Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-282883
PROSPECTUS
158,000
Class A Units with each Unit consisting of
(i) one (1) Share of Common Stock and (ii) one (1) Common Warrant to purchase one (1) Share of Common Stock
3,120,688
Class B Units with each Unit consisting of
(i) one (1) Pre-Funded Warrant to Purchase one (1) Share of Common Stock and (ii) one (1) Common Warrant to purchase one (1) Share of
Common Stock
196,721
Representative Warrants to Purchase 196,721 Shares of Common Stock
6,596,097
Shares of Common Stock Issuable Upon Exercise
of (i) 3,120,688 Pre-Funded Warrants, (ii) 3,278,688 Common Warrants and (iii) 196,721 Representative
Warrants
We
are offering 158,000 Class A Units (the “Class A Units”) with each Class A Unit consisting of (i) one (1) share of
our common stock, par value $0.01 per share (the “common stock”) and (ii) one (1) warrant to purchase one (1) share of common
stock (each a “Common Warrant”) at a public offering price of $1.525 per Class A Unit.
We
are also offering to certain purchasers whose purchase of Class A Units in this offering would otherwise result in the
purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the
purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, the opportunity to
purchase, if any such purchaser so chooses, Class B Units (the “Class B Units”), with each Class B
Unit consisting of (i) one (1) pre-funded warrant (each, a “Prefunded Warrant”) to purchase one (1)
share of common stock, in lieu of shares of common stock and (ii) one (1) Common Warrant. The purchase price of each Class
B Unit will be equal to the public offering price for Class A Units in this offering, minus $0.0001. Each Prefunded
Warrant is exercisable for one (1) share of our common stock and has an exercise price of $0.0001 per share, and a perpetual
term. This prospectus also relates to the offering of common stock issuable upon exercise of the Prefunded Warrants
and Common Warrants. We collectively refer to the Class A Units, Class B Units, the shares of common stock Prefunded
Warrants, Common Warrants and the shares of common stock underlying the Prefunded Warrants and Common Warrants as the
“securities.”
The
Class A Units and Class B Units are not certificated and the shares of common stock, Prefunded Warrants, and Common Warrants are
immediately separable and are being issued separately in this offering. Each Common Warrant is exercisable immediately
upon issuance, has a term of five (5) years from the date of issuance and an exercise price equal to $1.40.
The
underwriters have the option to purchase up to 491,803 additional shares of common stock and/or Common Warrants solely to cover
over-allotments, if any, at the public offering price, less the underwriting discounts and commissions. The over-allotment option may
be used to purchase shares of common stock and/or Common Warrants, or any combination thereof, as determined by the underwriters. The
overallotment option is exercisable for forty-five days from the date of this prospectus.
In
a concurrent private transaction, we have agreed to reduce the exercise price of 1,040,217 outstanding common stock purchase warrants
expiring between July 31, 2027 and May 6, 2031, to $1.40 per share. Please see the section of this Prospectus entitled
“Warrant Reprice Transaction” for a further description of the transaction.
Our
common stock is listed on The Nasdaq Capital Market under the symbol “PALI”. On December 11, 2024, the last reported sale
price of our common stock was $1.40 per share.
Investing
in our securities involves a high degree of risk. Before making an investment decision, please read the information under “Risk
Factors” beginning on page 9 of this prospectus and under similar headings in any amendment or supplement to this prospectus
or in any filing with the Securities and Exchange Commission that is incorporated by reference herein.
| | |
Class
A Unit | | |
Class
B Unit
| | |
Total | |
| Public offering price (1) | |
$ | 1.52500 | | |
$ | 1.52490 | | |
$ | 4,999,687.13 | |
| Underwriting discounts and commissions (2) | |
$ | 0.13725 | | |
$ | 0.137241 | | |
$ | 449,999.93 | |
| Proceeds to us, before expenses (3) | |
$ | 1.38775 | | |
$ | 1.387659 | | |
$ | 4,549,687.20 | |
(1)
The public offering price and underwriting discount corresponds to (i) a public offering price per Class A Unit of $1.5250
($1.38775 net of the underwriting discount) and (ii) a public offering price per Class B Unit of $1.52490
($1.387659 net of the underwriting discount).
(2)
We have agreed to reimburse the representative of the underwriters for certain expenses and issue the representative, or its designees,
warrants to purchase up to 6.0% of the number of Class A Units and Class B Units sold in this offering, including shares of common
stock sold pursuant to the over-allotment option, if any. See “Underwriting” on page 46 for additional information
regarding underwriting compensation.
(3)
The above summary of offering proceeds does not give effect to any proceeds from the exercise of any Prefunded Warrants, Common Warrants, or representative warrants being issued in
this offering.
We
have granted a forty-five (45) day option to the underwriters to purchase up to an additional 491,803 shares of common
stock and/or Common Warrants (up to 15% of the aggregate number of Class A Units and Class B Units sold in this offering) solely to cover
over-allotments, if any.
The
underwriters expect to deliver the securities to purchasers in the offering on or about December 13, 2024.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Ladenburg
Thalmann
The
date of this prospectus is December 13, 2024.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
We
incorporate by reference important information into this prospectus. You may obtain the information incorporated by reference without
charge by following the instructions under “Incorporation of Certain Information by Reference.” You should carefully read
this prospectus as well as additional information described under “Incorporation of Certain Information by Reference,” before
deciding to invest in our securities.
Neither
we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained
or incorporated by reference in this prospectus or in any free writing prospectus that we have authorized for use in connection with
this offering. We take no responsibility for and cannot provide any assurance as to the reliability of, any other information that others
may give you. This prospectus does not constitute an offer to sell to any person, or a solicitation of an offer to purchase from any
person, the securities offered by this prospectus in any jurisdiction in which it is unlawful to make such offer or solicitation of an
offer.
The
underwriters are offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted.
The information contained in this prospectus and any free writing prospectus that we have authorized for use in connection with this
offering is accurate only as of the respective dates thereof, and the information in the documents incorporated by reference in this
prospectus is accurate only as of the date of those respective documents, regardless of the time of delivery of this prospectus or of
any sale of our securities. Our business, financial condition, results of operations, and prospects may have changed since such dates.
It is important for you to read and consider all information contained or incorporated by reference in this prospectus in making your
investment decision. You should read both this prospectus, as well as the documents incorporated by reference into this prospectus and
the additional information described under “Incorporation of Certain Information by Reference” in this prospectus before
investing in our securities.
Unless
otherwise indicated, information contained in or incorporated by reference into this prospectus concerning our business and the industry
and markets in which we operate, including with respect to our business prospects, our market position and opportunity, and the competitive
landscape, is based on information from our management’s estimates, as well as from industry publications, surveys, and studies
conducted by third parties. Our management’s estimates are derived from publicly available information, their knowledge of our
business and industry, and assumptions based on such information and knowledge, which they believe to be reasonable. In addition, while
we believe that information contained in the industry publications, surveys, and studies has been obtained from reliable sources, we
have not independently verified any of the data contained in these third-party sources, and the accuracy and completeness of the information
contained in these sources is not guaranteed.
Although
we are not aware of any misstatements regarding the market and industry data presented in this prospectus and the documents incorporated
herein by reference, these estimates involve risks and uncertainties and are subject to change based on various factors, including those
discussed under the heading “Risk Factors” in this prospectus and any related free writing prospectus, and under similar
headings in the other documents that are incorporated by reference into this prospectus, including in our Annual Report on Form 10-K
filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2024 and our Quarterly Reports on Form 10-Q filed
with the SEC on May 13, 2024, August 12, 2024, and November 12, 2024. Accordingly, you should not place undue reliance
on this information.
For
investors outside the United States: We and the underwriters have not done anything that would permit this offering or the possession
or distribution of this prospectus in any jurisdiction where action for those purposes is required, other than in the United States.
Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions
relating to, the offering of the securities and the distribution of this prospectus outside of the United States.
PROSPECTUS
SUMMARY
This
summary highlights certain information about us, this offering and selected information contained elsewhere in or incorporated by reference
into this prospectus. This summary is not complete and does not contain all of the information that you should consider before making
an investment decision. For a more complete understanding of our company, you should read and consider carefully the more detailed information
included or incorporated by reference in this prospectus and any applicable prospectus supplement, including the factors described under
the heading “Risk Factors” beginning on page 9 of this prospectus, and in our Annual Report on Form 10-K filed with the SEC
on March 26, 2024 and our Quarterly Reports on Form 10-Q filed with the SEC on May 13, 2024, August 12, 2024 and November 12,
2024, together with any free writing prospectus we have authorized for use in connection with this offering and the financial statements
and all other information incorporated by reference in this prospectus. When used in this prospectus, except where the context otherwise
requires, the terms the “Company,” “we,” “us,” “our,” “Palisade,” or similar
terms refer to Palisade Bio, Inc.
Company
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 Crohn’s disease
(“CD”).
PALI-2108
Our
lead product candidate, PALI-2108, is a prodrug inhibitor designed to help treat UC by targeting the key enzyme phosphodiesterase-4 (“PDE4”)
in colon tissues and preventing it from breaking down cyclic Adenosine Monophosphate (“cAMP”) molecules which regulate inflammation
in the body. By inhibiting PDE4, intracellular cAMP molecule levels become elevated, which may lead to a reduction of inflammatory molecules
and an increase of anti-inflammatory molecules within tissues of the colon. Additionally, we believe that PALI-2108 may help prevent
the movement of inflammatory cells from the blood into colon tissues, thereby lowering the activity of certain proteins that contribute
to fibrosis (a type of tissue scarring).
With
a glucuronic-derived sugar moiety, PALI-2108 remains minimally absorbed until activated by the colonic bacterium enzyme β-glucuronidase.
We believe that localized bioactivation may help focus the effects of PALI-2108 where it would be most beneficial to a patient suffering
from IBD.
In
UC mouse models, we have demonstrated the dose-dependent efficacy of PALI-2108. Specifically, we utilized Dextran Sodium Sulfate (“DSS”)-induced
UC mouse models and target engagement in oxazolone-induced colitis. Thus, based on the research conducted on these mouse models, we demonstrated
that PALI-2108 has preferential colon activation. This preferential colon activation offers a unique approach to delivering the PDE4
inhibitor locally within the colon. This local delivery prevents the systemic toxicity inherent with immunosuppression and avoids the
known tolerability issues of PDE4 inhibitors.
Pipeline
| Program |
|
Indication |
|
Status
|
|
Highlights |
| PALI-2108 |
|
Ulcerative
Colitis |
|
Commenced
Phase 1 clinical trial in Canada |
|
We
have dosed 3 cohorts consisting of 24 subjects. |
| |
|
|
|
|
|
|
| PALI-1908 |
|
Fibro
Stenotic
Crohn’s
Disease |
|
Discovery |
|
Significant
overlap with PALI-2108 CTA for UC approved in 2024.
POC
for fibrosis pathway engagement completed. |
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”). Under the terms of the Giiant License Agreement, we obtained the rights to develop, manufacture,
and commercialize all compounds from Giiant, existing now and in the future, and any product containing or delivering any licensed compound,
in any formulation or dosage for all human and non-human therapeutic uses for any and all indications worldwide, including those technologies
that are the basis of PALI-2108. Pursuant to the terms of the Giiant License Agreement, pre-clinical 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. Additionally, per the terms of the Giiant License Agreement, we will pay (i) certain milestone
payments (in cash or our common stock at our sole election) (the “Giiant Milestone Payments”) and (ii) royalty payments upon
sales or sublicenses to third parties, with such Giiant Milestone Payments and royalty payments (the “Giiant License Payments”)
subject to a payment cap.
Our
Precision Medicine Approach
We
are developing a biomarker-based patient selection approach that we believe may aid clinicians in identifying patients who may better
respond to PALI-2108, thereby improving the rate of clinical response previously demonstrated with PDE4 inhibitors. Our approach involves
the use of clinical and multiomics data from large patient populations to identify PDE4-related biomarkers that are correlated with IBD,
its severity, and which are modified with local PDE4-inhibitor therapy in the colon. Based on our research, we have initiated the development
of corresponding biomarker assays for these PDE4-related biomarkers that we expect to use in our planned clinical studies with the aim
of developing regulatory approved tests for selecting potential responders to PALI-2108.
Phase I Clinical Study in Canada
On
October 9, 2024, Health Canada issued a No Objection Letter (“NOL”) related to our Phase 1 human clinical study of PALI-2108
for the treatment of UC. We formally commenced our Phase 1 human clinical study on October 11, 2024. As of the date of this prospectus,
we have dosed three cohorts. Each cohort consists of eight subjects, six of which receive drug and two of which receive a placebo.
Planned
Clinical Trial in the United States
In
addition to conducting clinical studies in Canada, we anticipate filing an Investigational New Drug Application (“IND”) with
the United States Food and Drug Administration (“FDA”) during 2025. If our IND is approved, we anticipate commencing clinical
trials of PALI-2108 in the United States during the second half of 2025.
Phase
1 Clinical Study
The
Phase 1 clinical study of PALI-2108 is a single-center, randomized, double-blinded, placebo-controlled clinical study focused on safety,
tolerability, and pharmacokinetics (“PK”) in both healthy volunteers and UC patients. The clinical study will include an
open-label UC patient cohort multiple dosing arms in which we will evaluate the pharmacodynamics of PALI-2108 in healthy volunteers.
We plan to enroll approximately 90 subjects across several arms of this Phase 1 clinical study including, (i) more than five subject
cohorts receiving a Single Ascending Dose (“SAD”) with a crossover to evaluate Food Effect (“FE”), (ii) four
or more subject cohorts receiving a Multiple Ascending Dose (“MAD”), and (iii) at least one multiple dose in a UC patient
cohort. The primary objective of the study is to assess the safety and tolerability of single (healthy subjects) and repeated (healthy
subjects and UC patients) oral doses of PALI-2108. Secondary objectives include determining plasma, urine, colon tissue, and fecal
(MAD healthy subjects and UC patients only) as well as the PK and FE of PALI-2108 and its metabolites following a single oral dose in
healthy subjects and repeated oral doses in both healthy subjects and UC patients. We anticipate announcing topline data from this study
during the second quarter of 2025. Assuming the trial meets its primary objectives, we plan to initiate a Phase 1b/2a clinical study
in UC patients in the second half of 2025.
Market
We
believe that if developed and approved for marketing, PALI-2108 could be an effective treatment for IBD. Our initial indications for
PALI-2108 are:
Ulcerative
Colitis
Ulcerative
colitis is a chronic inflammatory bowel disease that primarily affects the colon and rectum, leading to long-lasting inflammation and
ulcers in the digestive tract. Common symptoms include abdominal pain, diarrhea, and rectal bleeding. The prevalence of UC is estimated
to range from 156 to 291 cases per 100,000 people globally. In the eight major markets (“8MM”), diagnosed incident cases
of UC are projected to increase from 160,122 cases in 2021 to 168,467 cases by 2031, reflecting an annual growth rate (“AGR”)
of 0.52%. The U.S. is expected to have the highest number of diagnosed incident cases, totaling 104,795, while France will have the fewest
at 2,972 cases. Additionally, diagnosed prevalent cases are anticipated to rise from 1,946,428 in 2021 to 2,069,770 in 2031, with an
AGR of 0.63%. The U.S. will again lead in prevalence with 655,317 cases, whereas Canada will report the lowest with 91,186 cases. This
growth in diagnosed cases is largely attributed to changes in population dynamics across these markets. The market for 8MM for UC treatments
was valued at approximately $7.3 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of approximately 2.78%
from 2021 to 2031. Market expansion is driven by the increasing prevalence of the disease, advancements in diagnostic techniques,
and the development of more effective and targeted therapies.
Crohn’s
Disease
Crohn’s
disease is a type of inflammatory bowel disease 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 symptoms such as abdominal
pain, severe diarrhea, fatigue, weight loss, and malnutrition. The prevalence of CD between 2008 to 2009 is estimated to be approximately
300 cases per 100,000 commercially insured individuals in the United States. In the 8MM, diagnosed incident cases of
CD are expected to increase from 118,885 cases in 2022 to 122,175 cases by 2032, reflecting an AGR of 0.28%. The U.S. is projected to
have the highest number of diagnosed incident cases, with 68,815 cases, while France will report the fewest at 4,560 cases. Additionally,
diagnosed prevalent cases are anticipated to rise from 1,626,752 in 2022 to 1,695,580 in 2032, with an AGR of 0.42%. The U.S. will again
lead in prevalence, with 755,802 cases, whereas Japan will have the fewest diagnosed prevalent cases at 44,732. These increases in diagnosed
cases are attributed to changes in population dynamics across these markets. The global market for Crohn’s disease treatments was
valued at $13.3 billion in 2023 and is projected to grow at a CAGR of 4% from 2024 to 2032. This market growth is fueled by the rising
prevalence of the disease, improved diagnostic techniques, and increasing research and development activities for new drug therapies.
We
believe that of the addressable patient population for PALI-2108 in the US and the EU will be approximately 205,000 per year consisting
of 105,000 in the United States and 90,000 in the European Union.
Implications
of Being a Smaller Reporting Company
We
are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We
will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our shares
of common stock held by non-affiliates does not equal or exceed $250.0 million as of the prior June 30th, or (2) our annual revenues
did not equal or exceed $100.0 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliates
did not equal or exceed $700.0 million as of the prior June 30th. To the extent we take advantage of any reduced disclosure obligations,
it may make comparison of our financial statements with other public companies difficult or impossible.
Corporate
Information
We
were incorporated in 2001 in the State of Delaware under the name Neuralstem, Inc. In October 2019, we changed our name from Neuralstem,
Inc. to Seneca Biopharma, Inc., or Seneca. In April 2021, we effected a merger transaction with Leading Biosciences, Inc., or “LBS,”
whereby LBS became a wholly owned subsidiary of Seneca. In April 2021, we changed our name from Seneca Biopharma, Inc. to Palisade Bio,
Inc. Our principal executive offices are located at 7750 El Camino Real, Suite 2A, Carlsbad, CA, 92009, our telephone number is (858)
704-4900 and our website address is www.palisadebio.com. The information contained in or accessible through our website does not constitute
part of this prospectus supplement or the accompanying prospectus. As of December 11, 2024, we had eight (8) full-time employees.
Subsidiaries
We
primarily conduct our operations through LBS, our wholly owned subsidiary.
