Good day, and welcome to the Galmed conference call to discuss Financial Results for the Second Quarter of 2020. 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 time lines 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 beliefs and expectations of management as of today, and actual results, trends, time lines and projections relating to our financial position and projected development programs and pipeline could differ materially.

In particular, there is a significant uncertainty about the duration and severity of the COVID-19 pandemic and its impact on Galmed’s business operations.

We urge all investors to read carefully the risks and uncertainties disclosed in our filings with the SEC, including, without limitations, the risks under the heading, Risk Factors, described in our annual report on Form 20-F filed with the SEC and the risks and uncertainties included in the Form 6-K filed with the SEC earlier today.

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

ARMOR, our Phase III for Aramchol for NASH and fibrosis; Aramchol meglumine, a new improved version of Aramchol; and Amilo-5MER, a new clinical program in Galmed’s pipeline. Let me start with updates on our ARMOR Phase III NASH study as well as an assessment of the evolving impact of COVID-19 for the second half of 2020.

During the last quarter, the Data Monitoring Committee of the ARMOR study held a scheduled meeting and recommended that we could continue the ARMOR Phase III trial with no changes to the protocol. NASH is a chronic condition, which means that safety is crucial for any molecule aiming to address the unmet clinical need related to this disease.

Our second quarter report took place amid the eruption of the COVID-19 pandemic, which forced us to suspend screening and recruitment of patients to our study. As you may recall, our estimation at the time was that we would resume recruiting patients only in the last quarter of this year.

We used the downtime to work with our investigators, team and CRO and launched an awareness campaign on social media and in the research side. All of this was done in preparation of resumption of study activities. We are happy to report positive signs in recruiting, starting already in June, with growing numbers of patients screened.

So far, we opened sites in the USA, Canada, France, Mexico, Chile, Spain, Belgium, Turkey and South Korea, which are screening patients at a steady rate. Still, most sites are yet to resume elective clinical activity. Thus, we only expect the study to reach full capacity during the first half of 2021.

We are encouraged with the brief pace of sites opening and screenings. I’m cautiously optimistic and accordingly maintain our guidance for completion of recruitment of the first part of the ARMOR study in Q4 2021 and reporting of top line results in the second half of 2023.

Of course, the rapid development and fluidity of the COVID-19 pandemic precludes any firm estimate as the ultimate impact this disease will have on the ARMOR study, and it is subject to change.

I would like to take this opportunity to express our sincere gratitude to ARMOR investigators and the clinical teams who are going out of their way to avoid unduly early termination while assuring patients’ safety and scheduled follow-up. Now allow me to update you on our Aramchol meglumine program.

As discussed in our previous investors call, Galmed is developing Aramchol meglumine, which is a salt form of Aramchol free acid.

Aramchol meglumine creates benefits of long-term patent protection, cross-reference to all accumulated data of Aramchol thus far, including safety, tolerability and efficacy, more homogeneous blood levels of Aramchol in patients and, therefore, potential for higher efficacy.

It is important for me to stress that although Aramchol meglumine is considered a new chemical entity, NCE, Aramchol meglumine and Aramchol acid circulated Aramchol regardless of which drug product is administrated. We intend to approach the 8 regulatory agencies during Q1 2021 to discuss the Aramchol meglumine program.

And in preparation, we plan to conduct a preliminary bioequivalence study in Q3 this year to identify equivalent dose to 300-milligram BID Aramchol acid currently being used in ARMOR. This study is intended to serve as calibration of the regulatory bioequivalence study that we plan on performing in Q2 2021 with the identified Aramchol meglumine dose.

Now last but not least is the announcement in a separate press release that we issued today with respect to our Phase I readiness of Amilo-5MER. Amilo-5MER is a 5 amino acid peptide with a sequence homology to a specific MTADV sequence in human CD44 variant.

Amilo-5MER is being developed through a research collaboration between Galmed and the Lautenberg Center for General and Tumor Immunology, the Hebrew University, Hadassah Medical School Jerusalem.

The molecule originated from the laboratory of Professor David Naor, who published this specific sequence in its role in inflammatory diseases in the Journal of Clinical Investigation. Amilo-5MER has a unique mechanism of action binding to 3 pro-inflammatory amyloid proteins, 2 of which are known to be active only in their aggregated forms.

By binding to Serum Amyloid A, Amilo-5MER is diffused with a Serum Amyloid A aggregation and, therefore, inhibits the destructive autocrine self-amplifying cytokine loop that causes additional inflammatory reactions.

