8-K
Rafael Holdings, Inc. (RFL)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM8-K
CURRENTREPORT
Pursuantto Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 2020
RAFAELHOLDINGS, INC.
(Exactname of registrant as specified in its 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<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<br><br> <br>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 December 15, 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 ended October 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 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| Exhibit No. | Document |
| --- | --- |
| 99.1 | Press Release, dated December 15, 2020, reporting the results of operations for the fiscal quarter ended October 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: David Polinsky | |
| Title: Chief Financial Officer |
Dated: December 15, 2020
2
EXHIBITINDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated December 15, 2020, reporting the results of operations for the fiscal quarter ended October 31, 2020. |
3
Exhibit 99.1
Rafael Holdings Reports First QuarterFiscal Year 2021 Results
NEWARK, NJ – December 15, 2020: 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 RafaelHoldings
“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.
Contact:
Rafael Holdings
David Polinsky
Chief Financial Officer
P: (212) 658-1450
RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share andper share data)
| 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 |
All values are in US Dollars.
RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE LOSS
(unaudited, in thousands, except share andper share data)
| Three Months EndedOctober 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 EndedOctober 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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