[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q1 2025 show decreased assets and a reduced net loss, with notes highlighting going concern uncertainty [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $8.19 million by March 31, 2025, primarily due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,230 | $9,821 | | Total current assets | $7,887 | $10,494 | | Total assets | $8,190 | $10,880 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $2,777 | $3,236 | | Total liabilities | $2,859 | $3,388 | | Total stockholders' equity | $5,331 | $7,492 | | Total liabilities and stockholders' equity | $8,190 | $10,880 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss for Q1 2025 decreased to $2.23 million, driven by a significant reduction in operating expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $950 | $2,214 | | General and administrative | $1,360 | $1,459 | | Total operating expenses | $2,310 | $3,673 | | Loss from operations | $(2,310) | $(3,673) | | Net loss | $(2,230) | $(3,527) | | Basic and diluted net loss per common share | $(0.47) | $(4.59) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity declined to $5.33 million due to net loss, while common shares increased from warrant exercises - Total stockholders' equity decreased by **$2.16 million** during the first quarter of 2025, primarily driven by a net loss of **$2.23 million**[15](index=15&type=chunk) - The company issued **1,628,000 shares** of common stock in connection with the exercise of warrants during the three months ended March 31, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $2.33 million, resulting in a $2.59 million net decrease in cash Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,333) | $(3,180) | | Net cash (used in) provided by financing activities | $(258) | $2,024 | | Net decrease in cash, cash equivalents and restricted cash | $(2,591) | $(1,156) | | Cash, cash equivalents and restricted cash, end of period | $7,256 | $11,302 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's going concern uncertainty, reverse stock split, collaborations, and financial instrument fair values - The company is a clinical-stage biopharmaceutical company focused on developing PALI-2108 for inflammatory bowel disease (IBD), including Crohn's disease and ulcerative colitis[21](index=21&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern for one year, given its history of net losses, negative cash flows, and an accumulated deficit of **$138.2 million** as of March 31, 2025[22](index=22&type=chunk)[23](index=23&type=chunk) - On April 5, 2024, the company effected a **1-for-15 reverse stock split** of its common stock, with all share and per-share data retrospectively adjusted[28](index=28&type=chunk) - In February 2024, a warrant inducement transaction generated net proceeds of approximately **$2.2 million** from the exercise of **228,162 existing warrants**[51](index=51&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses PALI-2108 development, Q1 2025 financial results, and ongoing liquidity challenges with going concern warning [Executive Overview](index=24&type=section&id=Executive%20Overview) The company is advancing PALI-2108 for IBD, with Phase 1 data expected in Q2 2025 and planned U.S. trials in 2026 - The lead product candidate, PALI-2108, is a prodrug inhibitor of phosphodiesterase-4 (PDE4) being developed to treat ulcerative colitis (UC) and fibrostenotic Crohn's disease (FSCD)[110](index=110&type=chunk)[113](index=113&type=chunk) - A Phase 1 clinical study of PALI-2108 is ongoing in Canada, with all Single Ascending Dose (SAD) and Multiple Ascending Dose (MAD) cohorts completed, and topline data anticipated in the second quarter of 2025[115](index=115&type=chunk)[116](index=116&type=chunk) - The company plans to submit an Investigational New Drug Application (IND) to the FDA during 2025 and, if approved, commence U.S. clinical trials in the first quarter of 2026[117](index=117&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Total operating expenses decreased by 37% in Q1 2025 due to lower R&D costs for PALI-2108 Comparison of Results of Operations (in thousands) | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $950 | $2,214 | $(1,264) | (57)% | | General and administrative | $1,360 | $1,459 | $(99) | (7)% | | **Total operating expenses** | **$2,310** | **$3,673** | **$(1,363)** | **(37)%** | | **Net loss** | **$(2,230)** | **$(3,527)** | **$1,297** | **(37)%** | - The **$1.3 million** decrease in R&D expenses was primarily due to a **$2.2 million** reduction in preclinical joint development costs with Giiant, partially offset by a **$1.1 million** increase in costs for the Phase 1 clinical trial of PALI-2108, which commenced in November 2024[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - General and administrative expenses decreased by **$0.1 million** due to lower costs for shareholder services (no special meeting in Q1 2025), employee bonuses, and insurance[130](index=130&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company's $7.3 million cash balance is sufficient only through Q4 2025, necessitating additional financing - Management has concluded there is substantial doubt about the company's ability to continue as a going concern, as available cash is insufficient to fund operations for the next 12 months[123](index=123&type=chunk)[133](index=133&type=chunk) - The company believes its cash balance of **$7.2 million** as of March 31, 2025, is sufficient to fund planned operations through the fourth quarter of 2025, after which it will require additional financing[144](index=144&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,333) | $(3,180) | | Net cash (used in) provided by financing activities | $(258) | $2,024 | [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Palisade Bio is exempt from providing