RAPH.OQBRaphael Pharmaceutical INC
10-Q: Raphael Pharmaceutical Inc. Reports Q1 2025 Results: R&D Expenses Decrease, General and Administrative Costs Rise Amidst Ongoing Development
Sentiment:
Quarterly Report
Raphael Pharmaceutical Inc.'s Q1 2025 results show a decrease in research and development expenses offset by an increase in general and administrative costs, with the company continuing to focus on cannabinoid-based drug development.
Capital raiseThe company anticipates needing approximately $500,000 for research and development activities and $700,000 for capital expenditures over the next 12 months.The company believes that its existing cash and cash equivalents will not be sufficient to fund its projected cash requirements through the third quarter of 2025.The company has been raising capital through the issuance of shares and warrants.On January 16, 2025, the Company signed an agreement to raise $55 and to issue 115,000 shares of common stock and 55,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company.On January 30, 2025, the Company signed an agreement to raise $50 and to issue 200,000 shares of common stock.On March 2, 2025, the Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's chief executive officer.On March 21, 2025, the Company signed an agreement to raise $25 and to issue 50,000 shares of common stock and 10,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company.On March 21, 2025, the Company signed an agreement to raise $10 and to issue 10,000 shares of common stock and warrants to purchase up to 5,000 of the Company's common stock at an exercise price of $2.50 per share to a certain investor of the Company.
Worse than expectedThe company's cash position is weak and is not expected to fund operations beyond Q3 2025.The company is reporting a net loss and has no revenues.The company's management has concluded that substantial doubt about the Company's ability to continue as a going concern exists in the event that additional funding does not occur.
Summary
- Raphael Pharmaceutical Inc. reported its financial results for the quarter ended March 31, 2025.
- The company had no revenues for the three months ended March 31, 2025, and March 31, 2024.
- Research and development expenses decreased by 81% to $72,000 for the three months ended March 31, 2025, compared to $379,000 for the same period in 2024.
- General and administrative expenses increased by 110% to $353,000 for the three months ended March 31, 2025, compared to $168,000 for the same period in 2024, primarily due to stock-based compensation to a director.
- The operating loss totaled $425,000 for the three months ended March 31, 2025, a decrease of 22% compared to $547,000 for the three months ended March 31, 2024.
- Net loss totaled $429,000 for the three months ended March 31, 2025, a decrease of 22% compared to $550,000 for the three months ended March 31, 2024.
- The company's cash and cash equivalents were $50,000 as of March 31, 2025.
- The company believes that its existing cash and cash equivalents will not be sufficient to fund its projected cash requirements through the third quarter of 2025.
- The company anticipates needing approximately $500,000 for research and development activities and $700,000 for capital expenditures over the next 12 months.
- The company has funded its operations primarily through equity financing and the issuance of a loan.
- Management expects that the Company will continue to generate losses from the development, clinical development and regulatory activities of its product, which will result in negative cash flow from operating activity.
- This has led management to conclude that substantial doubt about the Company's ability to continue as a going concern exists in the event that additional funding does not occur.
Sentiment
Score: 3
Explanation: The sentiment is low due to the company's limited cash reserves, ongoing losses, and the management's statement about the company's ability to continue as a going concern. While there are some positive developments in research, the financial risks outweigh them.
Positives
- The net loss decreased by 22% compared to the same period last year.
- Research and development expenses decreased by 81% compared to the same period last year.
- The company completed a proof-of-concept clinical study for its lead product candidate for rheumatoid arthritis (RA) in the United States.
- The company plans to submit an IND application to the FDA and MOH following the completion of the Study.
Negatives
- The company had no revenues for the three months ended March 31, 2025, and March 31, 2024.
- General and administrative expenses increased by 110% compared to the same period last year.
- The company's cash and cash equivalents were $50,000 as of March 31, 2025.
- The company believes that its existing cash and cash equivalents will not be sufficient to fund its projected cash requirements through the third quarter of 2025.
- The company's management has concluded that substantial doubt about the Company's ability to continue as a going concern exists in the event that additional funding does not occur.
Risks
- The company's limited cash reserves raise concerns about its ability to fund operations beyond Q3 2025.
- The company's dependence on additional financing creates uncertainty about its ability to continue as a going concern.
- The company's reliance on third parties for manufacturing and commercialization poses risks related to quality control, supply chain disruptions, and regulatory compliance.
- The company's research and development efforts are subject to regulatory hurdles and the risk of unsuccessful clinical trials.
- The company's ability to obtain regulatory approvals for its product candidates is uncertain.
- The company's ability to generate significant revenues is uncertain.
- The company's operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.
Future Outlook
The company anticipates needing approximately $500,000 for research and development activities and $700,000 for capital expenditures over the next 12 months and believes that its existing cash and cash equivalents will not be sufficient to fund its projected cash requirements through the third quarter of 2025, raising substantial doubt about its ability to continue as a going concern.
Management Comments
- Management expects that the Company will continue to generate losses from the development, clinical development and regulatory activities of its product, which will result in negative cash flow from operating activity.
- This has led management to conclude that substantial doubt about the Company's ability to continue as a going concern exists in the event that additional funding does not occur.
