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What changed in PALISADE BIO, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PALISADE BIO, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+492 added−500 removedSource: 10-K (2024-12-31) vs 10-K (2024-03-26)

Top changes in PALISADE BIO, INC.'s 2024 10-K

492 paragraphs added · 500 removed · 330 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

114 edited+62 added−58 removed209 unchanged
Biggest changeUC primarily affects the colon and the rectum. Inflammation occurs in the innermost lining of the colon leading to ulcers. Symptoms include bloody diarrhea, abdominal pain, bowel urgency, and frequent bowel movements. CD can affect any part of the gastrointestinal tract, from the mouth to the anus.
Biggest changeFibrostenotic Crohn’s Disease Crohn’s disease ("CD") is an IBD that can affect any part of the gastrointestinal tract, from the mouth to the anus. It is characterized by inflammation that can penetrate deep into the layers of the affected bowel tissue, leading to a range of symptoms including abdominal pain, severe diarrhea, fatigue, weight loss, and malnutrition.
Strategy Our objective is to establish ourselves as a leader in the development of differentiated product candidates targeting the autoimmune, inflammatory, and fibrotic disease markets, which we believe will address a large, well-established need among patients living with autoimmune and inflammatory diseases.
Our Strategy Our objective is to establish ourselves as a leader in the development of differentiated product candidates targeting the autoimmune, inflammatory, and fibrotic disease markets, which we believe will address a large, well-established need among patients living with autoimmune and inflammatory diseases.
Relevant additional information obtained by the sponsor that pertains to a previously submitted IND safety report must be submitted as a follow-up IND safety report. Such report should be submitted within 15 calendar days after the sponsor receives the information.
Relevant additional information obtained by the sponsor that pertains to a previously submitted IND safety report must be submitted as a follow-up IND safety report. Such report should be submitted within 15 calendar days after the sponsor receives the additional information.
An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or if the trial poses an unexpected serious harm to subjects. The FDA or an IRB may also impose conditions on the conduct of a clinical trial.
An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or if the trial poses unexpected serious harm to subjects. The FDA or an IRB may also impose conditions on the conduct of a clinical trial.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted, to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted, to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
If Alto sells or grants to a third party a license to the patents and other rights specific to ALTO-100 prior to the achievement of a specified clinical development milestone, Alto will be required to pay us a low-double digit percentage of any consideration received by Alto from such license or sale, provided that the maximum aggregate consideration Alto will be required to pay to us under the ATA, including the upfront payment and all potential milestones and transaction-related payments, will not exceed $5.0 million.
If Alto sells or grants to a third party a license to the patents and other rights specific to ALTO-100 prior to the achievement of a specified clinical development milestone, Alto will be required to pay us a low-double digit percentage of any consideration received by Alto from such license or sale, provided that the maximum aggregate consideration Alto will be required to pay us under the ATA, including the upfront payment and all potential milestones and transaction-related payments, will not exceed $5.0 million.
We believe improvements to key existing therapies in IBD are necessary. • Inadequate Primary Response to Medical Treatment - Many patients experience low rates of clinical response to initial medical treatments. • Secondary Loss of Clinical Response or Drug Intolerance – A portion of patients initially respond well to treatment but later experience a loss of clinical response or develop intolerance to currently available drugs. • Patient Selection - Identifying patients likely to respond to specific drugs is critical. • Safety Concerns and Long-Term Medication Use - Existing drugs may have side effects and safety concerns, including black box warnings, associated with prolonged use. 8 • Limited Options for Refractory or Severe Disease – A portion of patients face refractory or severe disease that does not respond adequately to available treatments. • Enhancing Treatment Adherence -- Frequent or inconvenient dosing regimens, including infusions and injections, can hinder patient adherence.
We believe improvements to key existing therapies in IBD are necessary. • Inadequate Primary Response to Medical Treatment - Many patients experience low rates of clinical response to initial medical treatments. • Secondary Loss of Clinical Response or Drug Intolerance – A portion of patients initially respond well to treatment but later experience a loss of clinical response or develop intolerance to currently available drugs. • Patient Selection - Identifying patients likely to respond to specific drugs is critical. • Safety Concerns and Long-Term Medication Use - Existing drugs may have side effects and safety concerns, including black box warnings, associated with prolonged use. • Limited Options for Refractory or Severe Disease – A portion of patients face refractory or severe disease that does not respond adequately to available treatments. • Enhancing Treatment Adherence -- Frequent or inconvenient dosing regimens, including infusions and injections, can hinder patient adherence.
Among the provisions of the ACA of importance to our business are: • An annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs; 24 • An increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively; • A methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; • Extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • Expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • A Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D; • Expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and • A Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical research, along with funding for such research.
Among the provisions of the ACA of importance to our business are: • An annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs; • An increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively; 22 • A methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; • Extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • Expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; • A Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D; • Expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and • A Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical research, along with funding for such research.
Additionally, the ACA amended the intent requirement of certain of these criminal statutes under HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation; and • State and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers and drug pricing and/or marketing expenditures; and state and local laws requiring the registration of pharmaceutical sales representatives and state laws governing the privacy and security of health information in certain circumstances, many of 23 which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Additionally, the ACA amended the intent requirement of certain of these criminal statutes under HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation; and • State and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers and drug pricing and/or marketing expenditures; and state and local laws requiring the registration of pharmaceutical sales representatives and state laws governing the privacy and security of health information in certain circumstances, many of 21 which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
It also requires data controllers to be transparent and disclose to data subjects (in a concise, intelligible and easily accessible form) how their personal information is to be used, imposes limitations on retention of personal data; defines for the first time pseudonymized (i.e., key-coded) data; introduces mandatory data breach notification requirements; and sets higher standards for data controllers to demonstrate that they have obtained 27 valid consent for certain data processing activities.
It also requires data controllers to be transparent and disclose to data subjects (in a concise, intelligible and easily accessible form) how their personal information is to be used, imposes limitations on retention of personal data; defines for the first time pseudonymized (i.e., key-coded) data; introduces mandatory data breach notification requirements; and sets higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities.
For example, HIPAA, as amended by HITECH, and its implementing regulations, impose requirements relating to the privacy, security and transmission of individually identifiable health information on certain health care providers, health plans and health care clearinghouses, known as covered entities, as well as their business associates and covered subcontractors that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities.
For example, HIPAA, as amended by HITECH, and its implementing regulations, impose requirements relating to the privacy, security and transmission of individually identifiable health information on certain health care providers, 24 health plans and health care clearinghouses, known as covered entities, as well as their business associates and covered subcontractors that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities.
On October 22, 2021, Alto Neuroscience ("Alto") agreed to terms of an early exercise of the Purchase Option under the 189 License and entered into an asset transfer agreement ("ATA"). Alto is a U.S.-based 29 public, clinical-stage biopharmaceutical company with a mission to redefine psychiatry by leveraging neurobiology to develop personalized and highly effective treatment options.
On October 22, 2021, Alto Neuroscience ("Alto") agreed to terms of an early exercise of the Purchase Option under the 189 License and entered into an asset transfer agreement ("ATA"). Alto is a U.S. based public, clinical-stage biopharmaceutical company with a mission to redefine psychiatry by leveraging neurobiology to develop personalized and highly effective treatment options.
Pursuant to the Newsoara Co-Development Agreement (and subsequent assignment agreement), LBS granted or licensed Newsoara an exclusive right under certain patents to develop, use, sell, offer to sell, import, and otherwise commercialize licensed products (the “Newsoara Licensed Products”) for any and all indications in the People’s Republic of China, including the regions of Hong Kong and Macao, but excluding Taiwan (the “Territory”).
Pursuant to the Newsoara Co-Development Agreement (and subsequent assignment agreement), LBS granted or licensed Newsoara an exclusive right under certain patents to develop, use, sell, offer to sell, import, and otherwise commercialize 8 licensed products (the “Newsoara Licensed Products”) for any and all indications in the People’s Republic of China, including the regions of Hong Kong and Macao, but excluding Taiwan (the “Territory”).
Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug 23 rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Our goal is to attract and retain employees whose talents, expertise, leadership, and contributions are expected to support and facilitate growth and drive long-term stockholder value. Consequently, we provide employee wages that we believe are competitive within our industry, and we regularly evaluate the effectiveness of our compensation and benefit 30 programs against industry benchmarks.
Our goal is to attract and retain employees whose talents, expertise, leadership, and contributions are expected to support and facilitate growth and drive long-term stockholder value. Consequently, we provide employee wages that we believe are competitive within our industry, and we regularly evaluate the effectiveness of our compensation and benefit programs against industry benchmarks.
Clinical trial sponsors may also choose to discontinue clinical trials as a result of risks to subjects, a lack of favorable results, or changing business priorities. Compliance with cGMP Requirements Manufacturers of pharmaceutical products must comply with applicable cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.
Clinical trial sponsors may also choose to discontinue clinical trials as a result of risks to subjects, a lack of favorable results, or changing business priorities. Compliance with cGMP Regulations Manufacturers of pharmaceutical products must comply with applicable cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.
The FDA reviews the NDA to determine, among other things, whether the proposed product candidate is safe and effective for its intended use, has an acceptable purity profile and whether the product candidate is being manufactured in accordance with cGMP to assure and preserve the product candidate’s identity, safety, strength, quality, potency and purity.
The FDA reviews the NDA to determine, among other things, whether the proposed product candidate is safe and effective for its intended use, has an acceptable purity profile and whether the product candidate is being manufactured in accordance with cGMP regulations to assure and preserve the product candidate’s identity, safety, strength, quality, potency and purity.
In the case of such applications accepted for filing between four and five years after approval of the reference drug, the 30-Month Stay of approval triggered by a timely patent infringement lawsuit is extended by the amount of time necessary to extend the stay until 7 ½ years after the approval of the reference drug NDA. 21 New Clinical Trial (3-Year) Exclusivity A drug, including one approved under Section 505(b)(2), may obtain a three-year period of exclusivity for a particular indication or condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical trials (other than bioavailability studies) was essential to the approval of the application or supplemental application and was conducted/sponsored by the applicant.
In the case of such applications accepted for filing between four and five years after approval of the reference drug, the 30-Month Stay of approval triggered by a timely patent infringement lawsuit is extended by the amount of time necessary to extend the stay until 7 ½ years after the approval of the reference drug NDA. 19 New Clinical Trial (3-Year) Exclusivity A drug, including one approved under Section 505(b)(2), may obtain a three-year period of exclusivity for a particular indication or condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical trials (other than bioavailability studies) was essential to the approval of the application or supplemental application and was conducted/sponsored by the applicant.
Further, on November 20, 2020, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, 25 unless the price reduction is required by law.
Further, on November 20, 2020, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.
Efforts to ensure that our current and future business arrangements, including our relationship with our CROs or other vendors 26 who process data on our behalf, comply with applicable data privacy and data security laws and regulations will involve substantial costs.
Efforts to ensure that our current and future business arrangements, including our relationship with our CROs or other vendors who process data on our behalf, comply with applicable data privacy and data security laws and regulations will involve substantial costs.
To date, Newsoara has met all of its payment obligations under the Newsoara Co-Development Agreement. The Newsoara Co-Development Agreement will expire upon the later of the expiration date of the last valid claim of any licensed patent covering the Newsoara Licensed Products in the Territory.
To date, Newsoara has met all of its payment obligations under the Newsoara Co-Development Agreement. The Newsoara Co-Development Agreement will expire upon the expiration date of the last valid claim of any licensed patent covering the Newsoara Licensed Products in the Territory.
Human Clinical Trials Under an IND Clinical trials involve the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, which are generally physicians not employed by, or under, the control of the trial sponsor.
Under an IND Clinical trials involve the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, which are generally physicians not employed by, or under, the control of the trial sponsor.
The data do not need to support a label change for pediatric use; rather, the additional protection is granted if the pediatric clinical trial is deemed to have fairly responded to the FDA’s Written Request.
The data need not support a label change for pediatric use; rather, the additional protection is granted if the pediatric clinical trial is deemed to have fairly responded to the FDA’s Written Request.
We make this information available on or through our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.
We make this information available on or through our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. 30
Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug. 20 Section 505(b)(2) NDA Approval Process As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA under a “full” NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug. 18 Section 505(b)(2) NDA Approval Process As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA under a “full” NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
FDA Review and Approval Process Assuming successful completion of the required clinical and pre-clinical testing, the results of the pre-clinical tests and clinical trials together with detailed information relating to the product’s CMC, including negative or ambiguous results as well as positive findings, and proposed labeling, among other things, are submitted to the FDA for NDA approval to market the product for one or more indications.
FDA Review and Approval Process Assuming successful completion of the required clinical and preclinical testing, the results of the preclinical tests and clinical trials together with detailed information relating to the product’s CMC, including negative or ambiguous results as well as positive findings, and proposed labeling, among other things, are submitted to the FDA for NDA approval to market the product for one or more indications.
Privacy Shield Framework, or the Privacy Shield, under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme.
Privacy Shield Framework, or the Privacy Shield, under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the 25 Privacy Shield scheme.
In addition, this family includes a granted patent in China that we previously assigned to Newsoara to support our co-development agreement, which is described above. The expected expiration date of the issued patents (or any patents that may issue from pending applications) is 2035, excluding any adjustments or extensions of patent term that may be available.
In addition, this family includes a granted patent in China that we previously assigned to Newsoara to support our co-development agreement, which is described above. The expected expiration date of the issued patents (or any patents that may issue from pending applications) is 2035, excluding any adjustments or extensions of patent term that may be available. U.S.
In addition, manufacturers and other entities involved in the manufacture and distribution of approved pharmaceuticals are required to register their establishments with the FDA and certain state agencies, list their products, and are subject to periodic announced and unannounced inspections by the FDA and these state agencies for compliance with current cGMP and other requirements, which impose certain procedural and documentation requirements upon us and third-party manufacturers.
