Palisade Bio Reports Third Quarter Financial Results

Rhea-AI Summary

Palisade Bio, Inc. (PALI) announced its Q3 2021 financial results and key business updates. The Phase 2 clinical trial showed a significant 1.1-day improvement in GI recovery for patients using LB1148 compared to placebo. A $5.2 million investment from Yuma Regional Medical Center will support LB1148's clinical development. Financially, R&D expenses rose to $624,000, while G&A expenses increased to $2.4 million. As of September 30, 2021, cash and cash equivalents stood at $14.1 million, with outstanding debt of $568,000.

Positive

• 1.1-day improvement in GI recovery in Phase 2 trial.
• $5.2 million investment from Yuma Regional Medical Center.
• Cash and cash equivalents of $14.1 million.

Negative

• R&D expenses increased to $624,000, indicating higher operational costs.
• G&A expenses rose to $2.4 million, increasing the financial burden.

CARLSBAD, Calif., Nov. 15, 2021 (GLOBE NEWSWIRE) -- Palisade Bio, Inc. (Nasdaq: PALI) (“Palisade” or the “Company”), a clinical stage biopharmaceutical company advancing oral therapies that help patients with acute and chronic gastrointestinal (GI) complications, today provides a business update and releases its financial results for the third quarter ended September 30, 2021.

Third Quarter Highlights:

• In July 2021, the Company released top line Phase 2 clinical trial results from its development partner, Newsoara, that showed a 1.1-day improvement in GI recovery in patients receiving LB1148 vs placebo.
  
  
• In July 2021, the Company entered a worldwide exclusive license with the University of California to patent rights covering certain engineered substrates and use in measuring degradative enzymes for disease conditions, including cancer.
  
  
• In August 2021, Yuma Regional Medical Center made a private investment of $5.2 million to help advance clinical development of LB1148.
  

Financial Summary:

• Research and development expenses increased from $412,000 for the three months ended September 30, 2020, to $624,000 for the three months ended September 30, 2021, primarily attributable to an increase in clinical trial activities as non-essential surgical procedures, which were virtually halted following the onset of the COVID-19 pandemic, have begun to return to pre-pandemic levels resulting in more patients enrolled in our clinical trial. The increase was offset partially by a decrease in share-based compensation expense.
• General and administrative expenses increased from $1.4 million for the three months ended September 30, 2020, to $2.4 million for the same period of 2021, primarily related to an increase in other general and administrative expenses associated with operating as a public company, including accounting and legal costs, offset partially by a decrease in share-based compensation expense.
• Cash and cash equivalents as of September 30, 2021, was $14.1 million, while outstanding debt was $568,000.
  

“The positive results from the Phase 2 study demonstrated that LB1148 accelerated return to bowel function in patients undergoing GI surgery compared to placebo. We’re excited about the read outs of these Phase 2 data as they guide us towards a pathway for late-stage protocols,” stated Tom Hallam, Ph.D., President and Chief Executive Officer of Palisade Bio. “Additionally, we are initiating studies based on technology under the UC license to measure blood protease activity in defined patient groups, with the goal of identifying new biomarkers and therapeutic targets to build our pipeline.”

About Palisade Bio, Inc.
Palisade Bio is a clinical stage biopharmaceutical company advancing oral therapies that help patients with acute and chronic gastrointestinal complications stemming from post-operative digestive enzyme damage. Palisade Bio’s innovative lead asset, LB1148, advancing towards Phase 3 is a protease inhibitor with the potential to both reduce abdominal adhesions and help restore bowel function following surgery. Positive data from 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 of 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 communication contains “forward-looking” statements, including, without limitation, statements related to expectations regarding Palisade’s plans for future clinical development of LB1148, plans for regulatory approvals of LB1148, and plans for building a pipeline of therapies in the future. 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. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. Palisade 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.

Palisade Bio Investor Relations Contact: 
Dawn Hofmeister
Manager of Investor and Public Affairs
ir@palisadebio.com

CORE IR
ir@palisadebio.com

Palisade Bio Media Relations Contact:
CORE IR
Jules Abraham
julesa@coreir.com
917-885-7378

Palisade Bio, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share amounts)

		September 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	14,104			$	713
Accounts receivable			—				59
Prepaid expenses and other current assets			1,988				124
Total current assets			16,092				896
Restricted cash			26				26
Deferred transaction costs			—				1,817
Right-of-use asset			153				275
Property and equipment, net			3				5
Total assets		$	16,274			$	3,019
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	1,383			$	2,537
Accrued liabilities			722				2,740
Accrued compensation and benefits			89				1,590
Current portion of lease liability			158				168
Current portion of debt			387				578
Current portion of related party debt, net			181				469
Total current liabilities			2,920				8,082
Warrant liability			9,434				1,830
Non-current portion of debt			—				94
Lease liability, net of current portion			—				112
Total liabilities			12,354				10,118
Commitments and contingencies (Note 11)
Series C convertible preferred stock, $0.001 par value; 0 and 33,594,625 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 0 and 11,674,131 shares issued and outstanding at September 30, 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 September 30, 2021 and December 31, 2020, respectively			2				—
Common stock, $0.01 par value; 300,000,000 and 6,797,500 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 12,929,911 and 2,774,501 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively			130				28
Additional paid-in capital			99,503				51,396
Accumulated deficit			(95,715	)			(68,026	)
Total stockholders' equity (deficit)			3,920				(16,602	)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)		$	16,274			$	3,019

