Hi, I'm Tara Bancroft. I'm one of the Senior Biotech Analysts at TD Cowen. I wanna thank you guys all for coming to TD Cowen's 46th Annual Healthcare Conference. Our next session is a presentation from Palisade Bio. From Palisade we have J.D. Finley, the CEO, and Mitch Jones, the CMO. Thank you guys both for being here. It's a pleasure to have you. I will let you go ahead with your presentation, and if there's time at the end, we could do a little bit of Q&A. All right. Hand it to you.
Great. Thank you very much. Thank you all for attending. We're gonna tell you about our little science fair project that we're presenting at the school fair here soon. So we are a by quick background, Palisade Bio is a public company. We're developing oral therapeutics in the I&I space, and our lead drug that we'll talk about today is a PDE4 inhibitor, PALI-2108. This was a drug that was. Originally, the active ingredient was actually developed originally out of the Merck labs in Montreal. In 2010 when Merck shut down those labs, the medicinal chemists that were working on the drug spun that asset out and formed a company called Giiant Pharma in Canada. From there, they reformulated it as a prodrug.
The reason that the prodrug formulation is so important is that PDE4 inhibitors have shown great efficacy in treating IBD diseases like Crohn's and colitis. The problem with them is that they most PDE4 suffer from adverse events, severe adverse events, and the two primary sources of those are secretory diarrhea, which is caused by direct exposure of the PDE4 to the upper GI tract, and then the CNS events of headache and nausea are caused by spikes in the Cmax. What the prodrug formulation that they came up with does is it does not release until it hits the lower part of the GI, so it bypasses that upper exposure that triggers the secretory diarrhea.
Because the drug is released directly into tissue and then is more slowly released into plasma, you avoid the high spikes in Cmax in blood. Those are the reasons that they developed the prodrug, and that's what we've been able to show is very effective. We acquired this drug about two and a half years ago, the drug was in preclinical development at the time. We completed the preclinical development, and then a year later, we put it into the clinic. We've treated 84 healthy human volunteers and then another five UC patients in a small I-B cohort that read out in August of last year.
We are right now completing a small 6-12 patient cohort in fibrostenotic Crohn's disease, which we are intending to read out by the end of this month. We're on track to file an IND in ulcerative colitis for a definitive study of about 196 patients that we plan to file that IND in May of this year, start treating patients in early Q3 of this year, and then we're shooting for a readout of the data by the end of 2027. That's a quick introduction. Let me turn it over to Mitch, and he can cover some of the detailed science.
Sure, yeah. Nice to meet everyone today.
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Try this. Double up.
Does that work? Yeah. Let's start. PALI-2108 is the only PDE4 inhibitor prodrug in development targeting the ileum and colon. PDE4 as a target is commercially proven as both an anti-inflammatory drug in diseases like Behçet's, in psoriasis and psoriatic arthritis, as well as in fibrotic indications such as ILD and IPF. We have positive phase I-A data, as J.D. points out, as well as phase I-B data in ulcerative colitis and now in fibrostenotic Crohn's disease to be read out. The top line will read out this quarter. We're the first and only dual-acting anti-inflammatory, anti-fibrotic drug in FSCD. I'm just gonna get away from that 'cause it's causing a fair bit of reverberation in my ears. We're the first and only dual-acting drug in development for FSCD.
If you watch the markets, a few weeks ago, there was an IPO of a company called Agomab that is the main competitor in that space. They IPO'd at like, I don't know, $750+ million and raised $200 million with a GI or a soft drug of an ALK5 inhibitor for targeting, which is an anti-fibrotic drug, targeting fibrostenotic Crohn's disease. We've also developed a precision medicine test for selecting potential responders to our drug. This is our pipeline. We have a first indication in ulcerative colitis and a second program in fibrostenotic Crohn's disease. Fibrostenotic Crohn's disease is a sub group, I guess, of Crohn's patients.
These patients have fibrosis that causes stenosis or narrowing of the terminal parts of the ileum. They get the symptoms of obstruction. About 75% of Crohn's patients have to have surgery due to stenosis of the bowel, and about 50% in just 10 years. In terms of our upcoming milestones, we're expecting an IND clearance in the first half of 2026 in our UC program. First patient dosed in the second half or sort of mid-year. A readout, a top-line readout in our UC program, a definitive UC study in the final quarter of 2027. In fibrostenotic Crohn's disease, we expect an IND clearance second half of this year with a first subject dose early next year and interim readouts along the way.
