Fortress Biotech, Inc.

Previous wording

Fortress Biotech, Inc. (“Fortress” or the “Company”) is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holding and dividend and royalty revenue streams. Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. We have executed such arrangements in partnership with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center (“COH” or “City of Hope”), Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy’s Laboratories, Ltd., and Sun Pharmaceutical Industries Limited (“Sun Pharma”).

Current wording

Fortress Biotech, Inc. (“Fortress” or the “Company”) is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holdings and dividend and royalty income. Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. We have executed such arrangements in partnership with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center (“COH” or “City of Hope”), Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy’s Laboratories, Ltd. (“DRL”), and Sun Pharmaceutical Industries Limited (“Sun Pharma”).

Previous wording

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and finance expertise to help its subsidiaries and partner companies achieve their goals. Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. To date, three partner companies are publicly-traded, and four subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”), Sentynl Therapeutics, Inc. (“Sentynl”), Axsome Therapeutics, Inc. (“Axsome”), and Sun Pharma.

Current wording

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and financial expertise to help its subsidiaries and partner companies achieve their goals. Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. To date, three partner companies are publicly-traded, and four subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”), Sentynl Therapeutics, Inc. (“Sentynl”), Axsome Therapeutics, Inc. (“Axsome”), and Sun Pharma.

Previous wording

For a discussion of our critical accounting estimates, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 31, 2026 (the “2025 Form 10-K”). There were no material changes in our critical accounting estimates or accounting policies from December 31, 2025.

Current wording

For a discussion of our critical accounting estimates, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 31, 2026 (the “2025 Form 10-K”). There were no material changes in our critical accounting estimates or accounting policies from December 31, 2025 other than the following:

Previous wording

For the three months ended March 31, 2026 we generated $15.9 million of net product revenue related to the sale of Journey’s branded and generic products as compared to $13.1 million for the three months ended March 31, 2025. The $2.8 million, or 21%, increase is primarily driven by sales of Emrosi in the first quarter of 2026 of $6.3 million compared to $2.1 million in the first quarter of 2025. Journey launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in sales of Accutane of $0.3 million, the foam franchise products of $0.5 million, and Journey’s legacy products of $0.5 million due to continued competitive pressures.

Current wording

For the three months ended June 30, 2026, we generated $17.8 million of net product revenue related to the sale of Journey’s branded and generic products as compared to $15.0 million for the three months ended June 30, 2025. The $2.8 million, or 19%, increase is primarily driven by sales of Emrosi in the second quarter of 2026 of $8.1 million compared to $2.8 million in the second quarter of 2025. Journey launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in sales of Qbrexza of $1.8 million primarily due to coverage mix and a decrease in sales of Journey’s legacy products of $0.5 million due to continued generic competition.

Previous wording

Other revenue for the three months ended March 31, 2026 of $0.1 million consists of sales-based royalties recognized by Cyprium related to Sentynl’s net sales of ZYCUBO, and revenue recognized by Journey related to sales-based royalties on Cutia’s net sales of Amzeeq.

Current wording

Other revenue for the three months ended June 30, 2026 of $0.9 million consists of revenue of $0.7 million recognized by Journey related to the supply of Amzeeq to Cutia as well as sales-based royalties on Cutia’s net sales of Amzeeq, and royalties recognized by Cyprium on net sales of ZYCUBO of $0.2 million. Other revenue for the three months ended June 30, 2025 of $1.4 million consists of revenue recognized by Avenue related to the AJ201 license termination and program transfer.

Previous wording

Amortization of acquired intangible assets increased less than $0.1 million, or 6%, to $1.1 million for the three months ended March 31, 2026, from $1.1 million for the three months ended March 31, 2025, driven by the start of amortization on the anti-itch acquired intangible asset during the first quarter of 2026, offset by the completion of amortization on the Accutane intangible asset during the first quarter of 2026.

Current wording

Amortization of acquired intangible assets decreased $0.1 million, or 9%, to $1.0 million for the three months ended June 30, 2026, from $1.1 million for the three months ended June 30, 2025, driven by the start of amortization on the Eurax acquired intangible asset during the first quarter of 2026, offset by the completion of amortization on the Accutane intangible asset during the first quarter of 2026.

