Josh Blacher - CFO Allen Baharaff - President, CEO Maya Halperin - CMO.

Elemer Piros - ROTH Capital Partners Jason McCarthy - Maxim Group.

Good day and welcome to the Galmed Pharmaceuticals' First Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Josh Blacher, CFO. Please go ahead, sir..

Thank you, Orlando. Good morning, everyone and thank you for joining today's conference call. I'm pleased to be here today with President and CEO, Allen Baharaff; and CMO Dr. Maya Halperin to report you on our financial results for the first quarter of, 2015 as well as provide you with an update on our clinical development program.

As always we will be happy to take questions that you may have at the conclusion of our prepared remarks.

Before we begin, please note that we will be making certain forward-looking statements on today's call, including those regarding financial results, statements and forecast regarding anticipated timelines and the expectations with respect to our regulatory and clinical programs, as well as other statements that relates to future events.

These statements are based on our beliefs and expectations of management as of today and actual results, trends, timelines and projections relating to our financial positions and projected development programs and pipelines could differ materially.

We urge all investors to read carefully of the risks and uncertainties including without limitation the risks under heading “Risk Factors” described in our registration statement on Form 20-F filed with the SEC and risks and uncertainties included in Form 6-K filed with the SEC earlier today.

Galmed assumes no obligation to update any forward-looking statements or information which speaks as of the respective dates only. This morning, I will be providing you with our financial results for the quarter ended March 31, 2015.

For more information please refer to our quarterly report on Form 6-K filed earlier today with the SEC, which among other things provide the summary of such financial results. Now that we have been public for over a year, we can affirm our excellence in financial stewardship. Our operations are exceptionally efficient.

Our organizational structure employs the finest, yet minimum human capital while we have built a tight-knit consortium of world-class contract research organizations.

Accordingly, we have optimized our cash flows, minimized our financial exposure, allowed for the most nimble changes and pride ourselves on the quality and integrity of our clinical trials.

We report a cash and cash equivalent in other current assets totaling $30.3 million which compares to $32.2 million at December 31, 2014, a mere decrease of $1.9 million well ahead of our projected annual burn of $12 million.

I do note, however, that some of this under budget is a function of recruitment speed, so we would expect that this picks up during the balance of the year as the ARREST study moves into fifth gear. Nevertheless, this underscores the efficiency of our operations.

During the first quarter, we completed the deployment of our cash management strategy and now the vast majority of our current assets are generating and holding investment grade marketable securities.

The cash management strategy is expected to provide interest income of a few hundred thousand dollars on an annual basis as you can now see in the line item titled financial income on our income statement.

We continue to believe that our existing cash balance will be sufficient to fund our current operations into 2017 including the completion of our ARREST study. For the first quarter 2015, our net loss totaled $2.5 million or $0.22 per share compared to a net loss of $2.2 million or $0.27 per share for the corresponding quarter in 2014.

The first quarter of 2015 net loss included $0.6 million of non-cash stock-based compensation expense versus $0.2 million for the corresponding quarter in 2014. Our largest expense remains research and development which totaled $1.4 million for the first quarter 2015. This compares to $1.5 million to the corresponding period in 2014.

During the quarter, a sharp decrease in chemistry and formulation studies was largely offset by expenses related to clinical studies, research and regulatory affairs. Turning to G&A, our general and administrative expenses for the quarter totaled $1.1 million versus $0.6 million for the first quarter of 2014.

Modest increases were experienced in most categories which were expected as our team and operations grew substantially following our IPO in the first quarter last year. As always I would like to reiterate that I remain very accessible by email or phone, please feel free to contact me at any time.

I would now like to turn the call over to Allen Baharaff, President and CEO.

Allen?.

Thanks, Josh. I would like to update you regarding the progress of our clinical studies. I just returned from our European and Latin American Investigator meetings which hosted over 125 investigators and researchers including keynote addresses by Professor Vlad Ratziu, the Study principal investigator and Professor Rohit Loomba, the trials U.S.

principal investigator as well as Professor [Konan Luckner] [ph] who is our Central Pathologist for the ARREST study and he is also the member of the [Technical Difficulty] consortium.

This two day conference including important discussion on several key issues such as the definition of the resolution of NASH, the use of non-invasive biomarkers as well as other practical measures to [indiscernible] of the center of activity. Our Phase IIb ARREST study NASH is progressing as planned and we previously communicated.

Ten out of the 14 Israeli-based sites are already fully active excluding patients in full force and several patients have already been randomized and receiving aramchol. In the U.S., Europe and Latin America, we expect to initiate screening by June according to plan.

