FBIO 10-K & 10-Q changes, risk factors and insider trading

Investing in our Common Stock, our 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value (the “Series A Preferred Stock”) or any other type of equity or debt securities we may issue from time to time (together our “Securities”) involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K including the consolidatedConsolidated financialFinancial statementsStatements and the related notes, as well as the risks, uncertainties and other information set forth in the reports and other materials filed or furnished by our partner companies Avenue, Checkpoint, Journey and Mustang with the SEC, before deciding to invest in our Securities. If any of the following risks or the risks included in the public filings of Avenue, Checkpoint, Journey or Mustang were to materialize, our business, financial condition, results of operations, and future growth prospects could be materially and adversely affected. In that event, the market price of our Securities could decline, and you could lose part of or all of your investment in our Securities. In addition, you should be aware that the below stated risks should be read as being applicable to our subsidiaries and partner companies such that, if any of the negative outcomes associated with any such risk is experienced by one of our subsidiaries or partner companies, the value of Fortress’ holdings in such entity may decline. As used throughout this filing, the words “we”, “us” and “our” may refer to Fortress individually, to one or more subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context.

Even if any of our product candidates are approved, regulatory authorities may approve any such product candidates for fewer or more limited indications than we request, may place limitations on our ability to commercialize products at the intended price points, may grant approval contingent on the product’s performance in costly post-marketing clinical trials, or may approve a label that does not include the claims necessary or desirable for the successful commercialization of that product candidate. The regulatory authority may also require the label to contain warnings, contraindications, or precautions that limit the commercialization of the product. In addition, the Drug Enforcement Agency (“DEA”),DEA, or foreign equivalent, may schedule one or more of our product candidates under the Controlled Substances Act,CSA, or its foreign equivalent, which could impede such product’s commercial viability. Any of these scenarios could impact the commercial prospects for one or more of our current or future product candidates.

If any of our product candidates causes unacceptable adverse safety events in clinical trials, we may not be able to obtain regulatory approval or commercialize such product,product candidates, if approved, preventing us from generating revenue from such products’ sale. Alternatively, even if a product candidate is approved for marketing, future adverse events could lead to the withdrawal of such product from the market.

Controlled substances are subject to state, federal and foreign laws and regulations regarding their manufacture, use, sale, importation, exportation and distribution. Controlled substances are regulated under the Federal Controlled Substances Act of 1970 (“CSA”) and regulations of the DEA. IV tramadol, under development by our partner company Avenue, will be subject to these regulations.

While physicians may prescribe drugs for uses that are not described in the product’s label or that differ from those tested in clinical studies and approved by the regulatory authorities (“off label uses”),authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA. Such off-label uses are common across medical specialties and may constitute an appropriate treatment for some patients in varied circumstances. Regulatory authorities in the U.S. generally do not regulate the practice of medicine or behavior of physicians in their choice of treatments. Regulatory authorities do, however, restrict communications by pharmaceutical companies regarding the promotion of off-label use.

On July 25, 2024, we, as borrower, entered into a $50.0 million senior secured credit agreement (the “2024 Oaktree Agreement”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”). On December 12, 2025, we entered into the First Amendment to the 2024 Oaktree Agreement (“the “Oaktree First Amendment”), which provided for, among other things, an extension of the maturity date to June 30, 2028, and an adjustment to the minimum net sales covenant. On February 22, 2026, Fortress entered into the Second Amendment to the 2024 Oaktree Agreement (the “Oaktree Second Amendment, together with the Oaktree First Amendment and the 2024 Oaktree Agreement, the “New Oaktree Agreement”). We borrowed $35.0 million under the 2024 Oaktree Agreement on the date of the agreement (the “2024 Oaktree Note”) and are eligible to draw up to an additional $15.0 million with the lenders’ consent. The New Oaktree Agreement contains customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions. In addition, the New Oaktree Agreement contains certain financial covenants, including, (i) a requirement that we maintain a minimum liquidity of $7.0 million, which may be reduced or increased as described in the New Oaktree Agreement, and (ii) that product net sales of Journey meet a consolidated minimum net sales amount of $50.0$60.0 million onas aof trailingthe 12-monthlast basis,day testedof quarterly,the whichfiscal mayquarter beending reducedDecember or31, increased2025, $65.0 million as described inof the Oaktreelast Agreementday of the fiscal quarter ending March 31, 2026, $70.0 million as of the last day of the fiscal quarter ending June 30, 2026, $75.0 million as of the last day of the fiscal quarter ending September 30, 2026, and $80.0 million as of the fiscal quarter ending December 31, 2026 and the last day of each fiscal quarter thereafter (the “Minimum Net Sales Test”), subject to certain exclusions. Failure by the Company to comply with the financial covenants will result in an event of default, subject to certain cure rights with respect to the Minimum Net Sales Test. The OaktreeMinimum AgreementNet containsSales eventsTest covenant does not apply any time the outstanding principal balance of defaultthe Loan is less than or equal to $10.0 million. Under the Oaktree Second Amendment, in the event that arethe customaryoutstanding forprincipal financingsbalance of thisthe type,loan inis certainless circumstancesthan subjector equal to customary$15.0 curemillion periods.and InFortress addition,receives the Companydistribution isof alsoproceeds requiredfrom toCyprium (i)following raisethe commonclosing equity,of orthe receivesale inof monetizationsthe or distributions,PRV by theCyprium end of each calendar year priorpursuant to the maturitydefinitive date,asset inpurchase anagreement aggregatedated amountFebruary equal22, 2026 (the “PRV APA”), the minimum liquidity required will be lowered to the greater of $20$2.0 million or 50% of an amount set forth in an annual budget delivered toand the lendersMinimum andNet (ii)Sales maintainTest awill specifiedno minimumlonger equity stake in Journey. The breach of any other such provisions (even, potentially, in an immaterial manner) could result in an event of default under the Oaktree Agreement, the announcement and impact of which could have a negative impact on the trading prices of our securities. The restrictions imposed by such provisions may also inhibit our and certain of our subsidiaries and partner companies’ ability to enter into certain transactions or arrangements that management otherwise believes would be in our or such partner companies’ best interests, such as dispositions that would result in cash inflows to Fortress and/or our subsidiaries and partner companies, or acquisitions or financings that would promote future growth.apply.

