Rafael Holdings Reports Second Quarter Fiscal Year 2021 Results

Rhea-AI Summary

Rafael Holdings, Inc. (NYSE: RFL) reported Q2 FY 2021 revenue of $1.0 million, down from $1.2 million year-over-year, primarily due to the sale of a building. Loss per share increased to $0.50, influenced by a $7.0 million impairment related to Altira. Ameet Mallik will assume the CEO role on May 1, 2021. The firm holds 51% of Rafael Pharmaceuticals, which has received FDA Fast Track designation for its lead compound, CPI-613® (devimistat), aimed at treating various cancers. The company continues its focus on oncology through strategic investments and partnerships.

Positive

• FDA Fast Track designation granted to CPI-613® (devimistat) for treating metastatic pancreatic cancer and AML.
• Initiation of Phase 2 clinical trial for CPI-613® in soft tissue sarcoma.
• Acquisition of economic rights for a 33.33% interest in Altira, providing royalities on sales.
• Appointment of Ameet Mallik as CEO, bringing extensive pharma experience.

Negative

• Q2 FY 2021 revenue declined to $1.0 million from $1.2 million.
• Loss per share increased from $0.08 to $0.50 year-over-year.
• $7.0 million impairment of interest in Altira negatively impacting results.

NEWARK, N.J., March 17, 2021 /PRNewswire/ -- 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 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 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 Chief Executive Office effective May 1, 2021.  Howard Jonas, who has served as the company's Chairman and CEO since its inception, 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 interest in Altira, adding to the 33.33% interest purchased in fiscal 2020.  As in the first such agreement, the purchase gives 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 stock and warrants to purchase an additional 113,487 shares of the Company's Class B common stock for an aggregate sale price of $13 million.

Q2 FY 2021 – Pharmaceutical Holdings - Recent Developments

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' 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. Rafael Pharmaceuticals 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.

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 Rafael Holdings

"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.

RAFAEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share data)
	January 31, 2021				July 31, 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

 

RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
	Three Months Ended January 31,								Six Months Ended 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 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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SOURCE Rafael Holdings, Inc.

FAQ

What were the revenue and loss per share reported by Rafael Holdings (RFL) for Q2 FY 2021?

Rafael Holdings reported revenue of $1.0 million and a loss per share of $0.50 for Q2 FY 2021.

What caused the revenue decline for Rafael Holdings (RFL) in Q2 FY 2021?

The revenue decline to $1.0 million was primarily due to the sale of a building in Piscataway, NJ.

What is the significance of FDA Fast Track designation for Rafael Pharmaceuticals' CPI-613®?

The FDA Fast Track designation allows for accelerated development and review of CPI-613® for treating metastatic pancreatic cancer and acute myeloid leukemia.

Who has been appointed as the new CEO of Rafael Holdings (RFL)?

Ameet Mallik has been appointed as the new CEO of Rafael Holdings, effective May 1, 2021.

What were the key developments involving Rafael Pharmaceuticals mentioned in the press release?

Key developments include FDA Fast Track designation for CPI-613®, initiation of a Phase 2 trial in soft tissue sarcoma, and the acquisition of economic rights in Altira.