Rafael Holdings Reports Second Quarter Fiscal 2025 Financial Results

Rhea-AI Summary

Rafael Holdings (NYSE: RFL) reported Q2 fiscal 2025 financial results, highlighting its pending merger with Cyclo Therapeutics expected to close in Q3 2025. The company reported cash and cash equivalents of $48.3 million as of January 31, 2025.

The company recorded a net loss of $4.6 million ($0.19 per share) in Q2, compared to net income of $6.0 million ($0.25 per share) in the previous year. The decline was primarily due to unrealized losses of $1.1 million on Cyclo investments. For the first six months of fiscal 2025, net loss was $13.6 million ($0.57 per share).

Post-merger, Rafael will focus on Cyclo's lead clinical program Trappsol® Cyclo™, with topline data from a Phase 3 study in Niemann-Pick Disease Type C1 expected mid-2025. R&D expenses increased to $0.9 million in Q2 FY25 from $0.6 million year-over-year, while G&A expenses remained stable at $2.6 million.

Positive

• Strong cash position of $48.3 million
• Phase 3 trial topline data expected mid-2025
• Strategic merger with Cyclo Therapeutics nearing completion

Negative

• Net loss of $4.6 million in Q2 FY25 vs net income of $6.0 million in Q2 FY24
• Unrealized losses of $1.1 million on Cyclo investments
• R&D expenses increased 50% year-over-year to $0.9 million
• Six-month net loss widened to $13.6 million from $2.4 million profit year-over-year

Insights

Financial Analyst

Rafael Holdings presents a complex financial picture with its Q2 FY2025 results. The company's cash position of $48.3 million notably exceeds its current market cap of approximately $46.5 million, suggesting the stock is trading below cash value. This typically signals either market pessimism or concerns about future cash burn.

The company reported a quarterly net loss of $4.6 million ($0.19 per share) compared to net income of $6.0 million ($0.25 per share) in the prior-year period. This 177% swing is primarily attributed to unrealized losses of $1.1 million on Cyclo investments versus $9.7 million in gains last year - creating a nearly $11 million differential in performance.

The pending merger with Cyclo Therapeutics represents a fundamental business transformation from holding company to clinical-stage biotech. R&D expenses have already increased by 50% year-over-year to $0.9 million quarterly, reflecting expanded development activities. The consolidated six-month net loss of $13.6 million suggests an annualized cash burn rate that gives Rafael a runway of approximately 2-3 years at current spending levels.

For investors, the critical question is whether the current cash reserves will sustain operations through key value-inflection points, particularly the Trappsol® Cyclo™ clinical milestones expected mid-2025. The upcoming shareholder vote will determine if this strategic pivot materializes, presenting both opportunity and execution risk.

Biotechnology Expert

Rafael's pending merger with Cyclo Therapeutics strategically repositions the company in the ultra-rare disease space, focusing on Niemann-Pick Disease Type C1 (NPC1), a devastating lysosomal storage disorder affecting approximately 1 in 100,000 births. The lead asset, Trappsol® Cyclo™, addresses a significant unmet medical need, as current treatment options primarily offer symptomatic management rather than disease modification.

The Phase 3 TransportNPC™ Open-Label Sub-Study targeting patients under 3 years of age represents a scientifically sound approach. Early intervention in neurodegenerative conditions typically yields better outcomes before irreversible neurological damage occurs. Cyclodextrins like Trappsol® Cyclo™ work by potentially extracting accumulated cholesterol from cellular compartments, addressing a core disease mechanism.

The preliminary results presented at the WORLDSymposium and planned 48-week interim analysis of 104 enrolled patients constitute a robust development program for an ultra-rare indication. The orphan drug pathway offers regulatory advantages including potential expedited review, market exclusivity, and premium pricing potential upon approval.

From a development perspective, the expected topline data in mid-2025 creates a defined catalyst horizon. This timeline aligns with the company's financial runway, though success will depend on both clinical efficacy and the ability to navigate the regulatory pathway for an ultra-rare pediatric indication. The company's strategic focus on a single lead asset concentrates both risk and potential reward, making clinical execution paramount for long-term value creation.

The planned merger with Cyclo Therapeutics is anticipated to close in Q3 pending shareholder approvals

Post-merger the Company intends to focus its efforts on Cyclo’s lead clinical program Trappsol^® Cyclo™

NEWARK, N.J., March 13, 2025 (GLOBE NEWSWIRE) -- Rafael Holdings, Inc. (NYSE: RFL), today reported its financial results for the second quarter and first six months of fiscal year 2025 ended January 31, 2025.

