Rafael Holdings (RFL) Risk Analysis

From time to time, we and/or Rafael Medical Devices may publicly disclose preliminary or top-line data from preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following study completion and a more comprehensive review of the data related to the particular study or trial. We and/or Rafael Medical Devices may also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we or they may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the top-line or preliminary results reported may differ significantly from future results of the same or future studies, or different conclusions or considerations may qualify such results and/or limit the clinical significance and clinical conclusions that can be drawn from them, once additional data have been received and fully evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we and/or Rafael Medical Devices previously published. Even complete data from an individual study or clinical trial may be evaluated differently and result in different conclusions based upon subsequent data from a subsequently completed study. In addition, the full study results from all clinical trials are subject to FDA review, and the FDA may draw materially different conclusions than those reached by us or Rafael Medical Devices. 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. Interim data from preclinical studies 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 condition. Adverse differences between preliminary or interim data and final data could materially adversely affect our and Rafael Medical Devices' business prospects. Further, others, including regulatory agencies, may not accept or agree with our or Rafael Medical Devices' assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular device development program, the approvability or commercialization of the particular device candidate or device, and our and Rafael Medical Devices' companies in general. 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. If the interim, top-line, or preliminary data that we or Rafael Medical Devices report differs from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Rafael Medical Devices' ability to obtain approval, marketing authorization or clearance for, and commercialize, their device candidates may be adversely affected, which could materially adversely affect our and Rafael Medical Devices' business, financial condition, and results of operations.

The outcome of preclinical studies and early clinical trials may not be predictive of the success or failure of later preclinical studies and clinical trials, and interim results of preclinical studies and clinical trials do not necessarily predict success in future preclinical studies and clinical trials. Many companies in the medical device industry have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and Rafael Medical Devices could face similar setbacks. The design of a clinical trial can determine whether its results will support approval, marketing authorization or clearance of a device candidate, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or even completed. Rafael Medical Devices has limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval, marketing authorization or clearance. In addition, clinical data are often susceptible to varying interpretations and analyses. Many medical device companies that believed their device candidates performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval, marketing authorization or clearance for the device candidates. Even if Rafael Medical Devices, or future collaborators, believe that the results of clinical trials for Rafael Medical Devices' device candidates warrant regulatory approval, marketing authorization or clearance, the FDA or comparable foreign regulatory authorities may disagree and may not grant regulatory approval, marketing authorization or clearance of Rafael Medical Devices' device candidates. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same device candidate due to numerous factors, including changes in trial procedures set forth in protocols, proper implementation of inclusion and exclusion criteria, differences in standards of care in different geographical locations, differences in the size and type of the patient populations, changes in and adherence to the treatment regimen and other elements of the clinical trial protocol, and the rate of dropout among clinical trial participants. If Rafael Medical Devices fails to receive positive results in clinical trials of Rafael Medical Devices' device candidates, the development timeline and regulatory approval, marketing authorization or clearance and commercialization prospects for Rafael Medical Devices' most advanced device candidates, and, correspondingly, our and Rafael Medical Devices' business and financial prospects, would be negatively impacted.

Our business strategy includes elements for us and entities in which we invest to identify, create and test compounds, and where regulatory requirements are met, to advance clinical testing of those and other compounds. A significant portion of the research that the Pharmaceutical Companies are conducting involves new compounds and drug discovery methods and suitable drug delivery systems, including the Pharmaceutical Companies' proprietary technology. The drug discovery that the Pharmaceutical Companies are conducting using the Pharmaceutical Companies' proprietary technologies may not be successful in identifying compounds that are useful in treating cancer or other ailments. The Pharmaceutical Companies' research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates that, subject to meeting regulatory requirements, have the potential for initiating clinical development for a number of reasons, including: - the research methodology used may not be successful in identifying appropriate biomarkers, potential product candidates or effective carrier systems to confer a safe and effective drug delivery mechanism or a drug delivery advantage;- potential product candidates may, on further study, be shown to not be effective, have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive regulatory approval and achieve market acceptance. Research 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. If the Pharmaceutical Companies are unable to identify suitable compounds for preclinical and clinical development, and/or are unable to successfully meet regulatory requirements or initiating clinical trials and secure regulatory approval for any such compounds, the Pharmaceutical Companies will not be able to obtain product revenue in future periods, which likely would result in significant harm to the Pharmaceutical Companies' financial position and adversely impact the Pharmaceutical Companies' valuation and our business.

