Palisade Bio (Nasdaq: PALI) Reports Year End 2021 Financial Results and Corporate Update
CARLSBAD, Calif., March 18, 2022 (GLOBE NEWSWIRE) — Palisade Bio, Inc. (Nasdaq: PALI) (“Palisade” or the “Company”), a clinical stage biopharmaceutical company advancing oral therapies to aid patients suffering with acute and chronic gastrointestinal (GI) complications, today provides a business update and reports its financial results for the year ended December 31, 2021.
Highlights and Recent Events
“This past year was a transformative year for Palisade Bio. In April, we completed the merger of Seneca and Leading BioSciences and concurrent $22 million in financing. This was important because it provided the company with financial resources and access to capital to advance our clinical programs, add talent, and mature our operations in advance of late-stage studies. This milestone was followed just a few months later with we believe to the most important clinical data in our company’s history—the positive phase 2 clinical trial results of LB1148. These data demonstrated a statistically significant acceleration of the return of GI function by more than one day following GI surgery. These positive findings informed the company’s decision to progress to phase 3 pivotal clinical studies,” said Tom Hallam, Ph.D., chief executive officer of Palisade Bio. “We are excited to be advancing LB1148 to a pivotal clinical study to accelerate the return of bowel function following surgery. This has the potential to be transformative to patients suffering from delayed return of GI function while lowering the cost of quality care healthcare. We also look forward to building additional pipeline assets for Palisade Bio given the wide array of health complications caused by the inflammation and tissue damage produced by rogue digestive enzymes. We achieved these milestones in 2021 despite a challenging landscape in the biotech sector. We look forward to building on this momentum as we advance our drugs through clinical development and provide ongoing clinical data readouts over the coming year.”
Pipeline and Corporate Highlights
Clinical Results
Positive Phase 2 clinical trial results demonstrated that LB1148 accelerated the time to return of bowel function in GI surgery patients. LB1148 is 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. Scientific evidence suggests that the release of digestive proteases during surgery contributes to the temporary loss of normal gastrointestinal function. By inhibiting the activity of these digestive proteases, LB1148 has the potential to prevent damage to GI tissues, accelerate the time to return of normal GI function, and shorten the duration of costly post-surgery hospital stays. In July 2021, the Company released positive top-line Phase 2 clinical trial results demonstrating that LB1148 accelerated the time to return of bowel function by 1.1 days in patients undergoing GI surgery. With these and other data, LB1148 has been demonstrated to accelerate the return of GI function in three separate clinical studies, in three distinct regions (US, China and Taiwan), and across an array of surgeries from bowel resection to open heart surgery. We believe this type of acceleration in the return of GI function could be broadly applicable in the surgery settings across the globe. Taken together these data have allowed Palisade to attain alignment with the US FDA to proceed with phase 3 study of LB1148 for accelerating the return of bowel function in patients undergoing abdominal surgery. This transitions the Company from early-stage clinical development where the purpose of studies is to identify the proof-of-concept efficacy signals to late-stage clinical studies to attain the pivotal data needed to submit a New Drug Application to the FDA, with the goal of achieving commercial approval. The focus of the Company now transitions to executing on this pivotal clinical study. The Company anticipates initiating enrollment of the first patients in the phase 3 study in the second half of 2022.
Pooled-study analysis demonstrated LB1148 reduced post-surgical abdominal adhesions. Adhesion prevalence is historically reported to be >90% in patients who undergo abdominal surgery and represents a potentially significant contribution to serious complications such as small bowel obstruction, subsequent surgery, infertility, and chronic abdominal pain. Previously the Company had just three patients who had been assessed for adhesions following GI surgery. Now a pooled-study analysis demonstrated LB1148 was successful in reducing the risk of adhesions by 72% and reducing the extent and severity of adhesions by 92%, while the incidence of adhesions in the placebo group was similar to the published literature. These data have provided the basis of the Company’s decision to amend its phase 2 GI surgery study of LB1148 in the United States to evaluate 70 or more patients that may have an adhesion assessment to further inform Palisade’s development program to prevent post-surgical adhesions. The Company expects to complete enrollment by the end of 2022.