“We look forward to the upcoming shareholder vote on our pending merger with Cyclo Therapeutics (Nasdaq: CYTH) later this month and anticipate closing promptly post shareholder approvals. Upon closing, the Company’s strategic focus will be on its lead clinical asset, Trappsol^® Cyclo™,” said Bill Conkling, CEO of Rafael Holdings. Bill added, “We are encouraged by the preliminary results presented at the 21^st Annual WORLDSymposium in early February from the ongoing Phase 3 TransportNPC™ Open-Label Sub-Study evaluating Trappsol^® Cyclo™ for the treatment of Niemann-Pick Disease Type C1 in patients <3 years of age. We believe that Trappsol^® Cyclo™ has the potential to improve the lives of patients suffering from this rare genetic disease and topline data from the 48-week interim analysis of 104 enrolled patients is expected in the middle of 2025.”

Rafael Holdings, Inc. Second Quarter Fiscal Year 2025 Financial Results

As of January 31, 2025, we had cash and cash equivalents of $48.3 million.

For the three months ended January 31, 2025, we recorded a net loss attributable to Rafael Holdings of $4.6 million, or $0.19 per share, versus net income of $6.0 million, or $0.25 per fully diluted share in the year ago period. The year over year decline was attributable to the combined unrealized losses of $1.1 million on the Company’s investment in Cyclo equity which we purchased in advance of the potential merger as well as in the unrealized losses on convertible notes receivable from Cyclo in the current period, versus $9.7 million in unrealized gains on the Company’s investment in Cyclo in the year ago period.

Research and development expenses were $0.9 million for the three months ended January 31, 2025, compared to $0.6 million in the year ago period. The year over year increase relates to activity at Cornerstone and Day Three, which were consolidated with Rafael Holdings during fiscal 2024.

General and administrative expenses were $2.6 million in both the three months ended January 31, 2025, and 2024.

Rafael Holdings, Inc. First Six Months Fiscal Year 2025 Financial Results

For the six months ended January 31, 2025, we recorded a net loss attributable to Rafael Holdings of $13.6 million, or $0.57 per share, versus net income of $2.4 million, or $0.10 per share in the year ago period. The year over year decline was attributable to the combined unrealized losses of $4.9 million on the Company’s investment in Cyclo as well as in the convertible notes receivable from Cyclo, versus $7.6 million in unrealized gains on the Company’s investment in Cyclo in the year ago period.

Research and development expenses were $2.3 million for the six months ended January 31, 2025, compared to $1.1 million in the year ago period. The year over year increase relates to activity at Cornerstone and Day Three, which were consolidated with Rafael Holdings during fiscal 2024.

For the six months ended January 31, 2025, general and administrative expenses were $5.1 million compared to $4.6 million in the same period in the prior year.

About Rafael Holdings, Inc.

Rafael Holdings, Inc. is a holding company with interests in clinical and early-stage pharmaceutical companies including an investment in (and planned merger with) Cyclo Therapeutics Inc. (Nasdaq: CYTH), a biotechnology company dedicated to developing Trappsol^® Cyclo™, which is being evaluated in clinical trials, including an ongoing Phase 3 trial for the potential treatment of Niemann-Pick Disease Type C1 (“NPC1”), a rare, fatal, and progressive genetic disorder. Rafael also holds a majority equity interest in LipoMedix Pharmaceuticals Ltd., a clinical stage pharmaceutical company, Barer Institute Inc., a wholly owned preclinical cancer metabolism research operation, a majority interest in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority interest in Rafael Medical Devices, LLC, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries, and a majority interest in Day Three Labs, Inc., a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three’s technology and innovation like Unlokt™. The Company’s primary focus, to date, has been to expand our investment portfolio through opportunistic and strategic investments including therapeutics, which address high unmet medical needs. Upon closing of the planned merger with Cyclo, the Company intends to focus its efforts on making Trappsol^®Cyclo™ its lead clinical program.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our expectations surrounding the potential, safety, efficacy, and regulatory and clinical progress of our product candidates; plans regarding the further evaluation of clinical data; and the potential of our pipeline, including our internal cancer metabolism research programs. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, those disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended July 31, 2024, and our other filings with the SEC. These factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

