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What changed in Rafael Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Rafael Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+647 added−548 removedSource: 10-K (2023-10-30) vs 10-K (2022-10-31)

Top changes in Rafael Holdings, Inc.'s 2023 10-K

647 paragraphs added · 548 removed · 459 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

102 edited+81 added−26 removed172 unchanged
Biggest changeCurrently, 3 clinical trials are enrolling participants: ● A phase 2 study of devimistat in patients with relapsed or refractory Burkitt lymphoma/leukemia or high-grade b-cell lymphoma with rearrangements of myc and bcl2 and/or bcl6 ● A multi-center randomized phase 1b/2 study of gemcitabine and cisplatin with or without devimistat as first-line therapy for patients with advanced unresectable biliary tract cancer ● A phase 1/2 open-label study of devimistat in combination with hydroxychloroquine in patients with relapsed or refractory clear cell sarcoma (CCS) of soft tissue Cornerstone is also contemplating additional clinical trials for devimistat in combination with other compounds for different indications.
Biggest changeCurrently, 4 clinical trials are enrolling participants: ● A Multi-Center Randomized Phase IB/II Study of Gemcitabine and Cisplatin With or Without CPI-613 ® as First Line Therapy for Patients With Advanced Unresectable Biliary Tract Cancer (BilT-04) ● Pilot Study of CPI-613 ® , in Combination With Bendamustine, in Patients With Relapsed or Refractory T-Cell Non-Hodgkin Lymphoma ● A Phase I Dose-Escalation Study of CPI-613 ® in Combination With Chemoradiation in Patients With Pancreatic Adenocarcinoma ● Phase II Open-Label Multi-Cohort Study Evaluating CPI-613 ® in Combination With Hydroxychloroquine and 5-fluorouracil or Gemcitabine in Patients With Advanced Chemorefractory Colorectal, Pancreatic, or Other Solid Cancers Cornerstone is also contemplating additional clinical trials for devimistat in combination with other compounds for different indications.
Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the application for review, FDA has 180 days under the FFDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years.
Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the PMA for review, FDA has 180 days under the FFDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years.
Restrictions under applicable federal and state and analogous foreign healthcare laws and regulations include the following: ● the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs; ● the federal False Claims Act, which prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable protected health information, including breach notification regulations; 18 ● analogous state data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, medical and financial information, and other information, including data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information, as well as the California Consumer Privacy Act or CCPA, which, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals numerous rights relating to their personal information that may affect companies’ ability to use personal information or share it with business partners, and the California Privacy Rights Act, or CPRA, which expands the scope of the CCPA, imposes new restrictions on behavioral advertising and establishes a new California Privacy Protection Agency that will enforce the law and issue regulations, and is scheduled to become “operative” on January 1, 2023, with a 12-month “lookback provision,” and the various state laws and regulations may be more restrictive and not preempted by United States federal laws; ● analogous foreign data protection laws, including among others the EU General Data Protection Regulation, or the GDPR, and EU member states’ implementing legislation, which imposes data protection requirements that include strict obligations and restrictions on the ability to collect, analyze, and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total worldwide annual turnover of the preceding financial year), with legal requirements in foreign countries relating to the collection, storage, processing, and transfer of personal data continuing to evolve; ● the United States civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; ● the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers; and ● state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government.
Restrictions under applicable federal and state and analogous foreign healthcare laws and regulations include the following: ● the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs; ● the federal False Claims Act, which prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; 22 ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable protected health information, including breach notification regulations; ● analogous state data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, medical and financial information, and other information, including data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information, as well as the California Consumer Privacy Act or CCPA, which, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals numerous rights relating to their personal information that may affect companies’ ability to use personal information or share it with business partners, and the California Privacy Rights Act, or CPRA, which expands the scope of the CCPA, imposes new restrictions on behavioral advertising and establishes a new California Privacy Protection Agency that will enforce the law and issue regulations, and is scheduled to become “operative” on January 1, 2023, with a 12-month “lookback provision,” and the various state laws and regulations may be more restrictive and not preempted by United States federal laws; ● analogous foreign data protection laws, including among others the EU General Data Protection Regulation, or the GDPR, and EU member states’ implementing legislation, which imposes data protection requirements that include strict obligations and restrictions on the ability to collect, analyze, and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total worldwide annual turnover of the preceding financial year), with legal requirements in foreign countries relating to the collection, storage, processing, and transfer of personal data continuing to evolve; ● the United States civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; ● the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers; and ● state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government.
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; ● submission to the FDA of an Investigational New Drug, or IND, application, which must take effect before human clinical trials may begin; ● approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; ● preparation and submission to the FDA of an NDA requesting marketing for one or more proposed indications; ● review by an FDA advisory committee, where appropriate or if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; ● payment of user fees and securing FDA approval of the NDA; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; ● submission to the FDA of an Investigational New Drug, or IND, application, which must take effect before human clinical trials may begin; ● approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication; ● preparation and submission to the FDA of an NDA requesting marketing for one or more proposed indications; ● review by an FDA advisory committee, where appropriate if applicable; ● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCP and the integrity of the clinical data; ● payment of user fees and securing FDA approval of the NDA; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.
The MDR, among other things: ● strengthens the rules on placing devices on the market (e.g., reclassification of certain devices and wider scope than the MDD) and reinforces surveillance once the devices are commercially available; ● establishes explicit provisions on manufacturers’ responsibilities for follow-up on the quality, performance, and safety of devices placed on the market; ● establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; ● imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; ● improves the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; ● sets up a central database (MDR EUDAMED or EUDAMED), which is collaborative and interoperable and functions as a registration system, and a collaborative and a dissemination system (partially open to the public) that can, among other things, provide patients, healthcare professionals, and the public with information on products available in the EU; and ● strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo a clinical evaluation consultation procedure by experts before they are placed on the market. 16 Devices lawfully placed on the market pursuant to the MDD prior to May 26, 2021 may generally continue to be made available on the market or put into service until May 26, 2025, provided that the requirements of the MDR’s transitional provisions are fulfilled.
The MDR, among other things: ● strengthens the rules on placing devices on the market (e.g., reclassification of certain devices and wider scope than the MDD) and reinforces surveillance once the devices are commercially available; ● establishes explicit provisions on manufacturers’ responsibilities for follow-up on the quality, performance, and safety of devices placed on the market; ● establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; ● imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; ● improves the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; ● sets up a central database (MDR EUDAMED or EUDAMED), which is collaborative and interoperable and functions as a registration system, and a collaborative and a dissemination system (partially open to the public) that can, among other things, provide patients, healthcare professionals, and the public with information on products available in the EU; and ● strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo a clinical evaluation consultation procedure by experts before they are placed on the market. 20 Devices lawfully placed on the market pursuant to the MDD prior to May 26, 2021 may generally continue to be made available on the market or put into service until May 26, 2025, provided that the requirements of the MDR’s transitional provisions are fulfilled.
Instead, in support of such applications, a generic manufacturer may rely the FDA’s prior determination of safety and effectiveness based upon the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference-listed drug, or RLD. 505(b)(2) NDAs As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FFDCA.
Instead, in support of such applications, a generic manufacturer may rely on the FDA’s prior determination of safety and effectiveness based upon the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference-listed drug, or RLD. 505(b)(2) NDAs As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FFDCA.
FDARA requires that any original NDA or BLA submitted on or after August 18, 2020, for a new active ingredient, must contain studies of molecularly targeted pediatric cancers, unless a deferral or a waiver is granted, if the drug that is the subject of the application is intended for the treatment of an adult cancer and directed at a molecular target that the FDA determines to be substantially relevant to the growth or progression of a pediatric cancer. 11 Orphan drug designation and exclusivity Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product.
FDARA requires that any original NDA or BLA submitted on or after August 18, 2020, for a new active ingredient, must contain studies of molecularly targeted pediatric cancers, unless a deferral or a waiver is granted, if the drug that is the subject of the application is intended for the treatment of an adult cancer and directed at a molecular target that the FDA determines to be substantially relevant to the growth or progression of a pediatric cancer. 15 Orphan drug designation and exclusivity Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product.
Promitil ® was stable in plasma with a half-life of approximately 20 hours (vs 40-50 minutes for naked MMC). Next Steps for Clinical Development: Homologous recombination (HR) is an evolutionarily conserved process for repairing DNA double-strand breaks with high fidelity, and the BRCA1 and BRCA2 proteins play essential roles in this process.
Promitil ® was stable in plasma with a half-life of approximately 20 hours (vs 40-50 minutes for naked MMC). 5 Next Steps for Clinical Development: Homologous recombination (HR) is an evolutionarily conserved process for repairing DNA double-strand breaks with high fidelity, and the BRCA1 and BRCA2 proteins play essential roles in this process.
As of October 9, 2020, LipoMedix owns or in-licenses several families of U.S. patents. Additional patent applications will be filed as studies continue. Patents that LipoMedix has obtained and patents that may issue in the future based on LipoMedix’s currently pending patent applications for its platform technologies are scheduled to expire in years 2032 through 2035.
As of October 9, 2020, LipoMedix owns or in-licenses several families of U.S. patents. Additional patent applications may be filed as studies continue. Patents that LipoMedix has obtained and patents that may issue in the future based on LipoMedix’s currently pending patent applications for its platform technologies are scheduled to expire in years 2032 through 2035.
These dates do not include potential patent term extensions. 20 Four new patent applications covering the use of Promitil®, in combination with other chemotherapies and with radiotherapy, targeting of Promitil with a folate ligand, and a reformulation of Promitil with co-encapsulated mitomycin prodrug and doxorubicin have been approved by the USPTO or EPO in 2018-2020.
These dates do not include potential patent term extensions. Four new patent applications covering the use of Promitil ® , in combination with other chemotherapies and with radiotherapy, targeting of Promitil with a folate ligand, and a reformulation of Promitil with co-encapsulated mitomycin prodrug and doxorubicin have been approved by the USPTO or EPO in 2018-2020.
Patent term restoration and extension A patent claiming a new drug product or its method of use may be eligible for a limited patent term extension, also known as patent term restoration, under the Hatch-Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review.
Patent term restoration and extension A patent claiming a new drug product or its method of use may be eligible for a limited patent term extension, also known as patent term restoration, under the Hatch-Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review process.
U.S. and international trademarks are also maintained for potential brand names of devimistat in the event that it was to receive regulatory approval permitting commercialization. Barer has filed patents for its novel inventions, and has entered into licensing agreements for other intellectual property.
U.S. and international trademarks are also maintained for potential brand names of devimistat in the event that it was to receive regulatory approval permitting commercialization. 24 Barer has filed patents for its novel inventions, and has entered into licensing agreements for other intellectual property.
In the U.S., our product candidates are regulated as either drugs or biological products under the Federal Food, Drug and Cosmetic Act, or FFDCA, and the Public Health Service Act, or PHSA, and their implementing regulations, or as medical devices under the FFDCA and its implementing regulations, each as amended and enforced by the FDA.
In the U.S., our product candidates and device candidates are regulated as either drugs or biological products under the Federal Food, Drug and Cosmetic Act, or FFDCA, and the Public Health Service Act, or PHSA, and their implementing regulations, or as medical devices under the FFDCA and its implementing regulations, each as amended and enforced by the FDA.
In addition, the FDA generally will conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ facilities to ensure compliance with the FDA’s Quality System Regulation codified in 21 CFR Part 820, or QSR.
In addition, the FDA generally will conduct a pre-approval inspection of the applicant and/or its third-party manufacturers’ or suppliers’ facilities to ensure compliance with the FDA’s Quality System Regulation codified in 21 CFR Part 820, or QSR.
A sponsor also can submit a De Novo classification request directly, without first submitting a 510(k), if the sponsor determines that there is no legally marketed device upon which to base a determination of substantial equivalence.
A sponsor also can submit a De Novo classification request directly, without first submitting a 510(k), if the sponsor determines that there is no legally marketed predicate device upon which to base a determination of substantial equivalence.
If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and recordkeeping requirements. 13 In addition to clinical and preclinical data, the PMA must contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling.
If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and recordkeeping requirements. 17 In addition to clinical and preclinical data, the PMA must contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling.
A company must request orphan drug designation before submitting an NDA or BLA for the drug for the rare disease or condition. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use.
A company must request orphan drug designation before submitting an NDA or BLA for the drug for the rare disease or condition. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use(s).
Certain novel devices of low to moderate risk, for which the FDA can make a risk-based classification of the device into Class I or II, can receive marketing authorization in response to a De Novo request. 12 To obtain 510(k) clearance, a manufacturer must submit a 510(k) premarket notification demonstrating to the FDA’s satisfaction that the proposed device is at least as safe and effective as, that is, “substantially equivalent” to, another legally marketed device that itself does not require PMA approval, or a predicate device.
Certain novel devices of low to moderate risk, for which the FDA can make a risk-based classification of the device into Class I or II, can receive marketing authorization in response to a De Novo request. 16 To obtain 510(k) clearance, a manufacturer must submit a 510(k) premarket notification demonstrating to the FDA’s satisfaction that the proposed device is at least as safe and effective as, that is, “substantially equivalent” to, another legally marketed device that itself does not require PMA approval, or a predicate device.
If the FDA inspectional observations are not addressed and/or corrective action is not taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter (which would similarly necessitate prompt corrective action) and/or proceed directly to other forms of enforcement action, including the imposition of operating restrictions, including a ceasing of operations, on one or more facilities, enjoining and restraining certain violations of applicable law pertaining to products, seizure of products, and assessing civil or criminal penalties against the manufacturer and its officers and employees.
If the FDA inspectional observations are not addressed and/or corrective action is not taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter (which would similarly necessitate prompt corrective action) and/or proceed directly to other forms of enforcement action, including the imposition of operating restrictions, including a ceasing of operations, on one or more facilities, enjoining and restraining certain violations of applicable law pertaining to products, mandating recall of products, seizure of products, and assessing civil or criminal penalties against the manufacturer and its officers and employees.
Pharma Holdings owns 50% of CS Pharma Holdings, LLC (“CS Pharma”), a non-operating entity that owns equity interests in Cornerstone, and 44.0 million shares of Cornerstone Series D Convertible Preferred Stock and 979,617 common shares.
Pharma Holdings owns 50% of CS Pharma Holdings, LLC (“CS Pharma”), a non-operating entity that owns equity interests in Cornerstone, including 44.0 million shares of Cornerstone Series D Convertible Preferred Stock and 979,617 common shares.
The FDA will approve the new device for commercial distribution if the FDA determines that the data and information in the PMA application constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).
The FDA will approve the new device for commercial distribution if the FDA determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, suspension of the approval, product recalls, or complete withdrawal of the product from the market; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; and/or ● injunctions or the imposition of civil or criminal penalties. 10 The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, suspension of the approval, product recalls, or complete withdrawal of the product from the market; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; and/or ● injunctions or the imposition of civil or criminal penalties. 14 The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market.
Item 1. Business. OVERVIEW Rafael Holdings, Inc. (NYSE:RFL), (“Rafael Holdings”, “we” or the “Company”), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the “Pharmaceutical Companies”), through an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority equity interest in LipoMedix Pharmaceuticals Ltd.
Item 1. Business. OVERVIEW Rafael Holdings, Inc. (NYSE:RFL), (“Rafael Holdings”, “we” or the “Company”), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the “Pharmaceutical Companies”), including an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority equity interest in LipoMedix Pharmaceuticals Ltd.
In addition, the FDA controls the access of products to market through processes designed to ensure that only products that are safe and effective for their intended use(s) and otherwise meet the applicable requirements of the FFDCA and/or PHSA before they are made available to the public. 6 Review And Approval Of Drugs In The United States In the United States, the FDA approves and regulates drugs under the FFDCA, and its implementing regulations.