Regulatory
In 2021, the Company received FDA Fast Track designation for LB1148 for two indications: the treatment of postoperative gastrointestinal dysfunction associated with pediatric cardiovascular surgery, and reduction of adhesions following abdominal and pelvic surgery. The FDA Fast Track program is intended to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need. With Fast Track designation, Palisade Bio is eligible for greater access to the FDA for the purpose of expediting clinical development and creates eligibility for accelerated approval and priority review of LB1148. Fast Track Designation represents another positive step for the development of LB1148 and is a recognition of the serious need that exists for patients looking to avoid long-lasting and serious complications from post-surgical adhesions. The Company looks forward to working closely with the FDA about the clinical path forward with LB1148 for these indications.
Corporate
On April 27, 2021, Seneca Biopharma, Inc. (“Seneca”) completed its previously announced merger transaction with Leading BioSciences, Inc. (“LBS”), with LBS surviving as a wholly owned subsidiary of Seneca. Immediately following the Merger, Seneca changed its name to “Palisade Bio, Inc.
In August 2021, Yuma Regional Medical Center invested $5.2 million in the Company.
As we advance LB1148 through clinical studies with the goal of ultimately achieving FDA approval for commercialization, we continue to build our team. Key recent additions to our team include Rob McRae, Senior Vice President, Operations and Strategic Development; Nick McCoy, Vice President, Clinical Operations; Dawn Hofmeister, Senior Manager of Investor and Public Affairs; and James Berezniak, Associate Director, SEC Reporting and Accounting. These recent hires greatly expand our leadership team and operational capacity to execute on clinical studies, expand manufacturing, operations, and corporate communications.
Intellectual Property
We made great progress in advancing our patent portfolio and intellectual property protections of our lead clinical asset LB1148, with the European Patent Office granting a patent covering LB1148 until 2035, and the United States Patent and Trademark Office granting a new U.S. patent for use in treating adhesions and postoperative ileus.
In 2021, Palisade Bio entered into a worldwide exclusive license with the University of California, San Diego for patent rights covering engineered substrates measuring digestive protease activity for disease conditions, including cancer-related indications that had been excluded under preceding licenses with them.
2022 Milestones
The Company anticipates that its efforts for 2022 will largely focus on advancing LB1148 in the clinic. We plan to initiate a phase 3 study for accelerating the return of bowel function in the first half of 2022 and for the first patient to be enrolled in the second half of 2022. For the phase 2 study focusing on prevention of post-operative adhesions, the Company plans to commence enrolling patients under an amended protocol during the first half of 2022.
Financial Summary for the Year Ended December 31, 2021
Research and development expenses decreased $0.7 million to $2.4 million in 2021, compared to $3.1 million in 2020. This decrease is largely the result of a decline in clinical trial activities due to the onset of the COVID-19 pandemic.
General and administrative expenses increased $3.1 million to $9.3 million in 2021, compared to $6.2 million in 2020. This increase is primarily due to higher professional fees associated with regulatory, compliance and governance fees incurred as a result of becoming a public company through the merger with Seneca.
Cash and cash equivalents as of December 31, 2021, were $10.5 million, while outstanding debt was less than $0.1 million. Cash used in operations was $14.8 million for the year ended December 31, 2021, which included $3.7 million that was used to pay down current liabilities during the year.
About Palisade Bio, Inc.
