10-K: Fortress Biotech Narrows Losses, Boosted by Asset Sales

Fortress Biotech significantly reduced its net loss in 2025, driven by strategic asset monetizations and product approvals, despite ongoing operating losses and a paused preferred stock dividend.

Summary

• Net revenue increased by 10% to $63.3 million in 2025, primarily from Journey Medical's dermatology product sales.
• Net product revenue from Journey's commercial portfolio was $61.2 million in 2025, up from $55.1 million in 2024.
• Operating losses decreased by 36% to $70.2 million in 2025 from $110.4 million in 2024.
• Net income attributable to Fortress significantly improved to $6.8 million in 2025 from a net loss of $46.0 million in 2024.
• This improvement was largely due to a $27.1 million gain from the deconsolidation of Checkpoint Therapeutics and a $15.1 million increase in the fair value of Urica's equity interest in Crystalys.
• Research and development (R&D) expenses decreased by 79% to $11.9 million in 2025, mainly due to Checkpoint's deconsolidation and reduced costs at Urica and Mustang.
• Selling, general and administrative (SG&A) expenses increased by 10% to $96.4 million in 2025, driven by Checkpoint's stock-based compensation and Journey's Emrosi launch.
• Cash and cash equivalents stood at $79.4 million as of December 31, 2025.
• Accumulated deficit was $734.1 million at December 31, 2025.
• The company paused monthly dividend payments on its 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock in July 2024, with $12.0 million in undeclared dividends accumulated by December 31, 2025.
• FDA approval for ZYCUBO (copper histidinate) for Menkes disease was announced on January 13, 2026, with a Rare Pediatric Disease Priority Review Voucher (PRV) subsequently sold for $205 million on March 30, 2026.
• UNLOXCYT (cosibelimab-ipdl) received FDA approval in December 2024 and became commercially available in the U.S. in January 2026, following Checkpoint's acquisition by Sun Pharma in May 2025.
• Emrosi (minocycline hydrochloride extended-release capsules, 40mg) received FDA approval in November 2024 and launched commercially in March 2025.
• Avenue Therapeutics licensed ATX-04 (clenbuterol) for lysosomal storage diseases from Duke University in February 2026.
• Baergic Bio, a former Avenue subsidiary, was acquired by Axsome in November 2025, with Avenue eligible for future milestone payments and royalties.
• Mustang Bio received Orphan Drug Designation for MB-108 (HSV-1 oncolytic virus) in November 2024 and for MB-101 (IL13R2 CAR T cell therapy) in July 2025.
• Urica's dotinurad program saw Crystalys Therapeutics announce a $205 million Series A financing and the dosing of first patients in two global Phase 3 trials in October 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, reflecting significant financial improvements driven by strategic asset monetizations and product approvals, which substantially reduced net losses. However, persistent operating losses, the preferred dividend pause, and the delisting of a subsidiary temper the overall sentiment, indicating ongoing financial management challenges despite pipeline successes.

Positives

• Net income attributable to Fortress of $6.8 million in 2025, a significant improvement from a $46.0 million net loss in 2024.
• Operating losses decreased by 36% to $70.2 million in 2025.
• Net revenue increased by 10% to $63.3 million in 2025, driven by Journey Medical.
• FDA approval of ZYCUBO (CUTX-101) for Menkes disease on January 13, 2026, and subsequent sale of its PRV for $205 million.
• FDA approval of UNLOXCYT (cosibelimab-ipdl) in December 2024 and its commercial launch in January 2026.
• FDA approval of Emrosi in November 2024 and its commercial launch in March 2025, generating $14.7 million in incremental revenue in 2025.
• Significant reduction in R&D expenses by 79% to $11.9 million in 2025.
• Urica's dotinurad program secured $205 million Series A financing for global Phase 3 trials.
• Mustang Bio received Orphan Drug Designation for MB-108 and MB-101.
• Recovery of $4.6 million in funds related to a 2021 cybersecurity incident at Journey Medical.
• Sublease agreement for New York, NY office space expected to generate $11.8 million in base rent payments.

Negatives

• Continued operating losses, despite a reduction, totaling $70.2 million in 2025.
• Accumulated deficit of $734.1 million as of December 31, 2025.
• Pause of monthly dividend payments on Series A Preferred Stock since July 2024, with $12.0 million in undeclared dividends.
• Ineligibility to file new short-form registration statements on Form S-3 due to paused preferred stock dividends, making future capital raises potentially more costly and dilutive.
• Accutane revenue decreased by $6.5 million due to lower sales volume and market competition.
• Journey's sales of legacy products decreased due to lower unit volumes driven by generic competition.
• CAEL-101 Phase 3 clinical program did not achieve statistical significance for the primary endpoint, though a prespecified subgroup showed improvement.
• Avenue Therapeutics' common stock was delisted from Nasdaq in July 2025 and now trades on the OTC Markets.
• Mustang Bio terminated its MB-106 license with Fred Hutch due to unpaid patent expenses and maintenance fees.
• The company is subject to financial covenants under the New Oaktree Agreement, including minimum liquidity and Journey's net sales, and a capital raise test.