In addition, the FDA controls the access of products to market through processes designed to ensure that only products that are safe and effective for their intended use(s) and otherwise meet the applicable requirements of the FFDCA and/or PHSA before they are made available to the public. 10 Review And Approval Of Drugs In The United States In the United States, the FDA approves and regulates drugs under the FFDCA, and its implementing regulations.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration in that packaging over its shelf life. 8 If clinical trials are successful, the next step in the drug development process is the preparation and submission to the FDA of an NDA or BLA, Biologics License Application.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration in that packaging over its shelf life. 12 If clinical trials are successful, the next step in the drug development process is the preparation and submission to the FDA of an NDA or BLA, Biologics License Application.
Thereby CPI-613 ® is believed to have anti-cancer activity. Combining CPI-613 ® with generalized metabolic stressors like chemotherapy holds the potential to result in effective killing of even the most intractable tumors like pancreatic cancer. These effects were observed in Cornerstone Pharmaceuticals’ Phase 1/2 trials to date (Alistar, et al., 2017; Pardee et al., 2018).
Therefore CPI-613 ® is believed to have anti-cancer activity. Combining CPI-613 ® with generalized metabolic stressors like chemotherapy holds the potential to result in the effective killing of even the most intractable tumors like pancreatic cancer. These effects were observed in Cornerstone Pharmaceuticals’ Phase 1/2 trials to date (Alistar, et al., 2017; Pardee et al., 2018).
These laws have been subject to increased enforcement activities with respect to medical products manufacturers in recent years. Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, fines, imprisonment and, within the US, exclusion from participation in government healthcare programs, including Medicare, Medicaid, and Veterans Administration health programs.
These laws have been subject to increased enforcement activities with respect to medical products manufacturers in recent years. Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, fines, imprisonment and, within the US, exclusion from participation in government healthcare programs, including Medicare, Medicaid, Department of Defense, and Veterans Administration health programs.
We and the Healthcare Companies face competition from many different sources, including commercial pharmaceutical and biotechnology and medical device enterprises, academic institutions, government agencies, and private and public research institutions. Many of our and the Healthcare Companies’ competitors have significantly greater financial, product development, manufacturing and marketing resources than we and the Healthcare Companies possess.
We and the Investment Companies face competition from many different sources, including commercial pharmaceutical and biotechnology and medical device enterprises, academic institutions, government agencies, and private and public research institutions. Many of our and the Investment Companies’ competitors have significantly greater financial, product development, manufacturing and marketing resources than we and the Investment Companies possess.
Our global operations are also subject to foreign anti-corruption laws, such as the United Kingdom Bribery Act, among others. As part of our global compliance program, we seek to address anti-corruption risks proactively. COMPETITION We and the Healthcare Companies operate in highly competitive segments.
Our global operations are also subject to foreign anti-corruption laws, such as the United Kingdom Bribery Act, among others. As part of our global compliance program, we seek to address anti-corruption risks proactively. COMPETITION We and the Investment Companies operate in highly competitive segments.
The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance. 7 A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND.
The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance. 11 A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND.
When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements in order to use the study as support for an IND or application for regulatory approval.
When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements to use the study as support for an IND or application for regulatory approval.
GLP toxicology studies showed that any adverse events related to CPI-613 ® (devimistat) were considered transient and mostly observed during acute dosing; animals returned to normal post-dose (i.e., toxicities were reversable or recoverable).
GLP toxicology studies showed that any adverse events related to CPI-613 ® (devimistat) were considered transient and mostly observed during acute dosing; animals returned to normal post-dose (i.e., toxicities were reversible or recoverable).
Large pharmaceutical companies and medical device companies have extensive experience in clinical testing and obtaining regulatory approval for drugs and devices. In addition, many universities and private and public research institutes are active in research in direct competition with us and the Healthcare Companies.
Large pharmaceutical companies and medical device companies have extensive experience in clinical testing and obtaining regulatory approval for drugs and devices. In addition, many universities and private and public research institutes are active in research in direct competition with us and the Investment Companies.
These include, among others things: ● establishment registration and device listing with the FDA; ● continued adherence to the QSR requirements; ● labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provides adequate directions for use, and that all claims are substantiated, and which also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling, in accordance with FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; ● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of a cleared device; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury if the malfunction were to occur; ● correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FFDCA that may present a risk to health; ● complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include, among other things: ● establishment registration and device listing with the FDA; ● continued adherence to the QSR requirements; ● marketing, labeling, advertising, and promotion regulations, which require that promotion is truthful, not misleading, fairly balance and provides adequate directions for use, and that all claims are substantiated and in accordance with the provisions of the approved label, and which also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling, in accordance with FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; ● clearance or approval of product modifications to 510(k)-cleared, De Novo classified or PMA-approved devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of a cleared device; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury if the malfunction were to occur; ● correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FFDCA that may present a risk to health; ● complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and/or regulations; and ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Even if one of our product candidates is approved, sales of our products will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, commercial health insurers, and managed care organizations, provide coverage, and establish adequate reimbursement levels for, such products.
Even if one of the Pharmaceutical Companies’ product candidates is approved, sales of the Pharmaceutical Companies’ products will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, commercial health insurers, and managed care organizations, provide coverage, and establish adequate reimbursement levels for, such products.
If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our and the Healthcare Companies’ products can be subject to progressive price reductions or decreased volume of sales, or both.
If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our and the Investment Companies’ products can be subject to progressive price reductions or decreased volume of sales, or both.
Currently, the Company holds a portion a commercial building in Jerusalem, Israel as its remaining real estate asset. 1 Pharmaceuticals Overview We are a holding company with interests in clinical and early-stage pharmaceutical companies, through an investment in Cornerstone Pharmaceuticals, Inc., a clinical stage cancer metabolism-based therapeutics company, and a majority equity interest in LipoMedix Pharmaceuticals, a clinical stage pharmaceutical company.
Currently, the Company holds a portion a commercial building in Jerusalem, Israel as its remaining real estate asset. 2 Investment Companies Overview We are a company with interests in clinical and early-stage pharmaceutical companies, through an investment in Cornerstone Pharmaceuticals, Inc., a clinical stage cancer metabolism-based therapeutics company, and a majority equity interest in LipoMedix Pharmaceuticals, a clinical stage pharmaceutical company.
Thus, a clinical trial is planned to evaluate the safety, tolerability, and effects of Promitil in advanced pancreatic cancer patients who have deleterious germline mutation in BRCA1, BRCA2, or PALB2.
Thus, a clinical trial is planned to evaluate the safety, tolerability, and effects of Promitil in cancer patients who have deleterious germline mutation in BRCA1, BRCA2, or PALB2.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers, packagers or distributors that the sponsor may decide to use.
This license agreement was subsequently amended in 2004, 2007 and 2017 and relates to Cornerstone’s class of compounds. Cornerstone maintains a low single-digit royalty agreement with Altira Capital and Consulting, LLC (of which we own 66.66%), pursuant to which Cornerstone is granted sole ownership of patents directed to lipoic acid derivatives and other technology.
This license agreement was subsequently amended in 2004, 2007 and 2017 and relates to Cornerstone’s class of compounds. Cornerstone maintains a low single-digit royalty agreement with Altira Capital and Consulting, LLC (of which we own 66.66%)(“Altira”), pursuant to which Cornerstone is granted sole ownership of certain patents directed to lipoic acid derivatives and other technology held by Altira.
Based on the reported preclinical and clinical efficacy of MMC in BRCA mutated tumors, especially when combined with capecitabine in pancreatic cancer, and together with the demonstrated improved safety profile of Promitil in humans, LipoMedix believes that Promitil could offer an important therapeutic option for patients with pancreatic cancer.
Based on the reported preclinical and clinical efficacy of MMC in BRCA mutated tumors together with the demonstrated improved safety profile of Promitil in humans, LipoMedix believes that Promitil could offer an important therapeutic option for patients with pancreatic cancer.
Toxicokinetic (TK) exposures of C max (peak concentration) and area under curve (AUC) of CPI-613 ® (devimistat) from GLP Tox studies in rats and minipigs have shown safety margins expected to cover PK exposures of C max and AUC of CPI-613 ® (devimistat) in AML and pancreatic cancer patients at doses studied. 2 Clinical Highlights: More than 800 patients have been dosed with devimistat to date in 21 ongoing or completed clinical trials.
Toxicokinetic (TK) exposures of C max (peak concentration) and area under curve (AUC) of CPI-613 ® (devimistat) from GLP Tox studies in rats and minipigs have shown safety margins expected to cover PK exposures of C max and AUC of CPI-613 ® (devimistat) in AML and pancreatic cancer patients at doses studied. 3 Clinical Highlights: More than 890 patients have been dosed with CPI-613 ® (devimistat) to date in 24 ongoing or completed clinical trials.
Cornerstone has obtained U.S. orphan drug designation for CPI-613® (devimistat) in the treatment of pancreatic cancer, AML, MDS, Burkitt’s Lymphoma, Peripheral T-cell Lymphoma (PTCL), soft tissue sarcoma, and biliary cancer. Cornerstone maintains U.S. and international trademarks covering its lead development compound (CPI-613 ® (devimistat)).
Cornerstone has obtained U.S. orphan drug designation for CPI-613 ® (devimistat) in the treatment of pancreatic cancer, AML, MDS, Burkitt’s Lymphoma, Peripheral T-cell Lymphoma (PTCL), soft tissue sarcoma, and biliary cancer. Cornerstone maintains U.S. and international trademarks covering its lead development compounds (CPI-613 ® (devimistat) and Telaglenastat (CB-839)).
These laws govern the processes by which our product candidates would be brought to market.
These laws govern the processes by which our product candidates and device candidates would be brought to market.
The patent portfolio is currently comprised of five granted families of patents and one application under review. Rafael Medical Devices patents its technology, inventions, and improvements that it considers important to the development of its business.
The patent portfolio is currently comprised of five granted families of patents and one application under review. Rafael Medical Devices patents its technology, inventions, and improvements that it considers important to the development of its business and seeks to expand its intellectual property portfolio.
In addition to its own internal discovery efforts, Barer is pursuing collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
In addition to its own internal discovery efforts, Barer is pursuing collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
Any adverse regulatory action, depending on its magnitude, may restrict a manufacturer from effectively manufacturing, marketing, and selling any medical device(s) and could have a material adverse effect on the manufacturer’s business, financial condition, and results of operations. 14 After a device is cleared or approved or otherwise authorized for marketing, numerous pervasive regulatory requirements continue to apply unless explicitly exempt.
Any adverse regulatory action, depending on its magnitude, may restrict a manufacturer from effectively manufacturing, marketing, and selling any medical device(s) and could have a material adverse effect on the manufacturer’s business, financial condition, and results of operations. 18 After a device is cleared, receives marketing authorization, or approved for marketing, numerous pervasive regulatory requirements continue to apply unless a device is explicitly exempt from them.
Each of Cornerstone’s, LipoMedix’s, Barer’s, and Farber Partners’ (collectively referred to as the “Pharmaceutical Companies”) product candidates must be approved by the FDA through a New Drug Application, or NDA.
Each of Cornerstone’s, LipoMedix’s, Cyclo Therapeutics’, and Barer’s (collectively referred to as the “Pharmaceutical Companies”) product candidates must be approved by the FDA through a New Drug Application, or NDA.
As of September, 2022, Cornerstone owns or in-licenses more than ten U.S. patents, more than one dozen foreign patents registered in various countries, and many pending U.S. and foreign patent applications. Additional patent applications are anticipated to be filed as studies progress.
As of September 2023, Cornerstone owns or in-licenses more than one dozen U.S. patents, more than thirty (30) foreign patents registered in various countries, and many pending U.S. and foreign patent applications. Additional patent applications are anticipated to be filed as studies progress.
The Pharmaceutical Companies currently rely, and expect to continue to rely, on third parties for the manufacture of their product candidates for preclinical and clinical testing, as well as for commercial manufacture of any products that they may commercialize in the event that they receive regulatory approval.
The Pharmaceutical Companies currently rely, and expect to continue to rely, on third parties for the manufacture of their product candidates for preclinical and clinical testing, as well as for commercial manufacture of any products that they may commercialize.
CPI-613 ® (devimistat) was taken up less in non-malignant cells. In vivo animal models bearing diverse tumor types were used to evaluate dose response, PK, and metabolism of CPI-613 ® (devimistat). The drug was well tolerated in animal models studied. Prolonged survival was observed when compared to untreated controls in these animal models.
In vivo animal models bearing diverse tumor types were used to evaluate dose-response, PK, and metabolism of CPI-613 ® (devimistat). The drug was well tolerated in animal models studied. Prolonged survival was observed when compared to untreated controls in these animal models.
Several pre-clinical pharmacology and toxicology studies (including good laboratory practice toxicology (GLP Tox) studies) were conducted to investigate the pharmacokinetics (PK), drug metabolism, safety, and anticancer activity of CPI-613 ® (devimistat). In in vitro and ex vivo studies, CPI-613 ® (devimistat) exhibited anticancer activities against a tumor cell lines and cells.
Several pre-clinical pharmacology and toxicology studies (including good laboratory practice toxicology (GLP Tox) studies) were conducted to investigate the pharmacokinetics (PK), drug metabolism, safety, and anticancer activity of CPI-613 ® (devimistat). In in vitro and ex vivo studies, CPI-613 ® (devimistat) exhibited anticancer activities against tumor cell lines and cells. CPI-613 ® (devimistat) was taken up less in non-malignant cells.
Our focus to date has been to invest in and fund, discover, and develop novel cancer therapies, and we further seek to expand our portfolio through opportunistic investments in therapeutics which address high unmet medical needs through acquisitions, strategic investments, or in-licensing assets. Cornerstone We own our interest in Cornerstone through a 90%-owned non-operating subsidiary, Pharma Holdings, LLC (“Pharma Holdings”).
Our focus to date has been to invest in and fund, discover, and develop novel therapies, and we further seek to expand our investment portfolio through opportunistic investments including therapeutics which address high unmet medical needs. Cornerstone We own our interest in Cornerstone through a 90%-owned non-operating subsidiary, Pharma Holdings, LLC (“Pharma Holdings”).
Additional patent applications may be filed as development progresses as it deems to be in its best interest. MANUFACTURING The Healthcare Companies do not own or operate, and currently have no plans to establish, any manufacturing facilities or fill-and-finish facilities.
Additional patent applications may be filed as development progresses across the Investment Companies as deemed to be in its best interest. MANUFACTURING The Investment Companies do not own or operate, and currently have no plans to establish, any manufacturing facilities or fill-and-finish facilities.
LipoMedix obtains bulk drug substance and drug product supplies from established contract manufacturers on a purchase order basis and does not have long-term supply arrangements in place. LipoMedix does not currently have arrangements in place for commercial supply or redundant supply for bulk drug substance or drug product.
LipoMedix obtains bulk drug substance and drug product supplies from established contract manufacturers on a purchase order basis and does not have long-term supply arrangements in place.
Farber, a majority owned subsidiary of Barer, was formed around one such agreement with Princeton University’s Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. Barer’s pipeline’s current targets are in 4 main areas.
Farber, a majority owned subsidiary of Barer, was formed around one such agreement with Princeton University’s Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program.
As of September 16, 2022, Rafael Medical Devices had filed the following two patent applications related to its devices filed with the USPTO and PCT: Patent application entitled Compression Anchor Systems, Devices, Instruments, Implants and Methods of Assembly and Use, and patent application entitled Videoscopic Arthroscopic Instruments, Devices, and Systems and Methods of Use and Assembly.
As of September 16, 2023, Rafael Medical Devices had filed the following patent application related to its devices filed with the USPTO and PCT: Patent application entitled, Devices, Instruments, Implants and Methods of Assembly and Use, and patent application entitled Videoscopic Arthroscopic Instruments, Devices, and Systems and Methods of Use and Assembly.
Depreciation expense of property, plant and equipment was $1.4 million and $1.5 million in fiscal 2022 and fiscal 2021, respectively. COMPETITION With respect to our real estate business, we compete for commercial (office and retail) tenants in Jerusalem, Israel. The commercial real estate market is highly competitive.