Palisade Bio is a late-stage biopharmaceutical company advancing oral therapies that aid patients suffering with acute and chronic gastrointestinal complications stemming from post-operative digestive enzyme damage. Palisade Bio’s lead clinical asset LB1148 is a protease inhibitor with the potential to both reduce abdominal adhesions and help restore bowel function following surgery. Positive data from completed Phase 2 trials of LB1148 demonstrated safety and tolerability as well as a statistically significant improvement in return to bowel function and decrease in length of stay in ICU and hospital compared to placebo. Palisade Bio believes that its investigational therapies have the potential to address the myriad health conditions and complications associated with chronic disruption of the gastrointestinal epithelial barrier. For more information, please go to www.palisadebio.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “expect,” “plan,” “anticipate,” “estimate,” “intend,” “should,” “believe,” “would,” “could,” “potential,” “goal” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) convey uncertainty of future events or outcomes and are intended to identify these forward-looking statements. Forward-looking statements, include, without limitation, statements related to expectations regarding the potential of LB1148 to accelerate return to bowl function, prevent damage to GI tissues, and shorten duration of hospital stays; Palisade’s pipeline assets and/or therapies in the future; the applicability of acceleration in the return of GI function; Palisade’s plans for future clinical development of LB1148; expectations of regulatory approvals of LB1148; patient enrollment for studies; the Company’s belief that reduction in adhesions is not likely due to difference in the rates of minimally invasive approach; Palisade’s decision to amend its phase 2 GI surgery; and Palisade’s working with the FDA about the clinical path for LB1148. 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 Palisade’s current expectations and are based on management’s assumptions and estimates as of such date. Forward-looking statements involve risks and uncertainties. Palisade’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 and the uncertain and time-consuming regulatory approval process. Additional risks and uncertainties can be found in Palisade Bio’s Annual Report on Form 10-K for the year ended December 31, 2021, and in other filings subsequently made by us with the Securities and Exchange Commission. Palisade Bio 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 Palisade’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
Palisade Bio Investor Relations Contact:
Dawn Hofmeister
Manager of Investor and Public Affairs
ir@palisadebio.com
Palisade Bio Media Relations Contact:
CORE IR
Jules Abraham
julesa@coreir.com
917-885-7378
Palisade Bio, Inc.
Consolidated Balance Sheets (Audited)
(in thousands, except share and per share amounts)
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,495 | $ | 713 | ||||
| Accounts receivable | — | 59 | ||||||
| Prepaid expenses and other current assets | 1,879 | 124 | ||||||
| Total current assets | 12,374 | 896 | ||||||
| Restricted cash | 26 | 26 | ||||||
| Deferred transaction costs | — | 1,817 | ||||||
| Right-of-use asset | 109 | 275 | ||||||
| Property and equipment, net | 3 | 5 | ||||||
| Total assets | $ | 12,512 | $ | 3,019 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,323 | $ | 2,537 | ||||
| Accrued liabilities | 463 | 2,740 | ||||||
| Accrued compensation and benefits | 511 | 1,590 | ||||||
| Current portion of lease liability | 112 | 168 | ||||||
| Current portion of debt | 87 | 578 | ||||||
| Current portion of related party debt, net | — | 469 | ||||||
| Total current liabilities | 2,496 | 8,082 | ||||||
| Warrant liability | 2,651 | 1,830 | ||||||
| Non-current portion of debt | — | 94 | ||||||
| Lease liability, net of current portion | — | 112 | ||||||
| Total liabilities | 5,147 | 10,118 | ||||||
| Commitments and contingencies | ||||||||
| Series C convertible preferred stock, $0.001 par value; 0 and 33,594,625 shares authorized as of December 31, 2021 and December 31, 2020, respectively; 0 and 11,674,131 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively; liquidation preference of $10.4 million as of December 31, 2020 | — | 9,503 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Series A Convertible Preferred Stock, 7,000,000 shares authorized, $0.01 par value; 200,000 and 0 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively | 2 | — | ||||||
| Common stock, $0.01 par value; 300,000,000 and 6,797,500 shares authorized as of December 31, 2021 and December 31, 2020, respectively; 14,239,177 and 2,774,502 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively | 143 | 28 | ||||||
| Additional paid-in capital | 101,862 | 51,396 | ||||||
| Accumulated deficit | (94,642 | ) | (68,026 | ) | ||||
| Total stockholders’ equity (deficit) | 7,365 | (16,602 | ) | |||||
| Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | $ | 12,512 | $ | 3,019 | ||||
Palisade Bio, Inc.