A primary efficacy readout in Crohn's disease in the Crohn's indication in the first half of 2028. As I think most people can appreciate in this room, Crohn's and ulcerative colitis are both multi-billion dollar markets. Fibrostenotic Crohn's has no approvals and is still a blockbuster indication. On the left-hand side, here you'll see the first generation of PDE4 inhibitors, so approved drugs like AstraZeneca's roflumilast, Otezla, which you probably see commercials for all the time. It's an Amgen drug for psoriasis and psoriatic arthritis. Roflumilast was for, was a BID drug for COPD. Again, all PDE4 inhibitors that are oral are BID. Verona is an inhaled PDE3/4 that was acquired by Merck this year for $10 billion. Arcutis reformulated roflumilast as a cream, again, targeting skin.
The Verona drug is targeting lung with an inhaled version of a PDE3/4. Arcutis targeting skin with a topical cream. Hemay Pharma reported data with a, what seems to be a pan PDE4 inhibitor. Hemay is a China company. They reported China-only data, a 90-patient randomized control study of moderate to severe UC patients where they demonstrated a 57% clinical remission, 44% placebo corrected, roughly twice as good as sort of anything on the market, currently on the market. So that raised a lot of eyebrows. That together with phase II data demonstrating Otezla or Amgen's apremilast was highly significant at demonstrating a clinical remission in moderate to severe patients in UC several years ago.
That sort of forms the basis of de-risking in the UC indication. In the middle, you've got selective inhibitors. Boehringer has developed a highly selective inhibitor called a PDE4B inhibitor, nerandomilast, to try and get rid of some of the adverse effects of PDE4 inhibitors. That's gained an approval in IPF, which is a fibrotic indication where the standard of care was nintedanib. On the right, you've got us. We are developing a next-gen PDE4 prodrug orally delivered, the only orally delivered once daily. It's locally bioactivated, delivered to the site of disease. Some of the benefits to the therapeutic window, as J.D. has discussed. There's a number of slides here pointing out that, you know, the drug is a prodrug.
When it's released in the upper gut, it's inactive, then it's activated locally in the ileum and in the colon by a bacterial glucuronidase, beta-glucuronidase. Other drugs in the IBD space, like sulfasalazine, use similar mechanisms where they used bacterial azo reductase to release a 5-ASA drug locally and topically. That's got a long history of use, of effective use in IBD. This is a schematic showing that PDE4 inhibitors are kind of master regulators, pleiotropic drugs upstream of many of the mechanisms of action that are highly specific. We'll sort of skip forward to some differentiation. In the IBD space, patients and clinicians are still looking for drugs that are oral, novel targeted. In the oral space, the first comment, you've got JAK inhibitors. They've got black box warnings. You've got S1P modulators.
They come with a retinal monitoring requirement as well as they're not used in Crohn's disease. So again, for oral patients that are looking for oral drugs, this along with companies like Abivax's obefazimod are interesting and up and coming good options. Novel target, we're localized and targeted to disease tissues, which hopefully results in improved tolerability. Dual mechanism of action, so anti-inflammatory and anti-fibrotic. Previously in this space, many have focused only on anti-inflammatory properties of new medications, and this is anti-inflammatory and anti-fibrotic. We've developed a precision medicine approach for selecting patients that are likely responders.
Skipping forward a little bit here, we've conducted a phase I-A study where we dosed from 15 to 450, and we didn't see adverse events until the very top range there at 450. We did a multiple dosing study at 15 twice daily, and we used twice daily to start 'cause we didn't know if the increased bowel frequency would affect the pharmacology. What we found in this study is that we could go with our once daily formulation, but we went up to 50 twice daily, which is 100 daily, and settled on 30 titrated. These drugs, PDE4 inhibitors, are normally titrated because patients can build up tolerance over time.
