SCHEDULE: Fortress Biotech Reduces Mustang Bio Stake Below 5%

Fortress Biotech, Inc. has reported a decrease in its beneficial ownership of Mustang Bio, Inc. common stock, falling below the 5% threshold as of September 29, 2025.

Summary

• Fortress Biotech, Inc. (Reporting Person) filed an Amendment No. 6 to its Schedule 13D regarding its ownership in Mustang Bio, Inc. (Issuer).
• As of September 29, 2025, Fortress Biotech ceased to beneficially own more than five percent of Mustang Bio's common stock.
• Fortress Biotech now beneficially owns 258,858 shares of Mustang Bio's common stock, representing 4.0% of all outstanding shares.
• This includes 250,000 shares of Class A preferred stock, which are convertible into 333 shares of common stock.
• Fortress Biotech holds sole voting power over all 258,858 shares.
• The Class A preferred stock grants Fortress Biotech a voting majority in Mustang Bio.
• Fortress Biotech receives annual PIK Dividends in common stock, equal to 2.5% of Mustang Bio's fully-diluted outstanding capitalization.
• The filing also notes the issuance of 59,334 shares of Mustang Bio common stock to Fortress Biotech as Offering Equity Grants under a Founders Agreement.
• Warrants for 1,333 shares of Mustang Bio common stock are held by Fortress Biotech's Chairman, President, and CEO, Dr. Lindsay A. Rosenwald, and Executive Vice Chairman, Michael S. Weiss, exercisable until July 15, 2035, at $110.25 per share.

Sentiment

Score: 6

Explanation: The filing is largely neutral, reporting a change in beneficial ownership due to a threshold being crossed. The continued strategic influence of Fortress Biotech through preferred stock and ongoing equity grants are positive for Fortress, while the reduction below 5% is a factual reporting event rather than a negative performance indicator. The high warrant exercise price could be a long-term positive if the stock appreciates significantly, but is currently out of the money.

Positives

• Fortress Biotech continues to hold a significant strategic position in Mustang Bio through its Class A preferred stock, which ensures a voting majority.
• Fortress Biotech benefits from annual PIK Dividends, receiving additional common stock equal to 2.5% of Mustang Bio's fully-diluted capitalization.
• Fortress Biotech received 59,334 shares of Mustang Bio common stock as Offering Equity Grants, indicating ongoing financial arrangements.

Negatives

• Fortress Biotech's beneficial ownership of Mustang Bio common stock has fallen below the 5% threshold, which could be perceived as a reduction in direct equity exposure.

Risks

• The exercise price of $110.25 for the warrants held by Fortress executives is significantly higher than typical current biotech stock prices, potentially indicating a long-term bet or a historical price point that may not be realized.

Future Outlook

The filing does not provide explicit forward-looking statements or guidance regarding Mustang Bio's future operations or financial performance, focusing instead on the reporting person's ownership structure.

Management Comments

• Sole Voting Power includes 1,333 shares of Issuer's common stock underlying Warrants and 250,000 shares of the Issuer's Class A preferred stock (both of which are described further below).
• The Issuer's Class A preferred stock is identical to its common stock other than as to voting rights, conversion rights and the PIK Dividend right.
• Thus, the Class A preferred stock will at all times constitute a voting majority.
• The Reporting Person owns all outstanding shares of the Issuer's Class A preferred stock.
• Mr. Weiss has served Chairman of the Issuer's Board of Directors since May 2015 and as the Executive Chairman since January 2017. Dr. Rosenwald has served as a member of the Issuer's Board of Directors since the Issuer's conception.

Industry Context

This filing primarily concerns a change in beneficial ownership reporting threshold for a biotech company. While it doesn't directly address broader industry trends, the continued strategic involvement of Fortress Biotech, a company focused on acquiring, developing, and commercializing pharmaceutical and biotechnology products, suggests ongoing interest in Mustang Bio's therapeutic pipeline. The structure of preferred stock with significant voting rights and PIK dividends is a common mechanism for strategic investors to maintain influence and receive returns in early-stage or developing biotech firms.

Comparison to Industry Standards

• NA

Corporate Governance

Related Party Transactions

• Fortress Biotech receives an equity fee (Offering Equity Grant) from Mustang Bio, equal to 2.5% of any equity or debt financing, as per the Founders Agreement.
• Warrants for 1,333 shares of Mustang Bio common stock were issued by Fortress Biotech to its Chairman, President, and CEO (Dr. Lindsay A. Rosenwald) and Executive Vice Chairman (Michael S. Weiss), who also hold positions on Mustang Bio's board.

Stakeholder Impact

• Shareholders (Mustang Bio Common): Potential for dilution due to PIK Dividends issued to Fortress Biotech and Offering Equity Grants. Fortress Biotech's continued voting majority via preferred stock means common shareholders have less influence.
• Fortress Biotech (as a shareholder of Mustang Bio): Maintains strategic control and receives ongoing equity benefits despite a reduced direct common stock percentage.

Next Steps

• Fortress Biotech will continue to receive PIK Dividends in common stock on each January 1, as long as Class A preferred stock is outstanding.
• The Warrants held by Fortress executives are exercisable until July 15, 2035.

Key Dates

Recommendation

The filing primarily reports a change in beneficial ownership due to a reporting threshold being crossed, rather than a fundamental shift in the company's operations or financial health. Fortress Biotech maintains significant strategic control over Mustang Bio through its Class A preferred stock and continues to receive equity grants and PIK dividends. This indicates ongoing strategic alignment and investment, but the reduction in direct common stock ownership below 5% is a neutral event for the broader market. Without additional operational or financial updates from Mustang Bio, a 'hold' recommendation is appropriate, reflecting no immediate catalyst for significant price movement based solely on this ownership update.

Keywords

Fortress Biotech, Mustang Bio, SEC Filing, Schedule 13D/A, Beneficial Ownership, Common Stock, Class A Preferred Stock, Voting Rights, PIK Dividends, Equity Grants, Warrants, Biotechnology, Investment