Good morning, everyone. My name is Frank Tang, and I'm with the investment banking division at Morgan Stanley. Thank you all for joining us for the fireside chat with Palisade Bio. I'm joined today by CEO, J.D. Finley, and President and Chief Medical Officer, Mitch Jones. Welcome. For those who are not as familiar with Palisade Bio, could you give us an overview of where the company sits today, including a description, and give us an overview of PALI-2108, the thesis behind the once-daily gut-targeted locally activated oral PDE4 inhibitor prodrug? Sure. Thanks, Frank. PALI-2108 is a drug that we acquired from a Canadian company, Giiant Pharma, out of Montreal. That company was founded by some medicinal chemists from the Merck Frosst labs in Montreal. When they closed that down in 2010, these guys took some of the science with them and developed this PDE4 prodrug formulation. It was in preclinical status when we acquired it. We've taken it through, completed the preclinical and the phase I, and we are now about to start a phase II study in both ulcerative colitis and Crohn's. One of the interesting things about the design of the molecule, it was designed as a prodrug, which was intended to be specifically engineered for IBD. They've seen the efficacy with other PDE4s in the IBD space, but the problem has typically been the adverse events, and the prodrug formulation, which we can get into a little bit further, really avoids some of those additional AEs that you normally would see with a PDE4. Great. Thank you for that. You're pursuing the two largest IBD indications, both ulcerative colitis and Crohn's, in parallel. How do you think about the sequencing of that potential risk? It is interesting. When we were much smaller in terms of market cap, we had focused on FSCD because it was a niche opportunity where we thought we could win and do it most cost-effectively. When we completed our $140 million financing last October, we had a clear mandate from investors to pursue the broader UC market, so we have ramped up for that. We also have switched from focusing on FSCD, fibrostenotic Crohn's disease, to broader Crohn's disease. The reason for that is because of feedback we have gotten from our experts, clinical advisory board, et cetera, that have told us that right now, the regulatory pathway is still murky enough for fibrostenotic Crohn's, that we are better served by pursuing a smaller, broad Crohn's indication and then circling back and doing fibrostenotic Crohn's once that regulatory landscape has been cleared up. Clearly, we think pursuing both Crohn's and UC is in the best interest of building shareholder value. Great. I would love to dig in more around PALI-2108. This quarter marks your transition into phase II. The clearance of the IND. Could you walk us through the design of the trial? Yeah, I think I can take that. It is a double-blinded RCT, actually quadruple-blinded on the induction phase. Pretty standard study, built like a registrational study, but really a definitive study. So 12-week induction phase, three groups randomized one to one to one. A target of about 50 milligrams for the target dosing group. The high-dose group is 30 milligrams, the placebo group as well. So treated straight through the 12-week induction endpoint with a clinical remission primary endpoint, and then a double-blinded extension through maintenance out to 48 weeks. So patients will be treated straight through. If you are on 15 and responding, you stay on 15. Then same thing for 30, same thing for placebo. If you are not responding, then you get randomized or placed actually into a high-dose group in the maintenance phase. Then, of course, responders keep going, and non-responders are terminated. Yeah, so the study is designed to see a pretty healthy difference between placebo and treatment of about 20%. We have a 90% chance or 90% power to see a 20% difference between treatment groups, and 80% power to see a 17.5% difference. Sorry, it's the other way around. No, that was right. Okay. Exciting trial to look forward to. I'd say, looking backwards a little bit, your phase I signals were highly encouraging. five of five UC patients responding, roughly 47% reduction in SES-CD and Crohn's. How do you interpret the strength of that early data, and what did the translational data tell you about the potential impact on both inflammatory and fibrotic pathways? I think this is another one I can take. Historically, obviously, apremilast was evaluated in a UC study, let's say, combined around 20% clinical remission at 12 weeks over placebo. As well, mufemilast with a 90-patient double-blinded RCT, China-only study, demonstrated best in indication, 44% remission over placebo in the high-dose group in a dose response. I think we weren't trying to prove that PDE4s are effective in treating UC patients. What we did want to show is safety, obviously, but also that biomarkers would potentially predict when we achieved a high enough dose to show an effect. We demonstrated through our phase I program that we could go to once daily dosing. We also demonstrated that we could get enough drug to ileum, to ascending, to descending colon. We demonstrated an adequate, superior actually, PD effect in the ileum for Crohn's and in the ascending/descending colon for colitis, as well as a whole host of biomarkers. Those biomarkers were lymphocytes going in the right direction, fecal calprotectin improvements, CRP, et cetera, as well as in both the CD and the UC study, we saw endoscopic improvements. On the UC study, we saw 100% response, 40% remission, and in the CD study, we saw a 40% response of remission. Really, smaller studies, open label, non-controlled studies, but really the biomarkers all went in the right direction. It gave us the ability to collect information that we could use in our population PK models that were predictive. Maybe you could expand on that a little bit, the PK tissue exposure and biomarker data. How does it help you differentiate versus the prior PDE4 inhibitors? In the world of PDE4, almost all, if not most PDE4s are twice daily dosed. Ours has a terminal half-life of 12- 13 hours with an effective half-life of 27. So we're once daily dosed molecule, so that's one point of differentiation. We have seven times the amount of drug in tissue as measured four to eight hours post-dosing or at steady state. So you've got seven times the drug in tissue as compared to plasma, while at steady state. That's one to one at best for immediate dose, immediate release molecules. So those are two