market risk disclosures - As a smaller reporting company, Palisade Bio is not required to provide quantitative and qualitative disclosures about market risk[148](index=148&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a persistent material weakness in financial reporting - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective at a reasonable assurance level[150](index=150&type=chunk) - A material weakness in internal control over financial reporting persists, stemming from a lack of controls in the financial closing and reporting process, including insufficient segregation of duties and formalized procedures[153](index=153&type=chunk) - Remediation efforts are underway, including hiring additional finance staff, implementing new accounting software, and updating formal policies, but are not yet complete[155](index=155&type=chunk)[159](index=159&type=chunk) [PART II - OTHER INFORMATION](index=32&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings for the current period - The company reported no legal proceedings[161](index=161&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks including development, financial, operational, intellectual property, and securities-related challenges [Risks Related to Development, Commercialization, and Regulatory Approval](index=32&type=section&id=Risks%20Related%20to%20Our%20Development,%20Commercialization%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) Success hinges on PALI-2108's development, regulatory approval, and commercialization, facing clinical trial and third-party reliance risks - The company's business depends entirely on the successful clinical development, regulatory approval, and commercialization of its lead asset, PALI-2108[163](index=163&type=chunk)[169](index=169&type=chunk) - The company depends on its license agreement with Giiant Pharma Inc. for the rights to PALI-2108; termination of this agreement would materially harm the business[172](index=172&type=chunk) - There is a risk that the FDA or other foreign regulators may not accept data from the Phase 1 clinical trial being conducted in Canada, which could require additional, costly trials[174](index=174&type=chunk) [Risks Related to Our Business](index=40&type=section&id=Risks%20Related%20to%20Our%20Business) The company faces risks from limited operating history, unproven business model, and dependence on key personnel - The company has a limited operating history, has never generated revenue from product sales, and adopted a new business plan in September 2023, making it difficult to evaluate its future viability[200](index=200&type=chunk) - Future growth may depend on the ability to in-license or acquire additional product candidates, a process that is lengthy, complex, and competitive[206](index=206&type=chunk) [Risks Related to Dependence on Third Parties](index=42&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Heavy reliance on CROs and third-party manufacturers for PALI-2108 creates significant operational and supply chain risks - The company relies on third-party CROs to conduct clinical trials; if these CROs fail to meet regulatory requirements (like GCP), the clinical data may be deemed unreliable[211](index=211&type=chunk) - The company depends on two qualified suppliers for the API used in PALI-2108 and does not have internal manufacturing capabilities, creating risks related to supply shortages, quality control, and cost[212](index=212&type=chunk) - Reliance on foreign third parties in China and other countries for API supply creates risks related to potential U.S. legislation, tariffs, sanctions, or other trade restrictions[221](index=221&type=chunk)[222](index=222&type=chunk) [Risks Related to Financial Operations](index=44&type=section&id=Risks%20Related%20to%20Our%20Financial%20Operations) Significant financial risks include going concern doubt, history of losses, and an un-remediated material weakness in internal controls - Management has expressed substantial doubt about the company's ability to continue as a going concern for the next year, as available cash is not sufficient to fund operations for that period[223](index=223&type=chunk) - The company has a history of net losses and expects them to continue, with no guarantee of ever achieving profitability[225](index=225&type=chunk) - A material weakness in internal control over financial reporting, related to the financial closing process and segregation of duties, has not been fully remediated[226](index=226&type=chunk) [Risks Related to Intellectual Property](index=44&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Success depends on securing and enforcing patent protection for product candidates and complying with license agreements - The company's success depends on its ability to obtain and maintain patent protection for its product candidates, which is an uncertain, expensive, and time-consuming process[228](index=228&type=chunk)[229](index=229&type=chunk) - Failure to comply with obligations under the Giiant License Agreement could lead to termination of the license, which would materially harm the business as it covers the lead product candidate, PALI-2108[238](index=238&type=chunk) [Risks Related to Our Securities](index=47&type=section&id=Other%20Risks%20Related%20to%20Our%20Securities) Risks include stock price volatility, potential Nasdaq delisting, future dilution from financing, and no anticipated dividends - The company's common stock is at risk of being delisted from the Nasdaq Stock Market for failing to maintain the minimum **$1.00** bid price requirement, having received a non-compliance notice on April 30, 2025[247](index=247&type=chunk) - The company will require substantial additional capital, and future equity offerings will likely cause significant dilution to existing stockholders[242](index=242&type=chunk) - The