Good day, everyone, and welcome to the Galmed Pharmaceuticals first quarter 2016 earnings call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Josh Blacher, Chief Financial Officer. Please go ahead.

Thank you, Sharlon. Good morning and thank you, everyone, for joining us on today’s conference call. I’m pleased to be here today with President and CEO, Allen Baharaff, to report to you on our financial results for the first quarter of 2016 and to provide you with an update on our clinical development program. As always, we will be happy to take questions you may have at the conclusion of our prepared remarks. 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 timeline and expectations with respect to our regulatory and clinical development programs as well as other statements that are not statements of historical fact are related to future events. These statements are based on the beliefs and expectations of management as of today. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by the forward-looking statements on today’s call, including the risks and uncertainties disclosed under the heading Risk Factors in our annual report on Form 20-F filed with the SEC and the risks and uncertainties included on our 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. This morning, I will be providing you with our financial results for the quarter ended March 31, 2016. For more information, please refer to our quarterly report on Form 6-K filed earlier today with the SEC, which, among other things, provides a summary of such financial results. For the first quarter 2016, our net loss totaled $4.0 million or $0.36 per share compared with a net loss of $2.5 million or $0.22…

Thanks, Josh. Good morning and thank you all for joining us today. As always, I would like to start by providing you with a detailed update concerning the status of the ARREST Study. As you can see from the data we provided in our press release, we have now screened over 575 subjects for the ARREST Study, a 37% increase since our last public disclosure on March 22, 2016. As of yesterday, May 16, 2016, we had randomized 107 patients, a 43% increase since March 22, 2016 and have another six subjects who are eligible to be randomized. In April alone, we screened nearly 100 subjects, a 40% increase from March. In March, we screened 70 subjects. In addition, 81 subjects are currently within the screening process, which normally takes between six to eight weeks. Let me turn now to the breakdown of the study’s clinical sites. In the United States, we have 14 sites actively recruiting, which includes one additional site since March 31. Five additional sites are expected to be activated in the coming months. In Italy, three new sites have been activated since March 31 and 11 additional sites are expected to be activated in the coming months. In Germany, two new sites have been activated since March 31 and we currently expect that four additional sites will be activated in the next couple of months. We also expect that 12 additional sites will be activated in other European countries and Mexico in the next couple of months. Again, there is a ramp-up period between when a site is officially activated until when we actually begin seeing subjects being screened. To sum up, we anticipate having a total of 38 new sites in the next couple of months to support our second wave of recruitment, which will…

[Operator Instructions] We’ll have our first question from Jason Kolbert with Maxim.

Hi, guys. Congratulations on some great enrollment numbers and doing it very inexpensively. Help me understand how your expenses might track for the next year going forward and help me understand – I’m amazed you’ve enrolled a lot of patients and you haven’t spent a lot of money. Have you put some thought into what the enrollment numbers might look like as we move towards the pivotal program? Thanks.

Sure. Thanks for the question, Jason. We have publicly disclosed that we expect a current annual cash burn rate of about $12 million. That may be a little bit lumpy, but we’re going to try very hard to stick to it. We know what we’ve budgeted and we remain – this is a part of our DNA and it’s important to understand this. We’re spending money on clinical and non-clinical development and minimizing, to the greatest extent possible, personnel-related expenses. Remind me of the second part of your question, Jason?

Well, if you’re able to do this at a Phase II clinical trial, could you do the same thing in a pivotal trial? Because when I look at a NASH pivotal trial and I think of clinical expenses and global development and I think of a company like Pfizer, I think like $50 million. So I’m amazed at what you’re doing so inexpensively and I’m wondering if you are not thinking the same way, which is, what do you think the pivotal program might cost?

Okay. Jason, thank you for the call and hi. To start, this is really the core competence. And I would say, the beauty of operating from Israel is that the costs are just a fraction, sometimes a tenth of the cost that you are used to see in the US. Obviously, numbers will be different and we assume that between 30% to 40% of patients for the pivotal study will come from the US. And in the US, we see that the cost per patient is about $100,000 and compared to $10,000 that you see in Israel and $12,000 to $15,000 in Europe. I anticipate that the cost of the pivotal study will be somewhere between $50 million to $75 million, again, depends on the geographic – the breakdown of the different – of the population. But we certainly hope that we can be more competitive. And having now the sites operating – more than 80 sites participating in the study in ten countries, or even 11 countries, we believe that we would be able to maintain the same cost structure for the pivotal study and be much more efficient than what is usually seen, i.e., south of the $100 million which is anticipated for our Phase III study.

Congratulations. You’re really executing on exactly what you said you would do in the IPO. Really appreciate it. Thank you.

Thank you, Jason.

We’ll go next to Edward Nash, SunTrust.

Hey, guys. Thanks for taking the questions and congrats on your progress. This is Mike Guo on for Edward. So could you remind us the reasons for screen failure please? Is there a change of the screening rate? Because if we’re not mistaken, the failure rate was somehow in the 40% to 50% rate a couple of quarters ago. I have two follow-up questions regarding the combo trial please.