Because the Pharmaceutical Companies have limited financial and managerial resources, their focus on research programs and product candidates that they may or will identify for specific indications may not be exhaustive. As a result, the Pharmaceutical Companies may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. The Pharmaceutical Companies' resource allocation decisions may cause them to fail to capitalize on viable commercial medicines or profitable market opportunities. The Pharmaceutical Companies' spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines. If the Pharmaceutical Companies do not accurately evaluate the commercial potential or target market for a particular product candidate, they may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements, or outright product relinquishment in cases in which it would have been more advantageous for them to retain sole development and commercialization rights to such product candidate.

In order to obtain FDA approval to market a new drug, the product sponsor must demonstrate the safety and efficacy of the new drug in humans to the satisfaction of the FDA. To meet these requirements, the Pharmaceutical Companies will have to conduct extensive studies, including pre-clinical studies and adequate and well-controlled clinical trials. Clinical testing is very expensive, time-consuming, and subject to uncertainty. Before the Pharmaceutical Companies can commence clinical trials for a product candidate, they must complete extensive nonclinical and preclinical studies that support their planned and future INDs in the United States. 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. We also cannot be sure that the Pharmaceutical Companies will be able to submit INDs or similar applications with respect to their product candidates on the timelines we expect, if at all, and we cannot be sure that submission of IND or similar applications will result in the FDA or other regulatory authorities allowing clinical trials to begin. 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. Delays associated with programs for which the Pharmaceutical Companies are conducting nonclinical and preclinical studies may cause them to incur additional operating expenses. The commencement and rate of completion of nonclinical and preclinical studies and clinical trials for a product candidate may be delayed by many factors, including, for example: - inability to generate sufficient nonclinical and preclinical or other in vivo or in vitro data to support the initiation of clinical studies;- timely completion of nonclinical and preclinical laboratory tests, animal studies, and formulation studies in accordance with FDA's good laboratory practice requirements and other applicable regulations;- inability to secure approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before each trial may be initiated;- delays in reaching a consensus with regulatory agencies on study design and obtaining regulatory authorization to commence clinical trials;- delays in reaching agreement on acceptable contractual terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites and across different jurisdictions;- delays in identifying, recruiting and training suitable clinical investigators;- delays in recruiting eligible patients to participate in clinical trials;- delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable, cGMP-compliant quantities of product candidates for use in clinical trials;- insufficient or inadequate supply or quality of product candidates or other materials necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials;- imposition of a temporary or permanent clinical hold by regulatory authorities;- developments on trials conducted by competitors for related technology or medical products that raise FDA or foreign regulatory authority concerns about risk to patients of the technology broadly, or if the FDA or a foreign regulatory authority finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;- delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up;- challenges in collaborating with patient groups and investigators;- failure by CROs, other third parties or the Pharmaceutical Companies to adhere to clinical trial protocols;- failure by CROs, other third parties or the Pharmaceutical Companies to perform in accordance with the FDA's or any other regulatory authority's good laboratory practices, or GLPs, good clinical practice requirements, or GCPs, or other applicable regulatory guidelines in the US or other countries;- occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or occurrence of adverse events in a clinical trial of the same class of agents conducted by other companies;- changes to the clinical trial protocols;- clinical sites deviating from trial protocols or dropping out of a trial;- changes in regulatory requirements and guidance, or data from an ongoing or other studies, that require amending or submitting new clinical protocols;- changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;- selection of inclusion and/or exclusion criteria that significantly inhibit the ability to recruit patients into clinical trials;- selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data;- the cost of clinical trials of the Pharmaceutical Companies' product candidates being greater than anticipated;- interruptions of and/or delays in the clinical trials of the Pharmaceutical Companies' product candidates and the potential impact of such interruptions or delays on a product candidate's development program and the validity of clinical data result from a product candidate's development program;- clinical trials of the Pharmaceutical Companies' product candidates producing negative or inconclusive results, which may result in our or their deciding, or regulators requiring us, to amend clinical trial protocols, conduct additional clinical trials or abandon development of such product candidates;- transfer of manufacturing processes to larger-scale facilities operated by a contract manufacturing organization, or CMO, and delays or failure by CMOs or the Pharmaceutical Companies to properly implement such manufacturing processes or make any necessary changes to those processes and secure the requisite regulatory approvals; and - third parties being unwilling or unable to satisfy their contractual obligations to us or the Pharmaceutical Companies. In addition, disruptions caused by the COVID-19 pandemic and subsequent variants may increase the likelihood that the Pharmaceutical Companies encounter difficulties or delays in initiating, enrolling, conducting or completing any planned and ongoing nonclinical and preclinical studies and clinical trials. Any inability by the Pharmaceutical Companies to successfully initiate or complete nonclinical and preclinical studies or clinical trials could result in additional costs or impair our ability to generate revenue from future product sales of any product candidates that were thought to be on track to receive regulatory approval. In addition, if the Pharmaceutical Companies make manufacturing or formulation changes to their product candidates that already have undergone or are undergoing clinical evaluation, they may be required to or may elect to conduct additional studies to bridge modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which any marketed products have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize the Pharmaceutical Companies' product candidates and may seriously harm our business. Further, conducting clinical trials in foreign countries, as the Pharmaceutical Companies may do for their product candidates, presents additional risks that may delay completion of clinical trials. These risks include the failure of patients enrolled in clinical trials in foreign countries to adhere to clinical protocols as a result of differences in healthcare services or cultural customs, the utilization of alternative standards of care in foreign countries and the failure to conduct foreign clinical trials according to standards of care that FDA considers comparable to the standards of care in the US, failure of the Pharmaceutical Companies to persuade the FDA as to the scientific robustness and clinical acceptability of the data from any such foreign clinical trials, managing additional administrative burdens associated with foreign regulatory schemes, as well as political, economic, and public health risks relevant to such foreign countries. Moreover, principal investigators for the Pharmaceutical Companies' clinical trials may serve as scientific advisors or consultants to the Pharmaceutical Companies from time to time and receive compensation in connection with such services. Under certain circumstances, the Pharmaceutical Companies may be required to report some of these relationships to the FDA or state authorities or comparable foreign regulatory authorities. The FDA or state authorities or comparable foreign regulatory authority may conclude that a financial relationship between the Pharmaceutical Companies and a principal investigator has created a conflict of interest or otherwise affected conduct of the study or interpretation of the study results. The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site, and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of regulatory approval of one or more product candidates. Delays in the completion of any preclinical studies or clinical trials of the Pharmaceutical Companies' product candidates will increase our costs, slow down product candidate development and approval processes, and delay or potentially jeopardize our ability to commence product sales and generate product revenue from any product candidate that might receive regulatory approval. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Any delays to the Pharmaceutical Companies' preclinical studies or clinical trials that occur as a result could shorten any period during which they may have the exclusive right to commercialize such product candidates, and their competitors may be able to bring products to market before they do, and the commercial viability of any product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition, and prospects significantly.

