Palisade Bio Reports Second Quarter 2022 Financial Results and Provides Corporate Update

Palisade Bio Reports Second Quarter 2022 Financial Results and Provides Corporate Update




Palisade Bio Reports Second Quarter 2022 Financial Results and Provides Corporate Update

Quarter marked by initiation of Phase 3 study evaluating LB1148 for postoperative return of bowel function

CARLSBAD, Calif., Aug. 15, 2022 (GLOBE NEWSWIRE) — Palisade Bio (Nasdaq: PALI) a clinical stage biopharmaceutical company advancing therapies for acute and chronic gastrointestinal (GI) complications (the “Company”), reported its financial results for the quarter ended June 30, 2022.

Additionally, the Company provided a clinical program update for its lead asset in development, LB1148, an oral formulation of a broad-spectrum serine protease inhibitor designed to neutralize the activity of potent digestive proteases released from the gut during surgery.

Recent Highlights

  • Entered into an underwriting agreement on August 12, 2022 for public offering for expected gross proceeds of $12 million, bringing total equity funding to $14 million in 2022 and extending the cash runway to potentially the first half of 2023;
  • Initiated Phase 3 study of LB1148 in lead indication for postoperative return of bowel function in June and, subsequent to the second quarter of 2022, announced screening of the first patient;
  • Received National Medical Products Administration (NMPA) clearance to commence a Phase 3 clinical trial in China evaluating LB1148 to accelerate the return of bowel function following abdominal surgery; and
  • Launched new corporate website in order to better align with the Company’s mission to become a global leader in developing and commercializing novel therapeutics that target diseases resulting from a loss of gastrointestinal barrier integrity.

“Over the past quarter we continued to execute on our operational, clinical, and regulatory strategic imperatives, while achieving a milestone for the Company with the commencement of our Phase 3 study for LB1148,” commented Tom Hallam, Ph.D., Chief Executive Officer of Palisade Bio. “We have now emerged as a Phase 3 company with a study for GI surgery underway. Looking ahead, we are focused on opening additional clinical trial sites and driving enrollment. We fully intend to build on this momentum as we remain focused on operational excellence and advancing towards the potential registration and commercialization of LB1148.”

Clinical Program Update

LB1148, the Company’s lead asset in development, is a novel oral liquid formulation of the well-characterized digestive enzyme inhibitor tranexamic acid (“TXA”), with the potential to both reduce abdominal adhesions and help restore bowel function following surgery. LB1148 is currently being developed for administration prior to surgeries that are at risk of disrupting the intestinal epithelial barrier. By inhibiting the activity of these digestive proteases, LB1148 has the potential to prevent damage to GI tissues, accelerate the time to the return of normal GI function, and shorten the duration of costly post-surgery hospital stays.

Postoperative Return of Bowel Function: GI Surgery

In June 2022, the Company initiated its Phase 3 clinical trial evaluating LB1148 to accelerate the return of bowel function in adult patients undergoing gastrointestinal surgery, and subsequently announced the screening of the first patient in the study.

The Phase 3 study is designed as a multi-center, randomized, double-blind, parallel-group, placebo-controlled clinical trial set to enroll approximately 600 patients, which will assess the safety and efficacy of LB1148. The primary endpoint is time to recovery of the upper and lower gastrointestinal tract following surgery, defined as the time from the end of surgery to the toleration of food and first bowel movement. All patients enrolled in the study will undergo a scheduled bowel resection surgery that will include laparotomy and laparoscopic surgical approaches. The clinical study will utilize the same dosing of LB1148 used in the completed Phase 2 study in which LB1148 demonstrated a 1.1-day improvement in return of bowel function. Based on management’s current study projections and timelines, enrollment is targeted for completion within 18-24 months.

Additionally, in May 2022 the Company’s co-development partner Newsoara Biopharma Co. Ltd, received clearance from the NMPA in China to proceed with their Phase 3 clinical trial to evaluate LB1148 for accelerated return of bowel function in adult patients undergoing gastrointestinal surgery.

