Good day, and welcome to Galmed’s Fourth Quarter and Full Year 2019 Conference Call.

Today's conference is being recorded.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 forecasts regarding anticipated timelines and expectations with respect to our regulatory and clinical development programs, as well as other statements that relate to future events.

These statements are based on the beliefs and expectations of management as of today, and actual results, trends, timelines and projections relating to our financial position and projected development programs, and pipeline could differ materially.We urge all investors to read carefully the risks and uncertainties disclosed in our filings with the SEC, including, without limitation, the risks under heading Risk Factors, described in our Annual Report on Form 20-F filed with SEC, and the risks and uncertainties included in the Form 6-K filed with the SEC earlier today.

Galmed assumes no obligation to update any forward-looking statements or information, which speak as of the respective dates only.I would now like to turn the call over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead..

Good morning. And thank you for joining us on today's conference call. I'm pleased to be here today with our Chief Scientific Officer, Dr.

Liat Hayardeny; and our Chief Financial Officer, Yohai Stenzler, to provide you with an update on our clinical development programs, as well as report to you on our financial results for the fourth quarter and full year of 2019.

As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.In our Phase III ARMOR study progresses, I would like to provide you with insight regarding our progress as well as the assessment off and plans for addressing uncertainty related to the coronavirus.

There are more studies have been approved in nine countries today, including the USA, Canada, France, Belgium, the UK, Turkey, Spain, Chile and South Korea.

We're expecting approvals in Australia and Mexico in the next quarter, and Brazil and China before the year-end.The eruption of the novel coronavirus has thus far mainly affected operations of ARMOR study in South Korea and China, where activities came to our house.

As publicly reported, hospitals in this region are under strict public health restrictions, and travelling general is restricted.Unfortunately, in recent days, we started seeing an impact on some of our European sites. It was significant in activities cancelled and key people going into quarantine following travel.

There is no -- there is a general unease of conducting unnecessary activities in medical centers.It is too early to assess the full effects of the corona crisis on the study. But left unaddressed by government, it will inevitably affect our ability to conclude recruitment in the original timeframe.

Our approach to mitigating the adverse affects is to accelerate the opening of additional research sites from our backup countries because of a slowdown in some countries.I want to point out from a cost perspective, other than our general and administrative costs, which are quite modest, our clinical expenses are directly correlated to patient enrollment, and therefore delays in enrollment also reduce our cash burn until the patients are enrolled in the studies.

We are very focused on assuring the quality, timeline and cost effectiveness of ARMOR study. I’m quite certain that we are not the only bioscience company witnessing this phenomenon.We will continue to closely monitor the spread of the virus and the activity level of our participating sites to collaborate our response.

In parallel, we will continue on working towards NDA submission during the first half of 2023. The completion of enrolment of the first part of the study now expected by the second quarter of 2021, and reporting short-line results of the first part of the study by the fourth quarter of 2022.Now moving to other activities.

Two Phase I studies have been initiated earlier this year, and an additional Phase I study is expected to be initiated later this year. The first Phase I study is you have hepatic impairment trial, cohort 1 of the 3 was recently completed. Top-line data from this study is expected to be published by the fourth quarter of this year.

The second study is a must balanced study, which is running on schedule. The first building is expected in May 2020, and token result expected by Q4 2020.We are planning to commence TQT study. The protocol of this study is currently under FDA review. We expect the study will be initiated by the second half of this year and completion by Q1 2021.

Simultaneously, we continue to advance our knowledge on Aramchol mechanism of action, and its translation in human clinical studies. Data will be affected Aramchol glycaemic control i.e.

diabetics was accepted to be presented at EASL, European Liver Congress, which is still scheduled to take place in London on April 16 to 19, 2020.We're expecting three manuscripts to be published during 2020.

