Thank you. Welcome back everyone to Oppenheimer's 36th Annual Healthcare Life Sciences Conference. I'm Leland Gershell. I'm one of the Biotech Analysts here with the firm. Really a pleasure for us to have Palisade Bio as our next company with whom we'll be featuring on this virtual conference. We have the company's CEO, J.D. Finley, as well as President Mitch Jones, joining us for a fireside chat, where we will discuss the company's business objectives and programs. If you have any questions of your own that you'd like us to weave in, please submit those through the portal. With that, just want to first welcome J.D. and Mitch. Thank you for joining us.
Thanks for having us, Leland.
Yeah, thanks.
Great. For those who may be, you know, either newer to the story or haven't looked at Palisade in some time, maybe J.D., if you could give a brief history of the company and kind of how the current focus emerged from, you know, your prior experiences and your strategic pivot?
Happy to do that, Leland. The company's been around for what I'd say is probably about 16 years. It goes back to some science that was licensed out of UC San Diego. The company really was re-transformed in summer of 2023. We had a readout of the, you know, phase II study with that prior molecule that we were developing that showed lackluster results. At the same time, we were in the middle of hiring Mitch as our CMO. He had line of sight into an asset that came out of Canada. It was a PDE4 inhibitor that had been originally developed in the Merck labs in Montreal. They.
When Merck shut those labs down, the medicinal chemists that were working on that took the active ingredient with them, they reformulated it in a prodrug formulation in a company in Canada called Giiant Pharma. That was a company that had been financed by a group of VC Canadian VCs. But that syndicate blew up because the CEO of Giiant left and went to work for one of the VCs, you had a company without a CEO and without any funding, and we were sort of in the right place at the right time to acquire that asset. That's kind of how we got to where we are today. We took it from preclinical. We finished the preclinical work, and we've now completed some phase I-A and 1-B studies with it.
Great. You know, PDE4 inhibitors have a long history of inflammation, you know, Otezla in psoriasis, psoriatic arthritis, some inhaled approaches in respiratory disease, topicals. There's also, you know, typical class-typical AEs, like diarrhea, headache, nausea, that accompany those. You know, share with us how PALI-2108, you know, aims to capture the anti-inflammatory and antifibrotic benefits of that mechanism, but, you know, avoiding some of those systemic tolerability issues.
Yeah, I'll let Mitch kind of jump in on why the prodrug formulation is critical in mitigating those AEs, particularly the secretory diarrhea from exposure to the upper GI, as well as the CNS problems of headache and nausea from spikes in Cmax. Mitch, do you want to kind of get into a little bit of the detail of that?
Sure. You know, traditionally, PDE4 inhibitors have suffered from tolerability issues, including headache and nausea, the CNS sort of category of issues with tolerability, and in the GI, the secretory diarrhea. The, you know, one of the first approvals was roflumilast for COPD, an AstraZeneca drug, sort of a generation 1, very potent drug, but difficult in terms of tolerability. apremilast Otezla was approved as well as psoriasis, psoriatic arthritis, Behçet's disease, sort of better tolerated, due to, you know, the free fraction of the drug, due to this, the isoforms and potency for various isoforms and selectivity. You know, newer companies like Verona, who was acquired this year by Merck, Arcutis, have developed either topical or inhaled versions of PDE3, fours or PDE4s, and been quite successful.
There's also Boehringer, who has developed a PDE4B specific inhibitor, which just recently got an approval nerandomilast in IPF. It's truly a anti-inflammatory and now antifibrotic drug. At Palisade, we're developing a drug, PALI-2108, that's a prodrug. It's orally delivered as a tablet. We have a long half-life, it can be delivered once daily. We're the only PDE4 inhibitor in development with a once daily formulation. It's a glucuronidated PDE4 inhibitor, the bond that glucuronidates the sugar moiety to the active PDE4 inhibitor prevents it from being active.
When it's in the gut, it remains gut restricted, when it's released, and then when it's acted on by the bacterial PDE, β-glucuronidase enzyme, which can be ubiquitously produced by the bacteria of the gut, the PDE4 inhibitor is released, absorbed through the distal parts of the gut, the terminal ileum and colon, and then can circulate. Sort of one of the things that people don't often understand with our drug is that we actually achieve systemic levels of drug that can achieve IC90 despite having a gut-restricted prodrug that's locally bioactivated. By having a delayed release in a locally targeted drug, we get around the upper GI issues with CFTR receptors secreting potassium and causing a secretory diarrhea.
