gains, losses, or impairments on the investment in 2026, 2025, or on a cumulative basis.

Common Stock Warrant Liabilities


		Warrant
($ in thousands)		liabilities
Balance at December 31, 2024		$	214
Change in fair value of common stock warrants - Avenue			(15)
Change in fair value of common stock warrants - Checkpoint			108
Deconsolidation of Checkpoint			(306)
Balance at December 31, 2025			1
Change in fair value of common stock warrants - Avenue			(1)
Balance at March 31, 2026		$	—

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Avenue

Avenue has previously issued freestanding warrants to purchase shares of its common stock in connection with financing activities. Avenue’s outstanding warrants to purchase common stock were originally issued in October 2022 (the “October 2022 Warrants”). The October 2022 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. In connection with the Avenue January 2023 registered direct offering 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 direct offering in January 2023. The Black-Scholes model was used to value the October 2022 Warrants and at March 31, 2026 and December 31, 2025 the liability associated with the October 2022 Warrants was nil and $1,000, respectively.

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:


	March 31,		December 31,
	2026		2025
Stock price	$ 0.29		$ 0.68
Risk-free interest rate	3.73	%	3.75	%
Expected dividend yield	—		—
Expected term in years	1.5		1.8
Expected volatility	187	%	151	%

Partner Company Derivative Liability

The partner company derivative liability associated with Cyprium’s 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock (“Cyprium PPS”) increased in fair value by $7.1 million during the three months ended March 31, 2026. The increase in fair value was due to the settlement of the derivative in connection with the redemption of the Cyprium PPS (Level 1) and the liability was extinguished in connection with the redemption of the PPS (see Note 15).

As of March 31, 2026, no transfers occurred between Level 1, Level 2, and Level 3 instruments.

7. Intangible Assets, net

The Company’s finite-lived intangible assets consist of intangible assets acquired by Journey. The table below provides a summary of the Journey intangible assets for the periods presented:


		Estimated Useful		March 31,			December 31,
($ in thousands)		Lives (Years)		2026			2025
Intangible assets – product licenses		3 to 15		$	52,925		$	52,925
Accumulated amortization					(23,303)			(22,177)
Accumulated Impairment loss					(3,143)			(3,143)
Net intangible assets				$	26,479		$	27,605

For the three months ended March 31, 2026 and 2025, Journey’s amortization expense related to its product licenses was $1.1 million and $1.1 million, respectively.

In December 2025, Journey received FDA approval for the anti-itch product acquired in 2020. Prior to FDA approval, the anti-itch product had been presented as an intangible asset not yet placed in service totaling $3.9 million. Journey began amortizing the anti-itch intangible asset in January 2026.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The future amortization of intangible assets is as follows:


		Total
For the years ended: ($ in thousands)		Amortization
Remainder of 2026		$	2,906
2027			3,338
2028			3,159
2029			3,159
2030			3,159
Thereafter			10,758
Total		$	26,479

8. License Agreements

Avenue

License for clenbuterol (“ATX-04”)

In February 2026, Avenue entered into a license agreement with Duke University (“Duke”), pursuant to which Avenue obtained an exclusive worldwide license (the "ATX-04 License") from Duke to certain patents and know-how pertaining to ATX-04, a selective β2-adrenergic agonist for Pompe disease, for the treatment of lysosomal storage diseases.

Under the ATX-04 License, Avenue made an upfront payment to Duke and has an obligation to make development, regulatory, and commercial milestone payments upon the achievement of certain milestones. In addition, Avenue is obligated to pay a tiered low single-digit royalty on future net sales of ATX-04.

Beginning with calendar year 2028 and until first regulatory approval, Avenue is obligated to make minimum annual royalty payments. In the event the ATX-04 License is terminated, minimum royalty obligations will cease, and Avenue will only be responsible for amounts due up to the termination date.

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 technological 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 technological feasibility and have no alternate use. For the three months ended March 31, 2026, there was a nominal amount of expense recognized by Avenue for the ATX-04 License.

AnnJi Pharmaceutical Co. Ltd. (“AnnJi”) License Termination

In April 2025, Avenue and AnnJi entered into a License Termination and Program Transfer Agreement, pursuant to which the prior license agreement for AJ201 was terminated, the parties dismissed all pending dispute resolution proceedings and provided mutual releases of claims, and Avenue transferred all rights to the program back to AnnJi. Avenue also agreed to a 48-month non-compete in specified territories.

In connection with the termination, Avenue repurchased shares previously issued to AnnJi for nominal consideration and paid $0.2 million for legal expense reimbursement, which was accounted for as consideration payable to a customer and reduced revenue recognized.

AnnJi agreed to pay Avenue $1.6 million (net of withholding taxes), which was recognized as revenue upon transfer of the underlying rights during the quarter ending June 30, 2025.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Avenue is also eligible to receive (i) up to $5.0 million in development and regulatory milestones, (ii) up to $17.0 million in commercial milestones, (iii) royalties of 1.75% on net sales of AJ201, subject to reduction in certain circumstances, and (iv) a share of sublicensing income, subject to specified caps and minimums. These amounts represent variable consideration and are constrained until the achievement of the specified milestones.

Journey

Journey holds global rights to Emrosi™ (Minocycline Hydrochloride Modified Release Capsules, 40 mg) pursuant to a license agreement with Dr. Reddy’s Laboratories, Ltd. (“DRL”), under which Journey has made upfront and milestone payments, including $15.0 million upon FDA approval in November 2024, at which time the licensed assets were assigned to Journey. Journey may be required to make additional regulatory and commercial milestone payments of up to $150.0 million and pays royalties ranging from 10% to 14% on net sales, subject to reduction in certain circumstances.

