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 our extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. We have executed arrangements 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”), Fred Hutchinson Cancer Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Cincinnati Children’s Hospital Medical Center, Columbia University, the University of Pennsylvania, AstraZeneca plc and Dr. Reddy’s Laboratories, Ltd.

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 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. The Company has 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”), Fred Hutchinson Cancer Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Cincinnati Children’s Hospital Medical Center, Columbia University, the University of Pennsylvania, AstraZeneca plc and Dr. Reddy’s Laboratories, Ltd.

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 financial expertise to help the partners achieve their goals. Partner 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, four partner companies are publicly-traded, and two have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”).

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 finance expertise to help the partners 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, four partner companies are publicly-traded, and three subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”) and Sentynl Therapeutics, Inc. (“Sentynl”).

Previous wording

DFD-29 (modified release oral minocycline for the treatment of rosacea)

Current wording

Emrosi(Minocycline Hydrochloride Extended-Release Capsules, 40mg, also known as DFD-29, for the treatment of rosacea)

Previous wording

We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we chose to present only the two most recent fiscal years of audited financial statements in the 2023 Form 10-K, have reduced disclosure obligations regarding executive compensation and certain other matters, and smaller reporting companies are permitted to delay adoption of certain recently issued accounting pronouncements.

Current wording

We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we chose to present only the two most recent fiscal years of audited financial statements in the 2023 Form 10-K, have reduced disclosure obligations regarding executive compensation and certain other matters.

Previous wording

For the six months ended June 30, 2024 we generated $27.9 million of net revenue related to the sale of Journey’s branded and generic products. For the six months ended June 30, 2023, we generated $29.8 million of net revenue, of which $29.1 million relates to the sale of Journey’s branded and generic products, $0.3 relates to Journey’s royalties from Maruho, $0.4 million relates to Cyprium’s collaboration revenue with Sentynl and $0.1 relates to Checkpoint’s collaborative revenue from TGTX.

Current wording

For the three months ended September 30, 2024 we generated $14.6 million of net revenue related to the sale of Journey’s branded and generic products. For the three months ended September 30, 2023, we generated $34.8 million of net revenue, of which $15.3 million relates to the sale of Journey’s branded and generic products, $0.2 million relates to Cyprium’s collaboration revenue with Sentynl, and other revenue of approximately $19.3 million, which includes Journey’s receipt of royalties from its exclusive out-licensing partner for Qbrexza in Japan, Maruho, as well as a $19 million non-refundable upfront payment from Maruho related to a license granted by Journey to Maruho for the development and commercialization of Qbrexza in additional territories in Asia. Since October 2023, Journey has no longer been eligible to receive royalties from Maruho.

Previous wording

For the quarter ended June 30, 2024, the net decrease in revenue of $2.5 million or 14% is due to Journey’s$2.1 million or 12% decrease in product revenue due primarily to a $1.2 million decrease in net product revenue from Qbrexza and a $0.6 million decrease in net product revenue from legacy products. Collaboration revenue related to Cyprium’s agreement with Sentynl was fully recognized as of December 31, 2023 due to Sentynl’s assumption of control of the CUTX-101 development program in December 2023.

Current wording

Collaboration revenue related to Cyprium’s agreement with Sentynl was fully recognized as of December 31, 2023 due to Sentynl’s assumption of control of the CUTX-101 development program in December 2023.

Previous wording

We had $6.5 million and $7.8 million of costs of goods sold in connection with the sale of JMC branded and generic products for the quarters ended June 30, 2024 and 2023, respectively. Cost of goods sold decreased by $1.2 million, or 16% quarter-over-quarter, with the decrease mainly due to the decrease in net product revenue.

Current wording

We incurred $5.3 million and $6.4 million of costs of goods sold in connection with the sale of JMC branded and generic products for the quarters ended September 30, 2024 and 2023, respectively. Cost of goods sold decreased by $1.1 million, or 18% quarter-over-quarter, with the decrease mainly due to$0.6 million in inventory charges recorded in the prior year period and a decrease of $0.2 million in product royalties from the same period in 2023, resulting from lower sales of Accutane and the contractual expiration of the Exelderm product royalty in November 2023.

Previous wording

For the quarters ended June 30, 2024 and 2023, research and development expenses were approximately $12.7 million and $32.1 million, respectively. The table below provides a summary of research and development by entity, for the periods presented:

Current wording

For the quarters ended September 30, 2024 and 2023, research and development expenses were approximately $9.4 million and $20.3 million, respectively. The table below provides a summary of research and development by entity, for the periods presented:

Previous wording

The decrease in research and development spending at Mustang of $6.5 million is due to a reduction in personnel-related costs of $5.1 million, a $2.9 million reduction in lab supplies, $0.6 million decrease in program-related expenses, a $0.6 million decrease in facility and depreciation, and a $0.9 million reduction in consulting expense offset by a $3.7 million increase in other expenses, including $3.2 million in expenses incurred due to the June 2024 Repurchase of Assets from uBriGene. Checkpoint’s reduced research and development expense of $9.5 million is due to reduced commercial manufacturing costs for cosibelimab of $9.3 million due to manufacturing costs incurred in the prior period to build inventory to support a potential product launch of cosibelimab. Avenue’s decrease in research and development expense of $1.5 million in the quarter ended June 30, 2024 is primarily attributable to a decrease in clinical development costs related to the Phase 1b/2a of AJ201.