A manuscript entitled Aramchol down-regulates SCD1 hepatic stellate cells to attenuate cellular activation and fibrogenesis, a manuscript of the results of our Phase 2b ARREST study, and the manuscript incited Aramchol improve liver glucose and liver homeostasis in NASH via AMPK NAFLD regulation, which we submitted recently.Lastly, I'm happy to inform you that we came to an agreement with the FDA on our pediatric study plans for the evaluation of Aramchol for the treatment of NASH in pediatric population.I'd like to now to turn the call over to Yohai Stenzler, our CFO, to review our financial results for the fourth quarter and full year of 2019.

Yohai?.

Thank you, Allen, and good morning. And thank you for joining us today. This morning, I will be providing you with our financial results for the fourth quarter and the full year 2019.

For more information, please refer to Annual Report on Form 20-F filed earlier today with the SEC, which among other things provides a summary of such financial results.Our net loss for the three and 12 months ended December 31, 2019, totalled $8.3 million and $20.5 million, respectively, compared to with the net loss of $3.7 million and $9.9 million for the corresponding period in 2018.

As a result, our loss per share for the three and 12 months ended December 31, 2019, was $0.39 per share and $0.97 per share as compared to $0.18 per share and $0.54 per share for the corresponding periods in 2018. We had no revenue for the 12 months ended December 31, 2019, compared to $2 million during 2018.

Last year’s revenue was in connection with our license agreement with Samil Pharm.Research and develop expenses for the three and 12 months ended December 20, 2019, was $7.4 million and $18.2 million. This compared with $2.7 million and $8.3 million for the corresponding period in 2018.

All R&D activities have increased during the year 2019, many due to the preparation initiation and the initiation of the ARMOR study.Turning now to G&A, our general and administrative expenses for the three and 12 months ended December 31, 2019 was of $1.3 million and $4.2 million, respectively, versus $1.5 million and $4.4 million for the corresponding periods in 2018.

The decrease finally resulted from a decrease in salaries and benefits expenses due to lower year-end bonuses.During the three and 12 months ended December 31, 2019, we had a net financial income of $0.3 million and $1.9 million, respectively, versus $0.5 million and $0.9 million during 2019.

The increases of these results to our interest income from financial instruments.Finally, our cash balance. As of December 31, 2019, which includes cash, cash equivalents, short-term deposits, marketable debt securities and restricted cash totalled $75.6 million.With that said, operator, please provide instructions for the Q&A portion of our call..

Thank you. At this time we'll be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Yasmeen Rahimi with ROTH Capital Partners. Please proceed with your question..

Allen, I wanted to find out -- can you give a little bit more colour on what are these backup countries that you're referring to for opening additional sites? How many additional sites do you think would be needed? And if there are any additional costs associated compared those sites up and running? And then the second part of the question is, we would love to hear an update in regards to discussions that you've been having in regards to partnerships ex-U.S.

or ex-Europe to the extent that you can think about it?.

So as per backup countries Brazil, Australia and China were preliminary in our backup lease. And we were not going to open these countries for the first part of the study i.e. for the first 1,200 patients, enrollment of the first 1,200 patients.

We've now accelerated the regulatory submission, we are engaged -- we engaged with the local regulatory firm, which will work under our CRO program. And in order to accelerate approval in -- regulatory approval in Brazil, we’ve submitted a pre-IND to the Chinese authorities, to the NMPA. And Australia is also advancing.

And there is a fast track of approval -- regulatory approvals like. We expect that around July we'll be able to start recruiting patients in Australia. We are looking at -- we have still a list of other countries, including Argentina, and some in Eastern Europe, which we keep as that is we’ve done with due diligence and feasibility on many sites.

And we will keep those for -- mainly for the second part of the study. I think, if needed, we would, of course, also accelerate those countries and decide as well. We try to keep -- actually the number of the sites, I try to stick to the numbers that we reported before, somewhere between 150, 160 sites.

We are certainly monitoring the activity of the site. And I can tell you that we will not hesitate to closing sites, which are underperforming. These would be sites, which have a lot of screen failures and, of course, before they randomize the first patient, we will close the site. So the balance of the sites is going to stay the same.

