Palisade Bio Reports Year End 2022 Financial Results and Provides Corporate Update
Phase 2 topline data readout for prevention of post-surgical abdominal adhesions on track for Q2 2023
Strong balance sheet with sufficient cash expected to fund operations into mid-2024
Carlsbad, CA, March 23, 2023 (GLOBE NEWSWIRE) — Palisade Bio, Inc. (Nasdaq: PALI) (“Palisade” or the “Company”), a biopharmaceutical company advancing therapies for acute and chronic gastrointestinal (GI) complications, today reported its financial results for the full year 2022 and provided a corporate update.
“Our team has made great progress executing our operational plan to strengthen our financial profile, focus our pipeline and position the Company for important near-term data readouts. With the cash proceeds from our recently completed financings and exercises of warrants, we believe we are in a strong financial position to build on this momentum,” commented J.D. Finley, interim Chief Executive Officer. “We are focused and optimistic about our U.S. Phase 2 adhesions study with our lead drug, LB1148. We expect the topline data from this study in the second quarter of 2023, which we anticipate will provide valuable insight to determine the next phase of development for this program as we drive towards commercialization while also evaluating plans for additional pipeline indications. We believe that 2023 is poised to be an important year with a number of catalysts and opportunities to unlock significant shareholder value.”
Clinical Program Update for LB1148
U.S. Phase 2 Adhesions Study
LB1148 is currently being evaluated in a Phase 2 study for its effectiveness in reducing intra-abdominal adhesions, accelerating return of gastrointestinal function, and the prevention of post-operative ileus in patients undergoing elective bowel resection (PROFILE).
In December 2022, the Company voluntarily closed enrollment with a total of 35 of the planned 70 patients in its Phase 2 study. The Company expects to report topline data from these patients during the second quarter of 2023.
Dose Optimization Study
The Company is currently planning a dose optimization study for all indications to determine if a different dosing protocol would enhance the risk profile of LB1148 while simultaneously providing efficacy. It is anticipated that this study will generate pharmacokinetic and pharmacodynamic data across multiple doses in patients, with enrollment expected to commence in the second quarter of 2023.
Summary of Financial Results for the Year Ended December 31, 2022
As of December 31, 2022, the Company had cash, cash equivalents and restricted cash of $12.4 million. With the additional net cash proceeds of $4.7 million received in the first week of January ($2.1 million from the Company’s registered direct offering and private placement, which closed on January 4, 2023, plus $2.6 million related to warrant exercises) management believes it has sufficient cash to fund the Company’s operations into mid-2024.
Research and development expenses were $6.5 million for the year ended December 31, 2022, compared to $2.4 million for the year ended December 31, 2021, an increase of $4.1 million, or approximately 169%. The year-over-year increase is a result of the increased clinical activities from resuming patient enrollment in the Company’s U.S Phase 2 clinical study of the prevention of post-surgical abdominal adhesions and from the initiation of enrollment in its U.S. Phase 3 clinical study of the accelerated return of bowel function following gastrointestinal surgery. As previously disclosed, in the fourth quarter of 2022 the Company paused its U.S. Phase 3 study and is now directing its clinical focus to the continued advancement of its U.S. Phase 2 adhesions study.
General and administrative expenses decreased from $9.3 million for the year ended December 31, 2021 to $8.8 million for the year ended December 31, 2022. The decrease of $0.5 million was primarily attributable a year-over-year decrease in stock compensation expense of $0.6 million. The decrease in stock-based compensation expense in 2022 compared to 2021 was due to (i) approximately $0.4 million of incremental expense recognized in the fourth quarter of 2021 due to the modification of certain outstanding stock options and (ii) approximately $0.2 million of expense recognized in the second quarter of 2021 related to stock options granted to executive management as a result of the successful completion of its 2021 reverse merger; neither of which recurred in 2022.
The Company recognized restructuring costs of $0.4 million for the year ended December 31, 2022, consisting of severance and benefits payments pursuant to employment agreements and the execution of severance and release agreements with employees terminated under a September 2022 cost-reduction plan. As a result of the September 2022 cost-reduction plan as well as the executive officer terminations in October 2022, which were unrelated to the September 2022 cost-reduction plan, the Company began 2023 with a reduction in workforce of approximately 30%, which it believes aligns operational costs with its current operating plan and strategic initiatives.
About Palisade Bio
Palisade Bio is a 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 that acts to neutralize digestive enzymes, potentially reducing intestinal damage. In clinical studies, LB1148 has demonstrated positive results in reducing the incidence and severity of post-surgical abdominal adhesions and potentially accelerating the time to return of postoperative bowel function. LB1148’s current Phase 2 study is evaluating its effectiveness in reducing intra-abdominal adhesions, accelerating return of gastrointestinal function, and the prevention of post-operative ileus in subjects undergoing elective bowel resection (PROFILE).
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: the extent of our cash runway; estimates about the size and growth potential of the markets for our product candidates, and our ability to serve those markets, including any potential revenue generated; future regulatory, judicial, and legislative changes or developments in the United States (U.S.) and foreign countries and the impact of these changes; our ability to build a commercial infrastructure in the U.S. and other markets; our ability to compete effectively in a competitive industry; our ability to identify and qualify additional manufacturers to provide API and manufacture drug product; our ability to enter into commercial supply agreements; the success of competing technologies that are or may become available; our ability to attract and retain key scientific or management personnel; the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; our ability to obtain funding for our operations; our ability to attract collaborators and strategic partnerships; and the impact of the COVID-19 pandemic on our business, and operations, and supply. 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; and the Company’s ability to achieve additional financing to fund future operations. Additional risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 22, 2023. 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.
