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Pharmaceuticals and Biotechnology

Fortress Biotech Inc.

11/13/2026 | Press release | Distributed by Public on 11/13/2026 07:17

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q. Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Statements in this Quarterly Report on Form 10-Q that are not descriptions of historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). The words "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "might," "plans," "potential," "predicts," "should," or "will" or the negative of these terms or other comparable terminology are generally intended to identify forward-looking statements. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. Factors that could cause actual results to differ materially from those currently anticipated include those set forth under "Item 1A. Risk Factors" including, in particular, risks relating to:

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our growth strategy;

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financing and strategic agreements and relationships;

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our need for substantial additional funds and uncertainties relating to financings;

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uncertainty related to the timing and amounts expected to be realized from future milestone, contingent value right, royalty or similar future revenue streams, if at all;

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our ability to identify, acquire, close and integrate product candidates successfully and on a timely basis;

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our ability to attract, integrate and retain key personnel;

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the early stage of products under development;

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the results of research and development activities;

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uncertainties relating to preclinical and clinical testing;

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the ability to secure and maintain third-party manufacturing, marketing and distribution of our and our partner companies' products and product candidates;

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government regulation;

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patent and intellectual property matters; and

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competition.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The information contained herein is intended to be reviewed in its totality, and any stipulations, conditions or provisos that apply to a given piece of information in one part of this Quarterly Report on Form 10-Q should be read as applying mutatis mutandis to every other instance of such information appearing herein.

Overview

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").

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.

Our subsidiaries and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Journey Medical Corporation (Nasdaq: DERM, "Journey"), Mustang Bio, Inc. (Nasdaq: MBIO, "Mustang"), Avenue Therapeutics, Inc. (OTCID: ATXI, "Avenue"), Cellvation, Inc. ("Cellvation"), Cyprium Therapeutics, Inc. ("Cyprium"), Helocyte, Inc. ("Helocyte"), LemmaTx, Inc. ("LemmaTx"), Oncogenuity, Inc. ("Oncogenuity"), Urica Therapeutics, Inc. ("Urica"), and FBIO Acquisition Corp. LXII ("AcqCorpLXII"). Checkpoint Therapeutics, Inc. ("Checkpoint"), previously a partner company of ours, was acquired by Sun Pharma in May 2025. Baergic Bio, Inc. ("Baergic"), previously a subsidiary of Avenue, was acquired by Axsome in November 2025.

Recent Events

Revenue Portfolio

●

For the three months ended September 30, 2026 and 2025, net revenue was $19.2 million and $17.6 million, respectively, and is primarily related to the sale of Journey's marketed products.

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For the three months ended September 30, 2026, net revenue included $0.2 million in Cyprium's royalty revenue from ZYCUBO. Other revenue for the three months ended September 30, 2025 consists of revenue recognized by Journey related to Journey's supply of Amzeeq to Cutia.

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For the nine months ended September 30, 2026 and 2025, net revenue was $53.9 million and $47.2 million, respectively, and is primarily related to the sale of Journey's marketed products.

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For the nine months ended September 30, 2026, net revenue included $0.8 million in royalties related to Journey's supply of Amzeeq to Cutia, inclusive of $0.1 million in royalties on sales of Amzeeq by Cutia, and $0.5 million in Cyprium's royalty revenue from sales of ZYCUBO. Other revenue for the nine months ended September 30, 2025 included $1.4 million of revenue recognized by Avenue related to the AJ201 license termination and program transfer, and $0.6 million related to Journey's supply of Amzeeq to Cutia.

Commercial and Approved Products

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

●

In April 2026, our partner company Journey announced that approximately 85% of all commercial lives in the United States have access to Emrosi (Minocycline Hydrochloride Modified Release Capsules, 10mg immediate release and 30mg extended release) after contracting with a third major group purchasing organization.

●

In November 2024, Journey announced that the FDA approved Emrosi for the treatment of inflammatory lesions of rosacea in adults, and Journey subsequently launched Emrosi in March 2025.

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Emrosi was developed for the treatment of rosacea at our partner company, Journey, in collaboration with DRL.

ZYCUBO (copper histidinate for Menkes disease, formerly known as CUTX-101)

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On January 13, 2026, we announced the FDA approved ZYCUBO (copper histidinate, also referred to as CUTX-101) for the treatment of Menkes disease in pediatric patients. A priority review voucher ("PRV") was issued in connection with FDA approval and, pursuant to the transaction with Sentynl, was transferred to Cyprium. On February 22, 2026, Cyprium entered into a definitive asset purchase agreement pursuant to which Cyprium agreed to sell the PRV for $205 million, which was paid upon the closing of the sale as announced on March 30, 2026.

●

In July 2026, the board of directors of Cyprium declared a cash dividend of approximately $118.6 million to its shareholders. Based on the Company's ownership interest in Cyprium, approximately $95.4 million of the dividend was paid to Fortress with the remaining amount paid to noncontrolling shareholders of Cyprium.

●

Cyprium is eligible to receive up to $128 million in aggregate sales milestones and tiered royalties on net sales of ZYCUBO ranging from 3% to 12.5% on annual net sales. For the three and nine months ended September 30, 2026, Cyprium recognized $0.2 million and $0.5 million, respectively, in royalty revenue on net sales of ZYCUBO.

●

CUTX-101 was sourced by Fortress and was developed by Cyprium until the asset transfer in December 2023.

