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Rafael Holdings Reports First Quarter Fiscal Year 2021 Results

Published: Dec 15, 2020

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

  

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SOURCE Rafael Holdings, Inc.


Company Codes: NYSE:RFL

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