8-K
Rafael Holdings, Inc. (RFL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported): March 17, 2021
RAFAEL HOLDINGS, INC.
(Exact name of registrant as specified inits charter)
| Delaware | 1-38411 | 82-2296593 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 520 Broad Street<br><br> <br>Newark, New Jersey | 07102 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 212 658-1450
NotApplicable
(Formername or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425<br> under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12<br> under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to<br> Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to<br> Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b)-2 of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on<br><br> <br>which registered |
|---|---|---|
| Class B common stock, par value $0.1 per share | RFL | New York Stock Exchange |
Item 2.02. Results of Operations and Financial Condition.
On March 17, 2021, the Registrant posted an earnings release to the investors page of its website (www.rafaelholdings.com) announcing its results of operations for the fiscal quarter ended January 31, 2021. A copy of the earnings release concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Document |
|---|---|
| 99.1 | Press Release, dated March 17, 2021, reporting the results of operations for the fiscal quarter ended January 31, 2021. |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RAFAEL HOLDINGS, INC. | |
|---|---|
| By: | /s/ David Polinsky |
| Name:<br> David Polinsky | |
| Title:<br> Chief Financial Officer |
Dated: March 17, 2021
2
EXHIBITINDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated March 17, 2021, reporting the results of operations for the fiscal quarter ended January 31, 2021. |
3
Exhibit 99.1
Rafael Holdings Reports Second QuarterFiscal Year 2021 Results
NEWARK, NJ – March 17, 2021: Rafael Holdings, Inc., (NYSE: RFL), reported revenue of $1.0 million and a loss per share of $0.50 for the second quarter of its 2021 fiscal year, the three months ended January 31, 2021.
Q2 FY 2021 Consolidated Financial and Operational Highlights
| · | Revenue of $1.0 million, generated by Rafael Holdings’ real estate portfolio, decreased<br>from $1.2 million in the year-ago quarter due, in part, to the sale of its building in Piscataway, NJ. |
|---|---|
| · | Loss per share of $0.50 compared to a loss per share of $0.08 in the year ago quarter primarily<br>due to a $7.0 million impairment of the company’s interest in Altira, as described below. |
| --- | --- |
| · | Rafael Holdings’ Board of Directors has appointed Ameet Mallik to become the Company's<br>Chief Executive Office effective May 1, 2021. Howard Jonas, who has served as the company's Chairman and CEO since its inception,<br>will continue as Chairman of the Board and remain an active member of the management team. |
| --- | --- |
| · | William "Bill" Conkling has been named Rafael Holdings’ Chief Commercial Officer. |
| --- | --- |
| · | On December 7, 2020, the Company acquired the economic rights related to a 33.33% membership<br>interest in Altira, adding to the 33.33% interest purchased in fiscal 2020. As in the first such agreement, the purchase gives<br>the Company an indirect right to receive a 1% royalty on potential net sales of certain Rafael Pharmaceuticals’ products. |
| --- | --- |
| · | On December 7, 2020, Rafael Holdings sold 567,437 shares of the Company’s Class B common<br>stock and warrants to purchase an additional 113,487 shares of the Company’s Class B common stock for an aggregate sale price<br>of $13 million. |
| --- | --- |
Q2 FY 2021 – Pharmaceutical Holdings - RecentDevelopments
Rafael Pharmaceuticals
At January 31, 2021, the Company and its affiliates collectively owned securities representing 51% of the issued and outstanding capital stock of Rafael Pharmaceuticals and approximately 41% on a fully diluted basis including shares beneficially held through its interest in RP Finance, LLC., a funding vehicle. Recent developments announced by Rafael Pharmaceuticals include:
| · | The U.S. Food and Drug Administration (FDA) has granted Fast Track designation for Rafael Pharmaceuticals’<br>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)<br>in combination with hydroxychloroquine in patients with clear cell sarcoma of soft tissue. Rafael Pharmaceuticals will begin enrolling<br>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.
LipoMedix
At January 31, 2021, 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.
LipoMedix announced that its lead compound, Promitil® (PL-MLP), will be manufactured in the United States by ForDoz Pharma (ForDoz), a specialty pharmaceutical company focused on the development, manufacturing, and commercialization of value-added sterile and complex injectable products.
Barer Institute
The Barer Institute, a wholly owned subsidiary of Rafael Holdings, 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.
The Barer Institute announced that it had reached an agreement with Princeton University’s Office of Technology Licensing for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program and related intellectual property from the laboratory of Professor Joshua Rabinowitz, Department of Chemistry.