Okay. Thank you. Hi, Mike. Well, first of all, the failure rate has not changed. This is actually – we’ve been in touch with the pathologists and investigators of other NASH studies, the two other Phase IIb studies and certainly the ongoing pivotal study. We’re not experiencing a different screen failure rate than we see in other studies. I think the difference is between commercial and academic centers. These academic centers where they’re liver centers and the principal investigators are more – I wouldn’t say professional, but they know their patients more intimately. The screening failure is much lower. Based on the numbers we mentioned, maybe 50% or sometimes even 40%. So we see a better hit ratio. In commercial centers, when you start with the kind of the cold call, we see a failure of 25% to 30%. But, in general, these are the numbers. So these are the numbers that [indiscernible] study for. This is the number that we are working on. Nothing has changed.

Great. So for the combo trial, have you investigated Aramchol’s effect in combo with the Vitamin D animal models? And also, of all the NASH patients, what percentage of these patients have Vitamin D deficiency, please?

Okay. So first of all, very high. Let’s start from the end of the question. This is a publication that recently in gastroenterology – I cannot remember the exact site, but there’s a very high degree of NASH patients that has deficiency – Vitamin D deficiency. But please remember that for the combo program, we’re not only recruiting NASH patients, we’re also recruiting NAFLD patients with fibrosis. And here, we will see – I hope we will see a much lower screen failure because we will use many of the patients which are screen failure in our ARREST Study will be able to be randomized to this combination study, which requires the existence – one of the main reasons for the high – or relatively high screen failure is that we’re salvaging only the NASH – the very sick NASH patients. These criteria do not exist for the combination. We’re taking all NASH patients and even non-NASH patients provided they have NAFLD and fibrosis.

Okay, great. Thanks a lot.

We’ll have our next question from Vernon Bernardino with FBR & Co.

Hi, Allen and Josh. Thanks for taking my questions. And congrats also for the progress first quarter. I was wondering – and I apologize if I missed this earlier and I have asked this also in a similar way in the past. So with the screening process, you say in the press release it normally takes six to eight weeks. Can you go with us over again why it takes so long for the screening process?

Okay. We start, obviously, with the inclusion/exclusion criteria. And many patients are excluded on being diabetic – as you remember, we’re taking both diabetic and pre-diabetic patients. And as such, we cannot randomize patients who are under the new generation, the new GLP1 diabetic drugs. So those patients – these are first of being excluded. Then there is a biopsy. Biopsy has to be centrally read, has to be centrally colored by – all centers are being sent back to Austria. Once they are admitted as they are considered eligible for biopsy, they have to undergo an MRI or MRS to ensure that their liver fat content is higher than 6%. And only then they can be randomized. So this whole process takes between six to eight weeks. Obviously, we’re trying to make it as efficient as possible, consolidating biopsy centers and minimizing the operational time-waste in between. But there are a number of vendors that have to be – that are involved in the process, like the central reader, the biopsy, the lab, the gut samples, MRI centers, central reading, et cetera.

Okay. So you are trying to enrich the patient population as much as possible. But is there anything in which – an added process that’s not in the protocol so far as it relates to the diabetes drug such as the washout in case that you are interested in enrolling a patient, but that patient has not met the criteria during the screening process yet, but will?

If there is – and it is the investigator’s decision to enroll a patient and this is entirely at the discretion of the investigator. We are not involved. We simply follow a very strict exclusion/inclusion list of criteria and without making any deviation, whether it’s no matter where the patient comes from, and it’s up to the investigator to admit patients or to have wash-out periods or to – as long as – there is a six-month wash-out period between – for patients who have diabetes drugs. But, again, it’s the discretion of the investigator. We’re not involved in this process. What, I think, is important to say is that we are very, very carefully – we’ve been cherry-picking the patients because, if you think about it, then most of the patients, the severe NASH patients which are diabetic and there is also certain range of patients that we can take within the diabetic patients because they have to be controlled. Obviously, we don’t want uncontrolled diabetic patients. We can’t take cirrhotic patients. We cannot take NASH patients which are not severe enough. So it’s a very tedious process and a very rigid process to select the right patients. But at the end of the day, it will pay off because I think the data is going to be much more consolidated. It’s going to be very robust and a better data to evaluate the effect of the drug. Better population.

Thank you. One last question, if I may, before we go back into queue. So in a pivotal study, though, would you expand the type of patients you would enroll and include in the study or will it be same population? I ask because, if you expand it, then you’d cover – you’d broaden the potential patients that could be treated with Aramchol. Or are you just going to try to target these type of patients first and then broaden the label later?