In addition, manufacturers and other entities involved in the manufacture and distribution of approved pharmaceuticals are required to register their establishments with the FDA and certain state agencies, list their products, and are subject to periodic announced and unannounced inspections by the FDA and these state agencies for compliance with cGMP regulations and other requirements, which impose certain procedural and documentation requirements upon us and third-party manufacturers.
Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, and may commercialize products more quickly than we do.
Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, and they may commercialize products more quickly than we do.
The testing and approval process of product candidates requires substantial time, effort, and financial resources. Satisfaction of the FDA’s pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease. Before testing any product candidate in humans, the product candidate must undergo pre-clinical testing.
The testing and approval process of product candidates requires substantial time, effort, and financial resources. Satisfaction of the FDA’s pre-market approval requirements typically takes many years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease. Before testing any product candidate in humans, the product candidate must undergo preclinical testing.
Establishments may be subject to periodic, unannounced inspections by government authorities to ensure compliance with cGMP requirements and other laws. Discovery of problems may result in a government entity placing restrictions on a product, manufacturer or holder of an approved NDA, and may extend to requiring withdrawal of the product from the market.
Establishments may be subject to periodic, unannounced inspections by government authorities to ensure compliance with cGMP regulations and other laws. Discovery of problems may result in a government entity placing restrictions on a product, manufacturer or holder of an approved NDA, and may extend to requiring withdrawal of the product from the market.
Specifically, new drugs and biologics are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and pre-clinical or clinical data demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to both the product and the specific indication for which it is being studied.
Specifically, new drugs and biologics are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and preclinical or clinical data demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to both the product and the specific indication for which it is being studied.
These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide an adequate basis for product labeling. 15 Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be required by FDA, or may be voluntarily conducted after initial approval.
These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide an adequate basis for product labeling. 13 Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be required by FDA, or may be voluntarily conducted after initial approval.
Other post-approval requirements applicable to pharmaceutical products include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.
Other post-approval requirements applicable to pharmaceutical products include reporting of deviations from cGMP regulations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.
A clinical trial sponsor must submit the results of the pre-clinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some pre-clinical testing may continue even after the IND is submitted.
A clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted.
As noted above, recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States, e.g. on July 16, 2020, the Court of Justice of the European Union ("CJEU"), invalidated the EU-U.S.
As noted above, recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EEA to the U.S., e.g. on July 16, 2020, the Court of Justice of the European Union ("CJEU"), invalidated the EU-U.S.
If the Section 505(b)(2) applicant can establish that reliance on FDA’s previous findings of safety and effectiveness is scientifically appropriate, it may eliminate the need to conduct certain pre-clinical studies or clinical trials of the new product.
If the Section 505(b)(2) applicant can establish that reliance on FDA’s previous findings of safety and effectiveness is scientifically appropriate, it may eliminate the need to conduct certain preclinical studies or clinical trials of the new product.
Competition As a pre-clinical biotechnology company, we face competition from a wide array of companies in the pharmaceutical and biotechnology industries. This competition includes both small companies and large companies with greater financial and technical resources and longer operating histories than our own.
Competition As a clinical biopharmaceutical company, we face competition from a wide array of companies in the pharmaceutical and biotechnology industries. This competition includes both small companies and large companies with greater financial and technical resources and longer operating histories than our own.
Our principal executive offices are located at 7750 El Camino Real, Suite 2A, Carlsbad, California 92009, our telephone number is (858) 704-4900 and our website address is www.palisadebio.com. The information on our website is not incorporated by reference in this annual report on Form 10-K or in any other filings we make with the Securities and Exchange Commission ("SEC").
Our principal executive offices are located at 7750 El Camino Real, Suite 2A, Carlsbad, California 92009, our telephone number is (858) 704-4900 and our website address is www.palisadebio.com. The information on our website is not incorporated by reference in this annual report on Form 10-K or in any other filings we make with the SEC.
Our competitors may have significantly greater financial resources; a more established presence in the market; greater expertise in research and development, manufacturing, pre-clinical and clinical testing; more experience in obtaining regulatory approvals and reimbursement; and greater expertise in marketing approved products than we do.
Our competitors may have significantly greater financial resources; a more established presence in the market; greater expertise in research and development, manufacturing, preclinical and clinical testing; more experience in obtaining regulatory approvals and reimbursement; and greater expertise in marketing approved products than we do.
We currently have an agreement with ThermoFisher Scientific (“Thermo”) to supply us with the Newsoara Licensed Product as required under the Newsoara Co-Development Agreement. The agreement with Thermo is a non-specific master services agreement that allows us to alter the scope of services as needed.
We currently have an agreement with ThermoFisher Scientific to supply us with the Newsoara Licensed Product as required under the Newsoara Co-Development Agreement. The agreement with ThermoFisher Scientific is a non-specific master services agreement that allows us to alter the scope of services as needed.
The review process and the PDUFA goal date may be extended by three months if the FDA requests or the NDA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
The review process and the PDUFA goal date may be extended by three months if the FDA requests or the NDA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date. U.S.
Discovery of previously unknown problems or the failure to comply with the applicable regulatory 19 requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.
Discovery of previously unknown problems or the failure to comply with the applicable regulatory 17 requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.
At the state level, individual states in the United States have increasingly passed legislation and implemented regulations designed to control pharmaceutical and therapeutic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, individual states in the U.S. have increasingly passed legislation and implemented regulations designed to control pharmaceutical and therapeutic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
The FDA will not approve an NDA unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specification.
The FDA will not approve an NDA unless it determines that the manufacturing processes and facilities are in compliance with cGMP regulations and adequate to assure consistent production of the product within required specification.
We operate in a competitive landscape within the biopharmaceutical industry. Our focus on PDE4 inhibitor prodrugs that are locally acting and the use of precision medicine for IBD presents both opportunities and challenges. While PDE4 inhibitors that are systemically available have been demonstrated to have significant efficacy, there was dose limiting toxicity.
We operate in a competitive landscape within the biopharmaceutical industry. Our focus on PDE4 inhibitor prodrugs that are locally acting and the use of precision medicine for IBD presents both opportunities and challenges. While PDE4 inhibitors that are systemically available have been demonstrated to have significant efficacy, most have demonstrated dose-limiting toxicity.
In relation to the clinical trials that may be conducted in other countries with a view to obtaining a marketing authorization, there are comparable cGMP requirements and other regulatory rules that are implemented nationally. U.S.
In relation to the clinical trials that may be conducted in other countries with a view to obtaining a marketing authorization, there are comparable cGMP regulations and other regulatory rules that are implemented nationally. U.S.
Pursuant to the terms of the CVR Agreement, no distribution was required to be made to the CVR Holders because the CVR Payment Amount after deducting costs and expenses required to maintain the 189 License was less than $0.3 million.
Pursuant to the terms of the CVR Agreement, no distribution was required to be made to the CVR Holders as the CVR Payment Amount after deducting costs and expenses required to maintain the 189 License was less than $0.3 million.
The process required by the FDA before a new drug product candidate may be marketed in the United States generally involves the following: • Completion of pre-clinical laboratory tests and in vivo studies in accordance with the FDA’s Good Laboratory Practice ("GLP") regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations; • Submission to the FDA of an IND application, which allows human clinical trials to begin unless FDA objects (issues a “clinical hold”) within 30 calendar days; • Approval by an independent institutional review board ("IRB"), reviewing each proposed clinical trial and clinical site before each clinical trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with the protocol contained in the approved IND and in accordance with the FDA’s Good Clinical Practice ("GCP") regulations, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed product candidate for its intended use; • Preparation and submission to the FDA of a NDA for marketing approval that includes substantial evidence of safety and efficacy from results of nonclinical testing and clinical trials; • Review of the product by an FDA advisory committee, if applicable; • Satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the product candidate is produced to assess compliance with current Good Manufacturing Practice ("cGMP") requirements and to assure that the facilities, methods and controls are adequate to preserve the product candidate’s identity, safety, strength, quality, potency and purity; • Potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA; and • Payment of user fees and FDA review and approval of the ND A.
The process required by the FDA before a new drug product candidate may be marketed in the U.S. generally involves the following: • Completion of preclinical laboratory tests and in vivo studies in accordance with the FDA’s Good Laboratory Practice ("GLP") regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations; • Submission to the FDA of an IND application, which allows human clinical trials to begin unless FDA objects (issues a “clinical hold”) within 30 calendar days; • Approval by an independent institutional review board ("IRB"), reviewing each proposed clinical trial and clinical site before each clinical trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with the protocol contained in the approved IND and in accordance with the FDA’s Good Clinical Practice ("GCP") regulations, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed product candidate for its intended use; • Preparation and submission to the FDA of an NDA for marketing approval that includes substantial evidence of safety and efficacy from results of preclinical testing and clinical trials; • Review of the product by an FDA advisory committee, if applicable; • Satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the product candidate is produced to assess compliance with cGMP regulations and to assure that the facilities, methods and controls are adequate to preserve the product candidate’s identity, safety, strength, quality, potency and purity; • Potential FDA audit of the preclinical and clinical trial sites that generated the data supporting the NDA; and, • Payment of user fees and FDA review and approval of the ND A.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other requirements, the sponsor must develop methods for testing the identity, strength, quality, 16 potency and purity of the final product.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other requirements, the sponsor must develop methods for testing the identity, strength, quality, 14 potency and purity of the final product.
The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the United States and between states.
The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the U.S. and between states.
Orphan Drug Designation and Orphan Exclusivity Under the Orphan Drug Act The FDA may grant orphan designation to a drug product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States but for which there is no reasonable expectation that the cost of developing and making the product available in the United States for this type of disease or condition will be recovered from sales of the product.
Orphan Drug Designation and Orphan Exclusivity Under the Orphan Drug Act The FDA may grant orphan designation to a drug product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the U.S., or more than 200,000 individuals in the U.S. but for which there is no reasonable expectation that the cost of developing and making the product available in the U.S. for this type of disease or condition will be recovered from sales of the product.
The heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics, also has resulted in executive orders, congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.
The heightened governmental scrutiny in the U.S. of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics, also has resulted in executive orders, congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.
The conduct of the pre-clinical tests must comply with federal regulations and requirements including GLPs. 14 Concurrent with clinical trials, companies usually must complete some long-term pre-clinical testing, such as animal tests of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements.
The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs regulations. 12 Concurrent with clinical trials, companies usually must complete some long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP regulations.
This patent family includes a patent in Europe, three granted patents in the United States, two granted patents in Taiwan, granted patents in Australia, India, Japan, Mexico, Korea (KR 2397379) and Canada (CA 2942358), and a pending application in the U.S., all of which we solely own.
This patent family includes a patent in Europe, three granted patents in the U.S., two granted patents in Taiwan, granted patents in Australia, India, Japan, Mexico, Korea (KR 2397379) and 11 Canada (CA 2942358), and a pending application in the U.S., all of which we solely own.
As well, precision medicine has been successfully applied in oncology and its adoption in IBD remains an unmet need. Our competitors include established biopharmaceutical companies, emerging biotechnology companies, and generic manufacturers. Large pharmaceutical companies with extensive resources and established pipelines compete in the IBD space. Their existing products and research efforts pose a significant challenge to our ability to compete.
Also, precision medicine has been successfully applied in oncology and its adoption in IBD remains an unmet need. Our competitors include established biopharmaceutical companies, emerging biopharmaceutical companies, and generic manufacturers. Large pharmaceutical companies with extensive resources and established pipelines compete in the IBD space. Their existing products and research efforts pose a significant challenge to our ability to compete.
Manufacturers must continue to expend time, money, and effort in the areas of production and quality-control to maintain compliance with current cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
Manufacturers must continue to expend time, money, and effort in the areas of production and quality-control to maintain compliance with cGMP regulations. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners, vendors, or other third parties on whom we rely.
In the U.S., numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners, vendors, or other third parties on whom we rely.
Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and suspension and debarment from government contracts, and refusal of orders under existing government contracts. Equivalent laws have been adopted in other foreign countries that impose similar or arguably broader obligations.
Activities that violate the FCPA, even if they occur wholly outside the U.S., can result in criminal and civil fines, imprisonment, disgorgement, oversight, and suspension and debarment from government contracts, and refusal of orders under existing government contracts. Equivalent laws have been adopted in other foreign countries that impose similar or arguably broader obligations.
We also rely in part on trade secret, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. We seek to protect our proprietary position by filing and prosecuting patent applications in the United States and abroad related to our technology and product candidates.
We also rely in part on trade secret, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. We seek to protect our proprietary position by filing and prosecuting patent applications in the U.S. and abroad related to our technology and product candidates.
The issuance of a Written Request does not require the sponsor to undertake the described trials. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.
The issuance of a Written Request does not require the sponsor to undertake the described trials. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application. Other U.S.
Likewise, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the United States, the EU and other jurisdictions, such as the California Consumer Privacy Act of 2018 ("CCPA"), which has been characterized as the first “GDPR-like” privacy statute to be enacted in the United States.
Likewise, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the U.S., the EU and other jurisdictions, such as the California Consumer Privacy Act of 2018 ("CCPA"), which has been characterized as the first “GDPR-like” privacy statute to be enacted in the U.S.
Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, that issues arise that partially or fully suspend or terminate such studies.
Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, that issues arise that partially or fully suspend or terminate such studies. Human Clinical Trials in the U.S.
Commercial Should any of our product candidates be approved for commercialization, we intend to develop a plan to commercialize them in the United States and other key markets, through internal infrastructure and/or external partnerships in a manner that will enable us to realize the full commercial value of our programs.
Commercial Should any of our product candidates be approved for commercialization, we intend to develop a plan to commercialize them in the U.S. and other key markets, through internal infrastructure and/or external partnerships in a manner that will enable us to realize the full commercial value of our programs.
