Rafael Holdings Reports First Quarter Fiscal Year 2021 Results

News provided by

Rafael Holdings, Inc.

Dec 15, 2020, 16:30 ET

NEWARK, N.J., Dec. 15, 2020 /PRNewswire/ -- Rafael Holdings, Inc., (NYSE: RFL), reported revenue of $1.1 million and a loss per share of $0.09 for the first quarter of its 2021 fiscal year, the three months ended October 31, 2020.

Q1 FY 2021 Consolidated Financial Highlights

  • Revenue of $1.1 million in Q1 FY 2021, generated by Rafael Holdings' real estate portfolio, decreased from $1.2 million in the year-ago quarter.
  • Loss per share of $0.09, a decrease from $0.10 in the year ago quarter largely due to a gains on the sale of the Company's commercial real estate property in Piscataway, New Jersey and other investments which more than offset the increased research and development expense.
  • On December 7, 2020, the Company acquired the economic rights related to an additional 33.33% membership interest in Altira, a company which owns the rights to a receive a royalty on sales of certain Rafael Pharmaceuticals products.  The acquisition added to the 33.33% interest purchased in fiscal 2020 As in the first such agreement, the Company purchased the potential right to receive a 1% royalty on Net Sales on these products. 
  • On December 7, 2020, Rafael Holdings entered into a Securities Purchase Agreement for the sale of 567,437 shares of the Company's Class B common stock at a price per share of $22.91 (the closing price of Class B common stock on the prior trading day) for an aggregate purchase price of $13 million. In connection with the purchases, each purchaser was granted warrants to purchase 20% of the shares of Class B common stock purchased by such purchaser exercisable at $22.91. A majority of the proceeds received are expected to be used by the Company to exercise an additional portion of the warrant held by the Company's subsidiary to purchase equity securities of Rafael Pharmaceuticals. The remaining proceeds are expected to be used to fund the operations of Rafael Holdings' drug development programs including its Barer Institute subsidiary and for general corporate purposes.

Rafael Pharmaceuticals
At October 31, 2020, the Company and its subsidiaries collectively owned securities representing 51% of the outstanding capital stock of Rafael Pharmaceuticals and approximately 37% on a fully diluted basis.  Recent developments announced by Rafael Pharmaceuticals include:

  • The U.S. Food and Drug Administration (FDA) has granted Fast Track designation for the Company's lead compound, CPI-613® (devimistat), for the treatment of both metastatic pancreatic cancer and acute myeloid leukemia (AML).
  • Rafael Pharmaceuticals announced that it will initiate a Phase 2 clinical trial of CPI-613®(devimistat) in combination with hydroxychloroquine in patients with clear cell sarcoma of soft tissue. The Company will begin enrolling patients in partnership with Sara's Cure and Sarcoma Alliance for Research through Collaboration (SARC).
  • The FDA has granted Orphan Drug Designation for CPI-613® (devimistat) for the treatment of soft tissue sarcoma.  Rafael Pharmaceuticals' clinical trial will focus on the treatment of relapsed or refractory clear cell sarcoma.
  • Rafael Pharmaceuticals announced that it had crossed the enrollment of 100 patients in its Phase 3 clinical trial (Armada 2000) for patients with relapsed or refractory acute myeloid leukemia (AML). The multi-center, open-label, randomized pivotal trial is assessing the efficacy and safety of Rafael's lead compound CPI-613® (devimistat) in combination with high dose cytarabine and mitoxantrone (CHAM) compared to high dose cytarabine and mitoxantrone (HAM) therapy in older patients.

LipoMedix
At October 31, 2020, Rafael Holdings held 68% of the issued and outstanding ordinary shares of LipoMedix, a development-stage Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery.

Barer Institute
The Barer Institute has identified and begun to develop new therapeutic compounds, including compounds to regulate cancer metabolism, through internal development and in-licensing. It is working to validate newly discovered biomarkers for resistance and sensitivity within its portfolio compounds and to identify certain novel targetable mechanisms of action.

Remarks by Howard Jonas, Chairman and CEO of Rafael Holdings
"Rafael Holdings'continued to pursue the strategic goal of creating value in the pharmaceutical field including through its investments in Rafael Pharmaceuticals and its wholly owned Barer Institute.  In that regard, I am pleased that, among other milestones achieved, Rafael Pharmaceuticals' lead compound, CPI-613® (devimistat), received U.S. Food and Drug Administration granted Fast Track designation for the treatment of metastatic pancreatic cancer and, as Rafael Pharmaceuticals announced earlier today, for acute myeloid leukemia (AML).  The Barer Institute continues to make meaningful progress on its drug development programs." 

About Rafael Holdings, Inc.:
Rafael Holdings is focused on development of novel cancer therapies.  The company is a significant investor in two clinical stage oncology companies, Rafael Pharmaceuticals, Inc. and LipoMedix Pharmaceuticals Ltd.  Through its wholly owned Barer Institute subsidiary, the company is developing compounds focused on the regulation of cancer metabolism.  The company also holds commercial real estate assets in New Jersey and Jerusalem. For more information, visit our website at rafaelholdings.com.

