FORTRESS BIOTECH, INC.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2018

or

? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ____ to _____.

Commission File No. 001-35366

FORTRESS BIOTECH, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)

20-5157386 (I.R.S. Employer Identification No.)

2 Gansevoort Street, 9th Floor New York, New York 10014 (Address of Principal Executive Offices)

10014 (Zip Code)

Registrant's telephone number, including area code: (781) 652-4500

Securities registered pursuant to Section 12(b) of the Act:

(Title of Class)

Common Stock, par value $0.001 per share 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock

(Name of exchange on which registered) NASDAQ Capital Market

NASDAQ Capital Market

Securities registered pursuant to section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ? No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ? No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ?

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (? 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ?

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (? 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ?

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ? Non-accelerated filer ?

Accelerated filer x Smaller reporting company x Emerging growth company ?

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ?

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ? No x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed second fiscal quarter: $94,124,331 based upon the closing sale price of our common stock of $2.98 on that date.

Common stock held by each officer and director and by each person known to own in excess of 5% of outstanding shares of our common stock has been excluded in that such persons may be deemed to be affiliates. The determination of affiliate status in not necessarily a conclusive determination for other purposes.

As of March 14, 2019, there were 61,302,251 shares of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

FORTRESS BIOTECH, INC. ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I Item 1. Item 1B. Item 2. Item 3. Item 4.

Business. Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures

PART II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Consolidated Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations. Quantitative and Qualitative Disclosures About Market Risk. Financial Statements and Supplementary Data. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Controls and Procedures. Other Information

PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services

PART IV Item 15. Exhibits, Financial Statement Schedules. Item 16. Form 10-K Summary.

Page

1 1 39 39 39 40

40 40 40 40 48 48 48 48 49

49 49 49

49 50 50

51 51 55

ii

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Statements in this Annual Report on Form 10-K that are not descriptions of historical facts are forward-looking statements that 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. We have attempted to identify forward-looking statements by terminology including "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. 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:

?

our growth strategy;

?

financing and strategic agreements and relationships;

?

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

?

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

?

our ability to attract, integrate and retain key personnel;

?

the early stage of products under development;

?

the results of research and development activities;

?

uncertainties relating to preclinical and clinical testing;

?

the ability to secure and maintain third-party manufacturing, marketing and distribution of our and our affiliates' products

and product candidates;

?

government regulation;

?

patent and intellectual property matters;

?

dependence on third-party manufacturers; and

?

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 required by law.

iii

PART I

Item 1. Business.

Overview

Fortress Biotech, Inc. ("Fortress" or the "Company") is a biopharmaceutical company dedicated to acquiring, developing and commercializing pharmaceutical and biotechnology products and product candidates, which we do at the Fortress level, at our majorityowned and majority-controlled subsidiaries and joint ventures, and at entities we founded and in which we maintain significant minority ownership positions. Fortress has a talented and experienced business development team, comprising scientists, doctors and finance professionals, who identify and evaluate promising products and product candidates for potential acquisition by new or existing partner companies. We have executed such arrangements in collaboration with some of the world's foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center, St. Jude Children's Research Hospital and University College London.

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and finance expertise to help our partners achieve their goals. Our partner companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, and public and private financings.

Our business approach is designed for maximum flexibility, allowing us to pursue a broad array of new biopharmaceutical technologies with clinical and commercial potential. It enables us to move quickly to take advantage of time-sensitive opportunities when necessary and provides us with a range of options from which to select what we deem the most advantageous corporate or financial structure for each drug candidate. We seek to acquire, develop and commercialize drugs, drug candidates, technologies and operating subsidiaries with high growth potential, both at the Fortress level and via our partner companies. We believe that focusing on the identification, acquisition and early-stage development of product candidates while benefitting from our partners' development and commercialization expertise will reduce our internal expenses and allow us to have a larger number of product candidates progress to later stages of drug development.

As of the end of 2018, several of our partner companies possess licenses to product candidate intellectual property, including Aevitas Therapeutics, Inc. ("Aevitas"), Avenue Therapeutics, Inc. ("Avenue"), Caelum Biosciences, Inc. ("Caelum"), Cellvation, Inc. ("Cellvation"), Checkpoint Therapeutics, Inc. ("Checkpoint"), Cyprium Therapeutics, Inc. ("Cyprium"), Helocyte, Inc. ("Helocyte"), Journey Medical Corporation ("Journey" or "JMC"), Mustang Bio, Inc. ("Mustang"), and Tamid Bio, Inc. ("Tamid").

As used throughout this filing, the words "we", "us" and "our" may refer to Fortress individually or together with our affiliates and partners, as dictated by context.

Product Candidates and Other Intellectual Property

Marketed Dermatology Products

Through our partner company Journey we market seven dermatology products:

Targadox: Targadox (doxycycline hyclate tablets) is a tetracycline-class antimicrobial indicated as adjunctive therapy for severe acne.

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