Good morning and welcome to the Galmed Pharmaceuticals’ Third Quarter 2018 Earnings Call. This conference is being recorded. I would now like to turn the call over to Paul Arndt, Managing Director of LifeSci Advisors. Please go ahead, sir.

Thank you, operator. 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 expectations of management as of today, Monday, November 5, 2018 and actual results, trends, timelines and projections relating to our financial position and projected development programs 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 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 call over to Allen Baharaff, President and CEO of Galmed Pharmaceuticals. Allen, please go ahead, sir.

Thank you, Paul. 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; our Chief Medical Officer, Dr. Tali Gorfine; and our Chief Financial Officer, Yohai Stenzler to provide you with an update on our clinical development program, as well as to report to you on our financial results for the third quarter of 2018. As always, we will be happy to take any question you may have at the conclusion of our prepared remarks. Most importantly on June 12, 2018 we announced the results of the Phase IIb randomized, placebo-controlled ARREST trial of Aramchol, an SCD1 modulator, in 247 NASH patients. The American Association for the Study of Liver Diseases, AASLD, found Aramchol data significant and important and selected [indiscernible] on the ARREST study results to be presented orally in the late breaking session at the AASLD meeting next week in San Francisco. The Phase IIb clinical data would be presented by Prof. Vlad Ratziu, principal investigator of the ARREST trial. As a reminder, in the ARREST one year study, Aramchol showed liver reduction, biochemical improvement, NASH resolution and fibrosis reduction in a dose response pattern. In particular, compared to placebo the Aramchol 600 mg arm achieved the following endpoint. NASH resolution without worsening of fibrosis, a regulatory approvable endpoint. Fibrosis one stage direction without worsening of NASH, which is also a regulatory approvable endpoint. Decrease in liver enzymes, ALT, AST and better glycaemia control HbA1c all indicate significant improvement in liver stress and liver functioning. Aramchol continued to show excellent safety and tolerability profile, which altogether makes Aramchol one of the few advanced therapeutic candidates for NASH and support building upon the recent positive results to move into a Phase III trial.…

Thank you, Allen and good morning everyone. This morning, I’ll be providing you with our financial results for the quarter ended September 30, 2018. For more information, please refer to our report on Form 6-K filed earlier today with the SEC, which among others things, provides the summary of such financial results. For the third quarter of 2018, our net loss totaled $1 million, or $0.05 per share, compared with a net loss of $2.8 million, or $0.23 per share for the corresponding quarter in 2017. During the third quarter, we received a milestone payment of $1.5 million in connection with our license agreement with Samil Pharm. The milestone payment was recorded as revenue for the third quarter of 2018. Research and development expenses totaled $1.7 million for the third quarter of 2018. This compared with $2.3 million for the third quarter in 2017. The decrease resulted primarily from a decrease in clinical trail-related expenses. Turning now to G&A. Our general and administrative expenses for the quarter totaled $1 million, compared with $0.7 million for the corresponding period in 2017. The increase primarily resulted from an increase in non-cash stock-based compensation expenses. Our cash balance as of September 30, 2018, which include cash, cash equivalents, short-term deposits and marketable securities totaled $92.3 million, compared with $19 million in December 31, 2017. The increase is mainly attributable to the [$70.3] million in net proceeds raised in our successful underwritten public offering in June, as well as through the $5.9 million raise in our registered direct offering in April. With that said, operator, please provide instructions for the Q&A portion of our call.

Thank you. [Operator Instructions] We will now take our first question Yasmeen Rahimi of ROTH Capital Partners. Please go ahead.

Hi, team. This is Katie on for Yasmeen today. I have a few questions for you. The first being – on your press release or on the call you also mentioned – you mentioned that you are advancing the regulatory submissions process, does that mean you haven't had your end of Phase II meeting with the FDA yet?

