GlobeNewswire Inc | Aug 24, 2021 08:15AM EDT

August 24, 2021

CARLSBAD, Calif., Aug. 24, 2021 (GLOBE NEWSWIRE) -- Palisade Bio, Inc.(Nasdaq: PALI) (Palisade or the Company), a late-stage biopharma company advancing therapies for acute and chronic gastrointestinal (GI) complications, today provides a business update and releases its financial results for the second quarter ending June 30, 2021.

Recent Corporate Highlights:

-- Announced positive topline results from Phase 2 study of LB1148 by partner Newsoara demonstrating accelerated return of bowel function after gastrointestinal surgery -- Entered into worldwide in-licensing agreement with University of California for technology to support target identification, drug discovery, and clinical development -- Launched a Clinical Steering Committee to provide strategic guidance over late-stage clinical program development for its lead investigational drug LB1148 -- Hosted a key opinion leader (KOL) webinar on LB1148 with Drs. Steven Wexner, M.D., Cleveland Clinic and Mark A. Talamini, M.D., Northwell Health -- Received FDA Fast Track Designation for LB1148 for reduction of adhesions following abdominal and pelvic surgery -- Closed a $5.2M private investment by the Yuma Regional Medical Center to help advance clinical development of LB1148

Financial Summary:

-- R&D expenses declined from $650,000 for the three months ended June 30, 2020 to $314,000 in the three months ended June 30, 2021, primarily due to higher trailing enrollment in the prior period before the COVID-19 pandemic, as well as due to a general decrease in personnel-related costs and stock-based compensation in the current period. -- General and administrative expenses increased from $1.2 million in the quarter ended June 30, 2020 to $2.4 million in the same period of 2021, primarily due to increased compensation and stock compensation expenses, as well as other general and administrative expenses associated with operating as a public company. -- In-process R&D for the quarter ended 2021 was $30.1 million, as compared to $0 in the same period of 2020, and reflects the allocation of the merger price to in-process R&D projects acquired with no alternative future use. -- Cash and cash equivalents as of June 30, 2021 was $12.7 million, while outstanding debt was $1.1 million.

The recently announced topline Phase 2 data with our partner Newsoara showing LB1148 brought an accelerated return to bowel function in patients following surgery is yet another building block in our efforts to get LB1148 approved for GI treatments. Across our trials to date in both animals and humans, there is a consistent theme that the drug is both safe and effective in accelerating return of bowel function, stated Tom Hallam, Ph.D., President and CEO of Palisade Bio. Assuming positive future clinical results that are consistent with our trials to date, we see pathways to regulatory approval for LB1148. Moreover, we expect to build a pipeline of therapies based on our recently announced license agreement with the Regents of the University of California. We are now diligently planning our next strategic activities and look forward to providing additional investor updates as our corporate and clinical progress unfolds.

AboutPalisade Bio, Inc. Palisade Biois a late-stage biopharma company advancing therapies that help patients with acute and chronic gastrointestinal complications stemming from post-operative digestive enzyme damage. Palisade Bios innovative lead asset, LB1148, is a Phase 3-ready protease inhibitor with the potential to both reduce abdominal adhesions and help restore bowel function following surgery. Positive data from two Phase 2 trials of LB1148 demonstrated safety and tolerability as well as a statistically significant improvement in return to bowel function and decrease in length of stay in ICU and hospital compared to placebo.Palisade Biobelieves that its investigational therapies have the potential to address the myriad health conditions and complications associated with chronic disruption of the gastrointestinal epithelial barrier. For more information, please go towww.palisadebio.com.

Forward Looking Statements This communication contains forward-looking statements, including, without limitation, statements related to expectations regarding Palisades plans for future clinical development of LB1148, plans for regulatory approvals of LB1148, plans for building a pipeline of therapies in the future, and plans for additional investor updates in the future. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon Palisades current expectations. Forward-looking statements involve risks and uncertainties. Palisades actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, related to the Companys ability to advance its clinical programs and the uncertain and time-consuming regulatory approval process. Additional risks and uncertainties can be found in Palisade Bios (formerly known asSeneca Biopharma, Inc.) Quarterly Report on Form 10-Q for the quarter endedJune 30, 2021. Palisade expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Palisades expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Palisade Bio Investor Relations Contact:CORE IRir@palisadebio.com

Palisade Bio Media Relations Contact: CORE IRJules Abrahamjulesa@coreir.com917-885-7378

Palisade Bio, Inc.Condensed Consolidated Balance Sheets(in thousands, except share and per share amounts) June 30, December 2021 31, 2020 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 12,653 $ 713 Accounts receivable 59 59 Prepaid expenses and other current assets 2,013 124 Total current assets 14,725 896 Restricted cash 26 26 Deferred transaction costs - 1,817 Right-of-use asset 195 275 Property and equipment, net 3 5 Total assets $ 14,949 $ 3,019 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities: Accounts payable $ 1,406 $ 2,537 Accrued liabilities 955 2,740 Accrued compensation and benefits 164 1,590 Current portion of lease liability 184 168 Current portion of debt 696 578 Current portion of related party debt, net 445 469 Total current liabilities 3,850 8,082 Warrant liability 20,526 1,830 Non-current portion of debt - 94 Lease liability, net of current portion 17 112 Total liabilities 24,393 10,118 Series C convertible preferred stock, $0.001 parvalue; 0 and 33,594,625 shares authorized as ofJune 30, 2021 and December 31, 2020, respectively; - 9,503 0 and 11,674,131 shares issued and outstanding atJune 30, 2021 and December 31, 2020; liquidationpreference of $10.4 million as of December 31, 2020 Stockholders? deficit: Series A convertible preferred stock, 7,000,000shares authorized, $0.01 par value; 200,000 and 0 2 - shares issued and outstanding at June 30, 2021 andDecember 31, 2020, respectivelyCommon stock, $0.01 par value; 300,000,000 and6,797,500 shares authorized as of June 30, 2021 andDecember 31, 2020, respectively; 11,398,698 and 114 28 2,774,502 shares issued and outstanding at June 30,2021 and December 31, 2020, respectivelyAdditional paid-in capital 94,242 51,396 Accumulated deficit (103,802 ) (68,026 )Total stockholders' deficit (9,444 ) (16,602 )Total liabilities, convertible preferred stock and $ 14,949 $ 3,019 stockholders' equity (deficit)

