Hey everybody, we're back. Really happy to have the Palisade Bio team with us for the next Fireside Chat. We have CEO JD Finley and CMO Mitch Jones. Maybe I'll kick it over to JD for a quick overview of the company. Then we'll jump right into the fireside, so appreciate it.
Great. Well, thanks for having us, Alex. It's great to be here. Palisade Bio is a clinical stage company focused on developing next generation prodrugs for inflammatory and fibrotic diseases. Our lead program is PALI-2108, and it's a once-daily oral PDE4 inhibitor in a prodrug design. That design allows it to be bioactivated in the terminal ileum and the colon. Earlier this year, we completed our phase I program. Now we're initiating phase II programs in both ulcerative colitis and in Crohn's disease. It's really the totality of our phase I data that gave us the confidence to move forward into phase II. Namely, we saw favorable safety and tolerability. We saw sustained drug exposure in plasma above the IC90 threshold. We saw targeted ileal and colonic distribution.
We saw activity across key inflammatory and fibrotic pathways. Then we saw encouraging early clinical and endoscopic signals. As you know, we received our U.S. IND in June for ASCENTRA-UC, which is our global phase IIb study in moderately to severely active ulcerative colitis. Today we announced that we received CTA clearance in Canada as well for that study. The study will enroll 204 patients across North America and Europe, and we're making steady progress in activating U.S. sites as we speak. This is where we plan to first start enrolling patients. Then, as you probably saw yesterday, we also announced IND clearance for ASCENTRA-CD, which is our phase II study in Crohn's disease. In that study, we expect to enroll approximately 60 patients with moderate to severe disease. So now we're currently executing against both major forms of IBD.
Our thesis is really simple. PDE4 inhibition is a well-validated and an anti-inflammatory mechanism. But historically, PDE4 inhibitors have been constrained in addressing IBD because of the limited therapeutic window. What makes us unique is that PALI-2108 was specifically engineered to address that limitation through targeted bioactivation in the distal ileum and the colon. We've been able to show a sustained exposure profile through that design. We believe this design profile allows us to unlock more of the value of using a PDE4 inhibitor in IBD.
Great. That's a great overview. I think I do want to take a step back here and talk a little about mechanism and obviously there's clinical data out there from apremilast and afamelanotide, and the context around PALI-2108 design and the rationale there. But why does the PDE4 mechanism make sense in ulcerative colitis and Crohn's, just from a fundamental perspective?
Sure, I'll take that. Thanks, Alex. PDE4 is a validated anti-inflammatory and anti-fibrotic mechanism where there's commercial approvals and examples of each. The historical challenge with PDE4s has been achieving sufficient activity without the side effects that limit dosing. Twice daily apremilast has been evaluated in UC with a clinical remission rate of over 31%, approximately 20% above placebo. Further support comes from afamelanotide, another twice-daily PDE4 inhibitor developed by China's Hengrui Pharma, where in a blinded RCT, a phase II study conducted in China, the company reported remission rates of approximately 57% at the high dose versus 13% with placebo. That's a 44 percentage point difference.
Our thesis with PALI-2108 is straightforward. Deliver an established mechanism directly to the disease tissue, and this targeted approach has other precedents. You think about last year, Verona's inhaled PDE4 therapy acquired by Merck. Arcutis now has a topical PDE4 therapy that it's quite successful with. With PALI-2108, our goal is to deliver PDE4 directly to disease tissue, achieving wider therapeutic windows and sustained activity that supports once daily dosing.
How clear is it that it's the systemic exposure that drives some of the therapeutic index limitations of the PDE4 class, and how does colonic exposure help there?
Some of the tolerability issues with PDE4s, direct exposure to the upper GI tissues. It is a CFTR-driven secretory diarrhea that results. With a prodrug approach where we are locally bioactivating, we do not expose upper GI tissues to active PDE4 inhibitor. The headache and nausea really come from peaks or changes in concentration, spikes in the bloodstream that contribute to tolerability limitations there. By having a slowly released, locally bioactivated prodrug to active drug, it is able to overcome some of those tolerability issues.