We have historically relied in part on sales of our commonCommon stockStock to fund our operations. For example, we raised an aggregate of approximately $36.6 million in net proceeds in fiscal years 2023 and 2024 and $1.0 million in net proceeds in fiscal 2025 to date through the sale of shares of our commonCommon stock and other securitiesStock in offerings made under a Form S-3 “shelf” registration statement.statement and $2.6 million from warrant exercises in fiscal year 2025. Using a shelf registration statement to conduct an equity offering to raise capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. We are no longer eligible to file any new shelf registration statements due to non-payment of dividends on our Series A Preferred Stock since July 5, 2024 and because we have not resumed payment of dividends on our Series A Preferred Stock or paid all accumulated dividends, we have lost the ability to use our currently effective “shelf” registration statement on Form S-3. Accordingly, we are only able to conduct additional offerings of our securities under an exemption from registration under the Securities Act or under a Form S-1 registration statement. We would expect either of these alternatives to be a more expensive method of raising additional capital and may be more dilutive to our stockholders relative to using a Form S-3 shelf registration statement.

A significant portion of our sales derive from products that are without patent protection and/or are or may become subject to third-party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse impact on our operating income. Four of our marketed products, Qbrexza, Amzeeq, Zilxi, and Emrosi, for which we recently received FDA approval, currently have patent protection. Four of our marketed products, Accutane, Targadox, Luxamend and Exelderm, do not have patent protection or otherwise are not eligible for patent protection.

Our ability to successfully commercialize our products, or any product candidate forthat which we receivereceives marketing authorization,authorization will dependdepends in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the healthcare industry in the United States and elsewhere is cost containment. It is currently unknown what impact, if any, proposed changes by the federal and state governments in the U.S. and similar changes in foreign countries may have on pricing and reimbursement, particularly with respect to government programs such as Medicare and Medicaid.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the healthcarehealth industry and impose additional health policy reforms. ThereWe haveexpect beenthat significant ongoing judicial, administrative, executive and legislative effortschanges to modify or eliminate the Affordable Care Act.Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, may result in more rigorous coverage criteria and in additional downward pressure on the price that can be charged for drug products. In addition, on May 12, 2025, President Trump issued an executive order implementing the concept of most-favored nation pricing. Under this order, the HHS, in coordination with other federal agencies, is directed to take actions to ensure that the price of prescription drugs paid by federal health insurers, including Medicare and Medicaid, is in line with the prices paid in comparably developed nations. Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payers.

The Inflation Reduction Act of 2022 (the “IRA”) contains substantial drug pricing reforms, including the establishment of a drug price negotiation program within the U.S. Department of Health and Human ServicesHHS that would require manufacturers to charge a negotiated "“maximum fair price"” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs. Orphan drugs that treat only one rare disease are exempt from the IRA'sIRA’s drug negotiation program. Substantial penalties can be assessed for noncompliance with the drug pricing provisions in the IRA. The effects of the IRA on the pharmaceutical industry in general are not yet known.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. We expect that additionalAdditional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.future.

WeLegislative cannotand beregulatory sureproposals have been made to expand post-approval requirements and restrict sales and promotional activities for drugs. It is uncertain whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on our products or any future product candidates may be. In addition, increased Congressional scrutiny of the FDA’s approval processprocess, as well as staffing cuts effected at the FDA in early 2025, may significantly delay or prevent marketing approval, asand wellthe asindustry could become subject us to more stringent product labeling and post-marketing testing and other requirements.requirements, Weany doof notwhich knowcould whathave actionsa willmaterial be taken by the new presidential administration. Such actions mayadverse impact on the development and commercialization of drug products and could materially harm our business and financial condition.products.

