Conference Transcript - PALI 2026-06-04

Xander Borna, Analyst — Investment Banking, Jeffries Healthcare

Good afternoon, everyone. Thanks so much for coming. My name is Xander Borna. I'm from the Jeffries Healthcare Investment Banking Group, and it's my pleasure to announce J.D. and Mitchell

J.D. Finley, CEO

from Palisade Bio. Thanks, Xander. I'm J.D. Finley. I'm the CEO of Palisade Bio, and with me is Dr. Mitchell Jones. He's our president and chief medical officer, and we want to first thank you for taking an interest in our company, and I know we're the last guys kind of standing in the way between you and the bar, so we're going to try and make this as efficient as possible. I'm very excited to talk to you today about our lead drug. It's a PDE4 inhibitor. Kind of a quick background on how we acquired the drug. It was developed originally out of the Merck labs in Montreal, and the medicinal scientists who were working on that, when work closed down those labs in around 2010, they took that molecule with them, the active ingredient, and then they continued to develop it in a prodrug formulation that is the molecule that we are developing right now. They had taken it through preclinical, some preclinical work, and then we have taken it from there and finished up the preclinical work. We've taken it into about two years ago, we took it into the clinic, have treated 84 healthy volunteers with the drug, fasted, fed, sad, mad, you know, the typical phase 1A study. and then we've moved it into two Phase I-B cohorts, one five-patient cohort in ulcerative colitis and one in Crohn's disease. And a little bit about just kind of, and Mitch will get into the specifics of the science, but it's important to know that this drug was, unlike most IBD drugs that have been repurposed from other indications, this particular drug was initially developed specifically for IBD. And the pro-drug formulation is really one of the key components of that formulation that has improved therapeutic index. And again, Mitch will get into the specifics of how all that works. We read out our Phase I-B data in August of last year, And that was a catalyst for us raising about $138 million with a group of top-tier health care funds. And it literally transformed our company. And we're now happy to say that we are very well capitalized. We are about to start a phase 2 study in ulcerative colitis, and that will be followed by a phase 2 study in Crohn's disease. So with that brief overview, let me turn it over to Mitch.