UNLOXCYT (cosibelimab-ipdl, anti-PD-L1 antibody)

●

In May 2025, our partner company, Checkpoint, was acquired by Sun Pharma for $4.10 per share in cash plus a contingent value right of up to $0.70 per share upon the achievement of EU approval of Checkpoint's principal drug product candidate. Fortress received $28.0 million, and is eligible to receive up to $4.8 million upon achievement of the milestone provided for in the contingent value right.

●

Sun Pharma pays Fortress a 2.5% royalty on net sales of UNLOXCYT. For the three and nine months ended September 30, 2026, Fortress recognized $0.1 million and $0.2 million, respectively, in royalty income on net sales of UNLOXCYT.

●

On December 13, 2024, Checkpoint received approval from the FDA for UNLOXCYT (cosibelimab-ipdl), for the treatment of metastatic or locally advanced cutaneous squamous cell carcinoma in adults who are not candidates for curative surgery or radiation.

●

Cosibelimab was sourced by Fortress and developed at Checkpoint, which was acquired by Sun Pharma in May 2025.

Late Stage Product Candidates

CAEL-101 (light chain fibril-reactive monoclonal antibody for AL amyloidosis)

●

On October 5, 2021, AstraZeneca acquired Caelum Biosciences, Inc. ("Caelum"), a former subsidiary of Fortress, for an upfront payment of approximately $135 million paid to Caelum shareholders, of which approximately $56.9 million was paid to Fortress. The agreement also provides for additional potential payments to Caelum shareholders totaling up to $295 million, payable upon the achievement of regulatory and commercial milestones. Fortress is eligible to receive 42.4% of all potential milestone payments, which, together with the upfront payment, would total up to approximately $182 million.

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There are two ongoing global Phase 3 pivotal studies of CAEL-101 (also known as anselamimab) for Mayo Stage IIIa and Mayo Stage IIIb amyloid light-chain amyloidosis ("AL amyloidosis"), known as Cardiac Amyloid Reaching for Extended Survival ("CARES") (ClinicalTrials.gov identifiers: NCT04512235 and NCT04504825).

●

On July 16, 2025, AstraZeneca announced an update from its CARES Phase 3 clinical program showing that anselamimab did not achieve statistical significance for the primary endpoint compared to placebo in patients with Mayo stages IIIa and IIIb AL amyloidosis. The primary endpoint was defined as a hierarchical combination of time to all-cause mortality ("ACM") and frequency of cardiovascular hospitalizations ("CVH"). All patients in the clinical program received background standard of care for plasma cell dyscrasia. AstraZeneca stated that anselamimab showed highly clinically meaningful improvement in time to ACM and frequency of CVH in a prespecified subgroup of patients, compared to placebo (although AstraZeneca did not further characterize this subgroup). AstraZeneca also reported that anselamimab was well tolerated, with the majority of events balanced between the anselamimab treatment arm and the placebo arm. AstraZeneca has disclosed that regulatory approval for anselamimab in Japan has been obtained.

●

CAEL-101 was sourced by Fortress and developed by Caelum (founded by Fortress) until the acquisition by AstraZeneca of Caelum in October 2021.

Dotinurad (urate transporter (URAT1) inhibitor for gout)

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In July 2026, Urica announced that Crystalys Therapeutics, Inc. ("Crystalys"), in which Urica maintains an equity position, closed a $130 million Series B financing to support the late-stage global clinical development and commercialization preparation of dotinurad. After the Series B financing, as of September 30, 2026, Urica holds approximately 9% of Crystalys' fully-diluted equity.

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In May 2026, Crystalys announced the first patients were dosed in a randomized, double-blind, placebo-controlled, multicenter Phase 2 trial (ClinicalTrials.gov identifier: the AMETHYST study (NCT07535034)), evaluating dotinurad for the treatment of gout in participants who are intolerant to xanthine oxidase inhibitors or have failed uricase treatment.

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In October 2025, Urica announced that Crystalys closed a $205 million Series A financing.

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Also in October 2025, Urica announced the first patients were dosed in two randomized, double-blind, multicenter global Phase 3 trials (ClinicalTrials.gov identifiers: the RUBY study (NCT07089875) and the TOPAZ study (NCT07089888)) evaluating dotinurad for the treatment of gout.

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In July 2024, Urica entered into an asset purchase agreement, royalty agreement, and related agreements (collectively, the "Transaction Documents") with Crystalys. Under the Transaction Documents, Urica transferred substantially all intellectual property rights in dotinurad to Crystalys. In return, Crystalys issued to Urica shares of its common stock, granted certain anti-dilution rights, and also granted Urica a secured 3% royalty on future net sales of dotinurad.

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Dotinurad was approved in Japan in 2020 and has also obtained regulatory approval in China, the Philippines and Thailand.

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Dotinurad was sourced by Fortress and in development at our Urica subsidiary until the asset was acquired by Crystalys in July 2024.

Triplex (cytomegalovirus vaccine and immunotherapy)

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Triplex, a potential vaccine and immunotherapy for prevention and control of cytomegalovirus ("CMV"), is currently being studied in multiple ongoing clinical trials, including: a Phase 1/2 trial for CMV control in pediatric recipients of HSCT (NCT03354728); a Phase 1 trial of Triplex in combination with a bi-specific CMV/CD19 CAR T cell therapy for the treatment of non-Hodgkin lymphoma (NCT05432635); a Phase 2 trial for safety and effectiveness in reducing CMV complications in patients previously infected with CMV and undergoing donor hematopoietic cell transplant (NCT02506933); a Phase 1 trial of Triplex in combination with CAR T cell therapy for adults with non-Hodgkin lymphoma (NCT05801913); and a Phase 1 trial

of Triplex in combination with an allogeneic anti-CD19-CAR CMV-specific T cell therapy for adults with high-risk acute lymphoblastic leukemia (NCT06735690).

