Good day and welcome to the Galmed Conference Call to discuss Financial Results for the Third Quarter 2021. 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. 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 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 conference over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead.

Thank you, Shamali. Good morning and thank you for joining us on today’s conference call. I am pleased to be here today with our Chief Scientific Officer, Dr. Liat Hayardeny and our Chief Financial Officer, Yohai Stenzler. We are also grateful to have with us today our guest KOL Professor Vlad Ratziu from the Sorbonne Université and ARMOR study Co-Principal Investigator. Professor Ratziu will present the results from the first dataset of the open label part of our Phase 3 ARMOR study also referred as the ARCON cohort. Professor Ratziu will be happy to take questions following his presentation. At the second part of our today’s call, we will report to you on our financial results for the third quarter of 2021 and we will be happy to take questions addressed to management. As you know, early this year, an open label product was added to the Phase 3 ARMOR study designed to provide effect size on a higher dose of Aramchol 300 milligram b.i.d., with 153% elevation in exposure and optimal treatment duration for Aramchol. Galmed also added to the study a rigorous and robust pathology reading process, confirm and designed in consultation with the FDA, including a committee of three independent experienced liver pathologists. Biopsies are read by each pathologist individually, followed by a consensus reading. The data which will be soon presented by Professor Ratziu is aligned with the hypothesis that higher Aramchol dose results in an improved efficacy profile and that a direct anti-fibrotic effect of Aramchol may occur as early as 24 weeks. It is demonstrated by histology and corroborated by fibrosis biomarkers. Analysis of biomarkers in the larger ARCON cohorts support anticipation that further biopsy analysis will continue to show that Aramchol treatment provides a highly meaningful effect on fibrosis. Importantly, Aramchol continues to show excellent safety and tolerability profile. Now, let me transfer the call to Professor Ratziu. Professor Ratziu, please.

Thank you, Allen. I am always honored and very happy when I can get to present positive results. So, thank you for inviting me to do so today. So, hello, everyone. I hope you can see the slides we have prepared for you here. I would like to start by reiterating what Allen Baharaff explained very well, which is that this is an innovative study, which was designed within the randomized controlled trial, the Phase 3 trial of the ARMOR study and this is an open label part, which tests three different durations of exposure to Aramchol as explained a 6-month duration, a 12-month duration and a 18-month duration in three groups of patients of 50 patients each. It is an open label study. We know basically the rate of response in terms of fibrosis reduction of the placebo arm from the many studies that have been conducted and reported so far. So, the interest of the study is not the comparison with placebo, but rather to understand whether changing the pharmaco presentation of the drug by delivering it twice a day, which increases as you were told, considerably, the exposure in blood if this results in higher level of histological effect than what was previously tested and published in the Phase 2b trial. Moreover, this study will try to understand what would be the optimal period of treatment that results in a strong anti-fibrotic effect. And for that reason, the 3-period – length of the three durations are being compared simultaneously. Now, the study will continue after the respective 6, 12 or 18 months time where a controlled liver biopsy is being performed. It will continue in the same open-label fashion and it is scheduled to end around the same time as the randomized controlled Phase 3 trial ARMOR…

So thank you for Professor Ratziu, and we will open the floor now for Q&A for Professor Ratziu, and then we will continue with our regular call.

Thank you. Our first question that we have is from the line of Steve Seedhouse with Raymond James. Please proceed with your question.

Hi, this is Ryan Deschner on for Steve Seedhouse. I wanted to see if any of the patients in these cohorts are receiving any other therapies like vitamin E, pioglitazone fibrates, anything like that? And then also, were the patients consulted on lifestyle management eating well, exercising more, etcetera? Thank you.

Yes. Thanks. So this is akin to all the other studies that are being conducted in the field. Patients are allowed to be on other medications, particularly the ones you specified if they have been on that medication for an extended period of time before the biopsy that was – the initial biopsy was taken the biopsy that it’s used for randomization. So – because the assumption, like for all the other trials, is that if you have taken Vitamin E or pioglitazone for a number of months or years and then you have a liver biopsy that shows active NASH with fibrosis, that means you’re not a responder to that particular medication. If the patient was – started that medication only a few weeks before he – for the selection, then, of course, they were not allowed in the study. So all these patients can be considered as non-responders to pioglitazone or vitamin E. Now pioglitazone is not even marketed in some European countries and the use of vitamin E is actually pretty low, including in the United States. I cannot give you the exact numbers of those that are on these medications, but what is important is that they are basically equivalent to non-responders to these drugs. Now you’re also asking about that and lifestyle measurements. So here again, like all the other trials in NASH, people are given the information they are educated about what they need to change in their lifestyle and their diet and the exercise they are doing or not doing and they are constantly being reminded that in each study visit, but there is no systematic ancillary program of implementation of the and lifestyle changes. I’m not aware of any pharmacological trial that does that. So it’s active reinforcement, but it’s no more than that. Of course, any changes in weight, any changes in alcohol consumption any changes in the amount of activity that are captured at each visit. And this will be one of the compounders that will be taken into consideration when analyzing the final results on the effects on histology.

Got it. Thank you very much.