We went with a 30 titrated, which is a massive dose of a drug that is 20 times more potent than apremilast and or indimilast. We took that into a phase I-B cohort of five patients. We've mentioned previously that in that phase I-B cohort, we've demonstrated this in a small cohort, but there are other phase II data out there. Here you can see, safety and tolerability was really good in single dosing and even multiple dosing. There was no adverse events in the 15 and really just one there in the 30 mg titrated group, which you can see here on the left, single dosing and then multiple dosing. In the middle, you've got pre-dose steady-state trough. That's the trough just before the patient takes the next dose.
We want that to be above that second line, which is the inhibitory concentration 90 for the drug. That's the concentration that in a cell assay you inhibit the enzyme at 90%. you can see that we're well above that. you can see that we're well above that with these two doses of the drug, well above the IC 90 there. Actually, even 36 hours after dosing, we still have therapeutic levels of drug in tissue. You can see here at the 50 BID dose, you're approaching even IC 90 36 hours after dosing. In the current study that we're doing in FSCD, we're looking at steady state, which is four to eight hours after dosing, and we expect those numbers will be even higher.
We treated five patients with moderate to severe ulcerative colitis. None of them were on steroids. I think 16 years was the average time of diagnosis. One patient wasn't on background therapy, two were on 5-ASA or mesalamine, one on Entyvio and one on Remicade. There were no steroid tapers during the course of the study. Colon tissue cyclic AMP is just upstream from the inhibition, and you have a 30% increase, roughly 27% increase, sorry, in cyclic AMP of a 30-40, depending on how you, how you calculate, that individual or group means of tissue lymphocytes. This is a measure of the actual inflammatory cells by immunohistochemistry measured in tissue. PDE4B, a measure of the expression of the target, was down-regulated 70%.
Fecal calpro, kind of a normal biomarker of inflammation in IBD, down 70%. CRP, acute phase reactant and inflammatory marker, down 15% as well. The colon tissue histologic scores were improved 30%-60%. Remember, this is just in one week. Normally these measures are taken after 12 weeks of treatment. We saw modified Mayo score improve by 63%, 100% response and 40% remission. Again, all patients responders and then two of five in remission and another two almost in remission after just one week, including a five-day titration. We feel that those data support, you know, and sort of move beyond what was seen with apremilast and support the data seen in the China-only 90-patient study of mafimilast.
We've developed a test for measuring biomarkers that can predict a response. Hopefully we'll use this in our phase II post-hoc for selecting patients, and I won't necessarily go into that here. We're planning our ulcerative colitis study to begin mid-year. It will be a definitive study, meaning that it could be a registrational study. It's designed as such, but we can also run two parallel phase three studies. It's a study of a high and low dose versus placebo, 65 patients per arm out to an induction period of 12 weeks, and then extended through a blind of maintenance to 52 weeks with a primary endpoint of clinical remission at 12 weeks.
It is a treat straight through design, and responders are treated straight through and non-responders put into a blinded induction at the high dose. In fibrosenotic Crohn's disease, we have an ongoing study, as we mentioned, of fibrosenotic Crohn's patients treated for two weeks once daily with our PDE4 inhibitor. We're looking at safety tolerability, PK and PD in ileum, ascending, descending colon, superficial and deep histology with staining, patient-reported outcomes, engagement of the pathways with RNA-seq in colon tissue, ileocolonoscopy and an intestinal ultrasound. This study we'll read out this quarter and we will make decisions about our ongoing aspirations in Crohn's based on those data. This is the corporate overview that J.D. can sort of cover. I think, you know, it's kind of.
Yeah.
We can open it for questions.
Yeah. We completed a transformational financing in early October of last year that was on the heels of the readout of that UC data that Mitch just covered here. The good news with this financing is that it provides us with adequate funds to get through definitive studies in both ulcerative colitis and fibrosenotic Crohn's disease, and then still have about a year's worth of runway left over after that, so well into 2029 on the runway. It's very clean cap table. You can see here 206 million shares fully diluted. That includes the pre-funded warrants that were issued as part of the deal that have not yet been converted.
Like I said, a lot of in capital to get us well through the development of the two studies. Very clean cap table. This was an offering of straight common shares. I think we have about 8.5 million warrants left over from prior financings that are priced at $0.905 a share. Other than that, very clean cap table.
