SCHEDULE 13D/A: Fortress Biotech Solidifies Control and Equity Stake in Avenue Therapeutics with Amended 13D Filing

Fortress Biotech, Inc. has filed an Amendment No. 7 to its Schedule 13D, updating its beneficial ownership in Avenue Therapeutics, Inc. to 10.3% and detailing its continued voting majority through Class A preferred stock and ongoing equity grants.

Summary

• Fortress Biotech, Inc. (the "Reporting Person") filed Amendment No. 7 to its Schedule 13D regarding its stake in Avenue Therapeutics, Inc. (the "Issuer").
• The Reporting Person beneficially owns 328,746 shares of the Issuer's common stock, representing 10.3% of all outstanding shares.
• This beneficial ownership includes 250,000 shares of the Issuer's Class A preferred stock, which are convertible into 222 shares of common stock.
• The Class A preferred stock grants Fortress Biotech a voting majority, as each share is entitled to 1.1 times a fraction based on outstanding common and convertible Class A shares, ensuring it always constitutes a voting majority.
• Fortress Biotech owns all outstanding shares of the Issuer's Class A preferred stock.
• The filing was triggered by the issuance of 33,724 shares of Issuer's common stock as "Offering Equity Grants" under the Founders Agreement.
• Under the Founders Agreement, Fortress Biotech receives an equity fee equal to 2.5% of the gross amount of any Issuer equity or debt financing (the "Offering Equity Grant").
• Additionally, under the Issuer's Third Amended and Restated Certificate of Incorporation (the "Charter"), Fortress Biotech annually receives shares of common stock equal to 2.5% of the Issuer's fully-diluted outstanding equity (the "Annual Equity Grant").
• Fortress Biotech also holds Warrants exercisable until July 15, 2035, for 296 shares of Issuer common stock, issued to its Chairman/President/CEO and Executive Vice Chairman.
• The percentage calculation is based on 3,149,702 shares of common stock as of March 28, 2025, plus assumed conversion of Class A preferred stock and the 33,724 Offering Equity Grants.

Sentiment

Score: 6

Explanation: The filing is largely neutral as it primarily serves as an update on beneficial ownership and control. The continued strong control by Fortress Biotech and the ongoing equity grants are positive for Fortress, but the filing itself does not contain new operational or financial news for Avenue Therapeutics that would significantly alter its sentiment.

Positives

• Fortress Biotech maintains a voting majority in Avenue Therapeutics through its Class A preferred stock, ensuring significant control over strategic decisions.
• Fortress Biotech continues to receive equity grants (2.5% of financing and 2.5% of fully-diluted equity annually), providing ongoing equity accumulation and a growing stake in Avenue Therapeutics.

Future Outlook

NA

Industry Context

This filing highlights a common structure in the biotechnology and pharmaceutical industry where a parent or founding entity maintains significant control and financial interest in a spin-off or portfolio company. This is often achieved through mechanisms like preferred stock with superior voting rights and ongoing equity grants tied to financing activities, allowing the parent to benefit from the subsidiary's growth and capital raises while retaining strategic oversight.

Corporate Governance

Legal Proceedings

• The Reporting Person has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) in the last five years.
• The Reporting Person has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in it being subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws in the last five years.

Related Party Transactions

• Fortress Biotech is party to an Amended and Restated Founders Agreement with Avenue Therapeutics, under which it receives equity fees (Offering Equity Grants) for financings and annual equity grants.
• Fortress Biotech issued Warrants for 296 shares of Avenue Therapeutics common stock to its Chairman, President, and CEO (Lindsay A. Rosenwald, M.D.) and Executive Vice Chairman (Michael S. Weiss), who are executives of the Reporting Person.

Stakeholder Impact

• Shareholders (Avenue Therapeutics): Existing common shareholders' voting power is diluted by the Class A preferred stock's superior voting rights and by the issuance of Offering Equity Grants and Annual Equity Grants. This also clearly identifies Fortress Biotech as a controlling shareholder.
• Fortress Biotech Shareholders: Benefit from the continued control and equity accumulation in Avenue Therapeutics, which is a subsidiary or portfolio company, potentially enhancing the value of Fortress Biotech's investment.

Next Steps

• Fortress Biotech will continue to receive annual equity grants (2.5% of fully-diluted outstanding equity) from Avenue Therapeutics as per the Issuer's Charter.
• Fortress Biotech will continue to receive equity fees (2.5% of gross amount) from Avenue Therapeutics for any future equity or debt financings as per the Founders Agreement.
• Warrants held by Fortress Biotech executives are exercisable until July 15, 2035.

Key Dates

Keywords

Fortress Biotech, Avenue Therapeutics, Schedule 13D, Beneficial Ownership, Class A Preferred Stock, Voting Control, Equity Grants, SEC Filing, Biotechnology, Pharmaceuticals, Corporate Governance