Fortress Biotech, Inc. Q3 FY2022 earnings call

• Recorded record revenues of $57.7 million for the nine months ended September 30, 2022, which was 26% greater than the prior year's $45.1 million.
• In the third quarter, revenue was $16.1 million, down $3.5 million from the prior year. Targadox revenue was down $4 million due to generic competition, while Accutane revenue increased by $0.6 million.
• Enrolled 75% of patients in Phase 3 clinical trials for DFD-29, expecting enrollment completion by year-end, top-line data in the first half of 2023, and an NDA filing in the second half of 2023.
• Successfully settled three paragraph IV litigations with Padagis, with Qbrexza, Amzeeq, and Zilxi having entry dates no earlier than 2030, 2031, and 2027 respectively.
• Anticipates commercial operations returning to profitability with newly launched products, expected launch of anti-itch product, and internal efficiency maximization.

Total revenue for the third quarter of 2022 was $16.1 million, a decrease of $3.5 million from the third quarter of 2021. The decrease was primarily due to a $4 million reduction in Targadox revenue from generic competition, partially offset by a $0.6 million increase in Accutane revenue. Qbrexza, Amzeeq, Zilxi, and Accutane contributed $44.4 million or 81% of the year-to-date revenue of $57.7 million for the nine months ended September 30, 2022.

• Expect continued growth with newly launched products, expected launch of anti-itch product, and internal efficiency maximization.
• Aim for commercial operations to return to profitability.
• DFD-29 is expected to contribute over $100 million annually once launched.

• Suffered a $9.5 million cryptocurrency breach in September 2021. The Federal government seized significant cryptocurrency associated with the breach, and the process to convert it back to USD could take up to six months or more.

Q: Thoughts on adjustments given low Q3 results and sales force investment?

A: Claude mentions ramping up in Q4, looking at efficiencies, and the commercial team working to grow.

Q: Accutane performance?

A: Accutane was up year-over-year, held 11.2% market share, and there is potential for growth in 2023.

Q: Cryptocurrency breach recovery?

A: Ramsey Alloush says the FBI recovered significant portion in cryptocurrency, and it depends on conversion to USD.

Q: Anti-itch product launch?

A: Anticipated near term, but manufacturing delays due to COVID and excipient issues.

Q: Qbrexza performance, DFD-29 commercial spends?

A: Qbrexza is on track, DFD-29 has global rights with exceptions, and commercial spends are similar to other brands.

Q: 2023 revenue growth expectation?

A: Expect growth from newly launched brands, with legacy brands Ximino and Exelderm expected to hold strong.

Q: Accutane market decline?

A: Market was down 12% Q3 over Q2 2022, and Accutane maintained a consistent market share.