I'm Scott Henry, healthcare analyst at Alliance Global Partners. Our next fireside chat is with Fortress Biotech, ticker FBIO, with a market cap of approximately $75 million. Fortress Biotech is an incubator, for lack of a better word, of emerging biotech companies, although it also maintains positions in these companies. We cover Fortress Biotech here at AGP with a buy rating and a price target of $4.50 per share. It trades currently around $2.25. Presenting for the company is Chairman and CEO, Dr. Lindsay A. Rosenwald. Lindsay, would you like to take a few minutes to tell our audience a bit about yourself and Fortress? Thank you for coming.
Sure, Scott. Thanks for the opportunity. First of all, just to make it clear, we're not an incubator company. We're a company that uses the inefficiencies of the market for clinical stage medicines that have proof of concept in humans, inefficiencies that there's lots of great managements out there, and inefficiencies in that there's a lot more capital out there than good homes for it. We're building a long-term revenue stream, and that is our business, to take these assets and figure out ways to create cash flow and profits out of each one. Okay, so let me get up my slides.
I knew you wouldn't like that incubator word, Lindsay. That's why I said for lack of a better term, but thank you.
It worked. I tend towards low blood pressure, so you did me a favor. Thanks. I'll be making forward-looking statements, feel free to look at our SEC filings for our current financials and our risk factors. We do have a lot going on. Here's a snapshot of some recent events. In January of this year, we got an approval for a rare disease drug, a pediatric rare disease drug. We very recently, in March, sold that priority review voucher for $205 million. I'd like to see an incubator do that. Checkpoint Therapeutics, we sold the company after approval for what we think is a best-in-class PDL1 checkpoint inhibitor for a couple of indications. We sold that to Sun Pharma in May of 2025, and the drug was launched in the first quarter.
Urica, we launched and closed on a Series A financing in the fourth quarter of 2025 for $205 million also. That's in two phase III clinical trials. We also had, for our Journey, an NDA approval for Emrosi, which has launched it about one year ago. A lot of things going on now and certainly a lot of things expected in the future. Our business model is pretty complex. Unless you really focus on it, you're really not going to know the real value we're creating. First of all, today we do have a very good portfolio of assets approved and late-stage, mid-stage, and early-stage clinical programs that we control, and work to generate near-term and long-term revenue streams from them. We do this through business development. Our BD is R&D. I'm sorry, our R&D is business development.
We don't have any white coats in our company. Maybe straitjackets, but no white coats. We're very diversified. We always want to be diversified. We're not a one-trick pony. Wherever a drug that we can find, and we're very aggressive and sophisticated in finding these opportunities, where we can find them, where they've been reasonably de-risked clinically in humans, where we could generate real, a major commercial return for the level of our investment, we're going to try to license that asset in. This is a limitless scalability business. I know that royalties are very hot these days. As you saw, Ligand recently acquired XOMA for about $750 million. There are other companies in the royalty space that are very successful. A great deal of investors are dying to buy royalties.
We're the only company in the world that I know of that redundantly creates our own future royalties by licensing clinical-stage medicines, developing them and taking those assets and slicing them and dicing them into equity, future equity, royalties, milestones, some or all of those in each deal that we do. We're very focused on creating shareholder value, and that is our story. Portfolio overview. We've had three FDA approvals in the last 18 months or so. We have eight clinical and six pre-clinical candidates over a bunch of therapeutic areas. We have a dermatology business with eight drugs being marketed. We have nine subsidiaries. Oops, went too fast on that. Partner companies-FDA approval. We have one anticipated at least in the 2026, 2027 timeframe. The potential peak sales for these clinical candidates ranges from $100 million to over $2 billion.
That's important because we get royalties for most of these programs. We get a 2.5% to 12.5% royalty from these clinical candidates. From six of our subsidiaries, we also get 2.5% equity dividends each year. Last but not least, almost last but not least, this is our development stage pipeline and commercial portfolio. As you can see, over time, there's more and more checks that are filling out to the right, which means they've hit those milestones, and certainly the number of lines going across should increase. Probably next year, we'll have to have a second page for this. As I said, incredibly scalable model. We have many milestones coming up, and we certainly can go through that during our Q&A, which I guess we could start now. Okay, Scott?
Okay. Thank you, Lindsay. That was great. One of the things we like about Fortress here at AGP is there's always a lot of companies that are planting seeds in the ground of great ideas. For investors, one of the best times is often when you're also harvesting the crops. I think with Fortress, it's a good time right now because you're starting to see the monetizations. They're starting to occur with more regularity. That can be a good time, because it's also the same time that the financial distress starts to wane a bit as well. Thank you for joining us. We'll get started with some Q&A. I guess, just talking to your business model, unlike most biotech companies, I hear the word compounding more when I talk to you.
I hear more cash flow, more compounding, more generating continued success as opposed to banking on one product. Would you agree with that? Also to tuck in maybe how are you using AI in that business model?
Sure. The model works very well. In my career, I've had, I believe, well over a dozen new drug and new biologic approvals from companies I've founded or recapitalized. We know what to do. Historically, I've always had a large group of really smart MDs and PhDs looking for opportunities for us. It was a very expensive, time-consuming, and honestly pretty aggravating strategy, but it did work. It was a hard strategy, a lot of friction. Now through artificial intelligence, we can accomplish what we used to do with one or two dozen MD and PhDs. We can do this with three or four, because the artificial intelligence has gotten so good so quickly that we are, with three or four people, we are, I believe, 100 times more efficient than we were with this business model in the past.
You have to understand that there are a tremendous number of these drug candidates. It's not just clinical stage medicines that we're looking at that have proof of concept in humans. That's over 10,000 that we look for, we look through to find those gems. And there's hundreds of them at any one time that if we can find, would probably fit our model. At the same time, there's another 2,500 or so drug candidates that have been approved ex-USA, that we buy rights to the U.S. market, and sometimes U.S. and EU. Those are solid gold, because those data packages would take 10 or 15 years, to get through to an approval in a country like Japan or in the EU where there's tough FDAs. It would take 10 or 15 years, and it would cost you $500 million to $1 billion now.
We usually get those for a couple million dollars upfront. They're hard to find. The AI is really helping us. Was there another question in there?
I think that was great. You answered that perfectly.
We could talk about your business model for a while, but perhaps let's get into the products a little bit. A large part of your company is your stake in Journey Medical, publicly traded under the ticker D-E-R-M, DERM. At times, your stake in that company has almost captured your whole market cap.
Can you talk a bit about that position, and how it came about?
Sure
How you think about it?
Yeah, actually that's very interesting that you bring that up because people tend to not really do the work. In fact, most nobody does the work or nobody understands what we're doing, and it is hard to explain. When you look at our valuation, we do get value for the public companies in which there isn't much right now. The truth is, historically, our private companies have been much more valuable. In the case of Journey, we have nine or 10 million shares of the company. We have a really great management team. We just launched a year ago a drug called Emrosi for rosacea. It's been, as expected, not a quick launch because you have to get the docs involved to prescribe this. They're not going to easily prescribe it until you get insurance coverage. That is just now starting to happen.
We said it would take about 12-18 months until we really had the reimbursement down. We're well on the way. I think it is still another six months until we're really sure of the level of reimbursement from all of our current and eventual customers. We're on the right track, and we actually had a surprise to the upside with our earnings yesterday with our sales for the drug. That's Journey. We're one of the fewer medical dermatology companies around these days, which is very good, because that gives you a pretty good deal flow of opportunities since there aren't that many competitors for those drugs.
Okay, great. They did report the other day.
Yeah.
A strong number. We cover it over here at AGP as well. It's often said past behavior is very indicative of future behavior. Let's take a minute and revisit some of the recent success stories, which is often signaled by a monetization or raising of cash. We've got ZYCUBO with Cyprium, that subsidiary of yours. We've also got the Checkpoint sale. Tell us a little bit about how this model, when it works correctly, how it plays out.
Yeah, sure. In the case of ZYCUBO, which was a drug that we found in human clinical trials, a drug for a uniformly fatal newborn disease. When we found it was only in about 10 patients, but it was obvious the benefit these patients had. Because it was relatively thought to be a small market, nobody had either seen it or looked for it. This is what we do. We scan for these types of opportunities, and we were able to license it on very favorable terms. We knew it qualified for a priority review voucher if it would get approved. That was a very important incentive for us. We developed it, took a lot of time. We had problems with our chemistry and manufacturing, slowed us down by two or three years. We finally got the approval.
With that, we were lucky to top tick the priority review market. We got $205 million for that asset, the PRV. We have an excellent team at Sentynl Therapeutics that's marketing it. We get a royalty that over $100 million a year would give us 12.5% annually. Obviously, it's not a cheap drug, but it is a great drug, and we're optimistic for the sales. We've already taken out a lot of cash on a relatively tiny investment. On the case of UNLOXCYT, our best-in-class anti-PD, we believe best-in-class anti-PD-L1 checkpoint antibody. We got two approvals about a year ago or so for cutaneous squamous cell carcinoma, both locally advanced and also metastatic. We sold the company right after the approval. I think it was about $355 million, plus a CVR for another $75 million if it gets hit.
