On May 17, 2021 Fortress Biotech, Inc. (NASDAQ: FBIO) ("Fortress"), an innovative biopharmaceutical company focused on acquiring, developing and commercializing or monetizing promising biopharmaceutical products and product candidates cost-effectively, reported financial results and recent corporate highlights for the first quarter ended March 31, 2021 (Press release, Fortress Biotech, MAY 17, 2021, View Source [SID1234580122]).
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Lindsay A. Rosenwald, M.D., Fortress’ Chairman, President and Chief Executive Officer, said, "Fortress and our partner companies had an exciting start to the year, including the addition and commercial launch of two dermatology products, bringing our total number of marketed products to seven. Moreover, we continued to achieve significant milestones in the advancement of multiple key development programs. Notably, in February, our partner company, Cyprium Therapeutics ("Cyprium"), and Sentynl Therapeutics ("Sentynl"), a wholly owned subsidiary of the Zydus Group, signed a Development and Asset Purchase Agreement for CUTX-101 for the treatment of Menkes disease. This agreement, which included an $8 million upfront payment for the ongoing development of CUTX-101, in addition to regulatory and sales milestone payments plus royalties, allows us to potentially maximize the value of this important asset as Cyprium continues to advance CUTX-101 toward a rolling submission of a New Drug Application ("NDA") later this year."
Dr. Rosenwald continued, "Our portfolio continues to grow with more than 25 product candidates across our partner companies, including 17 clinical programs, of which four are pivotal programs. We expect to have a multitude of regulatory and clinical inflection points throughout the remainder of 2021, including the availability of clinical data from cosibelimab, CAEL-101 and MB-106. Importantly, our diversified business model is supported by a strong balance sheet, as we ended the first quarter with $291.5 million in consolidated cash, cash equivalents and restricted cash. Our operational catalysts and financial strength have us well-positioned for success and we remain focused on creating long-term shareholder value."
Recent Corporate Highlights1:
Marketed Dermatology Products
Our seven dermatology products are marketed by our partner company, Journey Medical Corporation ("Journey").
Our products generated net revenues of $10.7 million for the first quarter of 2021, compared to first quarter 2020 net revenues of $11.9 million. While product demand increased in the first quarter of 2021 compared to the first quarter of 2020, the decrease in net revenue in the first quarter of 2021 is primarily attributable to increased coupon expense costs related to standard insurance deductible resets. We expect year-over-year annual revenue growth in 2021 to exceed the 28% growth Journey achieved in 2020.
In April 2021, Journey acquired and recently launched its seventh prescription dermatology product, QBREXZA.
On April 1, 2021, Journey entered into an agreement with East West Bank ("EWB") in which EWB will provide a $7.5 million working capital line of credit.
On March 31, 2021, Journey completed its first close in connection with its Cumulative Convertible Class A Preferred Stock Offering. In connection with the first close, Journey issued an aggregate of 501,480 Journey Preferred A shares at a price of $25.00 per share, and after deducting commissions, fees, and expenses, for a total of $11.2 million in net proceeds.
We plan on launching one additional prescription product in the second half of this year.
CUTX-101 (Copper Histidinate for Menkes disease)
In February 2021, our partner company, Cyprium, and Sentynl signed a Development and Asset Purchase Agreement for CUTX-101 for the treatment of Menkes disease. Under the terms of the agreement, Cyprium received $8 million upfront to fund the development of CUTX-101 and could receive up to $12 million in regulatory milestone payments through NDA approval, and is eligible to receive sales milestones plus royalties. Royalties start from mid-single digits, scaling up to 25% on sales exceeding $100 million annually. Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued at NDA approval for CUTX-101. Cyprium is responsible for the development of CUTX-101 through approval of the NDA by the FDA, and Sentynl will be responsible for commercialization of CUTX-101, as well as progressing newborn screening activities.
We intend to begin the rolling submission of the NDA for CUTX-101 to the FDA in the second half of 2021.
CUTX-101 is currently in development at our partner company, Cyprium Therapeutics, Inc.
CAEL-101 (Light Chain Fibril-reactive Monoclonal Antibody for AL Amyloidosis)
Caelum Biosciences, Inc. ("Caelum") has two on-going Phase 3 studies of CAEL-101 for AL amyloidosis.