THE
OFFERING
| Class A Units we are offering |
|
158,000
Class A Units with each Class A Unit consisting
of (i) one (1) share of our common stock and (ii) one (1) Common Warrant. |
| |
|
|
| Class
B Units we are offering |
|
3,120,688
Class B Units with each Class B Unit consisting of (i) one (1)
Prefunded Warrant and (ii) one (1) Common Warrant. In the event that certain purchasers whose purchase of shares of common
stock in the Class A Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related
parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately
following the closing of this offering, such purchasers will have the opportunity to purchase, if such purchasers so choose, Class
B Units, in lieu of the Class A Units that would otherwise result in any such purchaser’s beneficial ownership exceeding 4.99%
(or, at the election of the purchaser, 9.99%) of our outstanding common stock. Each Prefunded Warrant is exercisable for one share
of our common stock. The exercise price of each Prefunded Warrant is $0.0001 per share. The Prefunded Warrants are exercisable immediately
and may be exercised at any time until all of the Prefunded Warrants are exercised in full. This offering also relates to the shares
of common stock issuable upon exercise of any Prefunded Warrants sold in this offering.
To better understand the terms of the Prefunded Warrants, you should
carefully read the “Description of Securities We Are Offering” section of this prospectus. You should also read the form
of Prefunded Warrant, which is filed as an exhibit to the registration statement that includes this prospectus.
|
| |
|
|
| Public
offering price |
|
The
public offering price of each Class A Unit
is $1.525, which represents the last reported sale price of our common stock as reported on the Nasdaq Capital Market on December
11, 2024 of $1.40 plus $0.125 which is allocated to each Common Warrant in such unit. The Class B Units will be sold at the
same price as the Class A Units minus $0.0001 per Class B Unit (which is the exercise price of the Prefunded Warrant contained in
the Class B Unit. |
| |
|
|
| Common
Warrants |
|
Each
Class A Unit and Class B Unit purchased in this offering, as the case may be, will include
one (1) Common Warrant to purchase one (1) share of common stock at an exercise price of
$1.40 per share, subject to adjustment in the event of stock dividends, stock splits,
stock combinations, reclassifications, reorganizations, or similar events affecting our common
stock, will be immediately exercisable upon issuance and will expire five (5) years from
the date of issuance. The shares of common stock in the Class A Units or the Prefunded Warrants
in the Class B Units, as applicable, and the accompanying Common Warrants, can only be purchased
together in this offering but will be issued separately and will be immediately separable
upon issuance. This offering also relates to the offering of the shares of common stock issuable
upon exercise of the Common Warrants. Each Common Warrant is exercisable for one (1) share
of common stock.
A holder of the Common Warrants may not exercise
any portion of the Common Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as
a group, would own more than 4.99% (or, at the election of the holder, such limit may be increased to up to 9.99%) of our outstanding
shares of common stock after exercise, as such ownership percentage is determined in accordance with the terms of the Common Warrants,
except that upon notice required in the Common Warrant, from the holder to us, the holder may waive such limitation up to a percentage,
not in excess of 9.99%. This prospectus also relates to the offering of the common stock issuable upon exercise of the Common Warrants.
To better understand the terms of the Common Warrants,
you should carefully read the “Description of Securities We Are Offering” section of this prospectus. You should also read
the form of Common Warrant, which is filed as an exhibit to the registration statement that includes this prospectus.
|
| |
|
|
| Over-allotment
option |
|
The
underwriters have the option to purchase an aggregate of 491,803 additional shares of common stock and/or Common Warrants
to purchase up to 491,803 shares of common stock solely to cover over-allotments, if any, at the price to the public less
the underwriting discounts and commissions. The over-allotment option may be used to purchase shares of common stock and/or Common
Warrants as determined by the underwriters. The over-allotment option is exercisable for forty-five (45) days from the date of this
prospectus. |
| |
|
|
| Warrant Reprice Transaction |
|
In
a concurrent private transaction, we have agreed to reduce the exercise price of 1,040,217
outstanding common stock warrants expiring between July 31, 2027, and May 6, 2031,
to $1.40 per share (the “Repriced Warrants’). Other than the reduction
in exercise price, the terms of the Repriced Warrants remain the same and unchanged.
|
| |
|
|
| Common
stock outstanding immediately before this offering |
|
1,514,292
shares of common stock. |
| |
|
|
| Common
stock outstanding immediately after this offering |
|
1,672,292
shares of common stock, or 2,164,095
shares if the underwriters exercise the over-allotment option in full, and assuming none of the Common Warrants, Prefunded Warrants, or
representative warrants issued in this offering are exercised. |
| |
|
|
| Use
of proceeds |
|
Net
proceeds
to us from this offering (excluding any proceeds from the exercise of Common Warrants or
Repriced Warrants) will be approximately $4.18 million (or $4.87 million if the underwriters
exercise the over-allotment option in full), after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us. We intend to use the net proceeds
from this offering to fund the Phase 1 clinical trial of PALI-2108, pre-clinical studies,
research and development, and working capital. See “Use of Proceeds” for
additional information.
|
| |
|
|
| Lock-Up Agreements |
|
We, and each of our officers and directors are subject to certain lock-up
restrictions as set forth in more detail in the “Underwriting” section. |
| Risk
Factors |
|
An
investment in our securities involves a high degree of risk. See “Risk Factors” beginning on page 9 of this prospectus
and the other information included and incorporated by reference in this prospectus for a discussion of the risk factors you should
carefully consider before deciding to invest in our securities. |
| |
|
|
| Nasdaq
Symbol |
|
Our
common stock is listed on The Nasdaq Capital Market under the symbol “PALI.” There is no established trading market for
the Prefunded Warrants or the Common Warrants and we do not expect such markets to develop. In addition, we
do not intend to apply for the listing of the Prefunded Warrants or Common Warrants on any national securities exchange or
other trading market. Without an active trading market, the liquidity of the Prefunded Warrants and Common Warrants will be
limited. |
Unless
otherwise indicated, all information in this prospectus assumes no exercise of outstanding options or warrants, no conversion of the
Series A 4.5% Convertible Preferred Stock described.
Unless
otherwise indicated, the number of shares of common stock to be outstanding immediately after this offering is based on 1,198,516 shares
of common stock outstanding as of September 30, 2024, which is adjusted for the following issuances subsequent to September 30, 2024
for an aggregate of 1,514,292 shares of common stock outstanding as of December 11, 2024: (i) an aggregate of 312,000
shares that were issued pursuant to the exercise of outstanding pre-funded warrants issued in our May 2024 private placement (ii)
3,000 shares that were issued to a consultant, and (iii) 776 shares that were issued pursuant to the vesting of restricted stock units,
but excludes:
| |
● |
3,120,688
shares of common stock issuable upon the exercise
of Prefunded Warrants issued in this offering; |
| |
|
|
| |
● |
3,278,688 shares of common stock issuable upon the
exercise of Common Warrants issued in this offering; |
| |
|
|
| |
● |
196,721
shares of common stock issuable upon the exercise
of the representative warrants issued as compensation to the representative of the underwriters in this offering; |
| |
|
|
| |
● |
452
shares of common stock issuable upon exercise of outstanding stock options as of December 11, 2024 granted under the LBS 2013
Amended and Restated Employee, Director, and Consultant Equity Incentive Plan, as amended and restated, or the 2013 Plan, with a
weighted-average exercise price of $14,403.57 per share; |
| |
|
|
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● |
40,155
shares of common stock issuable upon exercise of outstanding stock options as of December 11, 2024, granted under the 2021
Equity Incentive Plan, as amended, or the 2021 Plan, with a weighted-average exercise price of $43.70 per share; |
| |
|
|
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● |
10,079
shares of common stock issuable upon exercise of outstanding stock options as of December 11, 2024 granted under the 2021
Inducement Plan, with a weighted average exercise price of $14.26 per share; |
| |
|
|
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● |
2,952
shares of common stock issuable upon vesting of restricted performance stock units outstanding as of December 11, 2024; all
of which were issued under the 2021 Plan which vest subject to certain milestones; |
| |
|
|
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● |
37,589
shares of common stock reserved for future issuances under the 2021 Plan as of December 11, 2024, as well as any future automatic
increases in the number of shares of common stock reserved for future issuance under the 2021 Plan; |
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|
|
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● |
20,587
shares of common stock reserved for future issuance under our 2021 Employee Stock Purchase Plan, or the ESPP, as of December 11,
2024, as well as any automatic increases in the number of shares of common stock reserved for future issuance under the ESPP; |
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|
|
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● |
52,942
shares of common stock reserved for issuance under the 2021 Inducement Plan as of December 11, 2024; |
| |
|
|
| |
● |
1,245,470
shares of common stock issuable upon exercise of outstanding warrants as of December 11, 2024 with a weighted-average exercise
price of $27.04 per share; and |
| |
|
|
| |
● |
8
shares of common stock issuable upon conversion of the 200,000 outstanding shares of our Series A 4.5% Convertible Preferred Stock
as of December 11, 2024, as well as any future shares of common stock issuable upon conversion of additional shares of Series
A 4.5% Convertible Preferred Stock that may be issued as payment-in-kind dividends thereon in accordance with their terms. |
RISK
FACTORS SUMMARY
The
Company faces many risks and uncertainties, as more fully described in this prospectus. Some of these risks and uncertainties are summarized
below. The summary below does not contain all of the information that may be important to you, and you should read this summary together
with the more detailed discussion of these risks and uncertainties contained in the Section entitled “Risk Factors.”
Risk
Related to This Offering
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● |
We
have broad discretion in how we use the proceeds of this offering and may not use these proceeds effectively, which could affect
our results of operations and cause our common stock to decline. |
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|
|
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The Common Warrants are speculative in nature. |
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|
|
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● |
We may be required to repurchase the Common Warrants,
which may prevent or deter a third party from acquiring us. |
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|
|
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If
our stock price fluctuates after the offering, you could lose a significant part of your investment. |
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|
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● |
Future
sales of a significant number of our shares of common stock in the public markets, or the perception that such sales could occur,
could depress the market price of our shares of common stock. |
Risks
Related to Our Development, Commercialization and Regulatory Approval of Our Product Candidates
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● |
Our
business depends on the successful clinical development, regulatory approval, and commercialization of our therapeutic compounds,
including our lead asset PALI-2108. |
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|
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There
are substantial risks in drug development, and, as a result, we may not be able to successfully develop PALI-2108. |
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|
|
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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. |
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Even
if our clinical trials in Canada are successful, our ability to obtain regulatory approval in the United States is uncertain. |
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We
may find it difficult to enroll patients in our clinical trials, which could delay or prevent us from proceeding with clinical trials
of our product candidates. |
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We
expect that our operations and development of PALI-2108 will require substantially more capital than we currently have, and we cannot
guarantee when or if we will be able to secure such additional funding. |
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Our
product candidates may cause undesirable side effects or have other unexpected properties that could delay or prevent their regulatory
approval, limit the commercial profile of an approved label, or result in post-approval regulatory action. |
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There
can be no assurance that our product candidates will obtain regulatory approval. |
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If
clinical studies of PALI-2108 do not yield successful results, we may decide not to continue the development of PALI-2108. |
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|
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We
are conducting a Phase 1 clinical trial of PALI-2108 in Canada, and the FDA or applicable foreign regulatory authorities may not
accept data from such trials, or any other trial we conduct outside of the United States. |
Risks
Related to Our Business
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● |
We
have a limited operating history and have never generated revenue from product sales. |
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|
|
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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. |
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Our
common stock could be delisted from the Nasdaq Stock Market if we are unable to maintain compliance with the Nasdaq Stock Market’s
continued listing standards. |
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Our
success depends on the attracting and retaining of senior management and scientists with relevant expertise. |
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We
may choose to discontinue developing or commercializing 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. |
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|
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Our
inability to successfully in-license, acquire, develop and market additional product candidates or approved products could impair
our ability to grow our business. |
Risks
Related to Our Dependence on Third Parties
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● |
We
anticipate relying on third-party CROs and other third parties to conduct and oversee our clinical trials. If these third parties
do not meet our requirements or otherwise conduct the trials as required, we may not be able to satisfy our contractual obligations
or obtain regulatory approval for, or commercialize, our product candidates. |
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We
expect to rely on collaborations with third parties for the successful development and commercialization of our product candidates. |
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We
anticipate relying completely on third-party contractors to supply, manufacture and distribute clinical drug supplies for our product
candidates. |
Risks
Related to Our Financial Operations
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We
have expressed substantial doubt about our ability to continue as a going concern. |
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We
have a history of net operating losses, and we expect to continue to incur net operating losses and may never achieve profitability. |
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Failure
to remediate a material weakness in internal controls over financial reporting could result in material misstatements in our consolidated
financial statements. |
Risks
Related to Our Intellectual Property
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● |
We
may not be able to obtain, maintain or enforce global patent rights or other intellectual property rights that cover our product
candidates and technologies that are of sufficient breadth to prevent third parties from competing against us. |
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If
we fail to comply with our obligations under our intellectual property license agreements, we could lose certain licensed
rights that are important to our business. |
Other
Risks Related to Our Securities
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We
will need to raise additional capital in the future to fund our operations, which may not be available to us on favorable terms or
at all. |
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Our
common stock price may be highly volatile. |
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If
we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis
could be impaired. |
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|
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Our
Board of Directors (“Board”) of has broad discretion to issue additional securities, which might dilute the net tangible
book value per share of our common stock for existing stockholders. |
RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before investing in our securities, you should carefully consider the risks and uncertainties
discussed under “Risk Factors” in our latest annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and
current reports on Form 8-K, which are incorporated by reference herein in their entirety. Before making an investment decision, you
should carefully consider each of the following risks described below, together with all other information set forth in or incorporated
in this prospectus, including the financial statements and the related notes. The risks described in this prospectus or incorporated
by reference into this prospectus are not the only ones we face, but those that we consider to be material. Additional risks not presently
known to us or that we currently believe are immaterial may also significantly impair our business operations and could result in a complete
loss of your investment. Past financial performance may not be a reliable indicator of future performance, and historical trends should
not be used to anticipate results or trends in future periods. If any of the following risks actually occur, our business, financial
condition, results of operations or cash flow could be seriously harmed. This could cause the market price of our common stock to decline,
and you could lose all or part of your investment.
Risks
Related to This Offering
We
have broad discretion in how we use the proceeds of this offering and may not use these proceeds effectively, which could affect our
results of operations and cause our common stock to decline.
We
will have considerable discretion in the application of the net proceeds of this offering. We intend to use the net proceeds from this
offering primarily for our recently approved Phase 1 clinical trial of PALI-2108, pre-clinical studies, research and development,
and working capital. As a result, investors will be relying upon management’s judgment with only limited information about our
specific intentions for the use of the net proceeds of this offering. We may use the net proceeds for purposes that do not yield a significant
return or any return at all for our stockholders. In addition, pending their use, we may invest the net proceeds from this offering in
a manner that does not produce income or that loses value.
If
we do not maintain a current and effective prospectus relating to the common stock issuable upon exercise of the Common Warrants, public
holders will only be able to exercise such Common Warrants on a “cashless basis.”
If
we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of the Common Warrants at the time that holders wish to exercise such respective warrants, they will only be able to exercise them on
a “cashless basis,” and under no circumstances would we be required to make any cash payments or net cash settle such warrants
to the holders. As a result, the number of shares of common stock that holders will receive upon exercise of the Common Warrants will be fewer than it would have been had such holders exercised their Common Warrants for cash.
We will do our best efforts to maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise
of such Common Warrants until the expiration of such Common Warrants or until all Common Warrants have been exercised in full. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential
“upside” of the holder’s investment in our Company may be reduced.
The
Common Warrants are speculative in nature.
The
Common Warrants offered hereby do not confer any rights of common stock ownership on their holders, such as voting rights or the right
to receive dividends, but rather merely represent the right to acquire shares of common stock at a fixed price. Specifically, commencing
on the date of issuance, holders of the Common Warrants may acquire the common stock issuable upon exercise of such Common Warrants at
an exercise price of $1.40 per share of common stock. Moreover, following this offering, the market value of the Common Warrants
will be uncertain and there can be no assurance that the market value of the Common Warrants will equal or exceed the exercise price
of the Common Warrants, and consequently, whether it will ever be profitable for holders of the Common Warrants to exercise the Common
Warrants.
We
may be required to repurchase the Common Warrants, which may prevent or deter a third party from acquiring us.
The
Common Warrants provide that in the event of a “Fundamental Transaction” (as defined in the Common Warrant which generally
includes any merger with another entity, the sale, transfer or other disposition of all or substantially all of our assets to another
entity, or the acquisition by a person of more than 50% of our common stock), each Common Warrant holder will have the right at any time
prior to the consummation of the Fundamental Transaction to require us to repurchase the Common Warrant for a purchase price in cash
equal to the Black-Scholes value (as calculated under the Common Warrant) of the then remaining unexercised portion of such Common Warrant
on the date of such Fundamental Transaction, which may materially adversely affect our financial condition and/or results of operations
and may prevent or deter a third party from acquiring us.
If
our stock price fluctuates after the offering, you could lose a significant part of your investment.
The
market price of our common stock could be subject to wide fluctuations in response to, among other things, the risk factors described
in this prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to
be comparable to us. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to
affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to
the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and
market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market
price of our common stock. In the past, many companies that have experienced volatility in the market price of their stock have been
subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against
us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously
harm our business.
Future
sales of a significant number of our shares of common stock in the public markets, or the perception that such sales could occur, could
depress the market price of our shares of common stock.
Sales
of a substantial number of our shares of common stock in the public markets, or the perception that such sales could occur, including
from the exercise of outstanding warrants or sales of common stock issuable thereunder, could depress the market price of our shares
of common stock and impair our ability to raise capital through the sale of additional equity securities. A substantial number of shares
of common stock are being offered by this prospectus. We cannot predict the number of these shares that might be sold nor the effect
that future sales of our shares of common stock, including shares issuable upon the exercise of outstanding warrants, would have on the
market price of our shares of common stock.
There
is no public market for the Common Warrants or Prefunded Warrants being offered in this offering.
There
is no established public trading market for the Common Warrants or Prefunded Warrants being offered in this offering, and we do
not expect a market to develop. In addition, we do not intend to apply to list the Common Warrants or Prefunded Warrants on any
securities exchange or nationally recognized trading system, including The Nasdaq Stock Market. Without an active market, the liquidity
of the Common Warrants and Prefunded Warrants will be limited.
Holders
of our Common Warrants and Prefunded Warrants will have no rights as a common stockholder until they acquire our common stock.