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Triplex was sourced by Fortress and is currently in development at our subsidiary, Helocyte.

Early Stage Product Candidates

FB-607 (combination therapy for irritable bowel syndrome with diarrhea)

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In September 2026, AcqCorpLXII, a majority-owned and controlled subsidiary of the Company, entered into a license agreement with Cedars-Sinai Medical Center and other named parties, pursuant to which AcqCorpLXII obtained an exclusive worldwide license to rifaximin combined with N-acetylcysteine, referred to as FB-607 or RNIB21, for indications including irritable bowel syndrome with diarrhea ("IBS-D").

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FB-607 is currently being evaluated in a randomized, double-blind, placebo-controlled, multicenter Phase 2 clinical study assessing safety, efficacy and pharmacokinetics in adults with IBS-D (NCT06727422).

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FB-607 was sourced by Fortress and is currently in development at our subsidiary, AcqCorpLXII.

MB-109 (IL13Rα2-targeted CAR T Cells (MB-101) + HSV-1 oncolytic virus (MB-108))

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In November 2024, Mustang announced that the FDA granted Orphan Drug Designation to Mustang for MB-108, an HSV-1 oncolytic virus, for the treatment of malignant glioma. In July 2025, we announced that the FDA granted Orphan Drug Designation to Mustang for MB-101 for the treatment of recurrent diffuse and anaplastic astrocytoma (astrocytomas) and glioblastoma.

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In March 2024, data from the Phase 1 trial evaluating MB-101 IL13Rα2-targeted CAR T-cells in high-grade glioma were published in Nature Medicine. MB-101 was well tolerated, and 50% of patients achieved stable disease or better, with two partial responses and two complete responses in high-grade glioma patients. The two patients who achieved complete response both had high levels of intratumoral CD3+ T-cells pre-therapy (i.e., "hot" tumors), and their responses lasted 7.5 and 66+ months, respectively. In the cohort with dual intratumoral (ICT)/intraventricular (ICV) delivery and an optimized manufacturing process there was a ~70% improvement in median overall survival (10.2 months) compared to the expected survival rate of six months in this patient population.

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Mustang is currently exploring with COH an investigator-sponsored single-institution trial under the COH IND to treat patients with IL13Rα2+ recurrent GBM and high-grade astrocytoma with MB-109 that could potentially be initiated in the first quarter of 2027.

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MB-101, MB-108, and MB-109 are currently in development at our partner company, Mustang.

ATX-04 (selective β2-adrenergic agonist for Pompe disease)

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In February 2026, Avenue entered into a license agreement with Duke University, whereby Avenue obtained an exclusive worldwide license from Duke to certain patents and know-how pertaining to ATX-04 for the treatment of lysosomal storage diseases.

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Avenue intends to advance ATX-04 through a late-stage clinical development program leveraging existing human safety and efficacy data, with an initial focus on treating Pompe disease as an adjunct to enzyme replacement therapy.

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ATX-04 is currently in development at our partner company, Avenue.

FB-606 (sarcolemmal membrane stabilizer for Duchenne Muscular Dystrophy)

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In February 2026, Fortress contributed internally developed intellectual property for FB-606 to LemmaTx, a controlled subsidiary of Fortress, to advance the development of FB-606 as a potential membrane stabilizer for patients with Duchenne muscular dystrophy.

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FB-606 was sourced by Fortress and is currently in development at our subsidiary company, LemmaTx.

Other Product Candidates

AJ201 (Nrf1 and Nrf2 activator, androgen receptor degradation enhancer)

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In April 2025, Avenue and AnnJi entered into a License Termination and Program Transfer Agreement, pursuant to which the license agreement and related agreements were terminated and the program was returned to AnnJi, with AnnJi paying $1.6 million net of withholding to Avenue. Avenue is eligible to receive milestone payments, royalties on AJ201, and sublicensing revenue from AnnJi.

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AJ201 was sourced by Fortress and was previously in development at our partner company, Avenue.

BAER-101 (GABAA α2/3 positive allosteric modulator)

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In November 2025, Avenue announced it had entered into an agreement for Baergic to be acquired by Axsome Therapeutics, Inc. ("Axsome"), including the global rights to BAER-101 (also known as AZD7325), a novel oral GABAA α2,3 subtype-selective receptor positive allosteric modulator. BAER-101 was originally licensed by Baergic from AstraZeneca AB and will be referred to as AXS-17 by Axsome going forward. Axsome intends to evaluate AXS-17 as a potential treatment for epilepsy.

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Avenue is eligible to receive approximately 74% of all future payments and royalties payable to the former stockholders of Baergic including development and commercial milestones and a tiered mid-to-high single-digit royalty on potential global net sales of AXS-17.

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BAER-101 was sourced by Fortress and was in development at Baergic, a majority-owned subsidiary of Avenue, until its sale to Axsome in November 2025.

General Corporate

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On September 30, 2026, the $50.0 million senior secured credit agreement with Oaktree Fund Administration, LLC ("Oaktree"), as amended, was terminated upon the receipt by Oaktree of a payoff amount of $15.6 million from the Company comprising principal, interest and yield protection premium.

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In March 2026, the Company and Cyprium announced the closing of the sale of Cyprium's PRV for $205 million in gross proceeds. In connection with the sale of the PRV, the Company made payments to Oaktree comprising: $14.5 million in principal and $0.1 million in Yield Protection Premium.

