Good morning ladies and gentlemen and welcome to the 2016 Year-End Galectin Therapeutics Business Update conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. If anyone should require operator assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the turn over to Mr. Jack Callicut of Galectin Therapeutics.

Thank you and good morning. I’m Jack Callicut, Chief Financial Officer for Galectin Therapeutics, and I’d like to welcome you to our business update conference call for the fourth quarter and year end of 2016. These calls are intended to provide a corporate update and to discuss the company’s financial results. Today we’ll cover several items that were included in the press release that we issued earlier this morning. Joining me this morning is Dr. Peter Traber, our President, Chief Executive Officer and Chief Medical Officer. Before I turn the call over to Peter, I’d like to remind you that certain comments made during this conference call, particularly those anticipating our future financial condition and results of operations, results of our clinical trials and our strategic plans constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements by their very nature are subject to certain risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to in such statements. These risks and other risks are discussed in our Securities and Exchange Commission filings, including our Form 10-K which was also filed earlier this morning. A transcript of this presentation will be available on our website. I would now like to turn the call over to Dr. Traber.

Thank you, Jack. Good morning and thank you to all for joining us. Today I will provide a comprehensive view of the state of the company and its drug development programs. We achieved a number of significant milestones in 2016 in the development of our lead compound, GR-MD-02, and we anticipate reporting critical clinical data in our NASH-CX trial in December 2017. Before recapping the company’s progress, our plans for the upcoming year and opening this call to questions, let me first turn the call back over to Jack to cover our financial position and results. Jack?

Thanks Peter. For the year ended December 31, 2016, the company reported a net loss applicable to common shareholders of $22.4 million or $0.76 per share compared with a net loss applicable to common shareholders of $21.1 million or $0.88 per share for 2015. The increased net loss is largely due to higher research and development expenses primarily related to our Phase II clinical program. Research and development expenses for 2016 were $15.3 million compared with $13.1 million for 2015. Again, the increase primarily relates to costs for the NASH-CX Phase II clinical trial, partially offset by a lower preclinical cost. General and administrative expenses for 2016 was $6.2 million compared with $7 million for 2015, primarily due to a decrease in stock-based compensation. As of December 31, 2016, the company had $15.4 million of non-restricted cash and cash equivalents. In January and February 2017, the company raised a total of $1.5 million in net proceeds from the issuance of common stock. The company believes that it has sufficient cash to fund currently planned operations in research and development activities through December 31, 2017. Peter?

Thank you, Jack, for that recap of the finances. In setting the stage for this update, I will start with some history. Since taking the helm at Galectin in 2011, my goal has been to build shareholder value by realizing the tremendous potential for targeting galectin proteins in many human diseases. That’s because the galectin protein is associated with inflammation, scarring, and many other processes that are involved in the development of multiple diseases. There is a growing body of research demonstrating that galectin-3 is increased and involved in the development of many types of chronic human diseases, including liver, lung, kidney and heart fibrosis, most cancers, serious skin diseases, diabetes, atherosclerosis, and more. In 2011, we began testing various animal disease models that represented large unmet medical needs using two different carbohydrate-based drugs that bind to galectin-3. One drug was GM-CT-01 or Davanat, which was previously in development by the company for other purposes, and a new drug candidate we named GR-MD-02. Both of these drugs were tested in each animal model of disease. We started with models of fibrosis because it had been shown that galectin-3 was crucial for the development of fibrosis, and a therapy that can reduce or reverse fibrosis would address a very large group of disorders that are responsible for a major burden of disease. One of the two compounds, GR-MD-02 was discovered to have a more profound effect on fibrosis of the liver, kidney and lung in these animal experiments. As a result of this more profound effect on fibrosis, GR-MD-02 rather than GM-CT-01 has been the focus of our efforts. It is important to note that we have strong intellectual property claims for our lead compound and it uses with 15 granted patents in the United States, 24 granted patents outside the…

[Operator instructions] Our first question comes from the line of Ed Arce of HC Wainwright. Your line is now open.

Thank you. Hi Peter, it’s good to talk to you again.

Yes, hi Ed.

So just a few questions. First, a couple on NASH-CX. I just wanted to confirm, I believe you talked about this before, but as you report the data and get the full results, you will then, I assume, evaluate whether to pursue either a cohort that decreases HVPG to 10 millimeters of mercury, or the other that stops the progression to that level. And then the other question is the last update we had on the number of dropouts was five patients. I know that that’s still below the level that you assumed through your design. I’m just wondering if you had an update on that, and then I have a couple follow-ups.