Risks

• Most product candidates are in early development stages, requiring substantial capital, testing, and regulatory approvals, with no guarantee of successful development or commercialization.
• History of operating losses and expectation of continued losses, impacting working capital, total assets, and stockholders' equity.
• Need for substantial additional capital, which may not be raised when needed, potentially delaying or eliminating R&D programs, commercialization efforts, or planned acquisitions.
• Existing debt obligations (Oaktree, SWK) may restrict operations, and default could materially adversely affect the business.
• Reliance on Journey Medical for the vast majority of operating income, making the company vulnerable to issues affecting Journey's dermatology products (supply chain, demand, manufacturing, safety, regulation, competition, reimbursement).
• Significant portion of Journey's sales from products without patent protection (Accutane, Targadox, Exelderm, Luxamend) or subject to generic competition.
• Risk of patent invalidation or successful challenges through litigation (e.g., Lupin's Paragraph IV certification against Emrosi).
• Dependence on third-party payor reimbursement, which is increasingly scrutinizing medical necessity and cost-effectiveness, potentially limiting product utilization and market share.
• Potential adverse effects from duties, tariffs, and other trade barriers, especially given imports from India.
• Collaborations or divestitures may reduce business size, scope, market share, or ability to compete, and failure to consummate transactions may impair asset value.
• Acting as guarantor/indemnitor for subsidiaries' obligations could require substantial payments or dilutive stock issuances.
• Reliance on third parties for manufacturing, clinical trials, and development reduces control and may lead to delays or increased costs.
• Inability to obtain and maintain sufficient patent protection or trade secret protection.
• Risk of costly and time-consuming litigation for intellectual property infringement or to enforce patents.
• Disputes with licensors could adversely affect the ability to develop and commercialize product candidates.
• If approved products do not achieve broad market acceptance, revenues will be limited.
• Approved products may be subject to post-marketing requirements, restrictions, or withdrawal due to adverse events.
• Potential product liability exposure from clinical trials and commercial sales.
• Operating in a heavily regulated industry, with potential adverse impacts from future legislation or administrative actions (e.g., drug pricing reforms like the IRA, government shutdowns).
• Risk of delisting from Nasdaq if continued listing standards are not met (Avenue already delisted).
• Computer system failures, cyber-attacks, or cybersecurity deficiencies could disrupt operations, lead to data loss, and incur significant costs.
• Inability to hire or retain key officers or employees.
• Risk of employee misconduct or improper activities.
• Volatility in the market price of securities.
• Sales of substantial numbers of common stock shares could adversely impact the price.
• Inability to manage anticipated growth from acquisitions.
• Catastrophic disasters could damage facilities or cause data loss.
• Limitations on the use of net operating loss carryforwards (NOLs) due to ownership changes.
• Compliance with environmental, health, and safety laws.
• Challenges with properly managing the use of artificial intelligence (AI) could adversely affect the business.
• Changes in funding for the FDA and other government agencies could delay product development.
• Increased costs and management time due to operating as a public company and maintaining internal controls.
• Provisions in corporate documents and Delaware law might discourage or delay changes in control.

Future Outlook

The company expects research and development costs to increase in 2026 with potential new in-licenses or acquisitions. It believes current cash and cash equivalents are sufficient to fund operations for at least the next 12 months but will require additional financing for full development, regulatory filings, and commercialization. The board intends to regularly revisit its decision regarding the monthly dividend on Series A Preferred Stock. Axsome intends to evaluate AXS-17 (formerly BAER-101) as a potential treatment for epilepsy. Avenue intends to advance ATX-04 through a late-stage clinical development program, initially focusing on Pompe disease. Helocyte anticipates topline data for its Phase 2 Triplex trial in HIV/CMV co-infected patients in the first half of 2026 and expects its Phase 2 stem cell transplant study to be completed in the first half of 2026. Mustang is exploring an investigator-sponsored trial for MB-109 in recurrent GBM and high-grade astrocytoma, potentially initiating in the second quarter of 2026.

Management Comments

• Our board of directors deemed the foregoing to be in the best interests of the Company and its common stockholders in light of the Company’s current and anticipated financial condition and outlook, and after considering its fiduciary duties to the Company’s common stockholders and other relevant factors.
• We believe that our current cash and cash equivalents will enable us to continue to fund operations in the normal course of business for at least the next 12 months from the filing of this Annual Report on Form 10-K.
• Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
• Our management team members have expertise in information systems, compliance and corporate governance, which we believe are disciplines that are effective in the management of the Company’s cybersecurity risk.