Current wording

The decrease in research and development spending at Mustang of $9.4 million is primarily attributed to decreased expenses of $1.6 million for personnel related costs, primarily driven by the reduction in workforce, a decrease of $1.5 million of expense incurred for uBriGene services, a $1.5 million decrease in vector costs, a $2.5 million decrease in lab supplies, a $1.0 million decrease in program related expenses and a $0.9 million decrease in consulting expenses. The decrease in Other of $2.3 million is due to a decrease in clinical costs at Urica of $1.8 million related to the Phase 1b trial and the sale of the asset to Crystalys, and a decrease in research and development costs of $1.0 million at Cyprium due to the asset transfer of CUTX-101 to Sentynl in 2023, offset by an increase of $0.4 million in license costs at both Helocyte and Cellvation. Journey’s decrease of $1.4 million is primarily driven by lower clinical trial expenses to develop Emrosi. Avenue’s increase in research and development expense of $1.5 million in the quarter ended September 30, 2024 is primarily attributable to an increase in clinical development costs related to AJ201. Checkpoint’s increased research and development expense of $0.9 million is due to increased commercial manufacturing costs for cosibelimab of $1.1 million due to manufacturing costs incurred to build inventory to support a potential product launch, partially offset by a $0.5 million decrease in clinical costs for product candidates.

Previous wording

Selling, general and administrative expenses consist principally of personnel related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development expenses. For the three months ended June 30, 2024 and 2023, selling, general and administrative expenses were $20.8 million and $24.4 million, respectively. The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:

Current wording

Selling, general and administrative expenses consist principally of personnel related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development expenses. For the three months ended September 30, 2024 and 2023, selling, general and administrative expenses were $22.0 million and $21.7 million, respectively. The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:

Previous wording

Total other income (expense) decreased $8.2 million, or 89%, from expense of $9.2 million for the quarter ended June 30, 2023 to expense of $1.0 million for the quarter ended June 30, 2024, primarily due to the decrease of $4.3 million in interest expense and financing fees due to debt paid off by JMC and Mustang in 2023, as well as the $2.8 million included in interest expense and financing fees for the three months ended June 30, 2023 related to Mustang’s debt extinguishment fee for their payoff of the Runway note; and the loss on deconsolidation of Aevitas of $3.4 million in the prior year with no corresponding expense in the current period.

Current wording

Total other income (expense) decreased $7.7 million, or 243%, from income of $3.2 million for the quarter ended September 30, 2023 to expense of $4.5 million for the quarter ended September 30, 2024, primarily due to the increase of $3.7 million in interest expense and financing fees related to the Oaktree debt paid off by Fortress in 2024 resulting in a loss on extinguishment of debt of $3.6 million, and the $4.5 million increase in the gain on a decrease in fair value of the warrant liabilities, comprised of warrants issued by Checkpoint and Avenue.

Previous wording

For the three months ended June 30, 2024 we generated $14.9 million of net revenue related to the sale of Journey’s branded and generic products. For the three months ended June 30, 2023, we generated $17.4 million of net revenue, of which $17.0 million relates to the sale of Journey’s branded and generic products, $0.2 million relates to Journey’s royalties from Maruho Co., Ltd., a license partner of Journey, and $0.2 million relates to Cyprium’s collaboration revenue with Sentynl.

Current wording

For the nine months ended September 30, 2024 we generated $42.6 million of net revenue, the majority of which is related to the sale of Journey’s branded and generic products. For the nine months ended September 30, 2023, we generated $64.6 million of net revenue, of which $44.4 million relates to the sale of Journey’s branded and generic products, and $0.5 million relates to Cyprium’s collaboration revenue with Sentynl, $0.5 relates to Journey’s royalties from Maruho and$19 million is the non-refundable upfront payment from Maruho related to a license granted by Journey to Maruho for the development and commercialization of Qbrexza in additional territories in Asia. Since October 2023, Journey has no longer been eligible to receive royalties from Maruho.