We have entered into and consummated several partnershipscollaborations and/or contingent salessale agreements in respect of certain of our assets and subsidiaries, includingand anthe agreementacquisition undercomponent whichof these transactions has been consummated. These arrangements include the acquisition of Checkpoint will be acquired by Sun Pharma, which closed in May 2025, an equity investment and contingent acquisition agreement between Caelum and AstraZenecaAstraZeneca, and a development funding and contingent asset purchase between Cyprium and Sentynl, of which the acquisition components of each such transaction have not yet been consummated.Sentynl. Each of these arrangements has been time-consuming and has diverted management’s attention, and there can be no assurance that any of these transactions closes in a timely manner, or at all. With respect to the Checkpoint acquisition in particular, due to uncertainties as to the timing of the completion of the transaction, uncertainties as to whether Checkpoint’s stockholders will vote to approve the transaction, the possibility that competing offers will be made and the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction (or only grant approval subject to adverse conditions or limitations), Fortress may not realize the anticipated benefits of the proposed transaction in the time frame expected, or at all.attention. As a result of these consummated/contingent sales, as with other similar transactions that we may complete, we may experience a reduction in the size or scope of our business, our market share in particular markets, our opportunities with respect to certain markets, products or therapeutic categories or our ability to compete in certain markets and therapeutic categories.

If we acquire, enter into joint ventures with,with or obtain a controlling interest in, companies in the future, our financial condition, operating results and the value of our Securities may be adversely affected, thereby diluting stockholder value, disrupting our business and/or diminishing the value of our holdings in our partner companies.

Any terrorist attack, other act of violence or war, including military conflicts, could result in increased volatility in, or damage to, the worldwide financial markets and economy. This includes Russia’s February 2022 invasion of Ukraine, themilitary conflict between Israel andin the HamasMiddle and Hezbollah extremist groups,East, attacks by armed groups on cargo ships in the Red Sea, and tensions across the Taiwan Strait. For instance, the United States or other countries may impose sanctions that restrict doing business in the effectedaffected countries and increased military conflict may affect third-party vendors and cause delays.

This risk may be magnified in the case of the conflictrecent and ongoing military conflicts between the United States and Iran, Israel and Hamas and Hezbollah and Russia and Ukraine. Russia’sThese invasion and the ensuing response by Ukraineconflicts may disrupt our partner companies’ ability to conduct clinical trials in Russia,a Ukraine,number Belarus,of areas of the world, and Georgia, and potentially other neighboring countries. Although the impact of Russia’s military action is highly unpredictable,accordingly, certain clinical trial sites may be affected, including those of our partner company Checkpoint in Russia, Ukraine, Belarus, and Georgia.affected. Those clinical trial sites may suspend or terminate trials, and patients could be forced to evacuate or choose to relocate, making them unavailable for initial or further participation in clinical trials. For instance, Checkpoint had to terminate their Phase 3 NSCLC trial in the first quarter of 2023 as a result of such conflicts. Alternative sites to fully and timely compensate for clinical trial activities in these areas may not be available, and we may need to find other countries to conduct these clinical trials. Clinical trial interruptions may delay our plans for clinical development and approvals for our product candidates, which could increase costs and jeopardize our ability to commence product sales and generate revenues.

Additionally, trade policies and geopolitical disputes and other international conflicts can result in tariffs, sanctions and other measures that restrict international trade, and can materially adversely affect our business, particularly if these measures occur in regions where drug products are manufactured or raw materials are sourced. WithUnder the newcurrent presidential administration in the U.S., additional and higher tariffs and sanctions mayhave bebeen imposed on goods imported from China and other countries which could increase the cost of goods needed to commercialize our products and continue development of our current and any future product candidates. Further, such actions by the U.S. could result in retaliatory action by those countries which could impact our ability to profitably commercialize our products in those jurisdictions. As a result, our business, operations, and financial condition could be materially harmed.

We rely predominantly on third parties to manufacture the majority of our preclinical and clinical pharmaceutical supplies, and we expect to continue to rely heavily on such third parties and other contractors to produce commercial supplies of our product candidates and products, if approved. Further, we rely solely on third parties to manufacture Journey’s commercialized products. Such dependence on third-party suppliers could adversely impact our businesses.

Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities or potential liability. For example, we will remain responsible for ensuring that each of our preclinical studies and clinical trials are conducted in accordance with the general investigational plan and protocols for the trial and for ensuring that our preclinical studies are conducted in accordance with GLPs as appropriate. Moreover, the FDA requires us to comply with GCPs for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Regulatory authorities enforce these requirements through periodic inspections of trial sponsors, clinical investigators and trial sites. If we or any ofthird ourparty clinicalon researchwhich organizationswe rely fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may refuse to accept such data, or require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with GCP regulations. In addition, our clinical trials must be conducted with products produced under cGMP in strict conformity to cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

There is a finite number of service providers who can perform the services or produce the materials or product candidates that we need, and we therefore often have a limited number of options in choosing such service providers. The standard market terms in many of the agreements into which we customarily enter with such service providers are subject to evolution over time, often-times in favor of our counterparties. Also, some such agreements are “adhesion contracts” under which our contractual counterparties refuse to entertain any modifications to their template documentation. One area where service providers often have and exert leverage over us is the negotiation of liability language – specifically in broadly-scoped indemnification by us of service providers and/or the application of liability damages “caps” to certain of such service providers’ indemnification obligations. In any circumstance where we’vewe have been compelled to agree to such language, it is conceivable that we will be liable to third parties for liabilities in excess of such caps that are attributable to the actions, forbearances and/or culpability of such service providers and their indemnitees (and not to those of us and our personnel).