Amilo-5MER has been shown to significantly reduce chronic inflammation in animal models of rheumatoid arthritis, inflammatory bowel disease and MS. Recent ex-vivo study from human, peripheral blood mononuclear cells, PBMCs, from healthy subjects, stimulated by Serum Amyloid A, demonstrated a significant reduction of IL-6 secretion.

These findings suggest that Amilo-5MER have a role in the treatment of patients with severe COVID-19-associated acute respiratory distressed syndrome, ARDS. ARDS is characterized by significantly high serum levels of Serum Amyloid A and IL-6, which is the main cause for the cytokine storm in these patients.

We are now investigating these effects of PBMCs from COVID-19 patients. If positive, we plan to adjust our planned Phase I study of Amilo-5MER to also support a proof-of-concept study in COVID-19 patients. Amilo-5MER is Phase I ready. It has excellent safety profile thus far.

We intend to initiate a Phase I study in healthy volunteers in the United Kingdom in Q4 this year to support its development for IBD. Before I conclude, I would like to note that we are planning to virtually attend 3 investor conferences this quarter. Canaccord’s Annual Growth Conference will be held next week on August 11 to 13; H.C.

Wainwright Annual Global Investment Conference to be held on September 14 to 16; and Cantor Virtual Global Healthcare Conference to be held on September 15 to 17. We will be happy to schedule one-on-one meetings during this meeting -- during this event.

Also, as communicated in our previous investor call, we are planning to hold a virtual Analyst Day late November, early December this year. During this day, we plan on reporting more details on Amilo-5MER to development program as it evolves as well as the progress of the ARMOR study and the development of Aramchol meglumine.

I would like to turn the call now to Yohai Stenzler, our CFO, to review our financial results for the second quarter of 2020.

Yohai?.

Thank you, Allen, and good morning to you all. This morning, I will be providing you with our financial results for the second quarter ended June 30, 2020. For more information, please refer to our report on Form 6-K filed earlier today with the SEC, which, among other things, provide the summary of such financial results.

For the second quarter of 2020, our net debt totaled $5.5 million or $0.26 per share compared with a net loss of $4.2 million or $0.20 per share for the corresponding period in 2019. Research and development expenses totaled $5 million for the second quarter of 2020. This compared with $3.5 million for the second quarter in 2019.

The increase resulted primarily from an increase in CMC and formulation expenses in connection with our manufacturing of Aramchol API to support the ARMOR trial and the development of our Aramchol meglumine. Turning now to G&A.

Our general and administrative expenses for the quarter totaled $0.8 million compared with $1.2 million for the corresponding period 2019. The decrease resulted primarily from a decrease in professional services expenses and investor relations related expenses.

During the three months ended June 30, 2020, we’ve had a net financial income of $0.3 million versus $0.5 million in the comparable period in 2019. Additionally, the company recorded unrealized gains of $0.7 million during the three months ended June 30, 2020, as a result of a change in the market value of its marketable debt securities.

Our cash balance as of June 30, 2020, which includes cash, cash equivalents, restricted cash, short-term deposits and marketable debt securities, totaled $63.5 million compared with $75.6 million in December 31, 2019. With that said, operator, please provide instructions for the Q&A portion of our call..

[Operator Instructions] The first question comes from the line of Steve Seedhouse..

Could you maybe discuss on the bioequivalence study you mentioned planned for this quarter for Aramchol meglumine? Is, first, is that in healthy volunteers or NASH patients? Are you testing QD or BID doses? And also, what is the difference between that study and the one that I think I heard you say you were planning to start in the second quarter of next year to show bioequivalence?.

Yes. Thank you, Steve. I will let Liat to take this question, please..

Nice to hear from you. Thank you for your questions. For, we are starting with the twice-daily Aramchol meglumine versus Aramchol acid, but also once-daily as well. Just in order to say what’s the equivalent, we do expect, based on our previous bioequivalence that we had in dogs, that we will have higher exposure.

And therefore, we need to know exactly, a formulation is already being developed. So we just need to know the exact value that we need in this bioequivalence to compare the Aramchol meglumine versus Aramchol acid.

The second quarter in 2021 will be a full regulatory bioequivalence checking twice-daily, 300-milligram once with Aramchol acid, which is the formulation that is currently being given in ARMOR to the selected dose of Aramchol meglumine, either if we’re going to have a high exposure enough once-daily Aramchol meglumine or twice-daily, most probably lower dose of Aramchol meglumine in a fully regulatory registered study to submit to the regulators.

