Greetings. Welcome to the Galmed Pharmaceuticals’ Fourth Quarter and Fully Year 2018 Earnings Call. At this time all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I would now turn the conference over to Paul Arndt, with LifeSci Advisors. Mr. Arndt you may begin.

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, Wednesday, March 13, 2019 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 Chief Executive Officer. Allen, please go ahead, sir.

Thank you, Paul. Good morning and thank you all 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, Mr. 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 fourth quarter and full year 2018. As always, we will be happy to take any question you may have at the conclusion of our prepared remarks. As we gear up to start our plan Phase 3/4 ARMOR study, we are pleased to update you on our recent data on increased plasma level of Aramchol 600 milligram by dose splitting aimed at increasing treatment efficacy. As previously seen in our presentations, a dose response pattern was observed in the recently completed Phase 2b ARREST study. Aramchol 600 milligram resulted in higher efficacy compared to 400 milligram with only 20% elevation in plasma levels. We are reporting the successful Phase I PK study to show the significant increase of Aramchol plasma levels exposure when splitting the single 600 milligram dose into twice daily 300 milligram. Results demonstrate that plasma level increased in all subjects with average increase of 53%. This increase will allow subject to reach a higher exposure which we believe is associated with better efficacy. Importantly, comparing once daily dosing of Aramchol 600 milligram with 300 milligram BID on 16 subjects and a crossover design show that both dosing regimen were similar in terms of safety and were well tolerated. The results of this study were recently obtained and submitted to the FDA. We are planning to discuss these new findings in our forthcoming end of Phase 2b meeting. We find…

Thank you, Allen. Good morning and thank you for joining us today. This morning I will be providing you with our financial results for the fourth quarter and the full year of 2019. For more information please refer to annual report on Form 20-F filed earlier today with the SEC, which among other things provides a summary of such financial results. Our net loss for the three and twelve months ended December 31, 2018 totalled $3.7 million and $9.9 million respectively compared with a net loss of $3.6 million and $12.3 million for the corresponding period in 2017. As a result, our loss per share for the three and twelve months ended December 31, 2019 was $0.18 per share and $0.54 per share versus $0.27 per share and $0.98 per share for the corresponding period in 2017. Our revenue for the 12 months ended December 31, 2018 was $2 million compared to $1.1 million during 2017. This year the revenue included a milestone payment of $1.5 million in connection with our license agreement with Samil Pharm. Research and development expenses for the 3 and 12 months ended December 2018 totaled $2.7 million and $8.3 million respectively. This compares with $2.2 million and $9.7 million for the corresponding period in 2017. Turning now to G&A, our general and administrative expenses for the 3 and 12 months ended December 31, 2018, totaled $1.5 million and $4.4 million respectively versus $1.7 million and $3.8 million for the corresponding period in 2017. During the 3 and 12 months ended December 31, 2018, we've had a net financial income of 1.5 - $0.5 million and $0.9 million, respectively versus $0.01 and $0.1 million during 2017. Our cash balance as of December 31, 2018 which includes cash, cash equivalents, short-term deposits and marketable debt securities totaled $19.2 (sic) [$90.2] million. With that said operator, please provide instructions for the Q&A portion of our call.

Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Steven Seedhouse with Raymond James. Please proceed with your question.

Hi, thank you. Allen, just so I'm understanding the Split Dose Study protocol and data correctly, is 53% increase in exposure referring to the comparison of average drug levels for all the measurements taken over the three day period from day seven to 10. And if so I'd just be curious to know how Cmax and Cmin compared at steady state as well. It just seems if you increase the mean exposure so much by simply dividing out the dosing that you might have increased Cmin. But maybe I'm wrong, I just be curious to hear the detail there?

So we’ll let Liat Hayardeny, our Chief Scientific Officer to take these.

Yeah. So, hi, Steve and thank you for the question. So if you looked at the comparison the AUC is up regulated by 53%; all the [indiscernible] patients that this is volunteers subject to raise their exposure with an average of 53% with regards to the Cmax here. Usually when you split the dose you reduce the Cmax. It's very hard to see it in a compound that has a 72 hours half life and the Cmin was increased.