Palisade Bio, Inc.Condensed Statements of Operations(in thousands, except share and per share amounts)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Operating expenses:Research and $ 314 $ 650 $ 1,006 $ 1,902 developmentIn-processresearch and 30,117 - 30,117 - developmentGeneral and 2,427 1,191 3,688 2,334 administrativeTotaloperating 32,858 1,841 34,811 4,236 expensesLoss from (32,858 ) (1,841 ) (34,811 ) (4,236 ) operationsOther income (expense):Gain onforgiveness of - - 279 - debtLoss onissuance of - - (686 ) - secured debtChange in fairvalue of 5,133 - 5,175 - warrantliabilityChange in fairvalue of share 73 - 73 - liabilityInterest (655 ) (11 ) (2,367 ) (11 ) expenseOther income 16 1 16 12 Loss onissuance ofLBS Series 1 (1,881 ) - (1,881 ) - PreferredStockIssuance cost (1,574 ) - (1,574 ) - of warrantsTotal otherincome 1,112 (10 ) (965 ) 1 (expense)Net loss $ (31,746 ) $ (1,851 ) $ (35,776 ) $ (4,235 ) Loss per share:Basic $ (3.59 ) $ (0.67 ) $ (6.17 ) $ (1.53 ) Diluted $ (4.10 ) $ (0.67 ) $ (6.96 ) $ (1.53 ) Weightedaverage sharesused in computing lossper share:Basic 8,831,517 2,774,296 5,803,010 2,274,237 Diluted 8,984,198 2,774,296 5,879,351 2,774,237 Net lossattributableto common $ (31,746 ) $ (1,851 ) $ (35,776 ) $ (4,235 ) stockholders -basicChange in fairvalue of $ (5,119 ) $ - $ (5,119 ) $ - warrantsNet lossattributableto common $ (36,865 ) $ (1,851 ) $ (40,895 ) $ (4,235 ) stockholders -diluted

Palisade Bio, Inc.Condensed Consolidated Statements of Cash Flows Operations(in thousands) Six Months Ended June 30, 2021 2020 (unaudited) Net loss $ (35,776 ) $ (4,235 ) Adjustments to reconcile net income (loss) tonet cash provided by (used in) operating activities:Depreciation and amortization 2 1 In-process research and development 30,117 - Noncash transaction costs shared with Seneca (135 ) - Noncash lease expense 80 3 Gain on forgiveness of PPP loan (279 ) - Accretion of debt discount and non-cash 2,203 12 interest expenseLoss on issuance of LBS Series 1 Preferred 1,881 - StockLoss on issuance of debt 686 - Issuance cost allocated to warrant 1,574 - Change in fair value of warrant liabilities (5,175 ) - Change in fair value of share liability (73 ) - Stock-based compensation 1,064 880 Write off of accounts payable 183 - RSU vesting expense 41 - Changes in operating assets and liabilities: Trade and other receivables 25 (53 )Prepaid and other assets (1,294 ) 43 Accounts payable and accrued liabilities (2,499 ) 998 Accrued compensation (1,518 ) - Operating lease liabilities (79 ) - Net cash used in operating activities (8,972 ) (2,351 ) Cash flows from investing activities: Cash acquired in connection with the Merger 3,279 - Acquisition related costs paid (2,985 ) - Purchases of property and equipment - (6 )Net cash provided by (used in) investing 294 (6 )activities Cash flows from financing activities: Payments on debt (285 ) - Proceeds from issuance of debt 1,250 279 Proceeds from issuance of LBS Series 1 19,900 - Preferred StockRedemption of warrants (99 ) - Payment of debt issuance costs (148 ) - Net cash provided by financing activities 20,618 279 Net increase (decrease) in cash, cash 11,940 (2,078 )equivalents and restricted cashCash, cash equivalents and restricted cash, 739 3,623 beginning of periodCash, cash equivalents and restricted cash, 12,679 1,545 ending of period Reconciliation of cash, cash equivalents and restricted cash to the balance sheets:Cash and cash equivalents 12,653 1,519 Restricted cash 26 26 Total cash, cash equivalents and restricted 12,679 1,545 cash Supplemental disclosure of cash flows: Interest paid $ 50 $ - Supplemental disclosures of non-cash investing and financing activities:Transaction costs shared with Seneca $ 135 $ - Acquisition related costs included in accounts $ 367 $ - payable and accrued liabilitiesAcquisition costs related stock issuance $ 1,184 $ - Issuance of common stock to former Seneca $ 28,728 $ - stockholdersConversion of LBS Series C Preferred stock $ 9,503 $ - into common stockNet assets acquired in the Merger $ 2 $ - Acquisition related vesting of RSU's assumed $ 41 $ - in the MergerAcquisition related fair value change in $ 51 $ - warrant liability assumed in the Merger