In 2022, Journey acquired Amzeeq® and Zilxi® from Vyne Therapeutics, Inc., including contingent sales-based milestone payments of up to $450.0 million. As part of the transaction, Journey assumed a license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), under which Cutia has rights to commercialize the products in Greater China and Journey supplies finished product and earns low single-digit royalties on net sales.

In August 2025, Journey commenced commercial supply of product to Cutia and recognized $40,000 of other revenue for the three months ended March 31, 2026 related to product sales.

9. Debt and Interest

Debt

Total debt consists of the following:


	March 31, 2026						December 31, 2025
	Fortress		Journey		Total		Fortress		Journey		Total
($ in thousands)	2024 Oaktree Note		SWK Term Loan		Notes Payable		2024 Oaktree Note		SWK Term Loan		Notes Payable
Notes payable, short-term	$	—	$	2,500	$	2,500	$	—	$	—	$	—
Notes payable, long-term		15,000		22,500		37,500		29,494		25,000		54,494
Total Notes Payable		15,000		25,000		40,000		29,494		25,000		54,494
Plus: Yield Protection Premium/Exit fee		150		1,250		1,400		295		1,250		1,545
Less: Debt discount		(1,145)		(877)		(2,022)		(2,649)		(973)		(3,622)
Total Notes Payable, net	$	14,005	$	25,373	$	39,378	$	27,140	$	25,277	$	52,417

As of March 31, 2026, the carrying value of the notes payable approximates their fair value as the interest rates are variable and approximate the market rates for loans with similar terms and risk characteristics.

2024 Oaktree Note

In July 2024, the Company entered into a $50.0 million senior secured credit agreement (the “2024 Oaktree Agreement”), as amended (the “New Oaktree Agreement”). The Company borrowed $35.0 million at closing and may draw up to an additional $15.0 million, subject to lender approval. The loans bear interest at a rate equal to the three-month SOFR plus 7.625% (subject to a 2.50% floor and 5.75% cap), have an interest-only period through maturity, and mature on June 30, 2028. At March 31, 2026, the interest rate applicable to the 2024 Oaktree Note was 11.3%. The Company is required to make quarterly interest-only payments until the maturity date, except 12.5% of the then-outstanding principal balance of the loans is due on September 30, 2027, 12.5% of the principal balance of the loans is due on December 31, 2027, 37.5% of the principal balance of the loans is due on March 31, 2028, with the remaining principal amount due on the maturity date.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The New Oaktree Agreement contained customary affirmative and negative covenants and financial covenants, including minimum liquidity, minimum net sales, capital raise requirements, and minimum ownership thresholds, each subject to specified thresholds and conditions. The Company’s obligations are secured by substantially all of its assets.

In February 2026, the Company entered into the Second Amendment to the New Oaktree Agreement, which modified certain financial covenants. Upon the occurrence of a Cyprium monetization event related to the sale of the PRV and if the outstanding principal balance is less than or equal to $15.0 million, the minimum liquidity requirement is reduced to $2.0 million and the minimum net sales, capital raise, and minimum ownership of Journey covenants are eliminated. These covenants are no longer applicable if the outstanding principal balance is less than or equal to $10.0 million.

The Second Amendment also required the Company to apply proceeds from a Cyprium monetization event to repay amounts advanced to Cyprium and to make a mandatory prepayment of $10.0 million, plus accrued interest and applicable fees, under the credit agreement.

During the three months ended March 31, 2026, the Company made aggregate prepayments on the loan, including the required monetization-related prepayment, reducing the outstanding principal balance to $15.0 million. As a result, the minimum liquidity requirement was reduced to $2.0 million, and the minimum net sales, capital raise, and minimum stake in Journey covenants are no longer applicable.

The Company was in compliance with all applicable financial covenants under the New Oaktree Agreement as of March 31, 2026.

SWK Term Loan

In December 2023, Journey entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date of the facility, Journey drew $15.0 million. In June 2024, Journey drew the remaining $5.0 million under the Credit Facility. In July 2024, Journey entered into an amendment (the “First Amendment”) to the Credit Agreement with SWK. The First 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 First Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to Journey receiving approval on or before June 30, 2025. Journey received FDA approval for Emrosi in November 2024 and drew on the remaining $5.0 million.

Term loans under the Credit Facility (“SWK Term Loans”) accrue interest, which is payable quarterly in arrears, and 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.

In September 2025, Journey entered into the Third Amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, extends the maturity date of Journey’s existing Credit Facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured based on the twelve months ended December 31, 2025, from $70.0 million to $60.0 million. Journey satisfied the $60.0 million Revenue-Based Payment provision as of December 31, 2025. Accordingly, the interest-only period under the Credit Facility was extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026. Thereafter, Journey will make quarterly principal payments equal to $2.5 million per quarter, or 10.0%, of the outstanding principal amount of the funded SWK Term Loans, with any remaining principal balance due on the maturity date.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Journey may at any time prepay the outstanding principal balance of the SWK Term Loans in whole or in part. Upon repayment in full of the SWK Term Loans, Journey will pay an exit fee equal to 5% of the original principal amount of the SWK Term Loans. Additionally, Journey paid an origination fee of $0.2 million on the closing date of the Credit Facility and incurred issuance costs of $0.2 million, both of which have been recorded as a debt discount. Journey is accreting the carrying value of the SWK Term Loans to the original principal balance plus the exit fee over the term of the loan using the effective interest method. The amortization of the discount is accounted for as interest expense. The effective interest rate on the SWK Term Loans as of March 31, 2026 was 14.1%.

The Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of Journey. As of March 31, 2026, Journey was in compliance with the financial covenants under the Credit Facility.

Interest Expense

Interest expense includes contractual interest, and fees include amortization of the debt discount and amortization of fees associated with loan transaction costs, amortized over the life of the loan. The following table shows the components of interest expense for all debt arrangements during the periods presented:


	Three Months Ended March 31,
	2026						2025
($ in thousands)	Interest		Fees		Total		Interest		Fees		Total
2024 Oaktree Note	$	833	$	1,506	$	2,339	$	1,046		193		1,239
Partner company notes payable		797		95		892		789		102		891
Partner company contingent call option accretion¹		—		—		—		677		—		677
Other		137		—		137		(2)		—		(2)
Total Interest Expense and Financing Fee	$	1,767	$	1,601	$	3,368	$	2,510	$	295	$	2,805

Note 1: Relates to Urica’s optional repurchase obligation to Crystalys (see Note 3), which expired in 2025.

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:


		March 31,			December 31,
($ in thousands)		2026			2025
Accounts payable		$	14,139		$	14,238
Accrued expenses:
Professional fees¹			6,971			1,055
Salaries, bonus and related benefits			7,381			7,880
Research and development			355			277
Accrued royalties payable			1,863			1,805
Accrued coupons and rebates			14,770			16,547
Return reserve			2,508			2,177
Cyprium payment owed to NIH²			41,000			—
Other³			3,999			3,146
Total accounts payable and accrued expenses		$	92,986		$	47,125

Note 1:

On March 30, 2026, Cyprium closed a sale of its PRV (the “PRV APA”) for gross proceeds of $205 million. Cyprium is obligated to pay 2.5% of the PRV APA proceeds, or $5.1 million, to a third-party pursuant to an agreement.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 2:

Cyprium is obligated to pay 20% of the PRV APA proceeds, or $41 million, to the Eunice Kennedy Shriver National Institute of Child Health and Human Development, an institute of the National Institutes of Health (“NIH”).

Note 3:

Includes approximately $1.3 million of accrued consideration for Mustang, including approximately $50,000 of accrued interest, related to Mustang’s obligation to repurchase assets from uBriGene (Boston) Biosciences, Inc. (“uBriGene”) in 2024. The asset repurchase consisted of purchase consideration of an upfront payment of $0.1 million, and a deferred amount of approximately $1.3 million due twelve months after closing; however, Mustang can elect to delay its payment obligation for the deferred amount for additional six-month periods, upon written notice to uBriGene, if Mustang’s net assets are below $20 million. Additionally, beginning in June 2025, the deferred amount began accruing interest at a rate of 5% per annum. In December 2025, Mustang’s net assets were below $20 million, and it elected to delay the payment.

11. Non-Controlling Interests

The Company’s ownership interests in its consolidated subsidiaries at March 31, 2026 was similar to December 31, 2025, with the exception of increases at the public subsidiaries that pay a Payment-in-Kind (“PIK”) dividend to Fortress (see Note 15): Avenue increased 3.1%, and Mustang increased 4.0%. Cyprium increased 6.5% due to the conversion of a portion of the intercompany note payable balance into equity during the quarter ended March 31, 2026 (see Note 15).

12. Net Income (Loss) per Common Share

Basic net income or loss per share attributed to common stockholders is calculated by dividing the net income or loss attributed to Fortress, less the Series A Preferred dividends and subsidiary deemed dividends, by the weighted-average number of shares of Common Stock outstanding during the period, not including unvested restricted stock and other potentially dilutive securities. Diluted net income (loss) per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, restricted stock units, and restricted stock using the treasury stock method, if dilutive. The impact of these items is anti-dilutive during periods of net loss.

For the three months ended March 31, 2026 and 2025, the effect on the net income (loss) per share calculation from Series A Preferred dividends (paid and cumulated but undeclared) (see Note 13) was $2.0 million and $2.0 million, respectively, and partner company preferred and deemed dividends were nil and $0.1 million, respectively.

The following potentially dilutive securities were excluded from the computation of net income (loss) per common share for the periods presented because their effect would have been anti-dilutive:



		March 31,
		2026	2025
Warrants to purchase Common Stock		8,280,725	14,396,201
Options to purchase Common Stock		—	18,896
Unvested Restricted Stock and deferred Restricted Stock		638,659	3,093,923
Unvested Restricted Stock units and deferred Restricted Stock units		1,506,455	2,436,705
Total		10,425,839	19,945,725

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The computation of basic and diluted net income (loss) per common share is as follows:


	Three Months Ended March 31,
($ in thousands, except share and per share amounts)	2026			2025
Net income (loss) attributable to common stockholders	$	108,365	$	(12,715)
Weighted average common shares outstanding - basic		31,540,595		26,450,218
Dilutive effect of potential common shares		6,872,121		—
Weighted average common shares outstanding - diluted		38,412,716		26,450,218

Net income (loss) per common share attributable to common stockholders - basic	$	3.44	$	(0.48)
Net income (loss) per common share attributable to common stockholders - diluted	$	2.82	$	(0.48)

13. Stockholders’ Equity

9.375% Series A Cumulative Redeemable Perpetual Preferred Stock Dividends

In July 2024, Fortress announced that the Company’s Board of Directors had paused the monthly dividend of $0.1953125 per share of the Company’s 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock (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 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.