Maybe just before we open up for questions, we have a couple slides here about the team that we've built. We're pretty proud of putting together a team since the fall that is sort of world-class. We brought on James Izanec as our VP Head of Clin Dev. He's from BMS and J&J. Sharon Skare from AbbVie and Pfizer, Arena. you know, we have a Head of Translation, Joerg Heyer, kind of from an oncology translational background. Dan Larkins from Teva and Merck. Adarsh Patel here, Allergan and AbbVie. Ryker is our finance guy, J.D. and I you know. Ram sitting here, joining us in corporate development and IR with a background in JPMorgan and a bunch of other things.
Before we open it to questions, one other thing that has one question that's come up is, you know, in the Crohn's disease, are we going to pursue specifically fibrosing Crohn's or are we gonna pursue a broader indication of Crohn's with maybe a cohort of some fibrosing patients? I think we're gonna wait for the data from this 1B cohort and evaluate that before we make a final decision on that. As you can imagine, there's some tension between kinda which way you go. On, you know, the advantage of pursuing fibrosing Crohn's specifically is that it there is no approved therapy there.
Our drug is an anti-fibrotic as well as an anti-inflammatory, so it's a perfect therapy for that indication. The downside is that there is no current approved pathway. There is no approved therapy, we're not sure what the approval pathway is for sure with the FDA. Well, there are only two other competitors in the space, Agomab, who's ahead of us in development, and then Redx, who is behind us in development. Agomab will sort of pave the path for us in terms of regulatory approval pathway. I'm not sure they're far enough ahead of us that we'll have much guidance by the time we make a decision on whether to start a trial.
On the other hand, we've got Crohn's disease, which, it has a very clear, clearly defined pathway. That is sort of the reason we may pursue the broader Crohn's indication with a smaller subset. Again, we're gonna wait and see what these data from the 1B cohort look like. That'll help, I think, define a pathway there.
That's it.
All right, we can do some Q&A. I have some questions. Again, like, I mean, if you're in the audience and you wanna ask, feel free to shut me up at any time. You know, I cover the IBD space, I talk to a lot of investors, and one of the first questions that I always get from people is, "Oh my god, another drug. How is it gonna fit in? We have injectable IL-23, TNF. We have oral IL-23, you know, TYK2s and, of course, TL1A." Can you give us some context of how you think it could fit in and compete with all of these different mechanisms? You know, is it replacing Otezla? Is it something that you envision taking market share from injectables, from all orals, including TYK2s or what?
Let me make an opening comment, and then I'll turn it over to Mitch to give you a more complete answer. One of our KOLs when we talked about this. Early, you know, maybe about a year ago, we were actually trying to decide either/or because we were an undercapitalized company and didn't have the funds to really now pursue two indications. When we were in the position of having to choose one or the other, the fibrosing Crohn's was an attractive pathway just because there wasn't a lot of competition there, to your point. On the other hand, one of our KOLs pointed out, yeah, there's a lot of competition in Ulcerative Colitis, but that's because there has been no real effective solution yet in that space.
That's the opportunity for us in UC, is to actually demonstrate, like if we can replicate some of the efficacy that Hemay Pharma showed, without all the adverse events, that would be an unbelievable home run in that space. I think there's also some opportunities for combination therapies. Mitch, what's your take on that question?
Yeah, just sort of picking up on that. You know, I think when you look at the biologics, some of them have sort of, you know, sub 20% clinical remission rates at 12 weeks. It's sort of a one-in-five shot. Drugs like, I don't wanna pick on any, but drugs like the anti-integrins, you know, actually take a quite a long time to become effective or work. Your patients are, you know, suffering and are having symptoms. These are pretty severe symptoms in these patients. I think there's an opportunity to treat patients that have faster acting drugs. That's one thing. I think there's an opportunity up and coming for drugs that are not only anti-inflammatory, but anti-fibrotic.
I think we see there being sort of sub 20% clinical remission rates, We're looking to sort of break the ceiling of the 25% clinical remission rates at 12 weeks. You know, there's not a lot of really good oral options right now. The oral options in ulcerative colitis are the JAKs with black box warnings, the S1Ps where there's no approvals. You know, there's not approval in Crohn's disease or they don't work as well and there's this, you know, ophthalmologic sort of monitoring that's required. There's not great oral options. If things are going in the direction of sort of combinations, there might be some combinations, you know, for injectables, there's question is like what are the oral combinations?