Until
holders of our Common Warrants and Prefunded Warrants sold in this offering acquire shares of our common stock upon exercise of
the Common Warrants and Prefunded, the holders will have no rights with respect to shares of our common stock issuable upon exercise
of the Common Warrants and Prefunded Warrants. Upon exercise of the Common Warrants and Prefunded Warrants, holders will
be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.
Risks
Related to our Development, Commercialization and Regulatory Approval of our Product Candidates
Our
business depends on the successful clinical development, regulatory approval, and commercialization of our therapeutic compounds, including
our lead asset PALI-2108.
On
October 9, 2024, Health Canada approved our Canadian Clinical Trial Application (“CTA”) to commence a Phase 1 clinical trial
for PALI-2108 in Canada. On October 11, 2024, we commenced the Phase 1 clinical trial of PALI-2108. Our success depends on the
development and clinical success of PALI-2108, which is subject to a number of risks, including:
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the
continued enforceability of our research collaboration and license agreement with Giiant; |
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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); |
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our
ability to develop and implement clinical trial designs and protocols; |
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the successful initiation and completion of our current
planned clinical trials and any additionally required pre-clinical studies, if any; |
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our
ability to retain third-party Contract Research Organizations “CRO(s)” on terms acceptable to us for the conduct and
oversight of our anticipated clinical trials, including our Phase 1 clinical trial for PALI-2108; |
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our
ability to fund the development costs related to PALI-2108’s clinical development; |
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the
approval by the Health Canada or other regulatory authorities to commence the marketing of our product candidates; |
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the
ability for us and third-parties, if applicable, to achieve and maintain compliance with our contractual obligations and applicable
regulatory requirements; |
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the
ability of our contract manufacturers to manufacture sufficient supply of our product candidates to meet the required clinical trial
supplies and any additionally required pre-clinical studies; |
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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 current good manufacturing processes (“cGMP”); |
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our
ability to obtain favorable labeling for our product candidates through regulators that allows for successful commercialization; |
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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; |
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our
ability to price our product candidates to recover our development costs and applicable milestone or royalty payments, and to generate
a satisfactory profit margin; and |
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our
ability and our applicable collaboration and licensing partners’ ability to establish and enforce intellectual property rights
related to our product candidates and technologies. |
If
we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience
significant delays or an inability to obtain regulatory approvals or commercialize our proposed product candidates. For example, we are
currently enrolling and dosing subjects in our initial Phase 1 clinical trial of PALI-2108 in Canada. We may experience
delays or difficulties in finding suitable trial subjects, or in completing enrollment. Such delays may result in increased costs and
the failure to complete the study in a timely manner. Even if successfully completed, we must complete a number of additional clinical
trials prior to obtaining regulatory approval to commercialize our product candidates. Accordingly, we cannot make assurances that we
will ever be able to generate sufficient revenue through the sale of any product candidates, if approved, to internally fund our business.
There
are substantial risks in drug development, and, as a result, we may not be able to successfully develop PALI-2108.
We
have initiated a Phase 1 clinical trial of PALI-2108 in our target indication of inflammatory bowel disease.
Drug development requires a significant amount of capital and can take a long time to reach commercial viability, if it can be achieved
at all. During the development process, we may experience technological barriers that we may be unable to overcome. Further, certain
underlying premises in our development programs have not been proven. Because of these and similar uncertainties, it is possible that
our product candidates will not reach commercialization. If we are unable to successfully develop and commercialize our product candidates,
we will be unable to generate revenue or build a sustainable or profitable business.
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.
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. Our rights to PALI-2108 are subject to the continuation of, and our
compliance with, the terms of the Giiant License Agreement. If we fail to comply with any of our obligations under the Giiant License
Agreement, Giiant may have the right to terminate the Giiant License agreement, in which event we would not be able to continue the development
or our proposed commercialization of PALI-2108. Additionally, disputes may arise under the Giiant License Agreement regarding the intellectual
property that is subject to such agreement. 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.
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, we, any partner
with which we may collaborate, Health Canada, any similar regulatory authority, state and local agencies, counterpart agencies in foreign
countries, or the applicable Institutional Review Board at our trial sites, may suspend, delay, require modifications to or terminate
our clinical trials, once begun, at any time.
Even
if our clinical trials in Canada are successful, our ability to obtain regulatory approval in the United States is uncertain.
We
have commenced a Phase 1 clinical trial for ulcerative colitis in Canada. However, we have not received approval from the FDA
to commence any clinical trials in the United States, and there is no guarantee that we will be able to obtain such approval in a timely
manner, if at all. If our Phase 1 clinical trial is successful and we seek to initiate a Phase 2 clinical trial in the United States,
there is no certainty that the FDA will accept the data generated from our Canadian trial. The FDA’s acceptance of foreign clinical
data is subject to certain conditions, including whether the trial was conducted in accordance with good clinical practices (“GCP”)
and whether the FDA can validate the trial data through on-site inspections or other means. Moreover, the FDA will assess whether the
trial design, patient population, endpoints, and other factors meet the standards expected for clinical trials conducted within the United
States.
In
addition, regulatory approval for clinical trials and eventual drug approval in the United States is a complex process, influenced by
several factors, including:
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the
adequacy and relevance of the Phase 1 trial data in supporting progression to Phase 2, as evaluated by the FDA; |
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the
ability of the trial to meet safety, efficacy, and other scientific requirements set by the FDA, which may differ from those of Health
Canada; |
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whether
the foreign clinical trial was conducted under an FDA-recognized regulatory authority, and whether FDA oversight is possible through
monitoring or inspection of clinical sites; and |
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the
FDA’s consideration of the risk-benefit ratio for continuing clinical development in the United States, particularly based
on data from a non-U.S. population. |
Furthermore,
while the FDA does have the ability to approve drugs that have undergone clinical trials in foreign jurisdictions, including Canada,
approval is generally contingent on demonstrating that the trial data aligns with FDA standards and regulatory expectations. It is also
possible that we may be required to conduct additional trials in the United States to address any concerns regarding the applicability
of the foreign trial data to the U.S. population or regulatory environment. There can be no assurance that we will successfully obtain
FDA approval to initiate a Phase 1 clinical trial in the United States or that if our Canadian trial is successful, a subsequent Phase
2 trial.
We
may find it difficult to enroll patients in our clinical trials, which could delay or prevent us from proceeding with clinical trials
of our product candidates.
We
are currently enrolling subjects in the Phase 1 clinical trial of PALI-2108 in Canada. Identifying and qualifying subjects
to participate in our current and anticipated future clinical trials is critical to our success. Our inability to enroll
patients in our clinical trials on a timely basis could result in the trials being delayed or never completed.
Patient
enrollment and trial completion are affected by numerous additional factors, including the:
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process
for identifying patients; |
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design
of the trial protocol; |
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eligibility
and exclusion criteria; |
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perceived
risks and benefits of the product candidate under study; |
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availability
of competing therapies and clinical trials; |
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severity
of the disease under investigation; |
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proximity
and availability of clinical trial sites for prospective patients; |
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ability
to obtain and maintain patients’ consents; |
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risk
that enrolled patients will drop out before completion of the trial; |
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patient
referral practices of physicians; and |
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ability
to monitor patients adequately during and after treatment. |
If
we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or
terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results
of operations and prospects. There can be no assurances that we will be able to complete enrollment for our anticipated Phase 1 clinical
trial for PALI-2108, and if we fail to do so, we may not be able to complete the trial on a timely basis, or at all.
We
expect that our operations and development of PALI-2108 will require substantially more capital than we currently have, and we cannot
guarantee when or if we will be able to secure such additional funding.
We
have historically funded our operations and prior development efforts through the sale of our securities. 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. If we are not able to obtain additional capital
in the future or on acceptable terms, we may need to curtail our anticipated clinical trials as well as our operations.
Our
product candidates may cause undesirable side effects or have other unexpected properties that could delay or prevent their regulatory
approval, limit the commercial profile of an approved label, or result in post-approval regulatory action.
Unforeseen
side effects from PALI-2108 could arise either during clinical development or, if approved, after it has been marketed. Undesirable side
effects could cause us, any partners with which we may collaborate, or regulatory authorities to interrupt, extend, modify, delay or
halt clinical trials and could result in a more restrictive or narrower label or the delay or denial of regulatory approval by Health
Canada, or comparable regulatory authorities like the FDA.
Results
of clinical trials could reveal a high and unacceptable severity and prevalence of side effects. In such an event, trials could be suspended
or terminated, and Health Canada or comparable regulatory authorities, like the FDA, could order us to cease further development of or
deny approval of a product candidate for any or all targeted indications. The drug-related side effects could affect patient recruitment
or the ability of enrolled patients to complete the trial or result in product liability claims. Any of these occurrences may have an
adverse material effect on our business, financial condition, operating results and prospects.
Additionally,
if we or others identify undesirable side effects, or other previously unknown problems, caused by a product after obtaining regulatory
approval, a number of potentially negative consequences could result, which could prevent us or our potential partners from achieving
or maintaining market acceptance of the product and could substantially increase the costs of commercializing such product.
There
can be no assurance that our product candidates will obtain regulatory approval.
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:
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pre-clinical
data required for the submission of an IND or CTA; |
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controlled
research and human clinical testing; |
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● |
establishment
of the safety and efficacy of the proposed product candidate; |
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government
review and approval of a submission containing manufacturing, pre-clinical and clinical data; and |
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adherence
to cGMP regulations during production and storage. |
PALI-2108
will require significant development, clinical testing, possibly additional pre-clinical studies, and the investment of significant funds
to gain regulatory approval before it can be commercialized. Although we commenced a Phase 1 clinical trial in Canada, there can
be no assurances that gaining regulatory approval in Canada will result in regulatory approval from any other regulatory agency, including
the FDA of the United States. The results of our human clinical testing of PALI-2108 may not meet applicable regulatory requirements.
If approved in a jurisdiction, PALI-2108 may also require the completion of post-market studies. The process of completing clinical testing
and obtaining the required approvals is expected to take a number of years and require the use of substantial resources. Further, there
can be no assurance that PALI-2108 will be shown to be safe and effective in clinical trials or receive applicable regulatory approvals.
If we fail to obtain regulatory approvals, we will not be able to market PALI-2108 and our operations will be adversely affected.
If
clinical studies of PALI-2108 do not yield successful results, we may decide not to continue the development of PALI-2108.
We
must demonstrate that PALI-2108 is safe and efficacious in humans through extensive clinical testing. 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:
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the
results of pre-clinical studies that we have completed may not be indicative of results that will be obtained in human clinical trials; |
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safety
and efficacy results attained in pre-clinical studies, may not be indicative of results that are obtained in our clinical trials; |
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after
reviewing early clinical trial results, we may abandon projects that we previously believed to be promising; |
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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 |
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PALI-2108
may not have the desired effects, or may include undesirable side effects or other characteristics, that preclude applicable regulatory
approval or limit their commercial use if approved. |
It
may take us longer than we estimate to complete clinical trials, or we may not be able to complete them at all.
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. Even if we were to commence
and complete our clinical trials involving PALI-2108 as currently contemplated, they may not be successful.
Even
if PALI-2108 is approved for commercialization, future regulatory reviews or inspections may result in its suspension or withdrawal,
closure of a facility or substantial fines.
If
regulatory approval to market and commercialize PALI-2108 is received, regulatory agencies will subject PALI-2108, as well as the manufacturing
facilities, to continual review and periodic inspection. If previously unknown problems with a product or manufacturing and laboratory
facility are discovered, or we fail to comply with applicable regulatory approval requirements, a regulatory agency may impose restrictions
on PALI-2108 or us. The agency may require the withdrawal of PALI-2108 from the market, closure of the facility or substantial fines.
We
are conducting a Phase 1 clinical trial of PALI-2108 in Canada, and the FDA or applicable foreign regulatory authorities may not accept
data from such trials, or any other trial we conduct outside of the United States.
We
have commenced a Phase 1 clinical trial for PALI-2108 in Canada. We may conduct further trials in Canada as well as other
countries outside of the U.S. Although the FDA or other applicable foreign regulatory authority may accept data from our clinical trials
conducted in Canada, acceptance of such study data by the FDA or applicable foreign regulatory authority may be subject to certain conditions
or exclusion. Where data from foreign clinical trials (such as Canada) are intended to serve as the basis for marketing approval in the
United States, the FDA will not approve the application on the basis of foreign data alone unless such data are applicable to the U.S.
population and U.S. medical practice; the studies were performed by clinical investigators of recognized competence; and the data are
considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the
FDA is able to validate the data through an on-site inspection or other appropriate means. Many foreign regulatory bodies have similar
requirements. In addition, such foreign studies would be subject to the applicable local laws of the foreign jurisdictions where the
studies are conducted. There can be no assurance the FDA or applicable foreign regulatory authority will accept data from trials conducted
in Canada or elsewhere outside of the United States or the applicable home country. If the FDA or applicable foreign regulatory authority
does not accept such data, it would likely result in the need for additional trials, which would be costly and time-consuming and delay
aspects of our business plan.
The
successful commercialization of PALI-2108, if approved, will depend in part on the extent to which government authorities and health
insurers establish adequate reimbursement levels and pricing policies.
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 United States, 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. 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. Cost control initiatives may decrease coverage and payment levels for any drug and, in turn, the price that
we will be able to charge and/or the volume of our sales. We are unable to predict all changes to the coverage or reimbursement methodologies
that will be applied by private or government payers. Any denial of private or government payer coverage or inadequate reimbursement
could harm our business or future revenues, if any. If we partner with third parties with respect to any of our product candidates, we
may be reliant on that partner to obtain reimbursement from government and private payors for the drug, if approved, and any failure
of that partner to establish adequate reimbursement could have a negative impact on our revenues and profitability.
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.
Further federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for the product
candidates that we develop and may further limit our commercial opportunity. There may be future changes that result in reductions in
potential coverage and reimbursement levels for our product candidates, if approved and commercialized, and we cannot predict the scope
of any future changes or the impact that those changes would have on our operations.
If
future reimbursement for PALI-2108, subject to approval, is substantially less than projected, or rebate obligations associated with
them are substantially greater than expected, our future net revenue and profitability, if any, could be materially diminished.
We
face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a
product candidate and we may need to limit our commercialization.
The
use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the
risk of product liability claims. Product liability claims might be brought against us by clinical trial participants, consumers, health-care
providers, pharmaceutical companies, or others selling our products. If we cannot successfully defend ourselves against these claims,
we may incur substantial liabilities. Regardless of merit or eventual outcomes of such claims, product liability claims may result in:
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decreased
demand for our product candidates; |
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impairment
of our business reputation; |
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withdrawal
of clinical trial participants; |
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costs
of litigation; |
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substantial
monetary awards to patients or other claimants; and |
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loss
of revenues. |
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.
Even
if a product candidate obtains regulatory approval, it may fail to achieve the broad degree of physician and patient adoption and use
necessary for commercial success.
The
commercial success of our product candidates, if approved, will depend significantly on attaining broad adoption and use of the drug
by physicians and patients. 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:
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patient
demand for approved products that treat the indication for which they are approved; |
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the
effectiveness of a product compared to other available therapies or treatment regimens; |
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the
availability of coverage and adequate reimbursement from managed care plans and other healthcare payors; |
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the
cost of treatment in relation to alternative treatments and willingness to pay on the part of patients; |
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insurers’
willingness to see the applicable indication as a disease worth treating; |
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proper
administration by physicians or patients; |
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patient
satisfaction with the results, administration and overall treatment experience; |
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limitations
or contraindications, warnings, precautions or approved indications for use different than those sought by us that are contained
in the final approved labeling; |
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any
requirement of an authoritative regulatory body requirement to undertake a risk evaluation and mitigation strategy; |
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the
effectiveness of our sales, marketing, pricing, reimbursement and access, government affairs, and distribution efforts; |
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adverse
publicity about a product or favorable publicity about competitive products; |
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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 |
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potential
product liability claims or other product-related litigation. |
If
any of our product candidates are approved for use but fail to achieve the broad degree of physician and patient adoption necessary for
commercial success, our operating results and financial condition will be adversely affected, which may delay, prevent or limit our ability
to generate revenue and continue our business.
Risks
Related to our Business
We
have a limited operating history and have never generated revenue from product sales.
We
are a biopharmaceutical company with a limited operating history that may make it difficult to evaluate the success of our business to
date and to assess our future viability. While we were initially formed in 2001, our operations, to date, have been limited to business
planning, raising capital and other research and development activities related to our product candidates. We additionally adopted a
new business plan in September 2023 upon entering into the Giiant License Agreement. 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. 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.
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.
We
have no approved drugs and thus have not begun to market or generate revenues from the commercialization of any products. We only have
a limited history upon which we can evaluate our ability to develop PALI-2108. We initiated our initial Phase 1 clinical trial
of PALI-2108. 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.
For
example, to execute our business plan, we will need to:
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Execute
product development activities using unproven technologies; |
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Build,
maintain, and protect an intellectual property portfolio; |
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Demonstrate
safety and efficacy of our drug candidates in human clinical studies; |
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Receive
approval from Health Canada and / or approval from similar foreign regulatory bodies, such as the FDA; |
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Retain
qualified CROs to oversee and manage our Phase 1 clinical trial for PALI-2108 and future clinical trials; |
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Gain
market acceptance for the development and commercialization of any drugs we develop; |
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Ensure
our products are reimbursed by commercial and/or government payors at a rate that permits commercial viability; |
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Develop
and maintain successful strategic relationships with suppliers, distributors, and commercial licensing partners; |
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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 |
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Effectively
market any products for which we obtain marketing approval. |
If
we are unsuccessful in accomplishing these objectives, we may not be able to develop our proposed products, raise sufficient capital
to fund our operations, expand our business or continue our operations.
Our
common stock could be delisted from the Nasdaq Stock Market if we are unable to maintain compliance with the Nasdaq Stock Market’s
continued listing standards.
Our
common stock is listed on the Nasdaq Stock Market. There are a number of continued listing requirements that we must satisfy in order
to maintain its listing on The Nasdaq Stock Market, including the requirement to maintain a minimum bid price of at least $1.00 (the
“Bid Price Rule”). Although we are currently in compliance with the Bid Price Rule, we have been unable to comply with this
rule in the past. For example, in October 2023, we were notified that we were no longer in compliance with the Bid Price Rule and had
180 days to cure such deficiency. On April 5, 2024, we effected a 1-for-15 reverse stock split and we were notified by the Nasdaq Stock
Market that as of April 19, 2024, we were back in compliance with the Bid Price Rule. Notwithstanding our current compliance with the
Bid Price Rule, in the event that our common stock trades below $1.00 for 30 consecutive business days, we may again be subject to delisting.