Mitchell Jones, Board Member

So I'll try to move through these slides so there's time at the end for questions and answers. This is really just our corporate deck, so try and hit the key points. So 2108 is a PDE4 inhibitor prodrug delivered orally. It's the only oral PDE4 targeting terminal ileum and colon. Obviously, PDE-4 has commercial approvals in psoriasis, psoratic arthritis, Bechette's disease, COPD, inflammatory indications, but also in indications that are fibrotic like idiopathic pulmonary fibrosis with the approval of neuroendimolase this past year. As J.D. pointed out, we have 1A and 1B data in UC and FSCD, Clearly, dual acting mechanism of action, pleiotropic, anti-inflammatory, anti-fibrotic. And we also have developed a precision medicine test that will use post-hoc for predicting responders. Our lead program is an ulcerative colitis, a second program in Crohn's disease. We're expecting IND clearance in our lead program, first half of 26 with a first patient dose, second half, and efficacy readout planned in the second half of 27. Crohn's disease is just behind that with an IND clearance second half of this year for a subject dose to probably end of the year. And then an interim readout and a primary readout first half of 28. We don't have to go through the multi-billion dollar IBD market and ulcerative colitis and Crohn's disease. Mechanism of action, pleiotropic, So anti-inflammatory, anti-fibrotic, both of them are intracellular mechanisms, much like a JAK inhibitor. Intracellular cyclic AMP is one of the messengers that causes the production of inflammatory cytokines and is affecting immune cell trafficking and affects fibroblast activation. By inhibiting the PDE4 enzyme, which is elevated in cells that enter the inflamed tissues of the colon, you increase intracellular cyclic AMP, which has downstream effects on inflammation and on fibrosis. And you can see the inflammatory indications that we just discussed on the left and then the fibrosis indications on the right with their respective drugs. 2108 is designed, as J.D. pointed out, specifically for inflammatory bowel disease targeting the ileum and colon. By prodrug, we mean that it is designed to be gut-restricted and then activated locally at the site of disease where the disease tissue is. Drugs like sulfasalazine historically were designed as oral prodrugs. And sulfasalazine delivers 5-ASA, which is mesalamine, which is the first line for ulcerative colitis. by the release of a sulfa-leaving group after the action of an azoreductase enzyme. So the designers of 2108 used that historical data on a drug that works in ulcerative colitis and Crohn's to deliver 5-ASA. They used that same idea for the development, the design and development of 2108, and they glucuronidated the drug instead of using a sulfa-leaving group. here there's a sugar-relieving group. So our prodrug is delivered in tablet format, dissolves mid-small intestine, acted on by beta-glucuronidase enzyme as it's traveling through the gut in a restrictive fashion, and then the active PDE4 is released by colonic bacterium that build up in the terminal parts of the ilium and colon locally, topically at the site of disease, and then the active actually spills into the systemic circulation and contributes to circulating active, which has a free fraction, and contributes to approaching IC50, IC90. We had mentioned, I think, the sort of historical development of PD-4 inhibitors. Rofomolast may have been the first COPD drug by AstraZeneca. Amgen developed a Gen 2 drug, or actually Amgen bought cell genes, Gen 2 drug of Premalast, which is another BID oral for psoriasis, cirrhotic arthritis, and Bechetes. This past year, Verona was acquired by Merck, and they developed a PDE3-4 inhibitor that is inhaled. Arcutis, where the reformalized cream is doing well. And then Mephemolast is a Heme, China only, China company Heme Pharma has developed a drug Mephemolast, which is used in psoriasis and reported data last year in ulcerative colitis that is basically some of the best data reported to date for any molecule in UC with 44% placebo-adjusted remission rates at the high-dose 60-mid BID group. And so we put those sort of in the pan-inhibitor group, and then there's selective inhibitors. So to make the PDE4 isoform selective, Boehringer may develop neuroendimolast, which is a PDE4B selective inhibitor targeting idiopathic pulmonary fibrosis and and ILD as well and then Union Therapeutics has a PDE4 BND that's kind of targeting atopic derm we call ours a next-gen prodrug because we're using pharmacologic properties of prodrugs to deliver locally and avoid some of the tolerability issues so diarrhea is one of the tolerability issues which comes from upper GI exposure and then headache and nausea which comes from immediate release of the drug and changes in drug concentration over time that are whereas our drug is released slowly so we're differentiated once daily dosing no other PDE4 is once daily this is a novel target not approved yet in IBD it's got activated it improves the tolerability dual action mechanism and and perfect for to act as a backbone in combination therapy as well we've done a UC study here's a summary I can just quickly we've done a phase 1a sad mad and food effect study as well as you'll see a 1b study here in all sort of colitis patients we dosed normal healthy volunteers up to 450 and had no adverse events until we got to 450 where we saw some usual PDE4 related nausea headache diarrhea that kind of thing we dosed BID 15 all the way up to 50 and we saw some tolerability findings again grade one PDE4 of events at 50 and then decided to go with the 30-mig titrated dose, which had no adverse effects, and took that into the Phase I-B study in UC patients. This is a sort of summary of the adverse effects.

J.D. Finley, CEO

And that 30 was BID, that 30-mig was BID, and you're going to see later that these are really massive doses for our drug.

Mitchell Jones, Board Member

And then you'll see here some of the summary of the AE findings that we just summarized. This on the left, you'll see the single ascending dose, and on the right, you have a multiple dosing. In the middle, you've got, it sort of represents the C trough, the concentration trough, and then you've got the dotted line below at this, the IC50, and the dotted line above the IC90. Yeah, and so you can see that there's two dose groups here in normal healthy volunteers, There's the 15 twice daily, that's 30 daily, and the 30 twice daily, that's a total of 60 daily, which had no adverse events, at least the 31 titrated, and are well above, the C-trough is well above the IC90. In this particular study, we evaluated colon tissue samples 36 hours after dosing. Just the way the study worked, we couldn't get patients in there sort of earlier than the next day, and we you can see here with doses that with no adverse effects and with C trough above IC90 you still have tissue levels approaching IC90 even 36 hours after withdrawing dosing and so that 30 mg titrated dose what we considered a max tolerable dose BID dose in UC we took into a UC patient cohort five patients. These patients were not on steroids, there were no steroid tapers. We had one patient not on background, one 5-ASA, one 2-5-ASA, one Remicade, one Intivio, and we treated those patients just for one week. And again, primary endpoints in UC are usually 8 to 12 weeks, and clinical remission is the primary endpoint here you can see we had 27 around 27 plus increase in cyclic AMP we had tissue lymphocytes were down 29% colon tissue by 71% fecal calpro reduced by 70% plasma CRP by 15 we had improvements in histology scores as well even over one week 30 to 60 percent and we had a modified Mayo score reduction of almost, that was significant, and almost 63%. As you can see on the left, we had, on the right, sorry, we had patients, all patients saw pretty nice reductions on changes from baseline. We had 100% response and 40% remission. And so the modified Mayo score is made up, just to remind everyone of stool frequency, rectal bleeding, which are symptomatic. This was done in a confined setting, So patients were monitored very carefully, and then the endoscopy score.