Industry Context

StockSavvy.ai notes that Fortress Biotech operates a diversified biopharmaceutical model, leveraging strategic partnerships and subsidiary spin-offs to advance a broad pipeline. The recent FDA approvals and asset monetizations (ZYCUBO PRV, Checkpoint acquisition) highlight the potential for significant non-dilutive funding and royalty streams, a common strategy in the biotech sector to de-risk development and generate capital. However, the reliance on Journey Medical's dermatology portfolio for current operating income and the challenges faced by products without patent protection reflect the intense competitive pressures and generic erosion prevalent in the pharmaceutical market. The pause in preferred dividends and delisting of Avenue underscore the financial volatility and capital intensity inherent in early-stage drug development, even for companies with multiple assets. The increasing scrutiny on drug pricing (IRA, "most-favored nation" policies) and evolving regulatory landscape (AI, Supreme Court decisions impacting agencies) represent broader industry headwinds that could affect future profitability and operational flexibility.

Comparison to Industry Standards

• The sale of Cyprium's Rare Pediatric Disease Priority Review Voucher (PRV) for $205 million is a strong monetization event, comparable to other high-value PRV sales in the industry, such as the $350 million sale of a PRV by Sarepta Therapeutics in 2019 or the $125 million sale by United Therapeutics in 2018, indicating a robust market for such regulatory incentives.
• Journey Medical's Emrosi, as the lowest approved oral minocycline hydrochloride dose for rosacea, positions it competitively against existing treatments like Oracea, which it demonstrated superiority over in Phase 3 studies.
• UNLOXCYT's approval as the first and only PD-L1 blocking antibody for metastatic or locally advanced cSCC positions it uniquely in a niche oncology market, similar to how other first-in-class immunotherapies have gained market traction.
• The CAEL-101 Phase 3 trial's failure to meet its primary endpoint, despite showing "highly clinically meaningful improvement" in a prespecified subgroup, is a common challenge in complex disease areas like AL amyloidosis, where trials often face high hurdles, similar to other amyloidosis drug development programs that have struggled with broad efficacy endpoints.
• The $205 million Series A financing for Urica's dotinurad program by Crystalys Therapeutics is a substantial early-stage funding round, reflecting strong investor confidence in the gout treatment market and the asset's potential, comparable to significant Series A rounds seen in other promising biotech ventures.

Corporate Governance

Legal Proceedings

• Journey Medical filed a patent infringement lawsuit on February 25, 2026, in the District Court for the District of Delaware against Lupin Limited, Lupin Inc., and Lupin Pharmaceuticals, Inc. regarding their filing of an ANDA seeking approval for a generic version of Emrosi. Journey intends to vigorously defend its intellectual property, triggering a 30-month stay of FDA approval for Lupin's ANDA.
• The University of Tennessee Research Foundation v. Caelum Biosciences, Inc. (UTRF Litigation) was settled on October 16, 2024. UTRF's claims for trade secret misappropriation were dismissed with prejudice, and Caelum agreed to an upfront payment and additional potential milestone-based payments to UTRF. Fortress and other sellers were explicitly released from indemnification obligations related to this litigation.

Related Party Transactions

• Fortress has Founders Agreements with its partner companies and subsidiaries, entitling it to annual PIK dividends (2.5% of fully-diluted outstanding capitalization) and equity fees (2.5% of gross equity/debt financing).
• Fortress has Management Services Agreements (MSAs) with certain partner companies/subsidiaries, providing advisory, consulting, and strategic services for an annual consulting fee (e.g., $500,000 for Avenue, Cellvation, Cyprium, Helocyte, Mustang, Oncogenuity, Urica).
• Fortress and its affiliates, including all members of Fortress's Board of Directors, are contractually exempted from fiduciary duties to each partner company/subsidiary relating to corporate opportunities.
• Under a Shared Services Agreement with TGTX, Fortress is reimbursed for salary and benefit costs of certain R&D employees ($0.8 million in 2025, $0.9 million in 2024).
• A Desk Share Agreement with TGTX requires TGTX to pay 65% of the average annual rent for Fortress's New York, NY office space ($1.8 million in 2025, $1.7 million in 2024).
• In November 2024, Fortress entered into a Subscription and Forgiveness Agreement with Avenue, converting 50% of $0.5 million owed by Avenue under the MSA into newly issued common stock of Avenue and forgiving the remaining 50%.
• Michael S. Weiss (Executive Vice Chairman, Strategic Development and Director) receives annual cash fees and equity incentive grants from Checkpoint (until deconsolidation in May 2025) and Mustang for advisory services as Chairman of the Board.
• Under a Shared Services Agreement with Journey, Journey reimburses Fortress for salary and benefit costs of certain employees and other selling, general and administrative costs ($43,000 in 2025, $38,000 in 2024).
• Fortress fully and unconditionally guarantees Cyprium's 9.375% Cumulative Redeemable Perpetual Preferred Stock (Cyprium PPS). The Cyprium PPS was redeemed in March 2026 for twice its liquidation preference plus accumulated dividends following the PRV sale.