We are not disclosing any formal review, formal discussion with the FDA. As said before, or any other regulatory agency for that matter. We are working on submission simultaneously to FDA and EMA, and at the moment we are not [indiscernible] on any delays on the initiation of this study, which as I said before is produced for Q2 2019.

Okay, great. Thank you. And I believe you previously suggested perhaps late first quarter or early second quarter of next year for the Phase III initiation, so besides the end of Phase II meeting what are the other rate limiting factors of the Phase III initiation?

Hello, everyone. You know, ramp up of a very large Phase III study takes the usual course of regulatory submission, which takes time and feasibility that takes time, and [limitation] of the size and finalizing the protocol. And I think that few months are foreseen for this activity are pretty quick for the industry. As Allen said, we are on time with our submissions and our site feasibility and site selection etcetera.

Great, thank you, and my last question is, can you tell us about your selected dose in Phase III, specifically will you go with the 600 mg dose, and what additional data can we expect at the AASLD meeting next week? Thank you.

So the selected dose based on the results is the 600 mg once daily dose. That dose has shown our results, and several modalities have shown dose-dependent pattern in the liver fat reduction, in NASH resolution and fibrosis improvement, ALT, ALC, haemoglobin A1c all these analysis favored the 600 mg taking into consideration we have no safety signal or concern. We have no – we have definitely selected the higher dose for the Phase III study.

Maybe just to add another point here is although the selected dose, as Tali alluded, is 600 mg, we are doing some work on making a possible higher exposure of the drug. And if that would materialize then with this dose, we will use – it has to do with the regimen of the administration of the drug and we will inform accordingly.

Okay, and what additional data can we expect at AASLD?

So, you will have to wait till fiscal last year’s presentation, and basically you will see how in this large Phase 2b study, the data strongly supports advancement and design of the Phase III that we are working on.

Great. I give so much for taking my questions.

Thank you

We will now take our next question from Adam Walsh of Stifel. Please go ahead.

Hi. Can you hear me? Thank you so much for taking my question.

It's a pleasure Adam.

Okay, perfect. Thank you. First I have a couple – first, can you give us any more details around what you are thinking on the Phase III trial design? Are you planning just one Phase III or two Phase III and kind of in conjunction with those thoughts, maybe you could help us understand whether or not you think the 92 million on the balance sheet is currently enough to get us through the Phase III readout, which is a question that we get from clients sometimes?

Okay. I will start and then turn it over to Allen. The development – the Phase III program will basically resemble the programs that are currently agreed on with the regulators and as you know, we are talking about one Phase III study with biopsy-based endpoint after either 52 or 72 weeks, and clinically based endpoints based on clinical events with later readout. The data of the exact primary endpoint, how it will be defined would be the statistical analysis exactly, and the duration and the population we are now fine tuning, but they will resemble the large Phase III that are currently ongoing.

Great. That is helpful and the…

Sure. So, we I think [indiscernible] this company now entering the pivotal study, I think we had the advantage of the learning that were made from the earlier study. We did both top down analysis and bottom-up analysis, and when I say top down, we first looked at regions and countries and sites, which enough studies have been conducted, but at the same time we were busy over the last month building up a database of 500 most-active NASH investigators globally. As you will remember, ARREST study was a global study, with one third of the population coming from the US, one third from Latin America and one third from Europe and the rest of the world. So we think our database allows us to do a bottom-up analysis and learn from as much as, you know, from open information and interview we had with KOLs and investigators, this is part of the feasibility that Tali was talking about. How to ensure that the study is run in a very efficient way. And when I say efficient way I mean that we will try to avoid centers, which has the potential to recruit 2 or 3 patients only, and concentrate on centers that have the capability and the proven track record of recruiting 8 or 10 or 15 patients, which is also for the quality of the data – makes it a better quality of data for the study. So all of that is allowing us to – and I'm saying something here that – which I think is very important message to our partners and shareholders, and anyone who is asking about this question, about whether government has enough financing or enough funds to finance the Phase III, yes we do. I want to remind you all that the cost of the ARREST study on 247 patients over one year treatment including two biopsies and two MRI readings was less than $16 million. Now even if you multiple that by four, and I'm taking an extreme, so we're getting to around $75 million cost. The study I mean, it's fully financed. We have already received a number of calls from global bureau as well as local bureau and if you understood from my earlier comment, we are building each team but whether work it will be a global partner or license or any partner, who would run the study later on, or we run the study, we make sure that the cost of the pivotal study will be $75 million as we previously reported.

