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): March 5, 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) |
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| ☐ | 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)) |
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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<br> B common stock, par value $0.1 per share | RFL | New<br> York Stock Exchange |
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On March 5, 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 January 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 March 5, 2020, reporting the results of operations for the fiscal quarter ended January 31, 2020. |
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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/<br> David Polinsky | |
| Name: | David<br> Polinsky | |
| Title: | Chief<br> Financial Officer |
Dated: March 5, 2020
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EXHIBITINDEX
| Exhibit<br><br> <br>Number | Document |
|---|---|
| 99.1 | Press Release, dated March 5, 2020, reporting the results of operations for the fiscal quarter ended January 31, 2020. |
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Exhibit 99.1
****
Rafael Holdings Reports Second QuarterFiscal Year 2020 Results
NEWARK, NJ – March 5, 2020: Rafael Holdings, Inc., (NYSE: RFL), reported revenue of $1.2 million and a loss per diluted share of $0.08 for the fiscal quarter ended January 31, 2020.
Recent Rafael Holdings Highlights
| · | Subsequent to the quarter close, Rafael Holdings and other shareholders in Rafael Pharmaceuticals, a leader in cancer metabolism-based<br>therapeutics, entered into an agreement to provide up to $50 million to finance Rafael Pharmaceuticals’ operations and clinical<br>development program. Please see Rafael Holdings’ Form 8-K filed with the U.S. Securities and Exchange Commission on February<br>3, 2020 for additional information. |
|---|---|
| · | On November 21, 2019, Rafael Holdings up-listed its Class B common stock to the New York Stock Exchange from the NYSE American<br>exchange. The Company retained its ticker symbol, ‘RFL’. |
| --- | --- |
| · | The Barer Institute successfully synthesized novel chemical entities that have shown efficacy at inhibiting cancer metabolism,<br>with ongoing studies in syngeneic animal models. |
| --- | --- |
| · | Revenue of $1.2 million in Q2 FY2020, generated through Rafael Holdings’ real estate portfolio, increased from $1.0 million<br>in the year-ago quarter. The loss per share of $0.08 was unchanged from Q2 FY2019. |
| --- | --- |
Rafael Pharmaceuticals
Following the equity issued in connection with the financing arrangement referenced above, Rafael Holdings and its subsidiaries held 50.7% (38.7% exclusive of minority interests) of the capital stock of Rafael Pharmaceuticals.
| · | On March 3, 2020, Rafael Pharmaceuticals announced the appointment of Sanjay Sehgal, Ph.D., to Chief Regulatory Affairs and<br>Quality Assurance Officer. Dr. Sehgal formerly served as the Senior Vice President of Regulatory Affairs and Conformance at Celularity,<br>Inc. and was Chair of Regulatory Sciences for the American Association of Pharmaceutical Scientists (AAPS) from 2007-2008. |
|---|---|
| · | On January 21, 2020, Rafael Pharmaceuticals announced a collaboration with Michigan Medicine on a Phase 1b/2 clinical trial<br>of CPI-613® (devimistat) in combination with gemcitabine and cisplatin for patients with biliary tract cancer. |
| --- | --- |
| · | On January 14, 2020, Rafael Pharmaceuticals announced that it had enrolled 250 patients – half of its enrollment goal<br>– in its Phase 3 clinical trial (AVENGER 500) of CPI-613® for patients with metastatic pancreatic cancer. The study is<br>being conducted at multiple sites in the United States, France, Israel and South Korea. |
| --- | --- |
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LipoMedix
Rafael Holdings owns 57.9% 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.
| · | On January 23, 2020, LipoMedix announced that a Phase 1 study<br>of Promitil® (PL-MLP) in 53 patients with advanced, treatment-refractory colorectal cancer treated with Promitil either as<br>a single agent or in combination with capecitabine and/or bevacizumab was well tolerated and resulted in a substantial rate of<br>disease stabilization. Prolonged survival of stable disease patients was also observed. |
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Remarks by Howard Jonas, Chairman and CEO of RafaelHoldings
“Rafael Holdings’ key pharmaceutical investments, Rafael Pharmaceuticals and LipoMedix, both achieved important milestones in their respective clinical development programs this quarter. We also entered into an agreement to finance Rafael Pharmaceuticals’ expanding clinical development program and put in place key Barer Institute research programs. Finally, we continue to work to monetize some of our real estate portfolio including our office building in Newark, New Jersey.”
