Please explain Fortress’ GAAP financials.
Under GAAP, due to certain Fortress voting rights with the majority of our partner and subsidiary companies, Fortress consolidates the financial reporting of those companies. As a result, Fortress’ GAAP financials show consolidated revenues or losses inclusive of the underlying activities of its partner and subsidiary companies. The revenues and losses at the public partner companies are included in the consolidated financials, but do not impact Fortress’ standalone cash balances.
What is unique about Fortress’ business model?
Fortress’ mission is to generate long-term shareholder value from the acquisition, development, and commercialization of clinical-stage medicines. Fortress currently has 8 FDA-approved dermatology products and 25+ clinical and preclinical candidates across diversified therapeutic areas including oncology and rare diseases. Assets are developed by Fortress’ portfolio of private subsidiaries and public partner companies. Most subsidiaries and partner companies issue to Fortress an annual equity dividend worth 2.5% of subsidiary/partner company capitalization and a 4.5% royalty on net sales. Fortress also holds an equity stake in each subsidiary and partner company; Fortress shareholders achieve value during appreciation of those equity holdings or through exits. Fortress also has the potential to receive distributions from subsidiaries and partner companies from Priority Review Voucher (PRV) sales, asset monetizations, and dividends from cash flow.
Fortress focuses on acquiring later clinical-stage product candidates with existing proof-of-concept to reduce development risk. Fortress works with a team of medical and industry experts through which we have established 35+ new companies that seek to acquire new drug candidates to develop new medicines across multiple therapeutic categories.
For more information, please view a video with an overview of our unique business model.
What sets Fortress’ business model apart from other life science companies?
Fortress’ business model, through its subsidiaries and partner companies, takes advantage of inefficiencies in life sciences to license and develop clinical stage medicines. Fortress creates long-term value through royalties from sales and equity dividends while avoiding large research and development expenses. This model incentivizes the team to continue to expand Fortress’ pipeline of clinical medicines while continuously adding value to its existing subsidiaries and partner companies.
What is Fortress’ relationship to its subsidiaries and partner companies?
Generally, “subsidiary” refers to a private Fortress subsidiary, “partner company” refers to a public Fortress subsidiary, and “partner” refers to entities with whom one of the foregoing parties has a significant business relationship, such as an exclusive license or an ongoing product-related payment obligation.
Most subsidiary/partner companies provide Fortress with an annual 2.5% equity dividend and a 4.5% royalty on net sales when such sales exist. This incentivizes Fortress to continue to build value over time. Subsidiary/partner companies and Fortress can share resources, personnel, and expertise. Fortress provides all business development efforts including active identification of synergistic portfolio assets and provides ongoing operational, strategic, administrative support.
Where can I find information about Fortress’ preferred dividend?
Fortress’ website will contain dividend announcements and Form 8937s for FBIOP, Fortress’ 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock. Forms will be updated on a quarterly basis for the monthly dividends. Here is a link to the FBIOP Announcements page: https://www.fortressbiotech.com/investors/resources/fbiop-announcements.
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