We will obtain limited product liability insurance coverage for all of our upcoming clinical trials. However, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. When needed we intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for one or more of our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated sideadverse effects.events. A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

Any product for which we obtain marketing approval could be subject to restrictions or withdrawal from the marketmarket, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with products, when and if any of them are approved.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, and could result in financial, legal, business, and reputational harm to us. For example, in 2021, our partner company Journey was the victim of a cybersecurity incident that affected its accounts payable function and led to approximately $9.5 million in wire transfers being misdirected to fraudulent accounts. The details of the incident and its origin were investigated with the assistance of third-party cybersecurity experts working at the direction of legal counsel. The matter was reported to the Federal Bureau of Investigation and does not appear to have compromised any personally identifiable information or protected health information. The federal government was able to trace and seize the fraudulently transferred cryptocurrency associated with the breach. On September 19, 2024, the United StatedStates District Court Southern District of New York through the United States Marshalls notified the Company that it has recovered and would be returning to the Company a portion of the misappropriated cash, and in December of 2024 Journey received $4.6 million in connection with the recovery of funds related to the cybersecurity incident.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, consultants, or third-party partners could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with cGMPs, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately, comply with internal procedures, policies or agreements to which such employees, consultants or partners are subject, or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee, consultant, or third-party misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation, as well as civil and criminal liability. The precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other civil and/or criminal sanctions.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel, ability to accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result.result and staffing cuts effected at the FDA in early 2025 may significantly delay or prevent marketing approval. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. We do not know what impact any changes by the newcurrent presidential administration will have on our business or the business of our partners.

We customarily invest a significant portion of our cash in Insured Cash Sweeps (“ICS”) and/or Certificate of Deposit Account Registry Service (“CDARS”) accounts, each of which bearbears interest income to us that fluctuates according to adjustments in the target federal funds rate effected by the U.S. Federal Reserve’s Federal Open Market Committee (“FOMC”). The FOMC recently lowered the target federal funds rate and is anticipated by some to effect further decreases over the coming weeks and months, actions which have decreased, and could further decreasedecrease, the amount of interest income that we generate on our ICS, CDARS, and other short-term cash equivalent investment securities that we may hold.

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, Columbia University, the University of Pennsylvania, AstraZeneca plc andplc, 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, fourthree partner companies are publicly-traded, and threefour subsidiaries have consummated strategic partnerships with industry leaders AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”) and, Sentynl Therapeutics, Inc. (“Sentynl”), aAxsome whollyTherapeutics, ownedInc. subsidiary(“Axsome”), ofand ZydusSun Lifesciences Ltd.Pharma.

Our subsidiarysubsidiaries and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Checkpoint Therapeutics, Inc. (Nasdaq: CKPT, “Checkpoint”), Journey Medical Corporation (Nasdaq: DERM, “Journey” or “JMC”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc. (OTC: ATXI, “Avenue”), Baergic Bio, Inc. (“Baergic,” a subsidiary of Avenue), Cellvation, Inc. (“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). 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.

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

Triplex (cytomegalovirus (CMVvaccine and immunotherapy) vaccine)

We accounted for the debt with Oaktree with detachable warrants in accordance with ASC 470, Debt. We assessed the classification of the common stock purchase warrants issued in connection with such transactions and determined that such instruments met the criteria for equity classification. The note proceeds were allocated between the 2024 Oaktree Note (as defined below) and the warrants on a relative fair value basis.

We recorded the related issue costs and value ascribed to the warrants as a debt discount of the 2024 Oaktree Note (as defined below).Note. The discount is being amortized utilizing the effective interest method over the term of the 2024 Oaktree Note, which iswas approximately 15.39%11.6% at December 31, 2024.2025.

Amortization of acquired intangible assets decreasedincreased by $0.3$0.8 million, or 9%,24%, to $4.3 million for the year ended December 31, 2025, from $3.4 million for the year ended December 31, 2024, fromdriven $3.8 million forby the yearaddition endedof Decemberthe 31,Emrosi 2023acquired dueintangible asset upon Journey’s payment to the discontinuationDRL of Ximinothe milestone payment triggered by the FDA’s approval of Emrosi in theNovember third quarter of 2023.2024.

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 licenses and milestones, 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 years ended December 31, 20242025 and 2023,2024, R&D expenses were approximately $56.6$11.9 million and $101.7$56.6 million, respectively.respectively, a decrease of $44.7 million or 79%. The table below provides a summary of research and development by entity, for the years ended December 31, 20242025 and 20232024:

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Noncash, stock-based compensation expense included in R&D for the years ended December 31, 20242025 and 2023,2024, was $7.1$6.3 million and $3.2$7.1 million, respectively.respectively, a decrease of $0.9 million, or 12%.

