Josh Blacher - Chief Financial Officer Allen Baharaff - President and Chief Executive Officer Tali Gorfine - Senior Medical Director.

Ed Arce - H.C. Wainwright & Co. Jason Kolbert - Maxim Group.

Good day and welcome to this Galmed Pharmaceuticals Third Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Josh Blacher, Chief Financial Officer. Please go ahead, sir..

Thank you. Good morning and thank you for joining us on today’s conference call. I am pleased to be here today with President and CEO, Allen Baharaff, and Dr. Tali Gorfine, Senior Medical Director, to report to you on the financial results for the third quarter of 2016 and to provide you with an update on the clinical development programs.

As always, we will be happy to take any questions you 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 timelines and expectations with respect to our regulatory and clinical 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 initiation, timing, progress and results 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 provide you with our financial results for the quarter ended September 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 third quarter 2016, our net loss totaled $3.8 million or $0.34 per share compared with a net loss of $2.6 million or $0.23 per share for the corresponding quarter in 2015.

Based on the guidance of our auditors Deloitte & Touche we are recognizing revenue in the amount of $193,000 derived from the $2.1 million upfront payment in connection with the licensing agreement we signed with SAMIL Pharma on July 28, 2016.

The remaining unamortized $1.9 million of the upfront payment is categorized on the balance sheet as short-term and long-term deferred revenues and will be amortized on a straight line basis through the second quarter of 2018.

Relative to last year's quarter, the R&D expense increased $1.5 million to $3.3 million and total G&A expenses increased $19,000 to $656,000. This quarter’s net loss included $243,000 of non-cash stock-based compensation expense versus $239,000 of non-cash stock-based compensation expense incurred during the corresponding period in 2015.

Research and development remains our largest expense, which, for the third quarter of 2016, totaled $3.3 million. This compared to $1.8 million for the corresponding period in 2015.

The increase during the third quarter of 2016 was almost entirely attributable to the increase in expenses directly related to the ARREST Study as the trial continues to progress on schedule.

Turning now to G&A, our general and administrative expenses for the third quarter were essentially flat at $656,000 versus $637,000 for the third quarter of 2015. This demonstrates our discipline with regard to non-R&D related expenses.

Finally looking at our balance sheet, as of September 30, 2016, total assets were $19.5 million compared with $18.0 million as of June 30, 2016. The increase in our cash position stems from the gross proceeds related to our ATMs of approximately $4.8 million, as well as the upfront payment from our deal with SAMIL.

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

Allen?.

Thanks Josh. Good morning and thank you all for joining us today. Most importantly, patient recruitment in the ARREST Study continued to trend according to plan. We maintain our earlier estimate of full recruitment of 240 patients by year-end.

Specifically as of yesterday, November 6, we had randomized 182 patients and have another 11 subjects that are eligible to be randomized. Of these, 28% of patients are based in the United States, 35% in Europe and Israel, and the remaining 37% in Latin America.

In addition, 130 subjects are currently within the screening process, which normally takes between 4 to 6 weeks. During the third quarter, we screened 25% more subjects than during the second quarter, which follows an 18% sequential increase from the first quarter.

This consistent and continued up tick is mainly due to the result of the increase in new sites that have been activated during the last quarter. As we projected on the last quarter’s earnings call, we activated another 19 sites during the third quarter bringing up the total to 82 sites.

As importantly, on the scientific front, as we previously reported on March 30, 2016, we have data demonstrating significant anti-fibrotic activity of Aramchol in MCD diet in mice suggesting potential effect of Aramchol in NASH induced fibrosis.

We have also received additional data showing similar results in other pre-clinical models, which will be submitted for presentation at EASL later this month. Lastly, I would like to report several changes in our senior leadership team. Mr.

Josh Blacher, the Company's CFO, has notified us of his wish to leave the Company to pursue other opportunities, effective January 31, 2017. The Company accepted Josh’s decision and intends to appoint a new CFO in due course. In the meantime, CPA Yohai Stenzler, the Company's Director of Finance, will act as interim CFO. Mr.

