Palisade Bio, Inc. (PALI) September 2026 Conference Transcript

Hello, everyone. My name is Mitchell Kapoor. I'm a senior biotech analyst at H.C. Wainwright. Today, I have the pleasure of having Palisade Bio with us for a fireside chat. And from the company, I have J.D. Finley and Mitch Jones. Gentlemen, thank you for joining us today. Thanks for having us. So maybe to kick off the conversation, for those who are not familiar with the company or are not up to speed with the current developments, you can just give an overview of Palisade and the current initiatives for the company.

Sure. So I'll kind of give a little bit of background on our lead asset we're developing right now. I think that'll give you a sense of where we've come from. So we are developing a PD4 inhibitor for IBD. And this is an asset that was originally developed out of the Merck Frost labs in Montreal. And when they closed that lab down in 2010, the medicinal chemists who had been working on that, a few of them had taken this compound with them, the active ingredient, and continued to develop it into what is now Pali-2108, which is a prodrug formulation. Interestingly, the company that had pulled this out had been seeing the effects of PD-4s in the IBD space with drugs like apremilast and knew about the adverse effects that came with with pd4 inhibitors typically so they specifically engineered this asset with a prodrug formulation to improve the therapeutic index of the pd4 inhibitor um so that's how we got the asset they had been um it's kind of a bit of serendipity they had been uh committed they had a 20 million dollar commitment from seven canadian vcs to develop this asset in canada And along the way, the president of Giant Pharma decided to go to work for one of those VC members, which then blew up the syndicate. They lost their financing. So now you had a company with no financing and no leadership. And Mitch had been following this company for quite a while. And we were able to get in and acquire that asset fairly quickly. They were in the middle of preclinical development. We acquired it. We continued, completed the preclinical development, moved it into a phase one study where we treated 84 healthy human volunteers, and then we moved on to two phase 1b studies, one in ulcerative colitis where we treated five patients for a week, and then earlier this year we completed a five-patient study in FSCD that read out in January or early February. So that's kind of how we've gotten to where we are today. And now we're in the process of launching a phase two study in ulcerative colitis. And we will follow that with a phase two study in Crohn's disease.

Great.

And maybe also to start off, what makes this different than Otesla? yeah so maybe i'll sort of speak a little bit about 2108 and pd4 inhibitors in general so the first generation pd4 inhibitors or were drugs like refumalast bid drugs for copd developed by astrazeneca poorly tolerated generation two were included drugs like otesla as jd points out merck was set on developing a sort of Otesla better when the medicinal chemist that started Giant Pharma and developed this asset decided to borrow some of the aspects of a previous pro-drug called sulfasalazine, which is used to deliver 5-ASA mesalamine, which is first-line treatment in IBD in ulcerative colitis and Crohn's patients. Unfortunately, that drug's been marketed for Crohn's and colitis patients for, you know, 40 years. Unfortunately, and it relies on a microbiome enzyme and nasoreductase to deliver the payload, the 5-ASA, locally and topically. So the developers of Pali-2108 wanted to glucuronidate the drug instead of using a sulfa leaving group. They decided to glucuronidate it because there was a nausea associated with the sulfa group containing group but still they wanted to have the pde4 inhibitor delivered locally and topically even in this past year companies like verona developed an inhaled pde34 were acquired by merck for 10 billion plus or cutis has a topical form of reform last why those two examples are important. They're both pan-inhibitors, one generation one, one generation two. Obviously, pretty significant success in delivering PDE4 inhibitors topically, locally, seeing better efficacy, better safety. As well, Heme Pharma is a company, Chinese company, that has reported last year PDE4 inhibitor data twice daily mefemolast in a 90-patient double-blinded RCT in China. they saw a best in indication 44% remission. They saw a dose response at the 30 and 45 MIG BID dosing. So there's, you know, between the phase two data for a Tesla at 20% remission after above placebo and the mefemolase data at 45 and 60 MIG up to 44% remission, even at 12 week point and then 24-week point presented at DDW. I think there's a really good thesis that PDE4 inhibitors when delivered at the right dose locally and topically is one of the things that we're trying to do can achieve highest rates of remission in inflammatory bowel disease.

