10-Q: Raphael Pharmaceutical Q1 2026 Net Loss Decreases 47%

Raphael Pharmaceutical Inc. reported a reduced net loss of $229,000 for Q1 2026, a 47% decrease from the prior year, driven by lower R&D and G&A expenses, though the company continues to face going concern uncertainties.

Summary

• Raphael Pharmaceutical Inc. reported a net loss of $229,000 for the first quarter ended March 31, 2026, a significant decrease of 47% compared to a net loss of $429,000 in the same period of 2025.
• This reduction in net loss was primarily due to a decrease in research and development (R&D) expenses by 49% to $37,000 and general and administrative (G&A) expenses by 47% to $186,000.
• The company had no revenue in either period.
• As of March 31, 2026, Raphael Pharmaceutical had $1,000 in cash and cash equivalents, and an accumulated deficit of $10,397,000.
• The company continues to face substantial doubt about its ability to continue as a going concern due to its ongoing losses and the need for significant additional financing.
• Management estimates needing approximately $1 million for R&D and $1 million for capital expenditures over the next 12 months.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a negative filing due to the critical liquidity situation, the explicit statement of substantial doubt about the company's ability to continue as a going concern, and the lack of revenue, despite some positive developments in research and development.

Positives

• Net loss decreased by 47% to $229,000 in Q1 2026 compared to $429,000 in Q1 2025.
• Research and development expenses decreased by 49% to $37,000.
• General and administrative expenses decreased by 47% to $186,000.
• The company successfully completed a proof-of-concept clinical study for its lead product candidate for Rheumatoid Arthritis (RA) in December 2024.
• Launched the RaphaWell brand for RA support in the U.S. in August 2025, a natural, plant-based dietary supplement with no reported side effects during clinical trials.
• Filed a provisional patent application in November 2025 for a cannabinoid-based formula for treating neutrophil-dominant autoimmune diseases.

Negatives

• The company generated no revenue in the first quarter of 2026 and 2025.
• The company has an accumulated deficit of $10,397,000 as of March 31, 2026.
• Cash and cash equivalents were only $1,000 as of March 31, 2026.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company requires significant additional financing to fund operations, with an estimated need of $1 million for R&D and $1 million for capital expenditures over the next 12 months.
• Related party payables increased to $1,101,000 as of March 31, 2026, from $946,000 as of December 31, 2025.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern if additional funding is not secured.
• Failure to obtain additional financing on a timely basis or on acceptable terms could lead to licensing of assets, acquisition by another entity, cessation of operations, or bankruptcy protection.
• The company is still in its development and clinical stage and has not yet generated revenues, with uncertain future operating losses and profitability timing.
• Regulatory pathways for FDA and EMA approvals are subject to uncertainty and cost.
• The success of product candidates depends on favorable clinical trial results and regulatory approvals.
• The company relies on third parties for manufacturing and commercialization of its products.
• The company's ability to generate cash flows is uncertain.
• Economic weakness, inflation, or political instability could impact operations.
• Government regulation in the pharmaceutical industry, including costs and timing of regulatory approvals, poses a risk.
• The company may need to delay, reduce the scope of, or eliminate research or development plans if funds are not available.

Future Outlook

The company anticipates continuing to generate losses from development and clinical activities, resulting in negative cash flow from operations. Significant additional financing is required to fund projected operating requirements, estimated at approximately $1 million for R&D and $1 million for capital expenditures over the next 12 months. Management believes current cash on hand is sufficient only through the third quarter of 2026.

Management Comments

• "Managements plans include, but are not limited to, raising capital in the United States."
• "There can be no assurance that it will be able to successfully raise additional financing, including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or at all."
• "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 Companys ability to continue as a going concern exists in the event that additional funding does not occur."
• "Our vision is to emerge as a pioneering company at the forefront of formulating pharmaceutical drugs that harness the potential of purified cannabinoids and full-spectrum CBD oil."
• "Our primary mission is to cater to the unmet medical requirements of patients grappling with various disorders, with a particular focus on conditions linked to inflammation, such as autoimmune diseases, asthma, RA and COVID-19."

Industry Context

StockSavvy.ai notes that Raphael Pharmaceutical Inc. operates in the highly competitive and capital-intensive pharmaceutical sector, focusing on cannabinoid-based therapies. The company's strategy of developing treatments for autoimmune diseases, asthma, and COVID-19 aligns with growing interest in these therapeutic areas, but its early-stage development and lack of revenue highlight the significant risks inherent in this industry. The company's reliance on external funding and the ongoing need for regulatory approvals are common challenges faced by many emerging biopharmaceutical companies.

Comparison to Industry Standards

• The company's net loss of $229,000 for Q1 2026, while reduced, is typical for early-stage pharmaceutical companies investing heavily in R&D without generating revenue. For comparison, many pre-revenue biotech firms can incur multi-million dollar quarterly losses.
• The company's cash position of $1,000 is critically low and far below industry standards for companies in clinical development, which typically maintain cash reserves to fund operations for at least 12-18 months.
• The R&D expenses of $37,000 are significantly lower than industry benchmarks for companies pursuing novel drug development, suggesting a very lean operational model or a focus on very early-stage research.
• The company's reliance on related party credit and potential future equity financings is a common, albeit risky, funding strategy for smaller firms, contrasting with larger, established pharmaceutical companies that may utilize debt or more diverse equity offerings.

Legal Proceedings

• No material changes to legal proceedings as previously disclosed in the Annual Report on Form 10-K.

Related Party Transactions

• Payables to related parties (Officers) increased to $1,101,000 as of March 31, 2026, from $946,000 as of December 31, 2025.
• Short-term credit from a related party (a director) was $37,000 as of March 31, 2026, compared to $34,000 as of December 31, 2025.
• Transactions with related parties for the three months ended March 31, 2026, included consulting services ($96,000) and CFO fee ($36,000).
• The CEO and CFO are guarantors for the repayment of a short-term loan from a related party.
• The Chief Technology Officer is entitled to 15% of net royalty income from worldwide sales of COVID-19 treatments and received warrants to purchase 350,000 shares of common stock at $0.01 exercise price, which were exercised in November 2025.

Stakeholder Impact

• Shareholders: The company's going concern issues and need for significant financing could lead to dilution if new equity is issued, or significant value destruction if operations cease.
• Creditors: The company's low cash reserves and reliance on related party credit raise concerns about repayment ability.
• Employees: Continued operational uncertainty and potential need for restructuring could impact employment.
• Suppliers: The company's financial precariousness may affect its ability to meet payment obligations to suppliers.

Next Steps

• Submit an Investigational New Drug (IND) application to the FDA and MOH for the RA product candidate.
• Continue pre-clinical research to refine Raphaels Formula.
• Seek regulatory approvals from the FDA, EMA, and other international agencies.
• Enter into royalty agreements with GMP-approved manufacturers and distributors for commercialization upon regulatory approval.
• Secure approximately $1 million for R&D and $1 million for capital expenditures over the next 12 months.

Key Dates

Recommendation

The company's severe liquidity constraints, explicit going concern warnings, and lack of revenue present significant risks. While there are promising research developments, the immediate need for substantial financing, which is not guaranteed, makes the stock a high-risk investment. Investors should consider the substantial doubt about the company's ability to continue operations.

Keywords

Raphael Pharmaceutical, SEC Filing, 10-Q, Quarterly Report, Pharmaceutical, Biotechnology, Cannabinoids, CBD, Rheumatoid Arthritis, Autoimmune Diseases, Clinical Trials, FDA Approval, Net Loss, Going Concern, Financing