I think JD alluded to a lot of the phase I data you generated, but I guess maybe the question is, as you think about this differentiated product profile, what out of the phase I data really supports your view here of the differentiation profile?
Our phase I program was designed to go beyond safety and basic pharmacokinetics. In healthy volunteers, we characterized dose exposure and the pharmacology supporting once-daily dosing. Then we studied small groups, cohorts of UC patients and also fibrostenotic disease patients, Crohn's patients, where PALI-2108 was working as intended, and we wanted to figure that out in the smaller disease cohorts. In ulcerative colitis, after just seven days, all five patients achieved clinical response, and two achieved endoscopic response and remission. We also saw supportive improvements in histology, inflammatory markers, and pharmacodynamic measures. In the fibrostenotic Crohn's disease study, after just 14 days, we observed 47.5% mean reduction in SES-CD score, and we had two of five patients that achieved endoscopic response and remission.
These are small exploratory cohorts, but the clinical signals were supported by the direct evidence of drug exposure and target engagement in the intestinal tissues themselves.
Yeah, I guess the question on the UC and fibrostenotic Crohn's cohorts is with one or two weeks of total drug exposure, how confident are you in those signals?
Yeah, what gives us the confidence is the consistency across multiple measures. In the UC study, clinical response was accompanied by improvements in the modified Mayo components themselves. This was supported by histologic findings, inflammatory findings, pharmacodynamic findings. In the Crohn's disease study, we saw objective endoscopic improvement along with direct evidence of tissue exposure and engagement, even in the proximal parts of the terminal ileum. We saw rapid onset with anti-inflammatory. This rapid onset has been seen in other anti-inflammatory
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therapies, including JAK inhibitors such as RINVOQ.
Yeah. I guess based on the data so far too, do you feel like you're out of the woods from a tolerability perspective, or is there still more to understand as it relates to the profile as you dose for longer?
Yeah. A lot of the tolerability findings for PDE4 inhibitors occur within the first couple of days, so shorter studies will certainly be able to evaluate that. We do have planned our phase II program with 204 patients in the UC study and then 60 patients in the Crohn's study that are planned to go out first in the 12-week induction and then a year, which should demonstrate that. But we're pretty confident in looking at some of the others' data, for instance, with apremilast or with roflumilast, and then looking at how our pharmacokinetics relate to our adverse effects. We're fairly confident.
You've now decided to move, as you said, you got your IND cleared for Crohn's disease. You moved away from fibrostenotic Crohn's disease to Crohn's disease more broadly. Can you talk through the rationale for that shift?
Sure, I can take that. Our fibrostenotic Crohn's study gave us our first direct human experience with PALI-2108 in Crohn's disease.
Right.
What we saw gave us the confidence to expand into the broader population. On top of the tolerability markers that Mitch just touched on, we also demonstrated drug exposure in both ileal and colonic tissue. We saw pharmacodynamic target engagement, and we saw encouraging early endoscopic activity, again, only after two weeks of treatment. I think this matters because PALI-2108 may be relevant to both components of Crohn's disease, which are both the underlying inflammation as well as the fibrotic pathways. Moderate to severe Crohn's represents a much larger population, and it has a well-established regulatory and clinical development path. But just to be clear, we believe fibrostenotic disease still remains an important longer-term opportunity for our drug.
Yep, that totally makes sense. How are you thinking about this product profile so far? Are you thinking about monotherapy? How would this work in combination? How do you see PDE4 in UC and Crohn's in the future?
Yeah. On a high level, we're targeting a once-daily oral therapy with meaningful efficacy and a differentiated therapeutic window. What's encouraging is that our phase I studies gave us the evidence that the drug is working as it was designed. We saw high intestinal tissue exposure together with sustained systemic exposure. Importantly, we didn't observe the usual pattern of nausea, vomiting, diarrhea, headache, those kinds of things that you typically see with systemic
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PDE4 inhibitors. Given that the patients are seeing symptomatic relief relatively soon after beginning their treatment, we also see an opportunity for clinicians to use it early in their treatment regimen as patients move beyond conventional therapies. Now, longer term, as you're asking here, we believe PALI-2108 could play an important role in combo therapies as well. PDE4 inhibitors are complementary to a number of other mechanisms currently used or under development in IBD. The field is increasingly interested in combining mechanisms to improve outcomes. But for now, we're focused on establishing the efficacy, safety, and tolerability of our drug as a standalone therapy.