Industry Context
The company operates in the pharmaceutical drug research and development industry, focusing on cannabinoid-based therapies, which is a growing area with increasing regulatory acceptance and potential for new treatment options.
Comparison to Industry Standards
- It is difficult to compare Raphael Pharmaceutical's results directly to industry standards due to its early stage and focus on cannabinoid-based therapies.
- However, similar early-stage biotech companies often face challenges in securing funding and managing cash flow while pursuing research and development.
- Companies like GW Pharmaceuticals (acquired by Jazz Pharmaceuticals) have paved the way for cannabinoid-based drug development, but regulatory and market acceptance remain key factors for success.
- Compared to larger pharmaceutical companies, Raphael Pharmaceutical's R&D spending is significantly lower, reflecting its smaller size and stage of development.
- The company's reliance on research agreements with institutions like Rambam is a common strategy for early-stage biotech companies to leverage external expertise and resources.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chairman of the Board | NA | Ajay Kumar Dhadha | 2025-03-05 | Service agreement |
Related Party Transactions
- On March 2, 2025, the Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's chief executive officer.
- On March 5, 2025, the Company entered into a service agreement with Ajay Kumar Dhadha, pursuant to which Mr. Dhadha will serve as a member of our Board and as chairman of the Board.
- On March 10, 2025, the Company updated a service agreement with one of Company's directors and extended the service term until December 31, 2025.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and dependence on additional funding.
- Employees may experience uncertainty due to the company's going concern risk.
- Customers (potential patients) may face delays in the development and availability of new therapies.
- Suppliers and creditors face increased risk of non-payment due to the company's financial challenges.
Next Steps
- The company plans to submit an IND application to the FDA and MOH following the completion of the Study.
- The company intends to continue investigating its product for the treatment of autoimmune diseases.
- The company is aiming to develop a novel treatment for asthma.
- The company will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical research and development, drug formulation, clinical trial execution and regulatory submissions.
Key Dates
| Date | Description |
|---|---|
| 2007-05-17 | Raphael Pharmaceutical Inc. was incorporated under the laws of the State of Nevada. |
| 2019-07-17 | The Company entered into a sponsored Research Agreement with Rambam. |
| 2020-10-08 | The Company and its stockholders entered into a Share Exchange Agreement with an Israeli pharmaceutical company (Raphael). |
| 2020-10 | Raphael Israel entered into an engagement agreement with Wolc. |
| 2021-05-14 | The Company's board of directors and stockholders approved a 1-for-100 reverse split of the Company's common stock, which was implemented and became effective as of May 14, 2021. |
| 2021-05-14 | Raphael and the Company, completed the Share Exchange pursuant to which 9,459,253 common stock were issued to the shareholders of Raphael. |
| 2021-05-19 | The Company changed its name to Raphael Pharmaceutical Inc. |
| 2022-02-09 | The company filed an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. |
| 2022-02-16 | The company submitted an application with the Helsinki Committee at Rambam for a clinical trial in COVID-19 patients. |
| 2022-10 | The company entered into an agreement with the Medical Cannabis Research Center at Rambam for the development of a new, patentable formulation that combines purified cannabinoids to treat rheumatoid diseases. |
| 2023-03-27 | The MOH accepted the company's proposal for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients. |
| 2024-04 | The company began the Study in the United States, leveraging insights from the pre-clinical experiments we have conducted at the Rambam. |
| 2024-05-01 | The milestone was met and the Company granted to Dr. Igal Louria Hayon warrants to purchase up to 350,000 shares of Common Stock of the Company at an exercise price of $0.01. |
| 2024-12-23 | The company received the Study results with overall findings that emphasize the clinical potential of Raphaels Formula and suggest that it may have beneficial effects on symptom management and overall well-being for individuals with RA. |
| 2025-01-16 | The Company signed an agreement to raise $55 and to issue 115,000 shares of common stock and 55,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company. |
| 2025-01-30 | The Company signed an agreement to raise $50 and to issue 200,000 shares of common stock. |
| 2025-03-02 | The Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's chief executive officer. |
| 2025-03-03 | The company entered into a new service agreement with our Chief Technology Officer, substantially on the same terms as the agreement described above, effective as of January 1, 2025 |
| 2025-03-05 | The Company entered into a service agreement with Ajay Kumar Dhadha, pursuant to which Mr. Dhadha will serve as a member of our Board and as chairman of the Board. |
| 2025-03-10 | The Company updated a service agreement with one of Company's directors and extended the service term until December 31, 2025. |
| 2025-03-21 | The Company signed an agreement to raise $25 and to issue 50,000 shares of common stock and 10,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company. |
| 2025-03-21 | The Company signed an agreement to raise $10 and to issue 10,000 shares of common stock and warrants to purchase up to 5,000 of the Company's common stock at an exercise price of $2.50 per share to a certain investor of the Company. |
| 2025-03-31 | End of the quarterly period. |
| 2025-04 | The Company reached an agreement with one of its suppliers to reduce an outstanding debt of $120 thousand to $40 thousand. |
| 2025-05-15 | Date of the report. |
Keywords
pharmaceutical, cannabinoid, research and development, clinical trials, rheumatoid arthritis, COVID-19, CBD, financing, regulatory approvals, going concern
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