Expected Upcoming Milestones

  • Completion of patient enrollment in Phase 3 clinical trial targeted within 18-24 months
  • 2H 2022: Newsoara expected to commence patient enrollment in the Phase 3 clinical trial in China

Prevention of Post-Surgical Abdominal Adhesions: GI Surgery

Digestive enzymes can escape the intestine during abdominal surgery and cause damage to the intestines and surrounding organs resulting in the formation of scar tissue known as adhesions. Adhesion prevalence has historically been reported to be >90% in patients who undergo abdominal surgery and represents a potentially significant contribution to serious complications. Adhesions can cause chronic pain and may prevent normal organ function, including bowel obstructions. Adhesions can increase the difficulty of subsequent surgeries causing complications and are the leading cause of secondary infertility in women. In some cases, adhesions require a second corrective surgical procedure. There are currently no approved medications to prevent or treat adhesions.

The Company is conducting an ongoing randomized, double-blind, placebo-controlled, parallel-group, multicenter Phase 2 clinical trial of LB1148 in up to 200 patients undergoing elective bowel resection surgery in the United States. This trial is designed to evaluate whether patients treated with LB1148 experience fewer postoperative intra-abdominal adhesions. The trial will also assess LB1148’s impact on recovery of GI function, as compared to placebo.

Expected Upcoming Milestones

  • Q4 2022: Phase 2 enrollment completion
  • 1H 2023: Phase 2 study completion
  • 2H 2023: Report Phase 2 topline results

Summary of Financial Results for Second Quarter 2022

Net loss was $2.3 million and $31.7 million for the three months ended June 30, 2022 and 2021, respectively. The three months ended June 30, 2021 included in-process research and development expenses of $30.1 million, associated with the reverse merger which closed in April 2021.

Research and development expenses were $1.3 million in the second quarter of 2022, compared to $0.3 million in the second quarter of 2021, an increase of $1.0 million, or approximately 320%. As a percentage of total operating expenses, research and development expenses were 37% in the three months ended June 30, 2022, compared to 11% of total operating expenses in the same period last year, excluding in-process research and development expenses associated with the reverse merger of $30.1 million. The Company expects research and development expenses to continue to increase in the second half 2022, both in amount and as a percentage of total operating expenses, as it executes on its clinical development plan for LB1148. In particular, the Company expects the costs associated with investigative clinical trial sites that conduct research and development activities on the Company’s behalf to increase as it accepts new sites and new patients into its clinical trials. Similarly, the Company expects the vendor expenses related to the execution of clinical trials to continue to increase in the remainder of 2022, as well as costs related to the development and manufacture of LB1148.

General and administrative expenses decreased from $2.4 million for the three months ended June 30, 2021 to $2.3 million for the three months ended June 30, 2022. Net payroll and employee-related costs and consulting and contract labor costs increased by $0.1 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. Investor relations and shareholder costs increased by $0.1 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to the timing of the annual shareholder meeting being held in the second quarter of 2022 as opposed to the fourth quarter of last year. These increases were more than offset by lower stock-based compensation expense of $0.2 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 and lower expenses associated with the winddown of Seneca operations that were incurred in the three months ended June 30, 2021.

As of June 30, 2022, the Company had cash and cash equivalents of $5.0 million. On May 6, 2022, the Company entered into securities purchase agreements with certain investors pursuant to which it agreed to sell and issue, in a registered direct offering an aggregate of 3,646,690 shares of its common stock, par value $0.01 per share, at a purchase price per share of $0.55 and, in a concurrent private placement, also agreed to sell and issue to such purchasers warrants to purchase up to 3,646,690 shares of common stock at an exercise price of $0.7105 per share. The aggregate net proceeds from this transaction were $1.4 million, consisting of aggregate consideration of $2.0 million less equity issuance costs of approximately $0.6 million.