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increasedecrease in stock-based compensation expense included in R&D for the year ended December 31, 20242025 is primarily attributable to reduced expense at Fortress of $0.4 million, or 21%, due to grants fully vested as of July 2025, performance-based vesting of grants at Checkpoint, triggered by the FDA approval of UNLOXCYT in December 2024.2024, coupled with the deconsolidation of Checkpoint in May 2025, and the $0.6 million, or 98%, increase at Mustang due to the non-repeat of stock compensation expense credits from the April 2024 reduction in the Mustang workforce.

We expect research and development costs to decreaseincrease in 2025.2026 with potential new in-licenses or acquisitions.

The decrease in research and development – licenses acquired of $4.1$0.3 millionmillion, or 100%, in 20242025 is due primarily to $4.2$0.3 million paidincurred by AvenueMustang in 2024 related to AnnJia formilestone theachievement, AJ201 license in 2023. There werewith no comparable transactionsexpense in the year ended December 31, 2024.2025.

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 years ended December 31, 20242025 and 2023,2024, selling, general and administrative expenses were $87.7$96.4 million and $91.0$87.7 million, respectively.respectively, an increase of $8.7 million, or 10%. The table below provides a summary by entity of selling, general and administrative expenses for the years ended December 31, 20242025 and 2023,2024, respectively:

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

Stock-based compensation expense included in selling, general and administrative expenses in the years ended December 31, 20242025 and 20232024 was $25.5$22.5 million and $13.8$25.5 million, respectively.respectively, a decrease of $3.0 million, or 12%.

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress: Aevitas (until April 2023), Cellvation, Cyprium, Helocyte, Oncogenuity and Urica.

The increasedecrease in stock-based compensation expense included in selling, general and administrative expense for the year ended December 31, 20242025 is primarily attributable to performance-basedLong-Term Incentive Plan vesting ofthat grantsoccurred atin Checkpoint,July triggered2025, decreasing Fortress’ expense by the$2.5 FDAmillion, approvalor of UNLOXCYT received in December 2024, and additional expense incurred at Journey related to new employee grants.29%.

We expect selling, general and administrative expenses to remain flat or decreaseincrease in 2025.2026.

Journey recorded a loss recovery benefit to income of $4.6 million in connection with the recovery of funds related to a previously disclosed cybersecurity incident in September 2021. Journey received the $4.6 million in cash in December 2024. There was no comparable benefit recorded in 2025.

For the year ended December 31, 2024, Mustang recorded an asset impairment of $3.7 million, comprisedof which approximately $2.7 million was attributable to Mustang’s assessment of $2.2the millionrecoverability impairmentof lossthe allocatedasset togroup consisting of leasehold improvements,improvements $0.4and million impairment related toassociated right-of-use asset, and $1.0 million related to property, plant and equipment basedheld onfor ansale expected transaction. For the year endedat December 31, 2023,2024, Journeyand recordedsubsequently asold chargein of2025. $3.1There millionwas relatedno tocomparable itsexpense write-offin of Ximino, triggered by the decision to discontinue marketing of the product.2025.

We fund our operations through cash on hand, thedebt sale of debt,issuances, third-party financings, asset sales, and the sale of subsidiaries and partner companies. At December 31, 2024,2025, we had cash and cash equivalents of $57.3$79.4 million of which $20.9$35.2 million relates to Fortress and the private subsidiaries (primarily funded by Fortress), $6.6 million relates to Checkpoint, $6.8$17.3 million relates to Mustang, $20.3$24.1 million relates to JMC and $2.6$2.9 million relates to Avenue. Restricted cash primarily relates to office leases and totals $1.6$1.2 million.

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. We believe that our current cash and cash equivalents isare sufficient to fund operations for at least the next twelve months. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition and our ability to pursue our business strategies. We may seek funds through equity or debt financings, joint venture or similar development collaborations, the sale of partner companies, royalty financings, or through other sources of financing. See “Item 1A. Risk Factors—Risks Pertaining to the Need for and Impact of Existing and Additional Financing Activities.”

At MarchJune 31,30, 2026, the total amount of debt outstanding, net of the debt discount, was $39.4$39.6 million. If we default on our obligations, the holders of our debt may declare the outstanding amounts immediately payable together with accrued interest, and/or take possession of any pledged collateral. If an event of default occurs, we may be unable to cure it within the applicable cure period, if at all. If the maturity of our indebtedness is accelerated, we may not have sufficient funds available for repayment and we may be unable to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us, or at all. In addition, current or future debt obligations may limit our ability to finance future operations, satisfy capital needs, or to engage in, expand or pursue our business activities. Such restrictions may also prevent us from engaging in activities that could be beneficial to our business and our stockholders unless we repay the outstanding debt, which may not be desirable or possible.