Before approving an NDA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the product candidate if it determines that the manufacturing processes and facilities are not in compliance with cGMP requirements or otherwise are not adequate to assure consistent production of the product 17 candidate within required specifications.
Before approving an NDA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the product candidate if it determines that the manufacturing processes and facilities are not in compliance with cGMP regulations or otherwise are not adequate to assure consistent production of the product 15 candidate within required specifications.
In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.
In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.
The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The FCPA also obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. Other legislative changes have been proposed and adopted in the United States since the ACA.
The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. Other legislative changes have been proposed and adopted in the U.S. since the ACA.
The benefits of Breakthrough Therapy designation include the same benefits as Fast Track designation, plus intensive guidance from the FDA to ensure an efficient drug 18 development program. Fast Track designation, priority review, accelerated approval and Breakthrough Therapy designation do not change the standards for approval but may expedite the development or approval process.
The benefits of Breakthrough Therapy designation include the same benefits as Fast Track designation, plus intensive guidance from the FDA to ensure an efficient drug 16 development program. Fast Track designation, priority review, accelerated approval and Breakthrough Therapy designation do not change the standards for approval but may expedite the development or approval process. U.S.
These organizations are responsible for various stages of drug development and manufacturing, including but not limited to: • API Production: High-quality synthesis of active ingredients under stringent regulatory standards. 10 • Formulation Development: Design and development of stable and effective drug formulations suitable for clinical trials. • Clinical Trial Material Manufacturing: Production of investigational medicinal products in compliance with GMP for use in clinical trials. • Packaging and Labeling: Secure and compliant packaging and labeling solutions for clinical trial materials, ensuring patient safety and regulatory adherence. • Quality Control and Assurance: Comprehensive testing and validation processes to ensure the safety, efficacy, and quality of the clinical supplies.
These organizations are responsible for various stages of drug development and manufacturing, including but not limited to: • API Production: High-quality synthesis of active ingredients under stringent regulatory standards. • Formulation Development: Design and development of stable and effective drug formulations suitable for clinical trials. • Clinical Trial Material Manufacturing: Production of investigational medicinal products in compliance with current Good Manufacturing Practice ("cGMP") regulations for use in clinical trials. • Packaging and Labeling: Secure and compliant packaging and labeling solutions for clinical trial materials, ensuring patient safety and regulatory adherence. • Quality Control and Assurance: Comprehensive testing and validation processes to ensure the safety, efficacy, and quality of the clinical supplies.
Small Molecule New Drug Product Development Process Any new drug product must be approved by the FDA before it may be legally marketed in the United States. FDA approval is also required before marketing an approved drug product for a new indication or condition of use.
Small Molecule New Drug Product Development Process Any new drug product must be approved by the FDA before it may be legally marketed in the U.S. FDA approval is also required before marketing an approved drug product for a new indication or condition of use.
Concurrent with clinical trials, companies usually complete additional pre-clinical studies and must also develop additional information about the physical characteristics of the product candidate as well as finalize a process for manufacturing the product candidate in commercial quantities in accordance with cGMP requirements.
Concurrent with clinical trials, companies usually complete additional preclinical studies and must also develop additional information about the physical characteristics of the product candidate as well as finalize a process for manufacturing the product candidate in commercial quantities in accordance with cGMP regulations.
Patent Term Extensions Depending upon the timing, duration and specifics of FDA approval of the use of our therapeutic candidates, some of our United States patents may be eligible for limited patent term extension under the Hatch-Waxman Amendments to the FDCA ("Hatch-Waxman”).
Patent Term Extensions Depending upon the timing, duration and specifics of FDA approval of the use of our therapeutic candidates, some of our U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Amendments to the FDCA ("Hatch-Waxman”).
Pediatric Exclusivity Pediatric exclusivity is another type of non-patent marketing exclusivity available in the United States and, if granted, it provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents.
Pediatric Exclusivity Pediatric exclusivity is another type of non-patent marketing exclusivity available in the U.S. and, if granted, it provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents.
Health Reform The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably.
Health Reform The U.S. and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably.
There can be no assurance that NSI-532.IGF-1 will ever be successfully monetized or that CVR holders will receive CVR Payment Amounts from the sale of the NSI-532.IGF-1 assets. Human Capital Resources Overview As of December 31, 2023, we had nine full-time employees and no part-time employees.
There can be no assurance that NSI-532.IGF-1 will ever be successfully monetized or that CVR holders will receive CVR Payment Amounts from the sale of the NSI-532.IGF-1 assets. 29 Human Capital Resources Overview As of December 31, 2024, we had eight full-time employees and no part-time employees.
We engage a number of temporary employees and consultants to assist with finance, operations, human resources, legal, investor relations and information technology functions, as well as, to the extent needed, our pre-clinical and clinical operations. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages.
We engage a number of consultants to assist with finance, operations, human resources, legal, investor relations and information technology functions, as well as, to the extent needed, our clinical operations. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We consider our relations with our employees to be good.
These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly if they establish collaborative arrangements with large companies.
These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel; establishing clinical trial sites and patient registration for clinical trials; and in acquiring technologies complementary to, or necessary for, our programs. Smaller or earlier-stage companies may also prove to be significant competitors, particularly if they establish collaborative arrangements with larger companies.
In the EU, the data privacy laws are generally perceived to be stricter than those that apply in the United States and include specific requirements for the transfer of personal data outside the EU to the United States to ensure that EU standards of data privacy will be applied to such data.
In the EU, the data privacy laws are generally perceived to be stricter than those that apply in the U.S. and include specific requirements for the transfer of personal data outside the EU to the U.S. to ensure that EU standards of data privacy will be applied to such data.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur success depends on the development of PALI-2108, which is subject to a number of risks, including: • the continued enforceability of our research collaboration and license agreement with Giiant; • the successful completion of our IND or CTA enabling studies and research; • the submission and approval of an IND or CTA; • our ability to develop and implement clinical trial designs and protocols; • the successful initiation and completion of our planned pre-clinical studies and clinical trials; • the approval by the FDA or other regulatory authority to commence the marketing of our product candidates; • the ability for us and third-parties, if applicable, to achieve and maintain compliance with our contractual obligations and applicable regulatory requirements; 31 • the ability of our contract manufacturers to manufacture sufficient supply of our product candidates to meet the required pre-clinical studies and clinical trial supplies; • the ability of our contract manufacturers to remain in good standing with regulatory agencies and to develop, validate and maintain commercially viable manufacturing facilities and processes that are compliant with cGMP; • our ability to obtain favorable labeling for our product candidates through regulators that allows for successful commercialization; • acceptance by physicians, insurers, payors, and patients of the beneficial quality, safety and efficacy of our product candidates, if approved, including relative to alternative and competing treatments; • our ability to price our product candidates to recover our development costs and applicable milestone or royalty payments, and generate a satisfactory profit margin; and • our ability and our applicable collaboration and licensing partners’ ability to establish and enforce intellectual property rights related to our product candidates and technologies.
Biggest changeOur success depends on the development and clinical success of PALI-2108, which is subject to a number of risks, including: • the continued enforceability of our research collaboration and license agreement with Giiant; • timely and successful completion of required clinical trials, which may be significantly slower or costlier than we anticipate and/or produces results that do not achieve the primary or secondary endpoints of the trial(s); • our ability to develop and implement clinical trial designs and protocols; • the successful initiation and completion of our current planned clinical trials and any additionally required preclinical studies, if any; • our ability to retain third-party CROs on terms acceptable to us for the conduct and oversight of our anticipated clinical trials, including our Phase 1 clinical trial for PALI-2108; • our ability to fund the development costs related to PALI-2108’s clinical development; • the approval by Health Canada or other regulatory authorities to commence the marketing of our product candidates; • the ability for us and third-parties, if applicable, to achieve and maintain compliance with our contractual obligations and applicable regulatory requirements; • the ability of our contract manufacturers to manufacture sufficient supply of our product candidates to meet the required clinical trial supplies and any additional required preclinical studies; • the ability of our contract manufacturers to remain in good standing with regulatory agencies and to develop, validate and maintain commercially viable manufacturing facilities and processes that are compliant with cGMP regulations; • our ability to obtain favorable labeling for our product candidates through regulators that allows for successful commercialization; • acceptance by physicians, insurers, payors, and patients of the beneficial quality, safety and efficacy of our product candidates, if approved, including relative to alternative and competing treatments; • our ability to price our product candidates to recover our development costs and applicable milestone or royalty payments, and generate a satisfactory profit margin; and • our ability and our applicable collaboration and licensing partners’ ability to establish and enforce intellectual property rights related to our product candidates and technologies.
The success of this strategy depends partly on our ability to identify and select promising pharmaceutical product candidates and products, negotiate licensing or acquisition agreements with their current owners, and finance these arrangements. The process of identifying, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex.
The success of this strategy depends partly on our ability to identify and select promising pharmaceutical product candidates and approved products, negotiate licensing or acquisition agreements with their current owners, and finance these arrangements. The process of identifying, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex.
The claims may require us to initiate or defend protracted and costly litigation on behalf of customers, licensees, and 43 other parties regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of those parties or may be required to obtain licenses for the products they use.
The claims may require us to initiate or defend protracted and costly litigation on behalf of customers, licensees, and other parties regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages 43 on behalf of those parties or may be required to obtain licenses for the products they use.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline. The trading market for our common stock is and will be influenced by the research and reports that equity research analysts publish about us and our business.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline. The trading market for our common stock is and will be influenced by reports that equity research analysts publish about us and our business.
As a result, the expected timeline for data readouts, including incompleteness in data collection and analysis and other related activities, and certain regulatory filings may be negatively impacted, which would adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses, and adversely affect our business, financial condition, results of 47 operations, and prospects.
As a result, the expected timeline for data readouts, including incompleteness in data collection and analysis and other related activities, and certain regulatory filings may be negatively impacted, which would adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses, and adversely affect our business, financial condition, results of operations, and prospects.
In addition, impact on the operations of the FDA or comparable foreign regulatory authorities could negatively affect our planned trials and approval processes. Finally, economic conditions and business activity may be negatively impacted and may not recover as quickly as anticipated. Unstable economic and market conditions may have serious adverse consequences on our business, financial condition, and stock price.
In addition, impact on the operations of the FDA or comparable foreign regulatory authorities could negatively affect our planned trials and approval processes. Finally, economic conditions and business activity may be negatively impacted and may not recover as quickly as anticipated. 47 Unstable economic and market conditions may have serious adverse consequences on our business, financial condition, and stock price.
The degree and rate of physician and patient adoption of a product, if approved, will depend on a number of factors, including but not limited to: • patient demand for approved products that treat the indication for which they are approved; • the effectiveness of a product compared to other available therapies or treatment regimens; • the availability of coverage and adequate reimbursement from managed care plans and other healthcare payors; • the cost of treatment in relation to alternative treatments and willingness to pay on the part of patients; • insurers’ willingness to see the applicable indication as a disease worth treating; • proper administration by physicians or patients; • patient satisfaction with the results, administration and overall treatment experience; • limitations or contraindications, warnings, precautions or approved indications for use different than those sought by us that are contained in the final FDA-approved labeling, or other authoritative regulatory body approved labeling, for the applicable product; • any FDA requirement, or other authoritative regulatory body requirement, to undertake a risk evaluation and mitigation strategy; • the effectiveness of our sales, marketing, pricing, reimbursement and access, government affairs, and distribution efforts; • adverse publicity about a product or favorable publicity about competitive products; • new government regulations and programs, including price controls and/or limits or prohibitions on ways to commercialize drugs, such as increased scrutiny on direct-to-consumer advertising of pharmaceuticals; and • potential product liability claims or other product-related litigation.
The degree and rate of physician and patient adoption of a product, if approved, will depend on a number of factors, including but not limited to: • patient demand for approved products that treat the indication for which they are approved; • the effectiveness of a product compared to other available therapies or treatment regimens; • the availability of coverage and adequate reimbursement from managed care plans and other healthcare payors; • the cost of treatment in relation to alternative treatments and willingness to pay on the part of patients; • insurers’ willingness to see the applicable indication as a disease worth treating; • proper administration by physicians or patients; • patient satisfaction with the results, administration and overall treatment experience; • limitations or contraindications, warnings, precautions or approved indications for use different than those sought by us that are contained in the final approved labeling; • any requirement of an authoritative regulatory body to undertake a risk evaluation and mitigation strategy; • the effectiveness of our sales, marketing, pricing, reimbursement and access, government affairs, and distribution efforts; • adverse publicity about a product or favorable publicity about competitive products; • new government regulations and programs, including price controls and/or limits or prohibitions on ways to commercialize drugs, such as increased scrutiny on direct-to-consumer advertising of pharmaceuticals; and 36 • potential product liability claims or other product-related litigation.
Our business model assumes revenue from, among other activities, marketing or out-licensing the products we develop. PALI-2108 is in the early stages of development and because we have a short development history with PALI-2108, there is a limited amount of information about us upon which you can evaluate our business and prospects.
Our business model assumes revenue from, among other activities, marketing or out-licensing the products we develop. PALI-2108 is in the early stages of clinical development and because we have a short development history with PALI-2108, there is a limited amount of information about us upon which you can evaluate our business and prospects.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our products and product candidates could be delayed. Item 1B. Unresolved Staff Comments. None
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications or inappropriate disclosure of confidential or 49 proprietary information, we could incur liability and the further development and commercialization of our products and product candidates could be delayed. Item 1B. Unresolved Staff Comments. None
These products may compete with our products, and our patents or other intellectual property rights may not prevent them from competing. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
These products could compete with ours, and our patents or other intellectual property rights may not prevent them from competing. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
At any time, we may decide to discontinue the development of, or temporarily pause the development of, any of our product candidates then in existence, for a variety of reasons, including the appearance of new technologies that make our product candidates obsolete, competition from a competing product or changes in or failure to comply with applicable regulatory requirements.