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In February 2026, Fortress entered into a sublease agreement for all of its leased office space in New York, NY expiring in August 2031 concurrent with the base lease. Under the sublease agreement the Company expects to receive approximately $11.9 million in aggregate base rent payments over the term of the sublease. For the three and nine months ended September 30, 2026, the Company recognized sublease income of $0.5 million and $1.2 million, respectively. The Company remains primarily liable for the obligations under the original lease.

Critical Accounting Policies and Use of Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. Applying these principles requires our judgment in determining the appropriateness of acceptable accounting principles and methods of application in diverse and complex economic activities. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

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 for the year ended December 31, 2025, 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:

Contingent Consideration

The Company accounts for rights to contingent consideration received in connection with the disposal of a business as contingencies that are not recognized before realization. Sales-based contingent consideration is recognized when the underlying qualifying sales have occurred, the Company has an enforceable right to payment, and the amount is realized or realizable and determinable. Amounts recognized are presented as other income because they represent additional consideration from the disposal.

Accounting Pronouncements

See Note 2, "Summary of Significant Accounting Policies", to our unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Smaller Reporting Company Status

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 (x) the market value of our shares held by non-affiliates is less than $250 million or (y) 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 2025 Form 10-K, have reduced disclosure obligations regarding executive compensation and utilize certain other accommodations available to smaller reporting companies.

Basis of Presentation and Principles of Consolidation

The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company's consolidated financial statements include the results of the Company's subsidiaries for which it has voting control but does not own 100% of the outstanding equity of the subsidiaries. For consolidated entities where the Company owns less than 100% of the subsidiary, but retains voting control, the Company records net income (loss) attributable to non-controlling interests in its consolidated statements of operations and presents non-controlling interests as a component of stockholders' equity on its consolidated balance sheets. All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.

The following table summarizes the Company's ownership of the issued and outstanding common and preferred shares in certain consolidated Fortress subsidiaries as of the date indicated:


	September 30,
Partner Company/Subsidiary	2026
Avenue (OTCID: ATXI)	13.4	%
Cellvation	80.0	%
Checkpoint¹	-	%
Cyprium	80.4	%
Helocyte	83.8	%
Journey (Nasdaq: DERM)	34.9	%
LemmaTx	100.0	%
Mustang (Nasdaq: MBIO)	8.0	%
AcqCorpLXII	70.6	%
Oncogenuity	74.4	%
Urica	70.4	%

Note 1:Checkpoint was acquired in May 2025 by Sun Pharma.

Results of Operations

Comparison of the three months ended September 30, 2026 and 2025


		Three Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Revenue
Product revenue, net		$	18,925		$	17,025		$	1,900		11	%
Other revenue			234			606			(372)		(61)	%
Net revenue			19,159			17,631			1,528		9	%

Operating expenses
Cost of goods sold - (excluding amortization of acquired intangible assets)			5,884			5,755			129		2	%
Amortization of acquired intangible assets			969			1,064			(95)		(9)	%
Research and development			1,678			208			1,470		707	%
Selling, general and administrative			17,821			17,415			406		2	%
Total operating expenses			26,352			24,442			1,910		8	%
Loss from operations			(7,193)			(6,811)			(382)		6	%

Other income (expense)
Interest income			1,295			736			559		76	%
Interest expense and financing fee			(2,498)			(2,742)			244		9	%
Gain on common stock warrant liabilities			-			(2)			2		100	%
Gain from deconsolidation of subsidiary			104			-			104		100	%
Other income (expense)			(18)			17,672			(17,690)		(100)	%
Total other income (expense)			(1,117)			15,664			(16,781)		(107)	%
Income (loss) before income tax expense			(8,310)			8,853			(17,163)		(194)	%

Income tax (benefit) expense			(56)			26			(82)		(315)	%
Net income (loss)			(8,254)			8,827			(17,081)		(194)	%

Attributable to non-controlling interests			2,409			(2,977)			5,386		181	%
Net income (loss) attributable to Fortress		$	(5,845)		$	5,850		$	(11,695)		(200)	%


		Three Months Ended September 30,					Change
($ in thousands)		2026			2025		$		%
Revenue
Product revenue, net		$	18,925		$	17,025	$	1,900	11	%
Other revenue			234			606		(372)	(61)	%
Net revenue		$	19,159		$	17,631	$	1,528	9	%

For the three months ended September 30, 2026, we generated $18.9 million of net product revenue related to the sale of Journey's branded and generic products as compared to $17.0 million for the three months ended September 30, 2025. The $1.9 million, or 11%, increase is primarily driven by sales of Emrosi in the third quarter of 2026 of $9.0 million compared to $4.9 million in the third quarter of 2025. Journey launched Emrosi in the first quarter of 2025. This increase 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 $0.4 million due to continued generic competition.

Other revenue for the three months ended September 30, 2026 of $0.2 million consists of royalties recognized by Cyprium on net sales of ZYCUBO. Other revenue for the three months ended September 30, 2025 of $0.6 million consists of revenue recognized by Journey related to the supply of Amzeeq to Cutia for Cutia's commercial use.

Cost of Goods Sold - (excluding amortization of acquired intangible assets)


		Three Months Ended September 30,					Change
($ in thousands)		2026			2025		$		%
Cost of goods sold - (excluding amortization of acquired intangible assets)		$	5,884		$	5,755	$	129	2	%

We incurred $5.9 million and $5.8 million of costs of goods sold in connection with the sale of Journey's branded and generic products for the three months ended September 30, 2026 and 2025, respectively. Cost of goods sold increased by $0.1 million, or 2%, period over period driven primarily by an increase in royalty expense from the incremental net revenue recognized for Emrosi during the third quarter of 2026 as compared to the third quarter of 2025.

