MIAMI - Fortress Biotech, Inc. (NASDAQ:FBIO), a biopharmaceutical company, has announced a new loan agreement with Oaktree Capital Management, L.P. for up to $50 million to bolster its business development and pipeline advancement efforts. The initial tranche of $35 million has been received, with the option to draw an additional $15 million at Oaktree's discretion.
The new financing enables Fortress to settle its previous $50 million term loan with Oaktree ahead of the due date in August 2025. This move is expected to enhance the company's capital flexibility, with the new loan maturing on July 25, 2027. The interest rate is set at the 3-month Secured Overnight Financing Rate (SOFR) plus 7.625%, with a floor of 2.50% and a cap of 5.75%.
Dr. Lindsay (NYSE:LNN) A. Rosenwald, Chairman, President, and CEO of Fortress, expressed satisfaction with the continued partnership with Oaktree, highlighting the financial leeway it provides for the company's growth and asset acquisition. He also noted the potential for up to three regulatory approvals on New Drug Applications (NDAs) and Biologics License Applications (BLAs) within the next year, and possibly a fourth BLA filing by 2025.
Aman Kumar, Co-Portfolio Manager at Oaktree, commended Fortress's progress and business model, emphasizing the company's pipeline and its ability to address unmet medical needs.
Oaktree, a prominent life sciences industry financier, has invested nearly $4 billion in healthcare since 2020. Legal counsel for the transaction was provided by Troutman Pepper Hamilton Sanders LLP for Fortress and Sullivan & Cromwell LLP for Oaktree. Further details on the loan will be disclosed in a Form 8-K to be filed by Fortress with the SEC.
Fortress Biotech focuses on enhancing shareholder value through product revenue, equity holdings, and dividend and royalty revenue. It has seven marketed pharmaceutical products and over 20 development programs across various therapeutic areas, including oncology, dermatology, and rare diseases. The company partners with leading academic institutions and biopharmaceutical companies such as AstraZeneca (NASDAQ:AZN) and City of Hope.
This report is based on a press release statement from Fortress Biotech.
In other recent news, Fortress Biotech has completed an equity issuance to former Urica holders, distributing over two million shares of common stock. This move fulfills obligations under a 2022 agreement and reflects the company's strategy of managing its equity and meeting financial commitments to investors.
Concurrently, Mustang Bio (NASDAQ:MBIO), a Fortress subsidiary, has announced a stock offering and private placement expected to yield gross proceeds of approximately $2.5 million. The offering, managed by H.C. Wainwright & Co., involves the issuance of over six million shares of common stock or equivalents.
Furthermore, Mustang Bio reported positive results from its Phase 1/2 clinical trial of MB-106, a CAR T-cell therapy for Waldenstrom macroglobulinemia, a rare blood cancer. The trial data showed a 90% response rate among participants, indicating the potential efficacy of this treatment.
In the realm of financial analysis, H.C. Wainwright significantly upgraded its stock target for Fortress Biotech from $10.00 to $24.00, while Roth/MKM maintained a Buy rating on the company's stock. Roth/MKM highlighted Fortress Biotech's 2023 revenue of $84.5 million, an increase from the $75.7 million reported in 2022. These recent developments highlight the ongoing activities within Fortress Biotech and Mustang Bio.
InvestingPro Insights
As Fortress Biotech, Inc. (NASDAQ:FBIO) secures a new financial foothold with Oaktree Capital Management, investors and stakeholders are keenly observing the company’s performance metrics and future prospects. Here are some key insights from InvestingPro that may provide a deeper understanding of the company’s current financial health and market position:
Fortress Biotech's market capitalization stands at a modest $55.2 million, reflecting a company that is still in its growth phase. The company's revenue has shown a notable increase, with a growth of 32.48% over the last twelve months as of Q1 2024, indicating a strengthening position within its industry. Despite this, the company's gross profit margin is negative at -39.14%, highlighting challenges in maintaining profitability against costs.
InvestingPro Tips reveal that while Fortress Biotech is expected to experience net income growth this year, it is also quickly burning through cash. Additionally, the company does not pay a dividend, which may influence investment decisions for those seeking regular income streams. However, it's worth noting the significant price returns over the last week, month, and three months, suggesting a recent uptick in investor confidence.
For those interested in further analysis, there are additional PRONEWS24 tips available on InvestingPro, which could provide a more comprehensive view of Fortress Biotech's financial and market performance. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, granting access to valuable insights for informed investment decisions.
Overall, these metrics and tips from InvestingPro paint a picture of a company with potential for growth but also facing significant financial challenges. As Fortress Biotech continues to advance its pipeline and seeks regulatory approvals, these insights can help investors track the company's trajectory and make strategic choices.
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