company does not anticipate paying any dividends in the foreseeable future, so capital appreciation is the likely sole source of gain for stockholders[249](index=249&type=chunk) [General Risk Factors](index=50&type=section&id=General%20Risk%20Factors) General risks include health pandemics, adverse global economic conditions, and cybersecurity threats impacting operations - Health pandemics could disrupt business operations, delay research and development programs, and negatively impact the supply chain and clinical trial execution[258](index=258&type=chunk) - Global economic conditions, including inflation, tariffs, and rising interest rates, could increase operating costs and make it more difficult to obtain necessary financing[259](index=259&type=chunk) - The company is vulnerable to cyber-attacks, which could compromise sensitive data (including patient data), disrupt clinical trials, and lead to regulatory actions, litigation, and reputational harm[263](index=263&type=chunk)[272](index=272&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[274](index=274&type=chunk) [Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None reported[275](index=275&type=chunk) [Mine Safety Disclosure](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This disclosure item is not applicable to the company's operations - Not Applicable[276](index=276&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) The company reported no other information requiring disclosure for the period - None reported[277](index=277&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including corporate and contractual documents - Lists all exhibits filed with the report, including certificates of designation, warrants, license agreements, and officer certifications[278](index=278&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk)

Core Insights - Palisade Bio, Inc. presented positive preclinical data for PALI-2108, a colon-specific PDE4 inhibitor prodrug aimed at treating ulcerative colitis, demonstrating its efficacy in modulating inflammatory pathways and promoting a favorable immune response [1][3][6] - The company is advancing a Phase 1a/b study of PALI-2108, which has shown a favorable safety profile in single-ascending-dose cohorts [1][3] Preclinical Study Findings - PALI-2108 was tested in a mouse model of colitis, showing significant improvements in clinical parameters such as Disease Activity Index (DAI), body weight, and colon length in a dose-dependent manner [6] - The treatment resulted in a marked reduction of PDE4B expression in colon tissues, increased cAMP levels, and notable suppression of TNF-α compared to standard treatments like cyclosporine A and apremilast [6] - The study utilized 4% dextran sulfate sodium (DSS) to induce colitis in mice, with various dosages of PALI-2108 administered [3][6] Pharmacokinetics and Safety - Pharmacokinetic modeling indicated that PALI-2108 has favorable absorption and bioavailability, supporting its potential for clinical use [4] - The preclinical data highlighted minimal CNS toxicity and favorable dose-dependent effects, reinforcing the drug's safety profile [6] Presentation and Recognition - The first poster on PALI-2108 was recognized as a Poster of Distinction at Digestive Disease Week 2025, showcasing its significance in the field of gastrointestinal disorders [2][5] Ongoing Clinical Studies - The company is conducting a Phase 1a/b single-center, double-blind, placebo-controlled study to assess safety, tolerability, pharmacokinetics, and pharmacodynamics in healthy volunteers [7]

Core Insights - Palisade Bio, Inc. has been selected to present at the 3rd Annual Precision Medicine in Inflammatory Bowel Disease Summit, highlighting its focus on innovative therapeutics for autoimmune and inflammatory diseases [1][2] - The presentation will discuss the use of AI-driven insights to improve patient subtyping and treatment personalization in inflammatory bowel disease (IBD) [2] Company Overview - Palisade Bio is a clinical-stage biopharmaceutical company dedicated to developing novel therapeutics for patients with autoimmune, inflammatory, and fibrotic diseases [3] - The company aims to transform the treatment landscape through a targeted approach with its therapeutics [3]

Core Insights - Palisade Bio, Inc. has completed enrollment and dosing in all Phase 1a single ascending dose (SAD) and multiple ascending dose (MAD) cohorts for PALI-2108, aimed at treating Ulcerative Colitis (UC) [1][2][3] - Preliminary data indicates no serious adverse events (SAEs) or treatment-emergent adverse events (TEAEs) related to laboratory values or EKGs, demonstrating the drug's safety and tolerability [1][2][3] - The company is on track to report topline data from the Phase 1a portion of the study by the end of May 2025, with ongoing screening for the Phase 1b UC cohort [1][2][3] Study Details - The Phase 1a/b study aims to evaluate the safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) of PALI-2108 in healthy volunteers and UC patients [4] - Biomarkers such as serum high sensitivity C-reactive protein (hsCRP) and fecal calprotectin (CalPro) will be used to assess the drug's effects [4] - PALI-2108 is a new chemical entity that has not been previously administered to humans, differentiating it from other PDE4 inhibitors [4] Company Overview - Palisade Bio is focused on developing novel therapeutics for autoimmune, inflammatory, and fibrotic diseases, aiming to transform the treatment landscape with targeted approaches [6]