On August 12, 2022, the Company entered into an underwriting agreement pursuant to which the Company agreed to issue and sell, in a registered public offering (the “August 2022 Public Offering”), (i) 42,160,000 shares of common stock, (ii) 1,460 shares of Series B convertible preferred stock, (iii) 48,000,000 Series 1 Warrants with an exercise price of $0.25 per share and a term of one year following the issuance date, and (iv) 48,000,000 Series 2 Warrants with an exercise price of $0.25 per share and a term of five years following the issuance date. The pricing of the August 2022 Public Offering is for gross proceeds of $12.0 million and net proceeds of approximately $10.5 million after deducting estimated equity issuance costs of approximately $1.5 million. The warrants will be exercisable beginning on the date of stockholder approval of the exercisability of the warrants under Nasdaq rules. The closing of the offering is expected to take place on or about August 16, 2022, subject to the satisfaction or waiver of customary closing conditions.

About Palisade Bio
Palisade Bio is a late-stage biopharmaceutical company focused on developing therapeutics that protect the integrity of the intestinal barrier. The Company utilizes over three decades of research and established science that links the role of intestinal barrier biology and human disease to develop novel therapeutics that target and improve the integrity of the intestinal barrier.

The Company’s lead program, LB1148, is a broad-spectrum serine protease inhibitor which acts to neutralize digestive enzymes, potentially reducing intestinal damage. In multiple clinical studies, LB1148 has demonstrated positive results in accelerating the time to return of postoperative bowel function, and the Company recently presented analysis that LB1148 reduced the incidence and severity of post-surgical abdominal adhesions. LB1148 is currently being evaluated in a Phase 3 clinical study for accelerating the return of postoperative bowel function and in a Phase 2 study for the prevention of post-surgical abdominal adhesions.

The Company believes that addressing the disruption of the intestinal barrier can fundamentally change the way diseases are treated and establish new standards of patient care. For more information, please go to www.palisadebio.com.

Forward Looking Statements
This communication contains “forward-looking” statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Company’s intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: progress of studies, including opening additional clinical trial sites, timing of results or data, progress and completion of patient enrollment, including timing thereof and Newsoara’s expectation to complete enrollment; regulatory progress and strategy, including potential registration and commercialization of LB1148; the extent of the cash runway; the closing of the underwritten public offering; and expected proceeds from financings. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon the Company’s current expectations. Forward-looking statements involve risks and uncertainties. The Company’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the Company’s ability to advance its clinical programs, the uncertain and time-consuming regulatory approval process; the Company’s ability to achieve additional financing to fund future operations and the Company’s ability to comply with the continued listing requirements for Nasdaq. Additional risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 17, 2022, Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 15, 2022, as well as discussions of potential risks, uncertainties, and other important factors in our subsequent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Palisade Bio Investor Relations Contact:
Dawn Hofmeister
ir@palisadebio.com

Investor Relations Contact
JTC Team, LLC
Jenene Thomas
833-475-8247
PALI@jtcir.com

Source: Palisade Bio

 

Palisade Bio, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
    June 30,   December 31,
     2022     2021 
    (Unaudited)    
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 4,980     $ 10,495  
Prepaid expenses and other current assets     2,435       1,879  
Total current assets     7,415       12,374  
Restricted cash     26       26  
Right-of-use asset     363       109  
Property and equipment, net     2       3  
Total assets   $ 7,806     $ 12,512  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable   $ 1,041     $ 1,323  
Accrued liabilities     1,034       463  
Accrued compensation and benefits     76       511  
Current portion of lease liability     98       112  
Current portion of debt     611       87  
Total current liabilities     2,860       2,496  
Warrant liability     469       2,651  
Lease liability, net of current portion     266        
Total liabilities     3,595       5,147  
Commitments and contingencies        
         
Series A Convertible Preferred Stock, 7,000,000 shares authorized, $0.01 par value; 200,000 issued and outstanding at June 30, 2022 and December 31, 2021     2       2  
Common stock, $0.01 par value; 300,000,000 shares authorized as of June 30, 2022 and December 31, 2021, 21,880,169 and 14,239,177 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively     220       143  
Additional paid-in capital     105,180       101,862  
Accumulated deficit     (101,191 )     (94,642 )
Total stockholders’ equity     4,211       7,365  
Total liabilities and stockholders’ equity   $ 7,806     $ 12,512  
         

 