So that’s the difference. I hope I answered your question..

Yes. No, that’s helpful. And a couple of questions....

And it’s going to be healthy volunteers with regard to that..

Great. On Amilo-5MER, can you touch on how this peptide was discovered? Was it through like phage display or something similar? Or is this actually a naturally occurring peptide? And I have a couple of other questions, but let’s start with that..

Okay. So I think it’s interesting. I think what they actually did in the laboratory of Professor David Naor is the isolation of joint inflammatory cells, where they actually identified a sequence in a human CD44 variant that is responsible for higher inflammatory and for higher binding of FGF1 2D cells.

They actually search in reporting data, what is this specific sequence of, that you can find in the CD44 variant? This is the paper that I think we attached, or, if you want, I can send it to you, from JCI. This specific sequence that is responsible for the variability of this specific human CD44 was the MTADV, which we call today Amilo-5MER.

And it was the serendipity, we were looking for, what is this specific sequence it’s binding to? There were 3 pro-inflammatory proteins that this specific sequence is binding to.

Of them, the most important one, which is ubiquitous, sad to say, in any inflammatory disease is the Serum Amyloid A, which we know serves as a biomarker for IBD severity for rheumatic arthritis and currently in the severe cytokine storm in COVID-19.

So we aimed at the binding of 2, Serum Amyloid A sequencing by inflammatory cells as the monomers, but it’s only efficacious in creating this vicious circle of chronic inflammation as an aggregate.

The AMILO-5MER is binding to these monomers and do not allow the monomers to become aggregate and then to stop the vicious circle of chronic inflammation when it starts..

Okay. It looks also like a completely unmodified peptide just based on the structure. And the deck that you guys have, I’m wondering, what is the half-life or anticipated half-life in-vivo? And then, also, it looks like you’re dosing once daily. I’m curious what the mode of administration is there..

Yes. So the half-life, at the major fraction, I’d divide it into 2 fractions. The major fraction is about 1.5 hours, to be precise 1.5. So there is a minor fraction of the total exposure, which has what we call a tale in the PK, which is less than 1%. And the half-life is higher than 9 hours.

We are currently giving it in the, in this Phase I subcutaneously, and we developed an oral formulation parallel to that. We just didn’t want to wait..

Your next question comes from the line of Ed Arce from H.C. Wainwright..

A couple on Amilo-5MER.

First, I’m just wondering, as you described here, the particular reduction in IL-6, what led you to look at IBD, in particular, before other potential indications here, given there’s a number that could benefit from that effect?.

Thanks. So I have to say -- I mean, we have a lot of data with rheumatoid arthritis as well. We are embarking into Phase I in healthy volunteers, single and multiple dosing, first in human. We are talking about IBD. Many, many papers have been published about using Serum Amyloid A also as a biomarker and the main cause for the disease pathology.

So it’s easier to develop something that you have such a very clear, very easy blood biomarker as Serum Amyloid A, which there is very high level, up to 1000 time, in a disease state. We are not -- actually, we start with IBD or with potential IBD.

We anyway start with the single dose and multiple dose in healthy volunteers, but we are open for multiple indications. I do agree with you that this compound will be a very good compound, immune modulating all chronic inflammation that has a tissue destruction in multiple indications.

Currently, we are just -- the first in human is in healthy volunteers, as I said, single and multi-dosing anyway. I think Allen would maybe want to elaborate on the potential of other indications from a business point of view..

Yes. Thank you, Liat. So clearly, as you alluded, I mean, the potential is extremely large. And as a small company, we have been very selective. Our core competence is in the liver, autoimmune diseases. So IBD, Crohn. Mild to moderate was our first choice, but, as Liat explained, I mean, we are advancing the molecule into clinical studies.

And I don’t rule out the possibility of collaborating on other indications with either some of these Serum Amyloid A-related indications are geographical-related, some of our diseases, which are just only in Japan or in Asia, other in the Middle East.

So we are open for collaboration with geographical licensing in other ways, joint venture in other ways, which will not burden our cash balance, so our balance sheet to advance this molecule.

And I would not rule out also sometime in the future a combination together with Aramchol since it is also -- Serum Amyloid A has an important role also in NASH..

Okay. That’s helpful. Next question is -- sure. Given that the half-life you just disclosed is about 1.5 hours, I’m wondering how you view that in the context of dosing, given, of course, that you’re still working through PK/PD..