Remarks by Howard Jonas, Chairman and CEO of RafaelHoldings
“The progress being made by our pharma partners is highlighted by our Board’s selection of Ameet Mallik to join as CEO of Rafael Holdings beginning on May 1, 2021. Ameet is an extraordinarily capable and accomplished pharma executive with deep knowledge of oncological drug development and commercialization. Together with Bill Conkling, who has joined our team as Chief Commerical Officer, Ameet will lead our effort to realize the potential of Rafael Holdings including its investments in Rafael Pharmaceuticals, LipoMedix, and the Barer Institute.”
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 a pipeline of compounds focused on the regulation of cancer metabolism. For more information, visit rafaelholdings.com.
Contact:
David Polinsky
Chief Financial Officer, Rafael Holdings, Inc.
P: (212) 658-1450
RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share andper share data)
| July 31, <br> 2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 6,086 | $ | 6,206 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of 117 and 218 at January 31, 2021 and July 31, 2020, respectively | 124 | 267 | |||
| Due from Rafael Pharmaceuticals | 360 | 118 | |||
| Prepaid expenses and other current assets | 116 | 273 | |||
| Assets held for sale | - | 2,968 | |||
| Total current assets | 6,686 | 9,832 | |||
| Property and equipment, net | 43,760 | 44,433 | |||
| Equity investment – RP Finance LLC | 383 | 192 | |||
| Due from RP Finance LLC | 3,750 | - | |||
| Investments – Rafael Pharmaceuticals | 79,141 | 70,018 | |||
| Investments – Other Pharmaceuticals | 477 | 1,201 | |||
| Investments – Hedge Funds | 8,943 | 7,510 | |||
| Deferred income tax assets, net | - | 6 | |||
| In-process research and development and patents | 1,575 | 1,575 | |||
| Other assets | 1,534 | 1,580 | |||
| TOTAL ASSETS | 146,249 | $ | 136,347 | ||
| LIABILITIES AND EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Trade accounts payable | 495 | $ | 921 | ||
| Accrued expenses | 643 | 1,191 | |||
| Amount due for purchase of membership interest | 9,500 | 3,500 | |||
| Other current liabilities | 162 | 115 | |||
| Due to related parties | 29 | - | |||
| Total current liabilities | 10,829 | 5,727 | |||
| Other liabilities | 33 | 92 | |||
| TOTAL LIABILITIES | 10,862 | 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 January 31, 2021 and July 31, 2020, respectively | 8 | 8 | |||
| Class B common stock, 0.01 par value; 200,000,000 shares authorized, 15,664,476 issued and 15,652,120 outstanding as of January 31, 2021, and 15,034,598 issued and 15,028,536 outstanding as of July 31, 2020 | 155 | 149 | |||
| Additional paid-in capital | 142,746 | 129,136 | |||
| Accumulated deficit | (25,866 | ) | (16,255 | ) | |
| Accumulated other comprehensive income related to foreign currency translation adjustment | 3,761 | 3,762 | |||
| Total equity attributable to Rafael Holdings, Inc. | 120,804 | 116,800 | |||
| Noncontrolling interests | 14,583 | 13,728 | |||
| TOTAL EQUITY | 135,387 | 130,528 | |||
| TOTAL LIABILITIES AND EQUITY | 146,249 | $ | 136,347 |
All values are in US Dollars.
RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share andper share data)
| Three Months Ended<br> January 31, | Six Months Ended<br> January 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| REVENUE | ||||||||||||
| Rental – Third Party | $ | 190 | $ | 370 | $ | 426 | 716 | |||||
| Rental – Related Party | 527 | 527 | 1,047 | 1,047 | ||||||||
| Parking | 122 | 219 | 299 | 443 | ||||||||
| Other – Related Party | 120 | 120 | 240 | 240 | ||||||||
| Total revenue | 959 | 1,236 | 2,012 | 2,446 | ||||||||
| COSTS AND EXPENSES | ||||||||||||
| Selling, general and administrative | 2,767 | 2,221 | 5,359 | 4,262 | ||||||||
| Research and development | 1,568 | 448 | 2,083 | 693 | ||||||||
| Depreciation and amortization | 441 | 473 | 878 | 939 | ||||||||
| Impairment – Altira | 7,000 | - | 7,000 | - | ||||||||
| Loss from operations | (10,817 | ) | (1,906 | ) | (13,308 | ) | (3,448 | ) | ||||
| Interest (expense) income, net | (1 | ) | 33 | (1 | ) | (31 | ) | |||||
| Net loss resulting from foreign exchange transactions | - | - | - | (5 | ) | |||||||