Yes, let me answer that second question first, because it’s straightforward. We have had a total of 10 dropouts out of 162, which is about a 6% rate. We had anticipated at the beginning of the trial that there would be a 25% dropout rate, so we’re still well below the rate that we had anticipated for the trial. Let me go back to your first question, which is a complicated one in a number of aspects, but let me sort this out a little bit for you and the other callers. First of all, portal hypertension, or high blood pressure in the portal vein, is defined as a pressure above 5 millimeters of mercury. Clinically significant portal hypertension is defined at 10 millimeters of mercury, because above 10 millimeters of mercury is when complications begin to occur, such as the development of esophageal varices. We designed the clinical trial to enroll patients that had a mean portal pressure, or would have been expected to have a mean portal pressure between 12 and 15 millimeters of mercury, and without telling you the exact number, which we haven’t revealed, we were successful in enrolling a group of patients with a mean HVPG or portal pressure between 12 and 15 millimeters of mercury. So the mean patients have clinically significant portal hypertension, but not so severe that they’re in the end stage. Once we see the results of this trial on the mean change in portal pressure, we will also look at different groups of patients, those that started below 10 and those that started above, which were about two-thirds of the patients, and we will be able to determine then whether we--you know, what the next design of a clinical trial might look like based on the analysis of those results. But we are pleased that we were able to enrol a patient population with clinically significant portal hypertension, and we know that a 10 to 20% reduction in portal hypertension has clinically important outcome results in patients, so that’s why we’re targeting, or our statistical analysis targets 2 millimeter of mercury drop in patients that have above 12 millimeters of mercury of portal hypertension. Ed, I’m not sure if that fully answered your question.

Yes, it does. I just wanted to confirm that you would be looking at both sets of patients, those below and above that threshold of 10 millimeters of mercury, and it sounds like you’ve got a one-third to two-third split, so that’s helpful. You had also mentioned the other two programs that are focused on NASH cirrhosis. I was just wondering if you had any thoughts you’d care to share about how you view those programs and the approaches that they have.

Yes, the other two programs, one is a pan caspase inhibitor from Conatus, who just started a clinical trial enrolling even more severe patients with portal hypertension, and the second program is a Gilead clinical trial that is using an ASK-1 inhibitor, and they are enrolling a large clinical trial. Both of these clinical trials will not read out until long after ours because they’ve just been initiated.

Okay, then a couple last follow-ups. Do you expect to have any presence at EASL next month, and also I guess the last question for Jack is how should we think about operating expenses for 2017, just perhaps even just qualitatively? Thanks.

I will answer the EASL question. We will be attending EASL. We do have a late-breaking abstract at EASL, which is focused on an analysis of the methacetin breath test that we’re doing in conjunction with Exalenz. The presentation will be regarding the baseline values of the 13C-methacetin breath test as it correlates with HVPG, so we will be reporting data at EASL from that. Jack, you want to--?

Yes, as far as research and development expenses as well as our G&A expenses, we think those will be similar to 2016, and as we’ve mentioned, we’ve got cash currently to f fund operations through the end of the year, but we think those expenses will be about the same as they were last year.

Okay, great. Thank you, guys.

Thanks.

Thank you. Our next question comes from the line of Thomas Yip of FBR. Your line is now open.

Hi, good morning everyone. Thank you for taking our questions. Just asking a couple of quick questions for Vernon. We see that you have a large number of other galectin inhibitor candidates. Can you outline some on the activities that you have ongoing and when should we expect to see some early [indiscernible] presentations or medical conference data for those compounds?

Yes, thank you Thomas, and good to talk to you and Vernon. We have a program in discovery for identifying additional galectin-3 and other galectin inhibitors. We have not announced any information regarding those additional galectin inhibitors, but that program is ongoing, and when we have some animal data or additional data regarding those, we will communicate them. But we don’t have timing of that at this point. Thanks, Thomas.

Okay, so I guess from a bigger picture standpoint, if you see similar level of activity compared to GR-MD-02, I mean obviously they’re still in the preclinical stage, what are your plans to monetize them? Have you given any thought about it so far?

Yes, well the GR-MD-02, as you know, is a parenteral IV administered drug. The drugs that we are working on discovery would have the potential for other routes of administration, including oral administration. Additionally, we are working on higher potency and more specificity with regard to galectin-3 inhibition.

