GlobeNewswire Inc | Nov 15, 2021 07:00AM EST

November 15, 2021

CARLSBAD, Calif., Nov. 15, 2021 (GLOBE NEWSWIRE) -- Palisade Bio, Inc.(Nasdaq: PALI) (Palisade or the Company), a clinical stage biopharmaceutical company advancing oral therapies that help patients with acute and chronic gastrointestinal (GI) complications, today provides a business update and releases its financial results for the third quarter ended September 30, 2021.

Third Quarter Highlights:

-- In July 2021, the Company released top line Phase 2 clinical trial results from its development partner, Newsoara, that showed a 1.1-day improvement in GI recovery in patients receiving LB1148 vs placebo. -- In July 2021, the Company entered a worldwide exclusive license with the University of California to patent rights covering certain engineered substrates and use in measuring degradative enzymes for disease conditions, including cancer. -- In August 2021, Yuma Regional Medical Center made a private investment of $5.2 million to help advance clinical development of LB1148.

Financial Summary:

-- Research and development expenses increased from $412,000 for the three months ended September 30, 2020, to $624,000 for the three months ended September 30, 2021, primarily attributable to an increase in clinical trial activities as non-essential surgical procedures, which were virtually halted following the onset of the COVID-19 pandemic, have begun to return to pre-pandemic levels resulting in more patients enrolled in our clinical trial. The increase was offset partially by a decrease in share-based compensation expense. -- General and administrative expenses increased from $1.4 million for the three months ended September 30, 2020, to $2.4 million for the same period of 2021, primarily related to an increase in other general and administrative expenses associated with operating as a public company, including accounting and legal costs, offset partially by a decrease in share-based compensation expense. -- Cash and cash equivalents as of September 30, 2021, was $14.1 million, while outstanding debt was $568,000.

The positive results from the Phase 2 study demonstrated that LB1148 accelerated return to bowel function in patients undergoing GI surgery compared to placebo. Were excited about the read outs of these Phase 2 data as they guide us towards a pathway for late-stage protocols, stated Tom Hallam, Ph.D., President and Chief Executive Officer of Palisade Bio. Additionally, we are initiating studies based on technology under the UC license to measure blood protease activity in defined patient groups, with the goal of identifying new biomarkers and therapeutic targets to build our pipeline.

AboutPalisade Bio, Inc. Palisade Bio is a clinical stage biopharmaceutical company advancing oral therapies that help patients with acute and chronic gastrointestinal complications stemming from post-operative digestive enzyme damage. Palisade Bios innovative lead asset, LB1148, advancing towards Phase 3 is a protease inhibitor with the potential to both reduce abdominal adhesions and help restore bowel function following surgery. Positive data from 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 Bio believes that its investigational therapies have the potential to address the myriad of 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, and plans for building a pipeline of therapies 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, 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 Quarterly Report on Form 10-Q for the quarter endedSeptember 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:Dawn HofmeisterManager of Investor and Public Affairsir@palisadebio.com

CORE IRir@palisadebio.com

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

Palisade Bio, Inc.Condensed Consolidated Balance Sheets (Unaudited)(in thousands, except share and per share amounts)

September30, December31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 14,104 $ 713 Accounts receivable ? 59 Prepaid expenses and other current assets 1,988 124 Total current assets 16,092 896 Restricted cash 26 26 Deferred transaction costs ? 1,817 Right-of-use asset 153 275 Property and equipment, net 3 5 Total assets $ 16,274 $ 3,019 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities: Accounts payable $ 1,383 $ 2,537 Accrued liabilities 722 2,740 Accrued compensation and benefits 89 1,590 Current portion of lease liability 158 168 Current portion of debt 387 578 Current portion of related party debt, net 181 469 Total current liabilities 2,920 8,082 Warrant liability 9,434 1,830 Non-current portion of debt ? 94 Lease liability, net of current portion ? 112 Total liabilities 12,354 10,118 Commitments and contingencies (Note 11) Series C convertible preferred stock, $0.001 parvalue; 0 and 33,594,625 shares authorized as ofSeptember30, 2021 and December31, 2020,respectively; 0 and 11,674,131 shares issued and ? 9,503 outstanding at September30, 2021 andDecember31, 2020, respectively; liquidationpreference of $10.4 million as of December31,2020Stockholders' equity (deficit): Series A convertible preferred stock, 7,000,000shares authorized, $0.01 par value; 200,000 and 2 ? 0 shares issued and outstanding at September30,2021 and December31, 2020, respectivelyCommon stock, $0.01 par value; 300,000,000 and6,797,500 shares authorized as of September30,2021 and December31, 2020, respectively; 130 28 12,929,911 and 2,774,501 shares issued andoutstanding at September30, 2021 andDecember31, 2020, respectivelyAdditional paid-in capital 99,503 51,396 Accumulated deficit (95,715 ) (68,026 )Total stockholders' equity (deficit) 3,920 (16,602 )Total liabilities, convertible preferred stock $ 16,274 $ 3,019 and stockholders' equity (deficit)