Caelum formed a collaboration with Alexion Pharmaceuticals, Inc. in 2019, which includes an option to acquire Caelum. AstraZeneca announced the execution of a definitive agreement to purchase Alexion Pharmaceuticals, Inc. In the event of the closing of such transaction, the timeline for a potential exercise of the option to purchase Caelum will be accelerated to six months following the date of acquisition closing.
In May 2021, we announced that CAEL-101 clinical data were selected for two presentations at the European Hematology Association (EHA) (Free EHA Whitepaper) 2021 Virtual Congress ("EHA2021") taking place in June. The abstracts can be viewed online through the EHA (Free EHA Whitepaper)2021 website: here and here.
CAEL-101 is currently in development at Caelum Biosciences, Inc., a company founded by Fortress in 2017 and in which Fortress maintains a minority position.
Cosibelimab (formerly CK-301, an anti-PD-L1 antibody)
The registration-enabling study in metastatic cutaneous squamous cell carcinoma is fully enrolled and we are on track to report top-line results by year-end. With a potentially favorable safety profile versus anti-PD-1 therapy and a plan to commercialize at a substantially lower price, we believe cosibelimab has the potential to be a market disruptive product in the $25 billion and growing PD-(L)1 class.
A Phase 3 registration-enabling trial is planned to begin in first-line metastatic non-small cell lung cancer in mid-2021.
Cosibelimab is currently in development at our partner company, Checkpoint Therapeutics, Inc. ("Checkpoint").
MB-107 and MB-207 (Lentiviral Gene Therapies for X-linked Severe Combined Immunodeficiency)
In February 2021, we announced encouraging MB-107 and MB-207 clinical updates from our investigator-IND X-linked severe combined immunodeficiency ("XSCID") trials, as well as additional consistent safety and efficacy data. On January 28, 2021, the FDA removed a CMC hold on the MB-107 Phase 2 clinical trial Investigational New Drug ("IND") application after reviewing a comprehensive CMC package that was submitted in late December 2020. We expect to enroll the first patient in this pivotal multicenter trial in the second quarter of 2021 and we are targeting top-line data from the trial in the second half of 2022. We also expect to file an IND in the second quarter of 2021 for our pivotal multicenter Phase 2 clinical trial of MB-207.
MB-107 and MB-207 are currently in development at our partner company, Mustang Bio, Inc. ("Mustang Bio").
MB-106 (CD20-targeted CAR T Cell Therapy)
In May 2021, we announced that the FDA approved Mustang Bio’s IND application to initiate a multicenter Phase 1/2 clinical trial investigating the safety and efficacy of MB-106, a CD20-targeted CAR T for relapsed or refractory B-cell non-Hodgkin lymphomas ("B-NHL") and chronic lymphocytic leukemia ("CLL").
Also in May 2021, we announced that CD20-targeted CAR T data were selected for presentation at EHA (Free EHA Whitepaper)2021 scheduled to take place in June. Dr. Mazyar Shadman of Fred Hutchinson Cancer Research Center will present updated interim data from the ongoing Phase 1/2 clinical trial for B-NHL and CLL. A copy of the abstract can be viewed online through the EHA (Free EHA Whitepaper)2021 website here.
MB-106 is currently in development at our partner company, Mustang Bio.
Dotinurad (Urate Transporter (URAT1) Inhibitor)
In May 2021, we announced an exclusive license agreement with Fuji Yakuhin Co. Ltd. to develop Dotinurad in North America and Europe. Dotinurad is a potential best-in-class urate transporter (URAT1) inhibitor for gout and possibly other hyperuricemic indications including chronic kidney disease and heart failure. Dotinurad (URECE tablet) was approved in Japan in 2020 as a once-daily oral therapy for gout and hyperuricemia. Dotinurad was efficacious and well-tolerated in more than 500 Japanese patients treated for up to 58 weeks in Phase 3 clinical trials.
Dotinurad is currently in development at our partner company, FBIO Acquisition Corp. VIII.
