Good day and welcome to Galmed conference call to discuss financial results for the second quarter 2021. 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 the expectations of the management of today and actual results, trends, timelines or projections in relation to our financial position and projected development program 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 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 obligation to update any forward looking statements or information which speak as of their respective dates only. I would now like to turn the conference over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead..

Thank you Emma. Good morning and thank you for joining us on today's conference call. I am pleased to be here today with out 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 to reporter you on our financial results for the second quarter of 2021. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.

Let me start with a news that we reported earlier this week announcing FDA agreement with our plan to use Aramchol meglumine in the randomized double-blind placebo-controlled part of the Phase 3 ARMOR study.

In essence, the FDA agreed that we can proceed with our proposed clinical studies with Aramchol meglumine in lieu of Aramchol free acid without the need to repeat any nonclinical or clinical studies.

As you may recall, administration of administration of Aramchol meglumine doubled the systemic exposure of Aramchol compared with that after dosing Aramchol free acid.

Thus, once daily (QD) 383mg Aramchol meglumine oral dosage corresponds to that obtained with the existing twice daily (BID) 300mg Aramchol free acid form which is currently being evaluated in the Phase 3 ARMOR study.

As a reminder, in addition to its longer IP protection until December 2034, the transition to Aramchol meglumine will benefit our patients in two meaningful ways.

The first, achieving the required exposure with 50% less API means that we can move back to once-daily regimen with a potential improvement in convenience and adherence in our Phase 3 registrational part.

The second benefit, is that we can potentially significantly reduce our target marketing price once Aramchol is approved via the potential saving of approximately 50% of cost of goods. We consider the FDA agreement as a significant validation of our consistent efforts to maximize the potential of Aramchol in developing a NASH treatment.

The transition to Aramchol meglumine is the final step in our drug product optimization which included dose optimization, higher exposure treatment, treatment duration of optimization, 24, 48 and 72 weeks and and compound optimization, i.e.

sole form, which can be given QB and allows longer patent protection Now let me update you on the open label part of our ARMOR Phase 3 study. As you may recall, the open label part will provide us highly valuable data on the optimization of treatment duration and potential noninvasive techniques associated with NAST and fibrosis.

This is aimed at derisking our clinical development plan while increasing the probability of success of Aramchol's ARMOR refistrational part of the ARMOR study.

Results from approximately one-third of the study population, about 50 subjects, at the open label part of our ARMOR Phase 3 study that has completed the post-baseline liver biopsy are expected to be available in Q4 2021 as planned. Now shifting gear to our pipeline compound, Amilo-5MER.

As a brief reminder, Amilo-5MER is a highly potent inhibitor for chronic inflammation currently under development for IBD with targeted and specific mechanism of action. Amilo-5MER down-regulates multiple pro-inflammatory cytokines secretion.

In pre-clinical studies, Amilo-5MER demonstrated into serums, with Serum Amyloid A, Polymerization and aggregation, which is essential for the activity of Serum Amyloid A. Aggregated Serum Amyloid A is the main code in the biomarker of chronic inflammation.

Amilo-5MER has a unique mode of action upstream to all pro-inflammatory cytokine production, which are currently being used in the clinical trials and in clinical use. Earlier in Q2, we announced the first dosing of a first-in-human Phase 1 clinical trial of Amilo-5MER for single and multiple dosing.

I am happy to report to you today, that we completed Phase 1 and dosing and topline data is expected later this quarter. We are currently developing Amilo-5MER as an oral treatment for mild to moderate ulcerative colitis.

Since its mechanism of action is relevant to other chronic inflammatory diseases, we are also looking at additional indication and are currently developing formulations accordingly. Before I conclude, I would like you to know that we are planning to virtually attend three investor's conferences in the coming quarter.

The first is Canaccord Annual Growth Conference to be held next week on August 10 to 12, 2021. The second is the HC Wainwright Annual Global Investor Conference to be held on September 13 to 15, 2021. And lastly, the Cantor Global Healthcare Conference to be held on September 27 to 30, 2021.

We will be happy to schedule one-on-one meetings during these events. Now let me transfer the call to our CFO, Yohai Stenzler..

Thank you Allen. Good morning and thanks for joining our call today. This morning, I would be providing you with our financial results for the second quarter ended June 30, 2021. For more information, please refer to our 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 of 2021, our net loss totaled $8.4 million or $0.33 per share, compared with a net loss of $5.5 million or $0.26 per share for the second quarter in 2020. Research and development expenses totaled $7 million for the second quarter of, 2021,. This compares with to $5 million for the second quarter in 2020.

The increase resulted primarily from an increase in clinical trial expenses in connection with the ARMOR trial. Turning now to G&A. Our general and administrative expenses for the quarter totaled $1.4 million compared with $0.8 million for the corresponding period in 2020.

The increase resulted primarily from an increase in the cost of our D&O insurance policy premium as well as from increase in salaries and benefits.