Okay, that sounds good. We’ll just have to keep our eyes out for that. I guess I’ll switch gears a little bit, and I have a question about your pipeline in oncology. So given the IST that you have right now with Providence, what exactly do you need to file the IND and to go into Phase II clinical trials? Do you need to license it back from Providence or do you have the rights to that compound?

No, we have exclusive rights to GR-MD-02, and while we have pending intellectual property jointly with Providence with regard to the method of use, we have exclusive license to that as well, so there are no licensing or intellectual property issues there. The decision to go to a Phase II is going to be related, as I mentioned, to the results of ascending doses of GR-MD-02 in combination with pembrolizumab as compared to historical controls. With a significant difference in either the response or immunologic markers, which we are measuring as well, that would then lead us to a decision point about going to a Phase II control trial.

Okay, that sounds good. Thanks for the clarity. I guess one final question regarding the data that you’ve seen so far in atopic dermatitis. So you’ve outlined earlier that you plan to license that indication or enter into partnerships, so can you describe just on a very top level what would an ideal partnership look like, what specific characteristics will you be looking for?

Yes, it’s a good question. As I mentioned in the review, because it’s the same compound as we’re using in NASH cirrhosis, whatever deal we did with a partner around atopic dermatitis or a skin disease would have to not impair--protect the very large potential of the deal in NASH. So we are focusing on international companies rather than multinational or U.S. companies, skin-specific companies, and companies where we might do a deal that would not impeded a subsequent deal in NASH. So that’s kind of the focus of where we’re looking at this point.

Okay, that sounds good. Thank you again for taking my questions, and we’ll look forward to the progress this year and look forward to the CX data later this year.

Thank you, Thomas.

Thank you. Our next question comes from the line of Len Levi [ph] of Dotdot [ph] Partners. Your line is now open.

Thank you very much. Peter, as I speak with clinicians about how they think the NASH market will evolve with therapeutics over time, they’re drawing a parallel, albeit the sizes are different, to the hep-C market where they’re of the opinion that insurers will likely approve treatment for those patients with F3, F4 fibrosis cirrhosis initially because they’re most at risk for having complications. A lot of the NASH targets that other companies are developing seem to be aimed at earlier stages when the progression hasn’t yet gone as far and therefore the likelihood possibly of complications isn’t as great. I was just wondering if you could give us your thoughts on what’s the progression in years from NAFLD to NASH to cirrhosis and beyond is, and what indications, if any, you have where along that timeline you think that the initial treatments will be authorized by insurers or docs will want patients treated.

Yes Len, I think that’s an insightful question and also mirrors the discussions that we’ve had with thought leaders in NASH and liver disease. The progression from early fatty liver disease to cirrhosis is on the order of 20 years, so it progresses relatively slowly. There are some patients that may progress faster and so forth, but you can think about a 20-year period. Once you develop cirrhosis, it’s still about five years to developing complications of cirrhosis, and then a year or two before death or liver transplant. So we are focused on those will well compensated cirrhosis in that time frame where you have about five years or so to reverse or stave off the progression of fibrosis so that it doesn’t get to cirrhosis complications. It’s very clear that that target is going to be more accepted by both physicians, insurers and governments because you’re much closer to an outcome, a serious outcome, whereas in early stages of NASH in long-term follow-up studies that have been done, one study that was done in Sweden where they followed patients for 33 years, those with F1 or F2, Stage 1 or Stage 2 fibrosis when followed for 33 years had no difference in mortality or morbidity with relationship to a reference group. So an argument could be made that those patients with early disease, we can’t predict who is going to progress and they may not have any outcome problems, so that governments, insurers and physicians are going to be more reluctant to treat somebody for decades with the early form of the disease, particularly when lifestyle changes such as weight loss, exercise and so forth can make a big impact at that time. So I do think that it’s the late stage fibrosis that the most important approach to targeting this disease. Thanks Len.

Thank you.

Thank you. Our next question comes from the line of Sa’ar Yaniv of Roth Capital. Your line is now open. Sa’ar Yaniv: Hi, good morning guys. Thank you so much for taking my call. I appreciate it.

Hi Sa’ar. Sa’ar Yaniv: I had a couple questions about the cirrhosis study and then some other ones. First of all, are you--it seems that the completed enrollment of the study was in last August, so should we expect completion of the last patient in the study around August or September of this year?

Yes, that’s correct. Sa’ar Yaniv: Okay, so we’re looking at about two to two and a half months for you to compile all the data for the study?