On July 25, 2024, we, as borrower, entered into a $50.0 million senior secured credit agreement (the “2024 Oaktree Agreement”) with Oaktree Fund Administration, LLC and the lenders from time-to-time party thereto (collectively, “Oaktree”). On December 12, 2025, we entered into the First Amendment to the 2024 Oaktree Agreement (“the “Oaktree First Amendment”), which provided for, among other things, an extension of the maturity date to June 30, 2028, and an adjustment to the minimum net sales covenant. On February 22, 2026, Fortress entered into the Second Amendment to the 2024 Oaktree Agreement (the “Oaktree Second Amendment, together with the Oaktree First Amendment and the 2024 Oaktree Agreement, the “New Oaktree Agreement”). We borrowed $35.0 million under the 2024 Oaktree Agreement on the date of the agreement (the “2024 Oaktree Note”) and are eligible to draw up to an additional $15.0 million with the lenders’ consent. The New Oaktree Agreement contains customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions. In addition, the New Oaktree Agreement contains certain financial covenants, including, (i)including a requirement that we maintain a minimum liquidity of $7.0 million, lowered to $2.0 million following the closing of the sale of the PRV by Cyprium.million. Failure by the Company to comply with the financial covenants will result in an event of default.

We continue to generate operating losses in all periods including losses from operations of approximately $7.7$17.7 million and $22.3$58.8 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively and $70.2 million and $110.4 million for the years ended December 31, 2025 and 2024, respectively. At MarchJune 31,30, 2026, we had an accumulated deficit of approximately $623.7$624.1 million. We expect to make substantial expenditures and incur increasing operating costs and interest expense in the future, and our accumulated deficit will increase significantly as we expand development and clinical trial activities for our product candidates and finance investments in certain of our existing and new subsidiaries in accordance with our growth strategy. Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity.

Our operations have consumed substantial amounts of cash since inception. During the threesix months ended MarchJune 31,30, 2026 and 2025, we incurred R&D expenses of approximately $0.5$1.3 million and $3.9$12.1 million, respectively, and during the years ended December 31, 2025 and 2024, we incurred R&D expenses of approximately $11.9 million and $56.9 million, respectively. We expect to continue to spend significant amounts on our growth strategy. We believe that our current cash and cash equivalents will enable us to continue to fund operations in the normal course of business for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q. Until such time, if ever, as we can generate a sufficient amount of product revenue and achieve profitability, we expect to seek to finance potential cash needs.

We have historically relied in part on sales of our Common Stock to fund our operations. For example, we raised an aggregate of approximately $36.6 million in net proceeds in fiscal years 2023 and 2024 and $1.0 million in net proceeds through the sale of shares of our Common Stock in offerings made under a Form S-3 “shelf” registration statement and $2.6 million from warrant exercises in fiscal year 2025. For the threesix months ended MarchJune 31,30, 2026 we raised $1.2 million in net proceeds from warrant exercises. Using a shelf registration statement to conduct an equity offering to raise capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. We are no longer eligible to file any new shelf registration statements due to non-payment of dividends on our Series A Preferred Stock since July 5, 2024 and because we have not resumed payment of dividends on our Series A Preferred Stock or paid all accumulated dividends, we have lost the ability to use our currently effective “shelf” registration statement on Form S-3. Accordingly, we are only able to conduct additional offerings of our securities under an exemption from registration under the Securities Act or under a Form S-1 registration statement. We would expect either of these alternatives to be a more expensive method of raising additional capital and may be more dilutive to our stockholders relative to using a Form S-3 shelf registration statement.

Future revenue based on sales of our dermatology products, Qbrexza, Accutane, Amzeeq, Zilxi, Targadox, Exelderm, LuxamendLuxamend, Eurax and Emrosi, may be lower than expected or lower than in previous periods.

A significant portion of our sales derive from products that are without patent protection and/or are or may become subject to third-party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse impact on our operating income. Four of our marketed products, Qbrexza, Amzeeq, Zilxi, and Emrosi, currently have patent protection. FourFive of our marketed products, Accutane, Targadox, LuxamendExelderm, Eurax, and Exelderm,Luxamend do not have patent protection or otherwise are not eligible for patent protection.

Any terrorist attack, other act of violence or war, including military conflicts, could result in increased volatility in, or damage to, the worldwide financial markets and economy. This includes Russia’smilitary Februaryconflict 2022between invasionRussia ofand Ukraine, military conflict in the Middle East, attacksmilitary byconflicts armed groups on cargo ships inbetween the RedUnited Sea,States and Iran, and tensions across the Taiwan Strait. For instance, the United States or other countries may impose sanctions that restrict doing business in the affected countries and increased military conflict may affect third-party vendors and cause delays.

