Rafael Holdings Reports Fourth Quarter and Full Fiscal Year 2019 Results

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Oct 03, 2019, 19:39 ET

NEWARK, N.J., Oct. 3, 2019 /PRNewswire/ -- Rafael Holdings, Inc., (NYSE American: RFL), reported revenue of $4.9 million and a loss per share of $0.35 for the fiscal year ended July 31, 2019. Fourth quarter revenue was $1.4 million and the loss per share was $0.16.

Recent Operational Highlights

Rafael Pharmaceuticals, a clinical-stage pharmaceutical company in which the Company holds preferred equity and a warrant to increase ownership to 56% of the fully diluted equity interests, reached an out-licensing agreement with Ono Pharmaceutical Co., Ltd. of Japan. Ono gained exclusive rights to develop and commercialize Rafael Pharma's lead drug candidate, CPI-613® (devimistat) and related compounds for all indications in certain Asia-Pacific region countries. Rafael Pharma received an upfront payment of $12.9 million, with the right to an additional $150.3 million contingent on attainment of certain developmental and commercial milestones. Rafael Pharma will also receive low-double digit royalties based on net sales.
Rafael Pharma continued to expand its pivotal Phase 3 trial of CPI-613^® (devimistat) for patients with relapsed or refractory acute myeloid leukemia (AML) adding clinical trial sites in France, Austria, South Korea and Spain.
Rafael Pharma continued to expand its pivotal Phase 3 trial of CPI-613^® (devimistat) in combination with modified FOLFIRINOX as a first-line treatment for patients with metastatic pancreatic cancer adding clinical trial sites in France, Korea and Israel.
Future Oncology, a peer-reviewed medical journal, published two manuscripts about the details of ongoing Phase 2 and Phase 3 studies at Rafael Pharma.
LipoMedix Pharmaceuticals, a clinical-stage company in which we hold a majority interest, was awarded a Horizon 2020 Phase 1 grant for the project: Promitil® - a new 'smart' nanomedicine for cancer chemo-radiotherapy. Horizon 2020 is a research and innovation program of the European Union.

Remarks by Howard Jonas, Chairman and CEO of Rafael Holdings
"During the fourth quarter, our key pharma holding, Rafael Pharma, continued to advance its clinical development programs, including pivotal, multi-jurisdictional, Phase 3 trials of CPI-613^® (devimistat). Rafael Pharma also reached an out-licensing agreement with Ono Pharmaceuticals reflecting the promise of Rafael Pharma's lead drug candidate.

"In addition, we have established a wholly-owned venture to develop a pipeline of therapeutic compounds including compounds to regulate cancer metabolism. The venture is pursuing collaborative research agreements with scientists from top academic institutions.

"We also continue our efforts to realize the value of our real estate holdings including our 20-story commercial property and associated garage in Newark, New Jersey."

About Rafael Holdings, Inc.:
Rafael Holdings, Inc., ("Rafael Holdings" or "the Company"), a Delaware corporation, owns interests in commercial real estate assets and clinical-stage pharmaceutical companies. The commercial real estate holdings consist of properties in Newark, New Jersey, Piscataway, New Jersey and in Israel. The pharmaceutical holdings include interests in Rafael Pharmaceuticals, Inc., a clinical-stage, oncology-focused, pharmaceutical company and in LipoMedix Pharmaceuticals Ltd., a clinical-stage oncology-focused pharmaceutical company based in Israel.

RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

	July 31,
	2019		2018
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	12,024	$	15,803
Trade accounts receivable, net of allowance for doubtful accounts of $122 and $82 at July 31, 2019 and 2018, respectively		450		287
Marketable securities		—		24,701
Due from Rafael Pharmaceuticals		280		3,300
Prepaid expenses and other current assets		507		421
Total current assets		13,261		44,512

Property and equipment, net		48,733		50,113
Investments – Rafael Pharmaceuticals		70,018		13,300
Investments – Other Pharmaceuticals		2,000		2,000
Investments – Hedge Funds		5,125		4,218
Deferred income tax assets, net		19		—
In-process research and development and patents		1,575		1,651
Other assets		1,412		1,126

TOTAL ASSETS	$	142,143	$	116,920

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Trade accounts payable	$	795	$	367
Accrued expenses		605		500
Other current liabilities		27		24
Total current liabilities		1,427		891

Due to Related Parties		65		276
Convertible debt, net of discount of $54 – Related Party		14,946		—
Other liabilities		292		188
Accrued interest on convertible note – Related Party		649		—
TOTAL LIABILITIES		17,379		1,355

COMMITMENTS AND CONTINGENCIES

EQUITY
Class A common stock, $0.01 par value; 50,000,000 shares authorized, 787,163 shares issued and outstanding as of July 31, 2019 and 2018, respectively		8		8
Class B common stock, $0.01 par value; 200,000,000 shares authorized, 13,142,502 and 11,762,346 shares issued and outstanding as of July 31, 2019 and 2018, respectively		131		118
Additional paid-in capital		112,898		103,636
Accumulated deficit		(5,840)		(1,108)
Accumulated other comprehensive income		3,784		4,043
Total equity attributable to Rafael Holdings, Inc.		110,981		106,697
Noncontrolling interests		13,783		8,868
TOTAL EQUITY		124,764		115,565

