Roth starts Fortress Biotech at buy

Roth Capital Partners initiated coverage of Fortress Biotech (NASDAQ:FBIO) with a “buy” rating and $9 price target. The stock closed at $2.97 on Friday.

Fortress is dedicated to acquiring, developing and commercializing novel pharmaceutical and biotechnology products. The company has six subsidiaries, including Avenue Therapeutics, Checkpoint Therapeutics, Escala Therapeutics, Helocyte, Journey Medical, and Mustang Bio.

“Fortress has an ownership structure with its subsidiaries, which allows it to maintain significant value of pipeline assets through royalties, equity participation, fees and current revenues,” writes analyst Joseph Pantginis.

There are now about 20 development programs in place, and business development hiring continues in various verticals, he said, adding that, “we expect that this momentum will continue in broadening pipelines and subsidiaries.”

While the majority of pipeline assets are currently preclinical, Mr. Pantginis said the therapeutic niches being targeted are playing in the “right sandboxes,” ranging from orphan indications, to looking to be differentiated in the immuno-oncology arena.

“With current revenue, a late-stage asset and a broad pipeline, we believe it is an opportune time to visit the Fortress investment case,” he added. “The company looks to maintain meaningful economic participation in all of its subsidiaries, which should drive shareholder value in addition to the company developing its own internal pipeline.