J.D. Finley, CEO

And I'll just point out, these are the data that were a major catalyst in the fundraising we were able to complete in September and October of last year.

Mitchell Jones, Board Member

This is our planned study, our planned phase two study that's upcoming. We designed a definitive study, so really powered for the 12-week induction primary point of clinical remission a high low versus placebo group really powered to see 20% difference given a placebo of 12.5% clinical remission in the placebo group we designed in a blinded maintenance extension you can see here responders will be extended based on dose and then the non responders will go into a double-blinded induction maintenance extension to here we have 52 weeks we've also just recently completed an fscd study and we've reported those few months back again we treated five patients in a 1b study these are all crohn's patients with a history of fibro stenosis historic a long history of crohn's can lead to waxing and waning inflammation chronic inflammation which can eventually result in stenosis, often of the small bowel. 85% of Crohn's patients have to have surgery, or 85% of fibrous stenosis. Stenotic Crohn's patients have stenosis of the ileum. Around 75% of all Crohn's patients have to have surgery because of ileal stenosis. So it's a common condition that comes with chronic inflammation. here we treated five patients and we I think two were on background 23s and two were on TNF inhibitors and I think one was on background 5ASA we treated them for two weeks here we didn't have any withdrawals compliance was good again eighty percent on concomitant biologics we treated two patients that so after Under the first SADMAD study and the UC study, we populated a POP-PK model, which suggested because there was not differences in pharmacologic measures between normal healthy volunteers and UC patients, the half-life of the drug is long, so we could go to Q-day dosing, so here we're using daily dosing, once daily dosing, and the POP-PK model suggested that we could get to systemic IC90 at 30. So we started at 20, wanted to start below 30, and then work our way up 25. And then we treated also one patient with 30 over a two-week period. Patients were 15 years diagnosed, baseline of 8, concomitant biologics of 80%, fecal calpro in the low 100s, much like the Agomab study, if any of you follow the FSCD space. We had two adverse effects over the 10 patient weeks total, not two patients, but two total of AEs, one abdominal discomfort and one in fatigue. All patients achieved IC90 systemically, and we had over six, as you can see, tissue plasma ratio when looking at drug ratio to tissue in all compartments. We had a 59% decrease in fecal CalPRO, which was correlated tightly with our PD biomarker, cyclic AMP, which was increased 33%. And we had a 47.5% decrease, which was significant from baseline and endoscopic score, 40% response and 40% remission. Just to compare to, say, for instance, Agomab, they had a 7.4 baseline with a 2-point reduction here. There's an 8-point baseline with a 3.8-point reduction and 40% response and remission. So well-tolerated, robust PK, again, strong target engagement with our cyclic AMP data. Clear mechanistic evidence here. Clinical activity was confirmed in Crohn's disease. So we've decided to move forward with a luminal Crohn's study because the safety is very good in this refractory population, and we found that we have broad anti-inflammatory activity, including improvements in SES-CD score. So we will be announcing our future developments, but we're thinking more along the lines of an open-label study, more along the lines of, like, a Prometheus-type study of 50 to 60 patients, open-label moderate to severes.

