Josh Blacher - Chief Financial Officer Allen Baharaff - President and Chief Executive Officer.

Jason McCarthy - Maxim Group Thomas Yip - FBR & Co.

Good day and welcome to Galmed’s Pharmaceuticals second quarter 2016 earnings call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Josh Blacher. Please go ahead, sir..

Good morning and thank you Christine and thank you for everybody for joining today’s conference call. I am pleased to be here with President and CEO Allen Baharaff and incoming Chief Medical Officer, Dr.

Ran Oren who will be joined us telephonically to report to you on our financial results for the second quarter of 2016 and to provide you with an update on our clinical development programs. As always, we will be happy to take any questions 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 concerning financial results, statements and forecasts regarding anticipated timeline and expectations with respect to our regulatory and clinical development programs as well as other statements that are not statements of historical fact or related to future events.

These statements are based on the beliefs and expectations of management as of today. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by the forward-looking statements on today’s call.

Applicable risk and uncertainties include risk and uncertainties associated with the timing, progress and result of our research, preclinical studies and clinical trials including the risk and uncertainties disclosed under the heading Risk Factors in our Annual Report on Form 20-F filed with the SEC and risks and uncertainties including in our Form 6-K filed with the SEC earlier today.

Galmed assumes no obligation to update any forward-looking statements or information which speak of the respective dates only. This morning, I will be providing you with our financial results for the quarter ended June 30, 2016.

For more information, please refer to our quarterly report on Form 6-K filed earlier today with the SEC, which, among other things, provides a summary of such financial results.

For the second quarter 2016, our net loss totaled $4.3 million or $0.39 per share compared with a net loss of $2.4 million or $0.21 per share for the corresponding quarter in 2015. During the second quarter of 2016, total R&D expenses increased $1.8 million to $3.4 million and total G&A expenses decreased $106,000 to $861,000.

This quarter’s net loss included $790,000 of non-cash stock-based compensation expense versus $331,000 of non-cash stock-based compensation expense incurred during the corresponding period in 2015. Research and development remains our largest expense, which, for the second quarter of 2016, totaled $3.4 million.

This compared to $1.6 million for the corresponding period in 2015. The increase during the second quarter of 2016 was attributable primarily to the increase in expenses directly related to the ARREST Study as the trial continued to progress.

Turning now to G&A, our general and administrative expenses for the quarter totaled $861,000 versus $957,000 for the second quarter of 2015. Looking at our balance sheet, at June 30, 2016, current assets totaled $17.2 million compared with $20.2 million as of March 31, 2016.

The decrease in the second quarter 2016 resulted primarily from our spending on ongoing clinical studies and operating activities.

Due to the inflow of funds related to the upfront payment from the SAMIL deal, we will as well as our ongoing efforts to reduce non R&D related expenses, we continue to believe that our current cash balance should be positioned to maintaining our current operation through the second half of 2017.

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

Allen?.

Thanks Josh. Good morning everybody and thank you for joining us today. The ARREST Study continues to gain steam. As you recall, we randomized our 120th patient or half of the patient for the trial on June 1, one month ahead of our guidance.

As of July 31, 2016 we had randomized 132 patients and have another 27 subjects that are eligible to be randomized. In addition, 41 subjects are currently in the screening process, which normally takes between 6-8 weeks. During the second quarter, we randomized 46 patients 18% more than the first quarter.

Based on this, we continue to expect to complete a full recruitment of 240 patients by the end of the fourth quarter, 2016. Importantly, we activated another 15 sites during the second quarter and we are planning to activate an additional 20 sites during the third quarter for a total of 82 sites.

We believe that these new sites should propel the next wave of patient recruitment. Let me now spend a minute or two discussing why we think the SAMIL licensing agreement is an important milestone for Galmed. First, let me start by reviewing with you our business model.

We assume that the transaction for Aramchol’s global licensing rights would be based on ARREST Study results.