Previous wording

The decrease in research and development spending at Mustang of $16.6 million is due to a reduction in personnel-related costs of $10.9 million, $4.9 million reduction in lab supplies, $2.4 million decrease in program-related expenses, $1.4 million decrease in facility and depreciation, and $1.2 million reduction in consulting expense, offset by a $4.0 million increase in other expenses, of which approximately $3.2 million of expenses incurred related to the June 2024 Repurchase of Assets from uBriGene. Checkpoint’s reduced research and development expense of $16.8 million is due to reduced commercial manufacturing costs for cosibelimab of $10.6 million due to manufacturing costs incurred in the prior period to build inventory to support a potential product launch of cosibelimab, reduced regulatory expenses of $3.5 million as prior period costs included $3.2 million for the PDUFA fee to the FDA for the BLA filing of cosibelimab in the first quarter of 2023, and a $1.6 million decrease in clinical costs for product candidates. Journey’s increased research and development costs are due to the $4.0 million filing fee payment made to the FDA in January 2024 for the DFD-29 NDA in addition to the $3.0 million contractual milestone payment made to Dr. Reddy’s Laboratories, Ltd. triggered by the FDA’s acceptance of the DFD-29 NDA in March 2024. This was partially offset by lower clinical trial expenses incurred by Journey to develop DFD-29 product as the project concludes.

Current wording

The decrease in research and development spending at Mustang of $26.1 million is primarily attributable to a reduction in personnel-related costs of $12.5 million, $7.4 million reduction in lab supplies, $4.2 million decrease in program-related expenses, $1.5 million decrease in facility and depreciation, and $2.0 million reduction in consulting expense, offset by a $1.5 million increase in other expenses, primarily related to approximately $3.2 million of expenses incurred related to the June 2024 Repurchase of Assets from uBriGene. Checkpoint’s reduced research and development expense of $15.9 million is due to reduced commercial manufacturing costs for cosibelimab of $9.5 million related to manufacturing costs incurred in the prior period to build inventory to support a potential product launch of cosibelimab, reduced regulatory expenses of $3.5 million as prior period costs included $3.2 million for the PDUFA fee for the BLA filing of cosibelimab in the first quarter of 2023, and a $2.1 million decrease in clinical costs for product candidates. Journey’s increased research and development costs of $3.6 million are due to the $4.1 million filing fee payment made to the FDA in January 2024 for the DFD-29 NDA submission in addition to the $3.0 million contractual milestone payment made to Dr. Reddy’s Laboratories, Ltd. triggered by the FDA’s acceptance of the DFD-29 NDA in March 2024. This increase was partially offset by lower clinical trial expenses incurred by Journey as the clinical program was concluded.

Previous wording

Noncash, stock-based compensation expense included in research and development for the six months ended June 30, 2024 and 2023, was $1.7 million and $1.5 million, respectively.

Current wording

Noncash, stock-based compensation expense included in research and development for the nine months ended September 30, 2024 and 2023, was $2.9 million and $2.3 million, respectively.

Previous wording

We expect research and development costs to decrease in 2024 due to portfolio optimization and assets completing pivotal trials and entering registration stage.

Current wording

We expect research and development costs to remain lower in 2024 due to portfolio optimization and assets completing pivotal trials in 2023 and entering registration and approval stages.

Previous wording

Selling, general and administrative expenses consist principally of personnel related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development expenses. For the six months ended June 30, 2024 and 2023, selling, general and administrative expenses were $38.8 million and $49.8 million, respectively. The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:

Current wording

Selling, general and administrative expenses consist principally of personnel related costs, costs required to support the marketing and sales of our commercialized products, professional fees for legal, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development expenses. For the nine months ended September 30, 2024 and 2023, selling, general and administrative expenses were $60.9 million and $71.5 million, respectively. The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:

Previous wording

For the three months ended June 30, 2024, the decrease in selling, general and administrative expenses of $3.6 million or 15% is primarily attributable to decreased expenses at Fortress related to cost-reduction and optimization efforts and at Journey related to its expense reduction efforts in sales and marketing, as JMC has undertaken a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs to better align costs to their revenue-generating capabilities. The decrease in selling, general and administrative costs at Mustang is attributable to continued cost reduction efforts and optimization relating to personnel, consulting, and infrastructure. The increase in “Other” is due to an increase in professional fees, including legal expense, at Urica of $0.7 million.

Current wording

For the nine months ended September 30, 2024, the decrease in selling, general and administrative expenses of $10.6 million, or 15%, is primarily attributable to decreased expenses at Fortress related to cost-reduction and optimization efforts and at Journey related to its expense reduction efforts in sales and marketing, as JMC has undertaken a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs to better align costs to their revenue-generating capabilities. The decrease in selling, general and administrative costs at Mustang is attributable to continued cost reduction efforts and optimization relating to personnel, consulting, and infrastructure. The decrease in Other is led by reduced professional fees and legal spending at Urica and Cyprium. The increase of $1.3 million at Checkpoint is attributable to an increase in stock-based compensation of $0.6 million due to new employee grants, and an increase in professional fees of $0.8 million.