Depreciation expense of property, plant and equipment was $78 thousand and $72 thousand in fiscal 2023 and fiscal 2022, respectively. COMPETITION With respect to our real estate business, we compete for commercial (office and retail) tenants in Jerusalem, Israel. The commercial real estate market is highly competitive.
OUR STRATEGY Our strategy related to our real estate business is to continue to operate and maximize the value of our real estate holding in Israel. EMPLOYEES As of October 25, 2022, Rafael Holdings and its subsidiaries had 22 full-time employees and 1 part-time employee, including 5 full-time and 1 part-time employees dedicated to the real estate group. 22
OUR STRATEGY Our strategy related to our real estate business is to continue to operate and maximize the value of our real estate holding in Israel. EMPLOYEES As of October 30, 2023, Rafael Holdings and its subsidiaries had 13 full-time employees, including 1 employee dedicated to the real estate group. 26
A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals. The United States Patent and Trademark Office reviews and approves the application for any patent term extension in consultation with the FDA.
A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals. The United States Patent and Trademark Office, or PTO, reviews and approves the application for any patent term extension in consultation with the FDA upon PTO’s determination that the requirements for an extension have been met.
Our wholly-owned Barer Institute, is a preclinical cancer metabolism research operation formed in 2019 to focus on developing a pipeline of novel therapeutic compounds, including compounds to regulate cancer metabolism with potentially broader application in other indications beyond cancer. Barer is comprised of scientists and academic advisors that are experts in cancer metabolism, chemistry, and drug development.
Our wholly-owned Barer Institute, is a preclinical cancer metabolism research operation formed in 2019 to focus on developing a pipeline of novel therapeutic compounds, including compounds to regulate cancer metabolism with potentially broader application in other indications beyond cancer.
The focus of our efforts is subject to change with market conditions, results of our internal development efforts, the availability of investment opportunities on acceptable terms, the investment and acquisition opportunities we may pursue, and developments at those targets.
Historically, our focus was on investing in and funding entities to discover and develop novel cancer therapies. The focus of our efforts is subject to change with market conditions, results of our internal development efforts, the availability of investment opportunities on acceptable terms, the investment and acquisition opportunities we may pursue, and developments at those targets.
QSR compliance is necessary to receive and maintain FDA clearance or approval to market new and existing medical devices, and it is also necessary for distributing in the United States certain devices exempt from FDA clearance and approval requirements. The FDA conducts announced and unannounced periodic and ongoing inspections of medical device manufacturers to determine compliance with the QSR.
QSR compliance is necessary to receive and maintain FDA clearance or approval to market new and existing medical devices, and it is also necessary for distributing in the United States certain devices exempt from FDA clearance and approval requirements.
About Promitil ® : LipoMedix was established to advance the pharmaceutical and clinical development of a patented prodrug of mitomycin-C (MMC) and its efficient delivery in liposomes to cancer cells.
As of July 31, 2022, the Company’s ownership interest in LipoMedix was approximately 95%. 4 About Promitil ® : LipoMedix was established to advance the pharmaceutical and clinical development of a patented prodrug of mitomycin-C (MMC) and its efficient delivery in liposomes to cancer cells.
Thus, CPI-613 ® (devimistat) is being investigated for broad spectrum activity, and the potential to treat diverse tumor types, including difficult-to-treat cancers, high risk cancers, solid tumors as well as hematologic malignancies and advanced stage cancers by targeting cancer metabolism.
Additionally, this toxicity profile could support the administration of cocktails of anti-cancer drugs that may work synergistically with CPI-613 ® . Thus, CPI-613 ® (devimistat) is being investigated for broad-spectrum activity, and the potential to treat diverse tumor types, including difficult-to-treat cancers, high-risk cancers, solid tumors as well as hematologic malignancies and advanced-stage cancers by targeting cancer metabolism.
On October 28, 2021, the Company announced that the AVENGER 500® Phase 3 clinical trial did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas. Cornerstone had also initiated a Phase 3 pivotal trial (ARMADA 2000) of CPI-613® (devimistat) in patients with relapsed or refractory AML in November 2018.
On October 28, 2021, the Company announced that the AVENGER 500 Phase 3 clinical trial for CPI-613 ® (devimistat), Cornerstone Pharmaceuticals’ lead product candidate, did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas.
In preclinical studies, Promitil ® inhibited cancer cells growth in animal models (pancreatic, colorectal, stomach, breast, ovarian, melanoma, bladder), including multidrug resistant tumors, as monotherapy as well as in combination with radiotherapy and/or approved cancer drugs.
In preclinical studies, Promitil ® inhibited cancer cells growth in animal models (pancreatic, colorectal, stomach, breast, ovarian, melanoma, bladder), including multidrug resistant tumors, as monotherapy as well as in combination with radiotherapy and/or approved cancer drugs. In these studies, Promitil ® was found to be more efficacious and less toxic than MMC by a 3-fold factor.
The Pharmaceutical Companies do not currently have arrangements in place for redundant supply for bulk drug substance or drug product, however, we may seek to add that capability if we move toward regulatory approval and commercialization of specific candidates.
The Pharmaceutical Companies obtain supplies from these established contract manufacturers on a purchase-order basis and do not have long-term supply arrangements in place. The Pharmaceutical Companies do not currently have arrangements in place for a redundant supply of bulk drug substance or drug product, however, they may seek to add that capability if they move toward commercialization of specific candidates.
(Gabizon et al, “Pharmacokinetics of mitomycin-c lipidic prodrug entrapped in liposomes and clinical correlations in metastatic colorectal cancer patients” Investigational New Drugs , 38(5):1411-1420, 2020). 3. Phase 1B of Promitil-based chemo-radiotherapy in patients with advanced cancers. These study results have been presented at the ESTRO-2022 meeting in poster form.
Phase IB in advanced colorectal cancer patients with Promitil as single agent and in combination with capecitabine and/or bevacizumab. (Gabizon et al, “Pharmacokinetics of mitomycin-c lipidic prodrug entrapped in liposomes and clinical correlations in metastatic colorectal cancer patients” Investigational New Drugs , 38(5):1411-1420, 2020). 3. Phase 1B of Promitil-based chemo-radiotherapy in patients with advanced cancers.
There are several possible cancer settings with substantial patient numbers and significant unmet need where Promi-Dox potentially could be utilized. This formulation requires further product development.
There are several possible cancer settings with substantial patient numbers and significant unmet need where Promi-Dox potentially could be utilized. This formulation requires further product development. A patent application covering the formulation of Promi-Dox has been granted by the USPTO. 6 Cyclo Therapeutics Inc.
Rafael Medical Devices optimizes supply chains and manufacturing on a device per device basis focusing on quality, time, and cost. At present Rafael Medical Devices does not own or operate manufacturing facilities.
LipoMedix does not currently have arrangements in place for commercial supply or redundant supply for bulk drug substance or drug product. 25 Rafael Medical Devices optimizes supply chains and manufacturing on a device per device basis focusing on quality, time, and cost. At present Rafael Medical Devices does not own or operate manufacturing facilities.
EU member states’ laws related to the advertising and promotion of medical devices, which vary between jurisdictions, may limit or restrict the advertising and promotion of products to the general public and may impose limitations on promotional activities with healthcare professionals.
EU member states’ laws related to the advertising and promotion of medical devices, which vary between jurisdictions, may limit or restrict the advertising and promotion of products to the general public and may impose limitations on promotional activities with healthcare professionals. 21 Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical devices, in particular with respect to healthcare professionals and organizations.
The principal methods of competition for our and the Healthcare Companies’ products include quality, efficacy, market acceptance, price, and marketing and promotional efforts, patient access programs and product insurance coverage and reimbursement. 19 INTELLECTUAL PROPERTY Licenses Cornerstone maintains an exclusive license agreement with the Research Foundation of the State University of New York at Stony Brook, or RF, granting Cornerstone the exclusive right to make, use and sell products covered under specified technology relating to lipoic acid derivatives with the right to grant sublicenses.
INTELLECTUAL PROPERTY Licenses Cornerstone maintains an exclusive license agreement with the Research Foundation of the State University of New York at Stony Brook, or RF, granting Cornerstone the exclusive right to make, use and sell products covered under specified technology relating to lipoic acid derivatives with the right to grant sublicenses.
In the event of either of these occurrences, Rafael Medical Devices could be instructed to recall any products that it is marketing, cease distribution, and/or be subject to civil or criminal penalties. 17 Pharmaceutical Coverage, Pricing, And Reimbursement In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.
Pharmaceutical Coverage, Pricing, And Reimbursement In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.
LipoMedix LipoMedix is a clinical stage Israeli company focused on the development of a product candidate that holds the potential to be innovative, safe, and effective cancer therapy based on liposome delivery. As of July 31, 2022, the Company’s ownership interest in LipoMedix was approximately 84%.
In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. LipoMedix LipoMedix is a clinical stage Israeli company focused on the development of a product candidate that holds the potential to be innovative, safe, and effective cancer therapy based on liposome delivery.
(Golan et al., “Pegylated liposomal mitomycin C prodrug enhances tolerance of mitomycin C: a Phase 1 study in advanced solid tumor patients.” Cancer Medicine , 4:1472–1483, 2015). 2. Phase IB in advanced colorectal cancer patients with Promitil as single agent and in combination with capecitabine and/or bevacizumab.
LipoMedix has completed 3 clinical studies with Promitil ® including: 1. Phase 1A, a dose escalation study of Promitil in patients with advanced cancers. (Golan et al., “Pegylated liposomal mitomycin C prodrug enhances tolerance of mitomycin C: a Phase 1 study in advanced solid tumor patients.” Cancer Medicine , 4:1472–1483, 2015). 2.
Our and the Healthcare Companies competitors are pursuing the development and/or acquisition of pharmaceuticals, medical devices and over-the-counter (“OTC”) products that target the same diseases, conditions and unmet needs that we and the Healthcare Companies are targeting.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. 23 Our and the Investment Companies competitors are pursuing the development and/or acquisition of pharmaceuticals, medical devices and over-the-counter (“OTC”) products that target the same diseases, conditions and unmet needs that we and the Investment Companies are targeting.
The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included and the FDA’s classification of the resubmission.
The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included and the FDA’s classification of the resubmission. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
Accordingly, the Company holds an effective 90% interest in its Cornerstone interests held by Pharma Holdings directly, and an effective 45% indirect interest in its interest held by CS Pharma. Science and Preclinical: CPI-613 ® (devimistat) is a stable analog of normally transient, acylated catalytic intermediates of lipoate.
Accordingly, the Company holds an effective 90% interest in its Cornerstone interests held by Pharma Holdings directly and an effective 45% indirect interest in its interest held by CS Pharma.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, collaborations involving our product candidates and device candidates are subject to numerous risks, which may include the following: ● collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; ● collaborators may not pursue development and commercialization of our product candidates or device candidates or may elect not to continue or renew development or commercialization of our product candidates or device candidates based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate or device candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate or device candidate for clinical testing; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with the Pharmaceutical Companies’ product candidates and Rafael Medical Devices’ device candidates; ● a collaborator with marketing and distribution rights to one or more product candidates or device candidates may not commit sufficient resources to their marketing and distribution in the event that they were to receive regulatory approval or clearance; ● collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of a product candidate or device candidate, or that result in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or device candidates; and ● collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property. 51 As a result, if we enter into future collaboration agreements and strategic partnerships or out-license the Pharmaceutical Companies’ product candidates or Rafael Medical Devices’ device candidates, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business.
Biggest changeMoreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any product candidates because they may be deemed to be at too early of a stage of development for collaborative effort, and third parties may not view such product candidates as having the requisite potential to demonstrate safety and efficacy and obtain regulatory approval. 53 Further, collaborations involving our product candidates and device candidates are subject to numerous risks, which may include the following: ● collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; ● collaborators may not pursue development and commercialization of our product candidates or device candidates or may elect not to continue or renew development or commercialization of our product candidates or device candidates based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate or device candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate or device candidate for clinical testing; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with the Pharmaceutical Companies’ product candidates and Rafael Medical Devices’ device candidates; ● a collaborator with marketing and distribution rights to one or more product candidates or device candidates may not commit sufficient resources to their marketing and distribution in the event that they were to receive regulatory approval or clearance; ● collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of a product candidate or device candidate, or that result in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or device candidates; and ● collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
While we are actively seeking corporate development opportunities, we may not be able to find any suitable target businesses and consummate an investment, business combination or other transaction.
We may not be able to consummate any investment, business combination or other transaction. While we are actively seeking corporate development opportunities, we may not be able to find any suitable target businesses and consummate an investment, business combination or other transaction.
Results of preclinical studies and early clinical trials may not be predictive of results of future clinical trials. The outcome of preclinical studies and early clinical trials may not be predictive of the success or failure of later clinical trials, and interim results of clinical trials do not necessarily predict success in future clinical trials.
The outcome of preclinical studies and early clinical trials may not be predictive of the success or failure of later preclinical studies or clinical trials, and interim results of preclinical studies or clinical trials do not necessarily predict success in future clinical trials.
In addition, if a product that has ODD subsequently receives the first FDA approval for a particular active ingredient for the rare disease for which it has such designation, the product is entitled to orphan drug exclusivity.
In addition, if a product that has ODD subsequently receives the first FDA approval for a particular active ingredient for the rare disease for which it has such designation, the product is entitled to orphan drug exclusivity for that active ingredient for that rare disease.
If we or the Pharmaceutical Companies are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or they are not able to maintain regulatory compliance, we or they may be subject to enforcement action and we may not achieve or sustain profitability.
If we or the Pharmaceutical Companies are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or they are not able to maintain regulatory compliance, we or they may be subject to enforcement action and we or they may not achieve or sustain profitability.
As a result, the top-line or preliminary results reported may differ significantly from future results of the same studies, or different conclusions or considerations may qualify such results and/or limit the clinical conclusions that can be drawn from them, once additional data have been received and fully evaluated.
As a result, the top-line or preliminary results reported may differ significantly from future results of the same studies, or different conclusions or considerations may qualify such results and/or limit the clinical conclusions that can be drawn from them, once additional data have been received and fully evaluated.
Adverse differences between preliminary or interim data and final data could materially adversely affect our business prospects.
Adverse differences between preliminary or interim data and final data could materially adversely affect our business prospects.
In addition, the information we or they choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.
In addition, the information we or they choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP and GCP requirements for any clinical trials that are conducted post-approval.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP and GCP requirements for any clinical trials that are conducted post-approval.
The Pharmaceutical Companies’ and Rafael Medical Devices’ relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
The Pharmaceutical Companies’ and Rafael Medical Devices’ relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
If any of our patents are challenged, invalidated, circumvented by third parties or otherwise limited or expire prior to the commercialization of our products, and if we do not own or have exclusive rights to other enforceable patents protecting our products or other technologies, competitors and other third parties could market products and use processes that are substantially similar to, or superior to, ours and our business would suffer.
If any of our patents are challenged, invalidated, circumvented by third parties or otherwise limited or expire prior to the commercialization of our products, and if we do not own or have exclusive rights to other enforceable patents protecting our products or other technologies, competitors and other third parties could market products and use processes that are substantially similar, or superior, to ours, and our business would suffer.
The following examples are illustrative: ● others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; ● we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; ● we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; 64 ● issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● third parties performing manufacturing or testing for us using our product candidates, including technologies could use the intellectual property of others without obtaining a proper license; ● parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; ● we may not develop or in-license additional proprietary technologies that are patentable; ● we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and ● the patents of others may have an adverse effect on our business.
