I recently had the opportunity to interview Lindsay A. Rosenwald, CEO of Fortress Biotech, Inc. (FBIO), an innovative biopharmaceutical company focused on identifying, in-licensing and developing high-potential marketed drugs and development-stage drug candidates. Our discussion follows...
 

Terry Chrisomalis: You became a first time CEO at Fortress Biotech in December of 2013. What were your professional experiences in the preceding years/decades that allowed you to assume that role? Could you share some of the drugs that you found previously that were success stories?
Lindsay Rosenwald: I was a physician in private practice until the mid-1980s, when I went to Wall Street as a private investor and entrepreneur. I’m proud to have founded a number of biotech companies since the 1990s. One of the best-known is Cougar Biotechnology. Johnson and Johnson (JNJ) acquired it for approximately $1 billion on the strength of Zytiga, which is now the biggest selling prostate cancer drug in the world.

Two other drugs I’ve developed are the Parkinson’s drug Northera, which was sold to Lundbeck (HLUYY) for about $600 million, and Trisenox for acute promyelocytic leukemia, which was incurable before Trisenox came on the market.

There have been 12 drugs on which I’ve worked, which received FDA approval. One of the drugs I helped develop has been keeping a close family member alive for four or five years now. Sometimes when you do good things, it comes back to you.
 

Terry Chrisomalis: Fortress Biotech has an incredibly unique business model, very different from a traditional pure play biotech. How and why did you come up with this model? What are some market inefficiencies that led you to pursue this model?
Lindsay Rosenwald: As a private investor, I discovered that the life sciences industry is a very inefficient market. I ran the numbers a few years ago and estimated that about $300 to $400 billion is spent around the world on research and development every year. By itself, that’s great news. The inefficiency lies in the fact that the science is advancing so rapidly that drug developers can’t develop every promising drug candidate, and the drug candidates are only getting better as the years go on.

Fortress Biotech’s goal is to identify potentially effective drug candidates, in-license them and form partner companies led by people with the expertise to develop them so they can reach patients as efficiently as possible. Fortress Biotech and our partner companies now have more than 25 product candidates. Of those, 16 are in clinical trials and five are revenue-generating dermatology products.
 

Terry Chrisomalis: Journey Medical, the dermatology business within Fortress Biotech, has experienced explosive growth from its launch in 2015. What do you attribute this growth to in an otherwise flat or declining industry?
Lindsay Rosenwald: I give a lot of credit to our team of more than 40 salespeople. They work closely with dermatologists who prescribe a lot of the dermatologic products that we sell. We also have an outstanding treatment in Journey Medical Corporation’s lead product, Targadox for acne. When we launched it in 2016, it was the only 50 mg immediate-release doxycycline hyclate tablet available on the market. Patients have had great results. Its success made Journey Medical a cash flow positive company. Now we’re working toward Journey Medical expanding beyond the dermatology space.
 

Terry Chrisomalis: You have built the Fortress Biotech foundation over the last 5 years, and regularly talk about how the business can “snowball” from here. Explain to me why your business model is so scalable?
Lindsay Rosenwald: It’s highly scalable because the clinical-stage drug development candidates that Fortress Biotech likes to acquire are plentiful, available on very reasonable terms and exceptionally high quality. We have a unique and proprietary way to identify these assets, which includes studying the market, ensuring the data is strong and determining the likelihood that the drug candidate will be successful.
 

Terry Chrisomalis: The strategy at Fortress Biotech is to Identify, Develop, and Monetize assets.  What types of products and product candidates are you looking for?
Lindsay Rosenwald: We’re interested in the drug candidate alone, so there is no one type. While most companies work in a specific space like oncology or a certain rare disease, Fortress Biotech is concerned with whether the drug treats an unmet need, the quality of the data, how its manufacturing process works and if there’s a market for it. If a drug candidate meets our criteria, we’ll consider it. I see several interesting opportunities every day, but Fortress Biotech has an extensive due diligence process that drug candidates must pass before we enter any agreements.

Terry Chrisomalis: Where and how do you find them?
Lindsay Rosenwald: Fortress Biotech has an incredible business development group comprised of about a dozen people, most of whom are PhDs or MDs. I train them to scour the world for promising drug candidates. Fortress Biotech also has strong relationships with some of the world’s best research institutions, such as St. Jude Children’s Research Hospital, City of Hope and Fred Hutchinson Cancer Research Center. There are lots of opportunities out there, as at least 10 to 20 companies drop major programs annually that are often available for deals on favorable terms.

Terry Chrisomalis: Can you give me an example of Fortress Biotech executing on this strategy?
Lindsay Rosenwald: In 2018, our partner company Mustang Bio in-licensed a lentiviral gene therapy from St. Jude Children’s Research Hospital for the treatment of X-linked severe combined immunodeficiency, also known as bubble boy disease. We were excited about the data and the hope that the therapy, MB-107, could offer kids who previously had an average life expectancy of about two years. 

What made the partnership work is that each party brought something special to the table. St. Jude has a stable producer cell line that provides a reliable source of vector. That’s very unusual and was compelling to us. In turn, Mustang Bio has its own manufacturing facilities that could relatively easily adapt to manufacturing the gene therapy and get it to patients quickly. Last April, the New England Journal of Medicine published a study from St. Jude that found the gene therapy had cured infants in a clinical trial.

Terry Chrisomalis: Fortress Biotech currently has a dozen plus world-class academic and commercial partners. How important are these relationships to growing and sustaining your business?
Lindsay Rosenwald:Fortress Biotech’s relationships with research institutions and other companies are incredibly important to us. We don’t have the capability nor the desire to do our own research. Our focus is on acquiring the rights to research that has reached clinical stage. Our goal is for these relationships to be mutually beneficial. There are a lot of great institutions and companies that have assets that aren’t being developed. We step in to provide that opportunity for them.

Terry Chrisomalis: Fortress Biotech currently has 5 commercials stage products, and over 25 development stage programs. How do you plan to grow those numbers within the next year? Five years?
Lindsay Rosenwald: Fortress Biotech is always reviewing new drug candidates and discussing potential agreements with other companies and research institutions. One of our goals for the year is to expand our business development group and acquire more drug candidates. We also want to grow our sales and revenues to allow Journey Medical to branch out of the dermatology space. On the development side, we want to see our late-stage product candidates get approved and start bringing in revenues. 

But at the end of the day, we want to keep doing what we’re doing. Fortress Biotech is just getting started and we have a lot to look forward to.

Terry Chrisomalis: How and when do you determine whether to develop a product candidate on your own or look for a strategic partner?
Lindsay Rosenwald: It all comes down to the economics. We look at the value of the drug candidate and whether it’s more productive for Fortress Biotech to develop it alone, or with a strategic partner. If we don’t use a strategic partner, it has to be in a therapeutic area where we’d want to develop our own sales and marketing group.

Terry Chrisomalis: Thank you for your time.