If we fail to comply with the Bid Price Rule in the future, or any of the other continued listing requirements, there can be no assurance
that we will be able to regain compliance. The delisting of our common stock would likely adversely affect the market liquidity and market
price of our common stock and our ability to obtain financing for the continuation of our operations and/or result in the loss of confidence
by investors.
Our
success depends on attracting and retaining senior management and scientists with relevant expertise.
Our
future success depends to a significant extent on the continued services of our key employees, including our senior scientific, technical
and managerial personnel. We do not maintain key person life insurance for any of our executives. Competition for qualified employees
in the pharmaceutical industry is high, and our ability to execute our strategy will depend in part on our ability to continue to attract
and retain qualified scientists and management. If we are unable to find, hire, and retain qualified individuals, we may be unable to
execute our business plan in a timely manner, if at all.
We
may choose to discontinue developing or commercializing 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.
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. If we temporarily pause or terminate
a program in which we have invested significant resources, we will not receive any return on our investment and we will have missed the
opportunity to have allocated those resources to potentially more productive uses, which could have an adverse effect on us and our business.
Our
inability to successfully in-license, acquire, develop and market additional product candidates or approved products could impair our
ability to grow our business.
PALI-2108
is currently our only product candidate being actively developed. We may in-license, acquire, develop and market additional products
and product candidates. 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. 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. Other companies, including some with substantially greater financial, marketing, sales and other resources, may compete with
us for the license or acquisition of product candidates and approved products. Moreover, we may devote resources to potential acquisitions
or licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts. We may not be
able to acquire the rights to additional approved products or product candidates on terms that we find acceptable, or at all.
Further,
any product candidate that we acquire or license may require additional development efforts prior to commercial sale, including pre-clinical
or clinical testing and approval by the applicable regulatory authorities. 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.
Risks
Related to our Dependence on Third Parties
We
anticipate relying on third-party CROs and other third parties to conduct and oversee our clinical trials. If these third parties do
not meet our requirements or otherwise conduct the trials as required, we may not be able to satisfy our contractual obligations or obtain
regulatory approval for, or commercialize, our product candidates.
We
have retained a CRO to oversee our Phase 1 clinical trial for PALI-2108 in Canada. We are likely to rely on third-party CROs to conduct
and oversee our other anticipated clinical trials and other aspects of product development. 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. These CROs and other third parties
are expected to play a significant role in the conduct of these trials and the subsequent collection and analysis of data from the clinical
trials. We expect to rely heavily on these parties for the execution of our clinical trials and any additionally required pre-clinical
studies and will control only certain aspects of their activities. We and our CROs and other third-party contractors will be required
to comply with GCP and good laboratory practice (“GLP”) requirements, which are regulations and guidelines enforced by the
FDA and comparable foreign regulatory authorities, such as Health Canada with respect to our Phase 1 clinical trial for PALI-2108. Regulatory
authorities enforce these GCP or GLP requirements through periodic inspections of trial sponsors, principal investigators and trial sites.
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. 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 requirements. In addition, our clinical trials generally must be conducted with compounds produced under cGMP
regulations. 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. In the event that we are unable to retain a qualified CRO for our Phase 1 clinical trial for
PALI-2108, or any other anticipated clinical trial, it would delay planned clinical operations and result in additional cost and expense.
Additionally, if our current CRO for our Phase 1 clinical trial in Canada or if any of our CROs that we retain in the future were to
terminate their involvement with us, there is no assurance that we would be able to enter into arrangements with alternative CROs or
do so on commercially reasonable terms.
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. The clinical and commercial success of our product candidates may depend upon maintaining successful relationships
with third-party partners, which are subject to a number of significant risks, including the following:
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our
partners’ ability to execute their responsibilities in a timely, cost-efficient and compliant manner; |
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reduced
control over delivery and manufacturing schedules; |
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price
increases; |
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manufacturing
deviations from internal or regulatory specifications; |
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quality
incidents; |
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the
failure of partners to perform their obligations for technical, market or other reasons; |
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misappropriation
of our product candidates; and |
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other
risks in potentially meeting our product commercialization schedule or satisfying the requirements of our end-users. |
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
do not currently have, nor do we currently plan to acquire, the infrastructure or capability to supply, store, manufacture or distribute
clinical or commercial quantities of drug substances or products. Although we have entered into a commercial supply agreement to provide
us with such drug substances or products for our current Phase 1 clinical trial, our future ability to develop and commercialize, if
approved, our product candidates is dependent on our ability to obtain the APIs and other substances and materials used in our product
candidates successfully from third parties and to have finished products manufactured by third parties in accordance with regulatory
requirements and in sufficient quantities for pre-clinical and clinical testing and commercialization. If we fail to develop and maintain
supply and other technical relationships with these third parties, we may be unable to continue to develop or commercialize our products
and product candidates, which could adversely affect us and our business.
We
are dependent on our contract suppliers and manufacturers for day-to-day compliance with applicable laws and cGMP for production of our
proposed products and API. 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.
We
expect to continue to depend on third-party contract suppliers and manufacturers. Our supply and manufacturing agreements do not guarantee
that a contract supplier or manufacturer will provide services adequate for our needs. Additionally, any damage to or destruction of
our third-party manufacturers’ or suppliers’ facilities or equipment, even by force majeure, may significantly impair our
ability to have our products and product candidates manufactured on a timely basis. Our reliance on contract manufacturers and suppliers
further exposes us to the possibility that they, or third parties with access to their facilities, may misappropriate our trade secrets
or other proprietary information. In addition, the manufacturing facilities of certain of our suppliers may be located outside of the
United States. This may give rise to difficulties in importing our products or product candidates or their components into the United
States or other countries.
Risks
Related to Our Financial Operations
We
have expressed substantial doubt about our ability to continue as a going concern.
Management
has determined that there is substantial doubt about our ability to continue as a going concern for a period of one year following the
issuance of our most recently filed quarterly report. This determination was based on 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 the condensed consolidated
financial statements are issued, including 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. 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.
If
we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue
as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable
terms or at all.
We
have a history of net operating losses, and we expect to continue to incur net operating losses and may never achieve profitability.
We
have incurred net operating losses since our inception. We expect that our net operating losses will continue for the foreseeable future
as we continue our clinical, 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. Even if we were 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 do generate significant revenue, we may never achieve
profitability.
Failure
to remediate a material weakness in internal controls over financial reporting could result in material misstatements in our consolidated
financial statements.
Our
management has identified a material weakness in our internal control over financial reporting. The material weakness was due to a lack
of controls in the financial closing and reporting process, including a lack of segregation of duties and the documentation and design
of formalized processes and procedures surrounding the creation and posting of journal entries and account reconciliations.
If
our existing material weakness, which management concluded is still present as of the date of our most recent quarterly report on Form
10-Q, is not remediated, or if we identify further material weaknesses in our internal controls, our failure to establish and maintain
effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in
our consolidated financial statements and a failure to meet our reporting and financial obligations.
Risks
Related to Our Intellectual Property
We
may not be able to obtain, maintain or enforce global patent rights or other intellectual property rights that cover our product candidates
and technologies that are of sufficient breadth to prevent third parties from competing against us.
Our
success with respect to our current and future product candidates will depend, in part, on our ability to obtain and maintain patent
protection in both the U.S. and other countries, to preserve our trade secrets and to prevent third parties from infringing on our proprietary
rights. 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.
The
patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors
and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in
a timely manner in all the countries that are desirable. 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. Therefore, these and any of our patents and applications may not be prosecuted
and enforced in a manner consistent with the best interests of our business. Moreover, our competitors independently may develop equivalent
knowledge, methods and know-how or discover workarounds to our patents that would not constitute infringement. Any of these outcomes
could impair our ability to enforce the exclusivity of any issued or pending patents we may have or the ability to obtain future patent
protections, which may have an adverse impact on our business, financial condition and operating results.
Our
ability to obtain, maintain and/or enforce patents is uncertain and involves complex legal and factual questions especially across varying
countries. Accordingly, rights under any existing patents or any patents we might obtain or license may not cover our product candidates
or may not provide us with sufficient protection for our product candidates to afford a sustainable commercial advantage against competitive
products or processes, including those from branded, generic and over-the-counter pharmaceutical companies. In addition, we cannot guarantee
that any patents or other intellectual property rights will be issued from any pending or future patent or other similar applications
owned by or licensed to us. Even if patents or other intellectual property rights have issued or will issue, we cannot guarantee that
the claims of these patents and other rights are or will be held valid or enforceable by the courts, through injunction or otherwise,
or will provide us with any significant protection against competitive products or otherwise be commercially valuable to us in every
country of commercial significance that we may target.
Our
ability to obtain and maintain valid and enforceable patents depends on whether the differences between our technology and prior art
make it patentable. We do not have outstanding issued patents covering all of the recent developments in our technology and we are unsure
of the patent protection that we will be successful in obtaining, if any. 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. If the breadth or strength of protection provided
by the patents we hold or pursue with respect to our product candidates are challenged, it could dissuade companies from collaborating
with us to develop or threaten our ability to commercialize or finance our product candidates.
The
laws of some foreign jurisdictions do not provide intellectual property rights to the same extent or duration as in the U.S., and many
companies have encountered significant difficulties in acquiring, maintaining, protecting, defending and especially enforcing such rights
in foreign jurisdictions. If we encounter such difficulties in protecting or are otherwise precluded from effectively protecting our
intellectual property in foreign jurisdictions, our business prospects could be substantially harmed, especially internationally.
Proprietary
trade secrets and unpatented know-how are also very important to our business. 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, 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. 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.
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. 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. Consequently, we
may not be able to prevent third parties from using our inventions or even in launching an identical version of our product even if we
hold a valid patent. 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. 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.
Periodic
maintenance and annuity fees on any issued patent are due to be paid to applicable patent agencies, which require compliance with a number
of procedures, including certain documentary, fee payment and other similar provisions during the patent application process. Non-compliance
events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within
prescribed time limits, non-payment of fees in prescribed time periods, and failure to properly legalize and submit formal documents
in the format and style the country requires. While an inadvertent lapse can, in many cases, be cured by payment of a late fee or by
other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of
the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction just for failure
to know about and/or timely pay a prosecution fee. If we or our licensors fail to maintain the patents and patent applications covering
our product candidates for any reason, our competitors might be able to enter the market, which would have an adverse effect on our business.
If
we fail to comply with our obligations under our intellectual property license agreements, we could lose certain licensed rights
that are important to our business.
The
Giiant License Agreement pursuant to which
we license PALI-2108, and other assets of Giiant, contains certain requirements related to diligence, milestone, royalty,
insurance, expense reimbursement, and other obligations. If we fail to comply with these obligations, Giiant may have the ability
to terminate the license, subject to certain requirements as more fully set forth in the Giiant License Agreement. If the license granted
thereunder were to be terminated, our business, financial condition, operating results, and prospects would be materially adversely affected.
We
may be subject to patent infringement claims, which could result in substantial costs and liabilities, and prevent us from commercializing
our potential products.
Because
the intellectual property landscape in the fields in which we participate is rapidly evolving and interdisciplinary, it is difficult
to conclusively assess our freedom to operate without infringing on third-party rights. If any patent infringement claims are brought
against us, regardless of whether successful, we may incur significant expenses and divert the attention of our management and key personnel
from other business concerns. This could negatively affect our results of operations and prospects. We cannot be certain that patents
owned or licensed by us will not be challenged, potentially successfully, by others.
In
addition, if our product candidates are found to infringe the intellectual property rights of third parties, these third parties may
assert infringement claims against our customers, licensees and other parties with whom we have business relationships, and we may be
required to indemnify those parties for any damages they suffer as a result of such claims. 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 on behalf of those parties or may be required to obtain licenses for
the products they use. If we cannot obtain all necessary licenses on commercially reasonable terms, we may be unable to continue selling
such products.
We
may be subject to claims that our officers, directors, employees, consultants or independent contractors have wrongfully used or disclosed
to us alleged trade secrets of their former employers or their former or current customers.
As
is common in the biotechnology and pharmaceutical industries, certain of our employees were formerly employed by other biotechnology
or pharmaceutical companies, including our competitors or potential competitors. Moreover, we engage the services of consultants to assist
us in the development of our product candidates, many of whom were previously employed at, or may have previously been or are currently
providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
We may be subject to claims that our employees or consultants have inadvertently or otherwise wrongfully used or disclosed trade secrets
or other proprietary information of their former employers or their former or current customers. Although we have no knowledge of any
such claims being alleged to date, if such claims were to arise, litigation may be necessary to defend against any such claims. 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.
Other
Risks Related to Our Securities
We
will need to raise additional capital in the future to fund our operations, which may not be available to us on favorable terms or at
all.
We
have used and we intend to use the proceeds from this offering and any future offerings, to, among other uses, advance PALI-2108 through
clinical development, advancing the remainder of the existing portfolio through pre-clinical studies and into INDs or their equivalent
in foreign jurisdictions, our research and development activities and for general working capital needs. 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. 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 clinical trials or any additional pre-clinical 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. Raising additional
capital may be costly or difficult to obtain, which could inhibit our ability to achieve our business objectives. Given our limited cash
reserves and the significant amount of capital that we will likely need to fund our operations and business plan, our stockholders will
likely experience significant dilution to their ownership interests. If we raise additional funds through public or private equity sales
of our securities, the terms of these securities may include liquidation or other preferences that adversely impact the rights of our
common stockholders. Further, to the extent that we raise additional capital through the sale of common stock or securities convertible
or exchangeable into common stock, our stockholders’ ownership percentage will be decreased. In addition, any debt financing may
subject us to fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends. 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. Even if we obtain additional funding, there can be no assurance that it will
be available on terms acceptable to us or our stockholders.
We
believe that our existing cash and cash equivalents of approximately $8 million as of September 30, 2024 will be sufficient to fund our
planned operations, which include our recently approved Phase 1 clinical program, and preparations for future clinical trials, through
the first quarter of 2025, without the issuance of additional securities for cash. Assuming that we receive net proceeds of approximately
$4.18 million from this offering, we believe that the net proceeds from this offering will satisfy our capital needs into the 4th
quarter of 2025 under our current business plan. If the underwriters exercise the full over-allotment, we believe that the
net proceeds from this offering will satisfy our capital needs into the 1st quarter of 2026 under our current business plan.
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.
Market prices for securities of biotechnology and other life sciences companies historically have been particularly volatile and may
be subject to large daily price swings. 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; |
| | | |
| ● | 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 parties 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. |
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 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.
We
take advantage of reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in our
common stock being less attractive to investors.
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. As a smaller reporting company, we can take advantage of reduced
disclosure requirements, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements
in our SEC filings. Such reduced disclosures in our SEC filings may make it harder for investors to analyze our results of operations
and financial prospects. We cannot predict if investors will find our common stock less attractive if we rely on these exemptions. If
some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and
our stock price may be more volatile. We may take advantage of the reporting exemptions applicable to a smaller reporting company until
we are no longer a smaller reporting company, which status would end once we have a public float greater than $250 million. 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.
We
do not anticipate paying any dividends in the foreseeable future. We currently plan to retain our future earnings, if any, to fund the
development and growth of our business. As a result, capital appreciation, if any, of our shares will likely be your sole source of gain,
if any, for the foreseeable future.
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.
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. 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. If one or more equity research analysts ceases
coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our
stock price or trading volume to decline.
Future
sales of substantial amounts of our common stock, or the possibility that such sales could occur, could adversely affect the market price
of our common stock.
Future
sales in the public market of shares of our common stock, including shares issued upon exercise of our outstanding stock options or warrants,
or the perception by the market that these sales could occur, could lower the market price of our common stock or make it difficult for
us to raise additional capital.
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. 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. Although we believe these provisions collectively will provide for an opportunity
to receive higher bids by requiring potential acquirors to negotiate with our Board, they would apply even if the offer may be considered
beneficial by some stockholders. 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.
If
we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could
be impaired.
We
are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. The Sarbanes-Oxley
Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
We must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report
on the effectiveness of our internal controls over financial reporting in our periodic reports. This reporting will require us to incur
substantial professional fees and internal costs to expand our accounting and finance functions and to expend significant management
efforts.
Our
management identified a material weakness in our internal control over financial reporting. 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.
If
we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we are unable to maintain proper and
effective internal controls, we may not be able to produce timely and accurate consolidated financial statements. 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.
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. As of December 11, 2024, we had outstanding, common stock or securities
convertible into common stock, totaling 2,813,408 shares. As a result, we are authorized to issue up to an additional 277,186,592 shares
of common stock or common stock equivalents under our Certificate of Incorporation. Additionally, pursuant to the initial issuance of
(i) 1,000,000 shares of Series A 4.5% Convertible Preferred Stock, of which 200,000 shares are outstanding and (ii) 1,460 shares of Series
B Convertible Preferred Stock, of which no shares are outstanding, we are authorized to issue up to an additional 6,800,000 shares of
preferred stock. 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 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. Additionally, new investors may gain rights superior
to existing stockholders, depending on the terms of such transactions and types of securities. Pursuant to our equity incentive plans
and employee stock purchase plan, management is authorized to grant stock options, restricted stock units and other equity-based awards
to employees, directors and consultants, and to sell common stock to employees, respectively. 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.
General
Risk Factors
Our
business could be adversely affected by the effects of health pandemics or epidemics, such as the COVID-19 pandemic, which could cause
significant disruptions in our operations and those of our current or future CMOs, CROs, and other third parties upon whom we rely.
Health
pandemics or epidemics, such as the COVID-19 pandemic, have in the past and could again in the future result in quarantines, stay-at-home
orders, remote work policies, or other similar events that may disrupt businesses, delay our research and development programs and timelines,
negatively impact productivity and increase risks associated with cybersecurity, the future magnitude of which will depend, in part,
on the length and severity of the restrictions and other limitations. More specifically, these types of events may negatively impact
personnel at third-party manufacturing facilities or the availability or cost of materials, which could disrupt our supply chain. Moreover,
our trials may be negatively affected. Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital
resources. Some patients may not be able or willing to comply with trial protocols if quarantines impede patient movement or interrupt
healthcare services. Our ability to recruit and retain patients, principal investigators, and site staff (who as healthcare providers
may have heightened exposure) may be hindered, which would adversely affect our trial operations. Disruptions or restrictions on our
ability to travel to monitor data from our trials, or to conduct trials, or the ability of patients enrolled in our trials or staff at
trial sites to travel, as well as temporary closures of our trial partners and CMOs’ facilities, would negatively impact our trial
activities. In addition, we rely on independent clinical investigators, CROs, and other third-party service providers to assist us in
managing, monitoring, and otherwise carrying out certain of our pre-clinical studies and clinical trials, including the collection of
data from our trials, and the effects of health pandemics or epidemics, such as the COVID-19 pandemic, may affect their ability to devote
sufficient time and resources to our programs or to travel to sites to perform work for us. Similarly, our trials could be delayed and/or
disrupted. 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.