Amortization of acquired intangible assets

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

Research and Development Expenses

Research and development ("R&D") costs primarily consist of personnel-related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for upfront and milestone license fees, costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, laboratory costs and other supplies.

For the three months ended September 30, 2026 and 2025, R&D expenses were approximately $1.7 million and $0.2 million, respectively, an increase of $1.5 million, or 707%. The table below provides a summary of research and development by entity, for the periods presented:


		Three Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Research & development
Fortress¹		$	1,207		$	77		$	1,130		1468	%
Avenue			212			177			35		20	%
JMC			51			287			(236)		(82)	%
Mustang			208			(333)			541		162	%
Total research and development expense		$	1,678		$	208		$	1,470		707	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

The increase at Fortress in R&D expenses of $1.1 million, or 1468%, is primarily related to license costs of $1.0 million incurred at AcqCorpLXII for the license acquisition of FB-607. The increase in R&D expenses of $0.5 million, or 162%, at Mustang is attributed to the settlement of aged payables in 2025. The decrease at Journey in R&D expenses of $0.2 million, or 82%, is due to a reduction in costs incurred related to Eurax.

The table below provides a summary by entity of noncash, stock-based compensation expense included in R&D expense for the periods presented:


		Three Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Stock-based compensation - research & development
Fortress¹		$	22		$	120		$	(98)		(82)	%
Avenue			9			31			(22)		(71)	%
Mustang			-			1			(1)		(100)	%
Total stock-based compensation expense - research and development		$	31		$	152		$	(121)		(80)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

The decrease in stock-based compensation recorded in R&D expense of $0.1 million, or 80%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 is attributed to the vesting of grants in the prior year at both Fortress and Avenue.

Selling, General and Administrative Expenses

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 R&D expenses.

The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:


			Three Months Ended September 30,					Change
($ in thousands)		2026			2025			$		%
Selling, general & administrative
Fortress¹		$	3,886		$	3,857		$	29	1	%
Avenue			492			547			(55)	(10)	%
JMC			12,593			12,054			539	4	%
Mustang			850			957			(107)	(11)	%
Total selling, general & administrative expense		$	17,821		$	17,415		$	406	2	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

For the three months ended September 30, 2026, the increase in selling, general and administrative expenses of $0.4 million, or 2%, is primarily attributable to the increase at Journey of $0.5 million, or 4%, due to the incremental expense of $1.7 million recognized upon the settlement of a dispute with a vendor, offset by a reduction in Emrosi launch costs from the prior period. The decrease at Mustang of $0.1 million, or 11%, is primarily attributed to a $0.2 million decrease in the equity fee to Fortress related to financing activity in the prior year, partially offset by a $0.1 million increase in personnel-related expenses. The decrease at Avenue of $0.1 million, or 10%, was primarily due to a $0.1 million decrease in personnel-related costs.

The table below provides a summary by entity of noncash, stock-based compensation expense included in selling, general and administrative expense for the periods presented:


		Three Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Stock-based compensation - Selling, general and administrative
Fortress¹		$	745		$	1,037		$	(292)		(28)	%
Avenue			38			132			(94)		(71)	%
JMC			1,333			1,854			(521)		(28)	%
Mustang			2			22			(20)		(91)	%
Total stock-based compensation expense - selling, general and administrative		$	2,118		$	3,045		$	(927)		(30)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

The decrease in stock-based compensation recorded in selling, general and administrative expenses of $0.9 million, or 30%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, is primarily attributed to the decrease at Journey of $0.5 million, or 28%, due to the vesting of grants in the prior year, and the decrease at Fortress of $0.3 million, or 28%, is due to the vesting of grants under the Amended and Restated Long-Term Incentive Program ("LTIP") in 2025.

Other income (expense)


	Three Months Ended September 30,					Change
($ in thousands)	2026			2025		$		%
Other income (expense)
Interest income	$	1,295		$	736	$	559	76	%
Interest expense and financing fee		(2,498)			(2,742)		244	9	%
Loss on common stock warrant liabilities		-			(2)		2	100	%
Gain from deconsolidation of subsidiary		104			-		104	100	%
Other income (expense)		(18)			17,672		(17,690)	(100)	%
Total other income (expense)	$	(1,117)		$	15,664	$	(16,781)	(107)	%

Total other income decreased $16.8 million, or 107%, from $15.7 million for the three months ended September 30, 2025 to expense of $1.1 million for the three months ended September 30, 2026. Interest expense and financing fees for the three months ended September 30, 2026 includes $1.0 million loss on debt extinguishment related to the payoff of the Oaktree debt (see Note 9 to the unaudited condensed consolidated financial statements). Included in income for the three months ended September 30, 2025 is an increase in the fair value of Urica's investment in Crystalys of $15.1 million. Interest income increased $0.6 million or 76% for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 due to higher cash balances in the current period.

