Fortress Biotech, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Accrued Liabilities and other Long-Term Liabilities

Accrued Liabilities and other Long-Term Liabilities

12 Months Ended

Dec. 31, 2016

Accrued Liabilities and other Long-Term Liabilities

12. Accrued Liabilities and other Long-Term Liabilities

In December 2012, the Company acquired certain manufacturing rights from Ovamed and agreed to pay an aggregate of $1.5 million, in three installments of $0.5 million on December 12, 2014, 2015 and 2016, respectively. As of December 31, 2016, the Company made a payment of $1.1 million to Ovamed and will pay the remainder in 2017 pursuant to the terms of a settlement agreement. The remaining accrual is recorded on the Consolidated Balance Sheets as a current accrued expense of $0.9 million as of December 31, 2016. This obligation was recorded at its full value; accretion of the obligation was nil, $0.2 million and $0.2 million for the year ended December 31, 2016, 2015 and 2014, respectively, and is recorded as interest expense on the Consolidated Statements of Operations (see Note 8). On April 20, 2015, the Company decided to no longer pursue the development of TSO. As a result, the Company terminated all on-going TSO trials including its Phase 2A clinical trial in pediatric patients with autism spectrum disorder. A preliminary analysis of data from this trial failed to demonstrate any signal of activity.

The Company also had a collaboration agreement with Dr. Falk Pharma (“Falk”) in connection with the development of TSO. Under this agreement, Falk was to provide the Company with the Final Clinical Study Report (“CSR”). On August 3, 2015, Falk notified the Company that the CSR was complete and that access to the CSR was available. While the Company disputes the adequacy of the CSR and does not believe any payment is due to Falk, upon receipt of access to the CSR, the Company recorded a liability of €2.5 million ($2.6 million) in accrued expenses as of December 31, 2016.

Accrued expenses and other long-term liabilities, excluding National, consisted of the following ($ in thousands):

	December 31,
($ in thousands)	2016		2015
Accrued expenses:
Professional fees	$	1,253	$	382
Salaries, bonuses and related benefits		2,846		2,492
Accrued Severance		53
Ovamed manufacturing rights - short term component		900		2,007
Research and development		394		303
Dr. Falk Pharma milestone		2,634		2,717
JMC accrued cost of goods sold		726		-
Lease impairment		128		146
Other		1,148		523
Total accrued expenses	$	10,082	$	8,570

Other long-term liabilities:
Deferred rent and long-term lease abandonment charge		5,014		584
Total other long-term liabilities	$	5,014	$	584

National's accounts payable and other accrued expenses as of September 30, 2016, consisted of the following ($ in thousands):

	September 30,
	2016
Legal	$	1,346
Audit		198
Telecommunications		209
Data Services		425
Regulatory		444
Settlements		832
Deferred rent		65
Contingent consideration payable		424
Other		3,223
Total	$	7,166