The following examples are illustrative: ● others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; ● we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; ● we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; 64 ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● third parties performing manufacturing or testing for us using our product candidates, including technologies could use the intellectual property of others without obtaining a proper license; ● parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; ● we may not develop or in-license additional proprietary technologies that are patentable; ● we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and ● the patents of others may have an adverse effect on our business.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and could result in customers seeking other sources for the technology, or in ceasing from doing business with us.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and could result in customers seeking other sources for the technology or ceasing from doing business with us.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 52 ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health At, and their respective implementing regulations, which impose requirements on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, and their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable protected health information as well as their covered subcontractors, including breach notification regulations; ● analogous state data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, medical and financial information, and other information, including data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information, as well as the California Consumer Privacy Act or CCPA, which, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals numerous rights relating to their personal information that may affect companies’ ability to use personal information or share it with business partners, and the California Privacy Rights Act, or CPRA, which expands the scope of the CCPA, imposes new restrictions on behavioral advertising and establishes a new California Privacy Protection Agency that will enforce the law and issue regulations, and is scheduled to become “operative” on January 1, 2023, with a 12-month “lookback provision,” and the various state laws and regulations may be more restrictive and not preempted by United States federal laws; ● analogous foreign data protection laws, including among others the EU General Data Protection Regulation, or the GDPR, and EU member states’ implementing legislation, which imposes data protection requirements that include strict obligations and restrictions on the ability to collect, analyze, and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total worldwide annual turnover of the preceding financial year), with legal requirements in foreign countries relating to the collection, storage, processing, and transfer of personal data continuing to evolve; and ● the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health At, and their respective implementing regulations, which impose requirements on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, and their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable protected health information as well as their covered subcontractors, including breach notification regulations; ● analogous state data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, medical and financial information, and other information, including data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information, as well as the California Consumer Privacy Act or CCPA, which, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals numerous rights relating to their personal information that may affect companies’ ability to use personal information or share it with business partners, and the California Privacy Rights Act, or CPRA, which expands the scope of the CCPA, imposes new restrictions on behavioral advertising and establishes a new California Privacy Protection Agency that will enforce the law and issue regulations, and is scheduled to become “operative” on January 1, 2023, with a 12-month “lookback provision,” and the various state laws and regulations may be more restrictive and not preempted by United States federal laws; ● analogous foreign data protection laws, including among others the EU General Data Protection Regulation, or the GDPR, and EU member states’ implementing legislation, which imposes data protection requirements that include strict obligations and restrictions on the ability to collect, analyze, and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total worldwide annual turnover of the preceding financial year), with legal requirements in foreign countries relating to the collection, storage, processing, and transfer of personal data continuing to evolve; and ● the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Among the provisions of the ACA of potential importance to the Pharmaceutical Companies’ business and the Pharmaceutical Companies’ product candidates are the following: ● an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, or MDRP; ● a new methodology by which rebates owed by manufacturers under the MDRP are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; ● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to now offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; ● expansion of eligibility criteria for Medicaid programs; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; 40 ● new requirements to report certain financial arrangements with physicians and teaching hospitals for eventual publication; ● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians for eventual publication; ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and ● a Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models.
Among the provisions of the ACA of potential importance to the Pharmaceutical Companies’ business and the Pharmaceutical Companies’ product candidates are the following: ● an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, or MDRP; ● a new methodology by which rebates owed by manufacturers under the MDRP are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; ● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to now offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; ● expansion of eligibility criteria for Medicaid programs; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● new requirements to report certain financial arrangements with physicians and teaching hospitals for eventual publication; ● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians for eventual publication; ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and ● a Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models.
As a result of the COVID-19 pandemic, we may experience further disruptions that could severely impact our business, preclinical studies and clinical trials, including: ● delays in receiving approval from local regulatory authorities to initiate our planned clinical trials; ● delays or difficulties in enrolling patients in our clinical trials; ● delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; ● diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; ● risk that participants enrolled in our clinical trials or related staff will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events; ● interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as endoscopies that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; ● interruption or delays in the operations of the FDA, which may impact approval timelines; ● interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing or supply shortages, production slowdowns, global shipping delays or stoppages and disruptions in delivery systems; ● limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; ● refusal of the FDA to accept data from clinical trials in affected geographies; ● impacts from prolonged remote work arrangements, such as increased cybersecurity risks and strains on our business continuity plans; and ● delays or difficulties with equity offerings due to disruptions and uncertainties in the securities market.
As a result of the COVID-19 pandemic, we may experience further disruptions that could severely impact our business, preclinical studies, and clinical trials, including: ● delays in receiving approval from local regulatory authorities to initiate our planned clinical trials; ● delays or difficulties in enrolling patients in our clinical trials; ● delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; ● diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; ● risk that participants enrolled in our clinical trials or related staff will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events; 67 ● interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (such as endoscopies that are deemed non-essential), which may impact the integrity of subject data and clinical study endpoints; ● interruption or delays in the operations of the FDA, which may impact approval timelines; ● interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing or supply shortages, production slowdowns, global shipping delays or stoppages and disruptions in delivery systems; ● limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; ● refusal of the FDA to accept data from clinical trials in affected geographies; ● impacts from prolonged remote work arrangements, such as increased cybersecurity risks and strains on our business continuity plans; and ● delays or difficulties with equity offerings due to disruptions and uncertainties in the securities market.
Further, if any of the Pharmaceutical Companies’ product candidates obtains regulatory approval, toxicities associated with such product candidates previously not seen during clinical testing may also develop after such approval and lead to a number of potentially significant negative consequences, including, but not limited to: ● regulatory authorities may suspend, limit or withdraw approvals of such product, or seek an injunction against its manufacture or distribution; ● regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; ● the Pharmaceutical Companies may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies; ● the Pharmaceutical Companies may be required to develop and implement a risk evaluation and mitigation strategy, or REMS, which could include, among other things, a medication guide outlining the risks of such side effects for distribution to patients, and potentially limitations or even restrictions on prescribing, dispensing, and/or distribution; ● the Pharmaceutical Companies may be subject to fines, injunctions or the imposition of criminal penalties; ● we or the Pharmaceutical Companies could be sued and held liable for harm caused to patients; and ● our reputation may suffer.
Further, if any of the Pharmaceutical Companies’ product candidates obtains regulatory approval, toxicities associated with such product candidates previously not seen during clinical testing may also develop after such approval and lead to a number of potentially significant negative consequences, including, but not limited to: ● regulatory authorities may suspend, limit or withdraw approvals of such product, or seek an injunction against its manufacture or distribution; ● regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; ● the Pharmaceutical Companies may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies; 32 ● the Pharmaceutical Companies may be required to develop and implement a risk evaluation and mitigation strategy, or REMS, which could include, among other things, a medication guide outlining the risks of such side effects for distribution to patients, and potentially limitations or even restrictions on prescribing, dispensing, and/or distribution; ● the Pharmaceutical Companies may be subject to fines, injunctions or the imposition of criminal penalties; ● we or the Pharmaceutical Companies could be sued and held liable for harm caused to patients; and ● our reputation may suffer.
Rafael Medical Devices’ failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory agencies, which may include any of the following sanctions: ● adverse publicity, warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; ● repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizures of a device(s) that receives approval or clearance, if any; ● operating restrictions, partial suspension or total shutdown of production; ● customer notifications or repair, replacement or refunds; ● refusing Rafael Medical Devices’ requests for 510(k) clearance or PMA approvals or foreign regulatory approvals of new device candidates, new intended uses or modifications to existing devices, if any; ● withdrawals of current 510(k) clearances or PMAs or foreign regulatory approvals, resulting in prohibitions on sales of any Rafael Medical Devices’ device(s) that receives approval or clearance, if any; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and ● criminal prosecution.
Rafael Medical Devices’ failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory agencies, which may include any of the following sanctions: ● adverse publicity, warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; ● repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizures of a device(s) that receives approval or clearance, if any; ● operating restrictions, partial suspension or total shutdown of production; ● customer notifications or repair, replacement or refunds; ● refusing Rafael Medical Devices’ requests for 510(k) clearance or PMA approvals or foreign regulatory approvals of new device candidates, new intended uses or modifications to existing devices, if any; 48 ● withdrawals of current 510(k) clearances or PMAs or foreign regulatory approvals, resulting in prohibitions on sales of any Rafael Medical Devices’ device(s) that receives approval or clearance, if any; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and ● criminal prosecution.
The COVID-19 pandemic could also negatively impact our real estate business in a number of ways, including: ● the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis; ● the impact on rents and demand for office and retail space; ● a complete or partial closure of operations resulting from government action; ● the impact of new regulations or norms on physical space needs and expectations; ● the effectiveness of governmental measures aimed at slowing and containing the spread; ● the extent and terms associated with governmental relief programs; 67 ● the ability of debt and equity markets to function and provide liquidity; ● the ability to avoid delays or cost increases associated with building materials or construction services necessary for development, redevelopment and tenant improvements; and ● our tenants’ ability to ensure business continuity in the event a continuity of operations plan is not effective or improperly implemented.
The COVID-19 pandemic could also negatively impact our real estate business in a number of ways, including: ● the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis; ● the impact on rents and demand for office and retail space; ● a complete or partial closure of operations resulting from government action; ● the impact of new regulations or norms on physical space needs and expectations; ● the effectiveness of governmental measures aimed at slowing and containing the spread; ● the extent and terms associated with governmental relief programs; ● the ability of debt and equity markets to function and provide liquidity; ● the ability to avoid delays or cost increases associated with building materials or construction services necessary for development, redevelopment and tenant improvements; and ● our tenants’ ability to ensure business continuity in the event a continuity of operations plan is not effective or improperly implemented.
Later discovery of previously unknown problems with marketed devices, including adverse events of unanticipated severity or frequency, or with third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the marketing or manufacturing of any Rafael Medical Devices’ device that receives approval or clearance, withdrawal of the device from the market or voluntary or mandatory device recalls; 45 ● requirements to conduct post-marketing studies or clinical trials; ● fines, restitutions, disgorgement of profits or revenue, warning letters, untitled letters or holds on clinical trials; ● refusal by the FDA to approve or clear pending applications or supplements to approved applications filed by Rafael Medical Devices or suspension or revocation of approvals, if any; ● product seizure or detention, or refusal to permit the import or export of Rafael Medical Devices’ devices; and ● injunctions or the imposition of civil or criminal penalties.
Later discovery of previously unknown problems with marketed devices, including adverse events of unanticipated severity or frequency, or with third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the marketing or manufacturing of any Rafael Medical Devices’ device that receives approval or clearance, withdrawal of the device from the market or voluntary or mandatory device recalls; ● requirements to conduct post-marketing studies or clinical trials; ● fines, restitutions, disgorgement of profits or revenue, warning letters, untitled letters or holds on clinical trials; ● refusal by the FDA to approve or clear pending applications or supplements to approved applications filed by Rafael Medical Devices or suspension or revocation of approvals, if any; ● product seizure or detention, or refusal to permit the import or export of Rafael Medical Devices’ devices; and ● injunctions or the imposition of civil or criminal penalties.
Factors that may inhibit the Pharmaceutical Companies’ efforts to commercialize their medicines on their own include: ● the Pharmaceutical Companies’ inability to recruit and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future medicines; ● the lack of complementary medicines to be offered by sales personnel, which may put them at a competitive disadvantage relative to companies with more extensive product lines; ● our inability to equip medical and sales personnel with effective materials, including medical and sales literature, to help them educate physicians and other healthcare providers regarding applicable diseases and any products that receive regulatory approval; ● our inability to develop or obtain sufficient operational functions to support our commercial activities; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
Factors that may inhibit the Pharmaceutical Companies’ efforts to commercialize their medicines on our their own include: ● the Pharmaceutical Companies’ inability to recruit and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future medicines; 39 ● the lack of complementary medicines to be offered by sales personnel, which may put them at a competitive disadvantage relative to companies with more extensive product lines; ● the Pharmaceutical Companies’ inability to equip medical and sales personnel with effective materials, including medical and sales literature, to help them educate physicians and other healthcare providers regarding applicable diseases and any products that receive regulatory approval; ● the Pharmaceutical Companies’ inability to develop or obtain sufficient operational functions to support our commercial activities; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
Any potential acquisition or strategic partnership may entail numerous risks, including: ● increased operating expenses and cash requirements; ● the assumption of additional indebtedness or contingent liabilities; ● the issuance of our equity securities; ● assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; ● the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition; 73 ● retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; ● risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and ● our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
Any potential acquisition or strategic partnership may entail numerous risks, including: ● increased operating expenses and cash requirements; ● the assumption of additional indebtedness or contingent liabilities; ● the issuance of our equity securities; ● assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; ● the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition; ● retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; ● risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and ● our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
Later discovery of previously unknown problems with marketed products, including adverse events of unanticipated severity or frequency, or with third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory product recalls; ● restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials; ● fines, restitutions, disgorgement of profits or revenue, warning letters, untitled letters or holds on clinical trials; ● refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals; ● product seizure or detention, or refusal to permit the import or export of our products; and ● injunctions or the imposition of civil or criminal penalties.
Later discovery of previously unknown problems with marketed products, including adverse events of unanticipated severity or frequency, or with third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory product recalls; ● restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials; ● fines, restitutions, disgorgement of profits or revenue, warning letters, untitled letters or holds on clinical trials; 37 ● refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals; ● product seizure or detention, or refusal to permit the import or export of our products; and ● injunctions or the imposition of civil or criminal penalties.
Any such claim could also force use to do one or more of the following: ● incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay if a court decides that the product candidate, service, or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay up to treble damages and the third party’s attorneys’ fees; ● pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology; ● stop manufacturing, offering for sale, selling, using, importing, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product, service, or technology; ● obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all; ● redesign our product candidates, services, and technology so they do not infringe or violate the third party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time; ● enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others; ● find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or ● relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable 59 Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources.
Any such claim could also force use to do one or more of the following: ● incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay if a court decides that the product candidate, service, or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay up to treble damages and the third party’s attorneys’ fees; ● pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology; ● stop manufacturing, offering for sale, selling, using, importing, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product, service, or technology; ● obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all; ● redesign our product candidates, services, and technology so they do not infringe or violate the third party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time; ● enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others; ● find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or ● relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable 60 Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources.
The degree of market acceptance of the Pharmaceutical Companies’ product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy, safety profile, and any potential clinical advantages compared to alternative treatments; ● the approval, availability, market acceptance, and reimbursement for any companion diagnostic; ● the ability to offer the Pharmaceutical Companies’ medicines for sale at competitive prices; ● convenience and ease of administration compared to alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● ensuring uninterrupted product supply; ● the strength of marketing and distribution support; ● sufficient third-party coverage and reimbursement; and ● the prevalence and severity of any side effects.
The degree of market acceptance of the Pharmaceutical Companies’ product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy, safety profile, and any potential clinical advantages compared to alternative treatments; ● the approval, availability, market acceptance, and reimbursement for any companion diagnostic; ● the ability to offer the Pharmaceutical Companies’ medicines for sale at competitive prices; 38 ● convenience and ease of administration compared to alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● ensuring uninterrupted product supply; ● the strength of marketing and distribution support; ● sufficient third-party coverage and reimbursement; and ● the prevalence and severity of any side effects.
In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; ● federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; 54 ● federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
The FDA or any foreign regulatory bodies can delay, limit or deny approval of the Pharmaceutical Companies’ product candidates or require them to conduct additional nonclinical or clinical testing or abandon a program for multiple reasons in their sole discretion, including the following: ● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of clinical trials; ● the Pharmaceutical Companies may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● serious and unexpected drug-related side effects experienced by participants in clinical trials or by individuals using drugs similar to the Pharmaceutical Companies’ product candidates may result in negative regulatory conclusions regarding a product candidate’s safety profile; ● the Pharmaceutical Companies may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may disagree with the Pharmaceutical Companies’ interpretation of data from preclinical studies or clinical trials; 31 ● the data collected from clinical trials of the Pharmaceutical Companies’ product candidates may not be acceptable or sufficient to support the submission of a NDA or other comparable submission or to obtain regulatory approval in the United States or elsewhere, and the Pharmaceutical Companies may be required to conduct additional clinical studies; ● the FDA’s or the applicable foreign regulatory authority may disagree regarding the formulation, labeling, manufacturing, and/or the specifications of the Pharmaceutical Companies’ product candidates; ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which the Pharmaceutical Companies contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering clinical data insufficient for approval.
