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Fortress Biotech (FBIO) stock forecast: Regulatory hurdles pose risk

By Hermione Taylor

Edited by Jekaterina Drozdovica

12:46, 15 December 2021

Genetic research and Biotech science Concept. Human Biology and pharmaceutical technology on laboratory background.
Fortress Biotech (FBIO) stock forecast: Regulatory hurdles pose risk

Fortress Biotech Inc (NASDAQ: FBIO) is a biopharmaceutical company with a broad portfolio. Its strategy focuses on identifying drug candidates and developing them with partner firms.

Fortress does not specialise in a particular disease, and prides itself on its ‘focus on opportunism and diversification’. As a result, Fortress operates across areas as diverse as dermatology, oncology and rare diseases, while working with twelve partners.

But these diverse developments have seen varied degrees of success, meaning the Fortress Biotech share price has fluctuated significantly over the past five years. With analysts now uniformly rating the stock as a ‘buy’, what factors are shaping the Fortress Biotech stock forecast?

Fortress Biotech focus areas 

Regulatory hurdles put pressure on the stock

In late December 2017, the Fortress Biotech share price stood at $2.55. The stock is currently trading at $2.66 (as of 13 December). FBIO stock has encountered significant volatility along the way, falling below $1 in December 2018 and hitting a five-year high of $5.48 in April 2021.

Volatility has intensified since the pandemic hit, with the stock falling almost 50% between February and March 2020 as the impact of Covid-19 became clear. 

The share price rallied over summer 2020. It reached $4.80 that September before halving to $2.23 after the FDA raised concerns about one of Fortress’s key developments, IV tramadol pain relief developed with Avenue Therapeutics. 

Fortress Biotech stock price chart, 2016-2021

The share price tumbled again in mid April 2021 after the FDA unexpectedly delayed its review of the treatment.

Lingering losses amid mixed results

In the most recent Fortress stock news, the biopharma company reported third-quarter revenue of $21.m, up 123% from a year ago.

Despite the revenue uptick, the company is still loss-making. Net loss widened to $45m in the third quarter, equating to an earnings per share (EPS) of -$0.56, compared to a net loss of $29.9m in Q3 2020.

While the first three quarters of 2020 saw Fortress report a net loss of $82m, Q1-Q3 2021 has so far seen a net loss of $96.1m, an almost 17% increase. 

Research and Development costs make up the largest share of costs, and financing these requires additional capital.

“The company may need to raise capital in the marketplace in order to successfully push its products into the next phase, and there can be no assurances that the company will be able to successfully raise capital and/or do so on favourable term,” said Jason Kolbert, Senior Healthcare Analyst at Dawson James in the report published in August.

Fortress Biotech stock value fell by around a third over the course of November 2021.

FBIO stock price analysis: Technical view

The daily Relative Strength Index (RSI) for Fortress Biotech is neutral at 36.85 (13 December). An RSI below 30 could signal that FBIO stock is being oversold and undervalued. Though Fortress Biotech’s RSI moved above 70 in September 2020, its value no longer suggests that the share price is about to fall. 

Fortress Biotech stock chart, RSI, 2021

Other short-term indicators are pointing to a bearish price direction, with both moving averages and oscillators giving a ‘strong sell’ signal, with 16 indicators showing a ‘sell’ signal and ten staying neutral.

On a monthly basis, there are 14 ‘sell’ and 10 neutral indicators. 

Dermatology products deliver strong growth

Fortress markets seven prescription dermatology products with its partner company, Journey. These generated net revenues of $19.6m in Q3 2021, up from a net loss of $9.4m in the prior-year quarter.

The future product pipeline looks promising, too. Journey plans to launch one additional prescription product in the first half of 2022, and initiate a Phase 3 clinical program for a rosacea treatment in late 2021.

Mustang partnership: Going up a gear

Fortress has also partnered with Mustang to develop a gene therapy for immunodeficiency and a treatment for B-cell non-Hodgkin lymphomas and chronic lymphocytic leukemia.

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In August 2021, the European Medicines Agency granted Priority Medicines designation to the gene therapy treatment, whilst Mustang Bio was awarded a grant of $2m from the National Cancer Institute to fund a trial into the cancer therapies.

