Fortress Biotech, Inc. Q2 FY2022 earnings call

• Journey showed solid growth in Q2 2022 despite supply chain delays, which were resolved in July.
• QBREXZA and ACCUTANE continue to gain momentum; newly acquired products AMZEEQ and ZILXI contribute, with another prescription product to launch in H2 2022.
• Managed care claim estimates for AMZEEQ and ZILXI were updated as actual claims exceeded expectations.
• Progress on DFD-29 Phase 3 clinical program: patient enrollment tracking as planned, with 45% of targeted 640 patients enrolled; anticipating top-line data in H1 2023 and NDA submission in H2 2023.
• Market opportunity for DFD-29: an estimated 16 million U.S. patients with rosacea, $1 billion in prescription sales in 2021; Phase 2 data showed nearly double efficacy vs current market leader.
• Expansion of product portfolio through licensing and acquiring commercial/late-stage development assets to leverage sales force.

Total net revenues increased 20% to $18.3 million for the three months ending June 30, 2022, from $15.3 million in the same period of 2021. The growth was primarily driven by QBREXZA and ACCUTANE, which had combined net sales of $11.3 million in Q2 2022 compared to $6.5 million in Q2 2021, representing a 74% growth. However, Targadox saw a $3 million decrease due to generic competition, and Ximino and Exelderm had supply shortages. QBREXZA and ACCUTANE contributed significantly to revenue growth, while newly acquired products AMZEEQ and ZILXI also played a role in the overall revenue picture.

• Expect to recover significant lost revenues from supply chain delays over the remainder of 2022.
• Launch another prescription dermatology product in H2 2022.
• Complete enrollment for DFD-29 Phase 3 clinical trials in H2 2022.
• Anticipate top-line data from DFD-29 trials in H1 2023 and NDA submission in H2 2023.
• Expect another record year of growth in sales in 2022.

• Supply chain delays in Q2 2022 that affected product availability.
• Generic competition for Targadox leading to revenue decrease.
• Unforeseen challenges faced in Q2, though resolved.
• Cybersecurity breach resulting in $9.5 million losses, with some cryptocurrency seized but exact recovery timeline uncertain.

Q: What do we need to see in the data in order to differentiate DFD-29 from others and how does enrollment compare to initial expectation?

A: To differentiate, significant improvement on inflammatory lesions and investigator global assessment are key. Enrollment for DFD-29 Phase 3 studies MVOR-1 and MVOR-2 is on track, with a slight delay on the European leg of MVOR-2 due to external factors but overall within anticipated buffers.

Q: Could you comment on specific campaigns resonating well for QBREXZA and repeat vs new prescriptions?

A: QBREXZA has a digital campaign focusing on awareness, education, and driving inquiries to dermatology providers via social media; new prescriptions for QBREXZA have been trending upward, e.g., from 3600 in January to ~5400 in June, with refill rates increasing.