8-K
Rafael Holdings, Inc. (RFL)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuantto Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2020
RAFAELHOLDINGS, INC.
(Exactname of registrant as specified in its charter)
| Delaware | 1-38411 | 82-2296593 |
|---|---|---|
| (State or other jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 520 Broad Street 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<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
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 which registered |
|---|---|---|
| Class<br> B common stock, par value $0.1 per share | RFL | New<br> York Stock Exchange |
Item2.02. Results of Operations and Financial Condition.
On October 29, 2020, 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 and fiscal year ended July 31, 2020. 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 9.01Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit No. | Document |
| --- | --- |
| 99.1 | Press Release, dated October 29, 2020, reporting the results of operations for the fiscal quarter and fiscal year ended July 31, 2020. |
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: October 29, 2020
2
EXHIBITINDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated October 29, 2020, reporting the results of operations for the fiscal quarter and fiscal year ended July 31, 2020. |
3
Exhibit 99.1
Rafael Holdings Reports Fourth Quarterand Full Fiscal Year 2020 Results
NEWARK, NJ – October 29, 2020: Rafael Holdings, Inc., (NYSE: RFL), reported revenue of $4.9 million and a loss per share of $0.66 for the fiscal year ended July 31, 2020. Fourth quarter revenue was $1.2 million with a loss per share of $0.34.
Q4 FY 2020 Consolidated Highlights
| · | Revenue of $1.2 million in Q4 FY2020, generated by Rafael Holdings’ real estate portfolio, was unchanged from the year-ago<br>quarter. The loss per share of $0.34 increased from $0.16 in the year ago quarter largely due to additional investment in the Company’s<br>wholly owned pharmaceutical research venture, the Barer Institute. |
|---|---|
| · | In August after the quarter close, the company sold its commercial real estate property in Piscataway, New Jersey for $3.9<br>million |
| --- | --- |
Rafael Pharmaceuticals
At July 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.
| · | The U.S. Food and Drug Administration (FDA) granted Orphan Drug Designation for Rafael Pharma’s lead compound, CPI-613®<br>(devimistat), for the treatment of soft tissue sarcoma. Rafael’s clinical trial will focus on the treatment of relapsed or<br>refractory clear cell sarcoma. |
|---|---|
| · | Ono Pharmaceutical Co., has begun a multicenter, open-label Phase 1 study in Japan for patients with pancreatic cancer. The<br>study is evaluating the efficacy and safety of CPI-613®️ (devimistat) in combination with modified FOLFIRINOX (mFFX). |
| --- | --- |
| · | Rafael Pharma reached its target enrollment of 500 patients in its pivotal Phase 3 clinical trial for metastatic pancreatic<br>cancer (AVENGER 500). The trial is evaluating the efficacy and safety of CPI-613®️ (devimistat) in combination with<br>modified FOLFIRINOX (mFFX) as first-line therapy. Efficacy data for this trial could be available for analysis as early as the<br>second quarter of calendar year 2021. |
| --- | --- |
| · | Rafael Pharma has crossed the midpoint to its first interim analysis in enrollment for its pivotal Phase 3 clinical trial (ARMADA<br>2000) of CPI-613® (devimistat) for relapsed or refractory acute myeloid leukemia (AML). The multicenter, open-label, randomized<br>pivotal trial is evaluating the efficacy and safety of its lead compound devimistat in combination with high dose cytarabine and<br>mitoxantrone (CHAM) in older patients. The efficacy data for this trial couuld be available for interim analysis as early as the<br>second quarter of calendar year 2021. |
| --- | --- |
| · | Rafael Pharma expanded its Phase 2 clinical trial of CPI-613® (devimistat) for patients with relapsed or refractory Burkitt’s<br>lymphoma/leukemia. |
| --- | --- |
| · | Rafael Pharma entered into a research collaboration with Roswell Park Comprehensive Cancer Center to evaluate the effects of<br>CPI-613® (devimistat) with or without chemotherapy agents, including oxaliplatin/cisplatin/5-FU/carboplatin/taxol, on esophageal<br>cancer cells. |
| --- | --- |
LipoMedix
At July 31, 2020, Rafael Holdings held 67% 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. This stake is inclusive of 4 million shares of LipoMedix purchased in May 2020 for $1 million including conversion of outstanding bridge notes.
Barer Institute
The Barer Institute has identified and begun to evaluate 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. In addition, the Barer Institute has identified several potential lead compounds for clinical development and found combinations that may meaningfully increase the efficacy of certain clinical compounds.
