Good day. Welcome to Galmed’s Conference Call to discuss Financial Results for the First Quarter of 2020. 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 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.In particular there is significant uncertainty about the duration and severity of the COVID-19 pandemic, its impact on Galmed's business and operations. We urge all investors to read carefully the risk 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 call over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead.

Thank you, Sherry. 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 programs, as well as report to you on our financial results for the first quarter of 2020. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.I'd also like to say, I hope you and your family are safe and well, and we work to overcome the COVID-19 outbreak. I know this issue is very much on your mind and shortly I will provide an update on its impact on our operations.I'm delighted to share with you today new preclinical PK data comparing Aramchol free acid, the drug substance that is currently being evaluated in our ARMOR NASH Phase 3 study with our new form of our Aramchol, Aramchol meglumine.Over the last few years, Galmed has been in the process of developing a new product, Aramchol meglumine, which is a sole form of Aramchol free acid. It is important to note that Aramchol meglumine and Aramchol acid, circulate as Aramchol regardless of which drug product is administrated.Our research found that meglumine served as Aramchol increased the scalability of Aramchol, by five orders of magnitude, which was very surprising result for anyone given the art of pharmaceutical chemistry. Based on this data, when submitted in December 2014, a new composition of matter patents protecting Aramchol meglumine, as well as a wide range of other source worldwide.Of importance, Aramchol meglumine is considered a new chemical entity, as such, is eligible for new chemical entity patent protection until December 2034.…

Thank you, Allen, and good morning, everyone. This morning I will be providing you with our financial results for the first quarter ended March 31, 2020. 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 first quarter of 2020, our net loss totaled $6.1 million or $0.29 per share, compared with a net loss of $3.5 million or $0.17 per share for the corresponding quarter in 2019. Research and Development expenses totaled $5.6 million for the first quarter of 2020 compared with $3.3 million for the first quarter in 2019. The increase resulted primarily from an increase in clinical trial expenses in connection with our ongoing ARMOR study.Our general and administrative expenses for the quarter totaled $0.9 million compared with $0.8 million for the corresponding period in 2019. The increase resulted primarily from an increase in non-cash stock-based compensation expenses. During the three months ended March 31, 2020, we had a net financial income of $0.4 million versus $0.5 million in the previous quarter.Our cash balance as of March 31, 2020, which includes cash, cash equivalents, restricted cash short-term deposits, and marketable securities totaled $69 million, compared with $75.6 million in December 31, 2019.With that said operator, please provide instructions for the Q&A portion of our call.

Thank you. [Operator Instructions] Our first question is from Yasmeen Rahimi with ROTH Capital. Please proceed.

Hi, this is Petunia Ing [ph] on for Yasmeen. Thank you for taking our questions. So two questions for you. First is, can you provide some color on how safety profile of meglumine compares to Aramchol, whether there's any completed long-term tops from [indiscernible] to get clearance for Phase 3? And what does the FDA need to allow you to switch from Aramchol to meglumine? And there's a follow-up. Thank you.

So thank you for your question. We're building our case on compound with the name of Vyndaqel and Vyndamax, which is tafamidis meglumine and tafamidis free acids. Both of them are – [indiscernible] pharmaceutical by Pfizer. So these assets was approved in March 2019. And I'm referring all of you to this case supported by FDA. Those compounds are considered same active [indiscernible] and tafamidis is the speculation agent in plasma. And data also submitted in both forms is exchangeable and approval was achieved for both forms.Meglumine in this -- all the toxicology of meglumine is real-established. So we can move further need for any succeeding toxicology studies to be performed based on the educators that already used meglumine as a counter item.

Okay. Thank you. That's very helpful. And the follow-up question. How many patients have been dosed with Aramchol? And if you switch to meglumine will the data set from Aramchol and meglumine be combined in the final analysis? Thank you.

We are not disclosing this information Yasmeen. Once we will reach a milestone predefined milestones of randomized patients, we would disclose the information.

Okay. Thank you so much.