Palisade Bio, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)

		Three Months Ended September 30,								Nine Months Ended September 30,
			2021				2020				2021				2020
Operating expenses:
Research and development		$	624			$	412			$	1,630			$	2,314
In-process research and development			—				—				30,117				—
General and administrative			2,392				1,404				6,080				3,738
Total operating expenses			3,016				1,816				37,827				6,052
Loss from operations			(3,016	)			(1,816	)			(37,827	)			(6,052	)
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			12,764				—				17,939				—
Gain on change in fair value of share liability			18				—				91				—
Interest expense			(26	)			(28	)			(2,393	)			(39	)
Other income			20				1				36				13
Loss on issuance of LBS Series 1 Preferred Stock			—				—				(1,881	)			—
Loss on issuance of warrants			(1,673	)			—				(3,247	)			—
Total other income (expense)			11,103				(27	)			10,138				(26	)
Net income (loss)		$	8,087			$	(1,843	)		$	(27,689	)		$	(6,078	)
Earnings (loss) per share:
Basic		$	0.42			$	(0.66	)		$	(3.50	)		$	(2.19	)
Diluted		$	0.42			$	(0.66	)		$	(4.13	)		$	(2.19	)
Weighted average shares used in computing earnings (loss) per share:
Basic			12,100,292				2,774,502				7,902,104				2,774,237
Diluted			12,106,771				2,774,502				7,952,998				2,774,237
Net income (loss) attributable to common shares - basic		$	5,118			$	(1,843	)		$	(27,689	)		$	(6,078	)
Net income (loss) attributable to common shares - diluted		$	5,119			$	(1,843	)		$	(32,808	)		$	(6,078	)

Palisade Bio, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

		Nine Months Ended September 30,
			2021				2020
Net loss		$	(27,689	)		$	(6,078	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			2				2
In-process research and development			30,117				—
Noncash transaction costs shared with Seneca			(135	)			—
Noncash lease expense			122				105
Gain on forgiveness of PPP loan			(279	)			—
Accretion of debt discount and non-cash interest expense			2,334				32
Loss on issuance of LBS Series 1 Preferred Stock			1,881				—
Loss on issuance of secured debt			686				—
Loss on issuance of warrants			3,247				—
Change in fair value of warrant liabilities			(17,939	)			—
Change in fair value of share liability			(91	)			—
Stock-based compensation			1,208				1,544
Accrued and unpaid interest			—				7
Other			191				—
Changes in operating assets and liabilities:
Trade and other receivables			84				(53	)
Prepaid and other assets			(1,264	)			24
Accounts payable and accrued liabilities			(2,527	)			1,299
Accrued compensation			(1,544	)			—
Operating lease liabilities			(122	)			(102	)
Net cash used in operating activities			(11,718	)			(3,220	)
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			—				(5	)
Net cash used in investing activities			(54	)			(5	)
Cash flows from financing activities:
Payments on debt			(949	)			—
Proceeds from issuance of debt			1,250				379
Proceeds from issuance of LBS Series 1 Preferred Stock			19,900				—
Proceeds from issuance of common stock and warrants			5,209				—
Redemption of warrants			(99	)			—
Payment of debt issuance costs			(148	)			—
Net cash provided by financing activities			25,163				379
Net increase (decrease) in cash, cash equivalents and restricted cash			13,391				(2,846	)
Cash, cash equivalents and restricted cash, beginning of period			739				3,623
Cash, cash equivalents and restricted cash, end of period		$	14,130			$	777
Reconciliation of cash, cash equivalents and restricted cash to the balance sheets:
Cash and cash equivalents			14,104				751
Restricted cash			26				26
Total cash, cash equivalents and restricted cash		$	14,130			$	777
Supplemental disclosure of cash flows:
Interest paid		$	61			$	—
Supplemental disclosures of non-cash investing and financing activities:
Equity issuance costs included in accounts payable		$	67			$	—
Transaction costs shared with Seneca		$	135			$	—
Acquisition costs related to stock issuance		$	1,184			$	—
Issuance of common stock to former Seneca stockholders		$	28,728			$	—
Conversion of LBS Series C Preferred stock into common stock		$	9,503			$	—
Net assets acquired in the Merger		$	2			$	—
Acquisition related vesting of RSU’s assumed in the Merger		$	41			$	—
Acquisition related fair value change in warrant liability assumed in the Merger		$	51			$	—

FAQ

What were the key highlights from Palisade Bio's Q3 2021 results?

Palisade Bio reported a 1.1-day improvement in GI recovery from its Phase 2 trial and secured a $5.2 million investment from Yuma Regional Medical Center.

What is the current cash position of Palisade Bio?

As of September 30, 2021, Palisade Bio had cash and cash equivalents of $14.1 million.

How did the expenses change for Palisade Bio in Q3 2021?

R&D expenses increased to $624,000, while G&A expenses rose to $2.4 million compared to Q3 2020.

What is the significance of the investment from Yuma Regional Medical Center?

The $5.2 million investment is intended to advance the clinical development of LB1148, enhancing its market potential.