That mechanism is no longer in play, and as well, the drug is released slowly over time, which limits the Cmax, and so our therapeutic index on headache and nausea is greatly improved. Basically, the improvements in the differentiation are a pharmacological approach to improving therapeutic index and limiting adverse events.
Yeah. Now, your prodrug approach certainly seems to solve for, you know, that risk-benefit calculus and then making things much more optimized. I think it's also worth highlighting, you know, PDE4 is an attractive target because it's such a master regulator of inflammation. It lies upstream of a number of factors. Maybe if you could sort of kind of share with us sort of the role of PDE4 and the various, you know, cytokines and other agents that kind of lie downstream, that play multiple roles in inflammation and fibrosis.
Yeah, sure. I mean, our target is not dissimilar from, you know, the target in IPF. We still are targeting lymphocytes that have entered GI tissue and are overexpressing PDE4B and D, actually. When we look at a large set of patient data that we have, you know, PDE4B is overexpressed, PDE4D is overexpressed, and that's even in composite tissue biopsies. If you've got PDE4B and D overexpressing lymphocytes and tissue, and you sequence all of a biopsy sample, you can see a clearly a PDE4B overexpression, but also D. Our drug hits isoforms A, B, and D primarily, but then also has this improved pharmacology.
Downstream of PDE4 is cyclic AMP, and we've demonstrated in ulcerative colitis patients that we can increase cyclic AMP by 30%, 30%-40%, over just one week. Downstream of that, there are cytokines like expression of TNF-α, IL-12s, 23s, and even some of the intercellular pathways and signaling that includes the JAK-STAT pathway can be affected by intracellular cyclic AMP. Really kind of a master regulator, pleiotropic, anti-inflammatory, and antifibrotic.
Great. Yeah, let's talk a little bit about clinical. You had, you know, phase I-A, phase I-B data that was supportive, and clear you're, you know, you're, you know, moving into phase II. Any particular kind of highlights or patient subgroups, types of, you know, extent of disease or, you know, baseline biomarkers, prior biologic exposure in that patient group that kind of stood out to you in terms of a real signal, and how they may inform your upcoming phase II design?
Yeah. So maybe for some of the people watching today, you know, we've conducted a small study, an open label study in UC patients, five UC patients, all moderate to severes. We treated those patients for one week with titrated max dose of our drug, basically, and saw pretty significant improvements in biomarkers and a 63% modified Mayo improvement, 100% response, and 40% remission. I think when we look at other phase II data out there, the apremilast data demonstrate a 31.6% improvement in... or, clinical remission rate at 12 weeks, 20% placebo-corrected, and then the mufimlast data, which is China only, but still 57% clinical remission at 12 weeks, 44 placebo-corrected.
I think those three data sets, our data set, which is highly sort of translational, together with these other two data sets, demonstrate in moderate to severes that, you can achieve, you know, as long as you're not dose limited, you can achieve high rates of clinical remission. I think in future studies, we're planning on our lead program is to evaluate moderate to severe patients. We're going to enroll patients, at least 50%, but not more than 70% of patients that are bio-experienced. In our first study in UC, in five patients, we had, you know, one patient on ENTYVIO, one on REMICADE, two on 5-ASA, and one on no background in inactive disease.
On our in our current ongoing FSCD trial, we're also treating, like Agomab treated in, on top of standard of care, and so we're treating on top of things like 12, 23s, as well as TNF.
Great. Any particular kind of internal thresholds you have for judging, you know.
Concentrations. The other thing we do is we look at cyclic AMP. We've got kind of a benchmark cyclic AMP change that we saw in pretty, very consistently in our UC patient population, given a maximum dose of PDE4 inhibition. We're able now to use that and benchmark going forward when looking at our FSCD cohort, for instance, you know, what percent of that max cyclic AMP or PD effect are we able to achieve in the ileum of FSCD patients?
Great. Remind me, have you shared timelines around the phase II UC study? You know, also it's, you know, it's kind of a popular indication for development programs. Any particular challenges in execution that you foresee there, you know, in terms of enrollment and, I don't know, rescue rules and so forth?