At any time, we may decide to discontinue the development of, or temporarily pause the development of, any of our product candidates then in existence for a variety of reasons, including the appearance of new technologies that make our product candidates obsolete, competition from competing product(s) or changes in or failure to comply with applicable regulatory requirements.
We depend on our license agreement with Giiant to permit us to use patents and patent applications relating to PALI-2108. Termination of these rights or the failure to comply with obligations under this agreement could materially harm our business and prevent us from developing or commercializing PALI-2108, our lead product candidate.
We depend on our license agreement with Giiant to permit us to use patents and patent applications relating to PALI-2108. Termination of these rights or the failure to comply with our obligations under the license agreement could materially harm our business and prevent us from developing or commercializing PALI-2108, our lead product candidate.
Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if it had a longer operating history or a history of successfully developing and commercializing biopharmaceutical products.
Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing biopharmaceutical products.
Regardless of merit or eventual outcomes of such claims, product liability claims may result in: • decreased demand for our product candidates; • impairment of our business reputation; 35 • withdrawal of clinical trial participants; • costs of litigation; • substantial monetary awards to patients or other claimants; and • loss of revenues.
Regardless of merit or eventual outcomes of such claims, product liability claims may result in: • decreased demand for our product candidates; • impairment of our business reputation; • withdrawal of clinical trial participants; • costs of litigation; • substantial monetary awards to patients or other claimants; and • loss of revenues.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Similarly, supply-chain attacks have increased in frequency and severity.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to 48 make such payments due to, for example, applicable laws or regulations prohibiting such payments. Similarly, supply-chain attacks have increased in frequency and severity.
In addition, since we sponsor clinical trials, any breach that compromises patient data 49 and identities causing a breach of privacy could generate significant reputational damage and legal liabilities and costs to recover and repair, including affecting trust in us to recruit for future clinical trials.
In addition, since we sponsor clinical trials, any breach that compromises patient data and identities causing a breach of privacy could generate significant reputational damage and legal liabilities and costs to recover and repair, including affecting trust in us to recruit for future clinical trials.
It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them.
It is also possible that we or our current, or future licensors and licensees will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them.
In that event, we could still be a smaller reporting company if our annual revenues are below $100 million and we have a public float of less than $700 million. We do not anticipate paying any dividends in the foreseeable future.
In that event, we could still be a smaller reporting company if our annual revenues are below $100 million and we have a public float of less than $700 million. 45 We do not anticipate paying any dividends in the foreseeable future. We do not anticipate paying any dividends in the foreseeable future.
If our trade secrets are independently discovered, we would not be able to prevent their use and if we or our agents or representatives inadvertently disclose trade secrets and/or unpatented know-how, we may not be allowed to retrieve these trade secrets and/or unpatented know-how and maintain the exclusivity it previously held.
If our trade secrets are independently discovered, we would not be able to prevent their use and if we or our agents or representatives inadvertently disclose trade secrets and/or unpatented know-how, we may not be allowed to retrieve these trade secrets and/or unpatented know-how and maintain the exclusivity we previously held.
If we do not remediate this material weakness, or if we identify further material weaknesses in our internal controls, our failure to establish 46 and maintain effective internal financial and accounting controls and procedures could result in material misstatements in our consolidated financial statements and a failure to meet our reporting and financial obligations.
If we do not remediate this material weakness, or if we identify further material weaknesses in our internal controls, our failure to establish and maintain effective internal financial and accounting controls and procedures could result in material misstatements in our consolidated financial statements and a failure to meet our reporting and financial obligations.
We are entitled under our certificate of incorporation to issue up to 280,000,000 shares of common stock and 7,000,000 “blank check” shares of preferred stock. Shares of our blank check preferred stock provide our Board with broad authority to determine voting, dividend, conversion, and other rights.
We are entitled under our Certificate of Incorporation to issue up to 280,000,000 shares of common stock and 7,000,000 “blank check” shares of preferred stock. Shares of our blank check preferred stock provide our Board with broad authority to determine voting, dividend, conversion, and other rights of such preferred stock.
Ransomware attacks, including by organized 48 criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
Ransomware attacks, including by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
Global economic and business activities continue to face widespread uncertainties, and global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, bank failures, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks, and uncertainty about economic and geopolitical stability (for example, related to the ongoing Russia-Ukraine and Israel-Hamas conflict).
Global economic and business activities continue to face widespread uncertainties, and global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, bank failures, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks, and uncertainty about economic and geopolitical stability (for example, related to the ongoing Russia-Ukraine and Israel-Hamas conflicts).
The sale of human therapeutic products in the U.S. and foreign jurisdictions is subject to extensive and time-consuming regulatory approval, which requires, among other things: • pre-clinical data required for the submission of an IND or CTA; • controlled research and human clinical testing; • establishment of the safety and efficacy of the proposed product candidate; • government review and approval of a submission containing manufacturing, pre-clinical and clinical data; and • adherence to cGMP regulations during production and storage.
The sale of human therapeutic products in the U.S. and foreign jurisdictions is subject to extensive and time-consuming regulatory approval, which requires, among other things: • preclinical data required for the submission of an IND or CTA; • controlled research and human clinical testing; • establishment of the safety and efficacy of the proposed product candidate; • government review and approval of a submission containing manufacturing, preclinical and clinical data; and • adherence to cGMP regulations during production and storage.
If we or any of these third parties fail to comply with applicable GCP and GLP requirements, or reveal noncompliance from an audit or inspection, any clinical data generated in our clinical trials may be deemed unreliable and the FDA or other regulatory authorities may require us to perform additional clinical trials before approving our or our partners’ marketing applications.
If we or any of these third parties fail to comply with applicable GCP and GLP regulations, or reveal noncompliance from an audit or inspection, any clinical data generated in our clinical trials may be deemed unreliable, and the FDA or other regulatory authorities may require us to perform additional clinical trials before approving our or our partners’ marketing applications.
We expect that our operating losses will continue for the foreseeable future as it continues our drug development and discovery efforts. To achieve profitability, we must, either directly or through licensing and/or partnering relationships, meet certain milestones, successfully develop and obtain regulatory approval for one or more drug candidates and effectively manufacture, market and sell any drugs we successfully develop.
We expect that our operating losses will continue for the foreseeable future as we continue our drug development and discovery efforts. To achieve profitability, we must, either directly or through licensing and/or partnering relationships, meet certain milestones, successfully develop and obtain regulatory approval for one or more drug candidates and effectively manufacture, market and sell any drugs we successfully develop.
If that were to happen, the market price of our common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Our Board of Directors has broad discretion to issue additional securities, which might dilute the net tangible book value per share of our common stock for existing stockholders.
If that were to happen, the market price of our common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. 46 Our Board has broad discretion to issue additional securities, which might dilute the net tangible book value per share of our common stock for existing stockholders.
If we (or a third party upon whom it relies) experience a security breach or other disruption, or are perceived to have experienced such events, we may experience adverse consequences, including: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we (or a third party upon whom we rely) experience a security breach or other disruption, or are perceived to have experienced such events, we may experience adverse consequences, including: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable intellectual property or other rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may need to relinquish certain valuable intellectual property or other rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
Although we have taken steps to protect our trade secrets and unpatented know-how by entering into confidentiality agreements with third parties, and intellectual property protection agreements with officers, directors, employees, and certain consultants and advisors, there can be no assurance that binding agreements will not be breached or enforced by courts, that we would have adequate remedies for any breach, including injunctive and other equitable relief, or that our trade secrets 42 and unpatented know-how will not otherwise become known, inadvertently disclosed by us or our agents and representatives, or be independently discovered by our competitors.
Although we have taken steps to protect our trade secrets and unpatented know-how by entering into confidentiality agreements with third parties, and intellectual property assignment and protection agreements with officers, directors, employees, and certain consultants and advisors, there can be no assurance that such agreements will not be breached or enforced by courts, 42 that we would have adequate remedies for any breach, including injunctive and other equitable relief, or that our trade secrets and unpatented know-how will not otherwise become known, inadvertently disclosed by us or our agents and representatives, or be independently discovered by our competitors.
Even if we obtain additional funding, there can be no assurance that it will be available on terms acceptable to us or our stockholders. Our common stock price may be highly volatile. Since the completion of the merger with Seneca Biopharma, Inc., on April 27, 2021, our stock price has been subject to significant fluctuation.
Even if we obtain additional funding, there can be no assurance that it will be available on terms acceptable to us or our stockholders. Our common stock price may be highly volatile. Since the completion of the merger with Seneca on April 27, 2021, the price of our common stock has been subject to significant fluctuation.
Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems, our efforts may not be successful. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. Applicable data privacy and security obligations may require us to notify relevant stakeholders of certain security breaches and disruptions.
Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems, our efforts may not be successful. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. Applicable data privacy and security obligations may require us to notify relevant parties of certain security breaches and disruptions.
If the safety or quality of any product or product candidate or component is compromised due to a failure to adhere to applicable laws or for other reasons, we may not be able to commercialize or obtain regulatory approval for the affected product or product candidates successfully, and we may be held liable for injuries sustained as a result.
If the safety or quality of any product or product candidate or component is compromised due to a failure to adhere to applicable laws or for other reasons, we may not be able to commercialize or obtain regulatory approval for the affected product or product candidates successfully, and we may be held liable as a result.
In the past, following periods of volatility in the market price of a company’s securities, shareholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.
Our future consolidated financial statements may include a similar qualification about our ability to continue as a going concern. Our year-end and interim consolidated financial statements were prepared assuming that it will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.
Our future consolidated financial statements may include a similar qualification about our ability to continue as a going concern. Our year-end and interim consolidated financial statements were prepared assuming that we will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.
Our insurance coverage may not be sufficient to reimburse it for all expenses or losses it may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect it against losses.
Our insurance coverage may not be sufficient to reimburse us for all expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses.
Any increase in the number of shares outstanding as a result of the exercise of outstanding options, the vesting or settlement of outstanding stock awards, or the purchase of shares pursuant to the employee stock purchase plan will cause shareholders to experience additional dilution, which could cause our stock price to fall.
Any increase in the number of shares outstanding as a result of the exercise of outstanding options, the vesting or settlement of outstanding stock awards, or the purchase of shares pursuant to the employee stock purchase plan will cause stockholders to experience additional dilution, which could cause our stock price to fall.
All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot provide assurance that any approved products that it acquires will be manufactured or sold profitably or achieve market acceptance.
All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot provide assurance that any approved products that we acquire will be manufactured or sold profitably or achieve market acceptance.
Some of the factors that may cause the market price of our shares to fluctuate include, but are not limited to: • failure of our product candidates to show safety and/or efficacy in our pre-clinical or clinical trials; • our ability to obtain timely regulatory approvals for our product candidates, and delays or failures to obtain such approvals; • the results of pre-clinical or clinical trials, including our decision to pause or terminate any such trials; • failure of our product candidates, if approved, to achieve commercial success; 44 • the entry into, or termination of, or breach by partners of key agreements, including the Giiant License Agreement; • the initiation of, material developments in, or conclusion of any litigation to enforce or defend any intellectual property rights or defend against the intellectual property rights of others; • announcements of any financings; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack of, significant contracts, commercial relationships or capital commitments; • failure to elicit meaningful stock analyst coverage and downgrades of our stock by analysts; and • the loss of key personnel.
Some of the factors that may cause the market price of our shares to fluctuate include, but are not limited to: • failure of our product candidates to show safety and/or efficacy in our clinical trials; • our ability to obtain timely regulatory approvals for our product candidates, and delays or failures to obtain such approvals; 44 • the results of our clinical trials, including our decision to pause or terminate any such trials; • failure of our product candidates, if approved, to achieve commercial success; • the entry into, or termination of, or breach by partners of key agreements, including the Giiant License Agreement, and employment agreements with our named executive officers; • the initiation of, material developments in, or conclusion of any litigation to enforce or defend any intellectual property rights or defend against the intellectual property rights of others; • announcements of any financings; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack of, significant contracts, commercial relationships or capital commitments; • failure to elicit meaningful stock analyst coverage and downgrades of our stock by analysts; and • the loss of key personnel.
Thus, we have limited experience and have not yet demonstrated our ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area.
Thus, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management.
In the ordinary course of our business, it may process, as defined above, proprietary, confidential, and sensitive data, including personal data (such as health-related patient data), intellectual property, and trade secrets (collectively, sensitive information).
In the ordinary course of our business, we may process, as defined above, proprietary, confidential, and sensitive data, including personal data (such as health-related patient data), intellectual property, and trade secrets (collectively, sensitive information).
Although for planning purposes we project the commencement, continuation and completion of our pre-clinical studies and clinical trials; a number of factors, including scheduling conflicts with participating researchers and/or clinicians and research or clinical institutions, and difficulties in identifying or enrolling patients who meet trial eligibility criteria, may cause significant delays.
Although for planning purposes we project the commencement, continuation and completion of our clinical trials; a number of factors, including scheduling conflicts with participating researchers and/or CROs, clinicians and research or clinical institutions, and difficulties in identifying or enrolling patients who meet trial eligibility criteria, may cause significant delays.
We will require substantial additional capital to fund our operations and conduct the costly and time-consuming research and development, pre-clinical studies, and clinical work necessary to pursue regulatory approval of product candidates.
We will require substantial additional capital to fund our operations and conduct the costly and time-consuming research and development and clinical work necessary to pursue regulatory approval of product candidates.
Equity research analysts may elect not to provide research coverage of our common stock, and such lack of research coverage may adversely affect the market price of our common stock. In the event it does have equity research analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports.
Equity research analysts may elect not to provide research coverage of our common stock, and such lack of research coverage may adversely affect the market price of our common stock. In the event we do have equity research analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports.
Our failure to comply with these regulations and policies may require it to repeat clinical trials, which would be costly and delay the regulatory approval process.