Okay. Thank you. That's helpful. And were you able to look any - at any PD - biomarkers in the study? I'm not sure how useful they'd be in the nine day healthy volunteers study, but ALT or any other liver function tests, was anything like that measured?

We only look at this is a healthy volunteers; all these volunteers receive the two regimen in [indiscernible] study, we don't have and we don't experience any safety signals with all the volunteers that were in this study, although all we had 16 people in this study.

Okay. And just regarding the upcoming FDA meeting, besides obviously a conversation about the new dosing data where you've increased exposure are there any other you know, questions assuming you might have received some written feedback potentially to your initial meeting request, anything notable to mention from any potential feedback regarding you know, the trial design, the statistical analysis plan, just any other details obviously in addition to these dosing data that you'll discuss at the meeting?

There's no [special] [ph] issues to say, we still hold a very good and sustained safety margin for all our preclinical toxicology with the new exposure data. So we are happy that this week we still have margin of above more than 20 times [without long-term toxicity] [ph], so we don't assume this is going to be an issue. And we will go to the end of Phase 2 meeting and we - with the protocol ready and with everything. And hopefully we'll get the blessing of the FDA to our suggesting and answers to all the questions that we have.

Okay. Thanks. And just maybe switching to slightly different subject, last question for me, think at one point you guys might have been contemplating starting a clinical program in adolescent or Juvenile NASH. Maybe can you just talk about any plans there or key differences between adolescent and the adult NASH market and potential path to market there if that's still in the plans?

So yes, it is -- I mean, these discussions are still ongoing. We identified a principal investigator; we just want to make sure it's going be a two site – the initial study is going to be a two site study. We just wanted first and foremost you know our first priority is to put ARMOR study on track, on time, initiate this study. As you know 60 days after end of Phase 2b meeting we are expected to submit to the FDA our Pediatric Plan and we are going to discuss in this - submission the design of these adolescent study and – but we – and all we know the endpoint and the design of the study and we will definitely report as soon as we have an agreement with the agency we will report back.

Okay, great. Thanks for taking the questions. Thanks for the updates.

Thank you, Steve. Thank you for your question.

The next question is from Yasmeen Rahimi with Roth Capital. Please proceed with your question.

Hi, everyone. This is Katie An on for Yasmeen today. Thanks for taking the question. I have a couple. So are you going to propose to the FDA on your Phase 2 trial two doses or one? And in your meeting in your view what are the pros and cons of going with one dose in your opinion? Thanks.

So we will discuss with FDA you know all the possible scenarios. We've worked out a number of contingency plans which we intend to propose. This was the decision to go on a twice daily was the decisions that we've carefully looked in together with our KOLs, Scientific Advisory Board, and the board scientific committee. And I think we are - we feel very prepared for the meeting and discuss all possible contingency.

Okay. And then couple last ones. Can you remind us of the toxicology studies of the 600 milligram split dose? And maybe provide any comments you may have regarding what you think about the safety parameters with the dose splitting in human?

So, okay. So Aramchol half life is 72 hours, as you know in steady state. We have nine months toxicology [indiscernible] which covers the new higher exposure with a safety margin, actually 21, was greater than 20. Just to remind everyone on the line the FDA requires at least ten fold, so everything that’s higher - that is higher than ten fold. And we have greater than 20. So we are quite safe with the safety margin with our toxicology to this new regimen. We have all the toxicology that is supporting the new higher exposure. So we don't expect any [indiscernible] surprises from all our toxicology program. But it fully supports the new regimen and the higher exposure… In terms of clinical, as we reported the safety in [ARREST] [ph] was very good. And the only thing that we note is a possible minor increase in the incidence of [indiscernible] which we reported, the numbers are very, very small, so 11.2% for the 600 milligram versus 6.3% for placebo. If you do the math you add one more patient and there is no signal anymore. And since for this one possible event the difference in the incidence is small. There were no discontinuation to [indiscernible]. The events were mostly mild and they didn't require treatment, they resolved within one month. All in all, this is not considered a barrier to increase the overall exposure. It is anticipated with the twice daily dosing.

Okay. Thank you so much.

Thank you. The next question is from the line of Adam Walsh with Stifel. Please proceed with your question.

