Rafael Holdings Reports Second Quarter Fiscal 2023 Financial Results

For the three months ended January 31, 2023, we incurred a net loss from continuing operations of $3.3 million, or $0.13 per share. For the same period in the prior year, we incurred a net loss from continuing operations of $2.1 million, or $0.09 per share.

Research and development expenses were $2.2 million for the three months ended January 31, 2023, which includes $0.5 million in severance costs. For the same period in the prior year, research and development expenses were $3.3 million. The year over year reduction in spending is due to the winding down of the early-stage programs at Barer Institute.

Our general and administrative expenses from continuing operations were $2.1 million for the three months ended January 31, 2023, which includes $0.3 million in severance costs offset by a net credit of $0.05 million in non-cash stock-based compensation expense. For the same period in the prior year, we reported a credit of $1.7 million which included a net, non-cash credit of $11.2 million of stock-based compensation expense.

Rafael Holdings, Inc. First Half Fiscal Year 2023 Financial Results

For the six months ended January 31, 2023, we incurred a net loss from continuing operations of $8.5 million, or $0.36 per share. For the same period in the prior year, we incurred a net loss from continuing operations of $130.9 million, or $5.86 per share, which included a $25 million loss on the write-off of a receivable pursuant to a line of credit, a loss of $10.1 million on the write-off of a related party receivable and a $79.1 million charge for the impairment of our investment in Cornerstone Pharmaceuticals, Inc.

Research and development expenses were $4.3 million for the six months ended January 31, 2023, which includes $0.5 million in severance costs. For the same period in the prior year, R&D expenses were $5.5 million.

Our general and administrative expenses were $5.2 million for the six months ended January 31, 2023, which includes $0.4 million in severance costs as well as $1.0 million net, non-cash stock-based compensation expense. For the same period in the prior year, G&A expenses were $10.6 million which included $5.9 million in severance costs as well as a net, non-cash credit of $3.6 million of stock-based compensation expense.

About Rafael Holdings, Inc.

Rafael Holdings is a holding company with interests in clinical and early-stage pharmaceutical companies, including an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company. The Company’s primary focus is to invest in, fund, and develop novel cancer therapies. We further seek to expand our portfolio through opportunistic investments in therapeutics which address high unmet medical needs including through acquisitions and strategic investments.

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, the following: the impact of public health threats, including COVID-19, on our business and operations; clinical trials of product candidates may not be successful; our pharmaceutical companies may not be able to develop any medicines of commercial value; our pharmaceutical companies may not be successful in their efforts to identify or discover potential product candidates; the manufacturing and manufacturing development of our products and product candidates present technological, logistical and regulatory risks, each of which may adversely affect our potential revenue; potential unforeseen events during clinical trials could cause delays or other adverse consequences; risks relating to the regulatory approval process; interim, topline and preliminary data may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data; our product candidates may cause serious adverse side effects; ongoing regulatory obligations; effects of significant competition; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; product liability lawsuits; failure to attract, retain and motivate qualified personnel; the possibility of system failures or security breaches; risks relating to intellectual property and significant costs as a result of operating as a public company. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended July 31, 2022, and our other filings with the SEC 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, 2023 July 31, 2022 (unaudited) (audited)ASSETS CURRENT ASSETS Cash and cash equivalents $9,670 $26,537 Available-for-sale securities 79,197 36,698 Interest receivable 314 140 Accounts receivable, net of allowance for doubtful accounts of $242 and $197 at October 31, 2022 and July 31, 2022, respectively 272 157 Prepaid expenses and other current assets 512 4,621 Assets held for sale - 40,194 Total current assets 89,965 108,347 Property and equipment, net 1,732 1,770 Investments – Other Pharmaceuticals 254 477 Investments – Hedge Funds 5,015 4,764 In-process research and development and patents 1,575 1,575 Other assets 9 1,387 TOTAL ASSETS $98,550 $118,320 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $443 $564 Accrued expenses 1,326 1,875 Other current liabilities 197 3,518 Due to related parties - 69 Note payable, net of debt issuance costs - 15,000 Total current liabilities 1,966 21,026 Other liabilities 49 88 TOTAL LIABILITIES $2,015 $21,114 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, 2022 and July 31, 2022, respectively 8 8 Class B common stock, $0.01 par value; 200,000,000 shares authorized, 23,636,084 issued and 23,522,995 outstanding as of January 31, 2023, and 23,712,449 issued and 23,687,964 outstanding as of July 31, 2022, respectively 236 237 Additional paid-in capital 262,924 262,023 Accumulated deficit (167,115) (165,457)Accumulated other comprehensive gain (loss) related to unrealized gain (loss) on available-for-sale securities 308 (63)Accumulated other comprehensive income related to foreign currency translation adjustment 3,741 3,767 Total equity attributable to Rafael Holdings, Inc. 100,102 100,515 Noncontrolling interests (3,567) (3,309)TOTAL EQUITY $96,535 $97,206 TOTAL LIABILITIES AND EQUITY $98,550 $118,320 RAFAEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share data)
(unaudited)
(unaudited)
Three Months Ended January 31,
Six Months Ended January 31,
2023 2022 2023 2022 Revenues$70 $74 $140 $265 G&A Expenses 2,085 (1,680) 5,194 10,594 R&D Expenses 2,225 3,335 4,306 5,488 Depreciation and amortization 19 18 41 37 Provision for loss on receivable pursuant to line of credit - - - 25,000 Provision for losses on related party receivables - - - 10,095 Operating Loss (4,259) (1,599) (9,401) (50,949)Impairment of cost method investment - Cornerstone Pharmaceuticals - - - (79,141)Unrealized (loss) gain on investments - Hedge Funds 378 (454) 251 (243)Impairment of investments - Other Pharmaceuticals (67) - (223) - Other, net 701 - 924 (13)Loss before Incomes Taxes from continuing operations (3,247) (2,053) (8,449) (130,346)Taxes (5) (4) (10) (4)Equity in earnings (loss) of RP Finance - - - (575)Consolidated net loss from continuing operations (3,252) (2,057) (8,459) (130,925) Discontinued Operations Loss from discontinued operations related to 520 Property (157) (508) (241) (1,051)Gain on disposal of 520 Property - - 6,784 - Income (loss) from discontinued operations (157) (508) 6,543 (1,051) Net income (loss) (3,409) (2,565) (1,916) (131,976)Net loss attributable to noncontrolling interests (159) (244) (258) (17,631)Net income (loss) attributable to Rafael Holdings, Inc.$(3,250) $(2,321) $(1,658) $(114,345) Continuing operations loss per share Net loss from continuing operations$(3,252) $(2,057) $(8,459) $(130,925)Net loss attributable to noncontrolling interests (159) (244) (258) (17,631)Numerator for loss per share from continuing operations$(3,093) $(1,813) $(8,201) $(113,294) Discontinued operations earnings (loss) per share Net income (loss) from discontinued operations$(157) $(508) $6,543 $(1,051) Loss per share Continuing operations - basic and diluted$(0.13) $(0.09) $(0.36) $(5.86)Discontinued operations - basic and diluted (0.01) (0.03) 0.28 (0.06) Total basic and diluted earnings (loss) per common share$(0.14) $(0.12) $(0.08) $(5.91) Weighted average number of shares used in calculation of earnings (loss) per share, basic and diluted 23,155,018 19,713,127 23,085,612 19,332,630