It's not -- the cost of adding additional sites is negligible comparing to the advantage of keeping those sites open for the duration of the study. So we will try to keep, as we've always said, very efficient number of sites and make sure that all sites are highly performing sites.

As per the second part of your question, unfortunately the coronavirus is also delaying discussions that we were holding. And as you can understand, there's nothing to report at this stage. And when Yohai complete a report, of course, we will report the market. So immediately report the market..

Thank you. Our next question comes from line of Steven Seedhouse with Raymond James. Please proceed with your question..

I just wanted to clarify a few things from your filings. First off, thanks for the clarity on the impact of the coronavirus. That's obviously top of mind right now for everyone.

And just regarding some of the comments in your filings, so you mentioned still that the ARMOR study initiation is dependent in part on an IND that you plan to file with the FDA, and it has similar language for a foreign regulators regarding commencement of study outside the U.S.

Obviously, ARMOR was initiated in September, so just hoping if you clarify what that IND is referring to and just the status of any requirements with the FDA to begin or continue to enroll ARMOR?.

So thank you for question, Steven. Maybe I did not make the statement clear. We don't have -- IND is only for China where we did not have an IND in ARREST study. So that's the only country, which still need an IND. In all counties, other places, we are preparing our NDA.

So we are -- for the USA, we want to make sure that everything that has to be finished on time, including pathogenesis studies, other pre-clinical studies, Phase I studies. All of these protocols and discussions with the FDA are ongoing to ensure that once the data of the ARMOR study is published, we can submit an NDA very promptly.

And this is why we try to -- we give the guidelines, and the date of submission of paper -- we believe would get an NDA, and where we believe that will have the top-line data from the study..

Okay. Thank you, Allen. I appreciate that. And you also mentioned the filing -- just you highlighted on the call the Phase I studies that are ongoing. Some data from two of them, I believe, in 4Q '20, and from one of them in the first quarter of '21.

In your annual filings, just mentioned certain regulatory agencies in Europe are requiring additional clinical studies prior to initiating ARMOR in those jurisdictions.

So I just wanted to clarify if those Phase 1 studies are gaining factors for some of those jurisdictions in Europe or if this is separate?.

Again, thank you for clarifying the question. No. We have no requests, no special requests from any of the countries. And as we can see most of the countries participating in study already gave us the approval to initiate the study. The Phase I studies I am referring to are studies to support the NDA..

And I was interested to read also, it sounds like you guys have entered into a research and option agreement with an academic institution to acquire product candidates and pre-clinical research on that candidates currently ongoing.

So somebody could just talk about that product and clarify if it's a NASH product?.

So this is still very early stage. It’s still in pre-clinical stage. And we are doing a lot of pre-clinical work in order to make this compound as Phase I-ready. And with this communication, obviously, the costs of these activities are negligible.

And this is why did not report them separately and they are part of the R&D costs of -- the general R&D costs of Galmed. Once we'll get closer to IND, we would communicate the compounds, the indication and the plan for -- clinical plan for these compounds.

And most probably this year, all of that will -- should be opened in the coming quarters of this year..

Thank you. Our next question comes from line of Ant Arce with H.C. Wainwright & Co. Please proceed with your question..

So few for me. First, I just wanted to clarify and confirm your timeline for ARMOR. You mentioned 2Q '21, and I missed exactly what that was in the top line results of 4Q '22.

Just given the ongoing and likely ongoing disruptions at various sites from COVID, wanting to also confirm that -- at this point from your perspective given the flexibility that you have with additional sites and so forth that you do not expect any sort of timeline delays at this point?.

This is correct. I mean, as I said it before there maybe – we made slide one quarter from Q3 that I've communicated earlier. We have changed the date in Q4 2022 for readout of the study. And we are doing utmost to keep the original time, original schedule by opening new sites and by using some of our makeup countries.

So it's too early to make any clear – a very clear timeline but we believe that we are able to maintain the original timeframe of submitting the NDA in the first half of 2023..

And then, I missed actually what you had mentioned in your prepared remarks around EASL next month?.