Thanks. Hi, Al. A quick question back on the 300 milligram BID dose, in terms of the end of Phase 2 meeting, is this all - you know is this a meeting where you expected kind of check the boxes around this and move forward and if the FDA looks at the 16 patient PK study and says they want more data on the 300 BID dose, would you delay the Phase 3 and produce that or just take the 600 milligram forward into the pivotals?

As Allen said, we will discuss all the scenarios with the FDA. We have a number of plans and we plan to keep the timelines and budgets in the Phase 3 study, whatever the scenario will be.

Okay. Terrific. And then two others real quick if I could. Just quickly on the cash balance the $90 million, do you still expect that'll suffice all the way through the Phase 3 trial? And then also Allen on the - I always ask about this, but on the partnership front, you know, are you still considering that either geographic combination. And what are your thoughts ahead of the Phase 3 on that? Thank you.

Sure. Hi and thank you for the great question Adam. So budget, yes, budgets have - now we have a better granularity of budget since we already agreed with all vendors or whether it be CRO, the lab, the data management et cetera. So we can safely say that this study would cost about 60, six zero, US$60 million for the Phase 3. And as you know, we are sufficiently funded for this part of the study. The second part would depend very much on the results of the study and with a successful study also depends on a number of events. It's an outcome study. So we’ll have to carefully design the study and then we would come out with the budget, which I'm sure is going to be a very strict budget as we manage to get for this Phase 3 part. For discussion, I've repeatedly said that, we hope to be the first NASH treatment in some geographic, because we want to be first in the market. I think it’s important in some geographies. We are looking at a number of areas, Asia, in particular, China, as well as Middle East, and potentially Latin America. So this kind of discussions, I cannot of course - I cannot comment on any if there are or aren't any discussions ongoing. But we will favor very much and early agreement for geographical licensing.

Great. Thanks.

Our next question is from the line of Edward Nash with SunTrust Robinson Humphrey. Please proceed with your question.

Hey, congratulations on the new PK data. This is Funk on for Edward Nash. First question is, for the PK, can you - do you plan to - I mean, that they had to do some conferences to present the details where - yeah that's the first question. The second one is can you remind us what - from the Cmax to Cmin how long it takes for a 6 milligram acuity and how long it takes for the 300 DID acuity from Cmax to Cmin?

So at the moment we're not presenting the data. Of course, we would like first to discuss the data with the FDA. We have another study ongoing, which also includes Phase b and its also based on speed [ph] dose, is the drug interactions study Aramchol 016, which results are due very shortly and we would describe according to our publication strategy when and where to publish these data. Now about your – next part of your question Liat?

Yeah. So you were asking with regard to Cmax, Cmin difference, and you have to take into consideration that that's a long half life. It takes at least seven days, sometimes even higher than that to get into a steady state. Once it's a steady state then it ends with such a long half life. But it is being translated, a big difference is the half life stays the same, but it always has constant streaming because of the long past life, since you have 72 hour half life and you give it every 12 hours then or every 24 hours in the 600 milligram once daily.

Got it. That's very helpful. And also the second question is, I think it's very assuring that the $6 million can be sufficient for the Phase 3. But just to clarify is the $6 million going to be sufficient until the interim data readout or it's going to be sufficient until that outcome trial?

Yes, absolutely. We are calculating interim, but we continue recruitment. So it's not – doesn’t end only with the first 1000 patients. In fact, we included an additional year of operation and recruiting additional patients from the part - part of the Phase 4 study. So we take under consideration that it's not hard stuff, we continue the study and then report the results and decide accordingly.

Got it. And lastly just some items for the Phase 3 design, are you starting to run a 52 week trial or is it going to be a 72 week? And do you think it's reasonable to use that REGENERATE trial as the timing assumption for the Phase 3?

I think this is when – I mean, we are planning a 52 week trial and when you look at the data and both NASH resolution from the Phase 2b study and second fibrosis after 52 weeks we will compare that to the others - these ongoing data studies reporting, I think this puts our data in a very nice light and that we've achieved in 52 weeks we have such and effect and we intend to see progress at 52 week [ph]

Got it, great. Thank you so much.

Thank you.

The next question is from the line of Ed Arce with H.C. Wainwright. Please proceed with your question.

Hi, Allen. Good morning. Thanks for taking my questions and congrats on the PK data. So couple questions for you.