The FDA or any foreign regulatory bodies can delay, limit or deny approval of the Pharmaceutical Companies’ product candidates or require them to conduct additional nonclinical and preclinical or clinical testing or abandon a program for multiple reasons in their sole discretion, including the following: ● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of clinical trials; ● the Pharmaceutical Companies may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● serious and unexpected drug-related side effects experienced by participants in clinical trials or by individuals using drugs similar to the Pharmaceutical Companies’ product candidates may result in negative regulatory conclusions regarding a product candidate’s safety profile; ● the Pharmaceutical Companies may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may disagree with the Pharmaceutical Companies’ interpretation of data from preclinical studies or clinical trials; 34 ● the data collected from clinical trials of the Pharmaceutical Companies’ product candidates may not be acceptable or sufficient to support the submission of a NDA or other comparable submission or to obtain regulatory approval in the United States or elsewhere, and the Pharmaceutical Companies may be required to conduct additional clinical studies; ● the FDA’s or the applicable foreign regulatory authority may disagree regarding the formulation, labeling, manufacturing, and/or the specifications of the Pharmaceutical Companies’ product candidates; ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which the Pharmaceutical Companies contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering clinical data insufficient for approval.
The types of situations in which we may become a party to such litigation or proceedings include: ● we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our product candidates, or processes do not infringe those third parties’ patents; ● we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of third-party products that would compete unfairly with our products; 58 ● if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; ● if third parties initiate litigation claiming that our processes or product candidates, infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; ● if third parties initiate litigation or other proceedings, including inter partes reviews, oppositions or other similar agency proceedings, seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; ● we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our product candidate; and ● if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or product candidates infringe or misappropriate its patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings.
The types of situations in which we may become a party to such litigation or proceedings include: ● we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our product candidates, device candidates, or processes do not infringe those third parties’ patents; ● we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of third-party products that would compete unfairly with our products; ● if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; ● if third parties initiate litigation claiming that our processes or product candidates, infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; ● if third parties initiate litigation or other proceedings, including inter partes reviews, oppositions or other similar agency proceedings, seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; ● we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our product candidate; and ● if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or product candidates infringe or misappropriate its patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings.
LipoMedix faces competition from (i) other liposome and nanomedicine products in solid tumors (for example, Doxil (Janssen), Onivyde (Ipsen), Abraxane (Celgene)); (ii) other non-liposomal chemotherapeutic drugs in gastrointestinal malignancies recently developed or under development (for example, TAS-102 (Taiho) in colorectal cancer); (iii) biological therapy (including small molecule kinase inhibitors) recently developed or under development for colon cancer (for example, Regorafenib (Bayer)); (iv) immunotherapy approaches in gastrointestinal malignancies (for example, Merck USA), antibodies and/or vaccinations; and (v) other large companies such as Roche.
LipoMedix faces competition from (i) other liposome and nanomedicine products in solid tumors (for example, Doxil (Janssen), Onivyde (Ipsen), and Abraxane (Celgene)); (ii) other non-liposomal chemotherapeutic drugs in gastrointestinal malignancies recently developed or under development (for example, TAS-102 (Taiho) in colorectal cancer); (iii) biological therapy (including small molecule kinase inhibitors) recently developed or under development for colon cancer (for example, Regorafenib (Bayer)); (iv) immunotherapy approaches in gastrointestinal malignancies (for example, Merck USA), antibodies and/or vaccinations; and (v) other companies such as Roche.
Section 505(b)(2), if applicable under the FFDCA, would allow an NDA submitted to the FDA to rely in part on data in the public domain and the FDA’s prior conclusions regarding the safety and effectiveness of a previously-approved product, which could expedite the development program for certain of the Pharmaceutical Companies’ product candidates by potentially decreasing the amount of nonclinical and/or clinical data that they would need to generate in order to obtain FDA approval.
Section 505(b)(2), if applicable under the FFDCA, would allow an NDA submitted to the FDA to rely in part on data in the public domain and the FDA’s prior conclusions regarding the safety and effectiveness of a previously-approved product, which could expedite the development program for certain of the Pharmaceutical Companies’ product candidates by potentially decreasing the amount of nonclinical and preclinical and/or clinical data that they would need to generate in order to obtain FDA approval.
Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidates or medicines that the Pharmaceutical Companies may develop; ● injury to the Pharmaceutical Companies’ reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant costs to defend the related litigation; ● substantial monetary awards to trial participants or patients; ● loss of revenue; ● reduced resources of the Pharmaceutical Companies’ management to pursue the Pharmaceutical Companies’ business strategy; and diverted time and attention from executing on that strategy; and ● the inability to commercialize any medicines that the Pharmaceutical Companies may develop.
Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidates or medicines that the Pharmaceutical Companies may develop; ● injury to the Pharmaceutical Companies’ reputation and significant negative media attention; ● withdrawal of clinical trial participants; ● significant costs to defend the related litigation; ● substantial monetary awards to trial participants or patients; ● loss of revenue; 42 ● reduced resources of the Pharmaceutical Companies’ management to pursue the Pharmaceutical Companies’ business strategy; and diverted time and attention from executing on that strategy; and ● the inability to commercialize any medicines that the Pharmaceutical Companies may develop.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtain a license under the applicable patents, or until such patents expire or they are determined to be held invalid or unenforceable.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, any final product itself, or our device candidates, the holders of any such patents may be able to block our ability to commercialize the product candidate or device candidate unless we obtain a license under the applicable patents, or until such patents expire or they are determined to be held invalid or unenforceable.
Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers the Pharmaceutical Companies’ costs, including research, development, manufacture, sale and distribution. Reimbursement rates may vary, by way of example, according to the use of the product and the clinical setting in which it is used.
Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our or the Pharmaceutical Companies’ costs, including research, development, manufacture, sale, and distribution. Reimbursement rates may vary, by way of example, according to the use of the product and the clinical setting in which it is used.
Even if issued, existing or future patents may be challenged, including with respect to ownership, narrowed, invalidated, held unenforceable or circumvented, any of which could limit our ability to prevent competitors and other third parties from developing and marketing similar products or limit the length of terms of patent protection we may have for our product candidates.
Even if issued, existing or future patents may be challenged, including with respect to ownership, narrowed, invalidated, held unenforceable or circumvented, any of which could limit our ability to prevent competitors and other third parties from developing and marketing similar products or limit the length of terms of patent protection we may have for our product candidates or device candidates.
If the Pharmaceutical Companies or Rafael Medical Devices or any of these third parties fail to comply with applicable GLP or GCP regulations, the preclinical data generated in their preclinical studies and/or the clinical data generated in their clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require them to perform additional preclinical studies and/or clinical trials before approving any marketing applications.
If the Pharmaceutical Companies or Rafael Medical Devices or any of these third parties fail to comply with applicable GLP or GCP regulations, the preclinical data generated in their preclinical studies and/or the clinical data generated in their clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require them to repeat clinical trials and/or to perform additional preclinical studies and/or clinical trials before approving any marketing applications.
Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for or obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our product candidates and services.
Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained, or may in the future apply for or obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use, and sell our product candidates, device candidates, services, and technologies.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates or device candidates.
Complying with these rules and regulations has increased and will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.
Complying with these rules and regulations has increased and will continue to increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources 74 The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our common stock.
Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our common stock.
The Pharmaceutical Companies may not maintain adequate insurance for environmental liability or toxic tort claims that may be asserted against them in connection with their storage or disposal of biological, hazardous or radioactive materials. 39 In addition, the Pharmaceutical Companies may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
The Pharmaceutical Companies may not maintain adequate insurance for environmental liability or toxic tort claims that may be asserted against them in connection with their storage or disposal of biological, hazardous or radioactive materials. In addition, the Pharmaceutical Companies may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
As a result, the coverage determination process is often a time-consuming and costly process that will require the Pharmaceutical Companies to provide scientific and clinical support for the use of their products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
As a result, the coverage determination process is often a time-consuming and costly process that will require us and the Pharmaceutical Companies to provide scientific and clinical support for the use of their products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
It is unclear how other healthcare reform measures of the Biden Administrations or other efforts, if any, to challenge, repeal or replace the ACA, will impact the Pharmaceutical Companies’ businesses. In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the U.S.
It is unclear how other healthcare reform measures of the Biden Administrations or other efforts, if any, to challenge, repeal or replace the ACA, will impact the Pharmaceutical Companies’ businesses. 44 In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the U.S.
As a result, top-line data should be viewed with caution until the final data are available, and then, until the full study results have been completely evaluated by the FDA. From time to time, we and/or Rafael Medical Devices may also disclose interim data from preclinical studies or clinical trials.
As a result, top-line data should be viewed with caution until the final data are available, and then, until the full study results have been completely evaluated by the FDA. 46 From time to time, we and/or Rafael Medical Devices may also disclose interim data from preclinical studies or clinical trials.
Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our products. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.
Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates, device candidates, or the use of our products. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent, and the patent’s prosecution history.
If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, either generally or in connection with a Section 505(b)(2) submission by the Pharmaceutical Companies, the FDA may change its 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).
If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, either generally or in connection with a Section 505(b)(2) submission by the Pharmaceutical Companies, the FDA may change its 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA that the Pharmaceutical Companies submit under Section 505(b)(2).
If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and distributions to security holders could be adversely affected. We face significant competition for tenants.
If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and distributions to security holders could be adversely affected. We face competition for tenants.
Therefore, it is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies for our product candidates, or processes, or to obtain licenses or cease certain activities. Patents could be issued to third parties that we may ultimately be found to infringe.
Therefore, it is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies for our product candidates, device candidates, or processes, or to obtain licenses or cease certain activities. Patents could be issued to third parties that we may ultimately be found to infringe.
If the FDA does not allow any of the Pharmaceutical Companies’ product candidates to pursue approval under the Section 505(b)(2) regulatory pathway as anticipated, the Pharmaceutical Companies may need to conduct additional nonclinical studies and/or clinical trials, provide additional data and information, and meet additional standards for regulatory approval.
If the FDA does not allow any of the Pharmaceutical Companies’ product candidates to pursue approval under the Section 505(b)(2) regulatory pathway as anticipated, the Pharmaceutical Companies may need to conduct additional nonclinical and preclinical studies and/or clinical trials, provide additional data and information, and meet additional standards for regulatory approval.
If the Pharmaceutical Companies receive regulatory approval for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If the Pharmaceutical Companies are found to have promoted such unapproved, or off-label, uses, they may become subject to significant liability.
If the Pharmaceutical Companies receive regulatory approval for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If we or the Pharmaceutical Companies are found to have promoted such unapproved, or off-label, uses, we or they may become subject to significant liability.
Because we have not yet conducted a formal freedom to operate analysis for patents related to our product candidates, we may not be aware of issued patents that a third party might assert are infringed by one of our current or future product candidates, which could materially impair our ability to commercialize our product candidates.
Because we have not yet conducted a formal freedom to operate analysis for patents related to our product candidates or device candidates, we may not be aware of issued patents that a third party might assert are infringed by one of our current or future product candidates or device candidates, which could materially impair our ability to commercialize our product candidates or device candidates.
In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.
In order to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.
In addition, the degree of future protection afforded by our intellectual property rights is uncertain because even granted intellectual property rights have limitations, and may not adequately protect our business, provide a barrier to entry against our competitors or potential competitors or permit us to maintain our competitive advantage.
In addition, the degree of future protection afforded by our intellectual property rights is uncertain because even granted intellectual property rights have limitations, and may not adequately protect our business, provide a lawful barrier to entry against our competitors or potential competitors or permit us to maintain our competitive advantage.
A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business, including preventing or limiting the development and commercialization of any product candidates we develop.
A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business, including preventing or limiting the development and commercialization of any product candidates or device candidates we develop.
Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for the Pharmaceutical Companies’ product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities.
Results from nonclinical and preclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical and preclinical or clinical data for the Pharmaceutical Companies’ product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities.
Our and the Pharmaceutical Companies’ preclinical and clinical programs may experience delays or may never advance, which would adversely affect their ability to obtain regulatory approvals or commercialize their product candidates on a timely basis or at all, which could have an adverse effect on their business.
Our and the Pharmaceutical Companies’ preclinical and clinical programs may experience delays or may never advance, which would adversely affect the ability to obtain regulatory approvals or commercialize product candidates on a timely basis or at all, which could have an adverse effect on our business.
Moreover, inability to pursue approval under the Section 505(b)(2) regulatory pathway could result in new competitive products reaching the market more quickly than any product candidates the Pharmaceutical Companies are developing, which could adversely impact our competitive position and prospects.
Moreover, inability to pursue approval under the Section 505(b)(2) regulatory pathway could result in new competitive products reaching the market more quickly than any product candidates the Pharmaceutical Companies are developing, which could adversely impact our and their competitive position and prospects.
The in-licensing and acquisition of third-party intellectual property rights for product candidates is a competitive area, and a number of more established companies are also pursuing strategies to in-license or acquire third-party intellectual property rights for products that we may consider attractive or necessary.
The in-licensing and acquisition of third-party intellectual property rights for product candidates and device candidates is a competitive area, and a number of more established companies are also pursuing strategies to in-license or acquire third-party intellectual property rights for products that we may consider attractive or necessary.
In any case, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. 62 We may not be able to adequately protect our intellectual property rights throughout the world.
In any case, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. We may not be able to adequately protect our intellectual property rights throughout the world.
Any of these occurrences may harm our business, financial condition and prospects significantly. 27 If the Pharmaceutical Companies experience delays or difficulties in the enrollment of patients in clinical trials, the Pharmaceutical Companies’ receipt of necessary regulatory approvals could be delayed or prevented.
Any of these occurrences may harm our business, financial condition, and prospects significantly. If the Pharmaceutical Companies experience delays or difficulties in the enrollment of patients in clinical trials, the Pharmaceutical Companies’ receipt of necessary regulatory approvals could be delayed or prevented.
If these reports are not timely filed, regulators may impose sanctions and sales of Rafael Medical Devices’ products may suffer, and they may be subject to product liability or regulatory enforcement actions, all of which could harm our business.
If these reports are not timely filed, regulators may impose sanctions, and sales of Rafael Medical Devices’ products may suffer, and they and we may be subject to product liability or regulatory enforcement actions, all of which could harm our business.
Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market current or future product candidates.
Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market current or future product candidates or device candidates.
Conducting preclinical testing and clinical trials represents a lengthy, time-consuming and expensive process. The length of time may vary substantially according to the type, complexity and novelty of the program, and often can be several years or more per development program.
Conducting nonclinical and preclinical testing and clinical trials represents a lengthy, time-consuming, and expensive process. The length of time may vary substantially according to the type, complexity, and novelty of the program, and often can be several years or more per development program.
Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from such clinical trials continue other treatments for their disease.
Interim data from preclinical and clinical trials are subject to the risk that one or more of the preclinical or clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from such clinical trials continue other treatments for their disease.
Neither the Pharmaceutical Companies nor any future collaborator is permitted to market any new drug in the United States or abroad until we receive regulatory approval of an NDA, or other comparable submission, from the FDA or foreign regulatory agencies.
Neither we nor the Pharmaceutical Companies nor any future collaborator is permitted to market any new drug in the United States or abroad until they receive regulatory approval of an NDA, or other comparable submission, from the FDA or foreign regulatory agencies.
These payors may not view the Pharmaceutical Companies’ products, if any, as cost-effective, and coverage and reimbursement may not be available to the Pharmaceutical Companies’ customers, or those of any future collaborators, or may not be sufficient to allow the Pharmaceutical Companies’ products, if any, to be marketed on a competitive basis.
