On May 10, 2018 Fortress Biotech, Inc. (NASDAQ: FBIO) ("Fortress"), a biopharmaceutical company dedicated to acquiring, developing and commercializing novel pharmaceutical and biotechnology products, reported financial results and recent corporate highlights for the first quarter ended March 31, 2018 (Press release, Fortress Biotech, MAY 10, 2018, View Source [SID1234526479]).

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Lindsay A. Rosenwald, M.D., Fortress’ Chairman, President and Chief Executive Officer, said, "We have made significant advancements in the four years since we created and implemented our unique and efficient business model to benefit all stakeholders. The centralization of a number of critical corporate and R&D functions at Fortress allows our subsidiaries, or "Fortress Companies," to leverage internal synergies and minimize costs, so they can focus on getting drugs into the hands of people who need them. Our focus on continuing to build value through our strong business development engine and R&D team has led to the launch of nine development-stage subsidiaries, one specialty dermatology subsidiary and the in-licensing of more than 25 development-stage therapies since January 2014. The long-term success of our subsidiaries benefits Fortress through modest royalties on sales and annual and event-driven equity grants."

Dr. Rosenwald added, "By offering investment opportunities to finance specific Fortress Companies, we enable investors to select more concentrated exposure in innovative therapeutic areas, like CAR-T therapy and checkpoint inhibitors. We have done just that in the 18 months since we completed a successful tender offer for the majority of shares in National Holdings Corporation. This unique relationship enables us to offer National Holdings’ clients the opportunity to invest in drug candidates across a range of developmental stages and therapeutic areas. We are pleased with our synergistic collaboration with National Holdings and the significant progress National Holdings has made in the past 18 months to transform its firm culture."

Accomplishments since launch of Fortress business model in January 2014:

Research and development

Established 9 development-stage Fortress Companies in areas including CAR-T therapy, checkpoint inhibitors, gene therapy, rare diseases and pain management

Established Journey Medical Corporation, a specialty dermatology company with four marketed products (Targadox, Ceracade, Triderm and Luxamend) and a contract sales and marketing operation of more than 30 professionals

In-licensed more than 25 development-stage programs across multiple therapeutic areas, which are currently in development at Fortress and the Fortress Companies

Established a 27,000 sq. foot CAR-T processing facility at UMass Medicine Science Park in Worcester, Massachusetts, to manufacture Mustang Bio’s CAR-T therapies

Corporate

Established a business development / search and evaluate team, and expanded headcount to approximately 20 employees

Built a corporate operations team (finance, accounting, legal, investor relations and human resources) of 15 employees and expanded manufacturing, quality, regulatory, clinical and R&D staff to 34 employees

Financial Results:

As of March 31, 2018, Fortress’ consolidated cash, cash equivalents, short-term investments (certificates of deposit), cash deposits with clearing organizations and restricted cash totaled $179.4 million, compared to $168.3 million as of December 31, 2017, an increase of $11.1 million for the quarter.

Net revenue totaled $55.4 million for the first quarter of 2018, compared to $44.7 million for the first quarter of 2017. Total revenue as of March 31, 2018, includes $5.9 million of Fortress revenue and $49.5 million of revenue from National Holdings. Total revenue as of March 31, 2017, included $2.8 million of Fortress revenue and $41.9 million of revenue from National Holdings.

Research and development expenses were $25.0 million for the first quarter of 2018, of which $22.8 million was related to Fortress Companies. This compares to $7.1 million for the first quarter of 2017, of which $5.4 million was related to Fortress Companies. Non-cash, stock-based compensation expenses included in research and development were $2.3 million for the first quarter of 2018, compared to $0.8 million for the first quarter of 2017.

Research and development expenses from license acquisitions totaled $0.1 million for the first quarter of 2018, compared to $1.3 million for the first quarter of 2017.

General and administrative expenses were $13.5 million for the first quarter of 2018, of which $8.4 million was related to Fortress Companies. This compares to $10.3 million for the first quarter of 2017, of which $6.7 million was related to Fortress Companies. Non-cash, stock-based compensation expenses included in general and administrative expenses were $2.5 million for the first quarter of 2018, compared to $2.1 million for the first quarter of 2017.

National Holdings’ operating expenses totaled $50.8 million for the first quarter of 2018, compared to $43.1 million for the first quarter of 2017.

Net loss attributable to common stockholders was $21.0 million, or $0.49 per share, for the first quarter of 2018, compared to a net loss attributable to common stockholders of $12.0 million, or $0.30 per share, for the first quarter of 2017.

Recent Fortress and Fortress Company Highlights:

Aevitas Therapeutics, Inc.

In January 2018, Aevitas entered into a sponsored research agreement with the laboratory of Guangping Gao, Ph.D., at the University of Massachusetts Medical School to evaluate construct optimization for Aevitas’ AAV gene therapy treatment for complement-mediated diseases.

Avenue Therapeutics, Inc.

In March 2018, Avenue received Notices of Allowance from the U.S. Patent and Trademark Office ("USPTO") for three patent applications covering methods of administration for IV tramadol. Issuance of these patents is expected in the second quarter of 2018.

In April 2018, Avenue completed enrollment in its Phase 3, multicenter, randomized, double-blind, three-arm clinical trial evaluating the efficacy and safety of IV tramadol 50 mg and 25 mg versus placebo for the treatment of moderate to moderately severe pain in patients following bunionectomy surgery. Avenue expects to report topline data in the second quarter of 2018.

Caelum Biosciences, Inc.

In March 2018, a new analysis of data from the Phase 1b trial of Caelum’s CAEL-101 (mAb 11-1F4) for the treatment of relapsed or refractory amyloid light chain ("AL") amyloidosis was presented at the 16th International Symposium on Amyloidosis. The data demonstrated a correlation between a sustained decrease in N-terminal pro-brain natriuretic peptide (NT-proBNP) levels and an improvement in global longitudinal strain ("GLS") following CAEL-101 treatment in patients with cardiac AL amyloidosis.

Checkpoint Therapeutics, Inc.

In March 2018, Checkpoint completed an underwritten public offering that raised net proceeds of $20.8 million.

Also in March 2018, Checkpoint completed the dose escalation portion of the ongoing Phase 1 trial of CK-301, a fully human anti-PD-L1 antibody, in selected recurrent or metastatic cancers, and initiated the first dose expansion cohort, which is evaluating an 800 mg dose of CK-301 administered every two weeks.

In April 2018, Checkpoint presented preclinical data on BET inhibitor CK-103 at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting. CK-103 demonstrated combinatorial effects in an in vivo model with anti-PD-1 antibodies, which may support the development of CK-103 as an anti-cancer agent alone and in combination with Checkpoint’s anti-PD-L1 antibody CK-301.

Mustang Bio, Inc.

In March 2018, Mustang announced that Sadik Kassim, Ph.D., was appointed Chief Scientific Officer, and Knut Niss, Ph.D., was named Chief Technology Officer.

National Holdings Corporation:

Fortress acquired approximately 57% of National Holdings Corporation ("National Holdings") in September 2016.
Accomplishments since closing the tender include:

Established new client-focused leadership team at National Holdings and at its wholly-owned operating companies National Securities Corporation and National Asset Management, Inc.;
Invested in new technology infrastructure geared toward risk management and improved client performance; and
Continued to increase revenues, particularly in investment banking, as described in its Q1 10-Q, filed February 14, 2018