Palisade Bio, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
 
    Three Months Ended June 30,   Six Months Ended June 30,
     2022     2021     2022     2021 
Operating expenses:                
Research and development   $ 1,317     $ 314     $ 2,276     $ 1,006  
In-process research and development           30,117             30,117  
General and administrative     2,255       2,427       5,184       3,688  
Total operating expenses     3,572       32,858       7,460       34,811  
Loss from operations     (3,572 )     (32,858 )     (7,460 )     (34,811 )
Other income (expense):                
Gain on forgiveness of PPP loan   `                 279  
Loss on issuance of secured debt                       (686 )
Gain on change in fair value of warrant liability     1,225       5,133       2,018       5,175  
Gain on change in fair value of share liability           73             73  
Interest expense     (5 )     (655 )     (6 )     (2,367 )
Other income     8       16       9       16  
Loss on issuance of LBS Series 1 Preferred Stock           (1,881 )           (1,881 )
Loss on issuance of warrants           (1,574 )     (1,110 )     (1,574 )
Total other income (expense)     1,228       1,112       911       (965 )
Net loss   $ (2,344 )   $ (31,746 )   $ (6,549 )   $ (35,776 )
Loss per common share:                
Basic   $ (0.12 )   $ (3.59 )   $ (0.36 )   $ (6.17 )
Diluted   $ (0.12 )   $ (4.10 )   $ (0.36 )   $ (6.96 )
Weighted average shares used in computing loss per common share:                
Basic     20,294,652       8,831,517       18,281,788       5,803,010  
Diluted     20,294,652       8,984,198       18,281,788       5,879,351  
Net loss attributable to common shares – basic   $ (2,344 )   $ (31,746 )   $ (6,549 )   $ (35,776 )
Net loss attributable to common shares – diluted   $ (2,344 )   $ (36,865 )   $ (6,549 )   $ (40,895 )
                 

Palisade Bio, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
    Six Months Ended June 30,
     2022     2021 
     
Net loss   $ (6,549 )   $ (35,776 )
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization     1       2  
In-process research and development           30,117  
Noncash transaction costs shared with Seneca           (135 )
Noncash lease expense     94       80  
Gain on forgiveness of PPP loan           (279 )
Accretion of debt discount and non-cash interest expense           2,203  
Loss on issuance of LBS Series 1 Preferred Stock           1,881  
Loss on issuance of secured debt           686  
Loss on issuance of warrants     1,110       1,574  
Change in fair value of warrant liabilities     (2,018 )     (5,175 )
Change in fair value of share liability           (73 )
Stock-based compensation     694       1,064  
RSU vesting expense           41  
Other     (213 )     (183 )
Changes in operating assets and liabilities:        
Other receivables           25  
Prepaid and other assets     228       (1,294 )
Accounts payable and accrued liabilities     170       (2,133 )
Accrued compensation     (435 )     (1,518 )
Operating lease liabilities     (96 )     (79 )
Net cash used in operating activities     (7,014 )     (8,972 )
Cash flows from investing activities:        
Cash acquired in connection with the Merger           3,279  
Acquisition related costs paid           (2,985 )
Net cash provided by investing activities           294  
Cash flows from financing activities:        
Payments on debt     (260 )     (285 )
Proceeds from issuance of debt           1,250  
Proceeds from issuance of LBS Series 1 Preferred Stock           19,900  
Proceeds from issuance of common stock and warrants     1,775        
Redemption of warrants           (99 )
Payment of equity issuance costs     (16 )      
Payment of debt issuance costs           (148 )
Net cash provided by financing activities     1,499       20,618  
Net (decrease) increase in cash, cash equivalents and restricted cash     (5,515 )     11,940  
Cash, cash equivalents and restricted cash, beginning of period     10,521       739  
Cash, cash equivalents and restricted cash, end of period   $ 5,006     $ 12,679  
Reconciliation of cash, cash equivalents and restricted cash to the balance sheets:        
Cash and cash equivalents     4,980       12,653  
Restricted cash     26       26  
Total cash, cash equivalents and restricted cash   $ 5,006     $ 12,679