Remarks by Howard Jonas, Chairman and CEO of RafaelHoldings
“Rafael Holdings’ continued to execute on our strategic vision in the fourth quarter, selling our Piscataway property and further increasing our majority stake in LipoMedix. In August, Rafael Pharma announced a major milestone – fully enrolling its pivotal Phase 3 Avenger 500 study for patients with metastatic pancreatic cancer. Results could be available as early as the second quarter of 2021. The Barer Institute has multiple compounds under development and collaboration programs in process with some of the premier academic centers in the country.”
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.
Contact:
Rafael Holdings
David Polinsky
Chief Financial Officer
P: (212) 658-1450
Rafael Holdings, Inc.
Consolidated Balance Sheet
(in thousands except for share and per share data)
| 2019 | |||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 6,206 | $ | 12,024 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of 218 and 122 at July 31, 2020 and 2019, respectively | 267 | 450 | |||
| Due from Rafael Pharmaceuticals | 118 | 280 | |||
| Prepaid expenses and other current assets | 273 | 507 | |||
| Assets held for sale | 2,968 | — | |||
| Total current assets | 9,832 | 13,261 | |||
| Property and equipment, net | 44,433 | 48,733 | |||
| Equity investment – RP Finance | 192 | — | |||
| Investments – Rafael Pharmaceuticals | 70,018 | 70,018 | |||
| Investments – Other Pharmaceuticals | 1,201 | 2,000 | |||
| Investments – Hedge Funds | 7,510 | 5,125 | |||
| Deferred income tax assets, net | 6 | 19 | |||
| In-process research and development and patents | 1,575 | 1,575 | |||
| Other assets | 1,580 | 1,412 | |||
| TOTAL ASSETS | 136,347 | $ | 142,143 | ||
| LIABILITIES AND EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Trade accounts payable | 921 | $ | 795 | ||
| Accrued expenses | 1,191 | 605 | |||
| Amount due for purchase of membership interest | 3,500 | — | |||
| Other current liabilities | 115 | 27 | |||
| Total current liabilities | 5,727 | 1,427 | |||
| Due to related parties | — | 65 | |||
| Convertible debt, net of discount of 0 and 54 - Related Party | — | 14,946 | |||
| Other liabilities | 92 | 292 | |||
| Accrued interest on convertible debt - Related Party | — | 649 | |||
| TOTAL LIABILITIES | 5,819 | 17,379 | |||
| 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 July 31, 2020 and July 31, 2019, respectively | 8 | 8 | |||
| Class B common stock, 0.01 par value; 200,000,000 shares authorized, 15,034,598 issued and 15,028,536 outstanding as of July 31, 2020, and 13,142,502 shares issued and outstanding as of July 31, 2019 | 149 | 131 | |||
| Additional paid-in capital | 129,136 | 112,898 | |||
| Accumulated deficit | (16,255 | ) | (5,840 | ) | |
| Accumulated other comprehensive income related to foreign currency translation adjustment | 3,762 | 3,784 | |||
| Total equity attributable to Rafael Holdings, Inc. | 116,800 | 110,981 | |||
| Noncontrolling interests | 13,728 | 13,783 | |||
| TOTAL EQUITY | 130,528 | 124,764 | |||
| TOTAL LIABILITIES AND EQUITY | 136,347 | $ | 142,143 |
All values are in US Dollars.
Rafael Holdings, Inc.
Consolidated Statement of Operations
(in thousands except for share and per share data)
| Year Ended July 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| REVENUES | ||||||
| Rental – Third Party | $ | 1,516 | $ | 1,452 | ||
| Rental – Related Party | 2,082 | 2,125 | ||||
| Parking | 832 | 874 | ||||
| Other – Related Party | 480 | 480 | ||||
| Total Revenue | 4,910 | 4,931 | ||||
| COSTS AND EXPENSES | ||||||
| Selling, general and administrative | 9,118 | 8,821 | ||||
| Research and development | 2,391 | 1,027 | ||||
| Depreciation | 1,866 | 1,779 | ||||
| Loss from operations | (8,465 | ) | (6,696 | ) | ||
| Interest (expense) income, net | (32 | ) | 469 | |||
| Net (loss) gain resulting from foreign exchange transactions | (5 | ) | 47 | |||
| Gain on sale of marketable securities | — | 330 | ||||
| Impairment of investments - Other Pharmaceuticals | (799 | ) | — | |||
| Unrealized gain on investments - Hedge Funds | 2,385 | 907 | ||||
| Loss before income taxes | (6,916 | ) | (4,943 | ) | ||
| (Provision for) benefit from income taxes | (29 | ) | 19 | |||
| Impairment of equity method investment of Altira | (4,000 | ) | — | |||
| Equity in earnings of RP Finance | 192 | — | ||||
| Consolidated net loss | (10,753 | ) | (4,924 | ) | ||
| Net loss attributable to noncontrolling interests | (338 | ) | (231 | ) | ||
| Net loss attributable to Rafael Holdings, Inc. | $ | (10,415 | ) | $ | (4,693 | ) |
| OTHER COMPREHENSIVE LOSS | ||||||
| Net Loss | $ | (10,753 | ) | $ | (4,924 | ) |
| Foreign Currency Translation Adjustment | (22 | ) | 298 | |||
| Total Comprehensive Loss | (10,775 | ) | (4,626 | ) | ||
| Comprehensive (loss) income attributable to noncontrolling interests | (9 | ) | 173 | |||
| Total Comprehensive loss attributable to Rafael Holdings, Inc. | $ | (10,784 | ) | $ | (4,453 | ) |
| Loss per share | ||||||
| Basic and Diluted | $ | (0.66 | ) | $ | (0.35 | ) |
| Weighted average number of shares used in calculation of loss per share | ||||||
| Basic and Diluted | 15,764,829 | 13,275,239 |
Rafael Holdings, Inc.