So we had a publication in EASL that was accepted for presentation. But on -- electronic set of our employees, this is data that is based both on our ARREST study and our pre-clinical study, and have nice the translation of the -- mechanism of action translation from animal studies to human data. This data was accepted for EASL.

But as we are all waiting, I mean, I hope that EASL would think this take place, but there is high probability that it will be only virtual. So we may be able to deliver this presentation by WebEx or any other form. But this presentation would come out around that time.

Nonetheless, presentation is ready, and we'll make sure how to communicate it to the public..

Anyway, a manuscript was submitted already for publication with EASL. I think it’s a very good data showing the effects of Aramchol on hemoglobin A1C in other patients in ARREST. We see a very good, I would say, a disease modulation by Aramchol in our patients together with the mechanism of action that is supporting us. It's a very good paper.

And we hope to get very soon answer for accepting this paper for publication. We are waiting for the editor to get us accurate results. So it’s the first time that we’re showing to inflation. Next week, we move action over Aramchol to the clinical values.

And few more publications will follow on the translation of the mechanism of actions to the clinical that we saw in ARREST, and we will see hopefully in ARMOR results..

Okay. Great. Thanks for extra detail, Liat. Very appreciate it. Two more if I -- just two more quick ones, if I could. You mentioned some progress with the agency in terms of your design for a pediatric study, if you could share any details that would be great.

And then, lastly, with your current cash at $75.6 million, what is your view of the cash runway at this point? Thanks again..

So – and we have agreed. As I have alluded before we have agreed with FDA on our pediatric plan. We would be starting towards the end of this year the necessary toxicology studies and the first clinical studies, which start shortly after the completion of the third part of ARMOR, which is the end of 2022.

And then we, of course, agreed on -- I mean, the study designing is for 12 to 19 and 6 to 12, and then a waiver for earlier -- for younger patients. So all of that is agreed, time lines, protocols. And I hope we will be able to move forward for this very important indication. The other question, remind me what was the ....

The cash balance..

The cash balance, yeah. So our -- there's no change in our view about the cash balance. Study costs remained the same, and we keep very, very closely on budget. As I said before, it is based on activity, so it should not increase. As you can see from our balance sheet for the previous year, and we looked also on our budget for the next year.

Our burn rate, which is unrelated to the study, remains the same about $1.5 million per quarter. And I hope that we still be able to generate, with a very conservative investment -- financial investment revenues for the money that we have. That covers more or less the burn rate for the quarterly burn rate..

Right. Thanks so much..

So even if there is one or two quarters of delay with burn the rate, I think that mostly can be offset by the financial income..

Thank you. Our next question comes from line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question..

The first is what do you think will be the main advantages for your company if you are not the first on the market meaning, which criteria or items will you internally be on the lookout for that could help pave the way for Aramchol is approved?.

Kristen, I would let Liat take this with your permission..

I think that Aramchol is not actually competing with any of the candidates that are currently ongoing. So if you look at the [Indiscernible] is mainly targeting fibrosis. We don’t have affect on these effects. And they are targeting mainly [Indiscernible] range. And at the beginning they will start with the SV that has more of risk to deteriorate to S4.

We don't really know frankly what's going on with [Indiscernible], but if they will -- and we hope they will be approved. They are targeting mainly legal threat. Aramchol is targeting legal threats and fibrosis.

If you look at the mechanism of actions and if you look at the pre-clinical of [Indiscernible] for example, and we just recently saw a paper that they published about the effects on LX2 cells with the collagen introduction, which is comparable to Aramchol, which we were very glad because it was translated for them in the clinic showing a lot of probability of success for us as well.

And on the other hand, we have a very good effect in our clinic and from mechanism point of view, on liver fat as well. So we are [Indiscernible] we can actually say and definitely shown a good effect on liver fibrosis like upper liver, for example, and we are showing a very good effect on liver fat as well, which hopefully we would see with others.

So we will -- maybe the not first one to the market, but we will be the first one to show an effect on these effects at the same time as liver fibrosis targeting both, ballooning, the [Indiscernible] and liver fibrosis. They are targeting both we believe that we will be the first one to show..