I think that there's all kinds of opportunities, and actually when you think about it that way, we're sort of in a rarefied space kind of actually, with very, very few, folks that are oral once daily options. In the Crohn's space I think there's even fewer options just because the S1Ps aren't effective.
Okay. In the data that you showed, you had some really great one-week efficacy. Safety looks great, and I'll get to safety in a second. You know, with the one-week response rates and remission rates that you have, can you give us the context around the other factors that you've looked at that give you confidence in durability?
Sure, yeah. No. Obviously there's the Hemay study out there that shows 90 patient data. There's also Silvio's paper. Silvio Danese published a paper on apremilast efficacy that shows long-term durability of response. I think some of the, some of what we believe is the sort of history of use in other I&I indications also help support the benefit of PDE4s in long-term durability of response.
I think while we have a small data set, it's really a rich translational data set demonstrating that there's early activity, that activity is not only associated with a PD response, but a meaningful change in the inflammatory markers within tissue, and that's also related to a clinical outcome and response, and that is confirming what is seen in longer term studies that have been previously shown. show it sort of to a greater degree, yeah.
Okay. How about... Let's see. Safety, the PDE4 class, you know, there's various different safety events that are associated with it, but, you know, GI tox, CNS tox. You know, so far with the prodrug you've shown really good localized effects, a reduced Cmax. How would you say that the data that you've generated so far would, like, de-risk those safety events of the class?
Yeah, maybe again, we think about it in terms of like safety and then tolerability. When we think about safety, we think about, you know, toxicity. When we use the word toxicity, more likely, you know, findings on EKG or laboratory abnormalities that result in an adverse event. We're not seeing serious adverse events. We're not seeing, you know, EKG changes findings. We're not seeing laboratory findings, and these are even at the highest doses. I think the PDE4 class is well known to be safe long-term history, long history of use in the marketplace. In terms of tolerability, we're talking about, you know, the headache, the nausea and the diarrhea and again, this drug is designed to be local, targeting locally acting.
In our first studies, despite extremely high doses, we saw, you know, perfect tolerability in some cases. In other cases at really high doses, we saw the normal PDE4 related adverse events. In our newer, most recent study, which I guess we'll present data on in the next quarter, we'll, you'll be able to learn sort of more about, the tolerability of our drug with in once daily, doses.
What do you want to see in that data that you would think is really good?
We have done something called PopPK modeling, and basically it's computer modeling and statistical modeling where you use your phase I data to simulate what happens if I had 1,000 patients, statistical number of patients, what would that mean for my adverse events? What would that mean for my drug levels? What we found is that we believe our target dose in phase II is at or around, you know, 20-30 milligrams daily. We've purposefully designed our FSCD study that's we're gonna report out on to evaluate doses that are in alignment with our targeted phase II doses so that we can get a good idea of what the tolerability will be like, and we can get a good idea even in a more sort of sick population.
Then we can also get a good idea and characterize the pharmacokinetics of our drug and confirm what we see in the PopPK model. We've evaluated a small group of patients at our target phase II dosing to confirm what we've seen in our PopPK modeling as well, through an amendment to our phase I clinical study. We have enough data to confirm our target dosing.
Great. Okay. One more question that I wanna hear from both of you briefly. What do you think is most underappreciated about Palisade?
First of all, very few people until, you know, four months ago even knew we existed, so there's it's been a long battle of ours to get our name and our story told and we appreciate everybody here taking the time to learn about it, about our story. I think, you know, our science is fundamentally sound. We're not asking people to believe in new science. We're asking people to understand what we've done to make the drug more tolerable and, you know, I think it's just getting more people to hear the story.
I mean, I spend a fair bit of time on execution and working with our team, and I think in this space because there's been so many high profile acquisitions, that I think that it's become more and more expensive to develop drugs in the IBD space. Our DNA is that we are capital efficient, and we continue to do that. We're trying to, you know, execute these programs with the fundraising that we've done so far, and we, you know, think we can do it. I think, you know, I guess small but mighty kind of team approach and efficient use of capital is something that we should be known for. It's something that people probably don't know.
We're proud of.
Yeah.
All right. With that, we're up with on time, I really appreciate both of you for taking the time to educate us on this subject and everyone for listening.
Thank you.