Previous wording

For the three months ended March 31, 2026 and 2025, R&D expenses were approximately $0.5 million and $3.9 million, respectively, a decrease of $3.4 million, or 86%. The table below provides a summary of research and development by entity, for the periods presented:

Current wording

For the three months ended June 30, 2026 and 2025, R&D expenses were approximately $0.8 million and $8.1 million, respectively, a decrease of $7.3 million, or 90%. The table below provides a summary of research and development by entity, for the periods presented:

Previous wording

The decrease in stock-based compensation of $1.3 million, or 98%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 is attributed to the decrease at Checkpoint of $0.7 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease in stock compensation at Fortress of $0.6 million, or 99%, is due to vesting of grants under the LTIP in 2025.

Current wording

The decrease in stock-based compensation recorded in R&D expense of $4.7 million, or 99%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 is attributed to the decrease at Checkpoint of $4.1 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease in stock compensation at Fortress of $0.6 million, or 97%, is due to vesting of grants under the LTIP in 2025.

Previous wording

For the three months ended March 31, 2026, the decrease in selling, general and administrative expenses of $9.8 million, or 38%, is primarily attributable to the decrease of $7.4 million, or 100%, at Checkpoint due to the deconsolidation of that entity as of May 2025

Current wording

For the three months ended June 30, 2026, the decrease in selling, general and administrative expenses of $18.0 million, or 46%, is primarily attributable to the decrease of $19.9 million, or 100%, at Checkpoint due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Journey of $1.1 million, or 9%, is due to a reduction in Emrosi launch costs from the prior year quarter. The decrease at Avenue of $0.5 million, or 50%, was primarily due to a $0.3 million decrease in personnel-related costs and a $0.1 million decrease in professional fees. The increase of $3.3 million, or 63%, at Fortress is due to an increase of $3.1 million in personnel-related expenses and professional fees incurred at Cyprium and an increase of $0.2 million at LemmaTx. The increase at Mustang of $0.2 million, or 20%, is primarily attributed to a $0.2 million increase in personnel-related expenses.

Previous wording

The decrease in stock-based compensation of $3.2 million, or 65%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 is primarily attributed to the decrease at Checkpoint of $1.3 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma, and the decrease at Fortress of $1.5 million, or 69%, due to the vesting of grants under the LTIP in 2025.

Current wording

The decrease in stock-based compensation recorded in selling, general and administrative expenses of $9.2 million, or 76%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, is primarily attributed to the decrease at Checkpoint of $8.0 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma, and the decrease at Fortress of $1.1 million, or 46%, due to the vesting of grants under the LTIP in 2025.

Previous wording

We incurred $6.2 million and $4.8 million of costs of goods sold in connection with the sale of Journey’s branded and generic products for the three months ended March 31, 2026 and 2025, respectively. Cost of goods sold increased by $1.4 million, or 30%, related to product sales mix, driven primarily by a $1.3 million non-cash charge related to inventory acquired in the 2021 Qbrexza asset acquisition as well as an increase in royalty expense driven by the incremental net revenue recognized for Emrosi during the first quarter of 2026 as compared to the first quarter of 2025.

Current wording

We incurred $12.4 million and $9.7 million of costs of goods sold in connection with the sale of Journey’s branded and generic products for the six months ended June 30, 2026 and 2025, respectively. Cost of goods sold increased by $2.6 million, or 27%, related to product sales mix, driven primarily by a $1.3 million non-cash charge related to inventory acquired in the 2021 Qbrexza acquisition as well as an increase in royalty expense driven by the incremental net revenue recognized for Emrosi.

