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Palisade Bio Announces Exercise of Previously Issued Warrants for $2.5 Million

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Palisade Bio, Inc. announced an agreement to exercise existing warrants, resulting in gross proceeds of approximately $2.5 million prior to deducting placement agent fees and estimated offering expenses. The company will issue new unregistered warrants to purchase shares of common stock in a private placement. The net proceeds from the offering will be used for working capital and general corporate purposes.
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Insights

The exercise of Existing Warrants by Palisade Bio at a significantly reduced price compared to their initial exercise prices indicates a strategic move to secure immediate funding, likely due to an urgent need for liquidity. The gross proceeds of approximately $2.5 million, while providing short-term working capital, do not represent a substantial cash influx relative to the scale of biopharmaceutical operations, which typically require significant investment. This action could dilute existing shareholders but offers the potential for accelerated development activities.

The issuance of Replacement Warrants as an incentive for cash exercise suggests a confidence in the future value of the company's stock, albeit at the risk of further dilution. The five-year term of these warrants provides a long-term investment horizon, which could be seen as an optimistic signal regarding the company's growth prospects. However, the immediate impact on the company's stock price could be negative, given the dilution and the current price at which the warrants are being exercised.

The transaction involves complex securities laws, particularly the exemption from registration under the 1933 Act. The use of Section 4(a)(2) indicates a private placement to accredited investors, which is a common approach for raising capital without public offering. The commitment to file a registration statement for the resale of shares issuable upon exercise of the Replacement Warrants is a necessary step to provide liquidity for these investors and is indicative of the company's intent to comply with SEC regulations, ensuring that these transactions adhere to legal standards.

Palisade Bio's focus on chronic GI diseases taps into a specialized segment of the pharmaceutical market, which is characterized by a high demand for innovative treatments. The capital raised through this warrant exercise transaction is likely earmarked for advancing their therapeutic pipeline, which could enhance the company's competitive position if successful. However, the relatively modest amount raised suggests that further financing rounds or strategic partnerships may be necessary to fully fund late-stage development and commercialization efforts.

It is also important to consider the market's response to such financial maneuvers. While the immediate cash influx can be beneficial for ongoing operations, the perception of financial stability and growth potential among investors will be critical for the company's ability to raise additional funds in the future without resorting to aggressive dilutive financing options.

Carlsbad, CA, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Palisade Bio, Inc.  (Nasdaq: PALI) (“Palisade” or the “Company”), a biopharmaceutical company focused on developing novel therapeutics for serious chronic gastrointestinal (GI) diseases, today announced an agreement between the Company and several accredited investors to exercise certain existing warrants (the “Existing Warrants”) to purchase up to an aggregate of 3,413,286 shares of common stock. The Existing Warrants had initial exercise prices of $35.525, $2.375, and 2.64, respectively, and were issued by the Company on May 10, 2022, January 4, 2023, and April 5, 2023, respectively, with each exercise occurring at a reduced exercise price of $0.7313 per share.

The shares of common stock issuable upon exercise of the Existing Warrants are registered pursuant to registration statements which were filed and declared effective by the Securities and Exchange Commission (the “SEC”). The gross proceeds to the Company from the exercise of the Existing Warrants are expected to be approximately $2.5 million prior to deducting placement agent fees and estimated offering expenses.

In consideration for the immediate exercise of the Existing Warrants for cash, the exercising holders will receive new unregistered warrants (the “Replacement Warrants”) to purchase shares of common stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”). The Replacement Warrants will be exercisable into an aggregate of up to 3,413,286 shares of common stock, at an exercise price of $0.7313 per share, and a term of exercise equal to five years from issuance.

The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Ladenburg Thalmann & Co. Inc. acted as the exclusive placement agent for the warrant exercise transaction.

The Replacement Warrants described above were offered in a private placement pursuant to an applicable exemption from the registration requirements of the 1933 Act and, along with the shares of common stock issuable upon their exercise, have not been registered under the 1933 Act, and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. The securities were offered only to accredited investors. The Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock issuable upon exercise of the Replacement Warrants.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

About Palisade Bio

Palisade Bio is a biopharmaceutical company focused on developing novel therapeutics for serious chronic gastrointestinal diseases. The Company believes that by using a targeted approach with its novel therapeutics it will transform the treatment landscape. 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; our ability to successfully develop our licensed technologies; 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 maintain the Nasdaq listing of our securities; 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 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 or any global event 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 nonclinical and clinical programs, the uncertain and time-consuming regulatory approval process; and the Company’s ability to secure additional financing to fund future operations and development of its product candidates. 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 SEC on March 22, 2023, as well as the Company’s Quarterly Report on Form 10-Q, for the three and nine month periods ended September 30, 2023, filed with the SEC on November 9, 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


FAQ

What did Palisade Bio, Inc. announce in the press release?

Palisade Bio, Inc. announced an agreement to exercise certain existing warrants to purchase up to an aggregate of 3,413,286 shares of common stock.

What is the ticker symbol for Palisade Bio, Inc.?

The ticker symbol for Palisade Bio, Inc. is PALI.

What are the gross proceeds expected from the exercise of the existing warrants?

The gross proceeds to the company from the exercise of the existing warrants are expected to be approximately $2.5 million prior to deducting placement agent fees and estimated offering expenses.

What will the company do with the net proceeds from the offering?

The company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Who acted as the exclusive placement agent for the warrant exercise transaction?

Ladenburg Thalmann & Co. Inc. acted as the exclusive placement agent for the warrant exercise transaction.

Palisade Bio, Inc.

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Biotechnology
Biological Products, (no Disgnostic Substances)
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United States of America
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