Our next question is from Steve Seedhouse with Raymond James. Please proceed.

Yes. Hi. Thank you. Interesting development. Liat, I think I couldn't hear you very well, I think you were just talking about the tafamidis and the precedent here for the meglumine salt. And my understanding is that Vyndamax and Vyndaqel, so the free acid of the meglumine salt actually dosed differently on a milligram basis. I don't know if that's because of the pharmacology of tafamidis or if there actually is sort of a question about inter-changeability of the dose of the salt versus the free acid. So I'm just wondering if you can comment on that.Is there a point of uncertainty about whether you can actually just swap in one for the other and keep the same dose? Or do you have to do some dose finding or even add multiple doses to the Phase 3?

So, thank you, Steve. In the case of tafamidis the dose assessments with per AUC or exposure and not the dose. Well said by the way. The acid was adjusted to 61 milligram plus 80 milligram in meglumine salt, because the active [indiscernible] is different. So the FDA actually went one step further in allowing adjustment [indiscernible] and not for dose. You're right with your answer -- with your questions. It's not the same as adjusting same dose administration and the same dose regimen as you do with generic. This is a different case.

Okay. So maybe following up, does this give you…

Just bioequivalence is here clear exposure. So you do AUC per AUC, exposure is in the amount of the compounds that you think in the plasma of the patients, and not at the dose that you're giving.

Okay. A follow-up to that would be, does this give you an opportunity to go return to once daily dosing? Or are you going to stick with the BID dosing that you had previously sort of switched to, based on the PK study?

We will do every possible way but cannot promise anything at this stage. We are putting a lot of efforts for that, and if it's not going to be in as part of the Aramchol, it will be as a life cycle management, as we're putting every effort in formulation for that exact method that you're actually asking.

Okay. And then could you just talk about your level of confidence and the non-obviousness of the innovation step here of the meglumine salt and its patentability in the U.S.? Any worries there? Because I noticed you mentioned, discussions regarding patents in the U.S. were ongoing with USPTO.

Yes. So, I think the numbers speaks for themselves that as I said already 37 European countries and Japan, Canada, Australia, all accepted that. I mean, there's no question and the – the surprise and when we compare Aramchol meglumine to other salt, Aramchol meglumine features are clearly distinctive. And, so as you know, patent officers have their own independence. And in some countries, it’s taking faster, in others it's slower. But we are highly confident. This is something five-fold bio -- solution of a compound is not likely patients.

Okay. I appreciate that…

Liat is correcting me. 30,000-fold of solubility.

Yes, of solubility than Aramchol acid.

30,000. Three zero. 30,000-fold solubility.

I see. Okay. That's a lot. Last just a quick clarification question. So the press release, you mentioned that the innovative step here has led to a new chemical entity patent. Because there's multiple terminology here, I just want to make sure I'm understanding that correct. So this is in fact a product patent or a composition of matter patent and not a formulation patent. Is that correct?

That's absolutely correct. With a new composition of matter patent, and in fact, it might even be on an independent IND. It's a new chemical entity. This is not just a formulation.

Alright. Thanks so much for the questions.

Thank you, Steve. Thank you for your time.

Our next question is from Edward Nash with Canaccord Genuity. Please proceed.

Hello, Galmed and team. This is Adam on for Edward today. Congrats on the press release here. And Steve and Yasmeen got most of my questions, but just one more for us. Could you add any more color around the current status of research sites, worldwide on a regional basis? Like whether there are any open sites as China seems to have mostly reopened? And a related question is, how are you approaching or planning for a second potential spike in COVID cases in the fall?