Comparison of the nine months ended September 30, 2026 and 2025


		Nine Months Ended September 30,					Change
($ in thousands)		2026			2025		$		%
Revenue
Product revenue, net		$	52,685		$	45,173	$	7,512	17	%
Other revenue			1,229			2,010		(781)	(39)	%
Net revenue			53,914			47,183		6,731	14	%

Operating expenses
Cost of goods - (excluding amortization of acquired intangible assets)			18,245			15,484		2,761	18	%
Amortization of acquired intangible assets			3,064			3,193		(129)	(4)	%
Research and development			3,023			12,268		(9,245)	(75)	%
Selling, general and administrative			54,519			81,670		(27,151)	(33)	%
Total operating expenses			78,851			112,615		(33,764)	(30)	%
Loss from operations			(24,937)			(65,432)		40,495	62	%

Other income (expense)
Interest income			3,446			1,848		1,598	86	%
Interest expense and financing fee			(7,342)			(8,065)		723	9	%
Gain on sale of priority review voucher, net of expenses			158,873			-		158,873	100	%
Change in fair value of partner company derivative liability			(7,085)			-		(7,085)	100	%
Gain (loss) on common stock warrant liabilities			1			(399)		400	100	%
Gain from deconsolidation of subsidiary			186			27,127		(26,941)	(99)	%
Other income			11,764			17,599		(5,835)	(33)	%
Total other income			159,843			38,110		121,733	319	%
Income (loss) before income tax expense			134,906			(27,322)		162,228	594	%

Income tax expense			5,395			196		5,199	2653	%
Net income (loss)			129,511			(27,518)		157,029	571	%

Attributable to non-controlling interests			(25,451)			38,270		(63,721)	(167)	%
Net income attributable to Fortress		$	104,060		$	10,752	$	93,308	868	%


		Nine Months Ended September 30,					Change
($ in thousands)		2026			2025		$		%
Revenue
Product revenue, net		$	52,685		$	45,173	$	7,512	17	%
Other revenue			1,229			2,010		(781)	(39)	%
Net revenue		$	53,914		$	47,183	$	6,731	14	%

For the nine months ended September 30, 2026 we generated $52.7 million of net product revenue related to the sale of Journey's branded and generic products as compared to $45.2 million for the nine months ended September 30, 2025. The $7.5 million, or 17%, increase is primarily driven by sales of Emrosi for the nine months ended September 30, 2026 of $23.3 million compared to $9.7 million for the nine months ended September 30, 2025. Journey launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in sales of Qbrexza of $3.7 million primarily due to coverage mix and a decrease in sales of Journey's legacy products of $1.4 million due to continued generic competition.

Other revenue for the nine months ended September 30, 2026 of $1.2 million consists of $0.8 million recognized by Journey for the supply of Amzeeq to Cutia as well as sales-based royalties on Cutia's net sales of Amzeeq, in each case pursuant to the Cutia Agreement, and royalties recognized by Cyprium on net sales of ZYCUBO of $0.5 million. Other revenue for the nine months ended September 30, 2025 of $2.0 million consists of revenue recognized by Avenue related to the AJ201 license termination and program transfer of $1.4 million and revenue recognized by Journey related to the supply of Amzeeq to Cutia of $0.6 million.

Cost of Goods Sold - (excluding amortization of acquired intangible assets)


		Nine Months Ended September 30,					Change
($ in thousands)		2026			2025		$		%
Cost of goods sold - (excluding amortization of acquired intangible assets)		$	18,245		$	15,484	$	2,761	18	%

We incurred $18.2 million and $15.5 million of costs of goods sold in connection with the sale of Journey's branded and generic products, excluding amortization of acquired intangible assets, for the nine months ended September 30, 2026 and 2025, respectively. Cost of goods sold increased by $2.8 million, or 18%, 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 product royalties payable driven by the incremental net revenue recognized for Emrosi.

Amortization of acquired intangible assets

Amortization of acquired intangible assets decreased by $0.1 million, or 4%, to $3.1 million for the nine months ended September 30, 2026, from $3.2 million for the nine months ended September 30, 2025, driven by driven by the completion of amortization on the Accutane intangible asset partially offset by the start of amortization on the Eurax acquired intangible asset during the same period.

Research and Development Expenses

R&D costs primarily consist of personnel-related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for upfront and milestone license fees, costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, laboratory costs and other supplies.

For the nine months ended September 30, 2026 and 2025, R&D expenses were approximately $3.0 million and $12.3 million, respectively, a decrease of $9.2 million, or 75%. The table below provides a summary of research and development by entity, for the periods presented:


		Nine Months Ended
		September 30,						Change
($ in thousands)		2026			2025			$			%
Research & development
Fortress¹		$	1,649		$	1,586		$	63		4	%
Avenue			659			780			(121)		(16)	%
Checkpoint²			-			10,775			(10,775)		(100)	%
Journey			105			326			(221)		(68)	%
Mustang			610			(1,199)			1,809		151	%
Total research & development expense		$	3,023		$	12,268		$	(9,245)		(75)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

Note 2:

Checkpoint was deconsolidated as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

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 Journey in R&D expenses of $0.2 million, or 68%, is due to a reduction in costs incurred related to Eurax. The increase in R&D expenses of $1.8 million, or 151%, at Mustang is attributed to actions taken in 2025, including $1.4 million in one-time non-cash 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. The increase at Fortress of $0.1 million, or 4%, is primarily related to the increase at AcqCorpLXII of $1.0 million related to the license acquisition of FB-607, and the increase in R&D expense incurred by LemmaTx related to FB-606 of $0.6 million, partially offset by a decrease in stock compensation of $1.3 million related to fully vested LTIP grants and the increase in MSA income of $0.2 million related to LemmaTx and AcqCorpLXII.

