Rafael Holdings (RFL) risk factors, FY2024 10-K

Risks Related to Our Financial Condition and Capital Needs

1. 01We have limited resources and could find it difficult to raise additional capital
2. 02We have only a limited operating history upon which our business and prospects can be evaluated. We expect to encounter risks and difficulties frequently encountered by early-stage companies in the industries in which we operate
3. 03We hold significant cash, cash equivalents, and investments that are subject to various market risks
4. 04We may not be able to consummate any investment, business combination or other transaction

Risks Related to our Pharmaceuticals Business

1. 05Our future success may depend significantly on results of Cyclo Therapeutics’ Phase III trial for Trappsol® Cyclo™. If Cyclo is unable to successfully develop, gain regulatory approval for or commercialize its product candidates or experiences significant delays in doing so, our business will be materially harmed
2. 06We have invested a significant amount of capital in Cyclo. Our dependence on the success of Trappsol® Cyclo™ and the need for additional capital will increase if the merger is consummated and the Phase III trial for Trappsol® Cyclo™ is successful
3. 07The Pharmaceutical Companies may not be successful in their efforts to identify or discover potential product candidates
4. 08Research programs to identify new product candidates require substantial technical, financial, and human resources. The Pharmaceutical Companies may choose to focus the Pharmaceutical Companies’ efforts and resources on a potential product candidate that ultimately proves to be unsuccessful
5. 09We and the companies in which we hold interests may expend our and their limited resources to pursue a particular product candidate or an indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
6. 10If 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
7. 11Interim, “top-line,” and preliminary data from clinical trials that we announce or publish from time to time may have limited clinical significance, if any, and may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
8. 12Results of preclinical studies and early clinical trials may not be predictive of results of future preclinical studies or clinical trials
9. 13The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable, and if the Pharmaceutical Companies are ultimately unable to obtain regulatory approval for their product candidates, our or their business will be substantially harmed
10. 14The Pharmaceutical Companies may develop product candidates for which they plan to seek approval under the 505(b)(2) regulatory pathway in the United States. For example, LipoMedix may ultimately seek FDA approval of Promitil through the 505(b)(2) pathway
11. 15As part of their business strategy, the Pharmaceutical Companies may seek orphan drug designation, or ODD, for any eligible product candidates they develop, but they may be unsuccessful in obtaining or maintaining the benefits of such designations
12. 16Even if the Pharmaceutical Companies receive regulatory approval for any product candidate, they will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense
13. 17The occurrence of any event or penalty described above may inhibit our or the Pharmaceutical Companies’ ability to commercialize their product candidates and generate revenue and could require the Pharmaceutical Companies to expend significant time and resources in response and could generate negative publicity
14. 18The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses
15. 19Even if any of the Pharmaceutical Companies’ product candidates receive regulatory approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success
16. 20We and the Pharmaceutical Companies are dependent upon third parties for a variety of functions. These arrangements may not provide us with the benefits we expect
17. 21Cyclo is focused on a cure for NPC1 and faces competition from Actelion, a subsidiary of Johnson & Johnson Orphazyme, a public company based in Denmark, Zevra Therapeutics, Inc., Mandos Health, Azafaros and IntraBio among others
18. 22Product liability lawsuits against us or the Pharmaceutical Companies or our or their collaborators could cause substantial liabilities and could limit commercialization of any medicines that the Pharmaceutical Companies or our or their collaborators may develop
19. 23If we or the Pharmaceutical Companies fail to comply with environmental, health and safety laws and regulations, we or they could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our or their businesses
20. 24Current and future legislation may increase the difficulty and cost for us and the Pharmaceutical Companies and any future collaborators to obtain regulatory approval of the Pharmaceutical Companies’ product candidates and affect the prices obtained
21. 25Additional Risks Related to our Medical Device Business
22. 26Interim, “top-line” and preliminary data from preclinical studies and clinical trials that Rafael Medical Devices announce or publish from time to time may may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
23. 27Results of preclinical studies and early clinical trials may not be predictive of results of future preclinical studies and clinical trials
24. 28Even if Rafael Medical Devices receives regulatory approval, marketing authorization, or clearance for any device candidate, they will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense
25. 29The occurrence of any event or penalty described above may inhibit Rafael Medical Devices’ ability to commercialize their device candidates and generate revenue and could require Rafael Medical Devices to expend significant time and resources in response and could generate negative publicity
26. 30Rafael Medical Devices is dependent upon third parties for a variety of functions. These arrangements may not provide Rafael Medical Devices with the benefits they expect
27. 31Product liability lawsuits against Rafael Medical Devices or their collaborators or us could cause substantial liabilities and could limit commercialization of any medical devices that Rafael Medical Devices or their collaborators may develop
28. 32If Rafael Medical Devices fails to comply with environmental, health and safety laws and regulations, they could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of their businesses