Consolidated Statement of Cash Flows
(in thousands)
| Year Ended July 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Operating activities | ||||||
| Net loss | $ | (10,753 | ) | $ | (4,924 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||
| Depreciation | 1,866 | 1,779 | ||||
| Deferred income taxes | 13 | (19 | ) | |||
| Interest income on Rafael Pharmaceuticals Series D Convertible Note | — | (848 | ) | |||
| Interest income | — | (37 | ) | |||
| Net gain on sale of marketable securities | — | (330 | ) | |||
| Net unrealized gain on investments - Hedge Funds | (2,385 | ) | (907 | ) | ||
| Impairment of investments - Other Pharmaceuticals | 799 | — | ||||
| Impairment of equity method investment of Altira | 4,000 | — | ||||
| Equity in earnings of RP Finance | (192 | ) | — | |||
| Provision for doubtful accounts | 96 | 122 | ||||
| Noncash compensation | 684 | 372 | ||||
| Amortization of debt discount | 54 | 17 | ||||
| Write-off of patents | — | 76 | ||||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | 87 | (285 | ) | |||
| Prepaid expenses and other current assets | 234 | (86 | ) | |||
| Other assets | (168 | ) | 275 | |||
| Accounts payable and accrued expenses | 713 | 533 | ||||
| Other current liabilities | 88 | 3 | ||||
| Due to related parties | (65 | ) | 654 | |||
| Due from related parties | 162 | (280 | ) | |||
| Accrued interest - Related Party | 19 | 649 | ||||
| Other liabilities | 82 | 104 | ||||
| Net cash used in operating activities | (4,666 | ) | (3,132 | ) | ||
| Investing activities | ||||||
| Purchase of investment in Altira | (500 | ) | — | |||
| Purchases of property and equipment | (534 | ) | (399 | ) | ||
| Proceeds from sale and maturity of marketable securities | — | 25,031 | ||||
| Investment in Rafael Pharmaceuticals | — | (55,870 | ) | |||
| Net cash used in investing activities | (1,034 | ) | (31,238 | ) | ||
| Financing activities | ||||||
| Contribution from noncontrolling interest of consolidated entity | — | 4,587 | ||||
| Repayment of loan from Rafael Pharmaceuticals, including interest | — | 3,335 | ||||
| Proceeds from exercise of options | 29 | 190 | ||||
| Proceed from sale of shares | — | 7,777 | ||||
| Proceeds from issuance of convertible note | — | 15,000 | ||||
| Payments for taxes related to shares withheld for employee taxes | (125 | ) | — | |||
| Net cash (used in) provided by financing activities | (96 | ) | 30,889 | |||
| Effect of exchange rate changes on cash and cash equivalents | (22 | ) | (298 | ) | ||
| Net decrease in cash and cash equivalents | (5,818 | ) | (3,779 | ) | ||
| Cash and cash equivalents, beginning of year | 12,024 | 15,803 | ||||
| Cash and cash equivalents, end of year | $ | 6,206 | $ | 12,024 | ||
| Supplemental Schedule of Noncash Investing and Financing Activities | ||||||
| Adoption effect of ASU 2016-01 | $ | — | $ | 39 | ||
| Beneficial conversion feature of convertible debt - Related Party | $ | — | $ | 71 | ||
| Debt and accrued interest converted to Series D Preferred Stock | $ | — | $ | 10,848 | ||
| Related Party deposit utilized to purchase Class B Common Stock | $ | — | $ | 864 | ||
| Amount due for purchase of membership interest | $ | 3,500 | $ | — | ||
| Transfer of asset held for sale | $ | 2,968 | $ | — | ||
| Conversion of LipoMedix Bridge Notes | $ | 283 | $ | — | ||
| Conversions of related party convertible notes payable and accrued interest | $ | 15,668 | $ | — |
# # #