During the three months ended March 31, 2026, no dividends were declared by the Board of Directors. 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 income (loss) attributable to common stockholders (see Note 12). As of March 31, 2026, the Company has total undeclared dividends of approximately $14.0 million, including the cumulated (but undeclared) dividends due to Series A Preferred shareholders for the three months ended March 31, 2026 and 2025 of $2.0 million and $2.0 million, respectively.

Stock-based Compensation

As of March 31, 2026, the Company had the following equity compensation plans: the Fortress Biotech, Inc. 2013 Stock Incentive Plan, as amended (the “2013 Plan”), the Fortress Biotech, Inc. 2012 Employee Stock Purchase Plan (the “ESPP”) and the Fortress Biotech, Inc. Long Term Incentive Plan (“LTIP”). As of March 31, 2026, approximately 7.3 million shares are available for issuance under the 2013 Plan, and approximately 0.9 million shares are available for issuance under the ESPP.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes the stock-based compensation expense from employee stock purchase programs and restricted Common Stock awards and warrants for the periods presented:


	Three Months Ended March 31,
($ in thousands)	2026		2025
Fortress:
Employee and non-employee awards	$	543	$	2,607
Executive awards		133		180

Partner Companies:
Avenue		61		185
Checkpoint		—		1,956
Mustang		22		38
Journey		989		1,323
Other		8		—
Total stock-based compensation expense	$	1,756	$	6,289


	Three Months Ended March 31,
($ in thousands)	2026		2025
Research and development	$	23	$	1,342
Selling, general and administrative		1,733		4,946
Total stock-based compensation expense	$	1,756	$	6,289

Restricted Stock and Restricted Stock Units

The following table summarizes Fortress restricted stock awards and restricted stock units activities, excluding activities related to Fortress subsidiaries and partner companies:


				Weighted
				average grant
		Number of shares		price
Unvested balance at December 31, 2025		3,841,748		$	3.62
Restricted stock granted		1,087,458			3.22
Restricted stock vested		(37,037)			17.55
Restricted stock units vested		(129,409)			22.45
Unvested balance at March 31, 2026		4,762,760		$	2.91

As of March 31, 2026 and 2025, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $8.8 million and $8.3 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 5.0 years and 2.1 years, respectively.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Amended and Restated Long-Term Incentive Program (“LTIP”)

On July 15, 2015, the Company’s stockholders approved the LTIP for the Company’s Chairman, President and Chief Executive Officer, Dr. Rosenwald, and Executive Vice Chairman, Strategic Development, Mr. Weiss (amended and restated with stockholder approval on June 7, 2017 and May 23, 2024). 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.

During the three months ended March 31, 2026 and 2025, the Compensation Committee granted 475,424 shares and 454,163 shares, respectively, to each of Dr. Rosenwald and Mr. Weiss under the Company’s Long-Term Incentive Plan (“LTIP”). Each grant represented approximately 1% of the Company’s total outstanding shares as of the respective grant dates.

The restricted shares vest upon the earlier of: (i) (A) the Company achieving a specified increase in market capitalization from the grant date and (B) the participant’s continued service through, or involuntary termination prior to, July 16, 2035 (for the 2026 grant) or July 16, 2025 (for the 2025 grant); or (ii) a change in control of the Company, provided the participant remains in service through the date of such transaction.

Unvested shares are subject to repurchase by the Company at a nominal price for a period of 90 days following the earlier of (i) the applicable service date described above or (ii) the participant’s voluntary termination of service.

The grant date fair value of these awards was approximately $1.5 million for the 2026 grants and $0.9 million for the 2025 grants. For the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense related to LTIP grants of approximately $12,000 and $2.5 million, respectively, in its unaudited condensed consolidated statements of operations.

Warrants

The following table summarizes Fortress warrant activities, excluding activities related to Fortress subsidiaries and partner companies:


							Total weighted			Weighted average
							average			remaining
		Number of		Weighted average			intrinsic			contractual life
		shares		exercise price			value			(years)
Outstanding as of December 31, 2025		13,431,502		$	2.21		$	—		3.55
Exercised		(694,296)			1.74			—		—
Outstanding as of March 31, 2026		12,737,206		$	2.24		$	9,227,711		3.30

During the three months ended March 31, 2026, 694,296 warrants were exercised for gross proceeds of $1.2 million. As of March 31, 2026, Fortress had no unrecognized stock-based compensation expense related to warrants.

Capital Raises

2024 Shelf

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 March 31, 2026, $42.1 million of securities were available for sale under the 2024 Shelf, subject to General Instruction I.B.6. of Form S-3, known as the “baby shelf rules,” which limit the number of securities that can be sold under registration statements on Form S-3. However, on July 5, 2024, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notice. As a result, the Company is not currently eligible to use Form S-3 and has lost the ability to use the 2024 Shelf.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

The Company will regain eligibility to use the 2024 Shelf on the date it files its next Annual Report on Form 10-K, so long as it has: (i) by that date, paid all accrued but unpaid dividends at that time and (ii) timely paid all dividends accruing since the end of the fiscal year to which such Form 10-K relates.

Because the Company is not currently eligible to use Form S-3 due to the failure to pay dividends on the Series A Preferred Stock, on April 1, 2025 the Company filed a post-effective amendment to certain prior Form S-3 registration statements to continue the registration of certain previously issued warrants. This post-effective amendment was declared effective by the SEC on April 2, 2025.

