Good day. Welcome to the Galmed Conference Call to discuss Financial Results for the Fourth Quarter and Year Ended 2020. Today's conference is being recorded.

Before we begin, please note that we'll 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..

Thank you, Ross. 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 year end of 2020. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.

Earlier this quarter, we hosted a KOL Symposium and Pipeline Update focusing on our lead compound Aramchol, a Phase 3 asset for NASH and fibrosis; and our pipeline compound Amilo-5MER developed for chronic inflammatory disorders. Let me share with you the highlights of the data we presented on these two programs.

In December last year, we announced the addition of an open-label part of our -- for our ARMOR Phase 3 registrational study. The open-label part will enroll approximately 150 patients in selected sites.

It is designed to evaluate the treatment response, pharmacokinetics, and safety of twice daily administration BID of Aramchol 300-milligram and explore the kinetics of histological outcome measure as well as several non-invasive tests, including ProC3, ELF, and Fibroscan associated with NASH and fibrosis for treatment duration of 24, 48, and 72 weeks.

In addition, the open-label part includes pre and post-baseline microbiome profiling, which will help us to develop early biomarker for efficacy. We are currently checking the microbiome print of responding patients to Aramchol, which is significantly earlier than the histological response.

The open-label part may start addressing questions that are paramount not only for drug development, but also for subsequent treatment optimization for patients.

Such as, how early can a beneficial effect on fibrosis be observed? Are there subjects that improve with longer duration of therapy? Are there non-invasive tests that correlates or even predict a histological response and others?.

Thank you, Allen. Good morning and thanks for joining our call today. This morning, I will be providing you with our financial results for the fourth quarter and year ended December 31, 2020.

For more information, please refer to our report on Form 20-F filed earlier today with the SEC, which among other things provide a summary of such financial results.

Our net loss for the three and 12 months ended December 31, 2020, totaled $10.3 million and $28.8 million respectively compared with a net loss of $8.3 million and $20.5 million for the corresponding period in 2019.

As a result, our loss per share for the three and 12 months ended December 31, 2020 was $0.48 per share and $1.35 per share as compared $0.39 per share and $0.97 for the corresponding period in 2019. Research and development expenses, three and 12 months ended December 31, 2020, totaled $9 million and $26.1 million.

This compared with $7.4 million and $18.2 million for the corresponding period in 2019. The increase primarily resulted from an increase in clinical trial expenses in connection with the ARMOR study and an increase in drug development expenses in connection with the manufacturing of Aramchol to support our clinical studies. Turning now to G&A.

Our general and administrative expenses for the three and 12 months ended December 31, 2020, are pretty consistent with the corresponding period in 2019. The expenses totaled $1.3 million and $4.1 million respectively, versus $1.3 million and $4.2 million for 2019.

During the three and 12 months ended December 31st 2020, we had a net financial income of $0.1 million and $1.4 million respectively versus $0.3 million and $1.9 million during 2019.

Our cash balance as of December 31st 2020, which includes cash, cash equivalents, restricted cash, short-term deposits and marketable debt securities totaled $51 million. This amount does not include the $17.5 million of net proceeds raised during February in an underwritten public offering and from our ATM equity facility.

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

Question-and:.

Thank you. Thank you. Our first question is coming from the line of Ed Arce with H.C. Wainwright. Please proceed with your question..

Great. Thank you and good morning, everyone. Thanks for this update and congrats on the recent progress.

First question for me is, Allen, if you could remind us of the timeline now as you look to switch in the ARMOR study to the meglumine, beginning with the actual switch of dosing? And then, ultimately, full enrollment and expected data readout? Thank you..

Okay. So, thank you, Ed. So, as I said, we are now expecting to reinitiate the double-blind part of the ARMOR study by Q1, 2022. If all goes well and there's no reason to believe that things -- I mean, as far as we can see everything is going as planned. We are expecting that to enroll 1,000 patients in 18 months. So that will take us to Q3, 2023.

Then there is a -- very much would depend on the open-label study, whether it will be 48 weeks of treatment or 72 weeks of treatment. This data will be able to generate from the open-label kinetics -- efficacy kinetic study. We are still hoping that 48 weeks will be sufficient.