Previous wording

We expect selling, general and administrative expenses to remain flat in 2024.

Current wording

We expect selling, general and administrative expenses to remain flat or slightly lower for 2024.

Previous wording

For the six months ended June 30, 2024, we incurred impairment charges of $2.6 million attributable to Mustang’s assessment of the recoverability of the asset group consisting of its’ leasehold improvements and the associated right-of-use asset. For the six months ended June 30, 2023, Journey recorded a loss on the impairment of intangible assets of $3.1 million related to the impairment of the Ximino intangible asset, due to lower net product revenue and gross profit levels for the Ximino products in the six-month period ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, we incurred impairment charges of $2.6 million attributable to Mustang’s assessment of the recoverability of the asset group consisting of its leasehold improvements and the associated right-of-use asset. For the nine months ended September 30, 2023, Journey recorded a loss on the impairment of intangible assets of $3.1 million related to the impairment of the Ximino intangible asset, due to lower net product revenue and gross profit levels for the Ximino products.

Previous wording

Total other income (expense) decreased $2.0 million, or 36%, from expense of $5.5 million for the six months ended June 30, 2023 to expense of $3.5 million for the six months ended June 30, 2024, primarily due to the decrease of $6.0 million in interest expense and financing fees due to debt paid off by JMC and Mustang in 2023, as well as the $2.8 million included in interest expense and financing fees for the six months ended June 30, 2023 related to Mustang’s debt extinguishment fee for their payoff of the Runway note; and the loss on deconsolidation of Aevitas in the prior year with no corresponding expense in the current period.

Current wording

Total other expense increased $5.7 million, or 249%, from expense of $2.3 million for the nine months ended September 30, 2023 to expense of $8.0 million for the nine months ended September 30, 2024, primarily due to the decrease of $11.3 million in the gain on common stock warrant liabilities, offset by the $2.3 million decrease in interest expense and financing fees due to debt paid off by JMC and Mustang in 2023, as well as the $3.4 million increase in other income due in part to Journey’s $1.1 million gain on the extinguishment of short-term debt related to installment payments for the license of Ximino. Other expense in the nine months ended September 30, 2023 was comprised of a $4.1 million loss on the deconsolidation of Aevitas, offset by Mustang’s gain on the sale of assets to uBriGene of $1.4 million, and grant income of $0.7 million.

Previous wording

We will require 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. At June 30, 2024, we had cash and cash equivalents of $76.2 million, of which $38.2 million relates to Fortress and private subsidiaries, primarily funded by Fortress, $5.0 million relates to Checkpoint, $4.3 million relates to Mustang, $23.9 million relates to Journey, and $4.9 million relates to Avenue. We believe that our current cash and cash equivalents are sufficient to fund operations for at least the next 12 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 sales of subsidiaries/partner companies, royalty financings, or through other sources of

Current wording

We will require 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. At September 30, 2024, we had cash and cash equivalents of $58.9 million, of which $25.6 million relates to Fortress and private subsidiaries primarily funded by Fortress, $4.7 million relates to Checkpoint, $3.5 million relates to Mustang, $22.5 million relates to Journey, and $2.6 million relates to Avenue. We believe that our current cash and cash equivalents are sufficient to fund operations for at least the next 12 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 sales of subsidiaries/partner companies, royalty financings, or through other sources of financing; the rising interest rate environment may cause the Company to pay more interest on its various debt instruments, which could lead to higher operating expenses.

Previous wording

Cash Flows for the Six Months Ended June 30, 2024 and 2023

Current wording

Cash Flows for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Net cash used in operating activities decreased $29.3 million from the six months ended June 30, 2023, as compared to the six months ended June 30, 2024. The decrease is due to the decrease of $46.6 million in net loss, the $6.6 million decrease in the expense associated with subsidiaries/partner companies’ warrant liabilities, and the $11.4 million decrease resulting from changes in operating assets and liabilities, offset in part by the $3.0 million change in the expense for research and development – licenses acquired, $3.4 million change in the expense for loss form deconsolidation and dissolution of subsidiaries, and $2.9 million for Journey’s asset impairment loss in the prior period.

Current wording

Net cash used in operating activities decreased $26.0 million from the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2024. The decrease is due to the decrease of $30.6 million in net loss, the $11.1 million decrease in the expense associated with subsidiaries/partner companies’ warrant liabilities, and the $8.0 million decrease resulting from changes in operating assets and liabilities, offset in part by the $3.1 million change in the expense for research and development – licenses acquired, $4.1 million change in the expense for loss from deconsolidation and dissolution of subsidiaries, and $3.1 million for Journey’s asset impairment loss in the prior period.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is a decrease of $7.0 million, due to JMC’s $5.0 million used in investing activities for the deferred cash payment made to VYNE related to the acquisition of Amzeeq and Zilxi, and Avenue’s $2.0 million cash payment towards the purchase of the AnnJi license in the six months ended June 30, 2023, and no comparable activities in the period ended June 30, 2024.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 is a decrease of $2.0 million, due to JMC’s $5.0 million used in investing activities for the deferred cash payment made to VYNE related to the acquisition of Amzeeq and Zilxi and Avenue’s $3.0 million cash payment towards the purchase of the AnnJi license, each in the nine months ended September 30, 2023, offset by Mustang’s $6.0 million proceeds from the sale of assets to uBriGene in July 2023, and no comparable activities in the period ended September 30, 2024.