Our failure to comply with these regulations and policies may require us to repeat clinical trials, which would be costly and delay the regulatory approval process.
Even if we are able to successfully commercialize product candidates that receive regulatory approval, it may not be able to realize revenues at a level that would allow it to achieve or sustain profitability. Accordingly, we may never generate significant revenue and, even if it does generate significant revenue, it may never achieve profitability.
Even if we are able to successfully commercialize product candidates that receive regulatory approval, we may not be able to realize revenues at a level that would allow us to achieve or sustain profitability. Accordingly, we may never generate significant revenue and, even if we generate significant revenue, we may never achieve profitability.
We also expect to rely on various medical institutions, clinical investigators and contract laboratories to conduct our trials in accordance with our clinical protocols and all applicable regulatory requirements, including the FDA’s regulations and good clinical practice (“GCP”) requirements, which are an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, 34 administrators and monitors, and state regulations governing the handling, storage, security and recordkeeping for drug and biologic products.
We also expect to rely on various medical institutions, clinical investigators and contract laboratories to conduct our trials in accordance with our clinical protocols and all applicable regulatory requirements, including the FDA’s regulations and GCP requirements, which are an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors, and state regulations governing the handling, storage, security and recordkeeping for drug and biologic products.
We have a history of net losses, and we expect to continue to incur net losses and may never achieve profitability. We have incurred net losses since our inception, including net losses of $12.3 million and $14.3 million for the years ended December 31, 2023 and December 31, 2022, respectively.
We have a history of net losses, and we expect to continue to incur net losses and may never achieve profitability. We have incurred net losses since our inception, including net losses of $14.4 million and $12.3 million for the years ended December 31, 2024 and December 31, 2023, respectively.
Even if the patents do successfully issue, third parties may design around or challenge the validity, enforceability or scope of such issued patents or any other issued patents we own or license, which may result in such patents being narrowed, invalidated or held unenforceable.
Even if the patents are successfully issued, third parties may design around or challenge the validity, enforceability or scope of such issued patents or any other issued patents we own or license, which may result in such patents being narrowed, invalidated or held unenforceable.
Item 1A. Ri sk Factors. Investing in our common stock involves a high degree of risk. We have described below a number of uncertainties and risks that, in addition to uncertainties and risks presented elsewhere in this Annual Report, may adversely affect our business, operating results and financial condition.
Item 1A. Ri sk Factors. Investing in our common stock involves a high degree of risk. We have described below a number of uncertainties and risks that, in addition to uncertainties and risks presented elsewhere in this Annual Report on Form 10-K, may adversely affect our business, operating results and financial condition.
Adoption of any drug by the medical community may be limited if third-party payers will not offer coverage. Additionally, significant uncertainty exists as to the reimbursement status of newly approved drugs.
Accordingly, coverage and reimbursement may be uncertain. Adoption of any drug by the medical community may be limited if third-party payers will not offer coverage. Additionally, significant uncertainty exists as to the reimbursement status of newly approved drugs.
We may choose to discontinue developing or commercializing any of our product candidates, or may choose to not commercialize product candidates in approved indications, at any time during development or after approval, which could adversely affect us and our operations.
We may choose to discontinue development or commercialization any of our product candidates, or may choose not to commercialize product candidates in approved indications, at any time during development or after approval, which could adversely affect us and our operations.
We cannot assure that upon inspection by a given regulatory authority, such regulatory authority will determine whether or not any of our clinical or pre-clinical trials comply with applicable GCP and GLP requirements. In addition, our clinical trials generally must be conducted with compounds produced under cGMP regulations.
We cannot assure that upon inspection by a given regulatory authority such regulatory authority will determine whether any of our clinical trials comply with applicable GCP or GLP regulations. In addition, our clinical trials generally must be conducted with compounds produced under cGMP regulations.
Our future capital requirements will depend upon a number of factors, including: the number and timing of product candidates in the pipeline; progress with and results from pre-clinical testing and clinical trials; the ability to manufacture sufficient drug supplies to complete pre-clinical and clinical trials; the costs involved in preparing, filing, acquiring, prosecuting, maintaining and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining regulatory approvals and favorable reimbursement or formulary acceptance.
Our future capital requirements will depend upon a number of factors, including: the number and timing of product candidates in the pipeline; progress with and results from preclinical testing and clinical trials; the ability to manufacture sufficient drug supplies to complete clinical trials or any additional preclinical studies required; the costs involved in preparing, filing, acquiring, prosecuting, maintaining and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining regulatory approvals and favorable reimbursement or formulary acceptance.
If disputes over intellectual property that we have licensed, or in the future may license, prevent or impair our ability to maintain any of our license agreements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates and technologies. Pre-clinical and clinical drug development is very expensive, time-consuming and uncertain.
If disputes over intellectual property that we have licensed, or in the future may license, prevent or impair our ability to maintain any of our license agreements, including the Giiant License Agreement, on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates and technologies. Clinical drug development is expensive, time-consuming and uncertain.
Since our internal research and development capabilities are limited, it may be dependent on pharmaceutical companies, academic or government scientists and other researchers to sell or license products or technology to it.
Since our internal research and development capabilities are limited, we may be dependent on pharmaceutical companies, academic or government scientists and other researchers to sell or license products or technology to us.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection, or produce copy products, and, further, may export otherwise infringing products to territories where we have patent protection but enforcement on infringing activities is inadequate or where we have no patents.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection, or they may produce copy products, and, further, may export otherwise infringing products to territories where we have patent protection but enforcement against such activities is inadequate or where we have no patents.
As of June 30, 2023, the last business day of our most recently completed second fiscal quarter, our public float is less than $250 million and therefore, we qualify as a smaller reporting company under SEC rules.
As of June 30, 2024, the last business day of our most recently completed second fiscal quarter, our public float was less than $250 million and therefore, we qualify as a smaller reporting company under SEC rules.
Moreover, the stock markets in general have experienced substantial volatility in the biotechnology industry that has often been unrelated to the operating performance of individual companies or a certain industry segment. These broad market fluctuations may also adversely affect the trading price of our shares.
Moreover, the stock markets in general have experienced substantial volatility in the biotechnology industry, particularly in the micro-cap and nano-cap companies, that has often been unrelated to the operating performance of individual companies or a certain industry segment. These broad market fluctuations may also adversely affect the trading price of our shares.
In addition, both the federal and state governments in the United States and foreign governments continue to propose and pass new legislation, regulations, and policies affecting coverage and reimbursement rates, which are designed to contain or reduce the cost of health care.
In addition, both the federal and state governments in the U.S. and foreign governments continue to propose and pass new legislation, regulations, and policies affecting coverage and reimbursement rates, which are designed to contain or reduce the cost of health care.
The pre-clinical and clinical development of product candidates is very expensive, time-consuming, difficult to design and implement, and the outcomes are inherently uncertain. Most product candidates that commence clinical trials are never approved by regulatory authorities for commercialization and of those that are approved, many do not cover 32 their costs of development.
The clinical development of product candidates is very expensive, time-consuming, difficult to design and implement, and the outcomes are inherently uncertain. Most product candidates that commence clinical trials are never approved by regulatory authorities for commercialization and of those that are approved, many do not generate sufficient revenue to cover their costs of development.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the DGCL, which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
We are a party to a license agreement with Giiant under which we have been granted rights to patents and patent applications that are important to our business. We rely on this license agreement to be able to use various proprietary technologies that are material to our business, including certain trade secrets and patent applications that cover PALI-2108.
We are a party to the Giiant License Agreement under which we have been granted rights to patents and patent applications that are important to our business. We rely on this license agreement to be able to use various proprietary technologies that are material to our business, including patents, and patent applications that cover PALI-2108.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management. Provisions in our certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management. Provisions in our certificate of incorporation, as amended (“Certificate of Incorporation”), and bylaws, as amended (“Bylaws”) may delay or prevent an acquisition or a change in management.
We cannot provide any assurance that we will be able to establish or maintain third-party relationships in order to successfully develop and commercialize our product candidates. We anticipate relying completely on third-party contractors to supply, manufacture and distribute clinical drug supplies for our product candidates.
We cannot provide any assurance that we will be able to establish or maintain third-party relationships in order to successfully develop and commercialize our product candidates. We currently rely on third-party contractors to supply, manufacture and distribute clinical drug supplies for our product candidates.
Based on our existing cash resources and our current or future plan of operations, we do not have adequate capital to fund our anticipated operations through the completion of the development of PALI-2108. As a result, we may need to secure additional funding.
Based on our existing cash resources and our current business plan, we do not have adequate capital to fund our anticipated operations through the completion of the development of PALI-2108. As a result, we will need to secure additional funding.
We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales.
We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner that we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors will likely be materially diluted by the initial and subsequent sales.
For example, to execute our business plan, we will need to: • Execute product development activities using unproven technologies; • Build, maintain, and protect a strong intellectual property portfolio; • Demonstrate safety and efficacy of our drug candidates in multiple human clinical studies; • Receive FDA approval and approval from similar foreign regulatory bodies; • Gain market acceptance for the development and commercialization of any drugs we develop; • Ensure our products are reimbursed by commercial and/or government payors at a rate that permits commercial viability; • Develop and maintain successful strategic relationships with suppliers, distributors, and commercial licensing partners; • Manage our spending and cash requirements as our expenses will increase in the near term if we add programs and additional pre-clinical and clinical trials; and • Effectively market any products for which we obtain marketing approval.
For example, to execute our business plan, we will need to: • Execute product development activities using unproven technologies; • Build, maintain, and protect a strong intellectual property portfolio; • Demonstrate safety and efficacy of our drug candidates in multiple human clinical studies; • Receive approval from Health Canada and/or approval from similar foreign regulatory bodies, such as the FDA; • Retain qualified CROs to oversee and manage our Phase 1 clinical trial for PALI-2108 and future clinical trials; • Gain market acceptance for the development and commercialization of any drugs we develop; • Ensure our products are reimbursed by commercial and/or government payors at a rate that permits commercial viability; • Develop and maintain successful strategic relationships with suppliers, distributors, and commercial licensing partners; • Manage our spending and cash requirements as our expenses will increase in the near term if we add programs and additional preclinical and clinical trials; and • Effectively market any products for which we obtain marketing approval.
We expect that significant additional capital may be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our existing shareholders may experience substantial dilution.
We expect that significant additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our existing stockholders will likely experience substantial dilution.
We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on our product candidates does not guarantee exclusivity. The requirements for patentability differ in certain countries, particularly developing countries.
We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on our product candidates does not guarantee exclusivity. The requirements for patentability vary between countries, particularly developing nations.
Our ability to protect our product candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents around the world.
Our ability to protect our product candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents in certain countries.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States, especially when it comes to granting use and other kinds of patents and what kind of enforcement rights will be allowed, especially injunctive relief in a civil infringement proceeding.
In addition, the laws of some countries do not protect intellectual property rights to the same extent as the laws of all other countries or jurisdictions, especially when it comes to granting use and other types of patents and what kind of enforcement rights will be allowed, especially injunctive relief in a civil infringement proceeding.
The price of our common stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research.
The price of our common stock could decline if one or more equity research analysts downgrades our stock or issues other unfavorable commentary or research.
Sales of any approved drug candidate will depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other health care related organizations, who are increasingly challenging the price of medical products and services. Accordingly, coverage and reimbursement may be uncertain.
Sales of any approved drug candidate will depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs in the applicable jurisdiction, including, for example, Medicare and Medicaid in the U.S., private health insurers, health maintenance organizations and other health care related organizations, who are increasingly challenging the price of medical products and services.
Risks Related to our Dependence on Third Parties We expect to rely on collaborations with third parties for the successful development and commercialization of our product candidates. We expect to rely upon the efforts of third parties for the successful development and commercialization of our product candidates.
We expect to rely on collaborations with third parties for the successful development and commercialization of our product candidates. We currently rely on and expect to continue to rely upon the efforts of third parties for the successful development and commercialization of our product candidates.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any products, including the following: • the results of pre-clinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; • safety and efficacy results attained in early human clinical trials, if approved, may not be indicative of results that are obtained in later clinical trials; • after reviewing test results, we may abandon projects that it previously believed to be promising; • we or our regulators may suspend or terminate our clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and • PALI-2108 may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved. 33 It may take us longer than we estimate to complete pre-clinical studies and clinical trials, and we may not be able to complete them at all.
We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any products, including the following: • the results of preclinical studies that we have completed may not be indicative of results that will be obtained in human clinical trials; • safety and efficacy results attained in preclinical studies may not be indicative of results that are obtained in our clinical trials; • after reviewing early clinical trial results, we may abandon projects that we previously believed to be promising; • we or our regulators may suspend or terminate our clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and • PALI-2108 may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved.
Even if we are successful in defending against any such claims, any such litigation could be protracted, expensive, a distraction to our management team, not viewed favorably by investors and other third parties, and may potentially result in an unfavorable outcome.
Even if we are successful in defending against any such claims, the related litigation could be protracted, expensive, a distraction to our management team, and not viewed favorably by investors and other third parties.
We have not yet demonstrated an ability to successfully complete any clinical trials and has never completed the development of any product candidate, nor has it ever generated any revenue from product sales or otherwise.
Since that time, we have not yet demonstrated an ability to successfully complete any clinical trials and have never completed the development of any product candidate, nor have we ever generated any revenue from product sales.
We may rely on third-party CROs to conduct and oversee our anticipated pre-clinical studies and clinical trials and other aspects of product development.
We are likely to rely on third-party CROs to conduct and oversee our other anticipated clinical trials and other aspects of product development.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed8 unchanged
Biggest changeWe are planning to establish an appropriate confidentiality framework and document management system in order to safeguard sensitive information in addition to the safeguards provided by our third-party service providers.