At the Market Offering

During the three months ended March 31, 2026, the Company did not issue any shares under the Company’s at-the-market offering program. During the three months ended March 31, 2025, the Company issued and sold approximately 0.5 million shares at an average price of $1.94 for net proceeds of $1.0 million under the Company’s at-the-market offering program. The at-the-market offering program is currently suspended as a result of the Company’s current ineligibility to use Form S-3 registration statements.

Checkpoint 2025 Warrant Exercises

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

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

Pursuant to the Company’s Founders Agreement with Checkpoint, Checkpoint issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the January 2025 warrant exercises noted above. Accordingly, Checkpoint issued 18,500 shares of common stock to Fortress in the three months ended March 31, 2025.

Avenue At the Market Offering

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) under which Avenue was able to offer and sell, from time to time at its sole discretion, up to $3.9 million of shares of its common stock. The offers and sales of the shares were made pursuant to Avenue’s Form S-3 registration statement declared effective in 2021, and the related prospectus supplement dated May 10, 2024. During the three months ended March 31, 2025, Avenue issued 0.9 million shares through the Avenue ATM for net proceeds of $2.1 million. Avenue is no longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on the Nasdaq effective July 18, 2025.

Pursuant to the Company’s Founders Agreement with Avenue, Avenue issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the offering noted above. Accordingly, Avenue issued 23,474 shares of common stock to Fortress for the three months ended March 31, 2025.

Mustang 2024 Shelf Registration Statement and At-the-Market Offering (the “Mustang ATM”)

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 March 31, 2026, approximately $34.2 million under the Mustang 2024 S-3 remains available for sales of securities, subject to General Instruction I.B.6. of Form S-3, known as the “baby shelf rules,” which limit the amount of securities it can sell under its registration statements on Form S-3 in any 12-month period.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

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 three months ended March 31, 2026, Mustang did not issue any shares in connection with its ATM agreement. For the three months ended March 31, 2025, Mustang issued approximately 54,000 shares through the Mustang ATM for net proceeds of approximately $0.6 million.

Mustang February 2025 Equity Offering

In February 2025, Mustang closed on an equity offering of (i) 495,000 shares of its common stock, par value $0.0001 per share (the “Shares”), (ii) pre-funded warrants to purchase up to an aggregate of 2,162,807 shares of common stock (the “Pre-Funded Warrant Shares), (iii) Series C-1 warrants (the “Series C-1 Warrants”) to purchase up to 2,657,807 shares of common stock, and (iv) Series C-2 warrants (the “Series C-2 Warrants”)to purchase up to 2,657,807 shares of common stock. Each Share or Pre-Funded Warrant was sold together with one Series C-1 Warrant to purchase one share of common stock and one Series C-2 Warrant to purchase one share of common stock. The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099. The Pre-Funded Warrants had an exercise price of $0.0001 per share, were exercisable immediately upon issuance and expired when exercised in full. Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the “Warrant Stockholder Approval”). The Series C-1 Warrants expire five years from the date of stockholder approval and the Series C-2 Warrants 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 offering, after deducting the fees and expenses of the placement agent in the transaction, and other offering expenses payable by Mustang, but excluding the net proceeds from the exercise of the Warrants, was approximately $6.8 million.

Pursuant to the Company’s Founders Agreement with Mustang, Mustang issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the equity offering and ATM sales noted above. Accordingly, Mustang issued 67,806 shares of common stock to Fortress for the three months ended March 31, 2025.

Journey 2022 Shelf Registration Statement and At-the-Market Offering

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “Journey 2022 S-3”), which was declared effective on January 26, 2023. The Journey 2022 S-3 covered the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of Journey’s common stock, preferred stock, debt securities, warrants, and units.

In August 2025, Journey executed a new At Market Issuance Sales Agreement (the “Journey 2025 ATM Sales Agreement”) with B. Riley Securities, Inc. and Lake Street Capital Markets, LLC (each, an “Agent” and together, the “Agents”) replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B. Riley. In accordance with the terms of the Journey 2025 ATM Sales Agreement, Journey may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

On January 15, 2026, Journey filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “Journey 2026 S-3”), which was declared effective by the SEC on January 21, 2026. This shelf registration statement covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of its common stock, preferred stock, debt securities, warrants, and units. The Journey 2026 S-3 replaces the Journey 2022 S-3. Sales under the Journey 2025 Sales Agreement since the effective date are made under the Journey 2026 S-3.

During the three months ended March 31, 2026, Journey did not issue any shares in connection with its ATM agreement. For the three months ended March 31, 2025, Journey issued approximately 0.8 million shares under the Journey 2025 ATM Sales Agreement for gross proceeds of approximately $4.1 million.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

14. Commitments and Contingencies

Leases

New York, NY Sublease - Fortress

On February 10, 2026, the Company entered into a sublease agreement with a third party to sublease all of its leased office space in New York, NY, consisting of approximately 23,000 square feet, under its existing lease with Sage Realty Corporation (the “Landlord”). The Company obtained the Landlord’s consent to the sublease, and the sublease commenced on March 15, 2026. The sublease expires on August 31, 2031.

Pursuant to the sublease agreement, the Company expects to receive approximately $11.9 million in aggregate base rent payments over the term of the sublease. The Company remains primarily liable for the obligations under the original lease.

For the three months ended March 31, 2026, the Company continued to recognize lease expense under the original lease agreement and recognized sublease income from the sublease commencement date of March 15, 2026. Sublease income is recognized on a straight-line basis over the sublease term. The Company has elected to present sublease income as a reduction of lease expense within the condensed consolidated statement of operations.