I want to pivot to the phase II, but I think as a lead-into that, wanted to talk a little about your confidence in the dose selection for phase II and how you got to those doses.
Our phase I program evaluated single doses up to 450 mg and multiple doses up to 100 mg a day. That is 50 mg twice daily. In UC, we evaluated a dose of 30 mg twice daily and observed maximal drug exposure, both in intestinal tissue and systemically. In fibrostenotic Crohn's disease, we evaluated once-daily doses of 20, then 25 mg, and then 30 mg, which produced substantial tissue and systemic exposure. Then we moved on to conduct additional healthy volunteer studies to target phase II dosing studies at 15, 30, and 45 once daily. At all doses, we observed sustained pharmacologically relevant exposure of our active PDE4 inhibitor throughout the dosing interval. We had a clear dose-related increase in exposure systemically and observations that suggested we had reached a maximal tissue exposure prior to 45 mg.
All of these data were used and put into our PopPK model as part of our dose selection process, and that supports evaluating two distinct once-daily doses of 15 mg and 30 mg in our phase II program.
Sounds good. Let us walk through the UC phase II trial design, and I want to get into some of the details around how you are maintaining site selection, all those elements to make sure you have a study that is not failure to drug.
Sure, yeah. ASCENTRA-UC is a global randomized, double-blind, placebo-controlled phase II study, and we are enrolling approximately 204 patients. The patients are assigned equally to 15 mg once daily, 30 once daily, or placebo for 12-week induction period. The primary endpoint in the induction period is pretty classical on clinical remission at week 12, measured using modified Mayo score. We expect half of the patients will have failed a first line of advanced therapy, which allows us to look at both advanced therapy-naïve and experienced patients. Our enrollment strategy combines global site coverage also with a meaningful U.S. presence, and we have support from our CRO, but also from recruitment specialists that help identify patients through networks of gastroenterology practices. The study assumes a placebo remission rate of 12.5% and a treatment benefit of 20 percentage points over placebo.
Under those assumptions, it has approximately 90% power to demonstrate a dose effect. Recent studies have supported that. Our placebo assumption is quite conservative, actually.
Yeah, I guess in particular, clinical remission placebo responses in UC have been variable historically. I guess, what are the key elements here from a trial design perspective to limit placebo response, like global studies, monitoring sort of condiments, steroid utilization, all of those elements that matter?
Yeah. Obviously we have selected a CRO that specializes in these types of studies and has global reach. We are also using a specialist for identifying and recruiting patients. Those specialists are part of the way that they work is they educate the patients and educate the sites and provide the infrastructure to the sites on things like you had mentioned, patients taking steroids, for instance, off late or going to the off label or not telling their
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site investigators. Some of those things are really just educational things. Some of them are site selection things, and we have tried to focus on all of those things to make sure the patients in the study are sticking to our protocols.
How is site activation going? I saw obviously you had your CTA clearance in Canada today. How is that going? How close are you to dosing your first patients here?
Yeah, exactly. Our focus at Palisade is really execution right now. Site activations are ahead of schedule, screening's progressing well, and pre-screening patients is progressing as expected. We've activated two-thirds of our 30 planned U.S. sites, and we're activating across a planned global network of approximately 115 sites. As you point out, we've received our Health Canada CTA approval to proceed with the phase II study in Canada, so we're starting to demonstrate that we're getting approvals outside of the U.S., and we'll continue to do that in Eastern Europe and then Western Europe. With good early progress, now it's time to focus on first patient dosing and building enrollment momentum after that.
How confident are you around your second half 2027 guidance, everything on track?
Yeah. No, we're confident in that guidance. We're working closely with our enrollment specialists, and we've modeled this out, so nothing has changed. I think some of the data is actually published, our CROs published, our enrollment specialists have published data and recent data within the past year on enrollment. When we model out 115 sites, we are still tracking to that deadline.