Investor Relations Contact
JTC Team, LLC
Jenene Thomas
833-475-8247
PALI@jtcir.com
Source: Palisade Bio
Palisade Bio, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,383 | $ | 10,495 | ||||
| Prepaid expenses and other current assets | 2,350 | 1,011 | ||||||
| Total current assets | 14,733 | 11,506 | ||||||
| Restricted cash | 26 | 26 | ||||||
| Property and equipment, net | 10 | 3 | ||||||
| Right-of-use asset | 300 | 109 | ||||||
| Other noncurrent assets | 694 | 868 | ||||||
| Total assets | $ | 15,763 | $ | 12,512 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,759 | $ | 1,323 | ||||
| Accrued liabilities | 574 | 463 | ||||||
| Accrued compensation and benefits | 486 | 511 | ||||||
| Current portion of lease liability | 105 | 112 | ||||||
| Debt | 88 | 87 | ||||||
| Total current liabilities | 3,012 | 2,496 | ||||||
| Warrant liability | 61 | 2,651 | ||||||
| Lease liability, net of current portion | 211 | — | ||||||
| Total liabilities | 3,284 | 5,147 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Series A Convertible Preferred Stock, 7,000,000 shares authorized, $0.01 par value; 200,000 issued and outstanding at December 31, 2022 and December 31, 2021 | 2 | 2 | ||||||
| Common stock, $0.01 par value; 280,000,000 shares and 300,000,000 authorized as of December 31, 2022 and December 31, 2021, respectively 2,944,306 and 284,780 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 30 | 3 | ||||||
| Additional paid-in capital | 121,637 | 102,002 | ||||||
| Accumulated deficit | (109,190 | ) | (94,642 | ) | ||||
| Total stockholders’ equity | 12,479 | 7,365 | ||||||
| Total liabilities and stockholders’ equity | $ | 15,763 | $ | 12,512 | ||||
Palisade Bio, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 6,547 | $ | 2,430 | ||||
| In-process research and development | — | 30,117 | ||||||
| General and administrative | 8,764 | 9,307 | ||||||
| Restructuring costs | 410 | — | ||||||
| Total operating expenses | 15,721 | 41,854 | ||||||
| Loss from operations | (15,721 | ) | (41,854 | ) | ||||
| 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 | 2,426 | 23,033 | ||||||
| Gain on change in fair value of share liability | — | 91 | ||||||
| Interest expense | (13 | ) | (2,398 | ) | ||||
| Other income | 158 | 47 | ||||||
| Loss on issuance of LBS Series 1 Preferred Stock | — | (1,881 | ) | |||||
| Loss on issuance of warrants | (1,110 | ) | (3,247 | ) | ||||
| Total other income, net | 1,461 | 15,238 | ||||||
| Net loss | $ | (14,260 | ) | $ | (26,616 | ) | ||
| Loss per common share*: | ||||||||
| Basic | $ | (16.53 | ) | $ | (142.95 | ) | ||
| Diluted | $ | (16.53 | ) | $ | (169.74 | ) | ||
| Weighted average shares used in computing loss per common share: | ||||||||
| Basic | 880,311 | 186,195 | ||||||
| Diluted | 880,311 | 186,958 | ||||||
| Net loss attributable to common shares – basic | $ | (14,548 | ) | $ | (26,616 | ) | ||
| Net loss attributable to common shares – diluted | $ | (14,548 | ) | $ | (31,735 | ) | ||
(*) Basic and diluted loss per common share for the year ended December 31, 2021 adjusted to reflect the 1-for-50 reverse stock split effected on November 16, 2022.
Palisade Bio, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net loss | $ | (14,260 | ) | $ | (26,616 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 3 | 2 | ||||||
| In-process research and development | — | 30,117 | ||||||
| Noncash transaction costs shared with Seneca | — | (135 | ) | |||||
| Noncash lease expense | 164 | 166 | ||||||
| Gain on forgiveness of PPP loan | — | (279 | ) | |||||
| Accretion of debt discount and non-cash interest expense | — | 2,339 | ||||||
| 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 | 3,247 | ||||||
| Change in fair value of warrant liabilities | (2,426 | ) | (23,033 | ) | ||||
| Change in fair value of share liability | — | (91 | ) | |||||
| Stock-based compensation | 1,032 | 1,891 | ||||||
| Other | (233 | ) | (192 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | — | 84 | ||||||
| Prepaid and other assets and other noncurrent assets | 1,027 | (1,157 | ) | |||||
| Accounts payable and accrued liabilities | 399 | (2,395 | ) | |||||
| Accrued compensation | (25 | ) | (1,120 | ) | ||||
| Operating lease liabilities | (151 | ) | (168 | ) | ||||
| Net cash used in operating activities | (13,360 | ) | (14,773 | ) | ||||
| 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 | (10 | ) | — | |||||
| Net cash used in investing activities | (10 | ) | (54 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on debt | (790 | ) | (1,433 | ) | ||||
| 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 | 14,401 | 5,209 | ||||||
| Proceeds (payments) from the redemption of warrants | 2,274 | (99 | ) | |||||
| Payment of equity issuance costs | (627 | ) | (67 | ) | ||||
| Payment of debt issuance costs | — | (151 | ) | |||||
| Net cash provided by financing activities | 15,258 | 24,609 | ||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | 1,888 | 9,782 | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | 10,521 | 739 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 12,409 | $ | 10,521 | ||||
| Reconciliation of cash, cash equivalents and restricted cash to the balance sheets: | ||||||||
| Cash and cash equivalents | $ | 12,383 | $ | 10,495 | ||||
| Restricted cash | 26 | 26 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 12,409 | $ | 10,521 | ||||