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 financial institutions in which we hold our cash and
cash equivalents are subject to risk of failure. For example, recent events surrounding certain banks, including Silicon Valley Bank,
First Republic Bank, and Signature Bank, created temporary uncertainty on their customers’ cash deposits in excess of Federal Deposit
Insurance Corporation limits prior to actions taken by governmental entities. While we do not expect any developments with any such banks
to have a material impact on our cash and cash equivalents balance, expected results of operations, or financial performance for the
foreseeable future, if further failures in financial institutions occur where we hold deposits, we could experience additional risk.
Any such loss or limitation on our cash and cash equivalents would adversely affect our business.
The
extent of the impact of these conditions on our operational and financial performance, including our ability to execute our business
strategies and initiatives in the expected timeframe, as well as that of third parties upon whom we rely, will depend on future developments
which are uncertain and cannot be predicted. There can be no assurance that further deterioration in economic or market conditions will
not occur, or how long these challenges will persist. If the current equity and credit markets further deteriorate, or do not improve,
it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Furthermore, our stock price may decline
due in part to the volatility of the stock market and the general economic downturn.
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.
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). We may rely
upon third-party service providers and technologies to operate critical business systems to process sensitive information in a variety
of contexts, including, without limitation, third-party providers of cloud-based infrastructure, employee email, CROs, and other functions.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate
information security measures in place. We may share or receive sensitive information with or from third parties.
The
risk of a security breach or disruption, particularly through cyber-attacks, cyber-intrusion, malicious internet-based activity, and
online and offline fraud, are prevalent and have generally increased as the number, intensity, and sophistication of attempted attacks
and intrusions from around the world have increased. These threats are becoming increasingly difficult to detect and come from a variety
of sources, including traditional computer hackers, threat actors, personnel (such as through theft or misuse), sophisticated nation
states, and nation-state-supported actors. Some actors now engage and are expected to continue to engage in cyber-attacks, including
without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During
times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks,
including cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute
our products.
We
and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social engineering
attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced
persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks,
supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology
assets, adware, natural disasters, terrorism, war, and telecommunication and electrical failures. 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. 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.
Furthermore,
our remote workforce poses increased risks to our information technology systems and data, as most of our employees work from home, utilizing
network connections outside our premises.
Any
of the previously identified or similar threats could cause a security breach or disruption. While we have not experienced any such security
breach or other disruption to date, if such an event were to occur, it could result in unauthorized, unlawful, or accidental acquisition,
modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information and cause interruptions
in our operations, including material disruptions of our development programs and business operations.
We
may expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against
security breaches and disruptions. While we have implemented security measures designed to protect against security incidents, there
can be no assurance that these measures will be effective. We may be unable in the future to detect vulnerabilities in our information
technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected
until after a security breach or disruption has occurred. 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. Such disclosures
are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. 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. In particular, since we sponsor clinical
trials, any breach or disruption that compromises patient data and identities could generate significant reputational damage, which may
affect trust in us and our ability to recruit for future clinical trials. Additionally, the loss of clinical trial data from completed
or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or
reproduce the data.
Our
contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in
our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
Furthermore, we cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities
arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms
or at all, or that such coverage will pay future claims.
Our
business and operations would suffer in the event of system failures, cyber-attacks or a deficiency in our cybersecurity.
Despite
the implementation of security measures, our internal computer systems, and those of our current and future CROs and other contractors
and consultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication
and electrical failures. Although we have not suffered any material incidents to date, the risk of a security breach or disruption, particularly
through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber-terrorists, has generally increased
as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. While we have not
experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions
in our operations, it could result in a material disruption of our development programs and our business operations. 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. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory
approval efforts and significantly increase our costs to recover or reproduce the data. 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.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and any applicable prospectus supplement or free writing prospectus, including the documents that we incorporate by reference
herein and therein, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,
as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. 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 statements. Forward-looking statements may include, but are not limited to,
statements about:
| |
● |
the
results of our pre-clinical studies and clinical trials; |
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|
|
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● |
estimates
about the size and growth potential of the markets for our product candidates, and our ability to serve those markets, including
any potential revenue generated; |
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● |
future
regulatory, judicial, and legislative changes or developments in the U.S. and foreign countries and the impact of these changes; |
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|
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our
ability to successfully develop our licensed technologies; |
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|
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our
ability to build a commercial infrastructure in the U.S. and other markets; |
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|
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● |
our
ability to compete effectively in a competitive industry; |
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|
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● |
our
ability to identify and qualify additional manufacturers to provide API and manufacture drug product; |
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|
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● |
our
ability to enter into commercial supply agreements; |
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|
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● |
the
success of competing technologies that are or may become available; |
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● |
our
ability to attract and retain key scientific or management personnel; |
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|
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● |
the
accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; |
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|
|
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● |
our
ability to obtain funding for our operations; and |
| |
|
|
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● |
our
ability to attract collaborators and strategic partnerships. |
In
some cases, you can identify forward-looking statements by terms such as “may,” “will,” “intend,”
“should,” “could,” “would,” “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “projects,” “predicts,” “potential” and similar
expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events
and are based on assumptions and are subject to risks and uncertainties. As such, our actual results may differ significantly from those
expressed in any forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking
statements.
These
forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and
uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially
from current expectations and projections. Factors that might cause such a difference include the risk factors identified under the caption
“Risk Factors” in this prospectus, as well as those identified under the caption “Risk Factors” in our Annual
Report on Form 10-K, filed with the SEC on March 26, 2024 and our Quarterly Reports on Form 10-Q, filed with the SEC on May 13, 2024,
August 12, 2024, and November 12, 2024.
You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus or,
in the case of documents referred to or incorporated by reference, the date of those documents.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect
the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect
the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
USE
OF PROCEEDS
We
estimate that the net proceeds from the sale of securities in this offering (excluding any proceeds from the exercise of Common Warrants
or Repriced Warrants) will be approximately $4.18 million, after deducting the underwriting discounts and commissions and estimated offering
expenses payable by us based on a public offering price of $1.525 per Class A Unit and $1.52490 per Class B Unit. If the underwriters exercise the over-allotment option in full, we estimate that our net proceeds will be approximately $4.87
million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
Our
expected use of the net proceeds from this offering represents our current intentions based upon our present plans and business condition.
As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon
completion of this offering, or the amounts that we will actually spend on the uses set forth above. However, we currently plan to use
the net proceeds from this offering primarily fund our Phase 1 clinical trial of PALI-2108, pre-clinical studies,
research and development, and working capital.
The
amounts and timing of our actual use of net proceeds will vary depending on numerous factors, including the relative success and cost
of our research and development programs and our ability to gain access to additional financing. As a result, our management will have
broad discretion in the application of the net proceeds, and investors will be relying on our management’s judgment regarding the
application of the net proceeds of this offering. In addition, we might decide to postpone or not pursue certain development activities
if the net proceeds from the offering and any other sources of cash are less than expected.
Pending
the uses described above, we plan to invest these net proceeds in short-term, interest-bearing investments, investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of the United States. We also may use a portion of the net proceeds from
the offering to fund acquisitions or other business development opportunities. However, we have no current commitments or obligations
with respect to any such acquisitions or business development opportunities at this time.
MARKET
INFORMATION
Our
common stock is listed on The Nasdaq Capital Market under the symbol “PALI.” On December 11, 2024, the last reported
sale price for our common stock on The Nasdaq Capital Market was $1.40 per share. As of December 11, 2024, we had approximately
139 stockholders of record.
DIVIDEND
POLICY
We
do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our capital stock. We intend to retain all available
funds and future earnings, if any, to fund the development and expansion of our business. Any future determination regarding the declaration
and payment of dividends, if any, will be at the discretion of our Board and will depend on then-existing conditions, including our financial
condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board may deem
relevant.
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and capitalization as of September 30, 2024 on:
| |
● |
an
actual basis; |
| |
|
|
| |
● |
a
proforma basis after adjusting for the following issuances subsequent to September 30, 2024: (i) an aggregate of 312,000 shares
that were issued pursuant to the exercise of outstanding pre-funded warrants issued in our May 2024 private placement, (ii) 3,000
shares that were issued to a consultant, and (iii) 776 shares that were issued pursuant to the vesting of restricted stock units;
and |
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|
|
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● |
a
pro forma as adjusted basis, giving effect to the sale of 158,000 Class A Units (containing 158,000 shares of common
stock), at a public offering price of $1.525 per Class A Unit, no exercise of the Common Warrants sold in this offering, and no exercise
by the underwriters of the over-allotment option after deducting underwriting discounts and commissions and estimated offering expenses
payable by us. |
The
pro forma as adjusted information below is illustrative only. You should read the following table
in conjunction with our consolidated financial statements, including the related notes, and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” from our Quarterly Report on Form 10-Q for the quarter ended September
30, 2024, which are incorporated by reference into this prospectus.
| | |
As of September 30, 2024 | |
| | |
(unaudited) (in thousands) | |
| | |
Actual | | |
Pro Forma | | |
Pro Forma as Adjusted | |
| Cash and cash equivalents | |
$ | 8,040 | | |
$ | 8,040 | | |
$ | 12,221 | |
| Stockholders’ equity: | |
| | | |
| | | |
| | |
| Series A Convertible Preferred Stock, $0.01 par value per share, 7,000,000 shares authorized as of
September 30, 2024, actual, pro forma and pro forma as adjusted; 200,000 shares issued and outstanding as of September
30, 2024, actual, pro forma and pro forma as adjusted | |
| 2 | | |
| 2 | | |
| 2 | |
| Common stock, $0.01 par value; 280,000,000 shares authorized as of September 30, 2024 actual, pro
forma, and adjusted pro forma, 1,198,516 shares issued and outstanding as of September 30, 2024, actual, 1,514,292 shares
issued and outstanding as of September 30, 2024, proforma, and 1,672,292 shares issued and outstanding as of September 30,
2024, pro forma as adjusted | |
| 11 | | |
| 14 | | |
| 15 | |
| Additional paid-in capital | |
| 139,195 | | |
| 139,202 | | |
| 143,382 | |
| Accumulated deficit | |
| (132,600 | ) | |
| (132,600 | ) | |
| (132,600 | ) |
| Total stockholders’ equity | |
| 6,608 | | |
| 6,618 | | |
| 10,799 | |
| Total capitalization | |
$ | 9,336 | | |
$ | 9,336 | | |
$ | 13,517 | |
The
foregoing table is based on 1,198,516 shares of common stock outstanding as of September 30, 2024, which is adjusted for the following
issuances subsequent to September 30, 2024 for an aggregate of 1,514,292 shares of common stock outstanding as of December 11,
2024: (i) an aggregate of 312,000 shares that were issued pursuant to the exercise of outstanding pre-funded warrants issued
in our May 2024 private placement, (ii) 3,000 shares that were issued to a consultant, and (iii) 776 shares that were issued pursuant
to the vesting of restricted stock units, but excludes:
| ● | 3,120,688
shares
of common stock issuable upon the exercise of Prefunded Warrants issued in this offering; |
| | | |
| | ● | 3,278,688 shares of common stock issuable upon the exercise of Common Warrants issued in this offering; |
| | | |
| ● | 196,721
shares
of common stock issuable upon the exercise of the representative warrants issued as compensation
to the representative of the underwriters in this offering; |
| | | |
| ● | 452
shares of common stock issuable upon exercise of outstanding stock options as of December
11, 2024 granted under the LBS 2013 Amended and Restated Employee, Director, and Consultant
Equity Incentive Plan, as amended and restated, or the 2013 Plan, with a weighted-average
exercise price of $14,403.57 per share; |
| | | |
| ● | 40,155
shares of common stock issuable upon exercise of outstanding stock options as of December
11, 2024, granted under the 2021 Equity Incentive Plan, as amended, or the 2021 Plan,
with a weighted-average exercise price of $43.95 per share; |
| | | |
| ● | 10,079
shares of common stock issuable upon exercise of outstanding stock options as of December
11, 2024 granted under the 2021 Inducement Plan, with a weighted average exercise
price of $14.26 per share; |
| | | |
| ● | 2,952
shares of common stock issuable upon vesting of restricted performance stock units outstanding
as of December 11, 2024; all of which were issued under the 2021 Plan which vest subject
to certain milestones; |
| | | |
| ● | 37,589
shares of common stock reserved for future issuances under the 2021 Plan as of December 11,
2024, as well as any future automatic increases in the number of shares of common stock
reserved for future issuance under the 2021 Plan; |
| | | |
| ● | 20,587
shares of common stock reserved for future issuance under our 2021 Employee Stock Purchase
Plan, or the ESPP, as of December 11, 2024, as well as any automatic increases in
the number of shares of common stock reserved for future issuance under the ESPP; |
| | | |
| ● | 52,942
shares of common stock reserved for issuance under the 2021 Inducement Plan as of December
11, 2024; |
| | | |
| ● | 1,245,470
shares of common stock issuable upon exercise of outstanding warrants as of December 11,
2024 with a weighted-average exercise price of $27.04 per share; and |
| | | |
| ● | 8
shares of common stock issuable upon conversion of the 200,000 outstanding shares of our
Series A 4.5% Convertible Preferred Stock as of December 11, 2024, as well as any
future shares of common stock issuable upon conversion of additional shares of Series A 4.5%
Convertible Preferred Stock that may be issued as payment-in-kind dividends thereon in accordance
with their terms. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other
than compensation arrangements, including employment, termination of employment and change in control arrangements, with our directors
and executive officers, and the other transactions discussed in the sections titled “Executive Compensation,” “Director
Compensation,” and “Certain Relationships and Related Party Transactions” in our Definitive Proxy Statement on Schedule
14A filed with the SEC on May 22, 2024 and incorporated by reference herein, the following is a description of each transaction since
January 1, 2021 and each currently proposed transaction in which:
| |
(i) |
the
amounts involved exceeded or will exceed the lesser of (a) $120,000 or (b) 1% of the average of our total assets for the fiscal years
ended December 31, 2023 or 2022; and |
| |
(ii) |
any
of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or
person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest. |
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● |
In
April 2021, Dr. Kenneth Carter, Dr. Matthew Kalnik, and Mr. Dane Saglio, and Seneca’s senior vice president of research and
development agreed to the cancellation of their respective outstanding options to purchase common stock in Seneca immediately prior
to the closing of our merger with Seneca in exchange for aggregate consideration of $1,423,012. Dr. Carter, Dr. Kalnik, and Mr. Saglio
served as (i) Executive Chairman, (ii) President and Chief Operating Officer, and (iii) Chief Financial Officer of Seneca, respectively,
until the closing of our merger with Seneca in April 2021. |
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● |
In
July 2021, Altium Growth Fund, LP (“Altium”), a then holder of more than five percent of our common stock, entered into
a Waiver and Amendment Agreement with the Company (the “Waiver Agreement”). Pursuant to the Waiver Agreement, we and
Altium agreed to waive certain rights, waive the reset provisions with respect to the exercise price and number of shares subject
to the outstanding warrants held by Altium, eliminate certain financing restrictions, and accelerate registration rights for the
shares underlying the warrants. As consideration for the foregoing, pursuant to the Waiver Agreement, we issued Altium an additional
warrant to purchase up to 1,466 shares of our common stock. The Waiver Agreement also provides that we will file a resale registration
statement for the shares underlying Altium’s warrants, including the additional warrant to purchase up to 1,466 shares of our
common stock, before July 31, 2021, which was completed.
Effective
January 31, 2022 (the “2022 Effective Time”), Altium entered into a Waiver and Amendment Agreement with us (the “2022
Waiver Agreement”). Pursuant to the 2022 Waiver Agreement, we agreed with Altium to irrevocably waive any adjustment to the
exercise price of the existing warrants held by Altium from and after 2022 Effective Time for our issuances of equity or equity-linked
securities at a price below the exercise price of the warrants. The 2022 Waiver Agreement also includes agreement by the parties
to, among other things, (i) restrict Altium’s ability to sell our securities through a “leak out” provision whereby
sales are restricted by applying a volume limitation, (ii) shorten the notice period for Altium’s participation rights related
to certain future securities offerings, (iii) restrict our ability to conduct a primary offering of its securities for a specified
period of time, and (iv) provide registration rights for the shares underlying the January 2022 Warrant (defined below). As consideration
for the foregoing, pursuant to the 2022 Waiver Agreement, we issued Altium an additional warrant to purchase up to 3,000 shares of
our common stock (the “January 2022 Warrant”). The January 2022 Warrant was exercisable beginning six months following
the 2022 Effective Time.
|
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|
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● |
In
August 2021, we and Yuma Regional Medical Center (“Yuma”), a then holder of more than five percent of our common stock,
entered into a Securities Purchase Agreement pursuant to which Yuma purchased 2,013 shares of our common stock and a warrant to purchase
up to 503 shares of our common stock for a total purchase price of $5.2 million. The warrant is exercisable for five years. Dr. Trenschel,
our former director, did not have any pecuniary interest in these securities and disclaimed beneficial ownership of them. Dr. Trenschel
is the president and chief executive officer of Yuma.
Pursuant
to the securities purchase agreement, we agreed to file one or more registration statements with the SEC registering the resale of
the shares and the shares of our common stock issuable upon exercise of the warrant by Yuma, to have all such registration statements
declared effective within the timeframes set forth in the purchase agreement, and to keep such registration statements effective
for up to five years.
|
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|
|
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● |
In
October 2020, we issued and sold to Yuma (i) an unsecured promissory note in the principal amount of $0.5 million with an interest
rate of 10% per annum (the “Yuma Notes”) and (ii) warrants to purchase 2 shares of our common stock at an exercise price
of $20,137.50 per share (the “Old Yuma Warrants”). The Old Yuma Warrants were immediately exercisable and expire ten
years from the date of issuance. In May 2021, we entered into an agreement with Yuma to amend the Yuma Notes to extend the maturity
date of the Yuma Notes to November 15, 2021 (the “Notes Amendment”). In connection with the Notes Amendment, the Old
Yuma Warrants were cancelled and we issued new warrants to purchase 7 shares of our common stock at $4,500.00 per share to Yuma. |
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● |
We
determined that the outstanding stock options under the 2013 Plan had an exercise price per share that was significantly higher than
the current fair market value of our common stock (the “Underwater Options”). On November 18, 2021, the Compensation
Committee resolved that it was in the best interests of the Company and its stockholders to amend the Underwater Options for Dr.