About Rafael Holdings, Inc.:
Rafael Holdings holds commercial real estate assets and interests in clinical stage pharmaceutical companies. The real estate holdings consist of properties in Newark and Piscataway, New Jersey and Jerusalem, Israel. The pharmaceutical holdings include interests in two companies focused on the development and commercialization of oncology drugs: Rafael Pharmaceuticals, Inc. and LipoMedix Pharmaceuticals Ltd. In addition, Rafael Holdings, through its wholly owned subsidiary, the Barer Institute, Inc., is developing a pipeline of therapeutic compounds including compounds to regulate cancer metabolism. For more information, visit rafaelholdings.com
Contact:
Rafael Holdings
David Polinsky
Chief Financial Officer
P: (212) 658-1450
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RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share andper share data)
| July 31, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 9,522 | $ | 12,024 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of 170 and 122 at January 31, 2020 and July 31, 2019, respectively | 325 | 450 | |||
| Due from Rafael Pharmaceuticals | 118 | 280 | |||
| Prepaid expenses and other current assets | 326 | 507 | |||
| Total current assets | 10,291 | 13,261 | |||
| Property and equipment, net | 48,250 | 48,733 | |||
| Investments – Rafael Pharmaceuticals | 70,018 | 70,018 | |||
| Investments – Other Pharmaceuticals | 2,000 | 2,000 | |||
| Investments – Hedge Funds | 5,645 | 5,125 | |||
| Deferred income tax assets, net | 7 | 19 | |||
| In-process research and development and patents | 1,575 | 1,575 | |||
| Other assets | 1,450 | 1,412 | |||
| TOTAL ASSETS | 139,236 | $ | 142,143 | ||
| LIABILITIES AND EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Trade accounts payable | 569 | $ | 795 | ||
| Accrued expenses | 579 | 605 | |||
| Other current liabilities | 48 | 27 | |||
| Total current liabilities | 1,196 | 1,427 | |||
| Due to Related Party | 29 | 65 | |||
| Convertible note, net of discount of 0 and 54 – Related Party | — | 14,946 | |||
| Other liabilities | 92 | 292 | |||
| Accrued interest on convertible note – Related Party | — | 649 | |||
| TOTAL LIABILITIES | 1,317 | 17,379 | |||
| COMMITMENTS AND CONTINGENCIES | |||||
| EQUITY | |||||
| Class A common stock, 0.01 par value; 50,000,000 shares authorized, 787,163 shares issued and outstanding as of January 31, 2020 and July 31, 2019 | 8 | 8 | |||
| Class B common stock, 0.01 par value; 200,000,000 shares authorized, 15,020,485 and 13,142,502 shares issued and outstanding as of January 31, 2020 and July 31, 2019, respectively | 149 | 131 | |||
| Additional paid-in capital | 128,843 | 112,898 | |||
| Accumulated deficit | (8,691 | ) | (5,840 | ) | |
| Accumulated other comprehensive income related to foreign currency translation adjustment | 3,756 | 3,784 | |||
| Total equity attributable to Rafael Holdings, Inc. | 124,065 | 110,981 | |||
| Noncontrolling interests | 13,854 | 13,783 | |||
| TOTAL EQUITY | 137,919 | 124,764 | |||
| TOTAL LIABILITIES AND EQUITY | 139,236 | $ | 142,143 |
All values are in US Dollars.