The table below provides a summary by entity of noncash, stock-based compensation expense included in R&D expense for the periods presented:



		Nine Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Stock-based compensation - research & development
Fortress¹		$	51		$	1,371		$	(1,320)		(96)	%
Avenue			38			102			(64)		(63)	%
Checkpoint²			-			4,782			(4,782)		(100)	%
Mustang			-			(10)			10		100	%
Total stock-based compensation expense - research and development		$	89		$	6,245		$	(6,156)		(99)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

Note 2:

Checkpoint was deconsolidated as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The decrease in stock-based compensation recorded in R&D expense of $6.2 million, or 99%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 is attributed to the decrease at Checkpoint of $4.8 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 in stock compensation at Fortress of $1.3 million, or 96%, is due to vesting of grants under the LTIP in 2025.

Selling, General and Administrative Expenses

The table below provides a summary by entity of selling, general and administrative expenses for the periods presented:


		Nine Months Ended
		September 30,						Change
($ in thousands)		2026			2025			$		%
Selling, general & administrative
Fortress¹		$	16,787		$	13,986		$	2,801	20	%
Avenue			1,466			2,955			(1,489)	(50)	%
Checkpoint²			-			27,263			(27,263)	(100)	%
Journey			33,590			34,505			(915)	(3)	%
Mustang			2,676			2,961			(285)	(10)	%
Total selling, general & administrative expense		$	54,519		$	81,670		$	(27,151)	(33)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

Note 2:

Checkpoint was deconsolidated as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

For the nine months ended September 30, 2026, the decrease in selling, general and administrative expenses of $27.2 million, or 33%, 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 $0.9 million, or 3%, is due to a reduction in Emrosi launch costs from the prior period, offset by the incremental expense of $1.7 million recognized upon the settlement of a dispute with a vendor. The decrease at Avenue of $1.5 million, or 50%, is primarily due to a decrease of $0.8 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 $0.5 million decrease in personnel-related costs, a $0.1 million decrease in equity fees to Fortress associated with financing activities in the prior year, and a $0.1 million decrease in consulting costs. The decrease at Mustang of $0.3 million, or 10%, is primarily attributed to a $0.4 million decrease in non-cash stock-based compensation expense, primarily related to the equity fee to Fortress, and a $0.2 million decrease in professional and outside services, partially offset by a $0.3 million increase in personnel-related expenses. The increase of $2.8 million, or 20%, at Fortress is due to increased personnel and severance expenses of $2.5 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 $2.9 million related to fully vested LTIP grants in 2025, and $0.4 million in decreased legal costs associated with the Checkpoint transaction in 2025.

The table below provides a summary by entity of noncash, stock-based compensation expense included in selling, general and administrative expense for the periods presented:



		Nine Months Ended September 30,						Change
($ in thousands)		2026			2025			$			%
Stock-based compensation - Selling, general and administrative
Fortress¹		$	2,758		$	5,670		$	(2,912)		(51)	%
Avenue			131			421			(290)		(69)	%
Checkpoint²			-			9,315			(9,315)		(100)	%
Journey			3,759			4,513			(754)		(17)	%
Mustang			45			116			(71)		(61)	%
Total stock-based compensation expense - selling, general and administrative		$	6,693		$	20,035		$	(13,342)		(67)	%

Note 1:

Includes Fortress and private subsidiaries as applicable.

Note 2:

Checkpoint was deconsolidated as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The decrease in stock-based compensation recorded in selling, general and administrative expenses of $13.3 million, or 67%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 is primarily attributed to the decrease at Checkpoint of $9.3 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 $2.9 million, or 51%, due to the vesting of grants under the LTIP in 2025. The decrease at Journey of $0.8 million, or 17%, is due to grants that fully vested in the comparable prior period.

Other income (expense)


	Nine Months Ended September 30,					Change
($ in thousands)	2026			2025		$		%
Other expense
Interest income	$	3,446		$	1,848	$	1,598	86	%
Interest expense and financing fee		(7,342)			(8,065)		723	9	%
Gain on sale of priority review voucher, net of expenses		158,873			-		158,873	100	%
Change in fair value of partner company derivative liability		(7,085)			-		(7,085)	100	%
Loss on common stock warrant liabilities		1			(399)		400	100	%
Gain from deconsolidation of subsidiary		186			27,127		(26,941)	(99)	%
Other income		11,764			17,599		(5,835)	(33)	%
Total other income	$	159,843		$	38,110	$	121,733	319	%

Total other income increased $121.7 million, or 319%, from income of $38.1 million for the nine months ended September 30, 2025 to income of $159.8 million for the nine months ended September 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 nine months ended September 30, 2026 (see Note 3 to the unaudited condensed consolidated financial statements), and $0.2 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, including $1.0 million loss on the extinguishment of the Oaktree debt, and Journey's debt outstanding with SWK Funding LLC. The increase in interest income of $1.6 million, or 86%, is due to increased cash balances period over period.

Liquidity and Capital Resources

Sources of Liquidity

At September 30, 2026, we had an accumulated deficit of $630.0 million, primarily as a result of R&D expenses, and selling, general and administrative expenses.

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 September 30, 2026, we had cash and cash equivalents of $152.2 million, of which $114.1 million relates to Fortress and private subsidiaries primarily funded by Fortress, $14.3 million relates to Mustang, $22.3 million relates to Journey, and $1.5 million relates to Avenue. Restricted cash at September 30, 2026, was $1.2 million, which relates to pledges to secure letters of credit in connection with certain office leases held by Fortress.

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."

Stock Offerings and At-The-Market Share Issuances

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, 2026, $42.1 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. However, on July 5, 2024, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notice. As a result, the Company is not currently eligible to use Form S-3 and has lost the ability to use the 2024 Shelf. The Company will regain eligibility to use the 2024 Shelf on the date it files its next Annual Report on Form 10-K, so long as it has: (i) by that date, paid all accrued but unpaid dividends at that time and (ii) timely paid all dividends accruing since the end of the fiscal year to which such Form 10-K relates.