Part I [Business](index=6&type=section&id=Item%201.%20Business) Palisade Bio, Inc. is a clinical-stage biopharmaceutical company focused on developing therapeutics for autoimmune, inflammatory, and fibrotic diseases - The company's primary focus is on its lead product candidate, PALI-2108, a treatment for IBD (UC and FSCD), which is currently in a Phase 1 clinical trial in Canada[25](index=25&type=chunk)[29](index=29&type=chunk)[36](index=36&type=chunk) - Palisade's strategy involves advancing PALI-2108 through clinical trials, leveraging its platform for other autoimmune diseases, and pursuing strategic partnerships for development and commercialization[27](index=27&type=chunk) - The company has an exclusive worldwide license agreement with Giiant Pharma for the development and commercialization of PALI-2108 and other related compounds[46](index=46&type=chunk) - Palisade does not own manufacturing facilities and relies on third-party Contract Development and Manufacturing Organizations (CDMOs) for the clinical supply of its product candidates[54](index=54&type=chunk)[56](index=56&type=chunk) [Pipeline and Clinical Development](index=8&type=section&id=Item%201.%20Business.Pipeline%20and%20Clinical%20Development) The company's pipeline focuses on PALI-2108, a PDE4 inhibitor prodrug for IBD, currently in a Phase 1 clinical trial in Canada with topline data expected in Q2 2025 - PALI-2108 is a prodrug designed to be activated by colonic bacteria, delivering a PDE4 inhibitor locally to reduce inflammation and fibrosis in IBD[30](index=30&type=chunk)[31](index=31&type=chunk) - A Phase 1 clinical trial of PALI-2108 is ongoing in Canada, with topline data anticipated in the second quarter of 2025[37](index=37&type=chunk)[38](index=38&type=chunk) - The company plans to submit an Investigational New Drug Application (IND) to the FDA during 2025, aiming to start U.S. clinical trials in the first quarter of 2026[39](index=39&type=chunk) [Market and Competition](index=10&type=section&id=Item%201.%20Business.Market%20and%20Competition) The target market for PALI-2108 includes Ulcerative Colitis and Fibrostenotic Crohn's Disease, with significant market values and unmet needs, facing competition from established pharmaceutical companies IBD Market Projections | Indication | 2021/2022 Market Value | Projected 2031/2032 Market Value | CAGR | | :--- | :--- | :--- | :--- | | Ulcerative Colitis (UC) | ~$7.3 billion (2021) | >$9.5 billion (2031) | ~2.78% | | Crohn's Disease (CD) | $13.9 billion (2022) | ~$25.5 billion (2032) | ~6.0% | - A significant unmet need exists for FSCD, as approximately half of CD patients develop strictures within 10 years of diagnosis, and there are no approved therapies specifically for this indication[42](index=42&type=chunk) - Competition includes major pharmaceutical companies such as AbbVie, Johnson & Johnson, and Pfizer, as well as several other companies with IBD product candidates in development[67](index=67&type=chunk)[68](index=68&type=chunk) [Intellectual Property](index=15&type=section&id=Item%201.%20Business.Intellectual%20Property) The company's intellectual property for PALI-2108 is secured through an exclusive worldwide license from Giiant, covering pending U.S. and international patent applications, and includes a provisional patent for personalized PDE4 inhibitor methods - Palisade has exclusively licensed a worldwide patent portfolio from Giiant for PALI-2108, which includes one pending U.S. patent application (No. 17927827) and seven pending international applications[70](index=70&type=chunk) - The company has filed a provisional patent application (No. 63/733,390) for personalized methods of administering PDE4 inhibitors, aiming to protect its precision medicine approach[71](index=71&type=chunk) - The company maintains the patent family for its legacy asset LB1148, with patents expiring in 2035, to support its co-development agreement with Newsoara[73](index=73&type=chunk)[74](index=74&type=chunk) [Government Regulation](index=16&type=section&id=Item%201.%20Business.Government%20Regulation) The company's operations are subject to extensive regulation by the U.S. FDA and foreign authorities, encompassing drug development, clinical trials, marketing approval, manufacturing compliance, and various healthcare and data privacy laws - The drug approval process in the U.S. requires completion of preclinical studies, submission of an IND, and successful completion of Phase 1, 2, and 3 clinical trials before an NDA can be submitted to the FDA for marketing approval[76](index=76&type=chunk)[81](index=81&type=chunk) - The company is currently conducting its Phase 1 trial in Canada under a Clinical Trial Application (CTA) approved by Health Canada, which has a regulatory process similar to the FDA's[158](index=158&type=chunk)[161](index=161&type=chunk) - Beyond clinical regulations, the company is subject to numerous other laws, including the federal Anti-Kickback Statute, HIPAA, the Sunshine Act, and data privacy laws like GDPR and CCPA, which govern interactions with healthcare providers and the handling of patient data[132](index=132&type=chunk)[134](index=134&type=chunk)[151](index=151&type=chunk) [Human Capital and Corporate Information](index=34&type=section&id=Item%201.%20Business.Human%20Capital%20and%20Corporate%20Information) As of December 31, 2024, Palisade Bio had eight full-time employees and engages consultants, with compensation programs designed to attract and retain talent, operating from its Carlsbad, California headquarters - As of December 31, 2024, the company had **eight** full-time employees[175](index=175&type=chunk) - The company's compensation programs include competitive wages, equity incentives, and comprehensive benefits to attract and retain talent[177](index=177&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including dependence on PALI-2108's clinical success, a history of net losses, going concern doubts, reliance on third parties, intellectual property disputes, competition, and stock price volatility [Risks Related to Development, Commercialization and Regulatory Approval](index=35&type=section&id=Item%201A.