Our cash balance as of June 30, 2021 which includes cash, cash equivalents, restricted cash, short term deposits and marketable securities totaled $51.2 million compared with $51 million on December 31, 2020. With that said, operator, please provide instructions for the Q&A portion of our call..

. We will now take our first question from Edward Nash with Canaccord Genuity. Please go ahead. Your line is open..

Great. Thank you very much and congratulations guys in getting the go ahead with Aramchol meglumine. That's a huge plus for you guys, I know. So I just wanted to understand and I thank you for that review on the Phase 3 design, but just wanted to understand again, we are going to be getting those first 50 patients in the fourth quarter of this year.

Those patients will be the 24 week.

Is that correct? And then the next 50 will be the 48? And the next 50, 72 weeks? Is that correct?.

No. Hi. Good morning. No, this is not correct. I mean both patient, the patients are blinded randomized into the three groups. So in this first 50 patients, we will have about half of them are going to be 24 weeks and the rest are 48 and 72 week biopsies. These operations that transitioned from the double blind part..

Got it. Okay...

So each 50 group is blinded and mix of the populations of 24, 48 and 72..

Perfect. Got it. Okay. Great. And then for the analysis, it still go forward in front of the FDA. Obviously this will give you additional from that safety data but obviously for powering and accelerated approval submission, that will all be from, clearly, the blind apart where you will only be using the Aramchol meglumine.

Correct?.

Yes. Indeed. So as you know, the study is about efficacy kinetics. We are using the study already for really main reasons. One, for safety, which support the safety data of our NDA. Second is to learn what is the optimal treatment duration, whether it's 24, 48 or 72, there is a difference and if there is an association between the two.

And thirdly is the powering of the study since the dose is much higher, if to compare, initially ARMOR study was powered based on the Phase 2b study. Now we are giving twice daily, which is 50 percent higher exposure.

We are expecting that the effect size will change accordingly and hence the powering of the study and the number of patients will change accordingly..

Perfect. Thank you guys so much..

Thank you..

Thank you. We will now take our next question from Kristen Kluska from Cantor Fitzgerald. please go ahead. Your line is open..

Hi. Good morning Allen and team. Thanks for taking my questions and let me also add my congratulations to you on the outcome of this recent meeting with the FDA.

First, I wanted to ask if you could provide us with more details around the planned limited pharmacology studies and associated timing here? And whether you still think the end of the first quarter of 2022 is a good time point to start the next trial?.

So I will let Liat take that. Hello Kristen. Good morning. Thank you..

Hi Kristen. How are you doing? So we offered the FDA three very reasonable as far as clinical pharmacology studies. The first one is going to do with does range finding. Our relevant dose is twice daily 300mg Aramchol acid.

And we will do dose range finding to match exactly the exposure of the 300 milligrams twice daily that we have which has, as Allen alluded, higher exposure by 53% than the ARREST. The second study that we offered is food effects. This is quite clear. And the final one is, availability of the bioequivalence which was not liked.

So it's just regular, when you transfer from one entity to another when you expect the exposure, you just have to match the exposure through the food effects and do one dose and match it with a twice daily, which is currently new.

So it's a quite regular clinical pharmacology and it has all the other package, which we did thus far is fully acknowledged by the regulators for further development..

Now, as to your question about the timelines, it is very much dependent on the formulation. We are ready. All is set and ready.

And the data, the very relevant data that we get at the end of the year should allow us to better design the protocol amendments and decide on the, as I said before, duration and powering of the statistical analysis plan of this study.

So this is why and everything is done with the CMO in order to produce the formulation on time to initiate the double blind part of the study with Aramchol meglumine.

So at the moment, we are still clear guidance about, once we received the guidance from the FDA, we immediately had discussions with our drug product manufacturer to initiate the process and complete the formulation. We will keep you updated if there would be any delays.

Whether it would click into Q2 from Q1, we would only know once we have more visibility as to the formulation development..

Thanks. I appreciate that.

And now that you have the official green light here from the agency, just as it relates to some of your ongoing collaborations, particularly the combination study with a ASC41, will you also look in the future to use meglumine forward here? And then as it relates, you have made multiple comments in the past about using your therapy potentially as a backbone.

But how might this data that we are getting in the fourth quarter here help you determine future plans as it relates to evaluating different types of combinations as well?.

Absolutely. I mean from now onwards, we are using Aramchol meglumine. So first will be to incorporate Aramchol meglumine in the open label study. And I hope that this would be done already by the end of the first quarter of 2022.

And then all other combination studies whether it be ASC41 or the microbiome or others that we have in plan and we have communicated are going to be done together with Aramchol meglumine. This is the product that we are taking forward. It's an improved product and we would like all our patients to benefit from this improved product..

Okay. Thanks. I appreciate that. And then my last question for you.

Now that this agreement is in place and you have an extended IP portfolio, has this changed how you might think about the opportunity to commercialize? Specifically, whether you would look to pursue partners in certain geographies again now that because the IP portfolio has strengthened? Thanks again..