RAFAEL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share data)



October 31,
2020



July 31,
2020


ASSETS






CURRENT ASSETS






Cash and cash equivalents

$

7,231



$

6,206


Trade accounts receivable, net of allowance for doubtful accounts of $256 and $218 at October 31, 2020 and July 31, 2020, respectively


309




267


Due from Rafael Pharmaceuticals


240




118


Prepaid expenses and other current assets


460




273


Assets held for sale


—




2,968


Total current assets


8,240




9,832










Property and equipment, net


44,141




44,433


Equity investment – RP Finance


288




192


Due from RP Finance LLC


1,875




—


Investments – Rafael Pharmaceuticals


70,018




70,018


Investments – Other Pharmaceuticals


477




1,201


Investments – Hedge Funds


6,454




7,510


Deferred income tax assets, net


—




6


In-process research and development and patents


1,575




1,575


Other assets


1,550




1,580


TOTAL ASSETS

$

134,618



$

136,347


LIABILITIES AND EQUITY








CURRENT LIABILITIES








Trade accounts payable

$

1,155



$

921


Accrued expenses


443




1,191


Amount due for purchase of membership interest


3,500




3,500


Other current liabilities


141




115


Due to related parties


30




—


Total current liabilities


5,269




5,727










Other liabilities


33




92


TOTAL LIABILITIES


5,302




5,819










COMMITMENTS AND CONTINGENCIES
















EQUITY








Class A common stock, $0.01 par value; 35,000,000 shares authorized, 787,163 shares issued and outstanding as of October 31, 2020 and July 31, 2020, respectively


8




8


Class B common stock, $0.01 par value; 200,000,000 shares authorized, 15,050,609 issued and 15,044,547 outstanding as of October 31, 2020, and 15,034,598 issued and 15,028,536 outstanding as of July 31, 2020


149




149


Additional paid-in capital


129,393




129,136


Accumulated deficit


(17,701)




(16,255)


Accumulated other comprehensive income related to foreign currency translation adjustment


3,724




3,762


Total equity attributable to Rafael Holdings, Inc.


115,573




116,800


Noncontrolling interests


13,743




13,728


TOTAL EQUITY


129,316




130,528


TOTAL LIABILITIES AND EQUITY

$

134,618



$

136,347


RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited, in thousands, except share and per share data) 



Three Months Ended
October 31,



2020



2019


REVENUE






Rental – Third Party

$

236



$

346


Rental – Related Party


520




520


Parking


177




224


Other – Related Party


120




120


Total revenue


1,053




1,210










COSTS AND EXPENSES








Selling, general and administrative


2,592




2,041


Research and development


515




245


Depreciation and amortization


437




466


Loss from operations


(2,491)




(1,542)










Interest expense, net


—




(64)


Net loss resulting from foreign exchange transactions


—




(5)


Gain on sale of building


749




—


Impairment of investments - Other Pharmaceuticals


(724)




—


Unrealized gain (loss) on investments - Hedge Funds


944




(37)


Loss before income taxes


(1,522)




(1,648)


Provision for income taxes


(5)




(4)


Equity in earnings of RP Finance


96




—


Consolidated net loss


(1,431)




(1,652)


Net loss (income) attributable to noncontrolling interests


15




(54)


Net loss attributable to Rafael Holdings, Inc.

$

(1,446)



$

(1,598)










OTHER COMPREHENSIVE LOSS








Net loss

$

(1,431)



$

(1,652)


Foreign currency translation adjustment


(38)




6


Total comprehensive loss


(1,469)




(1,646)


Comprehensive loss attributable to noncontrolling interests


(21)




(2)


Total comprehensive loss attributable to Rafael Holdings, Inc.

$

(1,490)



$

(1,648)










Loss per share








Basic and diluted

$

(0.09)



$

(0.10)










Weighted average number of shares used in calculation of loss per share








Basic and diluted


15,822,722




15,640,683


RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited, in thousands)



Three Months Ended
October 31,



2020



2019


Operating activities






Net loss

$

(1,431)



$

(1,652)


Adjustments to reconcile net loss to net cash used in operating activities








Depreciation and amortization


437




466


Deferred income taxes


6




1


Net unrealized (gain) loss on investments - Hedge Funds


(944)




37


Impairment of investments - Other Pharmaceuticals


724




—


Equity in earnings of RP Finance


(96)




—


Provision for doubtful accounts


38




48


Stock-based compensation


214




94


Amortization of debt discount


—




54


Gain on sale of building


(749)




—










Change in assets and liabilities:








Trade accounts receivable


(80)




173


Prepaid expenses and other current assets


(187)




217


Other assets


30




(289)


Accounts payable and accrued expenses


(490)




(196)


Due from Rafael Pharmaceuticals


(122)




—


Other current liabilities


26




(12)


Due to related parties


30




(37)


Due from Rafael Pharmaceuticals


—




160


Other liabilities


(59)




—


Net cash used in operating activities


(2,653)




(936)










Investing activities








Purchases of property and equipment


(145)




(321)


Payment to fund RP Finance


(1,875)




—


Proceeds from sale of building


3,658




—


Proceeds related to distribution of Hedge Funds


2,000




—


Net cash provided by (used in) investing activities


3,638




(321)










Financing activities








Proceeds from exercise of options


43




—


Net cash provided by financing activities


43




—


Effect of exchange rate changes on cash and cash equivalents


(3)




4


Net increase (decrease) in cash and cash equivalents


1,025




(1,253)


Cash and cash equivalents, beginning of period


6,206




12,024


Cash and cash equivalents, end of period

$

7,231



$

10,771










Supplemental schedule of noncash investing and financing activities








Conversion of LipoMedix bridge notes

$

—



$

82


Conversions of related party convertible notes payable and accrued interest

$

—



$

15,668


SOURCE Rafael Holdings, Inc.