Thank you, Ed.

I know you said you will plan to discuss with the agency the different possible dosing scenarios. I'm wondering if one of those might just be proceeding with the study with both QD and BID at separate arms, if that's a feasible scenario, given that you've said you plan to keep for the original timeline and budget? And then I have a couple of follow ups.

Thank you, Ed for that. We were consistent of saying that we will discuss all scenarios with the regulators and we have worked out a number of contingency plans to propel. We will report after our consideration and conversation with the regulators. We don't feel comfortable before going to them saying anything about this.

Okay. Fair enough. And then with regards to the study I know you previously mentioned part of a discussion in that end of Phase 2 meeting with the agency, aside from the actual study itself is the possibility of a pediatric study. I'm sure you've really discussed as well the Phase 4 portion of the study itself, the longer term safety extension. I'm wondered what other components to the overall program, would you be discussing with the agency contemplating this part of the overall design?

Its again, we are - you know, we are a week, not a week or so before the meeting and I think that it's not appropriate to disclose any of our strategy or potential points if we want to raise with the public before we discuss it with the agency first. And we will - as soon as we have any news coming from the agency and we reach an agreement on the endpoints on this study design those we would report and that would be sooner than later.

But in terms of clarification, the study design is a Phase 3/4 study was a Phase 3 study that has histology endpoints and the Phase 4 that is not only a safety extension it's the clinical outcome based just like the FDA guidelines which are very, very clear at this stage. And pediatric Allen has alluded that we usually discussed about 60 days after the…

End of Phase 2.

End of Phase 2 meeting.

Okay. And then one last question for me just a point of clarification. When you discussed the 20 fold safety margin with Aramchol, especially relative to the 10 fold safety margin required by the FDA. What exactly are you referring to there? If you could. Thank you.

That certainly we are referring to long-term toxicology and I think the ICH guidelines are quite clear. You have to compare the exposure that you obtain in a high dose in your top issue to the exposure you have in human and you need to have at least 10 fold and higher than that difference in your long term toxicology. That ICH guidelines requirements and someone was just asking about our safety margin, of course, with the increase of exposure we had above 50, but now we've certainly fit above 20 and with the new exposure we are still in a very good light with regards to the safety margin with the ICH guidelines are requiring. So we are very good at this.

Great. That's very helpful. Thank you so much.

Thank you, Ed.

The next question is from the line of Claymon Surkov [ph] with B. Riley. Please proceed with your question.

Hi, guys. This is Mayank Mamtani, I think the operator got the name wrong. So I had a couple of questions and mostly follow-up. So on the Split [ph] dose, just wanted to understand what did you know before just taking a step back. What did you know about the exposure and response curve before you sort of went down this slide. Obviously you talked about the dose response 100 to 600 once daily. But anything else from earlier studies that you – that is part of the hypothesis and what was really the expectation coming out of Split big dose study? And then I have a couple of follow-up.

Okay. So thank you for this question. That's very interesting. I'll call it the class four compounds that you probably know, it has no suitability and low permeability. And we wanted to reach the Split [ph] dose which we did in the Phase 3b. But the dose that was - that gave us the efficacy that we were looking for, its a very well known in drug development that if you have a flexible molecule, if you split the dose you might end up with higher exposure. And since the deposit class for compound we modulate before. We have a company in England that we gave - we get them all the numbers and they're actually controlling the numbers of all our PK studies ever after from Phase 1 all the way including any amount [ph] and we ran a mathematical model - modelling time to see whether increasing the – whether increasing the dose just twice daily overall in 24 hours the same dose will result in higher exposure. We have the threshold. We decided this - that increasing of the exposure should be at least 40% and higher in order for us to go for a full PK in healthy volunteers and once we got that – that they actually accepted 43 elevation, a 43% elevation in the symmetrical model. We went to a very comprehensive and welcome back PK studies and of course the other one which was very important that the same people experienced both regiments as if we could compare between a certain volunteer what the exposure would be with a twice daily and with a once daily 600, so that we got the results and the results actually was published I think yesterday by the press release. So that - here you get the whole. We are not by the way just first on the company that is doing this. We had previously - you know, you could - one could look for other companies that fit the same splitting the dose, you know, kind of – one could look for low starting for example [indiscernible] for example that split the dose and put higher exposure. We have other companies that fit the same. So if you take for example insulin glargine, and you can see from the paper that they published in 2010 already, despite a slight increasing cost and inconvenience for the patients increased frequency of administration may result in a greater success in achieving their primary endpoint in a clinical trial. This is very well known method and technique in order to increase exposure when you cannot just increase the dose because of low permeability and low suitability. I hope I answered your question.