AstraZeneca acquires Caelum Biosciences 

On 5 October 2021, AstraZeneca’s Alexion acquired Caelum, a company founded by Fortress. Caelum is developing a treatment for AL amyloidosis, which is currently in Phase 3 studies. Fortress received $56.9m upfront from the sale of Caelum, and the agreement allows for further payments as regulatory and commercial milestones are reached. Fortress stands to gain up to $212m in future payments as a result. 

Risky business

Biotech companies face inherent clinical and regulatory risks, highlighted in Fortress’s case by its issues with FDA approval for its IV tramadol product. Fortress’s most recent SEC filing sets out the risks inherent in drug development

“Many of our and our partner companies’ product candidates are in early development stages and are subject to time and cost intensive regulation and clinical testing. As a result, our product candidates may never be successfully developed or commercialized,” the report said.

This makes forecasting the future valuation and calculating price targets a challenge. Kolbert highlighted the uncertainty surrounding valuations.

“For each individual product, we make certain assumptions about the timing and probability of success and apply these assumptions to our model,” the analyst wrote in a note.

“We apply a probability of success in our therapeutic models. This ranges from as low as 30% and as high as 70% based on what we feel is the therapeutic risk that the product will advance.”
 

Fortress Biotech (FBIO) stock forecast

The six analysts reporting on Fortress Biotech all currently rate the stock a ‘buy’. There is less consensus on price targets, however, with the analysts’ forecasts ranging from the low of $5 to the high of $21.

The average price target is currently $12.80, suggesting a potential 375.84% upside on the current (13 December) share price.

CHART

At the start of the 2020, analysts at Benchmark initiated coverage on Fortress Biotech with a ‘buy’ rating and a $9 price target.

Following the release of record 2020 results on 31 March, Jennifer Kim at Cantor Fitzerald reiterated an ‘overweight’ rating for the stock.

Weeks later, Scott Henry at Roth Capital boosted his FBIO stock price target from $4.50 to $5, though this remains the lowest analyst price target for Fortress Biotech stock.

Dawson’s Kolbert boosted his price target from $16 to $21 on 17 February, representing a 444.04% upside on the report date share price. In an August 2021 report, Kolbert remained bullish about Fortress's prospects, reiterating a ‘buy’ rating and increasing the price target to $24.

”New derm products complemented the franchise and we see the potential for the business to continue to grow, but that is not really the Fortress story, in our view. The real potential upside is the pipeline and partnerships,” he said.

More recently, Joseph Pantginis reiterated a ‘buy’ rating for Fortress stock in August, and analysts at B Riley and UBS Group have both reiterated bullish ratings for Fortress since it reported third-quarter results on 15 November.

FBIO stock analyst price targets and ratings in 2021

Note that analysts’ forecasts can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you can’t afford to lose. 

Fortress Biotech stock forecast 2025 

Though analysts’ forecasts rarely look at the longer term, Wallet Investor’s algorithm-based projections suggest that the share price could exceed $3 by February 2022.

Wallet Investor’s Fortress Biotech stock price forecast sees considerable price fluctuations over the coming five years, suggesting that the share price will reach a twelve-month high of $4.21 in April 2022, then dropping to $2.80 the following November.

Over a five-year horizon, Wallet Investor’s FBIO stock predictions see the price reaching an all-time high of $5.55 in April 2026, before falling back to $4.17 in November 2026.

Note that algorithm-based predictions are often wrong and past performance cannot guarantee future results. Wallet Investor’s forecasts use historical price movements to predict future prices. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you can't afford to lose.

FAQs

Is FBIO stock a good buy?

According to MarketBeat, all six analysts reporting on Fortress Biotech currently rate the stock a ‘buy’. 

Note that analyst predictions are often wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.

Why is FBIO stock going down?

Over the past 18 months, the Fortress Biotech share price has been impacted by several factors. The regulatory hurdles the biopharma company has faced in getting FDA approval for one of its key treatments may have been the key driver of the share price drop.

Will Fortress Biotech stock go up?

Data from MarketBeat shows that analyst price targets for Fortress Biotech range from a high of $21 to a low of $5. The average price target is currently $12.80, suggesting a potential upside for the stock.

Note that predictions are often wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.

Read more: Johnson and Johnson stock forecast: Will booster lift prices?

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