We depend heavily on third partythird-party manufacturers for product supply. If our contract manufacturers cannot successfully manufacture material that conforms to applicable specifications and FDA regulatory requirements, we will not be able to secure and/or maintain FDA approval for those products. Our third-party suppliers will be required to maintain compliance with cGMPs and will be subject to inspections by the FDA and comparable agencies and authorities in other jurisdictions to confirm such compliance. In the event that the FDA or such other authorities determine that our third-party suppliers have not complied with cGMPs or comparable regulations, the relevant clinical trials could be terminated or subjected to clinical hold until such time as we are able to obtain appropriate replacement material and/or applicable compliance, and commercial product could be unfit for sale, or if distributed, could be recalled from the market. Any delay, interruption or other issues that arise in the manufacture, testing, packaging, labeling, storage, or distribution of our products as a result of a failure of the facilities or operations of our third-party suppliers to comply with regulatory requirements, pass any regulatory agency inspection or otherwise perform under our agreements with them could significantly impair our ability to develop and commercialize our products and product candidates. In addition, several of our currently commercialized products, sold through our partner company Journey, are produced by a single manufacturer, and, although we closely monitor inventory prophylactically, disruptions to such supply arrangements could adversely affect our ability to meet product demand and therefore diminish revenues. Finally, in light of our partner company Mustang’s recent exit from its leased manufacturing facility and reduction in force in April 2024, we may increase our reliance at Mustang on third-party manufacturers or third-party collaborators for the manufacture of commercial supply of one or more product candidates for which our collaborators or we obtain marketing approval. We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms, and even if we are able to establish such agreements with third-party manufacturers, reliance entails additional risks.

We do not expect to have the resources or capacity to engage in our own commercial manufacturing of our product candidates, if they received marketing approval, and would likely continue to be heavily dependent upon third-party manufacturers. Our dependence on third parties to manufacture and supply clinical trial materials, as well as our planned dependence on third partythird-party manufacturers for any product candidates that may be approved, may adversely affect our ability to develop and commercialize products in a timely or cost-effective manner, or at all. In addition to the manufacturing and supply functions they provide, third-party manufacturers also play a key role in our efforts to obtain marketing approval for our product candidates, by interacting with, providing important information to, and hosting inspections by, applicable regulatory authorities. If a given contract development and manufacturing organization upon whom we rely in such a capacity is unwilling or unable to perform these activities on our behalf, the successful development and/or approval of the applicable product candidate could be delayed significantly.

To date, we have engaged primarily in intellectual property acquisitions, and evaluative and R&D activities and have not generated any revenues from product sales (except through Journey). We have incurred significant net losses since our inception. As of MarchJune 31,30, 2026, we had an accumulated deficit of approximately $623.7$624.1 million, and as of December 31, 2025 and 2024, we had an accumulated deficit of approximately $734.1 million and $740.9 million, respectively. We may need to rely on third parties for activities critical to the product candidate development process, including but not necessarily limited to:

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 holdingholdings and dividend and royalty revenue streams.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.,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 financefinancial 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.

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

For a discussion of our critical accounting estimates, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 31, 2026 (the “2025 Form 10-K”). There were no material changes in our critical accounting estimates or accounting policies from December 31, 2025.2025 other than the following:

Comparison of Threethe Monthsthree Endedmonths Marchended 31,June 30, 2026 and 2025

For the three months ended MarchJune 31,30, 20262026, we generated $15.9$17.8 million of net product revenue related to the sale of Journey’s branded and generic products as compared to $13.1$15.0 million for the three months ended MarchJune 31,30, 2025. The $2.8 million, or 21%,19%, increase is primarily driven by sales of Emrosi in the firstsecond quarter of 2026 of $6.3$8.1 million compared to $2.1$2.8 million in the firstsecond quarter of 2025. Journey launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in sales of AccutaneQbrexza of $0.3$1.8 million,million theprimarily foamdue franchiseto productscoverage mix and a decrease in sales of $0.5 million, and Journey’s legacy products of $0.5 million due to continued competitivegeneric pressures.competition.

We incurred $6.2$6.1 million and $4.8$4.9 million of costs of goods sold in connection with the sale of Journey’s branded and generic products for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Cost of goods sold increased by $1.4$1.2 million, or 30%, related to product sales mix,24%, driven primarily by athe $1.3supply millionof non-cash charge relatedAmzeeq to inventory acquired in the 2021 Qbrexza asset acquisitionCutia as well as an increase in royalty expense driven by the incremental net revenue recognized for Emrosi during the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025.

Amortization of acquired intangible assets increased less thandecreased $0.1 million, or 6%,9%, to $1.1$1.0 million for the three months ended MarchJune 31,30, 2026, from $1.1 million for the three months ended MarchJune 31,30, 2025, driven by the start of amortization on the anti-itchEurax acquired intangible asset during the first quarter of 2026, offset by the completion of amortization on the Accutane intangible asset during the first quarter of 2026.