%20Risk%20Factors.Risks%20Related%20to%20Development%2C%20Commercialization%20and%20Regulatory%20Approval) The company's success is highly dependent on its lead asset, PALI-2108, with substantial risks including trial failures, side effects, inability to obtain regulatory approval, patient enrollment challenges, and reliance on its license agreement with Giiant - The business is heavily dependent on the successful clinical development, regulatory approval, and commercialization of its single lead asset, PALI-2108[182](index=182&type=chunk) - The company depends on its license agreement with Giiant Pharma; termination of this agreement would prevent the development and commercialization of PALI-2108[186](index=186&type=chunk) - There is a risk that the FDA may not accept data from the Phase 1 clinical trial being conducted in Canada, which could require additional, costly trials in the U.S.[188](index=188&type=chunk) [Risks Related to Our Business and Dependence on Third Parties](index=41&type=section&id=Item%201A.%20Risk%20Factors.Risks%20Related%20to%20Our%20Business%20and%20Dependence%20on%20Third%20Parties) The company has a limited operating history with no product revenue, relies heavily on third-party CROs and API suppliers, and its success depends on retaining key personnel and navigating changes in FDA policies - The company has a limited operating history and has never generated revenue from product sales, making it difficult to evaluate its future viability[212](index=212&type=chunk) - Palisade relies on third-party CROs to conduct its clinical trials; if these CROs fail to perform as required, regulatory approval and commercialization could be jeopardized[223](index=223&type=chunk) - The company depends on two qualified suppliers for the API used in PALI-2108, and any supply shortages or quality issues could adversely impact the business[224](index=224&type=chunk) [Risks Related to Financial Operations and Securities](index=45&type=section&id=Item%201A.%20Risk%20Factors.Risks%20Related%20to%20Financial%20Operations%20and%20Securities) The company faces substantial doubt about its going concern ability due to recurring losses and insufficient cash, has identified a material weakness in internal controls, and its stock is volatile with delisting risk and future dilution concerns - Management has expressed substantial doubt about the company's ability to continue as a going concern, as available cash is not sufficient to fund operations for the next **12 months**[235](index=235&type=chunk) - The company has a history of net losses, reporting a net loss of **$14.4 million** for the year ended December 31, 2024, and expects losses to continue[237](index=237&type=chunk) - A material weakness in internal control over financial reporting has been identified, related to a lack of controls in the financial closing and reporting process[238](index=238&type=chunk) - The company's common stock is at risk of being delisted from the Nasdaq Stock Market if it fails to maintain compliance with continued listing standards, such as the minimum **$1.00** bid price rule[257](index=257&type=chunk) [Unresolved Staff Comments](index=54&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments - None[280](index=280&type=chunk) [Cybersecurity](index=54&type=section&id=Item%201C.%20Cybersecurity) The company relies on third-party IT providers, exposing it to cybersecurity risks, with the Audit Committee overseeing these risks, and no material incidents identified in the last fiscal year - The company relies on third-party providers for critical IT systems and processing of sensitive information, including patient data and intellectual property[280](index=280&type=chunk) - The Audit Committee is responsible for overseeing cybersecurity risks[283](index=283&type=chunk) - In the last fiscal year, the company has not identified any risks from cybersecurity threats that have materially affected it, but acknowledges that such risks are reasonably likely to exist[282](index=282&type=chunk) [Properties](index=54&type=section&id=Item%202.%20Properties) The company leases 2,747 square feet for its corporate headquarters in Carlsbad, California, under a lease expiring August 31, 2025, which it does not expect to renew - The company leases its corporate headquarters in Carlsbad, California, under a non-cancelable operating lease expiring on August 31, 2025[284](index=284&type=chunk) [Legal Proceedings](index=55&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material legal proceedings and does not expect any ordinary course claims to have a material adverse effect - As of the report date, the company is not a party to any material legal proceedings[286](index=286&type=chunk) [Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[287](index=287&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=56&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'PALI', has never paid dividends, and issued 3,000 restricted shares to a consultant in 2024, with no issuer purchases of equity securities - The company's common stock is traded on the Nasdaq Capital Market under the symbol **"PALI"**[290](index=290&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[292](index=292&type=chunk) - On October 1, 2024, **3,000** restricted common shares were issued to a consultant in an unregistered transaction[293](index=293&type=chunk) [Reserved](index=56&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The clinical-stage biopharmaceutical company reported a **$14.4 million** net loss in 2024, driven by increased R&D for PALI-2108, raised **$9.8 million** in financing, and has substantial doubt about its going concern ability beyond Q4 2025 - Management has substantial doubt about the company's ability to continue as a going concern, with cash on hand sufficient to fund operations only through the **fourth