Stenzler joined Galmed in June 2014 with 6 years' experience as an auditor manager at Ernst & Young LLP. With his accounting and finance expertise and his extensive experience in his current role as director of finance in Galmed, Mr. Stenzler is well-positioned to lead the finance function through this transition period.

I would like to personally thank Josh for his contribution to the Company since he joined Galmed two years ago. Josh has been a strong leader and a valuable colleague, and has been instrumental in many of Galmed's accomplishments during his tenure with the Company. We wish Josh well in his future endeavors.

As we reported on September 8, an important addition to our medical and scientific leadership team was the recruitment of Dr. Liat Hayardeny as Chief Scientific Officer. Dr.

Hayardeny joined Galmed with 16 years of experience in drug development in the global R&D Division at Teva Pharmaceuticals, where she served as the Senior Director and Head of Research Scientific Affairs. In that capacity, Dr. Hayardeny established the scientific positioning of Teva’s major innovative compounds. In addition, Dr.

Hayardeny managed Teva’s global research collaboration as well as publication, which she will be responsible for at Galmed too. I would like to personally welcome Dr. Hayardeny to the team.

Her recruitment signifies our commitment to building a capable and experienced leadership team in drug development and towards delivering Aramchol to its next phase of clinical development. With that said, operator, please provide instruction for the Q&A portion of the call..

[Operator Instructions] And we will first take our question from Ed Arce with H.C. Wainwright & Co. Please go ahead..

Good morning everyone, and congrats on the continued progress towards enrollment.

I just had a couple of questions just to help me think about how you are progressing towards that year-end goal, if you have 182 patients now randomized and 11 eligible, and assuming all of those are randomized soon, are 130 in the screening process with 47 needed to reach that goal, you essentially need 36% screening success rate given that it takes about 46 weeks, and we are almost eight weeks away from the year.

Is that a fair assessment of where you need to be?.

You are absolutely correct Ed. first of all thank you for the question and good morning Ed.

you are absolutely correct in your assessment, and if you would look at competitive studies, for instance, you can look at [Indiscernible] presentation, which is public on their website, you will see a similar 36% – between 30% to 36% hit rate of between screening and randomized patient.

So yes, you are right and we are building on a better screening rate because as time progresses, sites are becoming more and more expert and we see – I must tell you that in some of the sites in Italy for instance, we see now 50% hit rate, as well as the [Indiscernible] side, which obviously would be such a strong hit rate..

Great, and as a follow-up to that, just to be clear, I presume that even now you are continuing to activate new sites, is that correct?.

Now all sites have been activated. We are not activating new sites. All sites have been activated and we are now as I said 81 have been activated, and clearly we have a very simple methodology. Sites have contributed 4 or 5 patients can easily contribute 6 or 7 patients. The sites that contributed less is more difficult.

So we are concentrating on the high recruiting and high randomized sites and we are working on it daily. Literally I can tell you that the data that I revealed [Indiscernible], but we already have additional screening patients as of this morning.

So, this is a very oily machine from 12 countries, 4 continents, 81 sites, so we see inflow of patients on a daily basis..

Okay, great.

Just one last question then, you mentioned some new data that you expect to present at EASL in the spring, obviously without giving away too much in terms of the data that is still undercover, what in particular is this referring to, more fibrotic data or what?.

Yes. I mean we have now four models of animal models and in vitro models repeatedly done all indicating the same antifibrotic – strong antifibrotic effect of Aramchol on NASH patients – sorry, NASH animal, NASH model, which we believe should translate.

These are the same models that have been used in the literature for other compounds, which are under development, whether it is [Indiscernible] et cetera.

So, we have very, very – we think this is very nice data, and obviously we cannot elaborate before the data has been submitted and hopefully accepted for presentation at the liver conference in Europe, in Holland and the deadline is 22nd of November..

Okay, thank you. Excellent..

We will move to our next question with [Indiscernible]..

Hi guys. Thank you for taking my question. Ed actually asked most of my questions.

The only question I have is can you repeat the percentages of patients that have been enrolled in the US, EU and the rest of the world?.