Previous wording

R&D expense at Checkpoint decreased $3.8 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The increase in R&D expenses of $1.1 million, or 118%, at Mustang is attributed to actions taken in 2025, including $0.7 million in one-time savings from the settlement of aged payables and the $0.4 million gain recognized on the termination of the Worcester facility lease during the first quarter of 2025, which did not recur to similarly offset R&D expense in 2026. The decrease at Fortress in R&D expenses of $0.5 million, or 76%, is primarily related to the decrease in stock-based compensation expense of $0.6 million due to the vesting of grants under the Fortress Biotech, Inc. Long Term Incentive Plan (“LTIP”) in 2025, offset by $0.1 million increase in product development costs. R&D expense at Avenue decreased $0.2 million, or 51%, due to a $0.1 million decrease in personnel-related costs, and a $0.1 million decrease due to one-time costs incurred related to the return of the AJ201 license to AnnJi in 2025.

Current wording

R&D expense at Checkpoint decreased $10.8 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Fortress in R&D expenses of $1.1 million, or 71%, is primarily related to the decrease in stock-based compensation expense of $1.2 million due to the vesting of grants under the LTIP in 2025, offset by $0.1 million increase in product development costs. The increase in R&D expenses of $1.3 million, or 146%, at Mustang is attributed to actions taken in 2025, including $0.8 million in one-time savings from the settlement of aged payables and the $0.4 million gain recognized on the termination of the Worcester facility lease during the first quarter of 2025, which did not reoccur to similarly offset R&D expense in 2026. R&D expense at Avenue decreased $0.2 million, or 26%, due to a $0.2 million decrease in personnel-related costs.

Previous wording

as a result of its acquisition by Sun Pharma. The decrease at Avenue of $1.0 million, or 66%, was primarily due to a decrease of $0.8 million in legal expenses incurred in connection with the AnnJi license termination in 2025 (see Note 8 to the unaudited condensed consolidated financial statements), a $0.1 million decrease in professional fees, and a $0.1 million decrease in personnel-related costs. The decrease at Journey of $0.5 million, or 4%, is due to a reduction in Emrosi launch costs from the prior year quarter. The decrease at Mustang of $0.3 million, or 28%, is primarily attributed to a $0.2 million decrease in non-cash stock-based compensation expenses, primarily related to the equity fee to Fortress, and a $0.1 million decrease in outside service costs, primarily related to financing activity that occurred in the first quarter of 2025. The decrease of $0.6 million, or 13%, at Fortress is due to decreased stock compensation expense related to the vesting of grants under the LTIP in 2025 of $1.5 million offset by an increase of $0.3 million in personnel-related expenses and legal fees incurred at Cyprium of $0.4 million.

Current wording

For the six months ended June 30, 2026, the decrease in selling, general and administrative expenses of $27.7 million, or 43%, is primarily attributable to the decrease of $27.3 million, or 100%, at Checkpoint due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease at Journey of $1.5 million, or 7%, is due to a reduction in Emrosi launch costs from the prior period. The decrease at Avenue of $1.4 million, or 60%, was primarily due to a decrease of $0.9 million in legal expenses incurred in connection with the AJ201 license termination in 2025 (see Note 8 to the unaudited condensed consolidated financial statements), a $0.4 million decrease in personnel-related costs, and a $0.1 million decrease in professional fees. The decrease at Mustang of $0.2 million, or 9%, is primarily attributed to a $0.3 million decrease in non-cash stock-based compensation expenses, primarily related to the equity fee to Fortress, partially offset by a $0.1 million increase in personnel-related expenses. The increase of $2.7 million, or 26%, at Fortress is due to increased personnel and severance expenses of $2.1 million, Cyprium’s increased personnel-related expenses of $3.0 million and increased legal expense of $0.5 million, partially offset by decreased stock-based compensation at Fortress of $2.6 million related to fully vested LTIP grants in 2025, and decreased legal costs associated with the Checkpoint transaction in 2025.