These payors may not view the Pharmaceutical Companies’ products, if any, as cost-effective, and coverage and reimbursement may not be available to our or the Pharmaceutical Companies’ customers, or those of any future collaborators, or may not be sufficient to allow the Pharmaceutical Companies’ products, if any, to be marketed on a competitive basis.
We rely primarily upon a combination of patents, trademarks, trade secret protection, and other intellectual property rights as well as nondisclosure, confidentiality and other contractual agreements to protect the intellectual property related to our brands, product candidates, and other proprietary technologies.
We rely primarily upon a combination of patents, trademarks, trade secret protection, and other intellectual property rights as well as nondisclosure, confidentiality, and other contractual agreements to protect the intellectual property related to our brands, product candidates and device candidates, and other proprietary technologies.
There have been many lawsuits and other proceedings asserting patents and other intellectual property rights in the biopharmaceutical industries. We cannot assure you that our product candidates will not infringe existing or future third-party patents.
There have been many lawsuits and other proceedings asserting patents and other intellectual property rights in the biopharmaceutical industries. We cannot assure you that our product candidates and device candidates will not infringe existing or future third-party patents.
In the future, the Pharmaceutical Companies may choose to build a focused sales and marketing infrastructure to sell, or participate in sales activities with their collaborators for, some of their product candidates if and when they are approved.
In the future, the Pharmaceutical Companies may choose to build a focused sales and marketing infrastructure to sell, or participate in sales activities with our or their collaborators for, some of their product candidates if and when they are approved.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are required to disclose changes made in our internal control over financial reporting on a quarterly basis.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We are required to disclose changes made in our internal controls over financial reporting on a quarterly basis.
The Pharmaceutical Companies have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses.
We and the Pharmaceutical Companies have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses.
We and the Pharmaceutical Companies face competition with respect to current product candidates, and the Pharmaceutical Companies and their collaborators will face competition with respect to any product candidates that they or their collaborators may seek to develop or commercialize in the future, from major pharmaceutical companies and specialty biopharmaceutical companies worldwide.
We and the Pharmaceutical Companies face competition with respect to current product candidates, and we and the Pharmaceutical Companies and our and their collaborators will face competition with respect to any product candidates that they or their collaborators may seek to develop or commercialize in the future, from major pharmaceutical companies and specialty biopharmaceutical companies worldwide.
There may also be issued patents or pending patent applications that we are aware of, but that we think are irrelevant to our product candidates, which may ultimately be found to be infringed by the manufacture, sale, or use of our product candidates.
There may also be issued patents or pending patent applications that we are aware of, but that we think are irrelevant to our product candidates or device candidates, which may ultimately be found to be infringed by the manufacture, sale, or use of our product candidates or device candidates.
Moreover, because some patent applications are maintained as confidential for a certain period of time, we cannot be certain that third parties have not filed patent applications that cover our product candidates, services and technologies.
Moreover, because some patent applications are maintained as confidential for a certain period of time, we cannot be certain that third parties have not filed patent applications that cover our product candidates, device candidates, services, and technologies.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
These products may compete with our product candidates or device candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
We cannot be certain of the timely completion or outcome of the Pharmaceutical Companies’ preclinical studies and cannot predict if the FDA will allow their proposed clinical programs to proceed or if the outcome of their preclinical studies will ultimately support further development of their programs.
We cannot be certain of the timely completion or outcome of the Pharmaceutical Companies’ nonclinical and preclinical studies and cannot predict if the FDA will allow their proposed clinical programs to proceed or if the outcome of their nonclinical and preclinical studies will ultimately support further development of their programs.
If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the preclinical and/or clinical data they obtain is compromised due to the failure to adhere to preclinical or clinical protocols or regulatory requirements or for other reasons, the Pharmaceutical Companies’and Rafael Medical Devices’ preclinical studies and clinical trials may be extended, delayed or terminated, and they may not be able to complete development of, obtain regulatory approval of, or successfully commercialize their product candidates or device candidates.
If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the preclinical and/or clinical data they obtain is compromised due to the failure to adhere to preclinical or clinical protocols or regulatory requirements or for other reasons, the Pharmaceutical Companies’ and Rafael Medical Devices’ preclinical studies and clinical trials may be extended, delayed or terminated, and they may not be able to complete development of, obtain regulatory approval of, or successfully commercialize their product candidates or device candidates.
Numerous third-party patents exist in the fields relating to our products and services, and it is difficult for industry participants, including us, to identify all third-party patent rights relevant to our product candidates, services and technologies.
Numerous third-party patents exist in the fields relating to our products and services, and it is difficult for industry participants, including us, to identify all third-party patent rights relevant to our product candidates, device candidates, services, and technologies.
We may incorrectly determine that our product candidates are not covered by a third-party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope.
We may incorrectly determine that our product candidates or device candidates are not covered by a third-party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope.
The Pharmaceutical Companies have not obtained regulatory approval for any product candidate, and it is possible that any product candidates they may seek to develop in the future will never obtain regulatory approval.
We and the Pharmaceutical Companies have not obtained regulatory approval for any product candidate, and it is possible that any product candidates they may seek to develop in the future will never obtain regulatory approval.
The Pharmaceutical Companies likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market the Pharmaceutical Companies’ medicines effectively.
We and the Pharmaceutical Companies likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market the Pharmaceutical Companies’ medicines effectively.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLipoMedix has a Research and Services Agreement with Shaare Zedek Scientific Ltd. by which laboratory space at Shaare Zedek Medical Center is used for R&D activities. This agreement is conditioned to grant support for the Shaare Zedek Nano-Oncology research center either directly from LipoMedix or indirectly through the Israel Innovation Authority Fund (Israel Chief Scientist Office).
Biggest changeThis agreement is conditioned to grant support for the Shaare Zedek Nano-Oncology research center either directly from LipoMedix or indirectly through the Israel Innovation Authority Fund (Israel Chief Scientist Office). This arrangement has been in place since 2012, and the grant support is negotiable and renewed on an annual basis.
Rent was $3,600 annually, and the lease agreement ran through September 30, 2022. See Item 1—“Real Estate” for a discussion of properties held by the Company for investment purposes and Item 8—“Financial Statements and Supplemental Data,” for a detailed listing of such facilities.
See Item 1—“Real Estate” for a discussion of properties held by the Company for investment purposes and Item 8—“Financial Statements and Supplemental Data,” for a detailed listing of such facilities.
This arrangement has been in place since 2012, and the grant support is negotiable and renewed on an annual basis. However, there can be no guarantees that Shaare Zedek will continue this agreement in the future. LipoMedix leased an administrative office in Giv’at Ram Hi-Tech Park from the Hebrew University.
However, there can be no guarantees that Shaare Zedek will continue this agreement in the future. LipoMedix leased an administrative office in Giv’at Ram Hi-Tech Park from the Hebrew University. Rent was $3,600 annually, and the lease agreement ran through September 30, 2022.
Item 2. Properties. Our principal executive office is located in 520 Broad Street, Newark, New Jersey. Barer’s rents private lab and office space at 3675 Market Street in Philadelphia, Pennsylvania, with total annual rental costs of approximately $193,000.
Item 2. Properties. Our principal executive office is located in 520 Broad Street, Newark, New Jersey. LipoMedix has a Research and Services Agreement with Shaare Zedek Scientific Ltd. by which laboratory space at Shaare Zedek Medical Center is used for R&D activities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company intends to vigorously defend this matter. The loss is considered remote and no accrual has been recorded. The Company may from time to time be subject to legal proceedings that may arise in the ordinary course of business.
Biggest changeItem 3. Legal Proceedings Legal proceedings disclosure is presented in Note 19 to our Consolidated Financial Statements and in Item 8 to Part II of this Annual Report. The Company may from time to time be subject to legal proceedings that may arise in the ordinary course of business.
Although there can be no assurance in this regard, other than noted above, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. Item 4. Mine Safety Disclosures. Not applicable. 75 Part II
Although there can be no assurance in this regard, other than noted above, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. Item 4. Mine Safety Disclosures. Not applicable. 74 Part II
Removed
Item 3. Legal Proceedings. On December 31, 2019, an employee of the Company filed a complaint in connection with the incident for personal injuries against the Company and other parties in the New Jersey Supreme Court for an incident that took place on January 31, 2019 at 520 Broad Street, Newark, New Jersey.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn October 25, 2022, there were 265 holders of record of our Class B common stock and eight holders of record of our Class A common stock. All shares of Class A common stock are beneficially owned by eight trusts for the benefit of sons and daughters of Howard Jonas.
Biggest changeOn October 27, 2023, there were 262 holders of record of our Class B common stock and one holder of record of our Class A common stock. Howard Jonas has voting and dispositive power over all shares of Class A common stock.
Performance Graph of Stock We are a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934 and are not required to provide the information under this item. Issuer Repurchases of Equity Securities None. Item 6. Reserved.
Performance Graph of Stock We are a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934 and are not required to provide the information under this item. Issuer Repurchases of Equity Securities None. Item 6. [Reserved]. 75
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2022, and which is incorporated by reference herein.
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which we will file with the Securities and Exchange Commission within 120 days after July 31, 2023, and which is incorporated by reference herein.
The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers. On October 28, 2022, the last sales price reported on the NYSE for the Class B common stock was $1.83 per share.
The number of holders of record of our Class B common stock does not include the number of persons whose shares are in nominee or in “street name” accounts through brokers. On October 27, 2023, the last sales price reported on the NYSE for the Class B common stock was $1.55 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConsolidated Operations Our consolidated income and expense line items below income from operations were as follows: For the Years Ended July 31, Change 2022 2021 $ % (in thousands) Loss from operations $ (60,477 ) $ (28,199 ) (32,278 ) (114 )% Interest expense (6 ) (12 ) 6 50 % Interest income 201 2 199 (9950 )% Gain on sale of building — 749 (749 ) (100 )% Impairment of investments - Other Pharmaceuticals — (724 ) 724 100 % Impairment of cost method investment - Cornerstone Pharmaceuticals (79,141 ) — (79,141 ) (100 )% Realized loss on available-for-sale securities (45 ) — (45 ) (100 )% Unrealized (loss) gain on investments - Hedge Funds (504 ) 4,758 (5,262 ) (111 )% Loss from continuing operations before income taxes (139,972 ) (23,426 ) (116,546 ) (498 )% Provision for income taxes — (18 ) 18 100 % Equity in (loss) earnings of RP Finance (575 ) 383 (958 ) 250 % Consolidated loss from continuing operations (140,547 ) (23,061 ) (117,486 ) (509 )% Loss from discontinued operations related to 520 Property (1,830 ) (1,705 ) (125 ) (7 )% Net loss attributable to noncontrolling interests (17,719 ) (222 ) (17,497 ) (7882 )% Net loss attributable to Rafael Holdings, Inc. $ (124,658 ) $ (24,544 ) (100,114 ) (408 )% 80 Interest income.
Biggest changeThe decrease in general and administrative expenses of approximately $22 thousand during the year ended July 31, 2023 compared to the year ended July 31, 2022 is primarily due to a decrease in professional fees. 79 Consolidated Operations Our consolidated income and expense line items below loss from operations were as follows: Year Ended July 31, Change 2023 2022 $ % (in thousands) Loss from continuing operations $ (15,043 ) $ (60,477 ) 45,434 75 % Interest expense — (6 ) 6 100 % Interest income 3,253 201 3,052 (1518 )% Impairment of investments - Other Pharmaceuticals (334 ) — (334 ) (100 )% Impairment of cost method investment - Cornerstone Pharmaceuticals — (79,141 ) 79,141 (100 )% Realized gain (loss) on available-for-sale securities 154 (45 ) 199 (442 )% Realized gain on investment in equity securities 309 — 309 (100 )% Unrealized gain on investment in equity securities 33 — 33 (100 )% Unrealized gain on investments - Cyclo Therapeutics Inc. 2,663 — 2,663 (100 )% Unrealized gain (loss) on investments - Hedge Funds 220 (504 ) 724 (144 )% Loss from continuing operations before income taxes (8,745 ) (139,972 ) 131,227 94 % Benefit from income taxes 255 — 255 (100 )% Equity in loss of Day Three Labs Inc.
Financing Activities Cash provided by financing activities for the year ended July 31, 2022 was primarily related to proceeds of approximately $110 million related to the sale of our common stock to investors and a related party, partially offset by payment of transaction costs of $6.2 million.
Cash provided by financing activities for the year ended July 31, 2022 was primarily related to proceeds of approximately $110 million related to the sale of our common stock to investors and a related party, partially offset by payment of transaction costs of $6.2 million.
The change in the net loss attributable to noncontrolling interests was due to an approximate $17.3 million loss related to the Cornerstone Pharmaceuticals impairment loss (the total impairment loss was approximately $79 million) which was applicable to noncontrolling interests in certain of the Company’s subsidiaries and was allocated to the minority holders of interests in CS Pharma and Pharma Holdings in the approximate amounts of $10.4 million and $6.9 million, respectively, for the year ended July 31, 2022.
The change in the net loss attributable to noncontrolling interests was due to an approximate $17.3 million loss related to the Cornerstone Pharmaceuticals impairment loss (the total impairment loss was approximately $79 million) which was applicable to noncontrolling interests in certain of the Company’s subsidiaries and was allocated to the holders of interests in CS Pharma and Pharma Holdings in the approximate amounts of $10.4 million and $6.9 million, respectively, for the year ended July 31, 2022.
On September 24, 2021, the Company entered into a Line of Credit Loan Agreement (the “Line of Credit Agreement”) with Cornerstone Pharmaceuticals under which Cornerstone Pharmaceuticals borrowed $25 million from the Company. Due to the Data Events, the Company recorded a full reserve on the $25 million due the Company from Cornerstone Pharmaceuticals.
On September 24, 2021, the Company entered into a Line of Credit Loan Agreement (the “Line of Credit Agreement”) with Cornerstone under which Cornerstone borrowed $25 million from the Company. Due to the Data Events, the Company recorded a full reserve on the $25 million due the Company from Cornerstone.
In connection with the Data Events, during the year ended July 31, 2022, we recorded a full impairment charge to our cost method investment in Cornerstone Pharmaceuticals in the amount of approximately $79 million. Realized loss on available-for-sale securities .
In connection with the Data Events, during the year ended July 31, 2022, we recorded a full impairment charge to our cost method investment in Cornerstone Pharmaceuticals in the amount of $79 million. Realized gain (loss) on available-for-sale securities .
In light of the Data Events, the Company concluded that the prospects for CPI-613 were uncertain and has fully impaired in its financial statements for the year ended July 31, 2022, the value of its loans, receivables, and investment in Cornerstone Pharmaceuticals based upon its valuation of Cornerstone Pharmaceuticals.
In light of the Data Events, the Company concluded that the prospects for CPI-613 were uncertain and fully impaired in its financial statements for the year ended July 31, 2022, the value of its loans, receivables, and investment in Cornerstone based upon its valuation of Cornerstone.
Operating Activities The increase in cash used in operating activities for the year ended July 31, 2022 as compared to the year ended July 31, 2021 was primarily related to the net loss from continuing operations of $141 million and an increase in prepaid expenses and other current assets of $3.5 million, partially offset by the impact from noncash items, principally the impairment of the Company’s cost method investment in Cornerstone Pharmaceuticals of $79 million, the reserve on the amounts due the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement of $25 million, the reserve on receivables due from Cornerstone Pharmaceuticals totaling $10.1 million, changes in other current liabilities of $3.6 million, as well as other changes in assets and liabilities.
Cash used in operating activities for the year ended July 31, 2022 was primarily related to the loss from continuing operations of $140.5 million and an increase in prepaid expenses and other current assets of $3.5 million, partially offset by the impact from noncash items included in the loss from operations, principally the impairment of the Company’s cost method investment in Cornerstone Pharmaceuticals of $79 million, the reserve on the amounts due the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement of $25 million, the reserve on receivables due from Cornerstone Pharmaceuticals totaling $10.1 million, changes in other current liabilities of $3.6 million, as well as other changes in assets and liabilities.