Hallam, Mr. Finley and Dr. Dawson, our former Chief Executive Officer, current Chief Executive Officer, and former Chief Medical
Officer, respectively, to reduce the exercise price per share to $1,740.00, the closing per share price of the Company’s common
stock on November 18, 2021 (the “Repricing”). In accordance with the 2013 Plan requirements, the holders of the Underwater
Options identified under the Repricing consented to the modification of their affected awards. All the other terms of the Underwater
Options other than the exercise price remained the same, including the number of shares granted, vesting schedule and expiration
date. We determined that the Repricing represented a modification of share-based awards under ASC 718. Accordingly, we recognized
an incremental compensation expense of $0.4 million for the year ended December 31, 2021. Of the incremental compensation expense
recognized, $200,939, $147,197 and $37,574 was attributable to shares held by Dr. Hallam, Mr. Finley and Dr. Dawson, respectively |
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● |
During
the fiscal year ended December 31, 2021, the Company paid the following compensation to its non-executive directors that served as
directors at any time during such year: |
| |
○ |
An
aggregate of $492,102 in cash; |
| |
○ |
An
aggregate of $36,960 in stock awards consisting of 1,600 restricted stock units awarded to directors by Seneca Biopharma, Inc., prior
to the merger with LBS; and |
| |
○ |
An
aggregate of $489,489 in value of stock option grants consisting of 64 options granted to 7 directors during 2021, each having an
exercise price of $1,740.00 per share and a term of 10 years. |
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● |
Pursuant
to a registered offering in May 2022, we sold an aggregate of 4,862 shares of our common stock, par value $0.01 per share, at a purchase
price per share of $412.50 to certain investors. In a concurrent private placement, we also sold purchase warrants to such purchasers
to purchase up to 4,862 shares of our common stock at an exercise price of $532.875 per share, the closing bid price of our common
stock on May 5, 2022. Altium Growth Fund LP, a holder of greater than 5% of our common stock at the time of purchase, purchased 1,200
shares and 1,200 common stock warrants. The warrants were not exercisable until six months following the date of issuance and expire
five and a half years from the date of issuance |
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|
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● |
On
August 16, 2022, J.D. Finley, our current Chief Executive Officer and Chief Financial Officer, participated in the Company’s
underwritten offering. Pursuant to the offering, Mr. Finley invested $25,000 in exchange for 133 units at $187.50 per unit consisting
of an aggregate of (i) 133 shares of Common Stock, (ii) 133 Series 1 Common Stock purchase warrants and (iii) 133 Series 2 Common
Stock purchase warrants. The Series 1 warrants had a term of one year from issuance and expired on August 16, 2023. The Series 2
warrants have a term of five years from issuance. Both Series 1 and Series 2 warrants initially had exercises prices of $187.50 but
have been subsequently reduced as a result of adjustments to the exercise prices for future offerings contained in the warrants.
As of the date of this prospectus, the Series 2 warrants have an exercise price of $6.31 per share. |
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● |
On
August 16, 2022, Thomas Hallam, PhD, our former Chief Executive Officer and former member of our Board, participated in the Company’s
underwritten offering. Pursuant to the offering, Dr. Hallam invested $10,000 in exchange for 53 units at $187.50 per unit consisting
of an aggregate of (i) 53 shares of Common Stock, (ii) 53 Series 1 Common Stock purchase warrants and (iii) 53 Series 2 Common Stock
purchase warrants. The Series 1 warrants had a term of one year from issuance and expired on August 16, 2023. The Series 2 warrants
have a term of five years from issuance. Both Series 1 and Series 2 warrants initially had exercises prices of $187.50 but have been
subsequently reduced as a result of adjustments to the exercise prices for future offerings contained in the warrants. As of the date of this prospectus, the Series 2 warrants have an exercise price of $6.31 per share. |
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● |
On
October 11, 2022, we entered into a separation agreement with Thomas Hallam, Ph.D., our former chief executive officer and member
of its Board whereby the Company and Dr. Hallam agreed to a mutual release of claims in exchange for (i) the payment of an aggregate
of $530,000 payable in twelve equal monthly installments, (ii) up to twelve (12) months of continued COBRA coverage, (iii) twelve
(12) months of immediate vesting of his outstanding equity grants subject to time based vesting, and (iv) up to six (6) months of
virtual job replacement services valued at $3,100. Subsequent to entering into the separation agreement, certain facts and conduct
by Dr. Hallam were discovered that excused the Company’s performance under the settlement agreement. As a result, subsequent
to paying Dr. Hallam an aggregate of $22,000, we determined that it is not probable that any additional compensation would be due
to Dr. Hallam. |
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● |
During
the fiscal year ended December 31, 2022, we paid our non-employee directors an aggregate of $475,000 in cash for services on the
Board and associated committees. No individual director received more than $115,000 in such fiscal year.
|
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On
January 3, 2023, we granted J.D. Finley, our Chief Executive Officer and Chief Financial Officer, 349 restricted stock units valued
at $20,000. The restricted stock units vested in 4 equal quarterly installments over the grant year. The restricted stock units were
issued from the 2021 Plan. |
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● |
On
February 6, 2023, we granted J.D. Finley, our Chief Executive Officer and Chief Financial Officer: (i) an option to purchase 3,813
shares of our common stock valued at approximately $87,853, having an exercise price of $36.00 per share, a term of 10 years, and
which vests quarterly over a three year period (ii) 2,780 restricted stock units valued at approximately $100,080 which vests in
12 equal installments quarterly over a three year period, and (iii) 2,166 performance restricted stock units valued at approximately
$78,000, which vest (a) 50% when the volume weighted average price of our common stock over 20 consecutive trading days is $48.00,
and (b) 50% when such volume weighted average price of our common stock over 20 consecutive trading days is $63.75. All of the grants
issued to Mr. Finley were issued on a conditional basis and were subject to the receipt of shareholder approval of the grants, which
was received at our annual shareholder meeting held on June 8, 2023. |
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● |
On
February 6, 2023, we granted Robert McRae, our former Chief Operating Officer: (i) an option to purchase 800 shares of common stock
valued at approximately $18,431, having an exercise price of $36.00 per share, a term of 10 years, and which vests quarterly over
three years (ii) 533 restricted stock units valued at approximately $21,120 which vests in 12 equal installments quarterly over a
three year period, and (iii) 1,193 performance restricted stock units valued at approximately $42,960, which vest (a) 50% when the
volume weighted average price of our common stock over 20 consecutive trading days is $48.00 and (b) 50% when such volume weighted
average price of our common stock over 20 consecutive trading days is $63.75. All of the grants issued to Mr. McRae were issued on
a conditional basis and were subject to the receipt of shareholder approval of the grants, which was received at our annual shareholder
meeting held on June 8, 2023. |
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On
February 22, 2023, the Compensation Committee amended our non-employee director compensation policy. The Compensation Committee again
amended the non-employee director compensation policy June 24, 2024. For a full discussion of this policy, see the section of this
S-1 entitled “Director Compensation”. |
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● |
Pursuant
to a registered offering in April 2023, we sold an aggregate of 50,421 shares of our common stock at a purchase price per share of
$39.60 to certain institutional and accredited investors. In a concurrent private placement, we also sold (i) 30,349 unregistered
shares of common stock, (ii) 70,744 prefunded warrants to purchase common stock with a perpetual term and exercise price of $0.0015
per share, and (iii) 151,514 common stock purchase warrants with a term of five (5) years and an exercise price of $39.60 per share.
Armistice Capital LLC, a then holder of greater than 5% of our outstanding common stock pursuant to the ownership of outstanding
common stock purchase warrants, purchased (i) 25,210 shares in the registered offering and (ii) in the concurrent private placement:
(a) 5,076 unregistered shares of our common stock, (b) 45,470 prefunded warrants, and (c) 75,757 warrants to purchase common stock
in exchange for an aggregate of $2,999,930.11. |
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Effective
May 15, 2023, Robert McRae, our then Chief Operating Officer (“COO”) transitioned to an executive strategic consultant.
Upon the transition, Mr. McRae ceased his duties and responsibilities as COO. For his services, Mr. McRae received ongoing monthly
compensation of $4,000 per month until January 15, 2024, when he ceased providing services to us and his outstanding equity awards
ceased vesting. |
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Effective
June 1, 2023, we increased J.D. Finley’s base salary from $490,000 to $542,000 contemporaneous with his appointment from interim
CEO to CEO. Additionally, Mr. Finley’s target cash bonus was increased from 45% to 50% of his base salary. Additionally, on
June 11, 2023, we granted Mr. Finley: (i) options to purchase 9,900 shares of our common stock with a term of ten (10) years and
an exercise price of $24.00 per share, valued at $151,978 on the grant date and (ii) 4,446 restricted stock units valued at $106,720.
Each of the options and restricted stock units granted to Mr. Finley vest in twelve (12) equal installments on a quarterly basis
over three (3) years. The equity grants were issued from our 2021 Plan. |
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On
June 11, 2023, the Company granted to the non-employee members of the Board of Directors, as supplemental grants, an aggregate of:
(i) options to purchase 5,158 shares of common stock with a term of ten (10) years and an exercise price of $24.00 per share and
(ii) 2,756 restricted stock units. Each of the grants vests fully on the one (1) year anniversary of the grant date. The aggregate
options were valued at $78,136 and the aggregate restricted stock units were valued at $66,120. The equity grants were issued
from the 2021 Plan. |
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● |
On
September 5, 2023, pursuant to his appointment as Chief Medical Officer, the Company issued Mitchell Jones, M.D., Ph.D. (i) options
to purchase 5,000 shares of common stock with a term of ten (10) years and an exercise price of $10.35 per share and (ii) 3,646 restricted
stock units. The options vest quarterly over three (3) years from the grant date and the restricted stock units vest as follows:
(a) 303 shares on November 6, 2023, and (b) the remaining 3,343 shares vest over eleven (11) equal quarterly periods after the initial
vesting date. The options were valued at $33,267 and the restricted stock units were valued at $37,727, respectively from the grant
date. The equity grants were issued from the Palisade 2021 Inducement Plan. |
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● |
On
November 21, 2023, we granted J.D. Finley, our CEO and CFO, on a conditional basis until such time as there are sufficient shares
available under the 2021 Plan, which occurred upon the annual evergreen share increase on January 1, 2024: (i) options to purchase
3,000 shares of common stock with a term of ten (10) years and an exercise price of $8.85 per share, valued at $22,114 on the grant
date and (ii) 2,533 restricted stock units valued at $22,420. Each of the options and restricted stock units granted to Mr. Finley
vest in twelve (12) equal installments on a quarterly basis over three (3) years. |
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● |
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 Plan, which occurred upon the annual evergreen share increase on January 1, 2024:
(i) options to purchase 2,210 shares of common stock with a term of ten (10) years and an exercise price of $8.85 per share, valued
at $16,296 on the grant date and (ii) 1,866 restricted stock units valued at $16,520. Each of the options and restricted stock units
granted to Dr. Jones vest in twelve (12) equal installments on a quarterly basis over three (3) years. |
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● |
On
November 21, 2023, the Company granted to each of the non-employee members of the Board of Directors, as supplemental grants: (i)
options to purchase 458 shares of common stock with a term of ten (10) years and an exercise price of $8.85 per share and (ii)388
restricted stock units. Each of the grants vests fully on the one (1) year anniversary of the grant date. The aggregate of all options
were valued at $23,494 and the aggregate of all restricted stock units were valued at $24,037. The equity grants were issued from
the 2021 Plan.
|
| |
|
|
|
● |
Between
February 8, 2024 and February 9, 2024, James Neal, Stephanie Diaz, Dr. Cristina Csimma, and Dr. Robert Trenschel resigned as members
of our Board. Pursuant to their resignation, we agreed to fully vest all of their outstanding equity awards issued on June 11, 2023
and November 21, 2023 and to extend the exercise period of their outstanding options until the expiration of each option. Accordingly,
as a result of the vesting, we issued to the former directors, an aggregate of 3,162 of our common stock shares upon vesting of outstanding
restricted stock units and extended the exercise period for an aggregate of (i) 2,898 options issued on June 11, 2023 having an exercise
price of $24.00 per share and a term of 10 years and (ii) 1,834 options issued on November 21, 2023, having an exercise price of
$8.85 per share and a term of 10 years. |
| |
|
|
| |
● |
On
May 7, 2024, we granted Margery Fischbein, upon her appointment to serve on the Board, options to purchase 1,000 shares of common
stock with a term of ten (10) years and an exercise price of $7.90 per share. The options vest in twelve (12) quarterly installments
over a three (3) year period. The options were valued at $6,632 on the date of issuance and were issued from our 2021 Plan. |
| |
|
|
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● |
On
July 11, 2024, we granted each of our three (3) non-employee Board members, pursuant to our non-employee director compensation plan,
options to purchase 2,100 shares of common stock with a term of ten (10) years and an exercise price of $4.49 per share. The options
vest fully on the one (1) year anniversary of the grant date. The options were valued at $23,527.23 in the aggregate on the date
of issuance and were issued from our 2021 Plan. |
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|
|
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● |
On
May 28, 2024, we fully accelerated the vesting of an aggregate of (i) 7,068 restricted stock units held by J.D. Finley, our Chief
Executive Officer and Chief Financial Officer and (ii) 4,290 restricted stock units held by Dr. Mitchell Jones, our Chief Medical
Officer. |
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|
|
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● |
On
September 25, 2024, we entered into a revised employment agreement with J.D. Finley, our chief executive and chief financial officer.
Pursuant to the terms of the employment agreement, Mr. Finley (i) receives a base salary of $542,000 per year, (ii) is eligible to
receive an annual cash bonus based on the achievement of certain performance goals with a target of up to 50% of his base salary
and (iii) is eligible to receive an annual market-based stock option grant as determined by the Board. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding beneficial ownership of our capital stock as of December 11, 2024 by:
| |
● |
each
person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; |
| |
|
|
| |
● |
each
of our directors; |
| |
|
|
| |
● |
each
of our named executive officers; and |
| |
|
|
| |
● |
all
of our current executive officers and directors as a group. |
The
information in the following table is calculated based on 1,514,292 shares of our common stock outstanding as of December 11,
2024. Beneficial ownership is determined according to the rules of the SEC. Beneficial ownership means that a person has or shares
voting or investment power of a security and includes any securities that person or group has the right to acquire within 60 days after
the measurement date, including upon the exercise of common stock purchase options or warrants or the conversion of preferred stock.
| Name of Beneficial Owner (1) | |
Number of Shares Beneficially Owned | | |
Percentage of Shares Beneficially Owned | |
| Greater than 5% Stockholders | |
| | | |
| | |
| Armistice Capital, LLC (2) | |
| 125,692 | | |
| 8.30 | % |
| Directors and Named Executive Officers | |
| | | |
| | |
| Thomas Hallam,
Ph.D. (3) | |
| 54 | | |
| * | |
| Donald Williams (4) | |
| 5,078 | | |
| * | |
| Binxian Wei (5) | |
| 2,015 | | |
| * | |
| J.D. Finley (6) | |
| 22,675 | | |
| 1.49 | % |
| Michael Dawson, M.D. (7) | |
| - | | |
| * | |
| Herbert Slade, MD FAAAAI (8) | |
| - | | |
| * | |
| Robert McRae (9) | |
| 304 | | |
| * | |
| Mitchell Jones, M.D., Ph.D.
(10) | |
| 6,671 | | |
| * | |
| Margery Fischbein (11) | |
| 250 | | |
| * | |
| All
directors and executive officers as a group (9 persons) (12) | |
| 37,047 | | |
| 2.42 | % |
| |
* |
Represents
less than one percent |
| (1) |
Except
as otherwise indicated in the footnotes to this table, this table is based upon information supplied by officers, directors and principal
stockholders and Schedules 13D and 13G, and Forms 4, filed with the SEC. Unless otherwise indicated in the footnotes to this table
and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting
and investment power with respect to the shares indicated as beneficially owned. Shares of our common stock underlying options, warrants,
restricted stock units, and convertible securities that are currently exercisable or exercisable within 60 days of December 11,
2024 are deemed to be outstanding for the purpose of computing the number of shares held and the percent of total ownership of
the person holding those options, warrants, restricted stock units, or convertible securities, but are not treated as outstanding
for the purpose of computing the percent of total ownership of any other person. Applicable percentages are based on 1,514,292
shares of common stock outstanding on December 11, 2024, adjusted as required by rules promulgated by the SEC. Unless
otherwise indicated, the address of the beneficial owner is c/o Palisade Bio, Inc. 7750 El Camino Real, Suite 2A, Carlsbad, CA 92009. |
| |
|
| (2) |
Includes 125,692 shares of common stock as reported
by Armistice Capital, LLC on Schedule 13G, filed with the SEC on November 14, 2024. The Address of beneficial owner is 510 Madison
Avenue, 7th Floor, New York, NY 10022. Excludes common stock purchase warrants and pre-funded warrants held by Armistice
Capital, LLC that are subject to beneficial ownership limitations. |
| (3) |
Includes
54 shares of common stock underlying common stock purchase warrants. Dr. Hallam ceased to be an officer and director of the Company
effective October 11, 2022. |
| |
|
| (4) |
Includes
(i) 3,728 shares of common stock and (ii) 1,350 shares of common stock underlying stock options. |
| |
|
| (5) |
Includes
(i) 855 shares of common stock and (ii) 1,160 shares of common stock underlying stock options. |
| |
|
| (6) |
Consists
of (i)(a) 13,472 shares of common stock held by Mr. Finley, (b) 134 shares of common stock that may be acquired pursuant to the exercise
of outstanding warrants held by Mr. Finley, (c) 9,016 shares of common stock underlying options held by Mr. Finley, (ii)(a)
51 shares of common stock held by FCW Investments LLC, and (b) 2 shares of common stock underlying warrants held by FCW Investments,
LLC. The address for FCW Investments LLC is 19 Cherrymoor Dr, Englewood, CO 80113. Does not include 2,166 performance stock units
(PSUs), which vest based on volume weighted average trading price of the Company’s common stock. |
| |
|
| (7) |
Dr.