Now to add to that with the very clean safety and tolerability profile of Aramchol, I think that all the drugs that are now in development, which are showing very high effects on liver fat, but has some safety concerns. We will be given at the end of the day as induction maintenance for short-term plus reduction that we have set.

Aramchol, as we see that for the time being is the only drug, which is suitable for chronic long life treatment for NASH resolution and some prevention for progression of fibrosis with the benefit of [Indiscernible] [0:32:23] for reversing fibrosis as we have seen in our earlier studies..

Okay, great. Thank you. And then I think EASL is making a decision today regarding the status of the conference.

But outside of that, which conferences or events do you hope to attend later this year and what might we expect there?.

We would try and we -- my philosophy is I'm coming to any party that I'm invited to. So anywhere at all conferences, we will try to make as many as bank conferences, of course, and we had today 11 analysts covering Galmed, so there is quite a lot of exposure from the different finance institutions.

But certainly, [Indiscernible] just recently came from NASH [Indiscernible] presented in both [Indiscernible] in London. And there are a number of important NASH conferences that are scheduled later this year. We have already registered to most of them.

And I hope, I believe there is a high latitude that easily not going to fix it, but I hope that after that when we get [Indiscernible] we will get mix of business..

Thank you. [Operator Instructions] Our next question comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question..

Hey, everyone. It’s Jake [Indiscernible] on the line for Jason. Thanks for taking my question. Just a question here.

So with [Indiscernible] countries being used and with potentially different regulations in place in these countries, I just wanted to see if you guys foresee any changes in R&D expenses as a result of these site changes? Or if you guys expect to see any differences in the ease with which patients might be recruited for the study?.

So the philosophy that -- thank you Jason for the question. The philosophy that we have taken from the beginning is that we have set up a very clear budget that for all sites, and we have not deviated from any of them. We have a budget for U.S. sites, and we have a budget for European sites, and have a budget for the rest of the word sites.

And these are different budgets. And we have to adhere to the keeping up the -- when we are negotiating with the site, I have to say that they respect us and they send us we have a fiduciary duty to other sites. So when we say that we are not paying any other sites more than we are willing to pay you, they usually accept our budget.

So I don't see that we -- any budget is going to change according to the different markets and different -- and as I said before, we are actively managing our site, i.e. sites which are -- and we already gave a warning to certain sites, which were not performing. These is a lot of screening [Indiscernible] and enough screening.

And we have gave them a very clear message that we will not hesitate, close the site if we don't see activity which are as spend. And just as a reminder, our budget and our strategy plan -- recruitment strategy plan is built [Indiscernible].

We've done a lot of work based on our ARREST study, which we had more than 80 sites, together with the data that we have from the three or also other large Phase III studies that have been completed. So we know who are the best performing sites.

And we are working with [Indiscernible] that we are sure and be good performers, and hence make these are very efficient studies. I think that they – the costs when there is cost of these studies tend to increase when you need to hold a couple of hundreds of sites like 400 or 500 sites as we've seen some of the studies.

And those that some of the sites only randomize one patient, I think, are very, very costly to hold for the duration of the studies. This is something that we try to avoid at all costs..

And then I just want to make sure I got the stamp. For the ARMOR study, you guys planned completing enrollment by 2Q '21, and you guys expect top line data by 4Q '22.

Is that correct?.

That's correct..

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Baharaff for any final comments..

So I would like to thank you all for joining on this. So it's not an easy day on the financial markets. And I really, really appreciate all of us at Galmed. Appreciate. I see on the screen that there is a very high attendance of investors and analysts. So we appreciate very much for your continued support in Galmed. We are planning a booth.

Presently, we have a large booth [Indiscernible] well. It's booth 512. For anyone who would come to [Indiscernible] in London on 16th to 19th of April. I hope this will still take place. And if not we will try to do our utmost to meet you on [NVRS] monthly travel would be free and bills will be as usual. Thank you very much for joining today..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..