There will be no difference between the 48 weeks and 72 weeks, in terms of efficacy. So that's one year later. So we are talking about, Q2, 2024. So around that time, we should be able to submit the Aramchol for sub-age conditional approval.

Of course, we will continue -- at that time, we will continue the recruitment of the additional 1,000 patients which are needed for the outcome part of the study..

Fantastic. Great. And then a couple of follow-ups as well. Turning to your pipeline candidate Amilo-5MER. Clearly, you're focused on IBD as you just started your Phase 1 this week. But you also mentioned that there is potential given the mechanism for other types of chronic inflammatory conditions.

And I'm wondering if you could describe some of those that you think might be interesting for this compound? And then lastly, how should we think about the level or the pace of the increase of the R&D expense through 2021 given the support to both ARMOR and then the Amilo-5MER development? Thanks..

Okay. So, first, with -- it's the mechanism of action of Amilo-5MER indicates, it is relevant for a number of chronic inflammatory diseases. The one which comes immediately to mind is RA and COVID-19, which is more relevant to nowadays. As we said before, we are looking to develop this compound gradually.

So, the first thing we would like to see is a biomarker in a Phase 1b study. As we've described in our investor -- on our symposium -- on our KOL Symposium a month ago, this study is going to be of 20 patients and it would as earlier disclosed, we're expecting to initiate this study in the second half of this year..

Great, Allen. And if I may squeeze one last one in.

Actually, what I was actually trying to determine a better question really is, is there a budget in mind that you have for the overall ARMOR program in terms of R&D spend?.

It varies with -- there are a number of variables, so it's very difficult. We are definitely talking of south of US$100 million. But it will very much depends on what would be a competitive landscape at that time.

We've seen today that -- again as a reminder, we are 50% of the patients, at least 50% of the patients will be recruited outside the U.S., U.S. patients are the most expensive patients. So 50% would come outside of the U.S., and we have -- we know that on average these are about half or even one-third of the cost of U.S. patients.

The other 50% is -- depends very much on the competitive landscape. I saw it this morning, the news about Novo and Gilead initiating another Phase 2 -- large Phase 2 study for combination. It depends how many of the Phase 2b assets would advance by next year when we start to ramp up the recruitment for the Phase 3, registration part into Phase 3.

So, we still believe that this is just as a reminder the budget for -- that we had so far for the Phase 3 was about $65 million, since these 150 patients that are now in the open-label are not part of the double-blind part. We still have to count the full number of $65 million. But subject to the market conditions that may increase.

In my mind, I have somewhere between $70 million to $80 million, but these are not firm numbers. These are -- these numbers should be validated once we have all 200 centers open and we would like to ensure that recruitment would be on time as planned with 18 months and that may require additional funding..

Great. That’s very helpful, Allen. Thank you so much..

Thank you, Ed..

Our next question is from the line of Steve Seedhouse with Raymond James. Please proceed with your question..

Hey, good morning, everyone. First question I had was just on NASH. And I understand the FDA is open to, or in fact encouraging sponsors to run Phase 3 programs now with histology data in let's say F3 patients, but also looking at F4 patients to collect outcomes data as part of a sort of broader pivotal program.

I'm curious, if that's something you expect to discuss at the Type C meeting that you have scheduled or Galmed's thinking about incorporating F4 patients into a Phase 3 design?.

So yes, Steve, thank you – thank you for the question, Steve. I've seen that also – but this is not part of the guidance we received from the FDA. We are not recruiting F4 patients to the study. Our study population has not changed in the double-blind registrational part. It's F2 and F3 with risk factors.

So it's really – this new proposed structure is not relevant for Galmed..

Okay. Perfect. And then the other question I had on also on NASH was just with respect to Phase 1 studies hepatic impairment, cardiac repolarization. I think there were a few of these that you'd mentioned in the past.

I'm curious, if those are being run with Aramchol meglumine now given the transition of the program?.