Yes. So first, I have to say, working on Copaxone for 16 years, that did not have any pharmacokinetics. I think we, especially in Galmed, have a lot of people that worked in Copaxone for quite a long time. It’s a small peptide.

You have to take into consideration that when we are taking pharmacokinetics, and when I’m telling you that the half-life is 1.5 hours, that means that this is the half-life that we find the compound in the blood. It doesn’t mean that tissue distribution is not actually in place.

And you also have to take into consideration that once the Amilo-5MER, which is a very small peptide, is binding to Serum Amyloid A, it is being reduced. You don’t see it as a single in the blood. You see it as a bound.

And as a bound, you don’t really check it, okay? So that doesn’t mean for how long does it really stay in the body still active? It only says what’s the free fraction that you actually check in the blood..

Understood. One last question, if I may, on the meglumine compound.

Around the bioequivalence study that you’re starting, have you seen or is there any evidence to suggest that you’re receiving or seeing any time-dependent increases in bioavailability?.

I think the major benefit, Allen, if I may, the major benefit that we can see with Aramchol meglumine is the consistency, the higher consistency with all the patients.

So if you have, if you’re developing a class IV compound, which is non-soluble, you see a lot of differences from PK point of view, from the exposure of the patient’s point of view in the blood among patients. Here, what we have with Aramchol meglumine, which is 30,000 higher from solubility point of view.

You have consistent exposure over time, and you have homogeneity among patients, which definitely is going to reveal better efficacy over time..

[Operator Instructions] The next question comes from Kristen Kluska from Cantor Fitzgerald..

And congrats on all of the updates and pipeline expansion that’s been occurring under, behind the scene. So the first one is just related to the Phase III study. And I think that recruitment has been resumed across 9 countries, which is great to see.

Could you comment on how many countries have approved this study to date? And then, also, I know that in March, when the COVID-19 pandemic was really starting to emerge across the globe, you had discussed looking at potential backup sites or regions where you were originally expecting to enroll patients in the clinical base part of the study.

So do you have any updates related to the strategy as things continue to evolve?.

Okay. Thank you, Kristen. So naturally, all the countries that are recruiting already approved. And I can’t recall on top of my head, but there probably might be 3 or 4 other countries that have been approved. But screening SIV, site initiation visits, have been delayed due to COVID-19, and we expect to do them either this month or early September.

We have not, I mean, we have countries like Israel that was a backup country. We’ve heard from the site, since we ran the Phase II study in Israel, we didn’t need to go through the MOH, Ministry of Health, approval. So we know that we already got clearance from helping give from IRBs from the site.

And we are going, very shortly, we are going to start screening patients here in Israel. Brazil is also on top of our list. It’s, we are holding discussions with the Brazilian corner, the regulatory agency. And Argentina, Poland, so I can’t remember off the top of my head. All in all, we are talking about 18 countries that would operate.

Later second stage, we will have Bulgaria, Macedonia and China, of course, which we are awaiting. We’ve already had a pre-IND meeting in China. We are now submitting the full IND based on this pre-IND. So we expect that we’ll be able to start activity there early 2021. So everything is going as planned.

That’s, I think that’s all we have to say, that we are, we have a plan. We have a recruitment strategy plan, and everything is working as planned and even ahead of plan, as I said earlier..

Okay. And then as it relates to Amilo-5MER, just from quickly scanning the literature this morning, it seems there’s a clear rationale related to the role of SAA as a biomarker for some of these indications.

So could you discuss what you would hope to achieve by 12 weeks in this Phase Ib/IIa study? And then also, do you see any potential for clear differences as it relates to this role from both the Crohn’s disease and ulcerative colitis?.

So what do we hope to see? We hope to see in the 12 weeks, you’re actually right. I’ll start again. You’re actually -- wait. There’s a lot of publications talking about Serum Amyloid A as a biomarker for the severity of the disease and even for the relapsing, remitting status of these certain diseases. So you’re absolutely right.

There was Serum Amyloid A., in creating the disease, is still in a very late literature. Happy to share that with you. So it’s not just a biomarker, rather it is only a main cause of the disease. So what we are hoping to see? We are hoping to see in our clinical, I would say, 12-week clinical study, we hope to see a difference in mucosal healing.

And we always are going to use Serum Amyloid A as a biomarker.

