You operate in a unique way compared to typical biotech companies. Can you explain your business model and approach to our readers?
Fortress Biotech is distinct from conventional biotech firms in that our focus is primarily on identifying clinical-stage medicines worldwide, especially those with proof of concept in humans or those where obtaining such proof would be cost-effective, and treat an unmet medical need. Our goal is to enhance shareholder value through various revenue streams, including royalties, equity sales, company buyouts, and direct product revenues. Fortress Biotech itself minimizes spending on R&D, relying instead on the companies we control or collaborate with to undertake these activities. Once we achieve positive cash flow, we will then allocate funds toward R&D for our partner companies. Essentially, we function as a hybrid entity, combining aspects of an operating life sciences company, a royalty company, and somewhat of a private equity firm, embodying successful practices from each area into a single operating principle.
How do you identify and select the undervalued assets you decide to invest in?
The identification of undervalued assets, such as drug candidates in development, hinges on a comprehensive review of global R&D efforts in life sciences, which predominantly occur within major pharmaceutical companies, biotech firms, and government agencies. These entities often focus on blockbuster drugs due to their scale, overlooking smaller but potentially valuable opportunities. Our strategy involves finding these overlooked drug candidates that may not yet be on the radar of larger corporations until later stages, such as pivotal trials or post-approval. By leveraging our expertise and a diversified portfolio approach, we mitigate risks and capitalize on inefficiencies within the market, targeting assets that not only have significant clinical data but also show promise of commercial viability.
What challenges have affected your stock's performance, and how do you see the future unfolding for Fortress Biotech?
Our stock has experienced fluctuations, partly due to the complexity of managing a diverse portfolio of product opportunities, which can be challenging for investors that are typically focused on single product binary events. The market often favors investments in companies with fewer drug candidates. However, we anticipate becoming a growth story as our product approvals increase, making our stock more attractive to investors. Our approach, which diversifies risk across multiple products and stages, is designed to transition us into a cashflow-positive business, attracting greater investor interest, and revaluation of our stock.
Could you share details about the products in your pipeline that you're particularly excited about?
We're excited about several near-term products, including a novel treatment for adult rosacea by Journey Medical, which has a PDUFA goal date of November 4, 2024, and we believe could significantly impact the market with its impressive efficacy against the standard of care in clinical trials.
This product, alongside our diverse portfolio including CUTX-101 for a rare disease in newborns and a promising drug for AL amyloidosis (both of which are currently being developed by strategic partners), showcases our focus on diseases with high unmet needs and potential for significant impact. Our ability to identify and develop such innovative treatments reflects our commitment to delivering substantial value to both patients and shareholders.We anticipate as many as 3 product approvals over the next 12 months.
In the context of rapid technological advancements, how do you see the pharma industry evolving, particularly with regards to drug discovery and development?
We are witnessing a technological revolution in the pharma industry, driven by advances in computing power, artificial intelligence, and biologic discovery. These technologies are accelerating drug development and enabling the identification of numerous product leads, far exceeding the capacity for clinical trials and capital investment. This proliferation of potential treatments underscores the importance of efficient market strategies to harness these opportunities. The challenge remains in balancing societal willingness to pay for these advancements against the need to incentivize innovation, ensuring that we can continue to address and potentially cure diseases in the coming decades.
With the current technological revolution, do you foresee a change in biotech investment trends?
The technological revolution could significantly influence biotech investment, particularly as we see developments like the new type 2 diabetes drugs being marketed for obesity, which could have profound economic implications. However, the primary challenge remains the societal and governmental willingness to fund these innovations. The biotech industry's future hinges on finding a balance that encourages investment in drug development while ensuring access to these advancements as generics in the long term. This balance is crucial for continuing to cure diseases and potentially achieving a future where all diseases are curable.