Sure. 28 patients are from the US – close to 50, 49 or 50 patients from the US; 35 patients from Europe and Israel, of which 28 patients in Israel and the rest are in Europe, and many in France and Italy; and the remaining 37% in Latin America, most of them from Mexico, with about 19 patients from Chile..

Okay, great. Thank you so much..

Thank you Ed. just want to add, the rest is one of the first truly global NASH study. We are going to have studies from populations from Latin America, USA, Europe and China, which I think is very, very exciting to see the data from all these – the first time data from all these jurisdictions. .

And we will take our next question from Jason Kolbert with Maxim Group..

Two questions, one easy, one complicated.

The easy one is what have you learnt in terms of entry criteria on these patients, and we talked a lot about endpoints and metabolic markers, could you help me understand kind of how your thinking is evolving there, and then the more complicated question, believe it or not, is Josh, when you first signed on with Galmed you were so excited, I'm surprised to see your departure.

Can you help me understand kind of what that is all about?.

Okay. So I will let Tali, our Senior Medical Director, will take your first question and then Josh and I will try and help you on the second question..

Okay. With respect to entry criteria, what I can tell on this call because I cannot talk about detailed analysis of the [Indiscernible], but I can tell you that based on the protocol criteria, we are enrolling a very similar population that is enrolled to other recent completed or ongoing studies.

So based on the criteria written for the protocol, we are enrolling patients that have – many of them have fibrosis stages 2 and 3, and have high NASH score, and have baseline characteristics in terms of demographics matching very well, an enriched NASH population.

With respect to endpoints, we all are following and looking at endpoints as they develop scientifically and regulatory the ARREST Study again is well executed with the primary endpoint of MR spectroscopy that is very rightful for the drug based on the Phase IIA study, and the secondary end point that includes all the histological end points that are now being translated to the field, including NASH score improvement by two points, and NASH resolution based on ballooning, as well as fibrosis improvement.

So at the end of the day we have a very good population to show an effect on spectroscopy, and on histology end points..

Thank you for that. I appreciate it..

Let me just also clarify on this point, of course, this is also information which is public. We have some 60% of the patients as F2 and F3, and this is in line as Tali said, to the Flint and Golden studies, and the average NASH score is 5 – more than 5, which again is in line with the other studies.

So, we are heads on with – our data will be heads on to the data that you have seen from the three other studies that have been published. And before we move to the second question Jason, I just want to mention another thing and then I will let Josh take over.

When I recruited Josh some two years ago, it was understood – or I expected that a significant part of his time will be devoted to investor relations, and I expected Josh to be and as it is quite successfully he spent maybe 180 days a year traveling, mainly to the US with endless number of [road shows] and meeting investors, which took a lot of burden off me.

We have now reached I think the maturity that at this stage I believe that I know there is going to be more burden on my side, but I'm going to take over this investment relation role, together with our CSO, and in fact, we are coming to the US right after [Indiscernible], so if any of you investors would like to meet with us, I will be very happy to do so in the week of November 16, and we are meeting people in Boston during the conference days, next week or this week in fact, and early next week, and over the weekend because I feel that the level of the – we advanced to a stage that we can now it is important that I together with my leadership, the tentative leadership, will discuss with investors now when we are being about a year from the Arrive data, the data from our HIV study, and a little bit more than a year from our [data] to start and discuss the next steps.

Josh, please?.

Yes, Jason. Just to add to that, I firmly believe that Galmed is a good company and we are doing important work and for professional and personal reasons, a combination, hard to distribute – it is a good opportunity for me to evaluate some other opportunities in front of me..

[Operator Instructions] And with no further questions, I would like to turn the conference back over to management for closing remarks..

Thank you very much for joining the call today. As always, we are happy to answer questions directly, whether through email or you can call us at all times to Israel, and as I said, I will be happy to meet with you – any of you that will be at AASLD later this week, we will be very happy to meet, or later in New York.

Thank you for joining and looking forward to talk to you next quarter..

Ladies and gentlemen that does conclude today’s conference. You may now disconnect at this time..