We definitely have challenges with regard to enrollment, and I'll let Mitch tell you how we think we've mitigated that. What we've guided in terms of timelines are an approved IND or filing the IND in Q2, with the enrollment starting in Q3 of this year. We're looking for top-line readout by the end of 2027, which, as you can imagine, is a very aggressive timeline. You know, Mitch, do you want to kind of talk about what we're doing on the enrollment front to stick with that timeline?
Sure, yeah. You know, we've aligned ourselves and partnered with groups that have done this successfully before. You know, historically, there have been individuals and groups that have been able to enroll these studies in shorter duration, shorter periods of time, as well as, you know, selecting sites that are more likely to sort of produce an acceptable placebo clinical remission rate.
We have sort of spent a lot of time thinking about this and building our team around and building the groups that we're working with on the clinical execution side of things around, you know, how do we enroll this study quickly, and also how do we make sure that we control for what we can control for in terms of the likely placebo response rates. We feel pretty confident with the collaborators that we've got involved, that we can execute this.
Terrific. Yeah, and as you mentioned, you're also planning a phase I-B in fibrostenosing Crohn's disease or FSCD. Maybe just, you know, share with us for those who may be less familiar, this is sort of a very high unmet need, niche within Crohn's. If you could just kind of discuss the very limited options for those patients, and, you know, many of them progress to surgery. You know, how unmet need is that indication?
Yeah, I think it's probably the largest unmet need in inflammatory bowel disease. 75% of Crohn's patients go on to have surgery for a stricture in their lifetime. I think it's 50% in 10 years. The population is quite large. It's a pretty significant population. I think there's at least 200,000 patients that would be symptomatic and have an ileal stricture in the U.S. alone, maybe 750 globally. Pretty significant population. There's not really any approved therapies for treating specifically the stenosis or fibrosis. These patients have options like endoscopic balloon dilation, where there are repeat dilatations make up a significant proportion of patients that have an initial dilatation, then quite a significant fraction go on to have surgery anyways.
You know, surgery or balloon dilatation and repeat surgery or repeat dilatation aren't particularly good options. There's this effort to sort of understand the disease and then to use anti-inflammatory, antifibrotic agents to either reduce the size of the lesion, and these lesions are growing over time, reduce, improve the caliber of the lesion so that... Again, this is patients with, you know, chronic inflammation of the terminal ileum, which is causing to have developed, I think there's just a soft drug that's an IL-5 inhibitor for potentially treating these patients, and we're developing what we think is a great clinical candidate for this, proven anti-inflammatory, antifibrotic, single, you know, oral pill once daily.
Hopefully, we can treat these patients that are in pretty significant need.
Yeah. Anything to point out on, you know, fibrostenotic biology per se, versus just sort of your mainstream, you know, inflammatory activity? I guess a corollary to that is, you know, you know, depending on what you see in FSCD, do you think that any, you know, a signal there could be translatable to a broader Crohn's disease application? You know, what might you want to see to kind of move perhaps, you know, expeditiously toward kind of like a pan-Crohn's program?
Sure. I mean, our 1B study that's ongoing is a two-week study, so this will be the first time we treat patients for two weeks. It'll be the first time that we characterize once-daily dosing, so going to 30 mg once daily. We're also gonna be evaluating the safety and tolerability in what is a sort of new population for us in FSCD and patients that are sort of, you know, further have been diagnosed with Crohn's for a longer period of time than maybe a luminal Crohn's population. We've set up our study to look at the level of drug in the ileum, ascending, descending colon, to look at level of drug superficial and deep, to look at that PDE response.
cyclic AMP is the intracellular signaling molecule that's responding to a PDE4 inhibition response, and so measure that in the ileum as well. Look at RNA-Seq, so we can see what kind of pathway engagement we're getting. There's pathways that are driving disease pathology and FSCD. We're gonna have a measure of symptoms, so patient-reported outcomes, the what's called the sPROs, and then look at histology and staining, so the earliest signs of tissue remodeling using staining techniques, and then ileocolonoscopy. Part of your question is, you know, what could give the best read onto a broader Crohn's population, a larger opportunity, a larger market, a larger TAM? I think really an SES-CD score, I think, Agomab reported seven point four at baseline with a two-point change.
We'll be releasing our data in this quarter. I think, you know, our typical luminal Crohn's study is kind of more like in the 8-12 range in terms of baseline, yes, SES-CD score.
Okay.
I think the other thing to point out is because we are targeting IC90 in plasma levels, I think that's the other opportunity to apply this drug more broadly.