TOTAL LIABILITIES AND EQUITY	$	142,143	$	116,920

RAFAEL HOLDINGS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share data)

	Year Ended July 31,
	2019		2018
REVENUES:
Rental – Third Party	$	1,452	$	1,275
Rental – Related Party		2,125		2,223
Parking		874		873
Other – Related Party		480		—
Total Revenue		4,931		4,371

COSTS AND EXPENSES:
Selling, general and administrative		8,821		5,519
Research and development		1,027		995
Depreciation and amortization		1,779		1,698
Loss from operations		(6,696)		(3,841)

Interest income, net		469		16
Net gains resulting from foreign exchange transactions		47		32
Net loss on equity investments		—		(104)
Gain on sales of marketable securities		330		12
Unrealized gain on Investments – Hedge Funds		907		—
Gain on disposal of bonus shares		—		246
Loss before income taxes		(4,943)		(3,639)
Benefit from (provision for) income taxes		19		(8,437)
Net Loss		(4,924)		(12,076)
Net loss attributable to noncontrolling interests		(231)		(427)
Net loss attributable to Rafael Holdings, Inc.	$	(4,693)	$	(11,649)

OTHER COMPREHENSIVE LOSS
Net Loss	$	(4,924)	$	(12,076)
Unrealized loss on marketable securities		—		(308)
Unrealized gain on available-for-sale securities		—		1,869
Foreign currency translation adjustments		298		166
Total Comprehensive Loss		(4,626)		(10,349)
Comprehensive income (loss) attributable to noncontrolling interests		173		(107)
Total Comprehensive Loss attributable to Rafael Holdings, Inc.	$	(4,453)	$	(10,456)

Loss per share attributable to Rafael Holdings, Inc. common stockholders:
Basic and diluted	$	(0.35)	$	(0.93)

Weighted average number of shares used in calculation of loss per share:
Basic and diluted		13,275,239		12,485,000

RAFAEL HOLDINGS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(in thousands, except share data)

	Year Ended July 31,
	2019		2018
Operating activities
Net loss	$	(4,924)	$	(12,076)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,779		1,698
Deferred income taxes		(19)		8,859
Interest income on Rafael Pharmaceuticals Series D Convertible Note		(848)		—
Interest income		(37)		—
Net realized and unrealized gain on sale of marketable securities		(330)		—
Net realized and unrealized gain on Investments - Hedge Funds		(907)		—
Provision for doubtful accounts		122		—
Non-cash compensation		372		104
Amortization of debt discount		17		657
Realized gain on disposal of bonus shares		—		(246)
Loss on disposal of fixed assets		—		13
Net gain resulting from foreign exchange transactions		—		(32)

Change in assets and liabilities:
Trade accounts receivable		(285)		(23)
Other current assets and prepaid expenses		(86)		(258)
Write off of patents		76		—
Other assets		275		(586)
Accounts payable and accrued expenses		533		(35)
Other current liabilities		3		(10)
Due to Related Party		654		2
Due from Related Party		(280)		—
Accrued Interest - Related Party		649		—
Other liabilities		104		118
Net cash used in operating activities		(3,132)		(1,815)

Investing activities
Purchases of property and equipment		(399)		(710)
Proceeds from sale and maturity of marketable securities		25,031		6,670
Purchase of investments		—		(151)
Cash advances to IDT Corporation, net of repayments		—		(1,700)
Investment in Rafael Pharmaceuticals		(55,870)		—
Net cash (used in) provided by investing activities		(31,238)		4,109

Financing activities
Contribution from noncontrolling interest of consolidated entity		4,587		—
Repayment of loan by Rafael Pharmaceuticals, including interest		3,335		—
Proceeds from sale of shares		7,777		—
Proceeds from exercise of options		190		864
Cash advances from IDT Corporation, net of repayments		—		886
Proceeds from issuance of convertible note		15,000		—
Net cash provided by financing activities		30,889		1,750
Effect of exchange rate changes on cash and cash equivalents		(298)		3
Net (decrease) increase in cash and cash equivalents		(3,779)		4,047
Cash and cash equivalents at beginning of year		15,803		11,756
Cash and cash equivalents at end of year	$	12,024	$	15,803

Supplemental Schedule of Non-Cash Investing and Financing Activities
Adoption effect of ASU 2016-01	$	39	$	—
Beneficial conversion feature of convertible debt – related party	$	71	$	—
Series D Convertible Note and accrued interest converted to Series D Preferred Stock	$	10,848	$	—
Related Party deposit utilized to purchase Class B Common Stock	$	864	$	—
Cash payments made for taxes	$	—	$	—
Cash payments made for interest	$	—	$	—