Yes. Just to follow up on that a bit, Sa’ar, so the last infusion--after the last infusion, two weeks later the patient gets their final HVPG and other testing, and their last visit is about a month after that, so there’s about six weeks of additional data gathering before the database can be locked, so you can think of mid-October as being database lock with then analysis and data report in December. Sa’ar Yaniv: Okay, sounds good. You’re not planning on having any interim analysis for safety or futility in the study?

We have three scheduled safety interim analyses done by an independent drug safety monitoring board. Two of those have already been completed and there’s been no safety signals. The third and final DSMB before the end of the study will be in June time frame, so we will--there are safety monitoring analyses, but no interim efficacy analysis until the final patient and the database lock. Sa’ar Yaniv: Okay, great. You mentioned earlier that you had expected in the design to have a 25% dropout rate. It seems a little high, and I wanted to know what was the reason for such high expectations for dropout?

It’s a historical rate. Previous companies that have done clinical trials with patients with cirrhosis doing multiple procedures, such as the HVPG and liver biopsy, have had rates as high as 25% dropout, so when we were designing this study, it was the recommendation of KOLs and our CRO and the FDA, in fact, recommended that a dropout rate of 25% would not be unreasonable. We had originally estimated lower than that, but it was really the FDA questioning us about the size of the dropout rate, so we planned for 25% but were pleased to see that it’s running around 6%. Sa’ar Yaniv: Okay, that’s very helpful, thank you. The last question about the study, are you looking at any pre-specified sub-group analyses in the study? So you mentioned, for example, the HVPG rates above 5 and above 10, and then the 12 to 15 millimeter Hg. Are you looking at different groups there?

Yes, we have pre-specified analyses from looking at 5 to 10, 10 to 15, 15 and above, so we do have--as well as above and below 10, so we have pre-specified sub-group analyses as well. Sa’ar Yaniv: Okay. One quick question with the NASH fibrosis study, you announced the results in September 2016, I believe. What’s the status of GR-MD-02 in NASH?

Well, we are--that study, as you know, is in NASH with Stage 3 fibrosis, and in that short evaluation we did not see a difference in non-invasive testing. The result--that study was twofold: one, to evaluate non-invasive tests, and two, to see if there was any effect in a short-term therapy. We don’t have any plans on doing additional trials in non-cirrhotic NASH at this point. Sa’ar Yaniv: Okay, so now the program is focused only on NASH cirrhosis?

Yes, that’s correct. Sa’ar Yaniv: Okay, and what about the psoriasis program? What’s the plan in that program? Are you only looking to go forward with a partner, as you suggested earlier, or will you consider taking that forward by yourself?

Well, we will consider taking forward by ourselves the atopic dermatitis findings because as I mentioned, the market is much less mature, there hasn’t been a drug approved in 30 years in atopic dermatitis, and so we see the opportunity there as greater than psoriasis. But we would be willing to move both forward with a partner, depending on those discussions. Sa’ar Yaniv: And just to be clear, there are three patients in the atopic dermatitis study?

Yes, just three patients, investigator initiated Sa’ar Yaniv: So is there a plan to do a slightly larger study?

Yes, almost any study would be slightly larger than three! We are exploring those options at the present time. We haven’t made a decision on initiating a new trial, and it would have to come with funding for supporting that. Sa’ar Yaniv: Okay, and then the final question, if you don’t mind, do you have any plans on publishing any of the data that you’ve announced recently from NASH, from the psoriasis data in August, I think you have the NASH data in September, the atopic dermatitis? Any plans on conferences or scientific publications?

The psoriasis data was presented by the principal investigator at an academic conference, Maui Dermatology just this past week, and we’re preparing a publication of that information, and we will be publishing--we’re preparing a publication for the NASH FX trial. The atopic dermatitis, we may present that at a meeting, but we don’t have plans right now for publishing that. Sa’ar Yaniv: Okay, but you said for the NASH, you’re looking to publish that in a scientific journal?

Yes. Sa’ar Yaniv: Any plans on presenting that at any of the upcoming conferences, any upcoming scientific conferences or meetings?

No, we’re not presenting the data at the upcoming EASL meeting, but we are preparing a manuscript. Sa’ar Yaniv: Okay, great. Thank you so much for taking my questions.

Thank you, Sa’ar.

Thank you. At this time the question and answer session is completed. I will now turn the call back over to Dr. Traber for final remarks.

We thank you very much for your attention and for the excellent questions, and we look forward to delivering on the promise of the therapy of GR-MD-02 during the course of this year. Thank you very much for your attention.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.