quarter of 2025**[314](index=314&type=chunk)[349](index=349&type=chunk) Key Financial Results (in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | License revenue | $0 | $250 | | Research and development | $9,063 | $6,893 | | General and administrative | $5,796 | $6,202 | | Loss from operations | $(14,859) | $(13,070) | | Net loss | $(14,438) | $(12,300) | - R&D expenses increased by **$2.2 million (31%)** in 2024, primarily due to a **$3.6 million** increase in joint development expenses for PALI-2108 and a **$1.0 million** increase in drug manufacturing costs[318](index=318&type=chunk) - The company completed three financing events in 2024: a warrant inducement in February (net proceeds **~$2.2 million**), a private placement in May (net proceeds **~$3.5 million**), and an underwritten public offering in December (net proceeds **$4.1 million**)[303](index=303&type=chunk)[304](index=304&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.Liquidity%20and%20Capital%20Resources) The company's cash and equivalents were **$9.8 million** as of December 31, 2024, with **$12.2 million** net cash used in operations, and **$9.6 million** provided by financing activities, indicating a need for additional capital beyond Q4 2025 Summary of Cash Flows (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (12,193) | $ (11,133) | | Net cash used in investing activities | $ 0 | $ (4) | | Net cash provided by financing activities | $ 9,582 | $ 11,186 | - As of December 31, 2024, the company had **$9.8 million** in cash, cash equivalents, and restricted cash[337](index=337&type=chunk) - Cash provided by financing activities in 2024 totaled **$9.6 million**, driven by net proceeds from the February warrant inducement (**~$2.2 million**), May offering (**~$3.5 million**), and December offering (**$4.1 million**)[342](index=342&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) [Critical Accounting Policies and Estimates](index=65&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant estimates for accrued R&D expenses and the fair value measurement of contingent consideration, which is re-measured periodically with changes recognized in R&D expense - Accrued research and development expenses are estimated based on services performed by collaboration partners, CROs, and manufacturers, requiring management to estimate the level of service completed when invoices have not yet been received[351](index=351&type=chunk)[353](index=353&type=chunk) - The contingent consideration obligation from the Giiant License Agreement is a liability measured at fair value using a probability-based model with Level 3 inputs, including a discount rate of **9.29%** and management's projections of milestone achievement[357](index=357&type=chunk)[358](index=358&type=chunk) - The fair value of the contingent consideration liability decreased by **$54,000** during 2024, primarily due to an amendment to the Giiant agreement that reduced potential milestone payments[360](index=360&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Palisade Bio, Inc. is not required to provide the information for this item - The company is not required to provide this information as it qualifies as a smaller reporting company[363](index=363&type=chunk) [Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2024 and 2023, including the auditor's report with a "Going Concern Uncertainty" highlight, and detailed notes [Report of Independent Registered Public Accounting Firm](index=69&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, Baker Tilly US, LLP, issued an unqualified opinion on the financial statements but included a "Going Concern Uncertainty" paragraph due to the company's recurring losses and negative cash flows - The auditor's report contains a **"Going Concern Uncertainty"** paragraph, highlighting substantial doubt about the company's ability to continue as a going concern due to losses and negative cash flows[368](index=368&type=chunk) - The auditor, Baker Tilly US, LLP, expressed an opinion that the financial statements are presented fairly in conformity with U.S. GAAP[367](index=367&type=chunk) [Consolidated Financial Statements](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **$10.9 million** and a net loss of **$14.4 million** for 2024, with cash and equivalents decreasing to **$9.8 million** Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $9,821 | $12,432 | | Total Assets | $10,880 | $14,052 | | Total Liabilities | $3,388 | $2,739 | | Total Stockholders' Equity | $7,492 | $11,313 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Total operating expenses | $14,859 | $13,320 | | Net loss | $(14,438) | $(12,300) | | Net loss per common share | $(10.19) | $(27.01) | [Notes to Consolidated Financial Statements](index=75&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the going concern uncertainty, a **1-for-15** reverse stock split, 2024 equity offerings raising **$9.8 million**, the Giiant License Agreement's milestone obligations, and a full valuation allowance on deferred tax assets - The company effected a **1-for-15** reverse stock split on April 5, 2024. All share and per-share amounts have been retrospectively adjusted[399](index=399&type=chunk) - In 2024, the company completed a warrant inducement transaction and two equity offerings (May and December), raising a total of approximately **$9.8 million** in net proceeds[446](index=446&type=chunk)[451](index=451&type=chunk)[457](index=457&type=chunk) - The Giiant License Agreement requires the company to make potential milestone payments and royalty payments, subject to a payment cap. An amendment in August 2024 reduced future milestone payments in exchange for increased joint development cost reimbursement[483](index=483&type=chunk)[484](index=484&type=chunk) - The company maintains a full valuation allowance on its