Overview Rafael Holdings, Inc. (NYSE:RFL), (“Rafael Holdings”, “we” or the “Company”), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the “Pharmaceutical Companies”), through an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company a majority equity interest in LipoMedix Pharmaceuticals Ltd.
(NYSE:RFL), (“Rafael Holdings”, “we” or the “Company”), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the “Pharmaceutical Companies”), including an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority equity interest in LipoMedix Pharmaceuticals Ltd.
Barer is led by a team of scientists and academic advisors considered to be among the leading experts in cancer metabolism, chemistry, and drug development. In addition to its own internal discovery efforts, Barer is pursuing collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
Barer was led by a team of scientists and academic advisors considered to be among the leading experts in cancer metabolism, chemistry, and drug development. In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions.
Other - Related Party revenues decreased by approximately $360 thousand during the year ended July 31, 2022, compared to the prior year ended July 31, 2021. During the year ended July 31, 2022, the Company only billed Cornerstone Pharmaceuticals $120 thousand for the first quarter of 2022 for administrative, finance, accounting, tax, and legal services.
Other – related party revenues decreased by approximately $120 thousand during the year ended July 31, 2023, compared to the year ended July 31, 2022. During the year ended July 31, 2022, the Company only billed Cornerstone Pharmaceuticals $120 thousand for the first quarter of 2022 for administrative, finance, accounting, tax, and legal services.
As a result of the agreement to sell the 520 Property, the accompanying consolidated financial statements reflect the activity related to the sale of the 520 Property as discontinued operations. See Note 2 to our consolidated financial statements for additional information regarding the results, major classes of assets and liabilities, significant noncash operating items, and capital expenditures of discontinued operations.
As a result of the agreement to sell the 520 Property, the accompanying consolidated financial statements reflect the activity related to the sale of the 520 Property as discontinued operations. See Note 3 to our consolidated financial statements for additional information regarding the results, major classes of assets and liabilities, significant non-cash operating items, and capital expenditures of discontinued operations.
Farber Partners, LLC (“Farber”) was formed to support agreements with Princeton University’s Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, including an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. The Company also holds a majority equity interest in LipoMedix Pharmaceuticals Ltd.
Farber Partners, LLC (“Farber”) was formed to support agreements with Princeton University’s Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, including an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program.
The entirety of the expenses in the Healthcare segment relate to the activities of LipoMedix, Barer, Farber, and Rafael Medical Devices. As of July 31, 2022, we held a 100% interest in Barer, an 84% interest in LipoMedix, a 93% interest in Farber, and a 100% interest in Rafael Medical Devices. General and administrative expenses .
The entirety of the expenses in the Healthcare segment relate to the activities of LipoMedix, Barer, Farber, and Rafael Medical Devices. As of July 31, 2023, we held a 100% interest in Barer, a 95% interest in LipoMedix, a 93% interest in Farber, and a 100% interest in Rafael Medical Devices.
Off-Balance Sheet Arrangements We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
See Note 9, “Investments,” in our accompanying consolidated financial statements for further details. 84 Off-Balance Sheet Arrangements We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations, that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Estimates We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with U.S. GAAP. We apply these accounting policies in a consistent manner.
Critical Accounting Estimates We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with U.S. GAAP. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note 2, “Summary of Significant Accounting Policies,” in our accompanying consolidated financial statements.
As of July 31, 2022, Cornerstone Pharmaceuticals owed the Company $720 thousand, for which a full allowance for uncollectibility has been recorded and included in Due from Cornerstone Pharmaceuticals. Selling, general and administrative expenses . Selling, general and administrative expenses consist mainly of payroll, benefits, facilities, consulting and professional fees.
As of July 31, 2023 and 2022, Cornerstone Pharmaceuticals owed the Company $720 thousand which relates to administrative and back-office services, for which a full allowance for uncollectibility has been recorded. General and administrative expenses . General and administrative expenses consist mainly of payroll, benefits, facilities, consulting and professional fees.
Due to the Data Events, in the year ended July 31, 2022, the Company recorded a loss of approximately $10.1 million related to the full reserve recorded on the RP Finance receivable of $9.375 million, and a full reserve recorded on the Cornerstone Pharmaceuticals receivable of $0.720 million. Impairment expense - Altira.
Due to the Data Events, in the year ended July 31, 2022, the Company recorded a loss of approximately $10.1 million related to the full reserve recorded on the RP Finance receivable of $9.375 million, an equity method investment (see Note 6), and a full reserve recorded on the Cornerstone Pharmaceuticals receivable, see (Note 4) of $720 thousand.
Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K. 76 The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report.
Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.
Due to the Data Events, in the year ended July 31, 2022, the Company recorded a full reserve on the $25 million due to the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement. Loss on related party receivables.
The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities. Loss on line of credit. Due to the Data Events, in the year ended July 31, 2022, the Company recorded a full reserve on the $25 million due to the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement.
We recorded an impairment loss of $724 thousand related to our investment in Nanovibronix using the measurement alternative for the year ended July 31, 2021. Impairment of cost method investment - Cornerstone Pharmaceuticals.
Impairment of investments - Other Pharmaceuticals . We recorded an impairment loss of $334 thousand for the year ended July 31, 2023, related to an investment in securities in another entity using the measurement alternative. Impairment of cost method investment - Cornerstone Pharmaceuticals.
Healthcare Segment Our consolidated expenses for our Healthcare segment were as follows: Year Ended July 31, Change 2022 2021 $ % (in thousands) General and administrative $ (16,818 ) $ (16,902 ) 84 — % Research and development (8,742 ) (4,907 ) (3,835 ) (78 )% Depreciation (3 ) (2 ) (1 ) — % Provision for loss on receivable pursuant to line of credit (25,000 ) — (25,000 ) (100 )% Provision for losses on related party receivables (10,095 ) — (10,095 ) (100 )% Impairment – Altira — (7,000 ) 7,000 100 % Loss from continuing operations $ (60,658 ) $ (28,811 ) (31,847 ) (111 )% To date, the Healthcare segment has not generated any revenues.
Healthcare Segment Our consolidated expenses for our Healthcare segment were as follows: Year Ended July 31, Change 2023 2022 $ % (in thousands) General and administrative $ (8,794 ) $ (16,818 ) 8,024 48 % Research and development (6,312 ) (8,742 ) 2,430 28 % Depreciation (15 ) (3 ) (12 ) — % Provision for loss on receivable from Cornerstone Pharmaceuticals pursuant to line of credit — (25,000 ) 25,000 (100 )% Provision for losses on related party receivables — (10,095 ) 10,095 (100 )% Loss from operations $ (15,121 ) $ (60,658 ) 45,537 75 % To date, the Healthcare segment has not generated any revenues.
Depreciation on the 520 Property has ceased on July 1, 2022, as a result of the 520 Property being classified as held-for-sale. See Note 2 to our accompanying consolidated financial statements for further information regarding discontinued operations.
Depreciation on the 520 Property ceased effective July 1, 2022, as a result of the 520 Property being classified as held-for-sale. See Note 3 to our accompanying consolidated financial statements for further information regarding discontinued operations. As of July 31, 2023, the Company’s commercial real estate holdings consisted of a portion of a commercial building in Israel.
(“LipoMedix”), a clinical stage oncological pharmaceutical company based in Israel. In addition, the Company has invested in other early-stage pharmaceutical ventures.
The Company also holds a majority equity interest in LipoMedix, a clinical stage oncological pharmaceutical company based in Israel. In addition, the Company has invested in other early-stage pharmaceutical ventures. In 2016, the Company first invested in LipoMedix Pharmaceuticals Ltd. (“LipoMedix”), a clinical stage pharmaceutical company.
Discontinued operations includes (i) rental and parking revenues, (ii) payroll, benefits, facility costs, real estate taxes, consulting and professional fees dedicated to the 520 Property, and (iii) depreciation and amortization expenses on July 31, 2022 and (iv) interest (including amortization of debt issuance costs) on the note payable on the Property.
Discontinued operations include: (i) rental and parking revenues, (ii) payroll, benefits, facilities, consulting and professional fees dedicated to 520 Property, (iii) depreciation and amortization expenses, (iv) interest (including amortization of debt issuance costs) on the note payable that was secured by a mortgage on the 520 Property, and (v) gain on the disposal of the 520 Property.
On June 17, 2021, the Company entered into a merger agreement to acquire full ownership of Cornerstone Pharmaceuticals in exchange for issuing Company Class B common stock to the other stockholders of Cornerstone Pharmaceuticals.
The Company holds debt and equity investments in Cornerstone, that include preferred and common equity interests and a warrant to purchase additional equity. On June 17, 2021, the Company entered into a merger agreement to acquire full ownership of Cornerstone in exchange for issuing Company Class B common stock to the other stockholders of Cornerstone (“Merger Agreement” or “Merger”).
Interest income was $201 thousand and $2 thousand for the years ended July 31, 2022 and 2021, respectively. The increase is primarily due to the interest income earned on our investments in available-for-sale securities. Gain on sale of building.
Interest income was $3.3 million and $201 thousand for the years ended July 31, 2023 and 2022, respectively. The increase is primarily due to the interest income earned and accretion of the discount on the face value of our investments in available-for-sale securities whose balance increased to $57.7 million at July 31, 2023 from $36.7 million at July 31, 2022.
On July 1, 2022, the Company determined that the 520 Property met the held-for-sale criteria and the Company has therefore classified the 520 Property as held-for-sale in the consolidated balance sheets at July 31, 2022 and 2021.
Currently, the Company holds a portion of a commercial building in Jerusalem, Israel as its remaining real estate asset. On July 1, 2022, the Company determined that the 520 Property met the held-for-sale criteria and the Company has therefore classified the 520 Property as held-for-sale in the consolidated balance sheet at July 31, 2022.
The slight decrease in general and administrative expenses for the year ended July 31, 2022 compared to the year ended July 31, 2021 is primarily due to severance expense of approximately $5.9 million, an increase in salary expenses of approximately $2.2 million, an increase in professional fees of approximately $1.0 million, offset by a net decrease in stock-based compensation expense of approximately $7.9 million (inclusive of a forfeiture of restricted stock units of approximately $19.0 million) and a decrease in bonus pay of approximately $1.4 million.
The decrease in general and administrative expenses during the year ended July 31, 2023 compared to the year ended July 31, 2022 is primarily due to a net decrease in severance expense of approximately $5.0 million, a decrease in payroll expense of approximately $3.4 million, a decrease in legal expense of approximately $1.1 million, a decrease in professional fees of approximately $1.2 million and a decrease in other general and administrative expenses of approximately $0.7 million, partially offset by a net increase in stock-based compensation expense of approximately $3.6 million due to a material forfeiture of granted equity interests in the year ended July 31, 2022. 78 Research and development expenses.
The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our consolidated financial statements, or are the most sensitive to change from outside factors, are discussed below. 83 Stock-based Compensation We record stock-based compensation for options granted and restricted stock units awarded to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period.
Estimating the fair value of the Convertible Note Receivable requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. 83 Stock-based Compensation We record stock-based compensation for options granted and restricted stock units awarded to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period.
On October 28, 2021, the Company announced that the AVENGER 500 Phase 3 clinical trial for CPI-613® (devimistat), Cornerstone Pharmaceuticals’ lead product candidate, did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas, and following a pre-specified interim analysis, the independent data monitoring committee for the ARMADA 2000 Phase 3 study for devimistat recommended the trial to be stopped due to a determination that it was unlikely to achieve the primary endpoint (the “Data Events”).
On October 28, 2021, the Company announced that the AVENGER 500 Phase 3 clinical trial for CPI-613 ® (devimistat), Cornerstone’s lead product candidate, did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas.
Subsequently, on February 2, 2022, the Company withdrew its Registration Statement on Form S-4 related to the proposed Merger. 77 In 2019, the Company established the Barer Institute (“Barer”), an early-stage small molecule research operation focused on developing a pipeline of novel therapeutic compounds, including compounds to regulate cancer metabolism with potentially broader application in other indications beyond cancer.
This transaction is subject to a number of conditions which are beyond the Company’s control. In 2019, the Company established the Barer Institute Inc., an early-stage small molecule research operation focused on developing a pipeline of novel therapeutic compounds, including compounds to regulate cancer metabolism with potentially broader application in other indications beyond cancer.
This is offset by an approximate $1.39 million increase in interest expense. See Note 2 to our accompanying consolidated financial statements for further information regarding discontinued operations. Net loss attributable to noncontrolling interests.
See Note 3 to our accompanying consolidated financial statements for further information regarding discontinued operations. Net loss attributable to noncontrolling interests.
Our consolidated income and expenses for our Real Estate segment were as follows: Year Ended July 31, Change 2022 2021 $ % (in thousands) Rental – Third Party $ 179 $ 214 (35 ) (16 )% Rental – Related Party 111 108 3 3 % Other - Related Party 120 480 (360 ) (75 )% Selling, general and administrative (160 ) (122 ) (38 ) (31 )% Depreciation and amortization (69 ) (68 ) (1 ) (1 )% Income from continuing operations $ 181 $ 612 (431 ) 70 % Revenues.
Consolidated income and expenses for our Real Estate segment were as follows: Year Ended July 31, Change 2023 2022 $ % (in thousands) Rental – Third Party $ 171 $ 179 (8 ) (4 )% Rental – Related Party 108 111 (3 ) (3 )% Other – Related Party — 120 (120 ) (100 )% General and administrative (138 ) (160 ) 22 14 % Depreciation and amortization (63 ) (69 ) 6 9 % Income from operations $ 78 $ 181 (103 ) 57 % Other - Related Party.
The Company’s initial investment in Altira was impaired in fiscal year 2020. 79 Real Estate Segment The revenue and expenses of the 520 Property have been excluded from the real estate segment in the figures below due to its classification of held-for-sale and discontinued operations as of July 31, 2022.
Real Estate Segment The revenue and expenses of the 520 Property have been excluded from the real estate segment in the figures below due to its classification of held-for-sale and discontinued operations, and the sale of the 520 Property on August 22, 2022. The Real Estate segment consists of a portion of a commercial building in Israel.
If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.
We evaluate these estimates and assumptions on an ongoing basis and may retain outside consultants to assist in our evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.
Equity in (loss) earnings of RP Finance. We recognized a loss of $575 thousand and earnings of $383 thousand from our ownership interest in RP Finance for the years ended July 31, 2022 and 2021, respectively. Loss from discontinued operations related to 520 Property, net of tax.
We recognized a loss of $575 thousand from our ownership interest in RP Finance due to operating results for the year ended July 31, 2022.
In 2020, the Company sold an office building located in Piscataway, New Jersey and following the end of Fiscal 2022, the Company sold the building at 520 Broad Street in Newark, New Jersey and an associated public garage. Currently, the Company holds a portion of a commercial building in Jerusalem, Israel as its remaining real estate asset.
Historically, the Company owned real estate assets. In 2020, the Company sold an office building located in Piscataway, New Jersey and on August 22, 2022, the Company sold the building at 520 Broad Street in Newark, New Jersey and an associated public garage.
Investing Activities Cash used in investing activities for the year ended July 31, 2022 was primarily related to purchases of available-for-sale securities of approximately $65 million, amounts loaned to Cornerstone Pharmaceuticals of approximately $25 million pursuant to the Line of Credit Agreement and the payments to fund our portion of advances under the line of credit between RP Finance and Cornerstone Pharmaceuticals in the amount of approximately $1.9 million, partially offset by proceeds of $28.5 million from the maturities of available-for-sale securities. 82 Cash used in investing activities for the year ended July 31, 2021 was primarily related to the purchase of 7.3 million shares of Rafael Pharmaceuticals’ Series D Preferred Stock for $9.1 million, the payments to fund our portion of advances under the line of credit between RP Finance and Rafael Pharmaceuticals for $7.5 million, the payments of an aggregate of $2 million towards the acquisition of a second 33.333% membership interest in Altira, offset by the proceeds of $7 million from the liquidation of hedge funds and $3.7 million from the sale of the building in Piscataway, New Jersey in August 2020.