As previously communicated, during the fourth quarter of 2014, we initiated a single center double-blind randomized Phase IIa placebo control proof-of-concept study for aramchol in 36 patients for the treatment of newly formed cholesterol gallstones, following bariatric surgery.

As we announced in today's press release, the pace of enrollment of the study has struck significantly slower than anticipated.

Notwithstanding our significant efforts increased the number of starts enrollment have still continue to disappointment as a result, we have further requested the principal investigator to see the enrollment in the under performing center.

Accordingly, the company has taken this opportunity to reexamine the study design in order to achieve a better enrollment. It is important for me to say that we remain committed to the development of aramchol for cholesterol gallstone and we hope to provide the reserve strategy in the coming quarters.

In closing, we are very pleased with our progress and the status of our clinical development to-date and look forward to continue to execute our plans. With that said, Orlando please provide instructions for the Q&A portion of our call..

Certainly. [Operator Instructions] And we will take our first question from Elemer Piros with ROTH Capital Partners..

Yes. Good afternoon.

Can you hear me please?.

Yes, Elemer..

Yes. What I would like to ask you is, if you could talk about a little bit about the ongoing NASH study. I'm sure you observed that Genfit which just presented detailed data at a conference had to resort to some fairly cumulated statistical analysis to show some significance with their results.

And once they exclude it from early NASH patients and some underperforming centers then they saw a signal.

The question is what sort of variables based on their experience would have to control to perform a study that would stand up exclusively next year when you report?.

Maya maybe you would like to take that?.

Yes. Okay. Good morning everybody. Thank you, Elemer for the very good question. We had some decisions in the study design, which were confirmed now by the experience that was added by the Golden Study.

And those are basically two decisions, in the population that will be included in our study will have a more advanced disease – will have a NASH score of 4 and above, which ensure that the changes will be more discernible as opposed to the placebo group.

What happened in the Golden Study is that they included almost I think 15% of patients with NASH score of 3, as those patients were had results similar to the placebo group. We know that there are situations in the diseases in-itself and those situations are important mainly in the late advance disease.

So from the beginning the population to be included has more severe NASH measured by a NASH score of above 4 – 4 and above.

The second thing is the way the patients will be randomized which again we had some opinion before hand, but now we have perfected our randomizing system in centers which will have – licenses will have to include many centers in order to have a speedy recruitment.

So the randomization we will take into consideration the fact that they are many centers and it would be done in blocks in such a way that we will not get to a situation where one center will treat let's say three or four or five patients all of them placebo, other centers will have active because as there is a standard – a different standard of care, the patients have to be randomized not only overall but also in each center.

Those are against key elements to ensure that we have a robust analysis and we are confident our study design is robust and will lead to a good result..

Maya maybe just a follow-up on that, so if I calculate correctly each of the centers on average would have to enroll about 40 patients, is that correct? Or do you set a certain minimum that they would have to achieve in order to be able to be eligible?.

No. The site committed different number of patients. We do not limit the number of patient in order to have a site participate in the study. In a way, this spread of the site will be corrected by a good randomization.

And on the other hand it has the advantage of speedy recruitment involvement of more investigators which will be eventually become the opinion leader to use our product and access to – of the population to aramchol, which is a very important pre-marketing activity.

There are four differences among the centers, we have seen that Latin America and the U.S. will be the bulk of recruiters but some countries in Europe have already – some centers have already participated in Golden Study are very experienced and have a benefit – high number of patients. So we believe all centers will include patients..

And do you anticipate Maya that in both Europe, Latin America and the U.S., screenings would take place in the months of June?.

Yes. We think so. We believe so. We are very advanced in Latin America. We have approvals in many sites. The U.S. was submitted IND updated – IND for the study. Two months ago, we did not hear anything from FDA – we can go forward and Europe also has approved this study in most of the centers.

So we believe June will be the beginning and as Allen updated you, Israel also already had randomized patient and there study started already in Israel with a few patients in..

Yes. Thank you so much. And --.

Elemer I would like to add another point. We have seen the data now from recruitment distribution and the site as – from the other studies. And we don't obviously – we do not expect that would be much different in ARREST study. European site and I'm talking – we are talking France, Italy and Germany.

We do not expect that more than 3, 4 patients per site. This has been the same in the Golden Study, FLINT Study and other studies, previous top studies.

So I think this will give the number from this site, yes, these are very, very important site as Maya over key opinion leaders and they would like to be part of our study and we would like very much them to be part of the study. Many patients will come from Mexico.