Yep. No, that's fair. Yeah, and thinking about, you know, kind of development broadening, I mean, obviously, looking at monotherapy here, but, you know, as you roll forward, you know, could there be some combination strategies that would make sense, you know, with anti-TNFs or some others, you know, the JAKs or the IL-23s that could give you kind of even a more profound, you know, response or longer durability?
No, that's a, that's a great question. I think, you know, in doing this sort of careful translational work and looking at RNA-Seq in tissue helps. We last week presented at ECCO, a poster presentation that has a heat map on it and looks at sort of baseline to endpoint changes in various pathways, including the JAK-STAT pathway, including the TNF, you know, pathway, including TGF-β, and I think all three. The TGF-β and JAK-STAT for sure are zeroed out, and NF-κB, I think, as well. I think there's a little bit of room on the TNF pathway. In other studies, like our preclinical work, we saw, you know, zero in terms of remaining TNF in tissue and RDSS mouse modeling.
I think we're doing some work in the FSCD study to build up a mechanism for anti-inflammatory and anti-fibrotic mechanism based on single-cell expression. I think the single-cell expression should give us in tissue as well as in PBMCs, as well as in ileum versus colon, should give us the information that we need to select the right combinations.
Great. Let's talk a bit about, you know, kind of your financial resources. You did have a, you know, it was kind of a buy-in, like an equity investment from the Crohn's and Colitis Foundation announced earlier this year, their IBD of Interest program. Where is your last reported, you know, kind of cash and, you know, what can you tell us about your current runway?
Yeah. I can't remember. Our last reported cash might have been coming from Q3, or maybe we did an update after the financing in October. I can.
Sure
... I can tell you that, you know, that $138 million, which was effectively a re-IPO of the company, has given us runway to allow us to do a full, definitive study in ulcerative colitis, as well as one in some form of Crohn's, and still with about 12 months runway left over, so, you know, cash into 2029.
Great. That's that's obviously a very nice nice cushion. I guess, you know, maybe just thinking, you know, even beyond the UC and the FSCD, any kind of non-GI autoimmune diseases that could be down the road that would be somewhat obvious for a PDE4 prodrug type strategy? Would you kind of stay within the CUT architecture?
Yeah. Mitch, do you want to talk about kind of where we are definitely going to explore some other therapeutic areas, with obviously keeping the intense focus in the short term on our UC study, which is gonna be kicking off. I want to make it clear that we're not gonna be losing any time on that. Mitch, do you want to talk about some of the other exploratory things we're at least considering?
Sure. I mean, as J.D. points out, our lead, you know, program and 90-plus percent of our focus really is on our UC program, and then our Crohn's is sort of quick, you know, quickly, coming behind that. You know, it's not, you know, lost on us that others and, you know, have raised capital recently around, you know, PDE3, 4, COPD programs. There are others out there that are trying oral PDE, you know, COPD programs. I guess, you know, given improved pharmacology, given, you know, once daily, dosing, and given improved tolerability, we feel that we could potentially be in the, you know, the IPF space, or we could be in the COPD space, or any of these spaces, given that we can achieve an IC90.
We haven't sort of made any decisions or, but we are sort of exploring that. We do have, you know, a really small sort of precision-cut tissue studies ongoing with a group that's very good at that work, just to understand in skin and liver and in lung and in gut tissue, exactly how the drug is working.
Good. Yeah, then, yeah, I think as we wrap, just, you know, look, these inflammatory conditions like UC Crohn's, I mean, these are obviously the domain of, you know, big pharma has had a lot of success there with some of their products. Any thoughts you want to share about kind of corporate development in that regard, partnering opportunities, you know, U.S. versus potentially ex-U.S. markets, and how you may see those playing out?
You know, it's still early stages in that regard. We are, you know, we are meeting on a fairly regular basis with a number of large pharma, more at this point for the purpose of making sure they know who we are, so they can start following the story.
Yeah. It completes makes complete sense, so that when you guys have the data, they'll be they'll be ready to, you know, they'll be prepared. Wonderful! This has been great, having both of you on, and just checking to see if there's any other questions from the audience. I think we're good there. Yeah, thanks again, and thank you all for joining us in the Zoom, and hope everyone has a terrific rest of the conference. Thanks.
Thanks. Thanks, Leland.
Thanks very much for having us.
Great.