reasons. The other two differentiators are the tolerability issues for PDE4s come from direct exposure of the drug to upper gut. We are delayed release, local release, and bioactivation, so we avoid the upper gut, which is the source of secretory diarrhea, one of the tolerability issues. The other is the liability on the peak to trough ratio is pretty significantly reduced with our slow release profile, and so that improves the therapeutic index. That's great to hear. Maybe moving on a little bit from the UC. On Crohn's, I believe you plan to submit the IND for the trial in the second half of this year with the trial target to start in first quarter 2027. Could you talk more about PALI-2108's ileal and colonic activation fit in, specifically within Crohn's biology? Yeah, maybe we can start with the timing. Do you have any? Yeah. The timing is we are on track to submit the IND, or to get IND approval, in this half of the year. I think our current guidance on the Crohn's study is based on our SES-CD guidance that we put out when we thought we were going to do an SES-CD study. We plan to update that guidance once we actually get the IND approved, and at that point, we'll be able to not only update timing on the guidance, but also we'll be able to provide the details of the study design as well. On the question about Crohn's versus colitis, obviously, Crohn's is sort of more heterogeneous, full thickness versus superficial. Colonic, ileocolonic, or ileal disease sort of represents the vast majority of cases. We were really looking for, are we able to hit the ileum? Are we able to achieve PK and PD measures in the superficial and deep tissue compartments that are sort of maximal with our 30 mg dose? We are going to be taking the higher dose into the Crohn's study, which is fairly common. The higher tissue compartment/disease burden/inflammatory component warrants using higher doses of drug in that indication. We are going to use the 30 mg dose. Okay. Kind of moving beyond the data a little bit in the clinical trials, I would love to talk a little bit about the landscape. The IBD landscape is continually shifting and increasingly competitive at times. How do you see 2108 fitting into this landscape, and how would you compete in some of the differentiation aspects? Yeah. I will let you answer that, but I will just kind of start off by saying one of the things that when we were discussing whether to go into ulcerative colitis, given how crowded that space is, as opposed to fibrosnotic Crohn's disease, where there is no approved therapy. In discussing that with our key opinion leaders, they point out that the reason that ulcerative colitis is such a crowded space is that there really are no good solutions yet. That is part of the problem, is that, yeah, it is a crowded space, but no one is achieving the kinds of efficacy that people are satisfied with. Yeah, the way we see it is probably not unlike the kind of analysis your team does. A lot of the pharmaceutical companies look for injectable infused as well as oral small molecule. Obviously, with the JAK inhibitors having a black box warning, with the S1Ps having monitoring requirements as well as not being effective in Crohn's, there is a paucity of potential backbone therapies in the oral small molecule space. We see an opportunity for monotherapy that could be used also in the future as a backbone to combination therapy and oral small molecules. Companies like Spire are doing this in large molecule space. There is the data from VEGA, from DUET, that is supporting the potential future in combinations. Clearly, we think our drug is going to be effective as a monotherapy. But we also recognize that there is an opportunity in the oral small molecule space. Clearly, icatibant and obefazimod are the up-and-coming drugs, and we think that PDE4 is right there with them. Excellent. As competitive as it is, your point is very much correct in the sense that the treatment landscape is still subpar and patients are searching for better options. Moving on to the corporate side, could you please give us an overview of your cash balance and runway? You guys have a lot of exciting trials going on and planned. What we have is you ended the quarter with $125 million. Does that fund these trials? What is the runway? How do you think of your balance sheet from a financial perspective? Yeah, $125 million, as you said, as of June 30, our last Q that we filed, and we have enough capital to get through both the UC phase II study as well as the Crohn's phase II study. Great. Wrapping those both up by the end of next year, roughly. We still have about six to nine months cash runway beyond that. Obviously, it is not our intention to run our cash balance that low, so we will plan to augment that somewhere along the way, and we will do that opportunistically. Great. Those are my major questions, but as Palisade is a super interesting company, we would like you to leave us with what you think are the most important milestones investors should be focused on for the remainder of this year and into next year. Yeah. Do you want to talk about the milestones? Sure. in Q2, we had successful IND clearance. Obviously, the Crohn's IND is related to the UC IND, so in the second half of the year, we will get IND clearance in Crohn's disease. Obviously, we are approaching reporting on ClinicalTrials.gov, our study design which has to be done within 21 days of screening a patient. So that will give you some idea of how close we are to enrolling and dosing the first patient in ulcerative colitis. We expect to also make really good progress in our Crohn's program. I think our guidance is IND clearance in the second half and first patient dose in Q1, but I think we are making very good progress there as well. I would imagine we are only behind by about a quarter, compared to the UC program. Our UC program has 115 sites. So the plan is to enroll the study very aggressively. You will see through ClinicalTrials.gov and through our reporting the number of active sites that come online and the speed at which we do that. Right. We will likely guide as to enrollment progress at points along the way. The other thing is that because we're doing an open label CD study, we'll have line of sight into some of the data there, and there's an opportunity to share some of that data along the way as well. That's great. We look forward to your continued progress there. Thank you for joining us today. Thank you. Thanks for having us. We look forward to the continuing conversations. Great. Thank you.