Previous wording

Net cash used in financing activities was $8.2 million for the six months ended June 30, 2023, compared to $42.1 million of net cash provided by financing activities for the six months ended June 30, 2024, an increase of $50.3 million. The increase is attributable to the funds used in the prior period to pay off partner companies’ long-term debt of $40.3 million and JMC’s line of credit of $30.9 million, offset by loan proceeds of $5.1 million in the current period.

Current wording

Net cash used in financing activities was $10.9 million for the nine months ended September 30, 2023, compared to $44.8 million of net cash provided by financing activities for the nine months ended September 30, 2024, an increase of $55.7 million. The increase is attributable to the funds used in the prior period to pay off partner companies’ long-term debt of $50.4 million and JMC’s line of credit of $30.9 million, offset by loan proceeds of $38.7 million, proceeds from partner companies’ sale of stock, options and warrants of $37.1 million in the current period.

Previous wording

We fund our operations through cash on hand, the sale of equity and debt securities, from the sales of subsidiaries/partner companies, and from the proceeds resulting from the exercise of warrants and stock options. At June 30, 2024, we had cash and cash equivalents of $76.2 million, of which $38.2 million relates to Fortress and private subsidiaries, primarily funded by Fortress, $5.0 million relates to Checkpoint, $4.3 million relates to Mustang, $23.9 million relates to Journey, and $4.9 million relates to Avenue. Restricted cash at June 30, 2024 was $2.1 million, of which $1.2 million relates to Fortress, $0.4 million relates to Mustang, and $0.5 million relates to Cyprium.

Current wording

We fund our operations through cash on hand, the sale of equity and debt securities, from the sales of subsidiaries/partner companies, and from the proceeds resulting from the exercise of warrants and stock options. At September 30, 2024, we had cash and cash equivalents of $58.9 million, of which $25.6 million relates to Fortress and private subsidiaries primarily funded by Fortress, $4.7 million relates to Checkpoint, $3.5 million relates to Mustang, $22.5 million relates to Journey, and $2.6 million relates to Avenue. Restricted cash at September 30, 2024 was $2.1 million, of which $1.2 million relates to Fortress, $0.4 million relates to Mustang, and $0.5 million relates to Cyprium.

Previous wording

On July 23, 2021, the Company filed a shelf registration statement (File No. 333-258145) on Form S-3, which was declared effective on July 30, 2021 (the “2021 Shelf”). Approximately $86.2 million of securities remain available for sale under the 2021 Shelf as of June 30, 2024, subject to General Instruction I.B.6. of Form S-3. On May 17, 2024, the Company filed a shelf registration statement (File No. 333-279516) on Form S-3, which was declared effective on May 30, 2024 (the “2024 Shelf”). All $50.0 million of securities remain available for sale under the 2024 Shelf as of June 30, 2024, subject to General Instruction I.B.6. of Form S-3.

Current wording

On May 17, 2024, the Company filed a shelf registration statement (File No. 333-279516) on Form S-3, which was declared effective on May 30, 2024 (the “2024 Shelf”). As of September 30, 2024, $43.5 million of securities were available for sale under the 2024 Shelf, subject to General Instruction I.B.6. of Form S-3, known as the “baby shelf rules,” which limit the number of securities that can be sold under registration statements on Form S-3.

Previous wording

For the six-month period ended June 30, 2024, the Company issued and sold approximately 1.6 million shares at an average price of $1.87 per share for gross proceeds of $2.9 million pursuant to the Company’s at-the-market program.

Current wording

During the nine months ended September 30, 2024, the Company issued and sold approximately 1.8 million shares at an average price of $1.95 per share for gross proceeds of $3.5 million under the Company’s at-the-market offering program.

Previous wording

In March 2023, Checkpoint filed shelf registration statement (File No. 333-270843) on Form S-3 (the “Checkpoint 2023 S-3”), which was declared effective May 5, 2023. Under the Checkpoint 2023 S-3, Checkpoint may sell up to a total of $150 million of its securities. As of June 30, 2024, approximately $77.7 million of the securities remains available for sale through the Checkpoint 2023 S-3, subject to General Instruction I.B.6. of Form S-3.