That’s super helpful. Thank you so much. And just a couple of follow-ups on that, very minor, does this help compliance or does it not? And then I think earlier you said the drug-drug interactions study that also is ongoing which will have results imminently. What are some of the concomitant medication you're studying there that would be helpful to know?

So in terms of compliance we are definitely taking this into consideration and emphasizing it. There are multiple ways today, all kinds of applications that a patient may remind patients of their daily medications. I want to remind you that our study population is one that is already treated by several medications, some of them already twice daily, many patients with these for example medical means twice daily. And as long as we keep the instructions to medications in the morning and evening this does not disrupt activities and it should be not an issue. Can you repeat the second question.

No, I think I think you answered, just my – go ahead.

The DDI study is that we're currently running is with Sakkens [ph] and the results are expected shortly.

Okay. And just last question maybe you are able to answer this or not. What are the powering assumptions in terms of placebo adjusted response maybe on the fibrosis endpoint a national delusion that you feel comfortable presenting to the agency? And any comments on that even if it's general in nature you could provide?

Can you repeat that, I mean, I'm not sure we follow the question.

Just for the Phase 3 study in the end of Phase 2 discussing, anything you could comment on the powering assumptions for that study, what placebo adjusted response and fibrosis you might be thinking about or on natural solution [ph] for that matter?

So the ARREST study gave us sufficient information and currently there is also a reference from lot [ph] published data and we took all the numbers into consideration when powering the ARMOR study for both endpoints, NASH resolution without worsening of fibrosis and fibrosis improvements without worsening of NASH.

Great. Thanks so much for taking my question.

Thank you.

The next question is from the line of Caroline Palomeque with Maxim. Please proceed with your question.

All right. Thanks for taking the question, and congrats on the PK data. So I have two questions. First, can you talk more about what a typical Phase 3/4 pivotal trial protocol would look like versus a standard Phase 3? And then I have another question.

Well, the FDA recently published guidelines and there are precedents of ongoing pivotal studies. In NASH the Phase 3/4 studies include Phase 3 study as derogate endpoint based on histology. There are several ways this can either be NASH evolution or fibrosis improvements or any one of them. And different companies are taking different approaches. We aim with Aramchol [ph] to show an effect on both endpoints. The study continues into a Phase 4 study until you reach clinical outcomes and the clinical outcome are liver related events as FDA specifies including progression to fibrosis and their tactics, their compensation event or cause mortality and the Phase 4 is an event based study. So once you reach certain number of events based on your assumption you will have reached the end of the study. And when you show an effect on the clinical endpoint this is the time for a traditional approval. Because after the Phase 3 study because [indiscernible] past is an accelerated conditional approval. Does that answer the question?

Yes. That’s was really helpful. Thank you. And then so with Aramchol moving into Phase 3 and the data years away, do you plan on bringing in the other assets while that trial is ongoing?

We are continuously looking at possible combinations of Aramchol to run combination studies, which clearly understand that the end of the day its going to be very much in - the name of the game would be about combination therapy. We have been doing thoroughly preclinical studies with advanced clinical asset, with other preclinical assets and Phase 1 clinical asset and we have not started yet on a single asset or assets to go forward. As I said the first – for us the first priority is to put ARMOR on track, on time and once we feel that this is so we will evaluate ourselves to look into more details and do combination and in deciding our strategy and of course we will report as soon as we have any success.

Okay. That’s helpful. Thanks.

Thank you. At this time, I will turn the floor back to Allen Baharaff for closing remarks.

So thank you very much all for joining our call today. We look forward. This is a very important time for Galmed and we look forward for our forthcoming meeting with the FDA and hope would be able to report you back as soon as we can and a successful initiation of ARMOR study. Thank you all for joining.

Thank you.

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.