Risks Related to Reliance on Third Parties

1. 33The Portfolio Companies may, in the future, form or seek collaborations or strategic alliances or enter into licensing arrangements, and the Portfolio Companies may not realize the benefits of such collaborations, alliances or licensing arrangements

Risks Related to our Commercial Real Estate Business

1. 34We may be unable to renew leases or relet space as leases expire
2. 35We face competition for tenants

Risks Related to Intellectual Property

1. 36We and the companies in which we hold interests may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming, and unsuccessful
2. 37Our commercial success and that of the companies in which we hold interests depends significantly on our ability to operate without infringing upon the intellectual property rights of third parties
3. 38If we and the companies in which we hold interests are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
4. 39Changes in patent law could diminish the value of patents in general, thereby impairing the ability of us and the companies in which we hold interests to protect our respective existing and future product candidates, device candidates and processes
5. 40If our trademarks and trade names and those of the companies in which we hold interests are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
6. 41We and the companies in which we hold interests may not be able to adequately protect our intellectual property rights throughout the world
7. 42We and the companies in which we hold interests may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our product candidates
8. 43Patent terms may be inadequate to protect our competitive position and that of the companies in which we hold interests on our product candidates or device candidates for an adequate amount of time
9. 44Intellectual property rights do not necessarily address all potential threats to our business
10. 45We and the companies in which we hold interests may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties
11. 46Our intellectual property agreements and those of the companies in which we hold interests with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology
12. 47We and the companies in which we hold interests may not be successful in obtaining necessary intellectual property rights to future products through acquisitions and in-licenses

Risks Related to Employee Matters, Managing Our Growth, and Other Risks Related to Our Business

1. 48Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees
2. 49The requirements of being a public company may strain our resources, result in more litigation, and divert management’s attention
3. 50Public health threats could have an adverse effect on the Company’s operations and financial results
4. 51Similar impacts could be experienced by Rafael Medical Devices in response to the COVID-19 pandemic, subsequent variants or comparable public health emergencies
5. 52Conditions in Israel, including the ongoing war between Israel and Hamas, and other conflicts in the region, may adversely affect our real estate holding and operations of our Portfolio Companies, which would lead to a decrease in revenues
6. 53The relationships between Howard S. Jonas and IDT Corporation, and Genie Energy could conflict with our stockholders’ interests
7. 54Insurance policies are expensive and protect us only from some business risks, which leaves us exposed to uninsured liabilities
8. 55We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business and that of the companies in which we hold interests effectively

Risks Related to the Merger with Cyclo

1. 56The Exchange Ratio used in the Merger will be determined in accordance with a formula and is not yet knowable. The actual Exchange Ratio could be materially different than currently anticipated
2. 57We are subject to risks in connection with the announcement and pendency of the Merger, including the pendency and outcome of any legal proceedings against us, our directors and others relating to the Merger and the risks from possibly foregoing opportunities we might otherwise pursue absent the proposed Merger
3. 58While the Merger is pending, we are subject to contractual restrictions that could harm our business, operating results, and stock price
4. 59The Merger will involve substantial costs
5. 60We will incur significant transaction and Merger-related transaction costs in connection with the Merger
6. 61We or Cyclo may waive one or more of the closing conditions to the Merger without re-soliciting approval from our respective stockholders
7. 62We may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed
8. 63Changes in the market prices of our Class B Common Stock may result from a variety of factors that are beyond our control
9. 64We may not realize the anticipated benefits and cost savings of the Merger
10. 65Failure to complete the Merger could negatively impact our stock price and our future business and financial results
11. 66Third parties may terminate or alter existing contracts or relationships with us
12. 67The NYSE may not list our shares of Class B Common Stock, which could limit investors’ ability to make transactions in the shares of our Class B Common Stock and subject our Class B Common Stock to additional trading restrictions

Risks Related to Ownership of our Common Stock

1. 68We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation of the value of our common stock
2. 69We are controlled by our principal stockholder, which limits the ability of other stockholders to affect the management of the Company
3. 70Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall
4. 71We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
5. 72If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks
6. 73Investors may suffer dilution
7. 74The trading price of the shares of our Class B common stock is likely to remain volatile, and purchasers of our Class B common stock could incur substantial losses
8. 75If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline
9. 76We may be subject to securities litigation, which is expensive and could divert management attention