Allen, it’s great. Thanks for that and then and just one more real quick, before I jump back in the queue. I think, you've mentioned previously that you're doing or intend to do some lab experiments, testing Aramchol combination with other NASH drugs to see if maybe a combination approach might make sense there. Are you still doing that? And if so, what's the status of those studies and when we see data from those. Thanks?

So this is a preclinical data, and there is – we were very cautious in reporting any preclinical data, and if real, will do that in the relevant conferences, in the scientific conferences. I can directly ask, tell you more about the work, but I don't think, it's not the first priority of course. Our first priority is the pivotal study, but I would ask Liat to tell you a little bit about what are we doing, and what is the -- what is our view about that.

Hi Adam [ph], it’s Liat. Adam, I think that the last few notes that we got from other companies that are currently running combination therapies. We are checking this very cautiously, because I think the field now is under understatements that under understanding that combination is not only combining efficacy, but also combining toxicology, and I've been in some of the conference's two weeks ago where the key opinion leaders said that now when we are combining, it's good that we've seen animal models, combination and efficacy going back very well. But we also have always to check the drug-drug interaction and the toxicology that is involved in order to go to patients with good combination therapy, which will actually join efficacies but not join toxicity and not harming patients in any way.

Thanks for that. That makes sense. Thank you.

[Operator Instructions] We will now take our next question from Steve Seedhouse of Raymond James. Please go ahead sir.

Hi. Thank you for taking my questions. Allen, you touched on manufacturing, maybe, you could just clarify what if anything is changing from Phase II to Phase III and if you'll need to schedule a meeting with FDA after the Phase III API is manufactured to discuss CMC, and maybe just in addition to that, if you could just provide a general update or overview on where your manufacturing capabilities currently stand as it relates to supplying Phase III and subsequently a potential commercial launch?

So thank you, Steve. I think this is a very important point, which we have not touched. Galmed has always been in over the years, we've been investing proportionally, significant amount of money in API, EMP, drug product activity. And coming to the Phase, if you recall even our chronic toxicology study, and certainly the Phase IIB study was done with a compound that was manufactured by Perrigo and the reason for choosing Perrigo was, it was one of the largest generics manufacturer, and we wanted to make sure that our synthesis route is almost commercially ready. So there's very little changes that were made since then, and we are now as I said, completing the first campaign and undergoing the next campaigns. We are talking about production of approximately 600 kilograms of API. This is very significant amount, and we needed to select a manufacturer that has also commercial capabilities later on to be able to supply the market, because there will be no changes between the current synthesis route and the commercial route. Same from API, and for drug products, we are very extremely I would say, advanced in the design and the execution, so all of that was already made many months ago to ensure that once we initiate Phase III, there will be no delays from CMC aspects. This is why for us it's not great limiting factor. It's -- CMC has been going, ongoing and it's already done in a highly scalable route.

Okay. Thank you. Also just want to follow up on the selection of sites and you mentioned feasibility and you touched on it already a little bit. It sounds like, it refers mostly to basically patient flow through centers. Just curious to what extent do you bake competing trials into the assessment of feasibility, especially if you're focusing on those sites that are most active across other clinical trials and other than a number of patients. Is there anything else that informs your assessment of feasibility?