The Pharmaceutical Companies or their collaborators may not be able to initiate or continue clinical trials for the Pharmaceutical Companies' product candidates if the Pharmaceutical Companies or such collaborators are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or analogous regulatory authorities outside the United States. Enrollment may be particularly challenging for some of the orphan diseases the Pharmaceutical Companies target in the Pharmaceutical Companies' programs. In addition, there may be limited patient pools from which to draw for clinical studies. In addition to the rarity of some diseases, the eligibility (inclusion and exclusion) criteria of the Pharmaceutical Companies' clinical studies will further limit the pool of available study participants as they may require that patients have specific characteristics that they can measure or to assure their disease is either severe enough or not too advanced to include them in a study. In addition, some of the Pharmaceutical Companies' competitors may have approved competing products or ongoing clinical trials for product candidates that are in development to treat the same indications as the Pharmaceutical Companies' product candidates, and patients who would otherwise be eligible for the Pharmaceutical Companies' clinical trials may instead be prescribed a competitor's approved product or advised to enroll in clinical trials of the Pharmaceutical Companies' competitors' product candidates and therefore be ineligible or otherwise unwilling to enroll in the Pharmaceutical Companies' clinical trials. Patient enrollment is also affected by other factors including: - size and nature of the patient population;- severity of the disease under investigation;- availability and efficacy of approved drugs for the disease under investigation;- patient eligibility (inclusion and exclusion) criteria for the trial in question as defined in the protocol;- perceived risks and benefits of the product candidate under study;- clinicians' and patients' perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new products that may be approved or future product candidates being investigated for the indications the Pharmaceutical Companies are investigating;- delays in or temporary suspension of the enrollment of patients in planned clinical trials due to the COVID-19 pandemic or other public health emergencies;- ability to obtain and maintain patient consents and clinical trial enrollment;- patient referral practices of physicians;- the ability to monitor patients adequately during and after treatment;- proximity and availability of clinical trial sites for prospective patients; and - the risk that patients enrolled in clinical trials will drop out of the trials before completion, including as a result of contracting COVID-19 or other health conditions or being forced to quarantine, or, because they may be late-stage cancer patients or have other conditions and will not survive the full durations of the clinical trials. These factors may make it difficult for the Pharmaceutical Companies to enroll enough patients to complete their clinical trials in a timely and cost-effective manner. The Pharmaceutical Companies' inability to enroll a sufficient number of patients for their clinical trials would result in significant delays or may require them to abandon one or more clinical trials altogether. Enrollment delays in clinical trials may result in increased development costs for the Pharmaceutical Companies' product candidates and jeopardize their ability to obtain regulatory approval. Furthermore, even if the Pharmaceutical Companies are able to enroll a sufficient number of patients for their clinical trials, they may have difficulty maintaining participation in their clinical trials through the treatment and any follow-up periods.