Okay. So that one very much depends on our – the end of Phase IIb discussion with the FDA. From what I see from the other two pivotal studies which are already going, it will be the same type of population. I don’t expect that would change. But this is the beauty of this study because we might see – the MRI test, which, although, is a very, very complex operation, to run an MRI central-read study with 80 centers is extremely complex. But the data is going to be very, very valuable. And we would see what – it will be able to correlate the data of the MRI together with the biopsy data. We might be able to convince the regulator to accept the MRI as the primary endpoint for the Phase III. It all very much depends on the data, the results. We will have to see what the data will be at the end of the study and then discuss the protocol.

Thanks, again, for taking my questions and congrats again on the progress.

Thank you, Vernon. Thank you for the good questions.

[Operator Instructions]. We’ll go next to Ed Arce, H.C. Wainwright.

Hi, good morning. Thanks for taking my questions.

Hi, Ed.

Hi. So I was just wondering – and I apologize if this has already been addressed, I was cut off from the call for a bit – but it seems to me, though, that there could be a potential for running really low on funds before the end of the trial, given your previous cancellation of the interim adjustment or the interim results and the clear focus that you have on expenses in this quarter going forward. I was just wondering if there were, in terms of further clinical expenses, some unexpected additional costs, if there were any way that you could address that by reducing expenses in other ways. And then I have a follow-up. Thank you.

Thank you, Ed. I know that this is something that is in the mind of many of our investors and I think it’s a very important question. So we are running, as of the last quarter of 2016, under budget, what we call, GP 2016/2017 [ph]. And this is a very reductive budget. We are very, very careful. Because we understand the market environment has changed. It is very difficult to raise new funds and we have to ensure that we have enough funds not only to complete the study, but to negotiate and, later on, even to continue based on the results. So we’re not taking any new – we’re not developing any new clinical studies unless they are funded, unless we know that they’re funded and they’re within the budget. We’ve not changed the budget. And according to this budget, we have stated that we have enough funds through the second half of 2017. We’re cutting our costs wherever we can, delaying expenses wherever we can and ensure that – to get a general feel, the cost of – the budget of the Phase IIb study was $16 million. And, more or less, the cost that has to remain to cover the entire Phase IIb, the ARREST Study, is $11 million. So we have enough funds to complete Phase IIb, complete the ARREST Study. The question is really, with the extra $5 million which are left, how do we manage then in the most efficient way, getting value – creating value for our shareholders. And this is really the – this is really what we are – state of mind and what we aim to do during – until the market environment will change. Maybe, Josh, maybe you would like to add something.

Yeah, that’s a great question. And we want to clear the market of this anxiety. The last two trials that we announced, the ARRIVE trial and the trial of Mt. Sinai, are manageable expenses. We don’t publicly disclose how much, but you’d be surprised by how relatively inexpensive the studies actually are. And so, these are – and the Phase IIb is the biggie. It’s funded. The next ones are the investigator-initiated studies and they’re, relatively speaking, very reasonably priced that will deliver very interesting proof-of-concept data. And the pipeline of additional studies that we’re thinking about and contemplating, as Allen said and I said earlier, will not commence unless they are funded or unless there’s a clear strategy to have them funded immediately, okay? We are well aware of this issue and we’re not going to get trapped in it.

Okay. Thanks for that explanation. I appreciate it, the details. The other question I had was just if – and again, apologies if this had been already covered, but I just wanted to get an update on the ARRIVE Study and where you stand with that? Thank you.

As you know, ARRIVE Study is an investigator-initiated study, which is managed by Professor Rohit Loomba from the University of California in San Diego. And as such – and this is actually alluded very much in what Josh just said, a part of the idea – the study is – I wouldn’t say [indiscernible] but it is managed – monitored and managed by the San Diego team. And we try – and we’re not devoting any resources. Apart from what’s funded and agreed, there are no resources. And as such, we get – actually, I will see Professor Loomba in the NASH Paris Conference later this month and probably get an update, but there’s nothing really that we can disclose [indiscernible]. Josh, maybe you want to add something?

Sure. I’d just like to echo something that we’ve said several times. Professor Loomba is exceptionally competent, diligent and vital. It is always important in all of our trials not to rush in patients to rush in patients. We want the right patients and that may take time. That all being said, we’ve already publicly disclosed first patient in for the ARRIVE trial. There is now more than a first patient in and we will not say whether that’s two or more than two, but it has grown. There have been more screenings and it is moving. But it’s moving at Professor Loomba’s speed. And it’s important that we sort of keep an arm’s length distance with Professor Loomba and let him work that way he works and the level of quality that he feels is appropriate.

Understood. Okay. Thanks again.

That does conclude today’s question-and-answer session. I would now like to turn the conference back over to management to offer any additional or closing results.

Thanks very much. I hope this provided a high level of clarity. We’re always working on improving our disclosure and we hope that you will notice that we’re doing so. If you have any additional suggestions or any additional questions or comments, always feel free to contact me directly at josh@galmedpharma.com. Thank you very much.

That does conclude today’s conference. Thank you for your participation. You may now disconnect.