So basically, the study, the hepatic impairment has been progressed very well. There was some delay due to COVID-19. But in the recent weeks, we've accelerated – we've already completed the single administrative dose, and we've almost completed the multiple administrative dose both for moderate and mild patients.

Few more patients are needed to be recruited in this severe part. The Aramchol meglumine and Aramchol circulate as same moiety, where is no difference between the two. So, what we've done we have done. And in the future, a study that we have conducted so far will be based on Aramchol.

And new studies like TQT with cardiovascular not sure that we will need, this is another benefit that would come from the open-label study, collecting the data from these 150 patients. Based on this data, we may get an exemption from the TQT study. But future studies of course that are necessary for approval will be done with Aramchol meglumine..

Perfect. Thanks for the clarity, Allen..

Thank you, Steve..

Our next question is from the line of Kristen Luska with Cantor Fitzgerald. Please proceed with your question..

Hi, everyone. Good morning and good afternoon. Thanks for taking the questions. So the first one I had was as it relates to the upcoming ARMOR data, do you think it's possible that this could be presented at the liver meeting during the fourth quarter? And then, can you remind us about the current IPC on Aramchol meglumine.

I know, you recently had a US patent accepted here.

Is it just now that the composition of matter of patents are pending at this time?.

Okay. Thank you, Kristen for your questions. So I – we may be just missing the deadline for AASLD for this because we're expecting the data to come early Q4 and the – I think the cut-off date is September. So I don't think that we'll be able to get – we'll try and get it as a late breaker, but I'm not sure that will be accepted as a late breaker.

But certainly, we are going to communicate this data as soon as we have the -- first moderate diseases in open-label study. So we are accumulating all the data on a regular basis.

So we would try -- and if data would be overwhelming, maybe we will not wait for the 50 patients and report something after 30 patients or so when -- in order to meet the timelines. But I cannot promise that. In terms of the patent, the Aramchol meglumine patent is -- its expiry date is December 2034.

So we are protected before patent extension, before that exclusivity, before any this kind of additional time, we are protected until 2035. This is based on a new patent that was already accepted in the U.S. for low dose administration of Aramchol.

We are still waiting for the composition of matter, patent for Aramchol meglumine to be approved in the US in the same way it was approved in the rest of the world. And I'm sure this will come very soon, but the protection -- the patent protection in the U.S.

is already there from the patent that was accepted on the low dose administration of Aramchol..

Great. Thanks so much.

And then, just on these 50 patients that you've completed enrollment for, could you speak to your level of confidence in collecting all of the key data sets, sometime during the fourth quarter in light of the pandemic? And I know that things have changed quite a bit from the last earnings call, just with the rollout of some of the vaccines..

Yes. We have no -- look, the system here is geared for a large Phase 3 study, a 1,000-patient study. The way we read biopsies with three readers, and all -- and the adjudication, the DMC, I mean, data collection everything is done in a standard of registrational Phase 3 study.

So, we have no problem whatsoever in collecting the data, and I have very high confidence that indeed we will meet these timelines. We are -- in fact, we are seeing a surge in the number of patients that have now been randomized since there’re some restrictions, COVID-19 restrictions have been lifted, so numbers are very encouraging.

Even new recruiters, new screenings are very, very encouraging, the numbers that I've seen in the last two weeks. And please remember that we are operating now in selected sites out of the 200 sites that we have for the double-blind part. We are only operating in 50, 5-0, 50 selected sites, which were less affected by COVID-19 to start with.

So, there's no -- we've been working with these sites now for a-year-and-a-half. And it's a very good collaboration. So I don't see any interference, and I don't see any risk in this reporting of data..

Okay, great to hear. Thank you so much, Allen..

Thank you, Kristen..

Thank you. At this time, I will turn the call over to Allen Baharaff for closing remarks..

I would like to thank you all for joining the call today. As always, we are always available for follow-up calls and e-mails. And if you have any additional information that you would require, both on Aramchol, but more specifically on Amilo-5MER, which is an exciting time in Galmed times, having a new compound now getting into the clinic.

And looking forward and keep safe, and looking forward to talking to you on the next investor call..

Thank you. This will conclude today's conference. You may disconnect your lines at this time. And thank you for your participation..