Lease Termination – Mustang

In February 2025, Mustang concurrently exited the lease of its manufacturing facility in Worcester, Massachusetts, relocating its 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. In connection with the lease termination, Mustang recorded a net gain on lease termination of $0.4 million recorded in research and development expenses on the condensed consolidated statement of operations.

During the three months ended March 31, 2026 and 2025, the Company recorded the following as lease costs for the periods presented:


		Three Months Ended March 31,

($ in thousands)		2026		2025
Lease Cost
Operating lease cost		$	714	$	748
Shared lease costs			(535)		(533)
Variable lease cost			75		189
Sublease income			(91)		—
Total lease expense		$	163	$	404

The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC Topic 842, Leases:


		Three Months Ended March 31,
($ in thousands)		2026			2025
Operating cash flows from operating leases		$	(782)		$	(852)
Weighted-average remaining lease term – operating leases (years)			3.2			3.7
Weighted-average discount rate – operating leases			6.2	%		6.1	%

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Notes to Unaudited Condensed Consolidated Financial Statements


		Future Lease
($ in thousands)		Liability
Nine months ended December 31, 2026			2,267
Year ended December 31, 2027			3,125
Year ended December 31, 2028			3,220
Year ended December 31, 2029			3,054
Year ended December 31, 2030			3,056
Other			2,058
Total operating lease liabilities			16,780
Less: present value discount			(2,531)
Net operating lease liabilities, short-term and long-term		$	14,249

Indemnification

In accordance with its certificate of incorporation, bylaws and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date, and the Company has director and officer insurance to address such claims. The Company and its subsidiaries and partner companies also provide indemnification of contractual counterparties (sometimes without monetary caps) to clinical sites, service providers and licensors.

Legal Proceedings

In the ordinary course of business, the Company and its subsidiaries and partner companies may be subject to both insured and uninsured litigation. Suits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and seeking resulting alleged damages.

15. Related Party Transactions

Founders Agreement

The Company has entered into Founders Agreements and, in some cases, exchange agreements with certain of its subsidiaries and partner companies as described in the 2025 Form 10-K. The following table summarizes, by partner company/subsidiary, the effective date of the Founders Agreements and Payment-in-Kind (“PIK”) dividend or equity fee payable to the Company in accordance with the terms of the Founders Agreements, exchange agreements, and the subsidiaries' or partner companies’ certificates of incorporation:


				PIK Dividend as
				a % of fully
				diluted
				outstanding		Class of Stock
Partner Company/Subsidiary		Effective Date ¹		capitalization		Issued
Avenue		February 17, 2015		2.5	%	Common Stock
Cellvation		October 31, 2016		2.5	%	Common Stock
Checkpoint		March 17, 2015		—	%²	Common Stock
Cyprium		March 13, 2017		2.5	%	Common Stock
Helocyte		March 20, 2015		2.5	%	Common Stock
LemmaTx		February 11, 2026 ³		2.5	%	Common Stock
Mustang		March 13, 2015		2.5	%	Common Stock
Oncogenuity		April 22, 2020 ³		2.5	%	Common Stock
Urica		November 7, 2017 ³		2.5	%	Common Stock

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Notes to Unaudited Condensed Consolidated Financial Statements

Note 1:

Represents the effective date of the Founders Agreement of each subsidiary/partner company. 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.

Note 2:

Instead of a PIK dividend, Checkpoint paid the Company an annual equity fee in shares of Checkpoint’s common stock equal to 2.5% of Checkpoint’s fully diluted outstanding capitalization. Due to the deconsolidation of Checkpoint in May 2025 related to the Sun Pharma transaction (see Note 3), Checkpoint no longer has this obligation to the Company.

Note 3:

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

Management Services Agreements

The Company has entered into Management Services Agreements (the “MSAs”) with certain of its partner companies/subsidiaries as described in the 2025 Form 10-K. The following table summarizes the effective date of each MSA and the annual consulting fee payable by the partner company/subsidiary to the Company in quarterly installments:



Partner Company/Subsidiary		Effective Date		Annual MSA Fee (Income)/Expense
Avenue		February 17, 2015		$	500
Cellvation		October 31, 2016			500
Checkpoint¹		March 17, 2015			—
Cyprium		March 13, 2017			500
Helocyte		March 20, 2015			500
LemmaTx²		February 11, 2026			442
Mustang		March 13, 2015			500
Oncogenuity		February 10, 2017			500
Urica		November 7, 2017			500
Fortress					(3,942)
Consolidated (Income)/Expense				$	—

Note 1:Checkpoint was acquired by Sun Pharma in May 2025 (see Note 3).

Note 2:Lemma’s MSA fee for the year ended December 31, 2026 is pro-rated for its 2026 effective date of its MSA.

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.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Shared Services Agreement with TG Therapeutics, Inc. (“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 also Executive Chairman and Chief Executive Officer of TGTX. Under the terms of the agreement, TGTX reimbursed 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 three months ended March 31, 2025, the Company invoiced TGTX $0.1 million related to this arrangement. There was no amount invoiced to TGTX under this arrangement for the three months ended March 31, 2026.

Desk Share Agreement with TGTX

The Desk Share Agreement between the Company and TGTX, as amended, required TGTX to pay 65% of the average annual rent for the Company’s New York, NY office space. In connection with the Company’s Desk Share Agreement with TGTX for the New York, NY office space, for the three months ended March 31, 2025, the Company had paid $0.7 million in rent, and invoiced TGTX approximately $0.5 million for their prorated share of the rent base.