Research and development (“R&D”) costs primarily consist of personnel relatedpersonnel-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 MarchJune 31,30, 2026 and 2025, R&D expenses were approximately $0.5$0.8 million and $3.9$8.1 million, respectively, a decrease of $3.4$7.3 million, or 86%.90%. The table below provides a summary of research and development by entity, for the periods presented:

R&D expense at Checkpoint decreased $3.8$7.0 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The increase in R&D expenses of $1.1 million, or 118%, at Mustang is attributed to actions taken in 2025, including $0.7 million in one-time savings from the settlement of aged payables and the $0.4 million gain recognized on the termination of the Worcester facility lease during the first quarter of 2025, which did not recur to similarly offset R&D expense in 2026. The decrease at Fortress in R&D expenses of $0.5$0.6 million, or 76%,67%, is primarily related to the decrease in stock-based compensation expense of $0.6 million due to the vesting of grants under the Fortress Biotech, Inc. Long Term Incentive Plan (“LTIP”) in 2025,2025. offset by $0.1 millionThe increase in product development costs. R&D expenseexpenses atof Avenue decreased $0.2$0.1 million, or 51%,129%, dueat Mustang is attributed to athe $0.1settlement millionof decreaseaged payables in 2025 and an increase in personnel-related costs,expenses and a $0.1 million decrease due to one-time costs incurred related toin the returnthree ofmonths theended AJ201June license30, to AnnJi in 2025.2026.

The decrease in stock-based compensation recorded in R&D expense of $1.3$4.7 million, or 98%,99%, for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 is attributed to the decrease at Checkpoint of $0.7$4.1 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma. The decrease in stock compensation at Fortress of $0.6 million, or 99%,97%, is due to vesting of grants under the LTIP in 2025.

The decrease in stock-based compensation recorded in selling, general and administrative expenses of $3.2$9.2 million, or 65%,76%, for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 20252025, is primarily attributed to the decrease at Checkpoint of $1.3$8.0 million, or 100%, due to the deconsolidation of that entity as of May 2025 as a result of its acquisition by Sun Pharma, and the decrease at Fortress of $1.5$1.1 million, or 69%,46%, due to the vesting of grants under the LTIP in 2025.

Total other income (expense) increased $152.4$138.5 million, or 6,420%,617%, from expenseincome of $2.4$22.4 million for the threesix months ended MarchJune 31,30, 2025 to income of $150.0$161.0 million for the threesix months ended MarchJune 31,30, 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 $1.0$11.8 million duefor tothe Urica’ssix receiptmonths ofended additionalJune anti-dilution30, shares2026 (see Note 3 to the unaudited condensed consolidated financial statements), and $0.1 million in UNLOXCYT royalties recognized by Fortress as royalty income (contingent consideration). These gains were partially offset by interest expense and financing fee expenses related to Fortress’ debt outstanding with Oaktree and Journey’s debt outstanding with SWK Funding LLC. The $0.6 million, or 20%, increase in interest expenseincome andof financing$1.0 feesmillion is attributabledue to anincreased additionalcash paymentbalances madeperiod toover Oaktree for the Cyprium PRV sale monetization event.period.

At MarchJune 31,30, 2026, we had an accumulated deficit of $623.7$624.1 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 MarchJune 31,30, 2026, we had cash and cash equivalents of $255.8$196.6 million, of which $209.9$153.8 million relates to Fortress and private subsidiaries primarily funded by Fortress, $16.3$15.1 million relates to Mustang, $27.2$25.6 million relates to Journey, and $2.4$1.9 million relates to Avenue. Restricted cash at MarchJune 31,30, 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 next twelve months.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.”

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 MarchJune 31,30, 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.

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 MarchJune 31,30, 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 limit the amount of securities it can sell under its registration statements on Form S-3 in any 12-month period.

Net cash provided by operating activities increased $223.4$191.7 million from the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025. The increase is due to net income of $137.2$137.8 million for the threesix months ended MarchJune 31,30, 2026 as compared to the net loss of $24.7$36.3 million for the same period in 2025, anda andecrease increasein the gain recognized on the deconsolidation of $58.1Checkpoint of $27.0 million, and a decrease of $11.9 million resulting from changes in operating assets and liabilities led by the increase in accounts payable and accrued expenses of $44.7 million due primarily to the accrual of $41 million owed to the NIH by Cyprium as a result of the PRV sale (see Note 3 to the unaudited condensed consolidated financial statements).liabilities.

Net cash used in investing activities for the six months ended June 30, 2026 was $0.1 million, compared to net cash provided by investing activities for the threesix months ended MarchJune 31, 2026 as compared to the three months ended March 31,30, 2025 decreasedof by$7.3 $1.2million, a decrease of $7.3 million, due to the cash increase in 2025 as a result of the deconsolidation of Checkpoint, and Mustang’s $1.2 million proceeds from the sale of its held-for-sale assets related to the exit of its manufacturing facility in the prior-year quarter.2025.

Net cash used in financing activities for the six months ended June 30, 2026 was $27.3 million, compared to net cash provided by financing activities was $52.1 million for the threesix months ended MarchJune 31,30, 2025, compared to net cash used in financing activities2025 of $27.4$56.7 million for the three months ended March 31, 2026,million, a decrease of $79.5$84.0 million. The decrease is attributable to a decrease in proceeds from partner companies’ equity offerings and option and warrant exercises of $52.0$54.3 million, a decrease in proceeds from partner companies ATM offerings of $6.9 million, and a decrease in proceeds from Fortress ATM offerings of $1.0 million, partially offset by an increase in the payments made to Oaktree of $14.5$9.6 million, and an increase of $14.2 million in payments made for the redemption of partner company preferred shares, and a decrease in proceeds from ATM offerings of $1.0 million.shares.

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