J.D. Finley, CEO

Yeah, and I think it's important to put in context why we did an FSCD cohort to begin with. At the time we originally designed that study, we were still a sub-$10 million market cap company, and we were needing a way to, you know, differentiate ourselves. Once we completed our financing, we got a lot of feedback from our KOLs and our investors that said, you know, you really should put all your emphasis on a UC study. At the same time, we were getting feedback from the Agomab studies that made it clear that the regulatory pathway there is still very, very uncertain. And so rather than go down a path with a study that, you know, we're not clear on what is the regulatory approval pathway, we decided to broaden that to, you know, a broader Crohn's population. So that's what we're going to be designing the study around. We're still going to gather some fibrotic biomarkers in that Crohn's study because I think we still have an opportunity to be best in class in fibrostenotic Crohn's as well. given that this drug is pleiotropic and it's got, you know, both anti-inflammatory as well as anti-fibrotic effect. So, as we mentioned, we closed on about $138 million financing, you know, first week of October of last year. We have enough cash to get us through both the UC study as well as the crone study and still have about a month or a year's worth of runway left over after that. By the way, very clean cap table. If you go back to the prior slide, that raise back in October was a common only raise, no warrants. We do have, well, in our cap table right now, we have something like 40 million unexercised, pre-funded warrants to last-standing. So you have to factor that in to get the effective market cap of our company. And then we still have about 8 million, just over 8 million legacy warrants that are at 90 cents a share. So that's a slight overhang on our cap table as well. But other than that, a very clean cap table, no debt, nothing else. We have a very strong team. One of the things that we were you know probably proudest of is that following the financing we were able to attract some top talent from biotech you know from some of the the top you know pharma in the country and you know we're very well positioned to to move this forward beyond phase two and into phase three with with our current team. Mitch do you want to mention a little bit about the CLIN-AD board that we've got here. This is kind of the creme de la creme.

Mitchell Jones, Board Member

Yeah, so we've also attracted a CLIN-AD board, sort of world-class, of course, Bruce Sands, David Rubin, sort of at the top of some of the KOLs executing clinical research, VIP CMO at Elementa Flow at the Cleveland Clinic, kind of the fibrosis, KOL that's highest profile in the United States. LPB, Laurent, on a number of different glenade boards and high profile as well. And then Bram out of University of Leuven, sort of taking over for Severine, who's now the provost or something at Leuven.

J.D. Finley, CEO

Yeah, you probably saw Dr. Rubin presented the ABIVAX data on Monday. And Dr. Perrin Birulé, he presented the Agomab data at DDW. That's it. So that's it. So we'll open it up for questions.

Speaker 5

Can you just talk about kind of interpret those?

Speaker 4

Thanks so much. Can you just talk about interpreting the kind of emerging mefemilast data, if you can talk about kind of structure comparisons, just how to make sense of that, given that's not a prodrug and yours is a prodrug?

Mitchell Jones, Board Member

Sure. So, there's a paper published by Lee et al that demonstrates they take biopsy samples of colon tissue and do western blot analysis of the various isoforms, and you can see fairly clearly that healthy, there's not overexpression of PDE4, and then in disease patients, you've got groups of, let's say, 30% of patients overexpressing A, C, and D, and then fairly broad expression of B, as one might assume, given that, you know, others are targeting PDE4B for inflammation. But I still think it's important to recognize that pan-inhibition is required. The pathway is redundant in that cyclic AMP will be degraded by overexpressors of A, even if you have a few patients that are overexpressing A, you still want to address those patients. So, you know, mefemilast, they've suggested that they're a pan-inhibitor at times. At times when it was kind of in fashion, it was a PDE4 inhibitor, a specific inhibitor. And now I think it's, they mentioned, I think Laurent spoke about it sort of sparing isoform D. So it's hard to really know. But our drug is, we've measured activity on A, B, and D. so it's sort of more a pan-inhibitor. It's also more a next-gen inhibitor in design when you look at off-target and all that stuff, more like a Premalast. And then when it comes to the pro-drug design, the design is much like sulfasalazine, which worked well for delivering 5-ASA locally to tissues and was approved in Crohn's and colitis. Really, it's the sulfa-leven group causing nausea that was the issue with that drug. So this being, you know, a sugar-relieving group instead seems like maybe an old technology that is robust and was proven out, but then applying it to new targets and maybe even, you know, a target that has evidence that it worked, you know, in the hands of Celgene and now had higher doses than a Fumilash drug. We did look at the study state drug concentrations in Ileamason and Desenicolon. There is seven times, I think it said six times, I think we revised that around seven times, drug levels in colon tissue at steady state. So we think there's the ability to dose within a therapeutic range that will allow for tolerability as well as efficacy. whereas at the top range, I think you're seeing Mephomalitis run into issues with tolerability. There's a couple of serious adverse events, for instance.

Speaker 4

Thank you.

J.D. Finley, CEO

Okay, well, thank you very much, everyone, for your listening to our...