Biggest changeRisk Management and Strategy We are planning to establish an appropriate confidentiality framework and document management system in order to safeguard sensitive information in addition to the safeguards provided by our third-party service providers .
Additional information on cybersecurity risks faced by us are discussed in Part I, Item 1A, “Risk Factors,” under the headings “ If our information systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences ” and “ Our business and operations would suffer in the event of system failures, cyber-attacks or a deficiency in our cybersecurity. ” Our Board, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.
Additional information on cybersecurity risks faced by us are discussed in Part I, Item 1A, “Risk Factors,” under the headings “ If our information systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences ” and “ Our business and operations would suffer in the event of system failures, cyber-attacks or a deficiency in our cybersecurity. ” Governance Our Board, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−0 removed1 unchanged
Biggest changeWe have the option to renew the lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term. We do not expect to renew the lease upon its expiration. 50 For additional information regarding our lease agreements, see Note 9 of the consolidated financial statements included in this Annual Report on Form 10-K.
Biggest changeWe do not expect to renew the lease upon its expiration. 50 For additional information regarding our lease agreements, see Note 8, Commitments and Contingencies , of the consolidated financial statements included in this Annual Report on Form 10-K.
Added
We have the option to renew the lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−4 removed2 unchanged
Biggest changeAny future determination to declare dividends will be made at the discretion of our Board of Directors and will depend on, among other factors, our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant. Recent Sales of Unregistered Equity Securities On November 21, 2023, we granted J.D.
Biggest changeAny future determination to declare dividends will be made at the discretion of our Board of Directors and will depend on, among other factors, our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant.
The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
The recipients of securities in the above transaction(s) acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about the Company. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. R e served. 52
Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about the Company. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Holders As of March 21, 2024 there were 158 holders of record of our common stock, which does not include stockholders who hold shares in street name or stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid cash dividends on our common stock.
Holders As of March 20, 2025 there were 137 holders of record of our common stock, which does not include stockholders who hold shares in street name or stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid cash dividends on our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Capital Market under the symbol "PALI." On March 21, 2024, the last reported sale price our common stock on the Nasdaq Capital Market was $0.39 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Capital Market under the symbol "PALI." On March 20, 2025, the last reported sale price our common stock on the Nasdaq Capital Market was $0.78 per share.
Removed
Finley, our Chief Executive Officer, on a conditional basis until such time as there are sufficient shares available under the 2021 Equity Incentive Plan: (i) options to purchase 45,000 shares of common stock with a term of ten (10) years and an exercise price of $0.59 per share, valued at $22,114 on the grant date and (ii) 38,000 restricted stock units valued at $22,420.
Added
Recent Sales of Unregistered Equity Securities On October 1, 2024, we issued 3,000 restricted common shares to a consultant. The common stock shares were fully vested on the grant date and valued at $3.45 per share on the date of issuance.
Removed
Each of the options and restricted stock units granted to Mr. Finley vest in 12 equal installments on a quarterly basis over three years.
Removed
On November 21, 2023, we granted Mitchell Jones, M.D., Ph.D., our Chief Medical Officer, on a conditional basis until such time as there are sufficient shares available under the 2021 Equity Incentive Plan: (i) options to purchase 33,160 shares of common stock with a term of ten years and an exercise price of $0.59 per share, valued at $16,296 on the grant date and (ii) 28,000 restricted stock units valued at $16,520.
Removed
Each of the options and restricted stock units granted to Dr. Jones vest in 12 equal installments on a quarterly basis over three years.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+38 added−43 removed13 unchanged
Biggest changeCash used in operating activities of $13.4 million for the year ended December 31, 2022 reflects a $14.3 million net loss adjusted for $1.3 million of net cash inflows related to changes in operating assets and liabilities, and certain non-cash items including: (i) a $1.1 million loss recognized from the issuance of the January 2022 Warrants, (ii) a $2.4 million gain recognized for the change in the fair market value of the warrant liabilities in the period, and (iii) a $1.0 million non-cash expense recognized for stock-based compensation.
Biggest changeThe following table shows a summary of our cash flows for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Net cash used in operating activities $ (12,193 ) $ (11,133 ) Net cash used in investing activities — (4 ) Net cash provided by financing activities 9,582 11,186 Net Cash Used in Operating Activities Cash used in operations increased by approximately $1.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in net loss, partially offset by favorable changes in operating assets and liabilities. 58 Cash used in operating activities was approximately $12.2 million for the year ended December 31, 2024, which reflects a $14.4 million net loss adjusted for (i) approximately $1.4 million of net cash inflows related to changes in operating assets and liabilities, and (ii) certain non-cash items impacting the net loss, consisting primarily of (a) an approximately $0.7 million non-cash expense recognized for stock-based compensation and related charges, (b) an approximately $0.1 million non-cash expense associated with the issuance of our common stock as payment for vendor services provided, (c) an approximately $0.1 million non-cash expense related to the amortization of our operating lease right of use asset, and (d) an approximately $0.2 million non-cash gain recognized for the remeasurement of the contingent consideration liability associated with the Giiant Milestone Payments.
Gross cash proceeds from the September 2023 Offering were $2.0 million and net cash proceeds were $1.7 million after deducting cash equity issuance costs of approximately $0.3 million. On April 3, 2023, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock (the "April 2023 Offering").
Gross cash proceeds from the September 2023 Offering were approximately $2.0 million and net cash proceeds were approximately $1.7 million after deducting cash equity issuance costs of approximately $0.3 million. On April 3, 2023, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock (the "April 2023 Offering").
Gross cash proceeds from the April 2023 Offering were $6.0 million and net cash proceeds were $5.3 million after deducting cash equity issuance costs of approximately $0.7 million. On January 4, 2023, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock (the "January 2023 Offering").
Gross cash proceeds from the April 2023 Offering were approximately $6.0 million and net cash proceeds were approximately $5.3 million after deducting cash equity issuance costs of approximately $0.7 million. On January 4, 2023, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock (the "January 2023 Offering").
Warrant Exercises During the year ended December 31, 2023, we received gross cash proceeds of approximately $2.8 million from common stock warrant exercises, approximately $1.4 million of which related to common stock warrant exercises on December 30, 2022 for which the related cash was received by us in January 2023.
During the year ended December 31, 2023, we received gross cash proceeds of approximately $2.8 million from common stock warrant exercises, approximately $1.4 million of which related to common stock warrant exercises on December 30, 2022 for which the related cash was received by us in January 2023.
The net cash inflow from operating assets and liabilities was driven by (i) a $0.7 million cash inflow from the decrease in prepaids and other current assets and other noncurrent assets, which was primarily attributable to the amortization of the current and non-current portions of our prepaid insurance policies, and (ii) a $0.3 million cash inflow from an increase in accrued compensation and benefits, partially offset by (i) a $0.5 million cash outflow for accounts payable and accrued liabilities due to the timing of payments, and (ii) a $0.1 million cash outflow related to payments of our operating lease.
The net cash inflow from operating assets and liabilities was primarily attributable to (i) a $0.7 million cash inflow from the decrease in prepaids and other current assets and other noncurrent assets, which was primarily attributable to the amortization of the current and non-current portions of our prepaid insurance policies, and (ii) a $0.3 million cash inflow from an increase in accrued compensation and benefits, partially offset by (i) a $0.5 million cash outflow for accounts payable and accrued liabilities due to the timing of payments, and (ii) a $0.1 million cash outflow related to payments of our operating lease.
Refer to the paragraph under the heading "Going Concern" in the Financial Overview section above for management's assessment of our ability to continue as a going concern. 57 Sources of Liquidity We expect to incur substantial operating losses for the foreseeable future.
Refer to the paragraph under the heading "Going Concern" in the Financial Overview section above for management's assessment of our ability to continue as a going concern. Sources of Liquidity We expect to incur substantial operating losses for the foreseeable future.
In the event the we are unable to access additional capital, we may need to curtail or greatly reduce our operations, which could have a materially adverse impact on our business, financial condition, and results of operations.
In the event that we are unable to access additional capital, we may need to curtail or greatly reduce our operations, which could have a materially adverse impact on our business, financial condition, and results of operations.
Contingent Consideration Obligations Pursuant to the Giiant License Agreement, we incurred a contingent consideration obligation consisting of milestone payments.
Contingent Consideration Obligation Pursuant to the Giiant License Agreement, we incurred a contingent consideration obligation consisting of milestone payments.
Because the contingent consideration associated with the milestone payments may be settled in shares of our common stock solely at the election of the Company, we have determined it should be accounted for under Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity ("ASC 480") and accordingly we have recognized it as a liability measured at its estimated fair value.
Because the contingent consideration associated with the milestone payments may be settled in shares of our common stock solely at the election of the Company, we have determined it should be accounted for under ASC 480, Distinguishing Liabilities from Equity and accordingly we have recognized it as a liability measured at its estimated fair value.
General and Administrative Expenses General and administrative expenses consist primarily of salary and employee-related costs and benefits, professional fees for legal, intellectual property, investor and public relations, accounting and audit services, insurance costs, director fees and stipends, and general corporate expenses.
General and Administrative Expenses General and administrative expenses consist primarily of salary and employee-related costs and benefits, professional fees for legal, intellectual property, investor and public relations, accounting and audit services, insurance costs, director and committee fees, and general corporate expenses.
Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Although we do not expect our estimates of research and development expenses to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Notwithstanding, should our anticipated level of operations significantly change, we may require additional financing sooner than the first quarter of 2025. Further, beyond the first quarter of 2025 we will require additional financing to continue at our expected level of operations.
Notwithstanding, should our anticipated level of operations significantly change, we may require additional financing sooner than anticipated. Further, beyond the fourth quarter of 2025 we will require additional financing to continue at our expected level of operations.
Liquidity and Capital Resources Since our inception, we have financed our operations through the sales of our securities, issuance of long-term debt, the exercise of investor common stock warrants, and to a lesser degree, grants and research contracts as well as the licensing of our intellectual property to third parties.
Liquidity and Capital Resources Since our inception, we have financed our operations through the sales of our securities, issuance of debt, the exercise of common stock warrants, and to a lesser degree, grants and research contracts as well as the licensing of our intellectual property to third parties.
As needed, we manage third parties that are engaged to conduct our (i) research activities, (ii) pre-clinical, clinical and translational science development activities, and (iii) process development.
As needed, we manage third parties that are engaged to conduct our (i) research activities, (ii) preclinical, clinical and translational science development activities, and (iii) process development.
This process involves reviewing open contracts and purchase requisitions, communicating with our personnel, consultants, and research and development collaboration partners to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.
Our process around estimating accrued research and development expenses involves reviewing open contracts and purchase requisitions, communicating with our personnel, consultants, and research and development collaboration partners to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.
In instances where the expense determined to be recognized under the joint development plan exceeds the payments made to Giiant, we recognize an accrual of the joint development expenses. In addition, there may be instances in which payments made to Giiant will exceed the level of services provided, which results in a prepayment of the joint development expenses.
In instances where the expense determined to be recognized exceeds the payments made to the Giiant, we recognize an accrual of joint development expenses. In addition, there may be instances in which payments made to Giiant will temporarily exceed the level of services provided, which results in a prepayment of the joint development expenses.
If we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of our development activities, or potentially cease our operations. 60 Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
If we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of our development activities, or potentially cease our operations. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”).
The research and development costs included: • salaries and employee-related costs, including stock-based compensation; • laboratory and vendor expenses related to the execution of pre-clinical and clinical trials; • expenses under agreements with third-party contract research organizations, investigative clinical trial sites that conduct research and development activities on our behalf, and consultants; • costs related to develop and manufacture pre-clinical study and clinical trial material; and • regulatory expenses.
Research and Development Expenses The research and development expenses include: • salaries and employee-related costs, including stock-based compensation; • laboratory and vendor expenses related to the execution of preclinical and clinical trials; • expenses under agreements with third-party contract research organizations ("CROs"), investigative clinical trial sites that conduct research and development activities on our behalf, and consultants; • costs related to develop and manufacture preclinical study and clinical trial material; and • regulatory expenses.
Pursuant to situations whereby we perform any research and development or manufacturing activities under a co-development agreement, we record the expense reimbursement from the co-development partner as a reduction to research and development expense once the reimbursement amount is approved for payment by the co-development partner.
When we perform any research and development or manufacturing activities under a co-development agreement, we record the expense reimbursement from the co-development partner as a reduction to research and development expense once the reimbursement amount is approved for payment by the co-development partner.
Net Cash Provided by Financing Activities For the year ended December 31, 2023, cash provided by financing activities of $11.2 million was primarily attributable to net cash proceeds of $9.4 million from the January 2023 Offering, the April 2023 Offering, and the September 2023 Offering.
For the year ended December 31, 2023, cash provided by financing activities of approximately $11.2 million was primarily attributable to net cash proceeds of approximately $8.8 million from the January 2023 Offering, the April 2023 Offering, and the September 2023 Offering.
Our ability to raise additional capital may be adversely impacted by: (i) general political or economic conditions, (ii) inflation, (iii) rising interest rates, (iv) ongoing supply chain disruptions, (v) the ongoing global conflicts, including those in the Ukraine and Middle East, (vi) limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, (vii) or a resurgence of COVID-19, COVID-19 variants, or another pandemic.
Our ability to raise additional capital may be adversely impacted by: (i) general political or economic conditions, (ii) inflation, (iii) rising interest rates, (iv) ongoing supply chain disruptions, (v) the ongoing global conflicts, including those in the Ukraine and the Middle East, and (vi) limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry.
Also contributing to the cash provided by financing activities in the year was $2.8 million from the exercise of common stock purchase warrants, which includes the receipt in early January 2023 of a $1.4 million other receivable from warrant exercises on December 30, 2022, partially offset by payments of equity issuance costs of $0.6 million and payments of $0.4 million for our insurance financing arrangement.
