On Friday, Roth/MKM resumed coverage on Fortress Biotech (NASDAQ:FBIO) with a positive outlook, assigning a Buy rating and setting a price target of $10.00. The move reflects confidence in the biopharmaceutical company's diverse pipeline of clinical stage assets and its potential for near-term catalysts that could enhance company valuation and provide non-dilutive capital for development costs.
Fortress Biotech's portfolio includes 25 clinical assets, with three nearing approval in 2024. The company's strategy involves a mix of four public and six private companies, contributing to its diverse portfolio.
The firm has already successfully spun out four public companies, including Journey Medical, Mustang Bio (NASDAQ:MBIO), Checkpoint Therapeutics (NASDAQ:CKPT), and Avenue Therapeutics (NASDAQ:ATXI), all noted with a status of "NC" or no comment regarding their individual ratings.
The analyst highlighted that the anticipated approvals of DERM's DFD-29 for Rosacea, with a total addressable market (TAM) over $300 million, and CKPT's Cosibelmab for cutaneous squamous cell carcinoma (cSCC), with a TAM ranging from $500 million to $1 billion, are likely to push valuations higher in 2024. These milestones are seen as significant drivers for the company's future growth.
In addition to its ownership and controlling voting interest in its subsidiary companies, Fortress Biotech retains a 2.5% equity dividend and a 4.5% dividend on net sales for all subsidiaries, except for DERM. This arrangement is designed to protect against dilution and provides a securitizable asset, further strengthening the company's financial position.
The analyst's commentary underscores the belief that Fortress Biotech's strategic positioning and upcoming catalysts present a strong case for investment, with the potential to unlock significant value for shareholders in the near future.
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