Contact:
Barbara Ryan
Barbara.ryan@rafaelholdings.com
(203) 274-2825

RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
		January 31, 2025				July 31, 2024
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	48,319			$	2,675
Available-for-sale securities			—				63,265
Interest receivable			—				515
Convertible note receivables, due from Cyclo			16,589				5,191
Accounts receivable, net of allowance for credit losses of $245 at January 31, 2025 and July 31, 2024			200				426
Prepaid expenses and other current assets			725				430
Total current assets			65,833				72,502
Property and equipment, net			1,933				2,120
Investments – Hedge Funds			—				2,547
Investments – Cyclo			10,759				12,010
Convertible note receivable classified as available-for-sale			1,135				1,146
Goodwill			—				3,050
Intangible assets, net			1,787				1,847
In-process research and development			1,575				1,575
Other assets			20				35
TOTAL ASSETS		$	83,042			$	96,832
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		$	2,546			$	2,556
Accrued expenses			1,412				1,798
Convertible notes payable			614				614
Other current liabilities			107				113
Due to related parties			731				733
Installment note payable			1,700				1,700
Total current liabilities			7,110				7,514
Accrued expenses, noncurrent			3,294				2,982
Convertible notes payable, noncurrent			75				73
Other liabilities			—				5
TOTAL LIABILITIES			10,479				10,574
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, 2025 and July 31, 2024			8				8
Class B common stock, $0.01 par value; 200,000,000 shares authorized, 24,227,096 issued and 24,125,609 outstanding (excluding treasury shares of 101,487) as of January 31, 2025, and 24,142,535 issued and 23,819,948 outstanding (excluding treasury shares of 101,487) as of July 31, 2024			241				238
Additional paid-in capital			280,831				280,048
Accumulated deficit			(215,390	)			(201,743	)
Treasury stock, at cost; 101,487 Class B shares as of January 31, 2025 and July 31, 2024			(168	)			(168	)
Accumulated other comprehensive income related to unrealized income on available-for-sale securities			135				111
Accumulated other comprehensive income related to foreign currency translation adjustment			3,724				3,691
Total equity attributable to Rafael Holdings, Inc.			69,381				82,185
Noncontrolling interests			3,182				4,073
TOTAL EQUITY			72,563				86,258
TOTAL LIABILITIES AND EQUITY		$	83,042			$	96,832

RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except share and per share data)
	Three Months Ended January 31,								Six Months Ended January 31,
		2025				2024				2025				2024
Revenues	$	77			$	68			$	205			$	136
Cost of Infusion Technology revenue		38				-				75				-
SG&A Expenses		2,591				2,561				5,114				4,601
R&D Expenses		947				612				2,273				1,101
Depreciation and amortization		90				38				176				55
Loss on impairment of goodwill		3,050				-				3,050				-
Operating Loss		(6,639	)			(3,143	)			(10,483	)			(5,621	)
Interest income		489				693				1,057				1,275
Loss on initial investment in Day Three upon acquisition		-				(1,633	)			-				(1,633	)
Realized (loss) gain on available-for-sale securities		(16	)			399				178				576
Realized loss on investment in equity securities		-				-				-				(46	)
Realized gain on investment - Cyclo		-				-				-				424
Unrealized gain (loss) on investment - Cyclo		614				9,718				(3,751	)			7,594
Unrealized gain (loss) on convertible notes receivable, due from Cyclo		486				-				(1,102	)			-
Unrealized gain (loss) on investment - Hedge Funds		-				51				-				(115	)
Interest expense		(163	)			-				(325	)			-
Other (expense) income		(78	)			25				(80	)			118
(Loss) income before income taxes		(5,307	)			6,110				(14,506	)			2,572
Taxes		(20	)			-				(32	)			(6	)
Equity in loss of Day Three		-				(206	)			-				(422	)
Consolidated net (loss) income		(5,327	)			5,904				(14,538	)			2,144
Net loss attributable to noncontrolling interests		(686	)			(143	)			(891	)			(265	)
Net (loss) income attributable to Rafael Holdings, Inc.	$	(4,641	)		$	6,047			$	(13,647	)		$	2,409
Loss per share
Basic	$	(0.19	)		$	0.26			$	(0.57	)		$	0.10
Diluted	$	(0.19	)		$	0.25			$	(0.57	)		$	0.10
Weighted average shares in calculation
Basic		24,150,218				23,642,421				24,121,186				23,643,660
Diluted		24,150,218				24,402,069				24,121,186				24,403,308

FAQ

When is Rafael Holdings (RFL) expected to complete its merger with Cyclo Therapeutics?

The merger is expected to close in Q3 2025, pending shareholder approvals.

What was Rafael Holdings' (RFL) Q2 2025 net loss per share?

RFL reported a net loss of $0.19 per share in Q2 fiscal 2025.

How much cash does Rafael Holdings (RFL) have as of January 31, 2025?

RFL reported cash and cash equivalents of $48.3 million as of January 31, 2025.

When will Trappsol® Cyclo™'s Phase 3 trial topline data be available?

Topline data from the 48-week interim analysis is expected in mid-2025.

What caused Rafael Holdings' (RFL) year-over-year decline in Q2 2025 earnings?

The decline was primarily due to $1.1 million in unrealized losses on Cyclo investments, compared to $9.7 million in gains the previous year.