Also contributing to the cash provided by financing activities in the year was approximately $2.8 million from the exercise of common stock purchase warrants, which includes the receipt in early January 2023 of an approximately $1.4 million other receivable from warrant exercises on December 30, 2022, partially offset by payments of approximately $0.4 million for our insurance financing arrangement.
In February 2024, we completed a warrant inducement transaction for net cash proceeds of approximately $2.2 million consisting of gross cash proceeds of $2.5 million, less cash equity issuance costs of approximately $0.3 million.
In May 2024, we completed a private placement for net cash proceeds of approximately $3.5 million consisting of gross cash proceeds of $4.0 million, less cash equity issuance costs of approximately $0.5 million. 53 In February 2024, we completed a warrant inducement transaction for net cash proceeds of approximately $2.2 million consisting of gross cash proceeds of $2.5 million, less cash equity issuance costs of approximately $0.3 million.
Net cash used in operating activities was approximately $11.1 million for the year ended December 31, 2023, which includes a $12.3 million net loss adjusted for $0.4 million of net cash inflows related to changes in operating assets and liabilities and certain non-cash items impacting the net loss.
Net cash used in operating activities was approximately $12.2 million for the year ended December 31, 2024, which includes a $14.4 million net loss adjusted for $1.4 million of net cash inflows related to changes in operating assets and liabilities and certain non-cash items impacting the net loss.
Pursuant to agreements where we perform research and development activities under a joint development plan, such as our collaboration with Giiant, qualifying development costs pursuant to the terms of the Giiant License Agreement are expensed as research and development costs as incurred.
Pursuant to agreements where we perform research and development activities under a joint development plan, such as our research and collaboration with Giiant, qualifying development costs are expensed as research and development costs as incurred.
As of December 31, 2023, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $229,000, including imputed interest of $18,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 1.7 years.
As of December 31, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $93,000, including imputed interest of $3,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 0.7 years.
Pursuant to the Warrant Inducement Agreements, the exercise price of each Existing Warrant was reduced to $0.7313 per share.
Pursuant to the Warrant Inducement Agreements, the exercise price of each Existing Warrant was reduced to $10.97 per share.
("Seneca") on April 27, 2021 (the "Merger"). Any technology that we currently own or may acquire the rights to in the future is referred to by us as either a “product candidate” or "product candidates". Additionally, any reference herein that refers to pre-clinical studies also refers to nonclinical studies.
Any technology that we currently own or may acquire the rights to in the future is referred to by us as either a “product candidate” or "product candidates." Additionally, any reference herein that refers to preclinical studies also refers to nonclinical studies.
During the year ended December 31, 2022, we received gross cash proceeds of approximately $2.3 million for the exercise of outstanding common stock warrants.
Warrant Exercises During the year ended December 31, 2024, we received gross cash proceeds of approximately $2.5 million for the exercise of outstanding common stock warrants.
To date, we have not been able to generate significant revenues nor achieve operating profitability. Based upon our cash and cash equivalents balance of $12.4 million as of December 31, 2023, we believe we have sufficient cash to fund our currently planned operations into the first quarter of 2025.
To date, we have not been able to generate significant revenues nor achieve operating profitability. Based upon our cash and cash equivalents balance of $9.8 million as of December 31, 2024, we believe we have sufficient cash to fund our currently planned operations through the fourth quarter of 2025.
Other income (expense) Other income, net, of approximately $0.8 million for the year ended December 31, 2023 includes primarily dividend income of approximately $0.7 million from our short-term investments of excess cash in money market funds with maturities of three months or less, and a non-cash gain of approximately $0.1 million associated with the revaluation of our liability-classified warrants in the year.
Other income, net, of approximately $0.8 million for the year ended December 31, 2023 includes dividend income of approximately $0.7 million from our short-term investments, and a non-cash gain of approximately $0.1 million associated with the revaluation of our liability-classified warrants in the year.
Restructuring Expenses Associated with the 2023 RIF and the 2022 Cost-Reduction Plan, we recognized restructuring expenses of approximately $0.2 million and approximately $0.4 million for the years ended December 31, 2023 and December 31, 2022, respectively, consisting of severance and benefits payments pursuant to employment agreements and the execution of severance and release agreements.
Restructuring Expenses Associated with the 2023 RIF, we recognized restructuring expenses of approximately $0.2 million and for the year ended December 31, 2023, consisting of severance and benefits payments pursuant to employment agreements and the execution of severance and release agreements. We recognized no restructuring expenses for the year ended December 31, 2024.
As of December 31, 2023, approximately $143,000 of the contingent consideration obligation was recognized in accrued liabilities at the consolidated balance sheet as it is expected to be settled within one-year of the balance sheet date.
As of December 31, 2023, approximately $143,000 of the contingent consideration obligation was classified in accrued liabilities in the consolidated balance sheets as it was expected to be settled within one-year of the balance sheet date and the remaining obligation of approximately $61,000 was classified as a noncurrent liability in the consolidated balance sheet.
On May 10, 2022, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock (the “May 2022 Offering”). Gross cash proceeds from the May 2022 Offering were $2.0 million and net cash proceeds were approximately $1.4 million after deducting cash equity issuance costs of approximately $0.6 million.
Gross cash proceeds from the December 2024 Offering were approximately $5.0 million and net cash proceeds were $4.1 million after deducting cash equity issuance costs of approximately $0.9 million. On May 6, 2024, we completed a private placement of common stock, prefunded warrants to purchase common stock and warrants to purchase common stock (the "May 2024 Offering").
We do not expect to incur any other significant costs associated with either the 2022 Cost-Reduction Plan or the 2023 RIF.
We do not expect to incur any other significant costs associated with the 2023 RIF.
The initial contractual term is for 39-months commencing on June 1, 2022 and expiring on August 31, 2025. We have the option to renew the Corporate Office Lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term. We have determined that it is not likely we will exercise this renewal option.
We have the option to renew the Corporate Office Lease for an additional 36-month period at the 59 prevailing market rent upon completion of the initial lease term. We have determined that it is not likely we will exercise this renewal option.
Each of the Warrant Holders that exercised their Existing Warrants pursuant to the Warrant Inducement Agreements received one replacement warrant for each Existing Warrant exercised with each such replacement warrant having a term of five years from issuance and an exercise price per share of $0.7313. 58 The Warrant Holders collectively exercised an aggregate of 3,422,286 Existing Warrants.
Each of the Warrant Holders that exercised their Existing Warrants pursuant to the Warrant Inducement Agreements received one replacement warrant for each Existing Warrant exercised with each such replacement warrant having a term of five years from issuance and an exercise price per share of $10.97 (in its entirety, the "February 2024 Warrant Inducement").
As of September 1, 2023, the date the contingent consideration obligation was incurred, the fair value of the liability was determined to be approximately $0.2 million. 61 At the end of each reporting period, we re-measure the contingent consideration obligation to its estimated fair value and any resulting change is recognized in research and development expenses in the consolidated statements of operations.
At the end of each reporting period, we re-measure the contingent consideration obligation to its estimated fair value and any resulting change is recognized in research and development expenses in the consolidated statements of operations.
For the year ended December 31, 2022, we recognized no licensing revenue. Research and Development Expenses Research and development expenses have historically consisted primarily of costs incurred for the clinical development of our product candidate LB1148. On August 9, 2023, based on the results of the efficacy and safety data of the U.S.
Research and development expenses recognized in the year ended December 31, 2023 consisted primarily of costs directly incurred for the clinical development of our legacy product candidate, LB1148. On August 9, 2023, based on the results of the efficacy and safety data of the U.S. Phase 2 PROFILE study of LB 1148, we terminated the development of LB1148.
The initial fair value of the contingent consideration liability and an insignificant change in the fair value of the contingent consideration liability for the year ended December 31, 2023 is recognized in research and development expenses in the consolidated statements of operations.
In addition, the initial fair value of the contingent consideration liability of $0.2 million and transaction-related costs of approximately $0.1 million for the year ended December 31, 2023 is recognized in research and development expenses in the consolidated statements of operations.
Although the nature of our research and development expenses is expected to shift from clinical activities to those pre-clinical activities associated with the development of PALI-2108, we expect our overall net research and development expenses to remain consistent with prior periods. 54 Our direct research and development expenses are tracked by product candidate and consist primarily of external costs, such as fees paid under third-party license agreements and to outside consultants, Contract Research Organizations ("CROs"), clinical site, contract manufacturing organizations (“CMOs”) and research laboratories in connection with our pre-clinical development, process development, manufacturing, clinical development, and regulatory activities.
Our direct research and development expenses are tracked by product candidate and consist primarily of external costs, such as fees paid under third-party license agreements and to outside consultants, CROs, clinical site, contract manufacturing organizations (“CMOs”) and research laboratories in connection with our preclinical development, process development, manufacturing, clinical development, and regulatory activities.
Unless otherwise noted, all common stock shares, common stock per share data and shares of common stock underlying convertible preferred stock, stock options and common stock warrants included in these consolidated financial statements, including the exercise price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. 55 Results of Operations The following table summarizes our results of operations for the year ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, Change 2023 2022 $ % License revenue $ 250 $ — $ 250 n/a Operating expenses Research and development 6,893 6,547 346 5 % General and administrative 6,202 8,764 (2,562 ) (29 )% Restructuring costs 225 410 (185 ) (45 )% Total operating expenses 13,320 15,721 (2,401 ) (15 )% Loss from operations (13,070 ) (15,721 ) 2,651 (17 )% Other income (expense): Interest expense (15 ) (13 ) (2 ) 15 % Other income 785 2,584 (1,799 ) (70 )% Loss on issuance of warrants — (1,110 ) 1,110 n/a Total other income, net 770 1,461 (691 ) (47 )% Net loss $ (12,300 ) $ (14,260 ) $ 1,960 (14 )% License revenue During the year ended December 31, 2023, we recognized license revenue of approximately $0.3 million earned upon the achievement of a milestone under the Newsoara Co-Development Agreement.
Unless otherwise noted, all common stock shares, common stock per share data and shares of common stock underlying convertible preferred stock, stock-based awards and common stock warrants included in this Annual Report on Form 10-K, including the exercise or conversion price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the Reverse Stock Split. 55 Results of Operations The following table summarizes our results of operations for the year ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, Change 2024 2023 $ % License revenue $ — $ 250 $ (250 ) n/a Operating expenses: Research and development 9,063 6,893 2,170 31 % General and administrative 5,796 6,202 (406 ) (7 )% Restructuring costs — 225 (225 ) n/a Total operating expenses 14,859 13,320 1,539 12 % Loss from operations (14,859 ) (13,070 ) (1,789 ) 14 % Other (expense) income: Interest expense (12 ) (15 ) 3 (20 )% Other income, net 433 785 (352 ) (45 )% Total other income, net 421 770 (349 ) (45 )% Net loss $ (14,438 ) $ (12,300 ) $ (2,138 ) 17 % License revenue During the year ended December 31, 2023, we recognized license revenue of approximately $0.3 million earned upon the achievement of a milestone under the Newsoara Co-Development Agreement.
Gross cash proceeds from the January 2023 Offering were $2.5 million and net cash proceeds were approximately $2.2 million after deducting cash equity issuance costs of approximately $0.3 million. On August 16, 2022, we completed a registered public offering (the "August 2022 Offering").
Gross cash proceeds from the May 2024 Offering were $4.0 million and net cash proceeds were approximately $3.5 million after deducting cash equity issuance costs of approximately $0.5 million. 57 On September 11, 2023, we completed a registered direct offering of common stock (the "September 2023 Offering").
Net Cash Used in Investing Activities Cash used in investing activities for the years ended December 31, 2023 and December 31, 2022 consists of payments for leasehold improvements.
Net Cash Used in Investing Activities Cash used in investing activities for the year ended December 31, 2023 consists of payments for leasehold improvements. There was no cash used in or provided by investing activities for the year ended December 31, 2024.
We believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations: Accrued research and development expenses We required to make estimates of our accrued expenses resulting from our obligations under contracts or agreements with, as applicable, research and development collaboration partners, CROs, pre-clinical and clinical sites, manufacturers, vendors, and consultants in connection with conducting research and development activities, including those related to joint drug development that are advanced or reimbursed to Giiant pursuant to the terms of the Giiant License Agreement.
We are required to make estimates of our accrued expenses resulting from our obligations under contracts or agreements with, as applicable, research and development collaboration partners, CROs, clinical sites, manufacturers, vendors, and consultants in connection with conducting research and development activities, including those related to our ongoing clinical operations.
The 2022 Cost-Reduction Plan consisted primarily of a 20% reduction in our employee workforce to better align our resources with our proposed business plan. The 2023 RIF consisted of a 25% reduction in our employee workforce, specifically research and development employees that were no longer deemed critical for our development of PALI-2108.
Restructuring Costs In order to better utilize our resources on the implementation of our refocused business plans and corporate strategy, we committed to a reduction-in-workforce on October 27, 2023 (the "2023 RIF"). The 2023 RIF consisted of a 25% reduction in our employee workforce, specifically research and development employees that were no longer deemed critical for our development of PALI-2108.
Notwithstanding, our management has evaluated all conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued, including: (i) the probability that significant changes to our anticipated level of operations, due to factors that are within or outside of our control, would cause our available cash as of the date of this filing to not be sufficient to fund our anticipated level of operations for the next 12 months, and (ii) the uncertainties of the cost and timing of our efforts to in-license or acquire additional product candidates.
Going Concern Our management has evaluated all conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued, including: (i) our available cash as of the date of this filing will not be sufficient to fund our anticipated level of operations for the next 12 months; (ii) we will require additional financing by the end of 2025 to continue at our expected level of operations; and (iii) if we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of our development activities or perhaps cease operations.
As a result of the Reverse Stock Split, each of our shareholders received one new share of our common stock for every 50 shares such shareholder held immediately prior to the effective time of the Reverse Stock Split.