Dawson ceased to be an officer of the Company effective October 11, 2022. |
| |
|
| (8) |
Dr.
Slade was appointed to serve as our Chief Medical Officer on November 17, 2022 and ceased to be our Chief Medical Officer on September
5, 2023. |
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|
| (9) |
Includes
(i) 289 shares of common stock and (ii) 15 shares of common stock that may be acquired pursuant to the exercise of outstanding warrants.
Mr. McRae was appointed to serve as our Chief Operating Officer on February 2, 2023. Effective May 15, 2023, Mr. McRae transitioned
to a consultant until January 15, 2024. |
| |
|
| (10) |
Includes
(i) 3,852 shares of common stock, and (ii) 2,819 shares of common stock underlying options. |
| |
|
| (11) |
Margery
Fischbein was appointed to the Board on May 7, 2024. Includes 250 shares of common stock underlying options. |
| |
|
| (12) |
Includes
the securities described in footnotes (3)-(11) above. |
| |
* |
Represents
less than one percent. |
DESCRIPTION
OF CAPITAL STOCK
The
following summary is a description of the material terms of our capital stock. This summary is not complete and is qualified by reference
to our Certificate of Incorporation and our Bylaws, which are filed as exhibits to this prospectus and are incorporated by reference
herein. We encourage you to read our Certificate of Incorporation, our Bylaws and the applicable provisions of the Delaware General Corporation
Law for additional information.
As
of the date of this prospectus, our authorized capital stock consists of 280,000,000 shares of common stock, par value $0.01 per share,
and 7,000,000 shares of preferred stock, par value $0.01 per share.
Common
Stock
Shares
of our common stock have the following rights, preferences and privileges:
Fully
Paid and Non-Assessable. All outstanding shares of common stock are duly authorized, validly issued, fully paid, and nonassessable.
All authorized but unissued shares of our common stock are available for issuance by our Board without any further stockholder action,
except as required by the listing standards of the Nasdaq Stock Market.
Voting
Rights. Our common stock is entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.
Any action at a meeting at which a quorum is present will be decided by a majority of the voting power present in person or represented
by proxy, except in the case of any election of directors, which will be decided by a plurality of votes cast. There is no cumulative
voting.
Dividends
and Distributions. Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our common stock
are entitled to receive dividends when, as and if declared by our Board out of funds legally available for payment, subject to the rights
of holders, if any, of any class of stock having preference over the common stock. Any decision to pay dividends on our common stock
will be at the discretion of our board of directors. Our Board may or may not determine to declare dividends in the future. The Board’s
determination to issue dividends will depend upon our profitability and financial condition any contractual restrictions, restrictions
imposed by applicable law and the SEC, and other factors that our Board deems relevant.
Liquidation
Rights. In the event of a voluntary or involuntary liquidation, dissolution or winding up of the company, the holders of our common
stock will be entitled to share ratably on the basis of the number of shares held in any of the assets available for distribution after
we have paid in full, or provided for payment of, all of our debts and after the holders of all outstanding series of any class of stock
have preference over the common stock, if any, have received their liquidation preferences in full.
Other.
Holders of shares of our common stock are not entitled to preemptive rights. Shares of our common stock are not convertible into shares
of any other class of capital stock, nor are they subject to any redemption or sinking fund provisions.
Preferred
Stock
Under
the terms of our Certificate of Incorporation, our Board has the authority, without further action by our stockholders, to issue up to
7,000,000 shares of preferred stock in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted
by our Board. Our Board is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations,
powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of preferred
stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences
of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.
Our
Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or
other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in
our control and may adversely affect the market price of the common stock and the voting and other rights of the holders of our common
stock.
Series
A 4.5% Convertible Preferred Stock
In
December 2016, we designated a series of our preferred stock as Series A 4.5% Convertible Preferred Stock consisting of 1,000,000 designated
shares (which is subject to increase without the consent of all of the holders of the Series A 4.5% Convertible Preferred Stock in the
event such additional shares of Series A 4.5% Convertible Preferred Stock are issued solely to the holders as payment of accrued dividends).
As
of December 11, 2024, we had outstanding 200,000 shares of Series A 4.5% Convertible Preferred Stock with a stated value of $12.79
per share held by one holder and which are immediately convertible into an aggregate of 8 shares of common stock. The Series A 4.5% Convertible
Preferred Stock have no provisions regarding subsequent securities issuances or so called “price protection provisions.”
The holders of Series A 4.5% Convertible Preferred Stock shall be entitled to receive dividends in cash or additional shares of Series
A 4.5% Convertible Preferred Stock if and when declared by our Board in preference to the payment of any dividends on our common stock.
The holders of Series A 4.5% Convertible Preferred Stock shall have no voting rights but shall be entitled to appoint one member to our
Board. This right to appoint a member of the Board will terminate when there are less than 200,000 shares of Series A 4.5% Convertible
Preferred Stock outstanding. As long as any shares of Series A 4.5% Convertible Preferred Stock are outstanding, we shall not, without
the affirmative vote of the holders of a majority of the then outstanding shares of the Series A 4.5% Convertible Preferred Stock, alter
or change adversely the powers, preferences or rights given to the Series A 4.5% Convertible Preferred Stock or alter or amend the Certificate
of Designation, other than to authorize and issue additional shares of Series A 4.5% Convertible Preferred Stock. In addition, holders
of Series A 4.5% Convertible Preferred Stock are subject to certain beneficial ownership limitations.
Options
As
of December 11, 2024, we had outstanding stock options to purchase an aggregate of 50,686 shares of common stock issued pursuant
to (i) Leading BioSciences 2013 Amended and Restated, Employee, Director and Consultant Equity Incentive Plan, (ii) the 2021 Plan, and
(iii) the 2021 Inducement Plan, each as amended. The options have a remaining weighted average term of approximately 8.8 years and an
average weighted exercise price of $166.10 per share.
Performance
Restricted Stock Units
As
of December 11, 2024, we had an aggregate of 2,952 restricted performance stock units that vest (a) 50% when the volume weighted
average price of our Common Stock over 20 consecutive trading days is $48.00, and (b) 50% when such volume weighted average price of
our Common Stock over 20 consecutive trading days is $63.75.
Warrants
As
of December 11, 2024, we had outstanding common stock purchase warrants to purchase an aggregate of 1,245,470 shares of common
stock, with a remaining average term of 5.85 years and a weighted average exercise price of $27.04 per share.
Limitations
on Liability and Indemnification of Officers and Directors
Our
Certificate of Incorporation and our Bylaws limit the liability of our officers and directors and provide that we will indemnify our
officers and directors, in each case, to the fullest extent permitted by the Delaware General Corporation Law.
We
have entered into separate indemnification agreements with each of our directors and executive officers. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors or executive officers, we have been informed that in the opinion
of the SEC such indemnification is against public policy and is therefore unenforceable.
Certificate
of Incorporation and Bylaw Provisions
Our
Certificate of Incorporation and our Bylaws include a number of anti-takeover provisions that may have the effect of encouraging persons
considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts. These provisions include:
Board
Composition and Filling Vacancies. Because our stockholders do not have cumulative voting rights, the holders of a plurality of the
voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors,
can elect all of the directors standing for election, if they so choose, other than any directors that holders of any preferred stock
we have or may issue may be entitled to elect. Our Bylaws also provide that subject to the rights of the holders of any series of preferred
stock then outstanding, any director or the entire Board may be removed from office at any time, with or without cause, by the affirmative
vote of the holders of at least a majority of the voting power of the issued and outstanding shares of capital stock of the Company then
entitled to vote in the election of directors.
Special
Meeting of Stockholders. Our Bylaws also provides that a special meeting of stockholders may be called only by our chairperson of
the Board, chief executive officer or president, the secretary or any two directors.
Advance
Notice Requirements. Our Bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination
of candidates for election as directors or new business to be brought before meetings of stockholders. These procedures provide that
notice of stockholder proposals must be timely and given in writing to our corporate Secretary. Generally, to be timely, notice must
be received at our principal executive offices not fewer than 120 calendar days prior to the first anniversary date on which our notice
of meeting and related proxy statement were mailed to stockholders in connection with the previous year’s annual meeting of stockholders.
The notice must contain the information required by the Bylaws, including information regarding the proposal and the proponent.
Amendment
to Bylaws. The Board is expressly empowered to adopt, amend or repeal the Bylaws. The stockholders shall also have power to adopt,
amend or repeal the Bylaws; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Company
required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power
of all of the then outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, voting
together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws.
Exclusive
Forum Provision. Our Bylaws provide that unless we consent in writing to the selection of an alternative forum, the sole and exclusive
forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii)
any action asserting a claim arising pursuant to any provision of the DGCL or the Certificate of Incorporation or Bylaws (as either may
be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery
in the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware).
If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located
within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have
consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any
action brought in any such court to enforce the preceding sentence and (ii) having service of process made upon such stockholder in any
such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Delaware
Takeover Statute
We
are subject to Section 203 of the DGCL which, subject to certain exceptions, prohibits a Delaware corporation from engaging in any “business
combination” (as defined below) with any interested stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (1) prior to such date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) on consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding
those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held subject to this plan will be tendered in a tender or exchange offer;
or (3) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2⁄3% of the outstanding voting stock
that is not owned by the interested stockholder.
Section
203 of the DGCL defines generally “business combination” to include: (1) any merger or consolidation involving the corporation
and the interested stockholder; (2) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving
the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation
of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing
the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5)
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation. In general, Section 203 defines an “interested stockholder” as any entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled
by such entity or person.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Equiniti Trust Company, LLC. We act as the transfer agent and registrar for our
Series A 4.5% Convertible Preferred Stock and Series B Convertible Preferred Stock to the extent any shares are outstanding.
Listing
on the Nasdaq Capital Market
Our
common stock is listed on The Nasdaq Capital Market under the symbol “PALI.”
DESCRIPTION
OF SECURITIES WE ARE OFFERING
The
following summary of certain terms and provisions of the securities that are being offered hereby is not complete and is subject to,
and qualified in its entirety by, the provisions of the underlying securities, the forms of which are filed as exhibits to the registration
statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the forms
of securities for a complete description of the terms and conditions.
Units
Class
A Units - We are offering 158,000 Class A Units with each Class A Unit consisting of: (i) one (1) share of
our common stock and (ii) one (1) Common Warrant to purchase one (1) share of our common stock.
Class
B Units - We are also offering 3,120,688 Class B with each Class B Unit consisting of: (i) one (1) Prefunded Warrant and (ii)
one (1) Common Warrant to purchase one (1) share of our common stock.
The
Common Warrants included in the Class A Units and Class B Units are identical.
The
shares of common stock in the Class A Units or the Prefunded Warrants in the Class B Units, as applicable, and the accompanying
Common Warrants, can only be purchased together in this offering but will be issued separately and will be immediately separable
upon issuance.
Common
Stock
The
material terms and provisions of our common stock and each other class of our securities which qualifies or limits our common stock are
described under the caption “Description of Capital Stock” in this prospectus.
Description
of Common Warrants
The
following summary of certain terms and provisions of the Common Warrants that are being offered hereby is not complete and is subject
to, and qualified in its entirety by, the provisions of the Common Warrant, the form of which is filed as an exhibit to the registration
statement of which this prospectus forms a part. You should review the form of Common Warrant for a complete description of the terms
and conditions applicable to the Common Warrants.
Form.
Pursuant to a warrant agency agreement between us and Equiniti Trust Company, LLC, as warrant agent, the Common Warrants
will be issued in book-entry form and shall initially be represented only by one or more global Common Warrants deposited with the warrant
agent, as custodian on behalf of The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC,
or as otherwise directed by DTC.
Exercisability.
The Common Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full in immediately available funds for the number of shares of our common stock purchased upon such
exercise (except in the case of a cashless exercise as described below). A holder (together with its affiliates) may not exercise any
portion of the Common Warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder, 9.99%) of the
outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the
holder may increase the amount of ownership of outstanding stock after exercising the holder’s Common Warrants up to 9.99% of the
number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined
in accordance with the terms of the Common Warrants. Holders of the Common Warrants may also elect prior to the issuance of the Common
Warrants to have the initial exercise limitation set at 9.99% of our outstanding common stock. No fractional shares of common stock will
be issued in connection with the exercise of a Common Warrant. In lieu of fractional shares, we will either pay the holder an amount
in cash equal to the fractional amount multiplied by the exercise price or round up to the nearest whole share.
Duration
and Exercise Price. The exercise price per whole share of our common stock purchasable upon the exercise of the Common Warrants is
$1.40 per share. The Common Warrants will be immediately exercisable upon issuance and may be exercised until the five (5) year
anniversary from the date of issuance. The exercise price of the Common Warrants is subject to appropriate adjustment in the event of
certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common
stock and upon any distributions of assets, including cash, stock or other property to our stockholders.
Cashless
Exercise. If, at any time after the issuance of the Common Warrants, such holder exercises its Common Warrants and a registration
statement registering the issuance of the shares of common stock underlying the Common Warrants under the Securities Act is not then
effective or available (or a prospectus is not available for the resale of shares of common stock underlying the Common Warrants), then
in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price,
the holder shall instead receive upon such exercise (either in whole or in part) only the net number of shares of common stock determined
according to a formula set forth in the Common Warrants. Notwithstanding anything to the contrary, in the event we do not have or maintain
an effective registration statement, there are no circumstances that would require us to make any cash payments or net cash settle the
Common Warrants to the holders.
Transferability.
Subject to applicable laws, the Common Warrants may be offered for sale, sold, transferred or assigned at the option of the holder upon
surrender of the Common Warrant to us together with the appropriate instruments of transfer.
Exchange
Listing. We do not plan on applying to list the Common Warrants on the Nasdaq Capital Market, any other national securities exchange
or any other nationally recognized trading system. Without an active trading market, the liquidity of the Common Warrants will be limited.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the Common Warrants and generally including any
reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or
substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than
50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by
our outstanding common stock, the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants
the kind and amount of securities, cash or other property that the holders would have received had they exercised Common Warrants
immediately prior to such fundamental transaction. Any successor to us or surviving entity shall assume the obligations under the
Common Warrants. Additionally, as more fully described in the Common Warrant, in the event of certain fundamental transactions, the
holders of the Common Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Common
Warrants on the date of consummation of such transaction.
Rights
as a Stockholder. Except by virtue of such holder’s ownership of shares of our common stock, the holder of a Common Warrant
does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the Common
Warrant.
Description
of Pre-Funded Warrants
The
following summary of certain terms and provisions of Prefunded warrants that are being offered hereby is not complete and is subject
to, and qualified in its entirety by, the provisions of the Prefunded Warrant, the form of which is filed as an exhibit
to the registration statement of which this prospectus forms a part. You should review the form of Prefunded Warrant for a complete
description of the terms and conditions applicable to the Prefunded Warrants.
Form.
Pursuant to a warrant agency agreement between us and Equiniti Trust Company, LLC, as warrant agent,
the Prefunded Warrants will be issued in book-entry form and shall initially be represented only by one or more global warrants
deposited with the warrant agent, as custodian on behalf of The Depository Trust Company, or DTC, and registered in the name of Cede
& Co., a nominee of DTC, or as otherwise directed by DTC.
Exercisability.
The Prefunded Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full in immediately available funds for the number of shares of our common stock purchased
upon such exercise (except in the case of a cashless exercise as described below). A holder (together with its affiliates) may not exercise
any portion of the Prefunded Warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder,
9.99%) of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder
to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s Prefunded Warrants
up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the Prefunded Warrants. Purchasers of Prefunded Warrants in this
offering may also elect prior to the issuance of the Prefunded Warrants to have the initial exercise limitation set at 9.99% of
our outstanding common stock. No fractional shares of common stock will be issued in connection with the exercise of a Prefunded Warrant.
In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise
price or round up to the nearest whole share.
Duration
and Exercise Price. The exercise price per whole share of our common stock purchasable upon the exercise of the Prefunded Warrants
is $0.0001 per share of common stock. The Prefunded Warrants will be immediately exercisable and may be exercised at any time
until the Prefunded Warrants are exercised in full. The exercise price of the Prefunded Warrants is subject to appropriate
adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar
events affecting our common stock and upon any distributions of assets, including cash, stock or other property to our stockholders.
Cashless
Exercise. If, at any time after the holder’s purchase of Prefunded Warrants, such holder exercises its Prefunded
Warrants and a registration statement registering the issuance of the shares of common stock underlying the Prefunded Warrants
under the Securities Act is not then effective or available (or a prospectus is not available for the resale of shares of common
stock underlying the Prefunded Warrants), then in lieu of making the cash payment otherwise contemplated to be made to us upon
such exercise in payment of the aggregate exercise price, the holder shall instead receive upon such exercise (either in whole or in
part) only the net number of shares of common stock determined according to a formula set forth in the Prefunded Warrants. Notwithstanding
anything to the contrary, in the event we do not have or maintain an effective registration statement, there are no circumstances that
would require us to make any cash payments or net cash settle the Prefunded Warrants to the holders.
Transferability.
Subject to applicable laws, the Prefunded Warrants may be offered for sale, sold, transferred or assigned at the option of the
holder upon surrender of the Prefunded Warrant to us together with the appropriate instruments of transfer.
Exchange
Listing. We do not plan on applying to list the Prefunded Warrants on the Nasdaq Capital Market, any other national securities
exchange or any other nationally recognized trading system. Without an active trading market, the liquidity of the Prefunded Warrants
will be limited.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the Prefunded Warrants and generally including any
reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially
all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding
common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock,
the holders of the Prefunded Warrants will be entitled to receive upon exercise of the Prefunded Warrants the kind and
amount of securities, cash or other property that the holders would have received had they exercised the Prefunded Warrants immediately
prior to such fundamental transaction.
Rights
as a Stockholder. Except by virtue of such holder’s ownership of shares of our common stock, the holder of a Prefunded Warrant
does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the
Prefunded Warrant.
Description
of Representative Warrants
The
following summary of certain terms and provisions of the representative warrants that are being offered hereby is not complete and is
subject to, and qualified in its entirety by, the provisions of the representative warrant, the form of which will be filed as an exhibit
to the registration statement of which this prospectus forms a part. You should review the form of representative warrant for a complete
description of the terms and conditions applicable to the representative warrants.