One other point, there's selective PDE4 inhibitors that have been developed.

Boehringer has an approval just last year in ipf with an pde4b inhibitor in ipf again and there are others our approach is to use a pharmacologic approach to avoid some of the tolerability issues jd had pointed out some of those are gi issues we do that by having a pro drug that is released locally and topically and avoiding the upper gut as well as releasing the drugs slowly that gives us the ability to go once daily, and it also gives us the ability to avoid the peaks that cause nausea and headache. One last point, you know, we've done a lot of work on the target. So in taking biopsy samples, you do Western blots and look at PDE for A, B, C, and D. And so about 30, 40% of patients express and overexpress other isoforms, not just B. And so you can't go in with just a B-specific civic isoform in hopes of avoiding some of the tolerability issues because locally you've got overexpression in about 30-40% of patients by Western. We confirm that with expression level data and a lot of those data will be presented at the upcoming conferences at UEG week in Barcelona and at ACG. I think it's here in the United States. I forget which city right now.

Excellent. Wonderful overview. Okay. And then from the data that we've seen so far, the healthy volunteer data and then the FSCD data, what did we learn? What's the, you know, the path forward for folks who aren't familiar that, you know, there was a little bit of a pivot there. And then, you know, from an interpatient variability standpoint, what do we know from all of the data put together at this point?

So, well, I'll let Mitch weigh in on this as well, But I guess first and foremost, we've learned that the drug is very tolerable and is working as designed. As Mitch talked about, a lot of these other PD-4 inhibitors that have been used in IBD, they're being used or they're being repurposed from another indication, typically psoriasis, whereas we've been designed specifically for IBD from the beginning for the tolerability So, getting some of that data about tolerability, I think, has been critical. The other part of your question was sort of where are we going, you know, the FSCD cohort that we treated, and now we're moving into broader luminal clones. That has nothing to do with the results we saw from the FSCD cohort. In fact, you know, we were very, very pleased with those results. But the issue is that the regulatory landscape in fibrostinotic Crohn's disease is still somewhat uncertain, and rather than spending a lot of time going down that path and not being certain that we'll have FDA approval, we've chosen to start with an open-label study in luminal Crohn's. And we'll gather some fibrotic data from that study as well that'll help inform us later. but we're not going to go into FSCD until we have greater certainty on the regulatory pathway. Anything you want to add, Mitch?

Yeah, I mean, I just say that, you know, we didn't really spare any expense or even we spent a fair bit of time on the development of this drug. We did a phase one sad mad food effect study. We did a 1B in ulcerative colitis over just a week, but looking at a lot of different biomarkers, we saw, you know, 30% improvement in cyclic AMP, which is kind of a difficult to measure tissue assay, PD biomarker, 30% reduction in lymphocytes, 70% improvement in PDE4B, a 70% improvement in fecal calpro, 15 in plasma CRP in just one week. And the modified Mayo score, which is a combo of rectal bleeding, stool frequency, as well as endoscopy score, we saw 100% response and 40% improvement, again, with a max tolerated dose. There's other good examples of S1Ps and PDE4s that have done similar things on biomarkers, and certainly this was done in a phase one clinic and setting, so those symptomatic portions of the Mayo score were monitored carefully. And then in the FSCD study, we did that over two weeks. Again, after doing some extensive, sophisticated POP-PK modeling, we did a once-daily dosing starting at 20 and then 25 and then 30, and we saw a 40% response, 40% remission in the SES-CD score, and biomarkers effectively very similar to what we saw in the ulcerative colitis study but over two weeks.

Excellent. So maybe we can move to the Accentra study and just the design of that and what we can expect to see in the second half of next year.