Having such a clear biomarker makes it much easier for you to perform clinical trial with reduction, significant reduction in Serum Amyloid A concentration in the blood as the biomarker, which is very, very sensitive, by the way, much more than CLP, for example, has been shown in the literature. It’s a very clear biomarker and a very sensitive.

So, even reduction in 20% or 30% in Serum Amyloid A, which is -- as you can see, as much as early as 2, 3 weeks after treatment, you can definitely see that in 12 weeks, you will be able to see mucosal healing by colonoscopy and reduction in SAA as a blood, as a biomarker..

Great. Thank you. And then turning back over to NASH.

Could you talk about whether you think there are any interesting studies or techniques that you’re following that are related to some of the non-invasive alternatives to liver biopsy and identifying patients? So I know that GENFIT had published some results from the NIS for blood-based diagnostic earlier this week..

So of course, we are following all the recent very interesting studies, results -- studies as much as the public information as we can get. And on -- and also the landscape -- acceptable lancet publication that GENFIT have issued. There’s nothing really. There’s not enough data for us to comment.

But this is something which is a top priority for us simply because we followed the letter of rejection that -- or was it called a -- the industry letter -- I can’t remember the terminology. Yes. The CRL exactly.

And we understand that biopsy’s really on the top of the list of the FDA, and we are very privileged that -- to be able to follow all those earlier studies and get the feedback from FDA based on all these studies.

So this is something that we closely follow, but there’s really no news that we could share with you on that with that respect if it’s something which is updated on our protocols and statistical analysis plan..

Okay. Great. Thank you so much for taking my questions..

And the next question comes from the line of Jason McCarthy from the Maxim Group. Please go ahead..

Hi, everyone. It’s Dave online for Jason.

So regarding the salt formulation, just based on the time line of that line, I was just hoping you could shed some color on when you think you’d be able to start utilizing the salt formulation in the ARMOR study? And then with respect to the Amilo-5MER peptide, you mentioned that it may have potential indications with COVID-19 just based on preclinical data.

I was hoping you could perhaps shed some color on what the next steps would be in that specific indication..

Okay. Thank you. So let me start with the last question, which is about the COVID-19 is working with these kind of studies, demand a very high level of safety requirements.

And this is, of course -- so this is -- the reason of the delay is that the -- on the initiation really because the study by itself is a short study, but the actual execution of the study is slightly delayed.

And we were hoping to show that the same effect that we’ve seen on PBMCs or healthy volunteers stimulated, where SAA was stimulated, we would see with COVID-19 patients, which already have a high-level, stimulated SAA level.

So this data, I hope that we’ll be able to report this data before the next call, and, of course, we would issue a press release once we have this data in hand.

As to your first question on, forgot what the, Liat could take, Liat, do you want to take the first one?.

Yes. I just want to add for the COVID-19, so with COVID 19, as you probably all know, there are two stages. Some of the patients are sick, but they are not severely sick. And there is another, let me say, phase in the disease only for very severe patients, which experience what we call cytokine storm.

Cytokine storm is the exactly vicious cycle that we are talking about when we are talking about innovation of Serum Amyloid A, which is reported in multiple publications lately with the COVID-19 severe patients, which activates the immune system again and again. And the cytokine storm is what caused this main disease.

Interfering with this ability of Serum Amyloid A with this vicious circle and inducing again and again same cytokines that is activation of the additional Serum Amyloid A is our main goal here.

We are working with the company in England that has the ability to end, to recruit and to get PBMCs or fresh blood from COVID-19 patients to show first in lymphocyte what we call the, stop of this vicious cycle of the production of this cytokine storm. Once we have these results, we’ll be able to go directly to COVID-19 severe patients.

And we already are in contact with some of these centers in London. With Aramchol meglumine, as to your question, we will be ready with the formulated compounds to be given, tablets to be given to patients in, after bioequivalence, which is going to be regulatory-based, on the beginning of second quarter of 2021.

With these results, we will go again to the regulators because we do intend, as Allen just alluded.

In the first quarter, we go to the regulators with the initial bioequivalence that we are doing here starting this September and asking their directions through the bio, regulatory bioequivalence full study in the beginning of the second quarter, which is going to be our bioequivalence to go the second time to the regulators to get approval on this product..

Mr. Baharaff, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks..

Thank you, Mary, and thank you all for joining our call today. As always, we are happy to take calls, meetings, I mean, at the conferences, as I mentioned and, during that time, at any time. And looking forward for our next call, and stay safe. Thank you for joining today..

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines..