Good morning and welcome to the Galmed Pharmaceuticals’ Second Quarter 2018 Earnings Call. 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 related 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 as described in our Annual Report on Form 20-F filed with the SEC on March 23, 2017, and 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 relative dates only. Please note today’s call is recorded. At this time, I would like to turn the call over to Michael Wood from LifeSci Advisors. Please go ahead, sir.

Thank you, and god morning. And with the conclusion of those prepared remarks, I’d now like to turn the call over to Allen Baharaff, President and Chief Executive Officer of Galmed. Allen, please go head.

Thank you, Michael. 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 second quarter of 2018. As always, we will be happy to take any question you may have at the conclusion of our prepared remarks. We are very pleased with the program Galmed made during the second quarter, the most important accomplishment being our announcement on June 12th of top line results in the global 52-week Phase IIb ARREST study on 247 NASH patients. We discussed the results in detail at the time of the announcement and believe the following results, in particular, support advancement towards pivotal study, significantly more patients treated with Aramchol 600 milligram versus placebo achieved NASH resolution without worsening of fibrosis as demonstrated biopsy. NASH resolution without worsening of fibrosis is currently considered to be one of the primary endpoints for a pivotal Phase III FDA trial. A higher proportion of patients with at least one-point improvement in fibrosis score without worsening of NASH was demonstrated in Aramchol 600 milligram versus placebo in the 52-week biopsy. One-point improvement in fibrosis score without worsening of NASH is also currently considered to be one of the primary endpoints for our pivotal Phase III FDA trial. These two endpoints will be our proposed endpoint to the regulator for our forthcoming Phase III study. Specifically, significant reduction in ALT and AST was demonstrated in Aramchol 400 milligram and 600 milligram versus placebo. Aramchol continues to show good safety and tolerability profile. The mechanism of…

Thank you, Allen. Good morning and thank you for joining us today. This morning, we’ll be providing you with our financial results for the quarter ended June 30, 2018. For more information, please refer to our report on 6-K filed earlier today with the SEC, which among others things, provides the summary of such financial results. For the second quarter of 2018, our net loss totaled $2.7 million, or $0.17 per share, compared with a net loss of 2.7 million, or $0.22 per share for the corresponding quarter in 2017. We recognized $0.3 million of revenue for the three months ended June 30, 2018, the same amount as in the corresponding quarter in 2017. The revenue relates to the amortization of the upfront payment under our license agreement with Samil Pharm. Research and development expenses totaled $1.9 million for the second quarter of 2018. This compared with $2.4 million for the second quarter in 2017. The decrease resulted primarily from a decrease in the clinical trails-related expenses. Turning now to G&A. Our general and administrative expenses for the quarter totaled $1.1 million, compared with $0.6 million for the corresponding period in 2017. The increase primarily resulted from a provision for employees year-end compensation, as well as an increase in professional fees and investor relations for debt expenses. Our cash balance as of March 31, 2018, which includes cash, cash equivalents and marketable securities totaled $94.1 million, compared with $19 million at December 31, 2017. The increase is mainly attributed to the $70.3 million in net proceeds raised in an underwritten public offering in June, as well as $5.9 million raising our registered direct offering in April 2018. With that said, operator, please provide instructions for the Q&A portion of our call.

Thank you. [Operator Instructions] We will take our first question from Adam Walsh of Stifel. Your line is open. Please go ahead.

Hi. This if Edwin on for Adam. Thanks for taking my questions. So in the recent Phase II2b study, Aramchol saw great efficacy in NASH resolution and excellent safety profile and people start thinking Aramchol could be part of future comb therapy for NASH patients. And so my question is, do you think of a combo arm in the Phase III trial next year? And related to this, are you looking for any partnership ahead of Phase III launch? Thank you.

Thank you for that question. Aramchol is personally a very good standalone therapy, but also the best candidate for our combination therapy. And we are completely in agreement with this having a unique mechanism of action with the down regulation of SCD-1 and very good question. We are currently exploring the potential combination candidates to combine two at Aramchol and for our clinical studies. And you will probably see this in the coming future exploring this better into the clinical trial.

All right. Thank you.

Thank you. Our next question is from Elemer Piros from Cantor Fitzgerald. Please go ahead.

Again my apologies there. We’ll now take our next question from Yasmeen Rahimi from ROTH Capital. Please go ahead.

Hi, team. Congrats on the continued progress. Quick questions. So can you give us a little bit more color on your proposed Phase III trial design specifically on the length of treatment you would like to propose, whether it’s 52 weeks or 72, the dose at potential five? And then maybe generally, you can give further details as to where your trial design looks more like regenerate which is Intercept or more like result IT, which is Genfit? And I have one follow-up question, if I may.