Cash used in investing activities for the year ended July 31, 2022 was primarily related to purchases of available-for-sale securities of approximately $65 million, amounts loaned to Cornerstone Pharmaceuticals of approximately $25 million pursuant to the Line of Credit Agreement and the payments to fund our portion of advances under the line of credit between RP Finance and Cornerstone Pharmaceuticals in the amount of approximately $1.9 million, partially offset by proceeds of $28.5 million from the maturities of available-for-sale securities. 82 Financing Activities Cash used in financing activities for the year ended July 31, 2023 was primarily related to repayment of the $15 million note payable in connection with the sale of 520 Property and for payment of taxes related to shares withheld for employee taxes on vesting of shares granted to employees.
We recorded a realized loss of approximately $45 thousand related to maturities of available-for-sale securities for the year ended July 31, 2022. Unrealized (loss) gain on investments - Hedge Fund s. We recorded unrealized losses of approximately $504 thousand and gains of approximately $4.8 million for the years ended July 31, 2022 and 2021, respectively.
We recorded a realized gain of approximately $154 thousand related to the sale of available-for-sale securities for the year ended July 31, 2023. We recorded a realized loss of approximately $45 thousand related to the sale of available-for-sale securities for the year ended July 31, 2022. Realized gain on investment in equity securities.
The additional change is related to the losses from LipoMedix and Farber for the year ended July 31, 2022. 81 Liquidity and Capital Resources For the years ended July 31, Change 2022 2021 $ % Balance Sheet Data: (in thousands) Cash and cash equivalents $ 26,537 $ 7,854 18,683 238 % Restricted cash — 5,000 (5,000 ) (100 )% Working capital 87,321 (2,539 ) 89,860 (3539 )% Total assets 118,320 154,055 (35,735 ) (23 )% Note payable, net of debt issuance costs, held-for-sale 15,000 14,528 472 3 % Total equity attributable to Rafael Holdings, Inc. 100,515 122,286 (21,771 ) (18 )% Noncontrolling interests (3,309 ) 14,418 (17,727 ) (123 )% Total equity 97,206 136,704 (39,498 ) (29 )% For the years ended July 31, Change 2022 2022 $ % Cash flows (used in) provided by (in thousands) Operating activities used in continuing operations $ (26,038 ) $ (15,314 ) (10,724 ) 70 % Investing activities used in continuing operations (63,683 ) (7,921 ) (55,762 ) 704 % Financing activities provided by continuing operations 103,864 15,798 88,066 557 % Effect of exchange rates on cash and cash equivalents (306 ) 122 (428 ) (351 )% Discontinued operations - 520 Property (154 ) 13,963 (14,117 ) (101 )% Increase in cash and cash equivalents $ 13,683 $ 6,648 7,035 106 % Capital Resources As of July 31, 2022, we held cash and cash equivalents of approximately $26.5 million and available-for-sale securities valued at approximately $36.7 million, and investment in hedge funds valued at approximately $4.8 million.
Liquidity and Capital Resources As of July 31, Change 2023 2022 $ % (in thousands) Balance Sheet Data: Cash and cash equivalents $ 21,498 $ 26,537 (5,039 ) (19 )% Convertible note receivable, related party 1,921 — 1,921 100 % Working capital 80,796 87,321 (6,525 ) (7 )% Total assets 98,829 118,320 (19,491 ) (16 )% Note payable, net of debt issuance costs, held-for-sale — 15,000 (15,000 ) (100 )% Total equity attributable to Rafael Holdings, Inc. 100,293 100,515 (222 ) — % Noncontrolling interests (3,664 ) (3,309 ) (355 ) 11 % Total equity 96,629 97,206 (577 ) (1 )% For the Years Ended July 31, Change 2023 2022 $ % (in thousands) Cash flows (used in) provided by Operating activities of continuing operations $ (10,247 ) $ (26,038 ) 15,791 (61 )% Investing activities of continuing operations (26,960 ) (63,683 ) 36,723 (58 )% Financing activities of continuing operations (218 ) 103,864 (104,082 ) (100 )% Effect of exchange rates on cash and cash equivalents (146 ) (306 ) 160 (52 )% Operating, investing, and financing activities of discontinued operations 32,532 (154 ) 32,686 (21,224 )% (Decrease) increase in cash and cash equivalents $ (5,039 ) $ 13,683 (18,722 ) (137 )% 81 Capital Resources As of July 31, 2023, we held cash and cash equivalents of approximately $21.5 million, and available-for-sale securities valued at approximately $57.7 million.
On August 22, 2022, the Company completed the sale of the 520 Property for a purchase price of approximately $49.4 million and realized net proceeds of approximately $33 million.
On August 22, 2022, the Company completed the sale of the building at 520 Broad Street in Newark, New Jersey that serves as headquarters for the Company for a purchase price of approximately $49.4 million and realized net proceeds of approximately $33 million. Results of Operations Our business consists of two reportable segments - Healthcare and Real Estate.
Our significant accounting policies are discussed in Note 1, “Description of Business and Summary of Significant Accounting Policies,” in our accompanying consolidated financial statements. The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures.
The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances.
The increase in the net loss attributable to discontinued operations was due to an approximate $330 thousand increase in rental revenue, a $157 thousand increase in other income, a $709 thousand decrease in selling, general and administrative expenses and $73 thousand decrease in depreciation and amortization expense due to only 11 months of depreciation expense during 2022 as depreciation stopped as of July 1, 2022 when the 520 Property was classified as held-for-sale.
The increase in the net income attributable to discontinued operations for the year ended July 31, 2023 as compared to the year ended July 31, 2022 was due to a gain on the sale of the 520 Property of $6.8 million, an approximate $1.4 million decrease in interest expense, partially offset by a $3.3 million decrease in rental revenue, a $2.2 million decrease in general and administrative expenses (which is primarily comprised of a decrease in real estate taxes, utilities other building related repairs, maintenance expenses, and other expenses totaling approximately $2.4 million, slightly offset by a $129 thousand increase in expense related to the write-off of deferred rental income), and a $1.3 million decrease in depreciation and amortization expense due to no depreciation expense during the year ended July 31, 2023 as depreciation stopped as of July 1, 2022 when the 520 Property was classified as held-for-sale.
Additionally, there were approximately $2.0 million in proceeds provided by the exercise of 87,298 warrants to purchase Class B common stock. We do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves.
We do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.
General and administrative expenses consist mainly of payroll, severance, stock compensation expense, benefits, facilities, consulting and professional fees.
As of July 31, 2023, the Company recorded the funds received within prepaid expenses and other current assets and other liabilities of $825,000 within the consolidated balance sheets. General and administrative expenses . General and administrative expenses consist mainly of payroll, stock-based compensation expense, benefits, facilities, consulting and professional fees.
(“LipoMedix”), a clinical stage pharmaceutical company, the activities of the Barer Institute Inc. (“Barer”), a wholly-owned preclinical cancer metabolism research operation, and Rafael Medical Devices, Inc. (“Rafael Medical Devices” and together with the Pharmaceutical Companies, the “Healthcare Companies”), a wholly-owned orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries.
(“LipoMedix”), a clinical stage pharmaceutical company, the Barer Institute Inc. (“Barer”), a wholly-owned preclinical cancer metabolism research operation, an investment in Cyclo Therapeutics, Inc.
Research and development expenses increased for the year ended July 31, 2022 as compared to the year ended July 31, 2021 due primarily to increased activity at Barer, LipoMedix, Farber, and Rafael Medical Devices during the periods. Barer also has additional management this period which also attributed to the increase. Loss on line of credit.
Research and development expenses decreased for the year ended July 31, 2023 as compared to the corresponding period in fiscal 2022. Research and development expenses are derived from activity at Barer, LipoMedix, Farber, and Rafael Medical Devices. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at the Barer Institute.
Removed
The Company’s primary focus to date, has been to invest in and fund, discover and develop novel cancer therapies, and we further seek to expand our portfolio through opportunistic investments in therapeutics which address high unmet medical needs including through acquisitions, strategic investments, or in-licensing assets. Historically, the Company owned real estate assets.
Added
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report. Overview Rafael Holdings, Inc.
Removed
The Company has debt and equity investments in Cornerstone Pharmaceuticals, Inc., or Cornerstone Pharmaceuticals, that include preferred and common equity interests and a warrant to purchase additional equity.
Added
(Nasdaq: CYTH) (“Cyclo Therapeutics” or “Cyclo), a clinical-stage biotechnology company dedicated to developing life-changing medicines for patients and families living with challenging diseases through its lead therapeutic asset, Trappsol ® Cyclo™ ., an investment in Day Three Labs, Inc.
Removed
As of July 31, 2022, the Company’s commercial real estate holdings consisted of a building at 520 Broad Street in Newark, New Jersey (“520 Property”) that serves as headquarters for the Company and certain other entities and tenants and an associated 800-car public garage, and a portion of a commercial building in Israel.
Added
(“Day Three”), a company which reimagines existing cannabis offerings with pharmaceutical-grade technology and innovation like Unlokt™ to bring to market better, cleaner, more precise and predictable products in the cannabis industry, and a majority interest in Rafael Medical Devices, LLC, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries (“Rafael Medical Devices” and Day Three Labs together with the Pharmaceutical Companies, represent our “Investment Companies”).
Removed
Business Update - COVID-19, War in Ukraine In late 2019, a novel strain of coronavirus, SARS-CoV, which causes COVID-19, was identified and has proved to be highly contagious. It has since spread extensively throughout the world, including the United States, and was declared a global pandemic by the World Health Organization in March 2020.
Added
In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities. The Company’s primary focus is to expand our investment portfolio through opportunistic and strategic investments including therapeutics which address high unmet medical needs.
Removed
The Company actively monitors the outbreak, including the spread of new variants of interest, and its potential impact on the Company’s operations and those of the Company’s holdings.
Added
In addition, following a pre-specified interim analysis, the independent data monitoring committee for the ARMADA 2000 Phase 3 study for devimistat recommended the trial to be stopped due to a determination that it was unlikely to achieve the primary endpoint (the “Data Events”).
Removed
Even with growing availability of testing and vaccines and the relaxation of public health measures that were implemented to limit the spread of the pandemic, there continues to be uncertainty around the COVID-19 pandemic and its impact.
Added
Subsequently, on February 2, 2022, the Company withdrew its Registration Statement on Form S-4 related to the proposed Merger. 76 On March 21, 2023, the Company loaned $2.0 million to Cornerstone which debt is represented by a Promissory Note made by Cornerstone (the “Promissory Note” or “Note”).
Removed
The Company had implemented a number of measures to protect the health and safety of the Company’s workforce including a voluntary work-from-home policy for the Company’s workforce who can perform their jobs from home as well as restrictions on discretionary business travel. Most of our employees have returned to working from the office on a part-time basis.
Added
The Note, which bears interest at a rate of seven and one-half percent (7.5%) per annum, was originally due and payable on May 22, 2023.
Removed
The full impact of the COVID-19 pandemic on the Company will depend on factors such as the length of time of the pandemic; the responses of federal, state and local governments; the impact of future variants that may emerge; vaccination rates among the population; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our employees, vendors, and other partners. 78 The short and long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time.
Added
On May 22, 2023, the Promissory Note was amended to extend the maturity date to November 30, 2023 and to waive any increase in the interest rate provided for in the Note, provided that the entire principal amount and all accrued interest thereon is repaid in cash or converted into equity securities of Cornerstone no later than November 30, 2023.
Removed
The imposition of sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business and the companies in which we have investments, financial condition, and results of operations.
Added
Cornerstone is in the process of a comprehensive restructuring transaction including, an equity investment by the Company of $1.5 million with other stockholders having the right to invest amounts on the same terms to avoid dilution, the conversion and modification of other Cornerstone debt obligations, the extension of the Cornerstone debt held by RP Finance, a reverse stock split, the conversion of all outstanding preferred stock of Cornerstone into common stock and the adoption of certain governance measures.
Removed
Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of the Russian – Ukraine war on our business and the companies in which we have investments. Results of Operations Our business consists of two reportable segments - Healthcare and Real Estate.
Added
On February 9, 2023, the Company entered into a Share Purchase Agreement with LipoMedix in which LipoMedix sold 70,000,000 ordinary shares to the Company at a price per share of $0.03 and an aggregate sale price of approximately $2.1 million. Subsequent to this transaction, the Company owns 95% of LipoMedix.
Removed
The majority of these increases were related to pre-launch activities for CPI-613® which are not expected to be recurring in light of the Data Events. Research and development expenses.
Added
On April 7, 2023, the Company entered into a Common Stock Purchase Agreement (the “Day Three Purchase Agreement”) with Day Three. Day Three is a cannabinoid ingredient manufacturer specializing in the development and commercialization of novel cannabis product solutions.
Removed
The Company recorded an impairment loss of $7 million related to the Company’s investment in 33.333% of Altira during year ended July 31, 2021.
Added
Pursuant to the Day Three Purchase Agreement, the Company purchased 4,302,224 shares of common stock representing 38% of the outstanding shares of common stock of Day Three (33.333% on a fully diluted basis), for a purchase price of $3.0 million.
Removed
The Real Estate segment consists of a portion of a commercial building in Israel.
Added
The Company also received a warrant exercisable for 7,528,893 shares of common stock at an aggregate purchase price of $3.0 million, which expires five years from the date of issuance or earlier based on the occurrence of certain events as defined in the Day Three Purchase Agreement As of July 31, 2023, the Company had not exercised the warrant.
Removed
Rental revenues decreased by approximately $32 thousand in the year ended July 31, 2022, compared to the prior year, primarily attributable to one month’s worth of rental revenue from the building in Piscataway, New Jersey that was earned in fiscal 2021 prior to its August 2021 sale compared to no corresponding revenue in fiscal 2022. Other - Related Party.
Added
Refer to Note 8 to our accompanying consolidated financial statements for further detail. On May 2, 2023, the Company entered into a Securities Purchase Agreement (the “Cyclo SPA”) with Cyclo.
Removed
The increase in selling, general and administrative expenses of approximately $38 thousand during the year ended July 31, 2022 compared to the year ended July 31, 2021 is primarily due to an increase in professional fees and building operating expenses, coupled with other increases in administrative expenses on IDT R.E. Holdings Ltd.
Added
Cyclo is a clinical stage biotechnology company, whose common stock is listed on the Nasdaq Capital Market under the symbol CYTH, that develops cyclodextrin-based products for the treatment of neurodegenerative diseases.
Removed
In August 2020, we sold a building located in Piscataway, New Jersey, and recognized a gain on the sale of approximately $749 thousand for the year ended July 31, 2021. Impairment of investments - Other Pharmaceuticals .
Added
The Company purchased from Cyclo (i) 2,514,970 common shares (the “Purchased Shares”) and (ii) a warrant to purchase 2,514,970 common shares with an exercise price of $0.71 per share (the “Cyclo Warrant”), at a combined purchase price equal to $0.835 per Purchased Share and Cyclo Warrant to purchase one share, for an aggregate purchase price of $2.1 million.
Removed
We expect the balance of cash and cash equivalents, investment in corporate bonds, and investment in hedge funds to be sufficient to at least meet our obligations for the period through October 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk. FOREIGN CURRENCY RISK Revenue from tenants located in Israel represented 7% and 7% of our consolidated revenues, inclusive of revenue from discontinued operations, for the years ended July 31, 2022 and 2021, respectively. The entirety of these revenues is in currencies other than the U.S. Dollar.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risks FOREIGN CURRENCY RISK Revenue from tenants located in Israel represented 53% and 7% of our consolidated revenues, inclusive of revenue from discontinued operations, for the years ended July 31, 2023 and 2022, respectively. The entirety of these revenues is in currencies other than the U.S. Dollar.

Other RFL 10-K year-over-year comparisons