Sure. Yeah. So for everyone, you know, for anyone who's not, you know, up to speed on the studies, we, in Q2, we announced that we had IND clearance in the ulcerative colitis indication. Effectively, it's a registration-like study, what we call a definitive study, 2B study. It's a three-arm study. It's our target dose, which is 15, then high dose, which is 30, versus placebo. It's powered to see a 17.5% difference between active and placebo groups at an 80% confidence, 90% confidence to see a 20% difference. And we have 204 patients, randomized one-to-one-to-one through 12 weeks of induction, treat straight through design out to 48 weeks in maintenance, as well, a blinded maintenance phase. Yeah, so that's the UC study. We have started to activate sites, and so we'll have some updates on the UC program shortly.

Great. And then with Obifasmod's maintenance data, it's kind of, you know, changed the field a bit. Wondering about how you think, you know, does that weigh into the bar at all of how you interpret the data next year? And where is the optimal position for your drug, a gut-activated PDE form.

Yeah, so Obifazimod, I mean, the phase three data roughly, I think on average around 16 plus percent remission at eight weeks. And then the long-term maintenance data was, you know, a number, a couple of percent sort of better than anything in the field, sort of best in indication. Kind of no surprise. I think some of the, you know, in speaking with some of our expert ClinAb board members who are also on, you know, part in the ClinAb board for Abivax, you know, it's clear that they believe that the drug over time results in improved mucosal healing, potentially, and durable remission through sort of reprogramming the immune system. Some other, you know, mechanisms that are out there that could sort of act to help balance and cause mucosal healing would be something like AHR, although there's some sort of drawbacks to that as well. But in terms of opifazimod, it seems to be sort of moderately better long-term in terms of clinical remission and maintenance. So we'll see if that's true also in Crohn's disease. And I'm not sure that it's changed our goals necessarily. We're sort of focused first on. Because we have early symptomatic improvement, because we're potent anti-inflammatory, a little bit different mechanism, we're looking for pretty good data, something similar to mefemolaspil. I mean, that would be incredible, but in the induction phase.

Great. Okay.

And then earlier, we walked through together kind of the importance of maintaining an adequate sea trough and you know should we focus on average exposure what do you think about you know how does that look from the data we've seen and what that could predict of how the struggle work you know whenever we see the data so we've done some comparative PK work we looked at a premolast which had a 20% remission over placebo we looked at mefemolast which at the high end had a 44 over placebo even at the 24 week point and even in the crossover placebo to active therapy patients and we normalized all those data the pk data based on ic50 ic90 and then we looked at c trough we looked at exposure so auc and we looked at c average which is kind of a proxy for auc and consistently you know our drug 2108 was you know had either lower variability in the sea trough levels or superior exposure, exposure over a 24 hour period, or time spent above IC90 than the others. And so I think, you know, we were talking a little bit about how the terminal half-life versus the effective half-life of our drug, slightly different terminal half-life being 12 hours, you know, effective half-life maybe being 27 for our drug, whereas immediate release drugs like apremolast and mefemolast have much closer terminal and effective half-lives. And that's because our drug is a two-compartment system. You can kind of think of it simply as, you know, you're building up this reservoir of pro-drug in the colon that's being released locally. It's being absorbed through the diseased tissue. And there's a two-compartment system, meaning active drug coming from colon, but also from plasma to disease tissue versus immediate release drugs where it's circulating through plasma and into disease tissue. And so that causes, that sort of enables there to be pressure on the target, the PD4 target, you know, consistently because of the bioactivation locally as opposed to sort of this immediate release sort of sawtooth pattern and increased variability 24 hours later just before your next dose.

Yeah, and I think that consistency in delivery is what we believe eliminates a lot of the nausea and headaches that you typically see with a lot of spikes in the CMAX with the other PD4s that are systemically released.

Great. And the gut activation, obviously, is the central component to your strategy. when you think about the different patients and the different disease severity and who might enroll versus who might be, you know, a classic patient that would be on therapy when it's commercialized, how do you think about those dynamics and how consistent the gut activation is from patient to patient, both in your study, but how you would expect that would translate to the real world setting?