Reverse Stock Split On April 5, 2024, we effected a 1-for-15 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, our stockholders received one share of our common stock for every 15 shares each stockholder held immediately prior to the effective time of the Reverse Stock Split.
For the year ended December 31, 2022, cash provided by financing activities of $15.3 million was attributable to cash proceeds of $1.8 million from the May 2022 Offering and $12.6 million from the August 2022 Offering and cash 59 proceeds of $2.3 million from the exercise of common stock purchase warrants, partially offset by payments of equity issuance costs of $0.6 million during the year and payments of $0.8 million for our insurance financing arrangements.
Net Cash Provided by Financing Activities For the year ended December 31, 2024, cash provided by financing activities of approximately $9.6 million was attributable to net cash proceeds of approximately $2.2 million from the exercise of common stock warrants in conjunction with the February 2024 Warrant Inducement and net cash proceeds of approximately $7.9 million from the May 2024 Offering and December 2024 Offering, partially offset by payments made on our insurance financing arrangements of approximately $0.4 million.
The financial terms of the contracts entered into by Giiant with CROs, pre-clinical sites, manufacturers, vendors and consultants are subject to negotiation and vary from contract to contract. Often, this will result in payment flows that do not match the periods over which services are provided or milestones are met under the joint development plan.
The financial terms of these contract arrangements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows that do not match the periods over which services are provided or milestones are met under the associated research and development contract.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.” As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Palisade,” “Palisade Bio,” “the Company,” “we,” “us,” and “our” or similar designations in this report refer to Palisade Bio, Inc., a Delaware Corporation, and its subsidiaries.
As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Palisade,” “Palisade Bio,” the "Company,” “we,” “us,” and “our” or similar designations in this report refer to Palisade Bio, Inc., a Delaware Corporation, and its subsidiaries. Any reference to “common shares” or “common stock,” refers to our $0.01 par value common stock.
We expect any gains or losses from the change in the fair value of our liability-classified warrants to remain insignificant in future periods. Recently Issued and Adopted Accounting Pronouncements See Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 62
Recently Issued and Adopted Accounting Pronouncements See Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Net cash provided by financing activities was approximately $11.2 million for the year ended December 31, 2023. 53 Recent Financings In January 2023, we completed a registered direct offering and concurrent private placement of common stock and warrants to purchase common stock for net cash proceeds of $2.2 million consisting of gross cash proceeds of $2.5 million less cash equity issuance costs of approximately $0.3 million.
Net cash provided by financing activities was approximately $9.6 million for the year ended December 31, 2024. Recent Financings In December 2024, we completed an underwritten public offering for net cash proceeds of $4.1 million consisting of gross cash proceeds of $5.0 million less cash equity issuance costs of approximately $0.9 million.
Pursuant to the terms of the Giiant License Agreement, pre-clinical development PALI-2108 will be jointly undertaken by us and Giiant with a portion of development costs being paid by Giiant’s current grants.
Pursuant to the terms of the Giiant License Agreement, preclinical development of PALI-2108 was jointly undertaken by us and representatives of Giiant. Pursuant to the Giiant License Agreement, we paid, or reimbursed or advanced to Giiant, a portion of the joint development costs.
The following table shows a summary of our cash flows for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (11,133 ) $ (13,360 ) Net cash used in investing activities (4 ) (10 ) Net cash provided by financing activities 11,186 15,258 Net Cash Used in Operating Activities Cash used in operating activities was $11.1 million for the year ended December 31, 2023, which reflects a $12.3 million net loss adjusted for $0.4 million of net cash inflows related to changes in operating assets and liabilities and certain non-cash items impacting the net loss, consisting primarily of a $0.6 million non-cash expense recognized for stock-based compensation and related charges, and a non-cash expense of $0.2 million related to the recognition of the fair value of the contingent consideration obligation incurred pursuant to the Giiant Licensing Agreement transaction.
Cash used in operating activities was approximately $11.1 million or the year ended December 31, 2023, which reflects an approximately $12.3 million net loss adjusted for (i) approximately $0.4 million of net cash inflows related to changes in operating assets and liabilities, and (ii) certain non-cash items impacting the net loss, consisting primarily of (a) a $0.6 million non-cash expense recognized for stock-based compensation and related charges, (b) a $0.1 million non-cash expense related to the amortization of our operating lease right of use asset, and (c) a non-cash expense of $0.2 million related to the remeasurement of certain liabilities recorded at fair value.
Our lead product candidate, PALI-2108, is being developed as a therapeutic for patients living with inflammatory bowel disease ("IBD"), including ulcerative colitis and Crohn's disease.
OVERVIEW We are a clinical-stage biopharmaceutical company focused on developing and advancing novel therapeutics for patients living with autoimmune, inflammatory, and fibrotic diseases. Our lead product candidate, PALI-2108, is being developed as a treatment for patients living with inflammatory bowel disease ("IBD"), including ulcerative colitis ("UC") and Fibrostenotic Crohn's disease ("FSCD").
Refer to Note 6, Stockholders' Equity in Part II Item 8 of this Annual Report on Form 10-K for further details of our recent equity transactions.
Gross cash proceeds from the January 2023 Offering were approximately $2.5 million and net cash proceeds were approximately $2.2 million after deducting cash equity issuance costs of approximately $0.3 million. Refer to Note 5, Stockholders' Equity in Part II Item 8 of this Annual Report on Form 10-K for further details of our recent equity transactions.
Insurance Financing Arrangement Consistent with past practice, in June 2023, we entered into an agreement to finance an insurance policy that renewed in May 2023. The financing arrangement entered into in June 2023 has a stated annual interest rate of 7.92% and is payable over a 9-month period with the first payment commencing June 30, 2023.
Insurance Financing Arrangement In June 2024, we entered into an agreement to finance an insurance policy that renewed in May 2024. The insurance financing arrangement is payable over a 9-month period with the first payment having been payable on June 30, 2024. As of December 31, 2024, the aggregate remaining balance under our insurance financing arrangement was $79,000.
Any reference to “common shares” or “common stock,” refers to our $0.01 par value common stock. Any reference to “Series A Preferred Stock” refers to our Series A 4.5% Convertible Preferred Stock. Any reference to “Leading Biosciences, Inc.” or “LBS” refers to our operations prior to the completion of our merger with Seneca Biopharma, Inc.
Any reference to “Leading Biosciences, Inc.” or “LBS” refers to our operations prior to the completion of our merger with Seneca Biopharma, Inc. ("Seneca") on April 27, 2021 (the "Merger").
Also, in conjunction with our entry into the Giiant License Agreement, we recognized non-cash expenses of approximately $0.4 million for the year ended December 31, 2023, consisting of the initial recognition and subsequent remeasurement of the fair value of the contingent consideration milestone payment obligation incurred in the transaction in the amount of $0.2 million, and transaction-related costs in the amount of $0.2 million.
Finally, associated with the Giiant License Agreement entered into on September 1, 2023, the year ended December 31, 2023 included transaction costs of approximately $0.2 million and non-cash expense of approximately $0.2 million for the initial recording of the fair value of the contingent consideration obligation, compared to a small non-cash gain recognized for a decrease in the fair value of the contingent consideration obligation in the year ended December 31, 2024, resulting in a net favorable impact year-over-year of approximately $0.4 million.
The insurance financing arrangement is secured by the associated insurance policy. As of December 31, 2023, the aggregate remaining balance under our insurance financing arrangement was $158,000. Other than the remaining insurance financing arrangement payments due in 2024, as of December 31, 2023 we have no other minimum debt payments required in 2024 or thereafter.
Other than the remaining insurance financing arrangement payments due in 2025, as of December 31, 2024 we have no other minimum debt payments required in 2025 or thereafter. Future Liquidity Needs We have incurred significant operating losses and negative cash flows from operations since our inception.
During the year ended December 31, 2022, we recognized no license revenue. Research and Development Expenses Research and development expenses were approximately $6.9 million for the year ended December 31, 2023.
For the year ended December 31, 2024, we recognized no license revenue.
Research and development employee recruiting costs for the year ended December 31, 2023 compared to the year ended December 31, 2022 increased by approximately $0.2 million in conjunction with our hiring of our Chief Medical Officer on September 5, 2023.
Also, for the year ended December 31, 2024 compared to the year ended December 31, 2023, employee-related costs decreased by approximately $0.6 million as a result of a 25% reduction in our employee workforce in October 2023 and a decrease in fees associated with the hiring of our CMO in September of 2023.
The remaining amount of the contingent consideration liability of approximately $61,000 was recognized as a noncurrent liability in the consolidated balance sheet as of December 31, 2023.
As of December 31, 2024, the entire amount of contingent consideration obligation was classified as a noncurrent liability in the consolidated balance sheet as none of it is expected to be settled within one-year of the balance sheet date.
Based on our cash and cash equivalents balance of $12.4 million as of December 31, 2023 and additional net cash proceeds of approximately $2.2 million from the warrant inducement transaction completed in February 2024, we believe we have sufficient cash to fund our currently planned operations into the first quarter of 2025, including the anticipated commencement of a Phase 1 clinical trial of our lead drug candidate, PALI-2108.
Based on our cash and cash equivalents balance of $9.8 million as of December 31, 2024, we believe we have sufficient cash to fund our currently planned operations through the fourth quarter of 2025. Giiant License Agreement On September 1, 2023, we entered into a research collaboration and license agreement (the "Giiant License Agreement") with Giiant Pharma Inc. (“Giiant”).
Financial Results Our operating loss for the year ended December 31, 2023 was approximately $13.1 million, which consisted of research and development expense and general and administrative expense of approximately $6.9 million and $6.2 million, respectively, and restructuring costs of approximately $0.2 million, partially offset by license revenue of approximately $0.3 million.
If our IND is approved, we anticipate commencing clinical trials of PALI-2108 in the United States ("U.S.") during the first quarter of 2026. Financial Results Our operating loss for the year ended December 31, 2024 was approximately $14.9 million, which consisted of research and development expense and general and administrative expense of approximately $9.1 million and $5.8 million, respectively.
Other income, net, of approximately $1.5 million for the year ended December 31, 2022 includes an approximately $2.4 million non-cash gain associated with the revaluation of our liability-classified warrants in the period and dividend income of approximately $0.2 million, which was partially offset by a $1.1 million non-cash loss on the issuance of warrants.
Other income (expense) Other income, net, of approximately $0.4 million for the year ended December 31, 2024 includes dividend income of approximately $0.5 million from our short-term investments of excess cash in money market funds with maturities of three months or less, partially offset by other non-cash losses of less than $0.1 million associated primarily with the write-off of certain other receivable balances.
Research and development employee compensation-related costs increased by approximately $0.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increased year-over-year headcount through most of 2023 compared to 2022.
Research and Development Expenses Research and development expenses increased by approximately $2.2 million, or 31%, from approximately $6.9 million for the year ended December 31, 2023 to approximately $9.1 million for the year ended December 31, 2024, primarily due to (i) an increase in joint development expenses directly related to PALI-2108 of approximately $3.6 million, from approximately $0.7 million for the year ended December 31, 2023 to approximately $4.3 million for the year ended December 31, 2024, and (ii) an approximately $1.0 million increase in drug manufacturing costs for the preclinical and clinical trials of PALI-2108.
Contractual Obligation s Office Lease On May 12, 2022, we entered a new, non-cancelable facility operating lease (the "Corporate Office Lease") of office space for our corporate headquarters, replacing our existing corporate headquarters lease that expired on July 31, 2022. The Corporate Office Lease is for 2,747 square feet of an office building in Carlsbad, California.
Contractual Obligation s Office Lease We are party a to non-cancelable facility operating lease (the "Corporate Office Lease") of office space for our corporate headquarters. The initial contractual term is for 39-months commencing on June 1, 2022 and expiring on August 31, 2025.
In September 2023, we completed a registered direct equity offering of common stock for net cash proceeds of approximately $1.7 million consisting of gross cash proceeds of $2.0 million, less cash equity issuance costs of approximately $0.3 million.
The February 2024 Warrant Inducement closed on February 1, 2024 for net cash proceeds of approximately $2.2 million consisting of gross cash proceeds of approximately $2.5 million, less cash equity issuance costs of approximately $0.3 million. Cash Flows As of December 31, 2024, we had $9.8 million in cash, cash equivalents and restricted cash.
Similarly, drug manufacturing costs 56 decreased by approximately $0.9 million and costs associated with regulatory activity decreased approximately $0.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Partially offsetting these increases in joint development expenses and drug manufacturing costs was a decrease in clinical trial-related expenses of approximately $1.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
We recognize research and development expenses associated with the Giiant License Agreement only when the qualifying expenses are incurred by matching those expenses with the period in which we estimate services and efforts are expended or other aspects of the drug development or related activities are achieved, examples of which may include authorization of a study, the commencement of a study, the submission of study results milestones.
Expense payments made to Giiant pursuant to the terms of the Giiant License Agreement for qualifying development costs are expensed only as the associated research and development costs are incurred or other aspects of the drug development or related activities are achieved.
Removed
Item 7. Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations. You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Added
Item 7. Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations.
Removed
This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results, performance or achievements could differ materially from any future results, performance or achievements discussed in these forward-looking statements.
Added
Statements in this Annual Report on Form 10-K that are not strictly historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Removed
OVERVIEW On September 1, 2023, we entered into a research collaboration and license agreement for substantially all of Giiant Pharma, Inc.'s (“Giiant”) current and future proposed products (“Giiant License Agreement”).
Added
These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statem ents .
Removed
Upon the first approval of either an investigational new drug application ("IND") or a Canadian Clinical Trial Application ("CTA"), we will assume all development, manufacturing, regulatory and commercialization costs. On August 9, 2023, we announced that the topline data from our U.S Phase 2 PROFILE study of LB1148 did not meet its primary endpoint.
Added
You can identify these forward-looking statements because they involve our expectations, intentions, beliefs, plans, projections, anticipations, or other characterizations of future events or circumstances.

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