Form.
The representative warrants will be issued in certificated form by the Company.
Exercisability.
The representative warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full in immediately available funds for the number of shares of our common stock purchased
upon such exercise (except in the case of a cashless exercise as described below). A holder (together with its affiliates) may not exercise
any portion of the representative warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder,
9.99%) of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder
to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s representative warrants
up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the representative warrants. Holders of the representative warrants may also
elect prior to the issuance of the representative warrants to have the initial exercise limitation set at 9.99% of our outstanding common
stock. No fractional shares of common stock will be issued in connection with the exercise of a representative warrant. In lieu of fractional
shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to
the nearest whole share.
Duration
and Exercise Price. The exercise price per whole share of our common stock purchasable upon the exercise of the representative warrants
is 165% of the public offering price per Class A Unit sold in this prospectus. The representative warrants will be immediately
exercisable upon issuance and may be exercised until the five (5) year anniversary from the commencement of sales under this prospectus.
The exercise price of the representative warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions,
stock splits, stock combinations, reclassifications or similar events affecting our common stock and upon any distributions of assets,
including cash, stock or other property to our stockholders.
Cashless
Exercise. If, at any time after the issuance of the representative warrants, such holder exercises its representative warrants
and a registration statement registering the issuance of the shares of common stock underlying the representative warrants under the
Securities Act is not then effective or available (or a prospectus is not available for the resale of shares of common stock underlying
the representative warrants), then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment
of the aggregate exercise price, the holder shall instead receive upon such exercise (either in whole or in part) only the net number
of shares of common stock determined according to a formula set forth in the representative warrants. Notwithstanding anything to the
contrary, in the event we do not have or maintain an effective registration statement, there are no circumstances that would require
us to make any cash payments or net cash settle the representative warrants to the holders.
Transferability.
Subject to applicable laws, the representative warrants may be offered for sale, sold, transferred or assigned at the option of the holder
upon surrender of the representative warrant to us together with the appropriate instruments of transfer.
Exchange
Listing. We do not plan on applying to list the representative warrants on the Nasdaq Capital Market, any other national securities
exchange or any other nationally recognized trading system. Without an active trading market, the liquidity of the representative warrants
will be limited.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the representative warrants and generally including any
reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially
all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding
common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock,
the holders of the representative warrants will be entitled to receive upon exercise of the representative warrants the kind and amount
of securities, cash or other property that the holders would have received had they exercised the representative warrants immediately
prior to such fundamental transaction. Any successor to us or surviving entity shall assume the obligations under the representative
warrants. Additionally, as more fully described in the representative warrant, in the event of certain fundamental transactions, the
holders of the representative warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the
representative warrants on the date of consummation of such transaction.
Rights
as a Stockholder. Except by virtue of such holder’s ownership of shares of our common stock, the holder of a representative
warrant does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises
the representative warrant.
WARRANT REPRICE
TRANSACTION
In
a concurrent private transaction, we have agreed to reduce the exercise price of 1,040,217 outstanding common stock warrants expiring
between July 31, 2027 and May 6, 2031, to $1.40 per share (“Repriced Warrants’). Other than the reduction in exercise price, the
terms of the Repriced Warrants remain the same and unchanged.
UNDERWRITING
We
are offering the securities described in this prospectus through the underwriters named below. We have entered into an underwriting agreement
dated December 11, 2024 with Ladenburg Thalmann & Co. Inc., as the representative of the underwriters in this offering. Subject
to the terms and conditions of the underwriting agreement, the underwriters have agreed to purchase the number of our securities set
forth opposite its name below.
| Underwriters | |
Number of
Class A Units | | |
Number of
Class B Units | |
| Ladenburg Thalmann & Co. Inc. | |
| 158,000 | | |
| 3,120,688 | |
| Totals | |
| 158,000 | | |
| 3,120,688 | |
A
copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus is part.
We
have been advised by the underwriters that they propose to offer the Class A Units and Class B Units, if any, directly to the public
at the public offering prices set forth on the cover page of this prospectus. Any securities sold by the underwriters to securities
dealers will be sold at the public offering price less a selling concession not in excess of $0.13725 per Class A Unit and
$0.137241 per Class B Unit.
The
underwriting agreement provides that the underwriters’ obligation to purchase the securities we are offering is subject to conditions
contained in the underwriting agreement.
No
action has been taken by us or the underwriters that would permit a public offering of the securities in any jurisdiction outside the
United States where action for that purpose is required. None of our securities included in this offering may be offered or sold, directly
or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sales of any
of the securities offering hereby be distributed or published in any jurisdiction except under circumstances that will result in compliance
with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised to inform themselves
about and to observe any restrictions relating to this offering of securities and the distribution of this prospectus. This prospectus
is neither an offer to sell nor a solicitation of any offer to buy the securities in any jurisdiction where that would not be permitted
or legal.
The
underwriters have advised us that they do not intend to confirm sales to any account over which they exercise discretionary authority.
Underwriting
Discount and Expenses
The
following table summarizes the underwriting discount and commission to be paid to the underwriters by us.
| | |
Per
Class A Unit | | |
Per
Class B Unit | | |
Total
Without
Over-
Allotment | | |
Total
With Full
Over-
Allotment | |
| Public offering price (1) | |
$ | 1.52500 | | |
$ | 1.52490 | | |
$ | 4,999,687.13 | | |
$ | 5,749,686.71 | |
| Underwriting discounts and commissions (2)(3) | |
$ | 0.13725 | | |
$ | 0.137241 | | |
$ | 449,999.93 | | |
$ | 552,937.37 | |
| Proceeds to us, before expenses | |
$ | 1.38775 | | |
$ | 1.387659 | | |
$ | 4,549,687.20 | | |
$ | 5,196,749.34 | |
| (1) | The
public offering price and underwriting discount corresponds, in respect of the securities
of a public offering price per Class A Unit of $1.525 ($1.38775 net of the underwriting
discount) and a public offering price per Class B Unit of $1.5249 ($1.387659 net of the
underwriting discount). |
| (2) | We
have also agreed to reimburse the accountable expenses of the representative, including a
pre-closing expense allowance of up to a maximum of $20,000 and an additional closing expense
allowance up to a maximum of $95,000. |
| (3) | We
have granted a forty-five day over-allotment option to the underwriters to purchase up to
an aggregate of 491,803 additional shares of common stock and/or Common Warrants to
purchase up to 491,803 additional shares of common stock at the assumed public offering
prices per security set forth above less the underwriting discounts and commissions solely
to cover over-allotments, if any. |
We estimate the total expenses
payable by us for this offering assuming no Over-Allotment, to be approximately $817,000, which amount includes
(i) the underwriting discount of approximately $450,000, (ii) reimbursement of the accountable expenses of the underwriters, including
the legal fees of the representative of the underwriters, in an amount not to exceed $115,000 and (iii) other estimated company expenses
of approximately $252,000, which includes legal, accounting, printing costs and various fees associated with the registration and listing
of our securities.
The
securities we are offering are being offered by the underwriters subject to certain conditions specified in the underwriting agreement.
Over-allotment
Option
We
have granted to the underwriters an option exercisable not later than forty-five days after the date of this prospectus to purchase up
to an aggregate of an additional 491,803 shares of common stock and/or Common Warrants to purchase up to an additional 491,803
shares of common stock, or any combination thereof, as determined by the underwriters, at the assumed public offering price per security
set forth on the cover page hereto less the underwriting discounts and commissions. The underwriters may exercise the option solely to
cover overallotments, if any, made in connection with this offering. If any additional shares of common stock and/or Common Warrants
are sold, the underwriters will offer such securities on the same terms as those on which the other securities are being offered.
Representative
Warrants
We
have agreed to issue certain common stock purchase warrants (“representative warrants”) to the representative, or its designees,
of the underwriters, upon the closing of this offering, which entitle it to purchase 196,721 shares of common stock, or
226,229 shares of common stock assuming the exercise of the over-allotment option in full. The representative warrants will have
an exercise price equal to $2.51625 per share of common stock, will be exercisable immediately upon issuance, at any time and
from time to time, in whole or in part, during the five-year period commencing from the commencement of sales of this offering. The representative
warrants and the shares of common stock underlying the representative warrants are being registered on the registration statement of
which this prospectus is a part. See the form of representative warrant for a more complete description of the terms of such representative
warrants which has been filed as an exhibit to the registration statement of which this prospectus is part.
Listing
Our
shares of common stock are listed on The Nasdaq Capital Market under the symbol “PALI.” There is no established public trading
market for the Common Warrants or Prefunded Warrants, and we do not expect such markets to develop. In addition, we do not intend to
apply for a listing of the Common Warrants or Prefunded Warrants on any national securities exchange or other nationally recognized trading
system. Without an active trading market, the liquidity of the Common Warrants and Prefunded Warrants will be limited.
Lock-up
Agreements
Each
of our officers, directors and each of their respective affiliates and associated partners, and certain affiliated stockholders have
agreed with the underwriters to be subject to a lock-up period of ninety (90) days following the closing of this offering, subject to
certain exceptions. This means that, during the applicable lock-up period, such persons may not offer for sale, contract to sell, sell,
distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise dispose of, directly or indirectly, any
shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of our common stock. Certain
limited transfers are permitted during the lock-up period if the transferee agrees to these lock-up restrictions. We have also agreed,
in the underwriting agreement, to similar lock-up restrictions on the issuance and sale of our securities from the date of this prospectus
for a period of ninety (90) days following the closing of this offering, subject to certain exceptions. The representative may, in its
sole discretion and without notice, waive the terms of any of these lock-up agreements.
Right
of First Refusal
Pursuant
to our investment banking agreement with the representative dated April 10, 2024, provided that the Company consummates transactions
during the term of our agreement (“Term”) resulting in at least $4 million of gross proceeds, from the nine (9) months
following the date of such closing and expiration of the Term, should we propose to effect an additional financing, we have agreed
to offer the representative the opportunity to participate as a joint bookrunner, co-lead placement agent or co-lead sales agent or financial
advisor in respect of such financing, provided the right of first refusal period may be extended depending
on certain conditions being met during the Term.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Equiniti Trust Company, LLC.
Determination
of Offering Price
Our
common stock is currently traded on The Nasdaq Capital Market under the symbol “PALI.” On December 11, 2024, the closing
price of our common stock was $1.40 per share. We do not intend to apply for listing of the Common Warrants or Prefunded Warrants
on any securities exchange or other trading system.
The
public offering price of the securities offered by this prospectus was determined by negotiation between us and the underwriters.
Among the factors that we considered in determining the public offering price:
| ● | our
history and our prospects; |
| ● | the
industry in which we operate; |
| ● | our
past and present operating results; |
| ● | the
previous experience of our executive officers; and |
| ● | the
general condition of the securities markets at the time of this offering. |
The
public offering price stated on the cover page of this prospectus should not be considered an indication of the actual value of the securities
sold in this offering. That price is subject to change as a result of market conditions and other factors, and we cannot assure you
that the shares of common stock underlying the Class A Units, Prefunded Warrants (contained in the Class B Units) and Common Warrants
sold in this offering can be resold at or above the public offering price.
Stabilization,
Short Positions and Penalty Bids
The
underwriters may engage in syndicate covering transactions stabilizing transactions and penalty bids or purchases for the purpose of
pegging, fixing or maintaining the price of our common stock:
| ● | Syndicate
covering transactions involve purchases of securities in the open market after the distribution
has been completed in order to cover syndicate short positions. Such a naked short position
would be closed out by buying securities in the open market. A naked short position is more
likely to be created if the underwriters are concerned that there could be downward pressure
on the price of the securities in the open market after pricing that could adversely affect
investors who purchase in the offering. |
| ● | Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids
do not exceed a specific maximum. |
| ● | Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when
the securities originally sold by the syndicate member are purchased in a stabilizing or
syndicate covering transaction to cover syndicate short positions. |
These
syndicate covering transactions, stabilizing transactions, and penalty bids may have the effect of raising or maintaining the market
prices of our securities or preventing or retarding a decline in the market prices of our securities. As a result, the price of our common
stock may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriters make any representation
or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions may
be effected on The Nasdaq Capital Market, in the over-the-counter market or on any other trading market and, if commenced, may be discontinued
at any time.
In
connection with this offering, the underwriters also may engage in passive market making transactions in our common stock in accordance
with Regulation M during a period before the commencement of offers or sales of shares of our common stock in this offering and extending
through the completion of the distribution. In general, a passive market maker must display its bid at a price not in excess of the highest
independent bid for that security. However, if all independent bids are lowered below the passive market maker’s bid that bid must
then be lowered when specific purchase limits are exceeded. Passive market making may stabilize the market price of the securities at
a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Neither
we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the prices of our securities. In addition, neither we nor the underwriters make any representation that the underwriters
will engage in these transactions or that any transactions, once commenced will not be discontinued without notice.
Other
Relationships
From
time to time, certain of the underwriters and their affiliates may provide in the future, various advisory, investment and commercial
banking and other services to us in the ordinary course of business, for which they will receive customary fees and commissions. The
representative has acted as underwriter and placement agent in connection with our past offerings consummated in May 2022, August 2022,
January 2023, April 2023, September 2023, February 2024, and May 2024, and may receive additional compensation in connection with
advisory services.
Indemnification
We
have agreed to indemnify the underwriters against certain liabilities, including certain liabilities arising under the Securities Act,
or to contribute to payments that the underwriters may be required to make for these liabilities.
Electronic
Distribution
A
prospectus in electronic format may be made available on the websites maintained by the underwriters, if any, participating in this offering
and the underwriters may distribute prospectuses electronically. Other than the prospectus in electronic format, the information on these
websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or
endorsed by us or the underwriters, and should not be relied upon by investors.
LEGAL
MATTERS
The
validity of the securities being offered hereby will be passed upon for us by Silvestre Law Group, P.C., Westlake
Village, California. The underwriters are being represented by Ellenoff, Grossman & Schole LLP.
EXPERTS
The consolidated financial statements of Palisade Bio, Inc. for the year ended December 31, 2023, incorporated by
reference in this Prospectus, have been audited by Baker Tilly US, LLP, an independent registered public accounting firm, as stated in
their report, which is incorporated herein by reference. Such consolidated financial statements have been so incorporated by reference
in reliance upon the report of such firm given their authority as experts in accounting and auditing. The report on the consolidated financial
statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the securities being offered by
this prospectus. This prospectus does not contain all of the information in the registration statement and its exhibits. For further
information with respect to us and the securities offered by this prospectus, we refer you to the registration statement and its exhibits.
Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete,
and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each
of these statements is qualified in all respects by this reference.
We
are subject to the information and periodic reporting requirements of the Exchange Act, and we file periodic reports, proxy statements
and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s
website at www.sec.gov. You may also request a copy of these filings, at no cost, by writing us at Palisade Bio, Inc., 7750 El Camino
Real, Suite 2A, Carlsbad, CA 92009 or telephoning us at (858) 704-4900. We also maintain a website at www.palisadebio.com, at which you
may access these materials free of charge after they are electronically filed with, or furnished to, the SEC. The information contained
in, or that can be accessed through, our website is not incorporated by reference in, and is not part of, this prospectus and any references
to this web site or any other web site are inactive textual references only.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information
to you by referring to those documents. The information incorporated by reference is an important part of this prospectus, and information
that we file later with the SEC will automatically update and supersede this information. This prospectus omits certain information contained
in the registration statement, as permitted by the SEC. You should refer to the registration statement, including the exhibits, for further
information about us and the securities we may offer pursuant to this prospectus. Statements in this prospectus regarding the provisions
of certain documents filed with, or incorporated by reference in, the registration statement are not necessarily complete and each statement
is qualified in all respects by that reference
We
incorporate by reference the following documents we filed with the SEC pursuant to Section 13 of the Exchange Act and any future filings
we will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this prospectus until the termination
of the offering of the securities covered by this prospectus (other than information furnished under Item 2.02 or Item 7.01 of Form 8-K):
| ● | Our
Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March
26, 2024, including the Part III information contained therein; |
| ● | Our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024,
and September 30, 2024, filed with the SEC on May
13, 2024, August
12, 2024, and November 12, 2024, respectively. |
| ● | Our
Current
Reports on Form 8-K filed on January
29, 2024, February
1, 2024, February
13, 2024, March
6, 2024, March
27, 2024, April
5, 2024, April
10, 2024, May
3, 2024, May
10, 2024, July
8, 2024, and September
27, 2024; |
| ● | Our
Definitive
Proxy Statement on Schedule 14A, filed with the SEC on May
22, 2024 (other than the portions thereof which are furnished and not filed); and |
| ● | The
description
of our common stock which is registered under Section 12 of the Exchange Act, in our registration
statement on Form
8-A filed with the SEC on July 1, 2015, including any amendments or reports filed for
the purpose of updating such description, including Exhibit
4.2 to our Annual Report on Form 10-K for the year ended December 31, 2021, filed with
the SEC on March 17, 2022. |
You
may access the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, Proxy Statements, and amendments,
if any, to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at the
SEC’s website (www.sec.gov) or our website (www.palisadebio.com) as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC. The reference to our website does not constitute incorporation by reference of the information
contained in our website. We do not consider information contained on, or that can be accessed through, our website to be part of this
prospectus or the related registration statement.
We
will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge upon written or oral request,
a copy of any or all of the information that is incorporated by reference into this prospectus but not delivered with the prospectus,
including exhibits which are specifically incorporated by reference into such documents. You should direct any requests for documents
to 7750 El Camino Real, Suite 2A, Carlsbad, CA 92009, Attn: Secretary or may be made telephonically at (858) 704-4900.
158,000 Class A Units with each
Unit consisting of (i) one (1) Share of Common Stock and (ii) one (1) Common Warrant to purchase one (1) Share of Common Stock
3,120,688
Class B Units with each Unit consisting of
(i) one (1) Pre-Funded Warrant to Purchase one (1) Share of Common Stock and (ii) one (1) Common Warrant to purchase one (1) Share of
Common Stock
196,721
Representative Warrants to Purchase 196,721 Shares of Common Stock
6,596,097
Shares of Common Stock Issuable Upon Exercise
of (i) 3,120,688 Pre-Funded Warrants, (ii) 3,278,688 Common Warrants and (iii) 196,721 Representative Warrants
Ladenburg
Thalmann
The
date of this prospectus is December 13, 2024
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