Let me start with the second question as now the second wave. Interestingly, though we are running a global study. And as a global study, we get on a daily basis news from five different continents. And, I'm sure you're aware, there is different waves and different timings in different countries and different regions. So, we feel that some areas like Australia, we feel very confident that we had very few cases recorded to start with. And we feel that Australia will probably start recruiting very soon. Korea has already passed the first wave. And we recently had a very successful webinar with our Korean investigators, and they are eager to start recruiting patients. So, I think Korea will also be a second country to reopen the recruitment.And U.S., you know better than we do. It’s not that homogeneous. So we need it for the investigators. We're getting literally on a daily basis requests from investigators to reopen their sites. And we are monitoring that and we want to make sure so it will be done gradually and also only if we are, I would say convinced that they will not need to close that again for a second wave.So this is for your second question. But can you repeat your first question, please?

No, you more or less answered it in answering that second question. So, thank you very much for that.

Thank you.

Our next question is from Adam Walsh with Stifel. Please proceed.

Hi team, how are you? I hope you're well. A couple of questions here. I just want to be clear, I was having difficulty with my connection. I couldn't hear all that well. Allen, is there any chance that you'll have to restart the trial essentially with patients with the meglumine? I mean, in other words, is there any chance that the current formulation is going to have to be superseded by this one with a whole new set of patients?

So tafamidis, we are using tafamidis as a very good precedent. And they've made the change during the study with cross reference data from one in the free acid through the meglumine. And there is no reason why we should not be able to do the same. Another example that you may be aware of is statin that they changed formulation from amorphous to crystalline within Phase 3 and begin do the restart this study.So this time, there are a number of guidance, FDA guidance. And it is done, not a lot, I must say, but it has been done before. And tafamidis gave us an excellent, very timely precedent, because it was only approved in 2019. And as you know, we can access all the data, both the European and the U.S. And we are relying very much. And of course, we had a consulting -- regulatory consultants that we consulted with along the process before we decided to take this change. So we feel comfortable that the FDA would accept this view.

That's helpful. And then you mentioned that you're going to have an Analyst Day in the coming months, we could potentially get clarity on some of these issues at the Analyst Day. It seems that for the meglumine there's a couple of things that are important to you. One is the potential for U.S. patent and the other is the FDA sign off on potentially integrating the new formulation into the Phase 3. Would you expect both of those to kind of precede the Analyst Day? Or is the Analyst Day kind of independent of those two items?

Sure, Adam. First of all, I want to correct, it is not a new formulation, it's a new compound with a new chemical entity. This is a very important change. This is a completely different patent protection. And by the way, tafamidis acid was approved without the Phase 3, this is very interesting. They use the cross reference, Pfizer cross referenced the data from tafamidis meglumine and without running a Phase 3 study, they got an approval and R&D approval for tafamidis base. This is an interesting point to talk about the cross referencing data.We are doing our best but COVID-19 of course, here disrupted a little bit our plans, because I'm not sure when the FDA will be able to allow us to present the data and how long it will take until we get a reply. So, we will have to juggle between our core data and that we get from the FDA and our intention to provide additional information in this Analyst Day. We would also like to discuss in this Analyst Day, our pipeline product, so I hope that it will be done sooner rather than later. But it also depends, as I said, on things which we are not dependent on us, like FDA responsiveness.

That's great. And just one final one. Allen, we've had data from other NASH companies kind of coming out. I wonder if you could maybe opine on kind of what you've learned about how Aramchol, kind of stacks up and your thoughts on the space in general as it pertains to Aramchol? Thanks.

So, I think Tali would be a more appropriate person to do so. Our CMO, so I’ll let Tali answer.

Okay. So indeed, this week, had highlighted many questions we have been considering for a long time. We are of course disappointed with a GENFIT results. We’re curious about the normal Phase 2 results. Like everyone, we are awaiting further information about potential contributions to the higher placebo rates. That would include the usual suspects, weight loss imbalances and some of those indications, too. For example, the [indiscernible] lifestyle intervention and I think also methodology for topology need. So, we're always seeing some more information and I think it will be very, very important for the field.At the end of the day, the active treatment has to be placebo and the magnitude of effective measures within one study relevant to the placebo rate index study. I think the best example is plant and regenerates weather fibrosis improvement values with 21 versus 14 plants and 12 versus 23 in January. So this placebo rate but still the magnitude of effects about double.With respect to Aramchol, we have emphasized all along, it's a liver targeted. We think this is highly important. It has the mechanism of action and clinical data to support an effect on both natural evolution fibrosis improvements. Again, we always emphasize that these two go hand-in-hand and are desirable for NASH drug.The ARMOR study is a large study. It's powered for both endpoints. Add to that the population which we continue to maintain that will be enriched targeted population [indiscernible] patients. So, altogether I think that we will learn from information that comes out but ARMOR study and Aramchol are well on track for good products.