Previous wording

Total other income (expense) increased $152.4 million, or 6,420%, from expense of $2.4 million for the three months ended March 31, 2025 to income of $150.0 million for the three months ended March 31, 2026. As a result of Cyprium’s sale of its PRV in March 2026 for $205 million, Cyprium recorded a gain of approximately $158.9 million (see Note 3 to the unaudited condensed consolidated financial statements), and recognized the fair value increase of the embedded derivative liability of $7.1 million associated with the Cyprium perpetual preferred stock redemption due to the PRV sale. We also recognized an increase in the fair value of Urica’s equity interest in Crystalys of $1.0 million due to Urica’s receipt of additional anti-dilution shares (see Note 3 to the unaudited condensed consolidated financial statements). These gains were partially offset by interest expense and financing fee expenses related to Fortress’

Current wording

Total other income increased $138.5 million, or 617%, from income of $22.4 million for the six months ended June 30, 2025 to income of $161.0 million for the six months ended June 30, 2026. As a result of Cyprium’s sale of its PRV in March 2026 for $205 million, Cyprium recorded a gain of approximately $158.9 million (see Note 3 to the unaudited condensed consolidated financial statements), and recognized the fair value increase of the embedded derivative liability of $7.1 million associated with the Cyprium perpetual preferred stock redemption due to the PRV sale. We also recognized an increase in the fair value of Urica’s equity interest in Crystalys of $11.8 million for the six months ended June 30, 2026 (see Note 3 to the unaudited condensed consolidated financial statements), and $0.1 million in UNLOXCYT royalties recognized by Fortress as royalty income (contingent consideration). These gains were partially offset by interest expense and financing fee expenses related to Fortress’ debt outstanding with Oaktree and Journey’s debt outstanding with SWK Funding LLC. The increase in interest income of $1.0 million is due to increased cash balances period over period.

Previous wording

At March 31, 2026, we had an accumulated deficit of $623.7 million, primarily as a result of R&D expenses, and selling, general and administrative expenses.

Current wording

At June 30, 2026, we had an accumulated deficit of $624.1 million, primarily as a result of R&D expenses, and selling, general and administrative expenses.

Previous wording

We fund our operations through cash on hand, the sale of debt and equity securities, third-party financings, out-licensing of drug product and drug product candidates and the sale of subsidiaries and partner companies. At March 31, 2026, we had cash and cash equivalents of $255.8 million, of which $209.9 million relates to Fortress and private subsidiaries primarily funded by Fortress, $16.3 million relates to Mustang, $27.2 million relates to Journey, and $2.4 million relates to Avenue. Restricted cash at March 31, 2026, was $1.2 million, which relates to pledges to secure letters of credit in connection with certain office leases held by Fortress.

Current wording

We fund our operations through cash on hand, the sale of debt and equity securities, third-party financings, out-licensing of drug product and drug product candidates and the sale of subsidiaries and partner companies. At June 30, 2026, we had cash and cash equivalents of $196.6 million, of which $153.8 million relates to Fortress and private subsidiaries primarily funded by Fortress, $15.1 million relates to Mustang, $25.6 million relates to Journey, and $1.9 million relates to Avenue. Restricted cash at June 30, 2026, was $1.2 million, which relates to pledges to secure letters of credit in connection with certain office leases held by Fortress.

Previous wording

We may require significant additional financing to fully develop and prepare regulatory filings and obtain regulatory approvals for our existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for our potential products, and sales and marketing capabilities. We have funded our operations to date primarily through the sale of equity and debt securities, third-party financings, out-licensing of drug product and drug product candidates and the sales of subsidiaries and partner companies. We believe that our current cash and cash equivalents are sufficient to fund operations for at least the next twelve months. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition and our ability to pursue our business strategies. We may seek funds through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or through other sources of financing. See “Item 1A. Risk Factors—Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities.”

Current wording

We may require significant additional financing to fully develop and prepare regulatory filings and obtain regulatory approvals for our existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for our potential products, and sales and marketing capabilities. We have funded our operations to date primarily through the sale of equity and debt securities, third-party financings, out-licensing of drug product and drug product candidates and the sales of subsidiaries and partner companies. We believe that our current cash and cash equivalents are sufficient to fund operations for at least the twelve months following the date of filing of this Quarterly Report on Form 10-Q. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition and our ability to pursue our business strategies. We may seek funds through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or through other sources of financing. See “Item 1A. Risk Factors—Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities.”