Yes. Thank you, Yasmeen. This is Tali speaking. We are currently designing our Phase III study which we are post consulting with KOLs and we will propose to the FDA. From our point of view, we are planning on a study that this is very much like of it. That means, it will be, to answer your question of 52-week study and not a year-and-a-half. We take this is acceptable based on current table size. The dose will clearly be 600 milligram, which shows better efficacy in the ARREST study and the population, both hopefully be the same as the population in ARREST. That is taken through [F-1 to F-III] [ph] over risk capacity, overweight obesity and pre-average diabetic. That is the purpose of designing in front of population. For the same size, we will power the study to meet or to be powered for both endpoints. NASH is losing without worsening of fibrosis and fibrosis improvement without worsening of NASH. That would be more like the Obeticholic acid study and less like the Elafibranor study, but how we are going to face primary endpoints and with [indiscernible] adjustments remains to be discussed with the FDA.

Thank you so much, Tali, for the color. Very helpful. Second question is, I know you can’t really discuss any details of the results that you’re submitting to AFLD in November. But can you maybe just help us understand what sort of data we should be expected to see at the upcoming Liver Conference?

So in AFLD, we will present, of course, all this top line data that everyone that we presented already. And as Allen just alluded, you can find the top line data in our – with slide, of course, but also some subpopulation analysis, we are going to – we are working with professor of Galmed Jeff Hatfield, whereas the group selected to present and worsen PI of the study and we will present everything. We are still collecting a lot of questions on PIs with regards to the main interest with regards to the – result of the study. And we will collect as much as we will be able to view the statistical analysis and present every possible interest of the PIs that are asking the question.

Thank you, Liat.

Thank you. [Operator Instructions] We will take our next question from Edward Nash from SunTrust Robinson Humphrey.

Hi, good morning, guys. Thanks for taking the call. Just want to ask you a question, I assume that this trial that the Phase III would be an international study, correct?

Yes.

So I just wanted to – maybe you could just spend just a couple of a minute or so just talking a bit – a little bit about the issues with biopsying in Israel. I know that was something that came up quite a bit, because not some of the patients could not have been – couldn’t be biopsy in the final analysis on the Phase II? And just wanted to find out what that restriction was and how we can kind of avoid that in the future, so that we’re going to get more apples-to-apples based data?

So this is not an issue anymore. Indeed, when we started this study, the Ministry of Health [indiscernible] study, this is when we started in 2014. The first patient in the study came from Israel. And at that time, the Israeli Ministry of Health not allow a second biopsy in the context of a clinical. Associated with the Minister of Health, it took longer than we expected for the patient from Israel and that is exactly 24 patient completed the study without a second biopsy. I don’t remember the date in 2016 which we received an agreement about the second biopsy for patients in this study. And therefore, today, in Israel, the Ministry of Health does allow second biopsy with several restrictions. In the pivotal study, we will not include country size or anything that does allow exactly the protocol-defined [indiscernible] for this endpoint and that includes the second biopsy. I want to say one more thing about your question this issue with the Ministry of Health, we knew up really that is in our clinical analysis trend, which was recommending a month ago, specifically stated that and defined analysis for biopsy patient with second biopsy noting this limitation in Israel.

That’s very helpful. Thank you. And my last question would be just – we – I guess, I assume you’ll be able to meet with the agency, the FDA before the end of the year. Will you be – do you think you’ll be able to get the – the time will be such that we will get the minutes on that meeting before the end of the year given the idea of what the final agreement was? And I assume that what are you looking at first-half launch or more of a first quarter?

So, yes, we’re – this is our plan to meet with the FDA by the end of the year, but of course, we stand also in the timeline with the agency. And accordingly, we believe that towards the end of the first quarter or beginning of the second quarter of 2019, we’ll be able to initiate the study. This is our working assumption.

Great. Thanks very much, guys.

Thank you. We will take our next question from Elemer Piros of Cantor Fitzgerald. Your line is open. Please go ahead.

Yes. Allen, I was wondering if you could elaborate what would be the proposed budget for the upcoming Phase III trial? And I understand that it might be arranged since we don’t know the sample size at the moment?

Of course. So, as Tali alluded, the study goes to the very similar to direct study. Just to remind you, in direct study, we had 80 centers in 12 countries. We – our working assumption or the budget that we built with – built on 200 centers, about 200 centers, which we believe is an optimal number to run the pivotal study. And based on the cost of direct study, which was around US$18 – US$18 million and we, of course, do MRI. We believe that around US$75 million is the right number to the budget for the cost of the pivotal study. We are going to – our team is going to manage study the same way we conducted the Phase IIb. We have a very strong clinical team. And we are recruiting now additional senior members for the clinical operations team, which we would inform in due time. And this team is going to use local CRA, CRO to run the study that we believe that this is the right budget.