Thank you.

Our next question is from Kristen Kluska with Cantor Fitzgerald. Please proceed.

Hi, everyone, and thanks for taking my questions. I hope that everyone at the Galmed team is doing well right now. So, the first question I had is, are you able to discuss whether IP was a topic that was asked about during your ongoing partnership discussions? And how do you think this might change now that, there's been some developments in the NASH phase in general and also you may have extended IP here? Thank you.

So, it's too early. I think, I'd like to see more data coming from the study from the GENFIT study. And clearly, there is one less Phase 3 candidate in development, but which I must say personally I feel very sad because the 20 years the GENFIT has been part of my life. In fact it's for the patience and for everyone who is involved in this study over the course. But we always say this is a marathon run. And as a marathon run a study as I said before, we are planning the study as a robust, long study to meet both endpoints, and we keep on our mantra that we think that Aramchol is the best candidate in the market for the chronic treatment of NASH.And I hope that through this new patent life that would remove any overhang that was on such things.

Okay, thank you. And do you anticipate to plan on planning or to discuss keeping the fast track designation status for this?

It's still early. I mean, we are not sure yet. And this is something that so for the regulatory consultants, whether this is going to be an independent IND, or we are going to tag along to the existing IND. If it will be an independent IND, then yes of course, we go for the fast track but it may likely be that the faster way to go is not to a Type B meeting but the Type C meeting and continue the development with the same IND. So, I won't be able to tell you until we have guidance from the FDA.

Okay, thank you. And I know you haven't disclosed number of patients that have been treated thus far. But could you talk about whether you anticipate any challenges and if there are any solutions at this time collect follow up data from patients during these times?

Tali?

Yes. So actually I must say we are heart-warmed by the dedication of the investigators and the patients to remain in the study. And while we allow flexibility along the lines of what is allowed regional and regulatory guidelines, we see that all our patients are ongoing and that their follow ups are performed adequately. And this is very reassuring.

Okay, thank you. And then my last question here is Intercept tentative FDA AdCom meeting is scheduled in a few weeks from now. So I wanted to ask what you as a late-stage NASH developmental company are on the lookout for as it relates to your own company and program. Thank you.

I'm not sure. Could you repeat the question? I'm not sure really what are you asking?

Sure. So Intercept AdCom is scheduled to take place in a couple of weeks from now. So I was curious if you had any thoughts about whether there were any topics or questions you might think could happen that you might think about as it relates to your own program. So that down the line, when you potentially file for approval things that you might consider based off of what of Intercept?

So like you, we are awaiting this advisory board. Intercept has paved the way for a long time in the NASH field. And now we're at a critical milestone and we will learn from this AdCom exactly what is required for a successful NDA. And we still have time to adapt as required for things that may come up in this AdCom.

Okay, thank you very much. It's very helpful.

Our next question is from Jason McCarthy with Maxim group. Please proceed.

Hi everyone. It's Dave on the line for Jason. Thanks for taking my questions and I hope you guys are staying safe. So I just wanted to see if you guys had any concerns about the new salt formulation of Aramchol potentially exacerbating high-blood pressure in patients with hypertension, especially given the fact that high-blood pressure can potentially be a contributing factor to the development of NASH. Thanks.

So thank you for the question. But we have no such concerns. There is no signal on hypertension with Aramchol. The safety of the product we have disclosed many times and hypertension is not one of them.

Okay, thank you. I appreciate the clarification.