| Gain on sale of building | - | - | 749 | - | ||||||||
| Impairment of investments - Other Pharmaceuticals | - | - | (724 | ) | - | |||||||
| Unrealized gain on investments - Hedge Funds | 2,489 | 557 | 3,433 | 520 | ||||||||
| Loss before income taxes | (8,329 | ) | (1,316 | ) | (9,851 | ) | (2,964 | ) | ||||
| Provision for income taxes | (4 | ) | (12 | ) | (9 | ) | (16 | ) | ||||
| Equity in earnings of RP Finance | 96 | - | 192 | - | ||||||||
| Consolidated net loss | (8,237 | ) | (1,328 | ) | (9,668 | ) | (2,980 | ) | ||||
| Net loss attributable to noncontrolling interests | (72 | ) | (75 | ) | (57 | ) | (129 | ) | ||||
| Net loss attributable to Rafael Holdings, Inc. | $ | (8,165 | ) | $ | (1,253 | ) | $ | (9,611 | ) | $ | (2,851 | ) |
| OTHER COMPREHENSIVE LOSS | ||||||||||||
| Net loss | $ | (8,237 | ) | $ | (1,328 | ) | $ | (9,668 | ) | $ | (2,980 | ) |
| Foreign currency translation adjustment | 37 | (34 | ) | (1 | ) | (28 | ) | |||||
| Total comprehensive loss | (8,200 | ) | (1,362 | ) | (9,669 | ) | (3,008 | ) | ||||
| Comprehensive loss attributable to noncontrolling interests | 10 | (18 | ) | (11 | ) | (16 | ) | |||||
| Total comprehensive loss attributable to Rafael Holdings, Inc. | $ | (8,210 | ) | $ | (1,344 | ) | $ | (9,658 | ) | $ | (2,992 | ) |
| Loss per share | ||||||||||||
| Basic and diluted | $ | (0.50 | ) | $ | (0.08 | ) | $ | (0.60 | ) | $ | (0.18 | ) |
| Weighted average number of shares used in calculation of loss per share | ||||||||||||
| Basic and diluted | 16,172,421 | 15,790,400 | 15,997,571 | 15,715,442 |
RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended<br> January 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Operating activities | ||||||
| Net loss | $ | (9,668 | ) | $ | (2,980 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||
| Depreciation and amortization | 878 | 939 | ||||
| Deferred income taxes | 6 | 12 | ||||
| Net unrealized gain on investments - Hedge Funds | (3,433 | ) | (520 | ) | ||
| Impairment of investments - Other Pharmaceuticals | 724 | - | ||||
| Impairment – Altira | 7,000 | - | ||||
| Equity in earnings of RP Finance | (192 | ) | - | |||
| Provision for doubtful accounts | 104 | 48 | ||||
| Stock-based compensation | 719 | 411 | ||||
| Amortization of debt discount | - | 54 | ||||
| Gain on sale of building | (749 | ) | - | |||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | 39 | 77 | ||||
| Prepaid expenses and other current assets | 157 | 181 | ||||
| Other assets | 46 | (38 | ) | |||
| Accounts payable and accrued expenses | (933 | ) | (252 | ) | ||
| Due from Rafael Pharmaceuticals | (242 | ) | - | |||
| Other current liabilities | 47 | |||||
| Due to related parties | 29 | 126 | ||||
| Other liabilities | (59 | ) | 42 | |||
| Net cash used in operating activities | (5,527 | ) | (1,900 | ) | ||
| Investing activities | ||||||
| Purchase of investment in Altira | (1,000 | ) | - | |||
| Purchases of property and equipment | (205 | ) | (456 | ) | ||
| Payments to fund RP Finance | (3,750 | ) | - | |||
| Proceeds from sale of building | 3,658 | - | ||||
| Proceeds related to distribution of Hedge Funds | 2,000 | - | ||||
| Investment in Rafael Pharmaceuticals | (9,123 | ) | - | |||
| Net cash used in investing activities | (8,420 | ) | (456 | ) | ||
| Financing activities | ||||||
| Contribution from noncontrolling interest of consolidated entity | 912 | - | ||||
| Proceeds from exercise of options | 43 | - | ||||
| Proceeds from issuance of shares | 13,000 | - | ||||
| Payments for taxes related to shares withheld for employee taxes | (146 | ) | (116 | ) | ||
| Net cash provided by (used in) financing activities | 13,809 | (116 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 18 | (30 | ) | |||
| Net decrease in cash and cash equivalents | (120 | ) | (2,502 | ) | ||
| Cash and cash equivalents, beginning of period | 6,206 | 12,024 | ||||
| Cash and cash equivalents, end of period | $ | 6,086 | $ | 9,522 | ||
| Supplemental schedule of noncash investing and financing activities | ||||||
| Conversion of LipoMedix bridge notes | $ | - | $ | 200 | ||
| Conversions of related party convertible notes payable and accrued interest | $ | - | $ | 15,668 |
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