Because the Company is not currently eligible to use Form S-3 due to the failure to pay dividends on the Series A Preferred Stock, on April 1, 2025 the Company filed a post-effective amendment to certain prior Form S-3 registration statements to continue the registration of the offer and sale of shares underlying certain previously issued warrants. This post-effective amendment was declared effective by the SEC on April 2, 2025.

Journey

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 covered 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 August 2025, Journey entered into a new At Market Issuance Sales Agreement (the "Journey 2025 ATM Sales Agreement") with B. Riley Securities, Inc. and Lake Street Capital Markets, LLC (each, an "Agent" and together, the "Agents"). In accordance with the terms of the Journey 2025 ATM Sales Agreement, Journey may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

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 Journey 2025 ATM Sales Agreement after the effective date of the Journey 2026 S-3 are made under the Journey 2026 S-3.

Mustang

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, 2026, approximately $34.2 million under the Mustang 2024 S-3 remains available for sales of securities, subject to General Instruction I.B.6. of Form S-3, known as the "baby shelf rules," which limits the amount of securities it can sell under its registration statement on Form S-3 in any 12-month period.

Cyprium

In July 2026, Cyprium declared a cash dividend of approximately $118.6 million, of which approximately $95.4 million was paid to Fortress.

Cash Flows

Components of cash flows from publicly-traded partner companies comprise:


		For the Nine Months Ended September 30, 2026
($ in thousands)		Fortress¹			Avenue			Journey		Mustang		Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities		$	144,825		$	(1,335)		$	(2,262)	$	(2,851)	$	138,377
Investing activities			(86)			-			-		-		(86)
Financing activities			(65,842)			-			495		(139)		(65,486)
Net increase (decrease) in cash and cash equivalents and restricted cash		$	78,897		$	(1,335)		$	(1,767)	$	(2,990)	$	72,805

Note 1:

Includes Fortress, non-public subsidiaries and elimination entries.


		For the Nine Months Ended September 30, 2025
($ in thousands)		Fortress¹			Avenue			Checkpoint²			Journey			Mustang			Total
Statement of cash flows data:
Total cash (used in)/provided by:
Operating activities		$	10,603		$	(979)		$	(53,154)		$	(6,157)		$	(3,546)		$	(53,233)
Investing activities			8,956			-			-			-			1,165			10,121
Financing activities			(2,995)			2,094			47,310			10,800			14,526			71,735
Net increase (decrease) in cash and cash equivalents and restricted cash		$	16,564		$	1,115		$	(5,844)		$	4,643		$	12,145		$	28,623

Note 1:

Includes Fortress, non-public subsidiaries and elimination entries.

Note 2:

Checkpoint was deconsolidated as of May 2025 related to the Sun Pharma transaction (see Note 3 to the unaudited condensed consolidated financial statements).

The following table summarizes our consolidated cash flows during the periods indicated:


		Nine Months Ended September 30,
($ in thousands)		2026		2025			Change
Total cash (used in)/provided by:
Operating activities		$	138,377	$	(53,233)		$	191,610
Investing activities			(86)		10,121			(10,207)
Financing activities			(65,486)		71,735			(137,221)
Net increase (decrease) in cash and cash equivalents and restricted cash		$	72,805	$	28,623		$	44,182

Operating Activities

Net cash provided by operating activities increased $191.6 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase is due to net income of $129.5 million for the nine months ended September 30, 2026 as compared to the net loss of $27.5 million for the same period in 2025, a decrease in the gain recognized on the deconsolidation of Checkpoint of $26.9 million, and an increase of $13.8 million resulting from changes in operating assets and liabilities.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2026 was $0.1 million, compared to net cash provided by investing activities for the nine months ended September 30, 2025 of $10.1 million, a decrease of $10.2 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.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2026 was $65.5 million, compared to net cash provided by financing activities for the nine months ended September 30, 2025 of $71.7 million, a decrease of $137.2 million. The decrease is attributable to a decrease in proceeds from partner companies' equity offerings and option and warrant exercises of $61.6 million, an increase in partner company dividends declared and paid of $22.7 million, an increase in the payments made to Oaktree of $24.0 million, and an increase of $14.2 million in payments made for the redemption of partner company preferred shares.

Contractual Obligations

We enter into contracts in the normal course of business with licensors, contract research organizations ("CROs"), contract manufacturing organizations ("CMOs") and other third parties for the procurement of various products and services, including without limitation biopharmaceutical development, biologic assay development, commercialization, clinical and preclinical development, clinical trials management, pharmacovigilance and manufacturing and supply. These contracts typically do not contain minimum purchase commitments (although they may) and are generally terminable by us for convenience. Payments due upon termination or cancelation/delay consist of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation; in certain cases, our contractual arrangements with CROs and CMOs include cancelation and/or delay fees and penalties.

During the nine months ended September 30, 2026, there were no material changes in our contractual obligations and commitments, except (i) our lease obligation, as described in our 2025 Form 10-K and (ii) the extinguishment of our debt obligation to Oaktree Fund Administration, LLC being terminated upon full payment in September 2026, resulting in no future payments or obligations, as described in Note 9. 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.

Pursuant to the sublease agreement, the Company expects to receive approximately $11.9 million in aggregate base rent payments over the term of the sublease. The Company remains primarily liable for the obligations under the original lease.

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