Fortress Biotech, Inc. Q3 FY2022 earnings call

• Recorded $57.7 million in revenues for the nine months ended September 30, 2022, a 26% increase from the prior year. - Third quarter revenue was $16.1 million, down $3.5 million from Q3 2021. - Targadox was impacted by generic competition, but Accutane and newly launched products contributed. - DFD-29 Phase 3 trials enrollment progressing, with expected top-line data in H1 2023 and NDA filing in H2 2023. - Successful litigation settlements extended market exclusivity for Qbrexza, Amzeeq, and Zilxi. - Financial results: COGS decreased, but R&D and SG&A expenses increased; net loss for Q3 2022 was $10.1 million; non-GAAP adjusted EBITDA was a net loss of $4 million. - Cryptocurrency breach: Federal govt seized crypto, conversion back to dollars may take 6+ months.

For the third quarter of 2022, total revenue was $16.1 million, a decrease of $3.5 million from $19.6 million in Q3 2021. Targadox revenue was $4 million less in Q3 2022 compared to Q3 2021 due to generic competition. Accutane revenue increased by $0.6 million or 17% versus Q3 2021. Qbrexza, Accutane, Amzeeq, and Zilxi together represented $44.4 million or 81% of year-to-date revenue. The DFD-29 product candidate is in Phase 3 clinical trials with enrollment expected to complete by year-end, top-line data in H1 2023, and NDA filing in H2 2023, with expected net sales over $100 million annually once launched.

• Expect commercial operations to return to profitability with growth from new products, anti-itch product launch, and internal efficiencies. - Anticipate record revenues in 2022. - No specific Q4 guidance given yet, but trends in Q4 looking better than Q3.

• Macro-economic challenges affecting sector growth. - Generic competition impact on Targadox revenue. - Delays in anti-itch product launch due to manufacturing issues. - Uncertainty in cryptocurrency recovery from breach.

Q: Given the third quarter results being at the low end and macro environment issues, any adjustments planned?

A: Looking to cause efficiencies throughout the organization, plan to grow prescription base with commercial team.

Q: Confident in sequential growth from Q3 to Q4?

A: Q4 started better than Q3, trends looking better but no specific guidance.

Q: Thoughts on Accutane product, plateau or growth?

A: Accutane has climbed to 3rd position in market, room for growth with strong strategies.

Q: Color on cryptocurrency breach recovery?

A: FBI recovered significant crypto, conversion back to dollars depends on Bitcoin price.

Q: Anti-itch product launch timeline?

A: Still on track, but manufacturing delays due to COVID and excipient issues.

Q: View on Qbrexza product?

A: Qbrexza doing well, on track for 20%+ growth in prescriptions, potential run rate $28-30M.

Q: Commercial investments for DFD-29?

A: DFD-29 has global rights except BRIC and CIS countries, potential $100M in U.S. sales.

Q: Market decline impact on Accutane?

A: Market down 12% in Q3 2022, Accutane market share held at 11.12%.