Our next question is from Ed Arce with H.C. Wainwright. Please proceed.

Hi, everyone. Thanks for taking my questions. And very happy to hear that you are and have been apparently addressing this long standing overhang of the short patent protection. You and I, Allen have talked about on numerous occasions in the past.So, I know this has already been touched upon by several questions previously, but just wanted to drill down a bit further. Clearly, this is a new MCE and you're filing for a CMO or have filed the CMO patent.My question is, you're clearly confident on this path. I guess what my question is on the two key areas here with the FDA and the USPTO. What could potentially go wrong? Where are the key areas of risk where despite everything you've done to-date, there could be either some disagreement or even just a delay on moving forward?

Thank you, Ed. So, they it's a yes or no question. This is not something which is shades of grey, of another formulation whether this formulation can be accepted or not. It's about the essence of patents of -- whether it's novel or not. And here, we have a very few statements coming from the fitting [ph] as I said before, 37 independent patent offices, which all gave us the new competition of meta patent in flying colors. And discussions in the U.S. maybe they are a bit longer, maybe they are more prudent but we feel very good. We had extremely good arguments and it's almost, for us impossible to envisage a possibility that this patent will not be accepted. We feel very strongly about the patent. It's not the huge patent, it's not the formulation patent, it's a very strong new composition of matter of something which nobody could expect, neither did we.And I'm sure that -- I don't see any risk in some of the programs, because we are advancing this transition. So, we work simultaneously. Sometimes it takes a bit longer to have patent and granted, but that would not change anything in our plan.

Okay, thanks for that clarification. Another question is...

And just to clarify Ed one other thing there is no development with -- I mean, this is as we said before Aramchol meglumine in Aramchol circulated as the same with Aramchol. So, there is no -- it's not a different moiety which has some development in terms of the product itself.

And maybe just to say that to add on what Allen is saying the synthesis louses is very good and very well clarified. There is no impurities and the validation process are all set. And we don't see any problem in the chemical developments of CMC that is related to this compound.

Great. Thank you, Liat for that. So, another question is there are a couple -- while this is very similar compound of course, it's distinct and novel and there are two areas that you mentioned are different, the higher steady state AUC and the much higher solubility. You mentioned before that given those attributes you will be trying every -- make every effort to try to see if a once daily dosing is possible. Are there any other specific benefits or attributes that you would look for that would be an improvement over the data we have seen to date with Aramchol?

This is a great question and thank you for asking this. When you have a compound which is class 4, there is a very -- there’s that slight variation in exposure among patients, because it’s not soluble. So, with Aramchol meglumine the main added value is reduction in coefficients of variation.I think that the exposure of all the patients going to be quite similar and not very much varied from one patient to another. This is a very good -- it's very significant added value when we talk about pharmaceuticals that the exposure among patients is almost similar and not variable. And it gets you a lot of homogeneity when later on looking at the clinical data.

Great. That's very helpful. And then just one last question for me. Given your extended timelines here and certain degree of lack of visibility here, at least in the near-term, are you prepared to give us an estimate of your cash runway?

So it hasn't changed. We have still the cost of the study as we said earlier is not going to increase because of this change. There will be some additional CMC costs, but this is budgeted and we keep the same burn rates. We are still relatively small company. So we have a very and managed burn rate and which is about $1.5 million U.S. dollar per quarter, as you can see. And the additional costs for the CMC for the fixed burn rate, the additional cost for the CMC for preparing the additional Aramchol meglumine is already accounted in our budget.

Okay, great. Allen, thank you so much for this and congratulations on this development. Thanks very much. I very much look forward to your Analyst Day coming up.

We look forward. Thank you.

And our next question is from Mayank Mamtani with B. Riley FBR. Please proceed.