Current wording

In March 2023, Checkpoint filed shelf registration statement (File No. 333-270843) on Form S-3 (the “Checkpoint 2023 S-3”), which was declared effective May 5, 2023. Under the Checkpoint 2023 S-3, Checkpoint may sell up to a total of $150 million of its securities. As of September 30, 2024, approximately $65.7 million of the securities remains available for sale through the Checkpoint 2023 S-3.

Previous wording

In January 2024, Checkpoint closed on a registered direct offering (the “Checkpoint January 2024 Registered Direct Offering”) with a single institutional investor for the issuance and sale of 1,275,000 shares of its common stock and 6,481,233 pre-funded warrants. Each pre-funded warrant was exercisable for one share of Checkpoint common stock. The Checkpoint common stock and the pre-funded warrants were sold together with common stock warrants (the “Checkpoint January 2024 Common Warrants”) to purchase up to 7,756,233 shares of Checkpoint common stock, at a purchase price of $1.805 per share of common stock and $1.8049 per pre-funded warrant. The pre-funded warrants were funded in full at closing except for a nominal exercise price of $0.0001 and are exercisable commencing on the closing date and will terminate when such pre-funded warrants are exercised in full. The Checkpoint January 2024 Common Warrants are exercisable immediately upon issuance and will expire five years following the issuance date and have an exercise price of $1.68 per share. Checkpoint also issued the placement agent warrants to purchase up to 465,374 shares of common stock with an exercise price of $2.2563 per share. Net proceeds to Checkpoint from the Checkpoint January 2024 Registered Direct Offering were $12.6 million after deducting commissions and other transaction costs. As of July 2024, all of the pre-funded warrants from the Checkpoint January 2024 Registered Direct Offering were fully exercised.

Current wording

In January 2024, Checkpoint closed on a registered direct offering (the “Checkpoint January 2024 Registered Direct Offering”) for the issuance and sale of 1,275,000 shares of its common stock and 6,481,233 pre-funded warrants. Each pre-funded warrant was exercisable for one share of Checkpoint common stock. The Checkpoint common stock and the pre-funded warrants were sold together with common stock warrants (the “Checkpoint January 2024 Common Warrants”) to purchase up to 7,756,233 shares of Checkpoint common stock, at a purchase price of $1.805 per share of common stock and $1.8049 per pre-funded warrant. The pre-funded warrants were funded in full at closing except for a nominal exercise price of $0.0001 and are exercisable commencing on the closing date and will terminate when such pre-funded warrants are exercised in full. The Checkpoint January 2024 Common Warrants are exercisable immediately upon issuance and will expire five years following the issuance date and have an exercise price of $1.68 per share. Checkpoint also issued the placement agent warrants to purchase up to 465,374 shares of common stock with an exercise price of $2.2563 per share. Net proceeds to Checkpoint from the Checkpoint January 2024 Registered Direct Offering were $12.6 million after deducting commissions and other transaction costs. As of July 2024, all of the pre-funded warrants from the Checkpoint January 2024 Registered Direct Offering were fully exercised.

Previous wording

In December 2021, Avenue filed a shelf registration statement (File No. 333-261520) on Form S-3 (the “Avenue 2021 S-3”), which was declared effective on December 10, 2021. As of June 30, 2024, approximately $24.6 million of the securities remains available for sale through the Avenue 2021 S-3, subject to General Instruction I.B.6. of Form S-3.

Current wording

In December 2021, Avenue filed a shelf registration statement (File No. 333-261520) on Form S-3 (the “Avenue 2021 S-3”), which was declared effective on December 10, 2021. As of September 30, 2024, approximately $24.1 million of the securities remains available for sale through the Avenue 2021 S-3, subject to General Instruction I.B.6. of Form S-3.

Previous wording

Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $0.3006 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for Avenue’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of Avenue Common Stock and (y) Series B Warrants to purchase up to 220,538 shares of Avenue Common Stock. The net proceeds to Avenue from the exercise of the warrants was approximately $4.5 million, after deducting placement agent fees and estimated offering costs, but without giving effect to the exercise of the Series A Warrants and Series B Warrants issued in the January 2024 Warrant Inducement.

Current wording

Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $22.545 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for Avenue’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of Avenue Common Stock and (y) Series B Warrants to purchase up to 220,538 shares of Avenue Common Stock. The net proceeds to Avenue from the exercise of the warrants was approximately $4.5 million, after deducting placement agent fees and estimated offering costs, but without giving effect to the exercise of the Series A Warrants and Series B Warrants issued in the January 2024 Warrant Inducement.

Previous wording

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) with H.C. Wainwright & Co. LLC ("Wainwright") under which Avenue may offer and sell, from time to time at its sole discretion, up to $3,850,000 of shares of its common stock, par value $0.0001 per share (the "Shares"), through or to Wainwright. The offer and sale of the Shares will be made pursuant to a base prospectus forming a part of the 2021 Avenue S-3, and the related prospectus supplement dated May 10, 2024. During the six months ended June 30, 2024 and 2023, Avenue issued 87,683 shares through the Avenue ATM for net proceeds of $0.3 million.