Great. How are you thinking about what a good outcome looks like to sort of solidify the profile that you're envisioning for PALI-2108 in UC?
We think about success in our UC trial really at two levels. First, what constitutes a successful phase II study, and then second, what would constitute a differentiated product profile? At the study level, the primary objective is to demonstrate statistically and clinically meaningful improvement at week 12 in a modified Mayo clinical remission score. As Mitch already mentioned, we've powered the study at 90% using an assumed 20% remission rate above placebo and a conservative 12.5% placebo remission rate. At the product level, we'll look at the totality of the data, and that would include the absolute remission rate, the separation from placebo, endoscopic improvement, dose response, tolerability, and then ultimately durability through maintenance.
What we're looking for, Alex, is an overall data set that supports a differentiated profile and one that we hope will ultimately give physicians a compelling reason to prescribe PALI-2108 as a once-daily oral treatment for their patients.
Is that a 20% delta from placebo or 20%?
20% delta, correct, from placebo.
Based on your phase I work, would you expect to see a dose response here, or is it not clear if that's going to happen?
Yeah, I can take that. Yeah, certainly we expect to see a dose response. I think our pre-clinical data demonstrate clearly that we can dose very high with PALI-2108 and see dose response. Some of the earlier generation one, generation two PDE4 inhibitors, you don't see that with the DSS mouse model. As an example, as you dose up, you start to see some strange activity at the high end. But with our drug, we can dose and just get sort of more and more efficacy. We expect to see a dose response for sure.
Great. Your Crohn's study, you have the clearance there too in ASCENTRA-CD. I think the nuance here is that this is an open label study relative to a placebo-controlled UC study. What's the rationale for doing a phase II open label study in Crohn's?
Yeah. I think there's several reasons for doing an open label proof of concept study here. First, we already have encouraging human data in Crohn's disease in patients with treatment-refractory fibrostenotic Crohn's disease. We saw endoscopic improvement after just two weeks, alongside with direct evidence of ileocolonic tissue exposure, pharmacodynamic tissue engagement. Second, PDE4 inhibition has the potential to be relevant to both inflammation and fibrosis. Recurrent Crohn's drives tissue remodeling and fibrosis, which suggests the pathophysiology for both is involving inflammation but also fibroblast biology. PDE4 inhibition has been shown to address both of these, and so it's particularly compelling there. Third, the study is centered around an objective endpoint. We have centrally read endoscopic response at week 12. We'll also look at clinical outcomes, biomarkers, PK pharmacodynamics, and consistent findings across these measures should provide meaningful proof of concept and supportive data for our phase III.
Actually, I'll add to that, there's also a precedent.
Yeah.
Prometheus' APOLLO-CD program, subsequently acquired by Merck, used an open label phase IIa study design of approximately 50 patients, which acted as a proof of concept study and supported Merck's initiation of a phase III program.
I guess as an open label study, you have some flexibility around disclosure to some degree. Right now you're guiding to 1Q 2028, 12-week endoscopic improvement response data disclosure. I guess any possibility you might disclose data before you get the full data set, or are you expecting to just wait till you have the full 12-week data?
Yeah. As I mentioned at the beginning, because it is an open label study, it does give us the flexibility of reporting data along the way in 2027, and that would be our hope in this.
Okay, great. Last question here, how are you thinking about cash runway? What is embedded in those assumptions from here?
Yeah. Good news is we are in a very strong financial position. Based on our 10-Q we filed at the end of June, we reported approximately $25 million in cash and no long-term debt. Based on our current operating plan, we expect our existing cash to fund operations through major clinical milestones for both of our phase II programs, including the top-line readouts from the ASCENTRA-UC and from the ASCENTRA-CD studies. Alex, the great thing about having a strong balance sheet is that it allows us to stay focused on our highest priority right now, which is execution across both of these programs.
One quick correction there, $125 million in cash, not $25 million.
Oh, sorry, $125 million in cash. Thank you.
Great. Well, Mitch, JD, always a pleasure. Thanks for joining us.
Thanks, Alex. Appreciate it.