On March 15, 2026, the Company and TGTX entered into an amendment to the Desk Share Agreement agreeing to an equal allocation of the costs associated with the New York, NY lease during the term of the sublease (see Note 14) to the extent the costs are not reimbursed or otherwise paid by the subtenant under the sublease agreement. In connection with the amended desk share agreement, for the three months ended March 31, 2026, the Company recognized $0.7 million in lease costs, recorded in selling, general and administrative expense in the condensed consolidated statement of operations, and $0.7 million in capitalized sublease costs, recorded to other assets on the Company’s condensed consolidated balance sheet. The Company invoiced TGTX approximately $0.8 million for its proportionate share of these lease costs. At March 31, 2026, there was $0.5 million due from TGTX related to the amended desk share agreement, recorded to other receivables – related party on the Company’s condensed consolidated balance sheet at March 31, 2026.

Cyprium Debt Conversion Agreement and Promissory Note Payoff

On January 26, 2026, the Company entered into a Debt Conversion Agreement with Cyprium, whereby the Company agreed to convert $5.0 million of a total of $11.7 million owed by Cyprium under a promissory note, as amended, into approximately 2.5 million newly issued common shares of Cyprium. In March 2026, subsequent to the closing of the PRV sale (see Note 3), Cyprium made payments to the Company of the outstanding balances under the intercompany note, including accrued interest, and accrued expenses owed to the Company.

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 three months ended March 31, 2025, Checkpoint recognized $32,000 in expense related to the advisory agreement, including $17,000 in expenses related to annual equity incentive grants. As Checkpoint was deconsolidated in May 2025 (see Note 3) there was no comparative expense in the three months ended March 31, 2026.

In January 2017, Mustang entered into an advisory agreement effective January 1, 2017 with Caribe 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 three months ended March 31, 2026 and 2025, Mustang recognized approximately $15,000 and $15,000, respectively, in expenses related to the advisory agreement.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Shared Services Agreement with Journey

On November 12, 2021, Journey and the Company entered into an arrangement to share the cost of certain employees. The Company’s Executive Chairman and Chief Executive Officer is also 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 following the completion of its 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 three months ended March 31, 2026 and 2025, the Company’s employees have provided services to Journey totaling approximately $13,000 and $12,000, respectively. At March 31, 2026, the Company’s total related party receivable due from Journey was $0.5 million, and primarily relates 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 320,000 shares of Cyprium PPS. The Cyprium PPS was fully and unconditionally guaranteed by Fortress.

Pursuant to the terms of the Cyprium PPS, holders of record were entitled to receive a monthly cash dividend of $0.19531 per share, or $2.34375 per share on an annual basis. The Cyprium PPS was required to be redeemed in cash upon the first bona fide, arm’s-length sale of a Priority Review Voucher (a “PPS PRV Sale”) issued by the FDA in connection with the approval of CUTX-101. Upon a PPS PRV Sale, each share of Cyprium PPS would automatically be redeemed for an amount equal to twice the $25.00 liquidation preference, plus accumulated and unpaid dividends to, but excluding, the redemption date. Beginning 24 months after issuance, holders had the right to elect an exchange of the Cyprium PPS, with settlement at Fortress’ election in cash or Fortress’ Series A Preferred Stock. A mandatory exchange, also settleable at Fortress’ election in cash or Fortress’ Series A Preferred Stock, occurred on September 30, 2024 for any investors who did not opt to waive such mandatory exchange mechanism. Specifically, in September 2024, Cyprium offered holders the opportunity to waive enforcement of, and extend the mandatory exchange date to March 31, 2026, and therefore remain eligible to receive the redemption price upon a PPS PRV Sale, and waive the optional exchange right (the “PPS Extension”). Holders of 283,400 shares of Cyprium PPS opted into the PPS Extension.

The Company accounted for the Cyprium PPS as a financing obligation and recorded the carrying amount in the consolidated balance sheets as partner company perpetual preferred liability of $7.1 million as of December 31, 2025.

In addition, the Company concluded that the redemption feature associated with a PPS PRV Sale required bifurcation as an embedded derivative (partner company derivative liability), with remeasurement to fair value at each reporting date. The fair value of the embedded derivative was not material historically. As of December 31, 2025, although the NDA for CUTX-101 had been resubmitted and assigned a new PDUFA date of January 14, 2026, following the October 2024 Complete Response Letter, significant uncertainty remained regarding whether approval would be obtained, whether a PRV would be issued, and whether a PPS PRV Sale could be executed on a timely basis on agreeable terms prior to the March 31, 2026 mandatory exchange date. As a result, the fair value of the partner company derivative liability remained immaterial as of December 31, 2025.

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

In February 2026, the Company, Cyprium and an undisclosed buyer entered into a definitive agreement to sell Cyprium’s PRV for $205 million. Cyprium recorded the increase in the fair value of the partner company derivative liability of $7.1 million. The Cyprium PPS was automatically redeemed for an amount equal to twice the $25.00 liquidation preference, pursuant to the terms of the Cyprium PPS, in the amount of $14.2 million which was comprised of the $7.1 million partner company perpetual preferred liability and the $7.1 million partner company derivative liability. In March 2026, the sale of the PRV closed (see Note 3).