Current wording

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) with H.C. Wainwright & Co. LLC ("Wainwright") under which Avenue may offer and sell, from time to time at its sole discretion, up to $3,850,000 of shares of its common stock, par value $0.0001 per share (the "Shares"), through or to Wainwright. The offer and sale of the Shares will be made pursuant to a base prospectus forming a part of the 2021 Avenue S-3, and the related prospectus supplement dated May 10, 2024. During the nine months ended September 30, 2024, Avenue issued 245,617 shares through the Avenue ATM for net proceeds of $0.9 million.

Previous wording

On April 23, 2021, Mustang filed a shelf registration statement on Form S-3 (File No. 333-255476) (the “Mustang 2021 S-3”), which was declared effective on May 24, 2021. Under the Mustang 2021 S-3, Mustang was able to sell up to a total of $200.0 million of its securities. In the six months ended June 30, 2024, Mustang sold approximately $4.4 million of securities under the Mustang 2021 S-3 until its expiration on May 24, 2024.

Current wording

On April 23, 2021, Mustang filed a shelf registration statement on Form S-3 (File No. 333-255476) (the “Mustang 2021 S-3”), which was declared effective on May 24, 2021. Under the Mustang 2021 S-3, Mustang was able to sell up to a total of $200.0 million of its securities. In 2024, Mustang sold approximately $4.4 million of securities under the Mustang 2021 S-3 until Mustang’s ability to register new offers and sales of securities under such registration statement expired on May 24, 2024.

Previous wording

On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “Mustang 2024 S-3”), which was declared effective on June 12, 2024. Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities. As of June 30, 2024, approximately $37.5 million of the Mustang 2024 S-3 remains available for sales of securities. The Mustang 2024 S-3 expires on June 12, 2027. As of the filing of this Form 10-Q, Mustang is subject to the General Instruction I.B.6 to Form S-3, known as the “baby shelf rules,” which limit the number of securities it can sell under its registration statements on Form S-3.

Current wording

On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “Mustang 2024 S-3”), which was declared effective on June 12, 2024. Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities. As of September 30, 2024, approximately $36.3 million of the Mustang 2024 S-3 remains available for sales of securities, subject to the General Instruction I.B.6 to Form S-3. The ability of Mustang to register new offers and sales of securities under the Mustang 2024 S-3 expires on June 12, 2027.

Previous wording

On May 31, 2024, Mustang entered into an At-the-Market Offering Agreement (the “Mustang ATM”) relating to the sale of shares of common stock pursuant to the Mustang 2024 S-3. Under the Mustang ATM, Mustang pays the sales agents for the program a commission rate of 3.0% of the gross proceeds from the sale of any shares of common stock. During the six months ended June 30, 2024, Mustang issued no shares through the Mustang ATM.

Current wording

On May 31, 2024, Mustang entered into an At-the-Market Offering Agreement (the “Mustang ATM”) relating to the sale of shares of common stock pursuant to the Mustang 2024 S-3. Under the Mustang ATM, Mustang pays the sales agents for the program a commission rate of 3.0% of the gross proceeds from the sale of any shares of common stock. During the nine months ended September 30, 2024, Mustang issued approximately 2.7 million shares through the Mustang ATM for net proceeds of approximately $1.2 million.

Previous wording

In May 2024, Mustang closed on a public offering of 1,160,000 shares of common stock and pre-funded warrants to purchase up to 15,717,638 shares of common stock (or common stock equivalents in lieu thereof), and three series of 50,632,914 warrants with a combined public offering price of $0.237 per share (or per share common stock equivalent in lieu thereof) and accompanying warrants with an exercise price of $0.237 per share. The Series A-1 warrants have a five-year term, the Series A-2 warrants have a twenty-four month term, and the Series A-3 warrants have a nine month term. The warrants contain customary anti-dilution adjustments to the exercise price, including share splits, share dividends, rights offerings and pro rata distributions. The net proceeds of the public offering, after deducting the fees and expenses of the placement agent and other offering expenses payable by Mustang, but excluding the net proceeds, if any, from the exercise of the warrants, was approximately $3.3 million. All of the 15,717,638 pre-funded warrants were exercised as of June 30, 2024.