I was in Mexico together with Vlad Ratziu – with our principal investigator few weeks ago. And the fact that there are no competing studies, the fact is that, very good – those are private sites many Mexico [indiscernible] these are very compliant patients and which are eager to participate in clinical studies.

They wanted to participate in the [XT] [ph] studies and we are not allowed to participate, very few patients came from Mexico. So and we know that the prevalence of the disease is very high due to genetic reasoning in addition to the other known factors and this is Latinos – which is relevant to all Latinos.

So when we say Latin America, it's nearly Mexico, some will come from Chile, but I think Mexico is going to be a big recruiter for us. And the U.S. as Maya mentioned. Alongside Europe and Israel, which will be – I mean, yes, there, but we will not see the 10 numbers coming from these areas..

Yes. And somewhat of a follow-up but for the gallstone trial Allen, would you consider some U.S.

sites perhaps bariatric surgeries probably most prevalent here in the States?.

Let me tell you, I mean the – what we have noticed – it was a good lesson for us which is also important for the ARREST study by the way. The selection of the specific population of – different model indicated population for Golden Study.

That was only a proof-of-concept and we selected the patient that undergo the bariatric surgery because of the high-prevalent because these are newly fresh – freshly formed stone. And we believe that this is the good three months proof of concept study.

In literature we observe that 50% according to literature 50% of patients which undergo the bariatric surgery develop stones within 6 months to one-year after the operation. In reality we have learned few lessons. First of all, the numbers are much lower than we see in the literature. I would say 15% maybe 20% because of stones.

The second, we learned is the – these are healthy patients – they are not compliance patients. So it is very difficult to get those patients recruiting – recruited into the study.

So I'm not sure, we said it, we would like to think and reexamine, we have to – with our key opinion leaders and I'm taking this opportunity, Professor [George Gershwin] [ph], who is the Key Opinion Leader in the area has recently joined our Scientific Advisory Board.

And we are sitting together and discussing with our Scientific Advisory Board, what is the best study design and best study design, we would also maybe changing the population because not necessarily, so it will be faster to recruit patients. And the duration of the study maybe not three months and we go for six-month study.

This is a very – I know this was for first indication; we have a very strong animal data showing complete solution of cholesterol gallstone both in the treatment and prevention therapy. And we would like to meet that.

So I think this study should be carefully looked at and evaluate and we will come as soon as we come with conclusions we will obviously inform everyone..

And our next question comes from Jason Kolbert with Maxim Group..

Hi. Allen, Josh and Maya, its Jason McCarthy for Jason Kolbert. I have a technical question.

And I wanted to know the changes in – if you are measuring changes in biomarkers of information or other markers like metabolic markers and possibly combining that with the NASH activity score or better, and AFLD score, could that be used as a surrogate for biopsy even one of the two biopsies, or the FDA pretty grounded in – and I know that they are now completely clear on the NASH space yet.

But you think biopsy has proven resolution of disease at least as a secondary point?.

Maya would you like to go for it..

Yes. Thank you, Jason for this important question, which has two answers. The simple one – the short one is yes, the FDA still think at least momentarily that we need two biopsies in order to measure the change in the activity of the disease and will have to perform those two biopsies.

Going forward, the FDA has made clear in both in the discussions in the work shop on NASH clinical trial design that was held in 2013. And in the paper that was published following this work shop. That they would look surrogate end-point, when and if those will be validated.

Validated means ones validated vis-à-vis of the biopsies and two validated for prognosis. This did not happen yet. But, we are looking at quite a lot of secondary and exploratory end-point in our study.

First of all and foremost, we would like to validate the reduction of fat as measured MRS, Magnetic Spectroscopy and even Magnetic Imaging in some site. This was even mentioned in the annex of the FDA publication as a possibility in the future and FDA invited companies to validate the MRS and come and discuss.

Again, this is not validated yet, but maybe after ARREST study will be able to use it in a Phase III study and a fourth, much more importantly for the market penetration will be to be able to having real-life in order to see who are the responders to aramchol.

This other markers which we try to validate now, are the metabolomic – we have contract with a Chinese company called [Awwal] [ph], which validated until now a blood metabolomic test which can differentiate between NAFL and NASH.

They will collaborate with us in time to develop a specific companion metabolomic test for aramchol responders and this is an ongoing collaboration.

This is important to say that medical community, the FDA and of course, other companies do not believe that there will be one-marker which will be able to predict responders and non-responders, it must be more than one marker as you said and metabolomic look at around 25, 30 parameters in the blood.