16. Segment Information

The Company’s reportable segments for operating income (loss) for the three months ended March 31, 2026 and 2025 consist of the following ($ in thousands):


Three Months Ended March 31, 2026		Journey		Avenue		Mustang		Fortress¹		Consolidated
Product revenue, net		$	15,921	$	—	$	—	$	—	$	15,921
Other revenue			40		—		—		77		117
Net revenue			15,961		—		—		77		16,038

Cost of goods - (excluding amortization of acquired intangible assets)			6,218		—		—		—		6,218
Amortization of acquired intangible assets			1,126		—		—		—		1,126
Research and development			—		200		178		162		540
Selling, general and administrative			10,109		514		880		4,390		15,893
Total operating expenses			17,453		714		1,058		4,552		23,777
Loss from operations			(1,492)		(714)		(1,058)		(4,475)		(7,739)

Interest income			157		18		103		292		570
Interest expense and financing fee			(892)		—		—		(2,476)		(3,368)
Gain on sale of priority review voucher, net of expenses			—		—		—		158,873		158,873
Change in fair value of partner company derivative liability			—		—		—		(7,085)		(7,085)
Gain (loss) on common stock warrant liabilities			—		1		—		—		1
Other income (expense)			(3)		—		—		1,045		1,042
Total other income (expense)			(738)		19		103		150,649		150,033
Income (loss) before income tax expense			(2,230)		(695)		(955)		146,174		142,294

Income tax expense			—		—		—		5,132		5,132
Segment net income (loss)		$	(2,230)	$	(695)	$	(955)	$	141,042	$	137,162
Attributable to non-controlling interests											(26,789)
Net income attributable to Fortress										$	110,373

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Notes to Unaudited Condensed Consolidated Financial Statements


Three Months Ended March 31, 2026		Journey		Avenue		Mustang		Fortress¹		Consolidated
Intersegment activity²:
Research and development		$	—	$	63	$	63	$	(126)	$	—
Selling, general and administrative		$	—	$	63	$	63	$	(126)	$	—
Other Significant Items:
Change in fair value of equity method investment accounted for at fair value within other income		$	—	$	—	$	—	$	1,046	$	1,046
Segment assets		$	91,534	$	2,468	$	16,582	$	246,290	$	356,874
Stock-based compensation - Research & development		$	—	$	14	$	—	$	9	$	23
Stock-based compensation - Selling, general and administrative		$	989	$	47	$	22	$	675	$	1,733

Note 1:

Includes Fortress and private subsidiaries primarily funded by Fortress, including Cellvation, Cyprium, Helocyte, LemmaTx, Oncogenuity and Urica; and intercompany eliminations.

Note 2:

Segment activity consists of MSA fees paid by the subsidiaries to Fortress (see Note 15).


Three Months Ended March 31, 2025		Journey		Avenue		Checkpoint		Mustang		Fortress¹		Consolidated
Product revenue, net		$	13,139	$	—	$	—	$	—	$	—	$	13,139

Cost of goods - (excluding amortization of acquired intangible assets)			4,790		—		—		—		—		4,790
Amortization of acquired intangible assets			1,065		—		—		—		—		1,065
Research and development			39		411		3,788		(964)		664		3,938
Selling, general and administrative			10,569		1,494		7,361		1,217		5,022		25,663
Total operating expenses			16,463		1,905		11,149		253		5,686		35,456
Loss from operations			(3,324)		(1,905)		(11,149)		(253)		(5,686)		(22,317)

Interest income			149		32		1		100		208		490
Interest expense and financing fee			(891)		—		—		—		(1,914)		(2,805)
Gain (loss) on common stock warrant liabilities			—		15		(62)		—		—		(47)
Other expense			(7)		—		(2)		—		(3)		(12)
Total other income (expense)			(749)		47		(63)		100		(1,709)		(2,374)
Segment net loss		$	(4,073)	$	(1,858)	$	(11,212)	$	(153)	$	(7,395)	$	(24,691)
Attributable to non-controlling interests													14,107
Net loss attributable to Fortress												$	(10,584)

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FORTRESS BIOTECH, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements


Three Months Ended March 31, 2025		Journey		Avenue		Checkpoint		Mustang		Fortress¹		Consolidated
Intersegment activity²:
Research and development		$	—	$	63	$	—	$	63	$	(125)	$	—
Selling, general and administrative		$	—	$	117	$	178	$	279	$	(573)	$	—
Other Significant Items:
Segment assets		$	84,963	$	3,593	$	34,165	$	14,909	$	40,440	$	178,071
Stock-based compensation - Research & development		$	—	$	40	$	689	$	(11)	$	625	$	1,343
Stock-based compensation - Selling, general and administrative		$	1,323	$	145	$	1,267	$	50	$	2,161	$	4,946

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress, including Cellvation, Cyprium, Helocyte, Oncogenuity and Urica; and intercompany eliminations.

Note 2:

Segment activity consists of MSA and equity fees paid by the subsidiaries to Fortress (see Note 15).

17. Revenues from Contracts and Significant Customers

Disaggregation of Total Revenue

Journey has the following actively marketed products: Emrosi, Qbrexza, Amzeeq, Zilxi, Accutane, Exelderm, Targadox, and Luxamend. All of Journey’s product revenues are recorded in the U.S. Other revenue for the three months ended March 31, 2026 consists of $40,000 recognized by Journey related to the Cutia Agreement (see Note 8) and royalty revenue of $77,000 recognized by Cyprium related to the agreement with Sentynl (see Note 3).

The table below summarizes the Company’s net revenue for the periods presented:

Fortress Biotech, Inc. 10-Q