Previous wording

On January 15, 2026, Journey filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “Journey 2026 S-3”), which was declared effective by the SEC on January 21, 2026. This shelf registration statement covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of its common stock, preferred stock, debt securities, warrants, and units. The Journey

Current wording

On January 15, 2026, Journey filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “Journey 2026 S-3”), which was declared effective by the SEC on January 21, 2026. This shelf registration statement covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of its common stock, preferred stock, debt securities, warrants, and units. The Journey 2026 S-3 replaces the Journey 2022 S-3. Sales under the 2025 Sales Agreement after the effective date are made under the Journey 2026 S-3.

Previous wording

Net cash provided by operating activities increased $223.4 million from the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase is due to net income of $137.2 million for the three months ended March 31, 2026 as compared to the net loss of $24.7 million for the same period in 2025, and an increase of $58.1 million resulting from changes in operating assets and liabilities led by the increase in accounts payable and accrued expenses of $44.7 million due primarily to the accrual of $41 million owed to the NIH by Cyprium as a result of the PRV sale (see Note 3 to the unaudited condensed consolidated financial statements).

Current wording

Net cash provided by operating activities increased $191.7 million from the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase is due to net income of $137.8 million for the six months ended June 30, 2026 as compared to the net loss of $36.3 million for the same period in 2025, a decrease in the gain recognized on the deconsolidation of Checkpoint of $27.0 million, and a decrease of $11.9 million resulting from changes in operating assets and liabilities.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 decreased by $1.2 million, due to Mustang’s $1.2 million proceeds from the sale of its held-for-sale assets related to the exit of its manufacturing facility in the prior-year quarter.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $0.1 million, compared to net cash provided by investing activities for the six months ended June 30, 2025 of $7.3 million, a decrease of $7.3 million, due to the cash increase in 2025 as a result of the deconsolidation of Checkpoint, and Mustang’s $1.2 million proceeds from the sale of its held-for-sale assets related to the exit of its manufacturing facility in 2025.

Previous wording

Net cash provided by financing activities was $52.1 million for the three months ended March 31, 2025, compared to net cash used in financing activities of $27.4 million for the three months ended March 31, 2026, a decrease of $79.5 million. The decrease is attributable to a decrease in proceeds from partner companies’ equity offerings and option and warrant exercises of $52.0 million, an increase in the payments made to Oaktree of $14.5 million, and an increase of $14.2 million in payments made for the redemption of partner company preferred shares, and a decrease in proceeds from ATM offerings of $1.0 million.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 was $27.3 million, compared to net cash provided by financing activities for the six months ended June 30, 2025 of $56.7 million, a decrease of $84.0 million. The decrease is attributable to a decrease in proceeds from partner companies’ equity offerings and option and warrant exercises of $54.3 million, a decrease in proceeds from partner companies ATM offerings of $6.9 million, and a decrease in proceeds from Fortress ATM offerings of $1.0 million, partially offset by an increase in the payments made to Oaktree of $9.6 million, and an increase of $14.2 million in payments made for the redemption of partner company preferred shares.

Previous wording

During the three months ended March 31, 2026, there were no material changes in our contractual obligations and commitments, except our lease obligation, as described in our 2025 Form 10-K. On February 10, 2026, the Company became party to a sublease agreement with a third party to sublease all of its leased office space in New York, NY, consisting of approximately 23,000 square feet, under its existing lease with Sage Realty Corporation (the “Landlord”). The Company obtained the Landlord’s consent to the sublease, and the sublease commenced on March 15, 2026. The sublease expires on August 31, 2031.

Current wording

During the six months ended June 30, 2026, there were no material changes in our contractual obligations and commitments, except our lease obligation, as described in our 2025 Form 10-K. On February 10, 2026, the Company became party to a sublease agreement with a third party to sublease all of its leased office space in New York, NY, consisting of approximately 23,000 square feet, under its existing lease with Sage Realty Corporation (the “Landlord”). The Company obtained the Landlord’s consent to the sublease, and the sublease commenced on March 15, 2026. The sublease expires on August 31, 2031.