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RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE LOSS
(unaudited, in thousands, except share andper share data)
| Three Months Ended<br> January 31, | Six Months Ended<br> January 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| REVENUE: | ||||||||||||
| Rental – Third Party | $ | 370 | $ | 306 | $ | 716 | $ | 689 | ||||
| Rental – Related Party | 527 | 522 | 1,047 | 1,043 | ||||||||
| Parking | 219 | 189 | 443 | 420 | ||||||||
| Other – Related Party | 120 | — | 240 | — | ||||||||
| Total Revenue | 1,236 | 1,017 | 2,446 | 2,152 | ||||||||
| COSTS AND EXPENSES | ||||||||||||
| Selling, general and administrative | 2,221 | 1,716 | 4,262 | 3,169 | ||||||||
| Research and development | 448 | 276 | 693 | 649 | ||||||||
| Depreciation and amortization | 473 | 431 | 939 | 860 | ||||||||
| Loss from Operations | (1,906 | ) | (1,406 | ) | (3,448 | ) | (2,526 | ) | ||||
| Interest income (expense), net | 33 | 767 | (31 | ) | 868 | |||||||
| Net loss resulting from foreign exchange transactions | — | — | (5 | ) | — | |||||||
| Gain on sales of marketable securities, net | — | 103 | — | 330 | ||||||||
| Unrealized gain (loss) on Investments – Hedge Funds | 557 | (148 | ) | 520 | (52 | ) | ||||||
| Loss Before Income Taxes | (1,316 | ) | (684 | ) | (2,964 | ) | (1,380 | ) | ||||
| (Provision for) benefit from income taxes | (12 | ) | (17 | ) | (16 | ) | 14 | |||||
| Net Loss | (1,328 | ) | (701 | ) | (2,980 | ) | (1,366 | ) | ||||
| Net (loss) income attributable to noncontrolling interests | (75 | ) | 320 | (129 | ) | 136 | ||||||
| Net Loss attributable to Rafael Holdings, Inc. | $ | (1,253 | ) | $ | (1,021 | ) | $ | (2,851 | ) | $ | (1,502 | ) |
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| Net Loss | $ | (1,328 | ) | $ | (701 | ) | $ | (2,980 | ) | $ | (1,366 | ) |
| Foreign currency translation adjustments | (34 | ) | 80 | (28 | ) | 2 | ||||||
| Total Comprehensive Loss | (1,362 | ) | (621 | ) | (3,008 | ) | (1,364 | ) | ||||
| Comprehensive (loss) income attributable to noncontrolling interests | (18 | ) | 15 | (16 | ) | 23 | ||||||
| Total Comprehensive Loss attributable to Rafael Holdings, Inc. | $ | (1,344 | ) | $ | (636 | ) | $ | (2,992 | ) | $ | (1,387 | ) |
| Loss Per Share: | ||||||||||||
| Basic and diluted | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.12 | ) |
| Weighted average number of shared used in calculation of loss per share: | ||||||||||||
| Basic and diluted | 15,790,400 | 13,489,583 | 15,715,442 | 12,634,389 |
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RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended <br> January 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Operating activities | ||||||
| Net loss | $ | (2,980 | ) | $ | (1,366 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation and amortization | 939 | 860 | ||||
| Deferred income taxes | 12 | (15 | ) | |||
| Interest income on Series D Convertible Note | — | (848 | ) | |||
| Net gain on sales of marketable securities | — | (330 | ) | |||
| Unrealized (gain) loss on investments – Hedge Funds | (520 | ) | 52 | |||
| Provision for doubtful accounts | 48 | 9 | ||||
| Non-cash compensation | 411 | 172 | ||||
| Amortization of debt discount | 54 | 5 | ||||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | 77 | (78 | ) | |||
| Prepaid expenses and other current assets | 181 | (186 | ) | |||
| Other assets | (38 | ) | (82 | ) | ||
| Accounts payable and accrued expenses | (252 | ) | 296 | |||
| Due to/from related parties | 126 | 588 | ||||
| Other current liabilities | — | 39 | ||||
| Other liabilities | 42 | (15 | ) | |||
| Net cash used in operating activities | (1,900 | ) | (899 | ) | ||
| Investing activities | ||||||
| Purchases of property and equipment | (456 | ) | (58 | ) | ||
| Proceeds from sale and maturity of marketable securities, net | — | 25,031 | ||||
| Investment in Rafael Pharmaceuticals | — | (55,870 | ) | |||
| Net cash used in investing activities | (456 | ) | (30,897 | ) | ||
| Financing activities | ||||||
| Contribution from noncontrolling interest of consolidated entity | — | 4,587 | ||||
| Repayment of Loan from Rafael Pharmaceuticals | — | 3,300 | ||||
| Proceeds from exercise of options | — | 163 | ||||
| Proceed from sale of shares | — | 7,777 | ||||
| Proceeds from convertible notes payable - Related Party | — | 15,000 | ||||
| Payments for taxes related to shares withheld for employee taxes | (116 | ) | — | |||
| Net cash (used in) provided by financing activities | (116 | ) | 30,827 | |||
| Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (65 | ) | ||
| Net decrease in cash and cash equivalents | (2,502 | ) | (1,034 | ) | ||
| Cash and cash equivalents at beginning of period | 12,024 | 15,803 | ||||
| Cash and cash equivalents at end of period | $ | 9,522 | $ | 14,769 | ||
| Supplemental Schedule of Non-Cash 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 | ||
| Conversion of LipoMedix Bridge Note | $ | 200 | $ | — | ||
| Conversions of related party convertible notes payable and accrued interest | $ | 15,668 | $ | — |
# # #
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