Thank you very much.

Thank you. Our next question is from Steven Seedhouse of Raymond James. Your line is open. Please go ahead.

Hey, good morning. This is actually Alexander Ching on for Steve. Thanks for taking my question. Firstly, I want to ask was regarding the design of the Phase III trial, particularly in regards to geography. I think you touched on it somewhat during one of the previous questions. But just to be clear, are you still intending to target the same three regions in Phase II? And if so, will you be sticking to the same one-third type ratio recruitment target as before?

So it’s a simple answer. Yes, we plan to continue to enroll in these regions. We have some – we have been working a lot to get the ARREST study ongoing in these regions in terms of regulatory interaction, et cetera. And we now have like one step ahead in these regions and we have good relationship, which will continue, of course, we will expand. I cannot tell you exactly the composition of the patient that we will enroll as this depends, of course, on the competitive landscape and enrollment rates. But I assume that at the end of the day for the large pivotal, we will end up with something like one-third, one-third, one-third like we did here.

Understood. Thank you very much. And as a follow-up to that, would you clarify the patent protection on Aramchol? And when you have excluded it until, especially in the U.S. and Europe. I just want to clarify what the actual runway would be on that globally? Thanks very much.

Yes. So the patent for the composition of matter of patent for fatty liver disease is protected in 2023, if I remember correctly November 2023. We are relying on the [indiscernible] and believe that we’ll be able to get and this is based on the opinion that we received from our IP attorney, a counsel that this will give sufficient protection until 2028. Now in 2017, we’ve submitted a new patent on Aramchol effect on fibrosis. Once granted, this would give us additional protection until 2037. We have, all in all, by the way, we have about 16 families of patents in the very – and these families are called in all countries, including U.S., Europe, Japan, et cetera. And so in addition to these patents, we have an umbrella of other high barrier patent. We should use formulation and choice and various other orange book patent to provide a sufficient protection, IP protection now for government. We eventually kept a number of patent off the data, which now we have the data we are working on new families of patent, which we’ll submit through mid-year. And once granted, we believe it would give us a substantial additional protection for lifecycle management overall.

Thanks very much.

Thank you. Our next question is from Jason McCarthy of Maxim Group. Please go ahead. Your line is open.

Hi, guys. I know you’re going to – you’re planning to release more data, obviously, at AFLD later this half. I was wondering just based on the data that you did announced around the absolute change in that content. Could you just – could you give us a little bit more color around what the mean percent change in that was, because there is variability between all the different trials that are going on in the enrollment criteria and the average fat content that patients were coming in with? We can do our own extrapolation, but I was wondering if you can give us some color?

Okay. So as we have, as alluded before, we’re working on exactly on providing more information at AFLD. I can repeat the numbers that we have provided for absolute change in the mean fat, absolute change from baseline and you have the numbers in our press release. And also remind you that we did an analysis on 5% – a cut of a 5% absolute change or more for the MR spectroscopy of responder analysis, the post-hoc analysis, which is currently considered clinically meaningful cutoff and indeed, showed a patent and statistical significance in line with biopsy result and the ALT and AST result. So all in all, we are working on analyzing the MR spectroscopy data to – in more depth. We understand this is interesting information for everyone. This would be the first global study with these numbers. This would be the first large study with 52-week data on this data and the study that includes also biopsy. So we’re working on a large packet. From our point of view, I have to say, the biopsy results are more relevant at this stage looking forward. And our priority effort is to better understand how to design and sample size, and control is the endpoint for the pivotal study based on the biopsy results. So MR spectroscopy, I agree with yours interesting, but require a lot of additional analogies and it will take more time.

Great. Fair enough. Thank you.

Thank you. [Operator Instructions] Our next question is from Yasmeen Rahimi from ROTH Capital. Your line is open. Please go ahead.

Hey, team, it’s me, again. Question, along the study for the ARREST, can you enlighten us across the different sites that you had? Which sites were you able to enroll the factors? And with that in mind, are you considering to expand in that geographical location, therefore, to expedite your enrollment and therefore, expedite potential data readout?

Yasmeen, hi, it’s Liat and thank you for this question. I think this is a bit too early to answer this question and it’s not a public domain. So I think, we will take the next question, please.

It appears there are no further questions queued up at the moment. So I’d like to turn the conference back to our host for any additional or closing remarks.

Thank you very much, and we wish you all a relax summer holiday, and looking forward to talk to you all on our next investor call.

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