We kept about just under 10% of that money. To put it in perspective, we did have a very large randomized, non-small cell lung cancer trial, which would've allowed us, I believe, to get 10 or times more than that, because that is obviously the biggest indication for checkpoint antibodies, and it's a great drug. Unfortunately, we had to do a lot of enrollment in Russia and Ukraine, I think this drug was the first fatality in the war when it launched. That left us just with those two indications. Even there, we took out a nice bit of money, and we have a 2.5% royalty on a very long-lasting revenue stream from Sun Pharmaceuticals on this drug.
Good. Great. Just for the audience's perspective, keep in mind, you're often taking out $40, $50 million, sometimes more from one monetization. When you compare that to the market cap of $75 million, it's very material. Now, granted, there are some preferred shares, there's some other capital structure there, but every monetization is a big deal for Fortress Biotech at the current valuation.
Very big deal. In the case of Caelum, C-A-E-L-U-M, this is a company we founded several years ago. We licensed the drug to Alexion, which then was acquired by AstraZeneca. $hundreds of millions have gone into this asset by them. We put in, I think, $200,000. We are hoping that they'll submit in the U.S. for approval this year. They already did in Japan, I believe Japan, and in the EU. On approval, we'll receive over several years up to about $130 million in milestones. We've already taken out $60 million in cash when the company was sold. Again, on the $200,000 investment, that's been a pretty good return. Based on our cash flow, based on our very low expenses, that loan would, on an annual basis, just out of the milestones, make us cash flow positive.
You have to understand on the sale of the voucher, that's allowing us to pay off our about $30 million in debt, which was one of our biggest cost items was that interest. Our cost should be somewhere currently without the debt payments, I believe $10 million or less. We will hire some more staff, but we're going to keep our cash expenses very low. Between the royalties we're starting to receive, plus these milestones, if we receive them, plus all the other assets we have, the milestones, the potential royalties, and even exits from some of these things, potentially. We don't think we're ever going to have to be back in the capital markets for any equity, which is really important to our model.
Okay, great. We've got so much going on, we're going to run out of time very soon. Maybe in the last minute or so, talk about some of your exciting products on the future. I imagine you're going to bring up dotinurad.
Sure.
Anything else that would be a surprise asset that people are not talking about right now?
Yeah. Dotinurad, we bought it about five years ago, I think. It's what we think is a best-in-class URAT1 inhibitor for hyperuricemia and gout. We bought the entire data package for nothing upfront from a company in Japan that had it approved in Japan, and then soon was approved in China. We have U.S., EU and Great Britain. Anyway, we have a small investment in the development of that drug. We then, a few months ago, closed on a Series A, $205 million financing to pay for two phase III clinical trials, and we're well into those trials already. We think one should complete enrollment this year and one, I hope, early next year. Here's a really exciting, unexpected situation. There is one other company we're familiar with in the space. They're maybe a little bit ahead of us, maybe not. We really don't know.
It's a private company, called Arthrosi. They were recently acquired by Sobi. They're also a URAT1 inhibitor in phase III, or just about finished phase III. They were sold for $1 billion upfront, another, I believe, $500 million in milestones, and I suppose royalties. We certainly think our molecule could potentially be better. Certainly has the benefit of being on the market now, in Japan and now China for some period of time. It sells well and it's a very safe and effective drug. Again, we're probably getting zero value for that asset. We do have a royalty of 3% on it. Honestly, we do get calls from the royalty buyers about that asset. Honestly, until the drug's approved, it's highly unlikely we would sell that royalty. That's one. Well, let me see.
We have an asset called, our royalty is in a drug called Baergic. It's a drug we bought out of AstraZeneca. We knew it was a very well manufactured, which is really important to us, manufactured molecule. For us, it is for epilepsy. We sold it to Axsome, about a $7 or $8 billion market cap biotech company in the neuro space. They'll be developing it now through phase III. I think the next step is phase II. We got a really nice royalty on that one, and that could be a $500 million or more drug. Then we have a company called Helocyte. It's a best-in-class vaccine for cytomegalovirus. It's in a very large, 420-patient randomized liver transplant trial to see if it helps reduce transplant rejection, which would be a really sizable market for us.
We hope to enter an advanced phase III clinical trial for kidney transplant in the next year or so, pending financing. These are just a couple of the assets that we have. We really do have a lot. We don't really get a chance to go through the whole portfolio. We'd love that opportunity. Maybe we'll have an analyst day one of these days, Scott.
That would be great. I think I can hear the music playing, so I think we're out of time at this point. Always a pleasure, Lindsay. You always have a lot to talk about. Look forward to doing this again. Thank you for joining us.