It's a simple blood test, which will help to validate and then it will be a specific companion for aramchol which will then take to forward to the market.

There are others that which are in all the clinical trials and we are using them as you said test for inflammation, FibroMax, FibroTest for fibrosis CK18, a liver enzymes all those together with MRI will be validated in comparison with liver biopsy, which in itself is a surrogate and it's not ultimate diagnosis.

But, it's the best – still accepted by the authority..

Great. Thank you. And I just want to go back to the – I'm sorry –.

Jason, I just wanted to add that we are very privileged to have on our Scientific Advisory Board both Professor Ratziu and Professor Loomba.

Professor Loomba is today, if you see from the recent publication, the leading authority on MRI and MREs and he is really acting – the most advanced in the research of validation of those systems for detecting or differentiating between NASH and NAFL patient and even detecting – possibly detecting that steatohepatitis in those measures.

Ratziu on the other hand is advancing the tough measure, which developed by the CLIF consortium, he is the coordinator of the CLIF consortium and he really going to replace the NASH score -- is a much more accurate score.

So during the investigator meeting we had was a very vivid discussion between the two of them together with the distinguished investigator participated asking exactly the same questions that you raised, and thank you, Maya for answering it so clearly..

Great. Thank you. I just wanted to go back to the Genfit trial and how does Galmed view the Genfit trial data, the other caller said the data was sort of convoluted but they are – they did generate a p-value eventually and they are going to move to a pivotal Phase III study.

Do you see the – this is a positive for Galmed as you are both targeting similar stages of NASH maybe in seeing how regulators are assessing a similar NASH trial from beyond could give Galmed an advantage just in your studies?.

I don't really want to comment on the study. We have not seen yet all the data and so we have not formed as I say the decision why we are not there.

All I can say is that and we said that along during our road show and over the last year that we are in a position – in a great position for being third and having that ability to learn from the result of the study. So there were clearly some problems that were in the design of the study, which were because the study was designed 2, 3 years ago.

And [indiscernible] developed as it is today. And we know for instance the very important aspect is the definition of the resolution of NASH, which is a key issue and definition of [indiscernible] fibrosis. When we say [indiscernible] and not when you go from zero to one, its still – this is worsening.

And resolution we are taking the same view that Novo Nordisk taken with developing Victoza. Recent study of Victoza which resolution is disappearance of ballooning and reverting to steatosis from steatohepatitis to steatosis.

This is I think Genfit has a put the bar too low, FLINT study has probably put the bar too high and probably this is the right – the Victoza's definition we believe this is the right definition. The study helped us a lot to clarify issues and many of them were raised during the investigators meeting.

That when we went reached down point by point to better understand what exactly do we mean by every single word which -- that is stated in the protocol..

Great. Thank you. It sounds like everything is going really well looking forward to data coming. Thank you..

Thank you, Jason. Thank you..

[Operator Instructions] And we will take a follow-up question from Elemer Piros with ROTH Capital Partners..

Yes. This would be just a financial question to Josh. Josh assuming that G&A would trend fairly stable throughout the rest of the year, how do you view R&D though.

What were your assumption be as in terms of growth on a quarter-on-quarter basis?.

Yes. I think we are going to seen an up tick in the later part of the year as we said that the formulation for the most of the chemistry and formulation work is largely behind us. But, now the study – as we said we have several patients enrolled right now.

But, we are going to ramp up to $12 million a year burn rate or so for the better part of the year..

Thank you very much..

Though it's going to be a little back ended..

Elemer, I want to add another point I mean you would see also that will be is not part of the ARREST study but as you know, we are also preparing the initiation when we did our IPO, we raised money for Phase IIb for the ARREST study and the initiation of the Phase III, initiation but not the completion.

When we meant initiation, this is for instance the synthesizing of the API and the formulation of the API for the drug which will be needed for the Phase III. So there would be no delays between the two phases.

And these two will see some additional – this is the contract we have with [Darigo] [ph] and you will see some expenses go in that direction probably starting later this year and early next year..

Thanks for clarifying that..

And at this time, there are no further questions. I will turn the conference back over to Allen Baharaff for any additional or closing remarks..

So thank you very much Orlando. In closing as I said, we are very pleased with the progress of our status of the clinical development programs to-date. And we look forward to continuing to execute all as planned. Thank you very much for joining us today. And as Josh said before we are available and we welcome and encourage you to contact us. Thank you..

And ladies and gentlemen, this does conclude our conference for today. We thank you for your participation..