Yeah, so the patients we're going to be treating are moderate to severe patients. That's classic for uc drug developers um we are going to treat 50 of patients advanced therapy failing failing advanced therapies but less than 10 patients who have failed three or more advanced therapies less than 10 that's right and then um we'll have 50 of patients that are bio naive so i'm fairly consistent very similar to like an abavax type population i think the prometheus population was sort of 65 advanced therapy exposed and failing advanced therapies versus, you know, 45 or, sorry, 35 bio-naives. So I think it will be representative of the general, you know, population. In terms of part of that question, you know, is it, you know, these patients will be, you know, similar to other patients entering, you know, phase two or three clinical studies in the UC. So they'll be selected for, you know, not having serious chronic diseases like cancer or being on medical therapies. So in that way, they'll be homogeneous.

Great. Okay. And then fibrosis is, you know, a part of the disease. So just wondering, you know, how you could measure that in future studies and how you plan to track that.

Yeah, I mean, yeah, Mitch, can you get into the specifics of it, but you're hitting on one of the key areas where regulatory guidance is still pretty murky, and so we've got thoughts that come from our ClinAd board and other experts in the field. Mitch, why don't you kind of…

Yeah, so in Crohn's and colitis, there is fibrosis, which is the result of chronic inflammation in both. It's more apparent in Crohn's disease because it often involves a more sort of flexible, compliant tube at the end of the small intestine, which causes stricture and can cause acute abdomen and obstruction in acute abdomen, et cetera. But in ulcerative colitis, you also have fibrosis due to the ongoing inflammation. So our plans are to look at some of the pathways that represent antifibrotic pathways. Previously, we've looked at TGF beta, for instance, and we reported this in one of our posters, TGF beta levels, when looking at pathways before and after treatment with Pali-2108. And even in colon samples, we saw that that was kind of zeroed out or significantly reduced. So those, you know, we'll continue to look at some of the fibrotic pathways in colon tissue in the ilium in the case of in our Crohn studies. And then we've got other soluble biomarkers that are, you know, we're going to be reporting on at the ACG meeting and the UEG meeting that we'll probably include in future studies as well. Great.

Just to close things out, I'd like to take the opportunity to turn it over to you guys to mention anything critically important that we didn't get to touch upon today, and also to give a preview of the next 12 months ahead and the key inflection points we'll see.

Sure. Well, I'll let you take the first half of that, if you want.

The next 12 months?

No. What did we not talk about that ... Yeah, anything ...

I don't know if you want to touch on combination therapy and the ideas, kind of the thoughts Yeah, I mean, we sort of see the field as separated into infused biologics where companies like Spire and others are following sort of the studies like Duet and Vega, and the future might be combos. And so in the oral small molecule space, we see there being an opportunity for combos. And so what is the best backbone there? It's something that is safe, and we think we have a very safe drug. You know, no EKG issues, no lab issues, no serious adverse events. So is it a safe drug? It's a safe drug. Is it a good backbone? It's anti-inflammatory, potent anti-inflammatory with early symptomatic improvement. You can't sort of think of a better backbone therapy than that. Now, the existing therapies like JAK inhibitors have black box warnings. S1Ps have monitoring requirements. They're not useful. in Crohn's patients. So you've got, you know, upcoming Obifazomod, the Abivax drug, the MIR-124, as well as Ikotokinra, the J&J IL-23 that will hit the market sometime in the future. And so there's really only a handful of drugs that could be used in combination for oral small molecules, but fixed dose combos will come eventually. And so we're doing some work to to understand that in very complex, I guess, large human AI-supported models.

And then very quickly, next 12 months, we'll be very shortly announcing first patient dose in the UC study. We'll be announcing approval of the study for Crohn's disease. And we'll also give all the details of that study. That'll be an open-label study, so there may be opportunity to report data sometime during the year, next year. And then last patient dose probably in late Q3, early Q4 of next year for UC. So that's kind of the next 12 months. JD, Mitch, thank you both so much. Really appreciate your time today.

And thanks to the Palisade team and all the investors that joined us today for Fireside Chat.