If our or the Pharmaceutical Companies' product candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trials when used alone or in combination with other approved products or investigational new drugs, we or the Pharmaceutical Companies may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may prevent us or the Pharmaceutical Companies from securing regulatory approval or achieving or maintaining market acceptance of the affected product candidate if it were to received regulatory approval, and may adversely affect our business, financial condition, and prospects significantly. In addition, many compounds that initially showed promise in early-stage testing have later been found to cause side effects that prevented further development of the compound. Further, we expect that certain product candidates will be used in patients that have weakened immune systems, which may exacerbate any potential side effects associated with their use. Patients treated with product candidates may also be undergoing surgical, radiation and/or chemotherapy treatments, which can cause side effects or adverse events that are unrelated to the product candidate but may still impact the risk-benefit profile of the product candidate and the success of clinical trials. The inclusion of critically ill patients in clinical trials may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using or due to the gravity of such patients' illnesses. It may be very challenging, or even impossible, for us or the Pharmaceutical Companies to demonstrate that any such deaths or other adverse events are traceable to other therapies or medications that such patients may be using or to the gravity of such patients' illnesses, in which case the FDA or analogous regulatory authorities may attribute any such deaths or other adverse events to our or the Pharmaceutical Companies' product candidate being studied in the clinical trial. If significant adverse events or other side effects are observed in any of our or the Pharmaceutical Companies' current or future clinical trials, we or the Pharmaceutical Companies may have difficulty recruiting patients to the clinical trials, patients may drop out of such trials, or they may be required to abandon the trials or their development efforts of a product candidate altogether. We, the Pharmaceutical Companies, the FDA, other comparable regulatory authorities or an IRB may suspend or halt clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such trials are being exposed to inadequate clinical benefit and/or unacceptable health risks or adverse side effects. Further, if any of our or the Pharmaceutical Companies' product candidates obtains regulatory approval, toxicities associated with such product candidates previously not seen during clinical testing may also develop after any 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;- we or the Pharmaceutical Companies may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies;- we or 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;- we and/or the Pharmaceutical Companies may be subject to fines, injunctions or the imposition of criminal penalties;- we and/or the Pharmaceutical Companies could be sued and held liable for harm caused to patients; and - our reputation may suffer. Any of these events could prevent us or the Pharmaceutical Companies from achieving or maintaining market acceptance of the particular product candidate, if approved, could significantly harm the standing and reputation of the Pharmaceutical Companies among health-care providers and patients, and could seriously harm our business.

From time to time, we and/or the Pharmaceutical Companies may publicly disclose preliminary or top-line data from preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following study completion and a more comprehensive review of the data related to the particular study or trial. We and/or the Pharmaceutical Companies may also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we or they may not have received or had the opportunity to fully and carefully evaluate all data. 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 significance and clinical conclusions that can be drawn from them, once additional data have been received and fully evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. Even complete data from an individual study or clinical trial may be evaluated different and result in different conclusions based upon subsequent data from a subsequently completed study. In addition, the full study results from all clinical trials are subject to FDA review, and the FDA may draw materially different conclusions than those reached by us or the Pharmaceutical Companies. 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 the Pharmaceutical Companies may also disclose interim data from preclinical studies and clinical trials. Interim data from preclinical and clinical trials are subject to the risk that one or more of the preclinical or clinical outcomes may not be clinically relevant and 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. Adverse differences between preliminary or interim data and final data could materially adversely affect our business prospects. Further, others, including regulatory agencies, may not accept or agree with our or the Pharmaceutical Companies' assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. 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. If the interim, top-line, or preliminary data that we or the Pharmaceutical Companies report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, the Pharmaceutical Companies' ability to obtain approval for, and commercialize, their product candidates may be adversely affected, which could materially adversely affect our business, financial condition and results of operations.