Consolidated Statements of Operations (Audited)
(in thousands, except share and per share amounts)
| Year Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 2,430 | $ | 3,099 | ||||
| In-process research and development | 30,117 | — | ||||||
| General and administrative | 9,307 | 6,198 | ||||||
| Total operating expenses | 41,854 | 9,297 | ||||||
| Loss from operations | (41,854 | ) | (9,297 | ) | ||||
| Other income (expense): | ||||||||
| Gain on forgiveness of PPP loan | 279 | — | ||||||
| Loss on issuance of secured debt | (686 | ) | (841 | ) | ||||
| Gain on change in fair value of warrant liability | 23,033 | 38 | ||||||
| Gain on change in fair value of share liability | 91 | — | ||||||
| Interest expense | (2,398 | ) | (235 | ) | ||||
| Other income | 47 | 13 | ||||||
| Loss on issuance of LBS Series 1 Preferred Stock | (1,881 | ) | — | |||||
| Loss on issuance of warrants | (3,247 | ) | — | |||||
| Total other income (expense) | 15,238 | (1,025 | ) | |||||
| Net loss | $ | (26,616 | ) | $ | (10,322 | ) | ||
| Loss per common share: | ||||||||
| Basic | $ | (2.86 | ) | $ | (3.72 | ) | ||
| Diluted | $ | (3.39 | ) | $ | (3.72 | ) | ||
| Weighted average shares used in computing loss per common share: | ||||||||
| Basic | 9,309,774 | 2,774,370 | ||||||
| Diluted | 9,347,944 | 2,774,370 | ||||||
| Net loss attributable to common shares – basic | $ | (26,616 | ) | $ | (10,322 | ) | ||
| Net loss attributable to common shares – diluted | $ | (31,735 | ) | $ | (10,322 | ) | ||
Palisade Bio, Inc.
Consolidated Statements of Cash Flows (Audited)
(in thousands)
| Year Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Net loss | $ | (26,616 | ) | $ | (10,322 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2 | 3 | ||||||
| In-process research and development | 30,117 | — | ||||||
| Noncash transaction costs shared with Seneca | (135 | ) | — | |||||
| Noncash lease expense | 166 | 143 | ||||||
| Gain on forgiveness of PPP loan | (279 | ) | — | |||||
| Accretion of debt discount and non-cash interest expense | 2,339 | 202 | ||||||
| Loss on issuance of LBS Series 1 Preferred Stock | 1,881 | — | ||||||
| Loss on issuance of secured debt | 686 | 841 | ||||||
| Loss on issuance of warrants | 3,247 | — | ||||||
| Change in fair value of warrant liabilities | (23,033 | ) | (38 | ) | ||||
| Change in fair value of share liability | (91 | ) | — | |||||
| Stock-based compensation | 1,891 | 2,014 | ||||||
| Other | (192 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and other receivables | 84 | (59 | ) | |||||
| Prepaid and other assets | (1,157 | ) | 89 | |||||
| Accounts payable and accrued liabilities | (2,395 | ) | 1,006 | |||||
| Accrued compensation | (1,120 | ) | 1,494 | |||||
| Operating lease liabilities | (168 | ) | (141 | ) | ||||
| Net cash used in operating activities | (14,773 | ) | (4,768 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash acquired in connection with the Merger | 3,279 | — | ||||||
| Acquisition related costs paid | (3,333 | ) | — | |||||
| Purchases of property and equipment | — | (6 | ) | |||||
| Net cash used in investing activities | (54 | ) | (6 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on debt | (1,433 | ) | (27 | ) | ||||
| Proceeds from issuance of debt | 1,250 | 379 | ||||||
| Proceeds from the issuance of related party debt | — | 450 | ||||||
| Proceeds from issuance of LBS Series 1 Preferred Stock | 19,900 | — | ||||||
| Proceeds from issuance of common stock and warrants | 5,209 | 1,175 | ||||||
| Redemption of warrants | (99 | ) | — | |||||
| Payment of equity issuance costs | (67 | ) | — | |||||
| Payment of debt issuance costs | (151 | ) | (87 | ) | ||||
| Net cash provided by financing activities | 24,609 | 1,890 | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 9,782 | (2,884 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 739 | 3,623 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 10,521 | $ | 739 | ||||