That being said, we do believe that there are limited number of strategic geographies in Asia, Latin America and elsewhere when early licensing transaction prior to the conclusion of data from the ARREST Study is beneficial both for the local SMC [ph] and Galmed.

These early transaction will not only service clinical and commercial validation of the potential of Aramchol but importantly also bring in non-dilutive funding at a time when our market value is depressed in our opinion. I am happy to report our first license agreement with SAMIL Pharma and in Asia.

We believe the comprehensive due diligence SAMIL built over the years not only serves as a validation for Aramchol’s scientific excellence but also fortifies our presence in Asia which we believe will be an important commercial market for Aramchol.

We have recently completed the third part of the preclinical study of the Chinese healthcare and started screening Chinese healthcare to our ARREST Study. I believe that our relationship with SAMIL will give us the headstart in this important region. Before I conclude, I would like to welcome our new CMO, Professor Ran Oren.

Ronny [ph] as we call him was the natural choice as our CMO. Ronny has been a member of the Galmed family from the very first day in Galmed. Ronny is a practicing hepatologist and the Chief of a GI unit of a leading university and medical center in Israel.

I am sure that Ronny’s years of experience in clinical research would be an important support to our clinical team.

In terms of capital adequacy, as Josh mentioned, the addition of the upfront payment for SAMIL as well as our continued effort to contain all non-R&D related cost, our existing cash position should likely maintain our provision through the second half of 2017.

And until that, we will continue to evaluate the best timing of the [indiscernible] of seeking additional capital and we will be judicial as to when and how to proceed with many factors, including but not limited to market conditions prior and alternative for obtaining capital.

With that said, operator, please provide instruction for the Q&A portion of the call..

Thank you. [Operator Instructions] And our first question comes from Jason Kolbert with Maxim Group. Please go ahead, sir..

Good morning, guys, it’s actually Jason McCarthy for Jason Kolbert. I just got a question on the ARREST Study enrollment, you did hit a milestone, you got past the half way point 120 patients back in June.

Can you give us an update on the progress of enrollment and maybe the timing the complete enrollment as we start to look towards data and the outcome of the study?.

Okay, as I said before we have not said in our guidance that we will complete recruitment before the end of this year, end of 2016 we will complete recruitment of 240 patients and as the treatment period is one year treatment period, the study is a one year treatment period and three months follow-up thereafter, then we can make the calculation.

If we will be able to do a complete recruitment before the end of the year, we might be lucky and have the data still in 2017. If not, that will be in the third quarter of 2018..

Great and can you just give us an update on any feedback you have gotten from regulators, FDA or EMA about metabolic testing and biomarkers and potentially using the those as a surrogate for having to do multiple biopsies?.

Okay, I think this is – it’s a very important question. We are not –we are in continuous dialog with the regulators and we have included from the early stages an array of biomarkers whether these are single biomarkers, like the CK DIN [ph] or lipidomics, metabolomics, genomics. We are doing in other studies complementary studies to ARREST.

We are looking at microbio. So we were really looking at all different omics and other related biomarkers in addition to our primary endpoint which is the MRS [ph] which is the orphan – non-invasive measurement, all of these with the aim to try and correlate the histological improvement in NASH, resolution i.e.

resolution of NASH or two point improvement, two point improvement in non-core [ph] with those non-invasive biomarkers..

Okay, great. Thank you. And just one quick question.

Can you give us a sense of any other licensing agreements that your countries or regions that you might be targeting for like the one in Korea just recently?.

I am afraid, I cannot at this stage, as I stated before, I mean it has to be non-strategic countries but and the regions important to us are Asia and Latin America, mainly Asia and Latin America but we are looking at other jurisdictions as well..

Okay great, thank you very much for taking the questions..

Thank you, thank you for the call..

[Operator Instructions] Our next question comes from Yasmeen Rahimi [ph]. Please go ahead..

Thank you for taking the question. This is Yasmeen Rahimi calling on behalf of RHC [ph].