Current wording

In May 2024, Mustang closed on an equity offering of 1,160,000 shares of common stock and pre-funded warrants to purchase up to 15,717,638 shares of common stock (or common stock equivalents in lieu thereof), and three series of 50,632,914 warrants with a combined equity offering price of $0.237 per share (or per share common stock equivalent in lieu thereof) and accompanying warrants with an exercise price of $0.237 per share. The Series A-1 warrants have a five-year term, the Series A-2 warrants have a twenty-four month term, and the Series A-3 warrants have a nine month term. The warrants contain customary anti-dilution adjustments to the exercise price, including share splits, share dividends, rights offerings and pro rata distributions. The net proceeds of the equity offering, after deducting the fees and expenses of the placement agent and other offering expenses payable by Mustang, but excluding the net proceeds, if any, from the exercise of the warrants, was approximately $3.2 million. All of the 15,717,638 pre-funded warrants have since been exercised.

Previous wording

In June 2024, Mustang closed on a registered direct offering of 3,025,000 shares of common stock at $0.41 per share (or common stock equivalent) priced at-the-market under Nasdaq rules and pre-funded warrants to purchase up to 3,105,000 shares of common stock, at a price per pre-funded warrant equal to $0.4099, the price per share of common stock, less $0.001. The pre-funded warrants have an exercise price of $0.001 per share, became exercisable upon issuance and remain exercisable until exercised in full. In a concurrent private placement, Mustang also agreed to issue and sell unregistered warrants to purchase up to 6,130,000 shares of its common stock, with an exercise price of $0.41 per share, exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the warrants and will expire five years from the date of stockholder approval. Net proceeds were approximately $2.3 million, after placement agent’s fees and other offering expenses of approximately $0.3 million. All of the 3,105,000 pre-funded warrants were exercised as of June 30, 2024.

Current wording

In June 2024, Mustang closed on a registered direct offering of 3,025,000 shares of common stock at $0.41 per share (or common stock equivalent) priced at-the-market under Nasdaq rules and pre-funded warrants to purchase up to 3,105,000 shares of common stock, at a price per pre-funded warrant equal to $0.4099, the price per share of common stock, less $0.001. The pre-funded warrants have an exercise price of $0.001 per share, became exercisable upon issuance and remain exercisable until exercised in full. In a concurrent private placement, Mustang also agreed to issue and sell unregistered warrants to purchase up to 6,130,000 shares of its common stock, with an exercise price of $0.41 per share, exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the warrants and will expire five years from the date of stockholder approval. Net proceeds were approximately $2.1 million, after placement agent’s fees and other offering expenses of approximately $0.3 million. All of the 3,105,000 pre-funded warrants have since been exercised.

Previous wording

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “Journey 2022 S-3”), which was declared effective on January 26, 2023. The Journey 2022 S-3 covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of Journey’s common stock, preferred stock, debt securities, warrants, and units. In connection with the Journey 2022 S-3, Journey has entered into the Sales Agreement relating to shares of the Journey’s common stock. In accordance with the terms of the Sales Agreement, Journey may offer and sell up to 4,900,000 shares of its common stock, par value $0.0001 per share, from time to time. For the six months ended June 30, 2024, Journey issued and sold approximately 0.3 million shares of common stock at an average price of $5.28 per share for gross proceeds of $1.5 million under the Journey ATM. In connection with these sales, Journey paid aggregate fees of approximately $46,000. At June 30, 2024, 3,861,553 shares remain available for issuance under the Journey 2022 S-3.

Current wording

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “Journey 2022 S-3”), which was declared effective on January 26, 2023. The Journey 2022 S-3 covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of Journey’s common stock, preferred stock, debt securities, warrants, and units. In connection with the Journey 2022 S-3, Journey has entered into the Sales Agreement relating to shares of the Journey’s common stock. In accordance with the terms of the Sales Agreement, Journey may offer and sell up to 4,900,000 shares of its common stock, par value $0.0001 per share, from time to time. For the nine months ended September 30, 2024, Journey issued and sold approximately 0.3 million shares of common stock at for gross proceeds of $1.7 million under the Journey ATM. In connection with these sales, Journey paid aggregate fees of approximately $46,000. At September 30, 2024, 3.8 million shares remain available for issuance under the Journey 2022 S-3.

Previous wording

During the six months ended June 30, 2024, there were no material changes in our contractual obligations and commitments, including our lease obligations, as described in our 2023 Form 10-K.

Current wording

During the nine months ended September 30, 2024, there were no material changes in our contractual obligations and commitments, including our lease obligations, as described in our 2023 Form 10-K with the exception of the long-term debt. On July 25, 2024, Fortress entered into the $50.0 million senior secured credit agreement with a maturity date of July 25, 2027 with Oaktree Fund Administration, LLC (the “New Oaktree Agreement”). The Company borrowed $35.0 million under the New Oaktree Agreement on the Closing Date (the “2024 Oaktree Note”) and is eligible to draw up to an additional $15.0 million at the lenders’ discretion to support future business development activities. The 2024 Oaktree Note replaces the previous note made to the Oaktree in 2020, with respect to which the remaining $50.0 million balance on the prior note was repaid in full.