Hi team. Thanks for taking my question and congrats on the progress. Most of my questions are addressed, but I do have a couple of quick follow-ups. So as you think about the process of engaging the agency and also sort of what human studies you may have to do with the NCE? And what sort of process? Is it like a Type C meeting you would have to have with them? Like very similar to have you I think went through last year with the BID versus QD where obviously you had to do the bioequivalence and drug interaction study. Could you just clarify that piece? And also I know for your NDA you had these other early stage studies like hepatic impairment, mass balance, EQT what is the impact on that?

So the only thing that we are currently doing of course, is going to bioequivalence in human and just to see that we are around the thing. We will do, we will try to do our best via very good formulation or few formulations to maybe allow reductions from BID to QD. Not sure this is going to be possible. We do need to stay within our AUC, within the exposure, in order to be able to use all the data that is coming with us, i.e; toxicology and everything that's accumulated as fast. So, we will say within the range of the exposure of the Aramchol BID-300 milligram is even now in ARMOR.

So, just to clarify, we are not aiming for higher exposure. We are keeping the same exposure, the same way and philosophy generics are being developed. And hence, we will only need a Phase 1 bioequivalence study. There's no necessary. We don't need any other toxicology drugs or interaction or any of these kind of studies are not needed. It's preclinical data and the Phase 1b data.

Always remember that the circulating active moiety is the same. We're still talking about circulating Aramchol in the plasma, and everything that has to do with this from this point of view is the same active ingredients.

And could you clarify the impact to other studies that you started? And I think one other study had to have data by the end of the year. I think the hepatic impairment.

So the only study that study in advancing is the hepatic impairment, which is ongoing. And again, it's not going to be impacted and other Phase 1 are not going to be impacted as well. The other study the mass balance is also advancing. It's widely-labeled compound, so it takes a bit longer. And the rest of the studies are still planned, some of them are delayed because of COVID-19. But we don't think there is any -- there is no urgency in completing these studies. Those are studies that are needed for NDA.

Great. And then a follow-up on Phase 3 ARMOR trial design. Have you disclosed sort of your following assumptions? And also on this underlying all concomitant medications, of course, you have the diabetics as a majority. But what are you allowing versus what are you excluding in terms of anti-diabetic drugs?

So, I don’t think if I heard the question correct. We have in the protocol and we can feel for – [indiscernible] more detail the strength of this one but we have written the inclusion and exclusion criteria very meticulous and aligned with the FDA guidance that was out. We allow diabetes medication if they are stable for different time points different time duration depending on the drug. Of course, we only enrolled stable patient based on hemoglobin A1C and other parameters. So we make sure that the patient at the time of screening or baseline are stable and on stable medication.Now of course we know that the study is a long study and patients may require adjustments or change in their medication, by the way the same for diabetes and other core comorbidities hypertension, dyslipidemia, et cetera. So all these standards of care adjustments we acknowledge may happen during the study and we do not impose any specific disallowment on such required changes. The RFQ does -- we asked the investigator to consider the indication and sometimes discuss with us. But based on, we have no disallowments on specific drugs for diabetes or other comorbidities.Maybe you've asked because of drug interaction because of your previous questions. So I may also add that…

And also the learnings from the GENFIT study and the placebo response there and also the metabolic parameters not really showing that much of a difference drug versus placebo.

So we don't have yet. The GENFIT hasn't disclosed whether concomitant medication is related to the placebo response. Actually in the initial call that they had that day I listened to it and they say that the first look that they have done indicates the probably weight loss and concomitant medications are not responsible for the higher placebo response rate. I don't have more information than you have on this issue.

Great. Thanks. Thanks for taking my follow-up question.

Okay. I don't know if I answered with respect to drug-drug interaction. We don't have the concerns with respect to either diabetic medications or patents with respect to drug-drug interactions.

That's great to hear. And look forward to seeing more of the data at the Analyst Day.

Thank you.

And that concludes our Q&A session. I would like to turn the conference back over to Mr. Baharaff for closing comments.

Thank you very much. So thank you all for joining our call today and wish you all a safe and well. And as always, please do not hesitate to contact us for any follow-up questions that you have. Until then, bye-bye.

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