Yes. We have always and openly said, we are working under the assumption that we are developing Aramchol meglumine and taking it into Phase 3. Our door is open. And we are definitely looking for global, geographical, joint venture, any form of collaboration.

I think that we have built a very nice job package for any pharmaceutical companies that would look at the data because on the one hand, we have optimized the API and the drug product. We did all the heavy lifting in terms of their getting the regulation from all the way from Australia to Brazil to China, U.S, of course, Middle East, Korea, whatever.

I mean we were looking at 18 countries, agreements with more than 250 sites around the globe, around five continents.

So all this heavy lifting together with their optimization of the drug product is on the one hand and on the other hand giving the partner an opportunity to influence the protocol because I am sure that everyone wants to make and to review before you initiate a double blind part, they want to make their own adjustments and fine tuning.

And we are very open to that. So between today and until we start the double blind part of the study, we are open for discussion for any commercial discussion..

Thank you. We will now take our next question from Steve Seedhouse from Raymond James. Please go ahead. Your line is open..

Yes. Hi. This is a Timur Ivannikov, on for Steve Seedhouse. I would also like to congratulate you on the green light for Aramchol meglumine.

And just to make sure I understood correctly, so the main gatekeeper that's holding you back before you could start a randomized Phase 3 study, so you were talking about material needing to be manufactured but you also obviously need to see some label Aramchol data.

So could you just talk about what kind of data you would need to see before you can proceed with a randomized study? Sort of what is the benchmark for that data? Thank you..

So thank you for the question because I think this is a very important issue. Here at Galmed, we are looking at the data very carefully, not only in our data, on the competitive landscape data as well.

And we have to ensure that our data is in line and what is the target product profile of Aramchol meglumine is in line of the development in this space. We are very much aware of the recent NASH study, NASH resolution studies and datas whether it's semaglutide or other compounds that have a very significant effect on NASH resolution.

On the other hand, the very mild effect that we will observe on fibrosis from obeticholic acid. So altogether, we are trying to give the best package. With the best package, the benefit is precious to our patients that will give both NASH resolution, fibrosis improvement and safety.

And this is the kind of the data that we anticipate to see from the open label study. Maybe the first 50 patients will not be enough. Maybe we will need to wait for the 100 or 150. We are hoping that there will be a signal, strong enough signal, with the first 50 patients.

But we will look at the data and we say we want to wait another quarter or another few quarters until we see 100 patients and then decide on, we will embark on this large extensive Phase 3 study, double blind part of the study, we will definitely do that.

This is because I think we have the responsibility to all patients and to our investors and we want to make sure that once we go into that route of initiating this double blind part of the study, we have significantly derisked the program and increase the probability of success..

I think that we planned the two to cross. So we developed Aramchol meglumine, we gave it to formulation. We are doing the best formulation for Aramchol meglumine. And at the same time, arrive from the kinetics efficacy. And the date would somehow approximately will cross.

And we will have finally final formulation, stability and everything that you have with Aramchol meglumine, at that time, we will probably have the data on the kinetics so that we will a full, very good design of Phase 3 classical trial, the regulatory clinical trial..

Okay. Thank you for that. And can you also talk about the cadence of additional cohorts from the open label study? I think if I remember, you were saying every six months. I am not sure your next cohort data will still be around mid 2022 or is that timing different? Thank you..

No. This is correct. The cohort is anticipated by the second quarter of 2022. So this the 100 patients. So the first 40 and then another 50 by mid 2022..

Okay. Great. And then one question for another Amilo-5MER. So I think you talked about going after oral and subcu for Phase 1b for different indications. Can you just talk about, in terms of your oral formulation, still systemically distributed versus minimally absorbed.

And just to clarify, Phase Ia, that's oral only, right?.

So the Phase 1a was done subcutaneous and with healthy volunteers. And now we are working on two types of formulations. We are working on oral local formulation which is for ulcerative colitis for the GI tract.

So we are working with a specific formulation but will to and in the right place where we want it to be open and create a local effect in the GI tract. This formulation is designed for a Phase 2a study for ulcerative colitis patients. At the same time, we are also working with the localized formulation.

This would be injectable again for different indications, probably RA, which will be injectable to the joint. This formulation, we may also look at other indication. But it's too early to talk about..

Okay. Thanks very much..

Thank you..

Thank you. That will complete our Q&A section for today's call. I will now turn the call back to Allen Baharaff for any closing remarks..

So thank you all for joining our call today. I hope that we will be able to come with some more good news in this coming quarter and eventually of course to communicate this open level part of the study.

Again, we would like to reiterate our participation in the three conferences, in that Canaccord Annual Growth Conference, at HC Wainwright Conference and the Cantor Conference which we welcome any questions and would like very much to meet as hat many of view and of course hope to see you this time probably virtually also at AASLD where we have submitted a number of abstracts which I hope will be accepted and this would be an additional catalyst for our activity.

Thank you..

Ladies and gentlemen, that will conclude today's conference. You may now all disconnect..