Palisade Bio, Inc.Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts)

Three Months Ended Nine Months Ended September30, September30, 2021 2020 2021 2020 Operating expenses:Research and $ 624 $ 412 $ 1,630 $ 2,314 developmentIn-processresearch and ? ? 30,117 ? developmentGeneral and 2,392 1,404 6,080 3,738 administrativeTotaloperating 3,016 1,816 37,827 6,052 expensesLoss from (3,016 ) (1,816 ) (37,827 ) (6,052 )operationsOther income (expense):Gain onforgiveness of ? ? 279 ? PPP loanLoss onissuance of ? ? (686 ) ? secured debtGain on changein fair value 12,764 ? 17,939 ? of warrantliabilityGain on changein fair value 18 ? 91 ? of shareliabilityInterest (26 ) (28 ) (2,393 ) (39 )expenseOther income 20 1 36 13 Loss onissuance ofLBS Series 1 ? ? (1,881 ) ? PreferredStockLoss onissuance of (1,673 ) ? (3,247 ) ? warrantsTotal otherincome 11,103 (27 ) 10,138 (26 )(expense)Net income $ 8,087 $ (1,843 ) $ (27,689 ) $ (6,078 )(loss)Earnings(loss) per share:Basic $ 0.42 $ (0.66 ) $ (3.50 ) $ (2.19 )Diluted $ 0.42 $ (0.66 ) $ (4.13 ) $ (2.19 )Weightedaverage sharesused incomputing earnings(loss) pershare:Basic 12,100,292 2,774,502 7,902,104 2,774,237 Diluted 12,106,771 2,774,502 7,952,998 2,774,237 Net income(loss)attributable $ 5,118 $ (1,843 ) $ (27,689 ) $ (6,078 )to commonshares - basicNet income(loss)attributable $ 5,119 $ (1,843 ) $ (32,808 ) $ (6,078 )to commonshares -diluted

Palisade Bio, Inc.Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)

Nine Months Ended September30, 2021 2020 Net loss $ (27,689 ) $ (6,078 )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization 2 2 In-process research and development 30,117 ? Noncash transaction costs shared with Seneca (135 ) ? Noncash lease expense 122 105 Gain on forgiveness of PPP loan (279 ) ? Accretion of debt discount and non-cash interest 2,334 32 expenseLoss on issuance of LBS Series 1 Preferred Stock 1,881 ? Loss on issuance of secured debt 686 ? Loss on issuance of warrants 3,247 ? Change in fair value of warrant liabilities (17,939 ) ? Change in fair value of share liability (91 ) ? Stock-based compensation 1,208 1,544 Accrued and unpaid interest ? 7 Other 191 ? Changes in operating assets and liabilities: Trade and other receivables 84 (53 )Prepaid and other assets (1,264 ) 24 Accounts payable and accrued liabilities (2,527 ) 1,299 Accrued compensation (1,544 ) ? Operating lease liabilities (122 ) (102 )Net cash used in operating activities (11,718 ) (3,220 )Cash flows from investing activities: Cash acquired in connection with the Merger 3,279 ? Acquisition related costs paid (3,333 ) ? Purchases of property and equipment ? (5 )Net cash used in investing activities (54 ) (5 )Cash flows from financing activities: Payments on debt (949 ) ? Proceeds from issuance of debt 1,250 379 Proceeds from issuance of LBS Series 1 Preferred Stock 19,900 ? Proceeds from issuance of common stock and warrants 5,209 ? Redemption of warrants (99 ) ? Payment of debt issuance costs (148 ) ? Net cash provided by financing activities 25,163 379 Net increase (decrease) in cash, cash equivalents and 13,391 (2,846 )restricted cashCash, cash equivalents and restricted cash, beginning 739 3,623 of periodCash, cash equivalents and restricted cash, end of $ 14,130 $ 777 periodReconciliation of cash, cash equivalents and restricted cash to the balance sheets:Cash and cash equivalents 14,104 751 Restricted cash 26 26 Total cash, cash equivalents and restricted cash $ 14,130 $ 777 Supplemental disclosure of cash flows: Interest paid $ 61 $ ? Supplemental disclosures of non-cash investing and financing activities:Equity issuance costs included in accounts payable $ 67 $ ? Transaction costs shared with Seneca $ 135 $ ? Acquisition costs related to stock issuance $ 1,184 $ ? Issuance of common stock to former Seneca stockholders $ 28,728 $ ? Conversion of LBS Series C Preferred stock into common $ 9,503 $ ? stockNet assets acquired in the Merger $ 2 $ ? Acquisition related vesting of RSU?s assumed in the $ 41 $ ? MergerAcquisition related fair value change in warrant $ 51 $ ? liability assumed in the Merger