deferred tax assets of **$32.5 million** as of December 31, 2024, due to uncertainty about their realization[520](index=520&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=100&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[533](index=533&type=chunk) [Controls and Procedures](index=100&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were not effective as of December 31, 2024, due to a material weakness in internal control over financial reporting, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024[535](index=535&type=chunk) - A material weakness in internal control over financial reporting exists due to a lack of controls in the financial closing and reporting process, including a lack of segregation of duties[539](index=539&type=chunk) - Remediation efforts are underway, including hiring more finance personnel, implementing new software, and formalizing accounting procedures, but the material weakness has not yet been fully remediated[541](index=541&type=chunk)[542](index=542&type=chunk) [Other Information](index=101&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[544](index=544&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=101&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[545](index=545&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=102&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's Board of Directors comprises four members, three independent, with an independent Board Chair, and operates through Audit, Compensation, and Governance and Nominating committees, adhering to a Code of Business Conduct and Ethics - The Board of Directors has **four** members: J.D. Finley (CEO), Donald Williams (Chair), Margery Fischbein, and Binxian Wei[549](index=549&type=chunk) - The Board has an independent chair, Donald Williams, separate from the CEO, J.D. Finley[562](index=562&type=chunk) - The Board has three standing committees: Audit, Compensation, and Governance and Nominating. All committee members are independent[571](index=571&type=chunk) - The Board has determined that Donald Williams, Margery Fischbein, and Binxian Wei are independent directors under Nasdaq listing standards[561](index=561&type=chunk) [Executive Compensation](index=111&type=section&id=Item%2011.%20Executive%20Compensation) The executive compensation program includes base salary, performance-based cash bonuses, and equity incentives, with CEO J.D. Finley's total 2024 compensation at **$813,000**, guided by peer analysis, and includes severance provisions and a clawback policy 2024 Summary Compensation Table | Name and Principal Position | Year | Salary ($) | Non-Equity Incentive Plan Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | J.D. Finley, CEO & CFO | 2024 | 542,000 | 271,000 | 813,000 | | Mitchell Jones, M.D., Ph.D., CMO | 2024 | 415,000 | 166,000 | 581,000 | - The 2024 annual discretionary cash bonus targets were **50%** of base salary for the CEO and **40%** for the CMO, which were paid out at **100%** based on achievement of corporate performance targets[598](index=598&type=chunk)[599](index=599&type=chunk) - Employment agreements for named executive officers include severance provisions for termination without cause or resignation for good reason, with enhanced benefits (e.g., **18 months** salary continuation for the CEO and full equity acceleration) if termination occurs in connection with a change in control[606](index=606&type=chunk)[607](index=607&type=chunk)[610](index=610&type=chunk) - The company adopted a formal equity compensation program for non-employee directors in June 2024, providing for initial and annual option grants[635](index=635&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=122&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 15, 2025, directors and executive officers beneficially owned **1.02%** of common stock, Armistice Capital, LLC held **6.49%**, and **109,613** shares were available for future issuance under equity compensation plans Security Ownership as of March 15, 2025 | Name of Beneficial Owner | Percentage of Shares Beneficially Owned | | :--- | :--- | | Armistice Capital, LLC | 6.49% | | All directors and executive officers as a group (5 persons) | 1.02% | Equity Compensation Plan Information as of Dec 31, 2024 | Plan Category | Securities to be Issued upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | 43,547 | 56,672 | | Not approved by security holders | 10,079 | 52,941 | | **Total** | **53,626** | **109,613** | [Certain Relationships and Related Transactions, and Director Independence](index=124&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has a policy for reviewing related person transactions exceeding **$120,000**, with the Audit Committee overseeing, and notable transactions include Armistice Capital LLC's **$3.0 million** participation in a 2023 offering - The company has a formal written policy for the review and approval of related person transactions, overseen by the Audit Committee[649](index=649&type=chunk) - In an April 2023 offering, Armistice Capital LLC, a then greater than **5%** stockholder, purchased shares, pre-funded warrants, and warrants for an aggregate price of approximately **$3.0 million**[652](index=652&type=chunk) - Other reported related party transactions consist of employment agreements, salary adjustments, and equity grants to executive officers and non-employee directors, as detailed in the Executive and Director Compensation sections[651](index=651&type=chunk)[652](index=652&type=chunk) [Principal Accounting Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Baker Tilly US, LLP served as the independent auditor, with aggregate audit fees of **$454,213** in 2024 and **$422,500** in 2023, all pre-approved by the Audit Committee Accountant Fees (in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $454,213 | $422,500 | | Audit-related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total Fees** | **$454,213** | **$422,500** | - All audit and non-audit services provided by the independent auditor were pre-approved by the Audit Committee[657](index=657&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=129&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements included in Item 8 and provides an index of all exhibits filed with or incorporated by reference into the Form 10-K, with schedules omitted as not required - The consolidated financial statements are located in Item 8 of the report[662](index=662&type=chunk) - An index of all exhibits filed with the report is provided, including material agreements such as the Giiant License Agreement and various financing agreements[663](index=663&type=chunk)[665](index=665&type=chunk) [Form 10-K Summary](index=136&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a Form 10-K summary - None[674](index=674&type=chunk)

Core Insights - Palisade Bio, Inc. is advancing its clinical-stage biopharmaceutical product PALI-2108 for the treatment of Ulcerative Colitis, with positive preliminary data from its Phase 1a/b study indicating safety and tolerability [2][4][5] - The company has completed five single ascending dose (SAD) cohorts and the first three of four multiple ascending dose (MAD) cohorts, reporting no serious adverse events (SAEs) or treatment-emergent adverse events (TEAEs) related to laboratory values or EKGs [1][3][4] - Topline data is expected to be reported in the first half of 2025, aligning with management's expectations [4][5] Study Details - The Phase 1a/b study aims to evaluate the safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) of PALI-2108 in both healthy volunteers and patients with Ulcerative Colitis [5] - Biomarkers such as serum high sensitivity C-reactive protein (hsCRP) and fecal calprotectin (CalPro) will be utilized to assess the drug's effects, alongside histological assessments of colonic tissue [5] - PALI-2108 is a new chemical entity that has not been previously administered to humans, differentiating it from other PDE4 inhibitors that have received market approval [5] Company Overview - Palisade Bio is focused on developing novel therapeutics for patients with autoimmune, inflammatory, and fibrotic diseases, aiming to transform the treatment landscape through targeted approaches [7]

Core Insights - Palisade Bio, Inc. has been selected to present data on its lead program PALI-2108 for ulcerative colitis at Digestive Disease Week (DDW) 2025, indicating recognition of its research within the gastroenterology field [1][2] - The company focuses on developing novel therapeutics for autoimmune, inflammatory, and fibrotic diseases, aiming to transform treatment landscapes through targeted approaches [3] Presentation Details - PALI-2108 will be featured in two poster presentations at DDW 2025, with the first session on May 4, 2025, discussing a bioinformatic approach revealing potential anti-fibrotic efficacy [2] - The second presentation on May 5, 2025, will highlight PALI-2108's bioactivation in the colon and its effects on colon tissue PDE4B, increasing c-AMP and suppressing TNF-α in a mouse model of colitis [2] Company Overview - Palisade Bio is a clinical-stage biopharmaceutical company dedicated to advancing therapeutics for patients with autoimmune, inflammatory, and fibrotic diseases [3]

Core Viewpoint - Palisade Bio, Inc. (PALI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Palisade Bio reflects an improvement in the company's earnings outlook, which is expected to positively impact its stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between changes in earnings estimates and near-term stock price movements, making the Zacks rating system valuable for investors [5][7]. - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. Specifics on Palisade Bio - For the fiscal year ending December 2024, Palisade Bio is expected to earn -$11.40 per share, reflecting a year-over-year change of 57.8% [9]. - Over the past three months, the Zacks Consensus Estimate for Palisade Bio has increased by 44.8%, indicating a positive trend in earnings estimates [9]. Conclusion on Zacks Rating System - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [10][11]. - The upgrade of Palisade Bio to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for higher stock movement in the near term [11].

Core Viewpoint - Palisade Bio announced positive preclinical data for its lead product candidate, PALI-2108, aimed at treating Ulcerative Colitis (UC), which was presented at the 2025 Crohn's and Colitis Congress [1][2]. Company Overview - Palisade Bio is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for patients with autoimmune, inflammatory, and fibrotic diseases [3]. - The company aims to transform the treatment landscape through a targeted approach with its therapeutics [3]. Product Development - The positive preclinical data for PALI-2108 is a significant milestone in Palisade's UC development program [2]. - The company has released a Virtual Investor segment discussing the implications of this data for its product development [2]. Investor Engagement - The Virtual Investor segment featuring Palisade Bio is available for viewing, along with additional videos from other Virtual Investor events [2].

Dr. Joerg Heyer, Head of Translational Science and Medicine of Palisade Bio highlights preclinical data for lead product candidate, PALI-2108, for the treatment of Ulcerative Colitis (UC) Carlsbad, CA, March 04, 2025 (GLOBE NEWSWIRE) -- Palisade Bio, Inc. (NASDAQ:PALI) ("Palisade", "Palisade Bio", or the "Company"), a clinical-stage biopharmaceutical company focused on developing and advancing novel therapeutics for patients living with autoimmune, inflammatory, and fibrotic diseases, today announced the re ...