Some of my questions were answered previously, so I wanted to go ahead and ask, given that your total cash is $8.7 million including $2 million from the recent licensing agreement and $4.3 million net loss in 2Q, your current cash run rate appears to be in 13 months, so could you help us understand where you are expecting to conserve resources to reach through the second half of 2017?.

Okay, first of all the second quarter results do not or the June 30 balance sheet does not include $1.7 million on a net basis that will be being credited to our balance sheet in the third quarter of the upfront.

We did receive a smaller amount the remainder of $300,000 during the second quarter and we are and you will see a tapering off some of the ARREST Study expenses as the enrollment drops off.

So as we continue to enroll, you are going to see high spending periods, it’s likely to anticipate you know similar R&D spend in the third and fourth quarter that you did in the second quarter but as our patient recruitment curtails the spending there should curtail as well.

We have also sharpened our pencil and taken a good look of any studies or either clinical or non-clinical studies that does not help us get to Phase III any sooner and delay those.

So any inflow of additional capital will help us inject capital to other clinical studies, other pre-clinical studies that everything that we have currently announced, all the ongoing clinical studies are funded with the existing cash that we have on our balance sheet..

Great, thank you.

And then if I could follow-up with one more question, could you disclose any of the milestones that make up the potential additional $6 million payment from SAMIL Pharma?.

Yes there will be a milestone at the successful completion of the ARREST trial, at the successful completion of a Phase Study arrest file at the successful completion of a Phase III and the commercial launch of Aramchol in Korea.

You may have also read that we have double digit milestone payments that we are able to earn from sales in Korea and that is very nice as well. And I would like to know that the process that we ran was exhaustive.

We talked to a number of companies in deep level of conversations NDA level conversations and not only are we happy strategically with our choice but also economically it was a very good selection for us as well.

Then the final note on the SAMIL deal, I will also note that they an option to acquire rights to commercialize Aramchol in Vietnam as well which is not an insignificant market and will largely depend on the results from the ARREST trial..

Good, thank you, Josh..

I should note that those total milestones do not include any incremental milestone that we would earn in Vietnam..

Great, thank you so much for taking the questions..

Sure..

[Operator Instructions] And our next question comes from Thomas Yip with FBR & Co. Please go ahead..

Hi everyone. Vernon said that he cannot, he is having some difficulties dialing into the call so I am asking the question for him.

So just a follow-up regarding your deal with SAMIL, can you tell us a little bit what clinical responsibilities SAMIL will have and what trials are they paying for?.

Sure, okay. So, basically as you may know in Korea, a drug will not approve, be approved before there will be an approval at FDA or EMA. So it’s lot dependent on the GAAP analysis if there is there are any studies that needs to be done prior to commercialization in Korea then SAMIL will carry those studies.

But more importantly is the fact that we will be able to include Korea inside in our pivotal studies and then that will also give the renewed data for the Korean regulators for having the drug registered in Korea. And will allow us to complete, already complete the pivotal study faster with an exposure and different exposure in Korea..

Okay, thanks for that detail. So I guess just a follow-up regarding SAMIL, can you remind us will SAMIL be completely in charge of all commercialization within Korea or any, you know you mentioned Vietnam as a possible territory that they can opt in.

So they will be primarily responsible for those activities?.

Yes, I mean we have a steering committee, a joint steering committee to monitor and supervisor, monitor in affect all these activities. But in principle, they will take the lead as you mentioned both in Korea and Vietnam.

They have expertise, I mean SAMIL has both activities commercial manufacturing and commercial activities in this country and it is the best partner to do it..

Okay, sounds good. Thanks for taking my questions and congrats on a great quarter..

Thank you, Thomas..

And we have no further questions. At this time, I would like to turn the conference back over to Mr. Allen Baharaff for any additional closing remarks..

Thank you very much. This is Josh, and if you have any additional questions or comments please feel free to be in contact with us. As usual, you have our phone numbers and email addresses on our press release. Have a great day everyone..

And that does conclude today’s call. Thank you for your participation. You may now disconnect..