Stakeholder Impact

• Shareholders (Common Stock): Face dilution risk from future equity raises but benefit from potential capital appreciation from successful product development and monetizations. No cash dividends are expected in the near future.
• Shareholders (Preferred Stock): Experience impact from the pause of monthly dividend payments since July 2024, with $12.0 million in undeclared dividends accumulated, affecting their expected income.
• Employees: Benefit from stock-based compensation plans designed to attract and retain qualified personnel. Cybersecurity risks could potentially impact employee data.
• Creditors (Oaktree, SWK): Are secured by company assets and subject to debt covenants. The recent PRV sale proceeds will be used for mandatory prepayments, reducing debt.
• Customers: Are impacted by the availability, pricing, and reimbursement policies of the company's products, particularly Journey's dermatology portfolio.
• Suppliers/Partners: The company's reliance on third-party manufacturers and CROs means their performance and compliance directly affect the company's operational timelines and product quality.

Next Steps

• Helocyte anticipates topline data for its Phase 2 Triplex trial in HIV/CMV co-infected patients in the first half of 2026.
• Helocyte anticipates its Phase 2 multicenter, double-blind, randomized, placebo-controlled study measuring the safety and effectiveness of Triplex in reducing CMV complications in patients previously infected with CMV and undergoing donor hematopoietic cell transplant to be completed in the first half of 2026.
• Mustang is exploring an investigator-sponsored single-institution trial for MB-109 in recurrent GBM and high-grade astrocytoma, potentially initiating in the second quarter of 2026.
• Avenue plans to initiate a Phase 3 safety study for IV tramadol in the future, subject to necessary financing.
• Avenue intends to advance ATX-04 through a late-stage clinical development program, initially focusing on Pompe disease.
• Crystalys Therapeutics is advancing global Phase 3 clinical studies for dotinurad.
• Fortress will need to raise additional funding for R&D, regulatory filings, and commercialization.
• Fortress Board intends to revisit the decision regarding the monthly dividend on Series A Preferred Stock regularly.
• Fortress will regain eligibility to use Form S-3 for capital raises once all accrued but unpaid dividends on Series A Preferred Stock are paid and timely payments resume.
• Fortress is evaluating the tax effect of the PRV sale and its ability to realize net operating loss carryforwards.

Key Dates

Recommendation

Fortress Biotech presents a mixed financial picture. While the significant reduction in net loss for 2025, driven by strategic asset monetizations like the ZYCUBO PRV sale and the Checkpoint acquisition, is a strong positive, the company continues to incur substantial operating losses and has paused preferred stock dividends, indicating ongoing cash flow challenges. The diversified pipeline and recent product approvals offer future growth potential, but the inherent risks of drug development, generic competition, and the need for further capital raises suggest a "hold" recommendation. Investors should monitor the progress of key pipeline assets, the company's ability to resume preferred dividends, and its overall liquidity management.

Keywords

Biopharmaceutical, Drug Development, SEC Filing, 10-K, Fortress Biotech, FBIO, Journey Medical, DERM, Mustang Bio, MBIO, Avenue Therapeutics, ATXI, Cellvation, Cyprium Therapeutics, Helocyte, Oncogenuity, Urica Therapeutics, Checkpoint Therapeutics, Sun Pharma, Axsome, AstraZeneca, Oaktree, FDA Approval, ZYCUBO, Menkes Disease, PRV, Priority Review Voucher, UNLOXCYT, cosibelimab-ipdl, cutaneous squamous cell carcinoma, Emrosi, rosacea, Dotinurad, gout, Triplex, cytomegalovirus vaccine, CAR T cell therapy, Glioblastoma, MB-101, MB-108, MB-109, IV Tramadol, ATX-04, clenbuterol, lysosomal storage diseases, Pompe disease, AJ201, SBMA, BAER-101, AXS-17, epilepsy, Clinical Trials, R&D, Intellectual Property, Patents, Generic Competition, Regulatory Approval, Financial Performance, Operating Losses, Debt, Capital Raise, Dividends, Nasdaq Delisting, Cybersecurity, Corporate Governance