IV Tramadol
In October 2020, Avenue Therapeutics ("Avenue") announced that it had received a Complete Response Letter ("CRL") from the FDA regarding Avenue’s NDA for IV tramadol. The FDA held a Type A meeting with Avenue in November 2020 to discuss the issues outlined in the CRL. On February 12, 2021, Avenue resubmitted its NDA to the FDA for IV tramadol. The NDA resubmission followed the receipt of the official minutes from Avenue’s Type A meeting with the FDA. The NDA resubmission included revised language relating to the proposed product label and a report relating to terminal sterilization validation. On February 26, 2021, Avenue received an acknowledgment letter from the FDA stating that Avenue’s resubmission of its NDA is a complete, class 1 response to the CRL, and a Prescription Drug User Free Act ("PDUFA") goal date was set for April 12, 2021. On April 13, 2021, Avenue announced that the FDA was still reviewing its NDA for IV tramadol and had not provided a decision regarding the NDA. As of May 1, 2021, Avenue had not received approval from the FDA for IV tramadol. Accordingly, under the Stock Purchase and Merger Agreement ("SPMA"), InvaGen retains an option to consummate the second stage closing until October 31, 2021 (after which Avenue can choose to terminate the SPMA), and also retains the option to terminate the SPMA.
IV tramadol is currently in development at our partner company, Avenue.
General Corporate
In February 2021, Fortress partner company, Aevitas Therapeutics, appointed Markus Peters, Ph.D., M.Sc., as Chief Executive Officer.
Financial Results:
To assist our stockholders in understanding our company, we have prepared non-GAAP financial results for the three months ended March 31, 2021 and 2020. These results exclude the operations of our three public partner companies: Avenue, Checkpoint, and Mustang Bio. The goal in providing these non-GAAP financial metrics is to highlight the financial results of Fortress’ core operations, which are comprised of our commercial-stage business, our privately held development-stage entities, as well as our business development and finance functions.
As of March 31, 2021, Fortress’ consolidated cash, cash equivalents and restricted cash totaled $291.5 million, compared to $235.0 million as of December 31, 2020, an increase of $56.5 million during the quarter.
On a GAAP basis, Fortress’ net revenue totaled $11.6 million for the first quarter of 2021, which included $10.7 million in net revenue generated from our marketed dermatology products. This compares to net revenue totaling $12.9 million for the first quarter of 2020, which included $11.9 million in net revenue generated from our marketed dermatology products.
On a GAAP basis, consolidated research and development expenses including license acquisitions were $20.2 million for the first quarter of 2021, compared to $15.1 million for the first quarter of 2020. On a non-GAAP basis, research and development expenses including license acquisitions were $4.1 million for the first quarter of 2021, compared to $2.3 million for first quarter of 2020.
On a GAAP basis, consolidated selling, general and administrative expenses were $17.5 million for the first quarter of 2021, compared to $15.5 million for the first quarter of 2020. On a non-GAAP basis, consolidated selling, general and administrative expenses were $13.0 million, of which $6.2 million is attributed to Journey, for the first quarter of 2021, compared to $11.6 million, of which $5.6 million is attributed to Journey, for the first quarter of 2020.
On a GAAP basis, consolidated net loss attributable to common stockholders was $8.8 million, or $0.11 per share, for the first quarter of 2021, compared to consolidated net loss attributable to common stockholders of $12.4 million, or $0.19 per share for the first quarter of 2020.
Fortress’ non-GAAP loss attributable to common stockholders was $7.3 million, or $0.09 per share, for the first quarter of 2021, compared to Fortress’ non-GAAP loss attributable to common stockholders of $4.2 million, or $0.07 per share, for the first quarter of 2020.
1. Includes Research and development expense and Research and development – licenses acquired expense for the quarter ended March 31, 2021 and 2020, respectively.
2. Excludes $0.1 million for Fortress MSA for the quarter ended March 31, 2021; excludes $0.1 million for Fortress MSA for the quarter ended March 31, 2020.
3. Excludes $0.1 million of Fortress MSA expense and $0.6 million Fortress financing fee for the quarter ended March 31, 2021; and $0.1 million of Fortress MSA expense for the quarter ended March 31, 2020.
4. Excludes $0.1 million of Fortress MSA expense and $1.2 million Fortress financing fee for the quarter ended March 31, 2021; and $0.1 million of Fortress MSA expense and $0.1 million Fortress financing fee for the quarter ended March 31, 2020.