So again as a reminder ARREST was a global study, and Aramchol is going to be a global study as well. So we are not relying only on the U.S. side, which typically are the highly competitive as you rightly said, and typically are working for recruiting patients for the pivotal study. We were the first company that has run a NASH study in Latin America. Later on, other companies they followed up, and now the pivotal studies that are running are also recruiting patients in the same centers that we've opened and trained in Latin America. I think that we have a very goodwill at these centers, which would give us priority in recruiting patients for the pivotal study. So I do not foresee any competition coming from there. Europe is -- we have a very reasonable expectations of we will open some sites that or some country even though we know that it's going to be only one center or maybe two centers with the recruitment capabilities that we are aiming for and the U.S. is a different ballgame. U.S; we are now I – I assume it's going to be the first territory that will open, and we are working, I cannot disclose much about the strategy, but there is a different strategy that we are going to run for the U.S. with some local experienced CRO.

Okay.

I would like to add, it's Tali , I want to add just shortly competitive landscape sounds frightening, but please note that although there are many studies and more and more studies that are ongoing the recruitment for the studies is actually going pretty well for all companies. So many times from my experience in the different fields when the field is evolving and more opportunities open and more knowledge is gathered and more regulatory strategy is known then the studies become more efficient and more patients join the studies and this is actually forward movement in the field.

Okay. Thank you. I had just one last housekeeping question. You received a milestone payment from Samil Pharma. My understanding was that they had an option to extend the license beyond Korea to include Vietnam as well following the ARREST study. Could you just clarify that if my understanding is correct there, and if a decision on that option has been made? Thank you.

We will meet with representative of Samil Pharma in the coming conference at AASLD, and that would be part of the discussion. There's also another part of the discussion is the contribution of patients from Korea for the pivotal study because in their agreement, in our agreement, was also undertaking from Samil Pharma to contribute patients to the pivotal study and now we will discuss that as part of the plan.

Okay. Thank you. Thanks for taking the questions and I look forward to seeing you guys at AASLD.

Thank you, Steve. Looking forward.

We will now take our next question from Edward Nash of SunTrust. Please go ahead.

Hey good morning. This is [Indiscernible] for Edward Nash. Thank you for taking my questions. Allen and the team could you give us more color on your comments regarding increasing the Aramchol exposure? Is that something you plan to explore in a separate arm interface Phase III study?

So I think that the data was out in June, and I think everybody had the impression that we did and all the rest of the physicians around that. That's -- it's the dose dependency in fact and the 600 milligram is more effective than the 500 milligram is they are kind of [Indiscernible]. We selected the 600 understanding that higher the dose, better the efficacy is. Nevertheless, since Tali actually said, we saw that actually we reinforced a good safety and tolerability of Aramchol and we are currently running from Phase PK study to have some idea whether we can have a bigger exposure of the patient knowing that if you have higher exposure you have higher efficacy as we saw in the other study. We cannot now enclose any more data about this, when the data will be out we will make decisions and we will include all the community with the decisions that we have.

Just to clarify this is a human PK study and it is based on modeling and animal studies as we had before.

Terrific. Thank you for the color.

We will now take our next question from Jason McCarthy of Maxim Group. Please go ahead.

Hi, thanks for taking my question. So given more than 90 million in cash in the balance sheet, I was wondering if you have any plans to expand Aramchol to additional indications, or acquire additional assets while we await the initiation of the ARMOR study this summer?

So our first and the most important task at the moment that the company has is to initiate the pivotal study on time, as planned, and on budget. Once this is done, we can free our thoughts and look around, and now discuss according to mechanism of action and scientific rationale, whether there is any reasoning to do either or both.

Alright. Thank you very much.

Thank you, Jason.

It appears there I know further questions at this time. Mr. Baharaff I'd like to turn the conference back to you for any additional or closing remarks.

I would like to thank you all for joining us on today's call. We are having a number of important events at AASLD. Liat has mentioned the Late-Breaking Oral Abstract, the poster presentation. We have some investors event, and this management is going to be present, and any of you are coming to AASLD, I hope to meet you later this week. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.