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

Hello, everyone. This is Thomas Yip asking a couple of questions for Ed. Congratulations on the very exciting open-label data so far. There are a couple of questions. First, among the five patients who achieved a two-point reduction in fibrosis as we’ve seen in other slides, at approximately what time point was that achieved? And when should we expect the next set of biopsy data from ARCON cohort?

So thanks, Thomas. I don’t have the exact detail of these five patients. Maybe Galmed has it, whether that was week 24, 48. I think it’s quite equal in between the groups. But with the small numbers, I’m not sure if we can be confident about that. So these results will be given. Now for the next – so the study is ongoing. So they are – each week, there are people who have – their second biopsy being taken. So this will continue. We hope that the next time we report filings on this cohort, it will be when the first 50 patients instead of the current 20 will reach the end-of-treatment biopsy. So then we will have a picture – a larger picture on the number of patients that is higher than the one presented here, so 50 patients. So I don’t know when that exactly will happen, but we hope that this can be available by the time we hold EASL next year. So I hope that we can show you more data at that time.

Okay. Got it. Next year. And I just want to confirm for the biomarker data analysis that was presented today. Is the ASLD cohort of 20 patients a part of the overall open-label ARCON cohort of 139 patients or are they separate cohorts?

The 20 patients are part of the 139 cohort that is – that I presented. They are in there.

Okay. So the data of approximately 50 patients of the open label overall does contain the AASLD cohort?

And it contains additional patients that have been followed for variable periods of time. Some of them only 4 weeks, other 8 weeks out of 12 weeks. But the repeated measurements methodology that has been used takes into account the individual period of exposure for each one of these 139 patients, and the graph was built using these data.

Right. Got it. And then parsona one last one point about the study about the demographic so far of – we see that over 77% of patients enroll in the open label are female patients? Is this by design? And also do you expect any potential impact?

No, it’s absolutely not by design. It happens to be that way. Actually, if you look at most studies, at least most trials that have been published so far, there is a majority of women. Maybe not 77%, it’s more like 60%, 65%, but that is, in fact, the majority of women is always something that we see in this series.

Okay, understood. Thank you so much for taking our questions.

Thank you.

Our next question comes from the line of Kristen Kluska with Cantor. Please proceed with you question.

This is Rick on for Kristen. Could you please discuss how you look at the importance of time to onset in these results, particularly in comparison to other announcements in the NASH space. What importance do you believe the time to onset could ultimately have for physicians and patients?

Thanks, Rick. So you’re saying time to onset, you mean the duration of exposure in the trial? 24%, 48% to…

Yes, that’s correct. Yes.

So we’re just trying to understand the dynamics of the antifibrotic potency of the drug, because it can well happen. You know that you have people who are – for one particular drug that responds much earlier than, let’s say, no – you can have one particular drug, which has a much earlier response and other drugs that you need to use for a longer period of time to obtain the same results. So, that’s one thing. I let say, some drugs act very fast, others act very at slowly, that’s one thing. The other thing – and we don’t know which one is Aramchol, because all these studies that have been performed so far for all the drugs, including Aramchol, the Phase 2b trial, they only have one fixed period of time. The only trial where we tested two – we did serial biopsies, so that to understand the dynamics, to understand if there is an early or a late response was the trial, where biopsies were performed 1 year and 2 years. But in all the other trials, it’s just one fixed time period. So you don’t know whether you’re at the maximum of the effect or if you’re at a time point, we’re just starting to see the effect. So in order to get a better understanding of how this drug acts on fibrosis and the other aspects of liver injury, it is good to have more than one time point to understand the kinetics of the response. That’s one thing. The second thing is that there is individual variability. So there might be early responders and late responders, people who need to be treated for a longer period of time in order to have a response. So that also is the basis for comparing three different…

Alright. That’s helpful, thank you.

Our next question comes from the line of Justin Zelin with BTIG. Please proceed with your question.

Hi, thanks for taking the question. Just curious if you could help us put into context how you view these results on fibrosis improvement as compared to some of the other data sets available in the field currently?

So as an academic, I have to be very careful the way I answer your question because it is very hard to compare studies between that are not head-to-head, as you know, and which can defer in terms of duration of treatment in terms of population rend so on and so forth. Nonetheless, for the moment, practically speaking, there aren’t many studies out there that have shown a clear effect on fibrosis regression, even drugs such as the GLP-1 receptor agonist semaglutide, as you’re very well known, has not shown in an intention to treat an effect on fibrosis. Madrigal has not shown yet – I mean, Madrigal has not shown yet convincingly that effect will see the results of the Phase 3 trial. But so – and the only exception is actually obeticholic acid over a period of time, on an extended period of time of 72 weeks, but in a large Phase 3 trial. So there aren’t many examples out there of drugs that were successful in reducing fibrosis. So in that sense, Aramchol is positioned, I think, in a particularly good position here with the results that have been presented in the Phase 2b trial and the ones that I show you today. Obviously, this is not sufficient. A Phase 3 trial is necessary to prove beyond doubt that there is an antifibrotic effect. And this will be done, hopefully, with everybody’s efforts. But for the moment, if you simply consider the level of response in the patients I have shown you today. And if you consider the historical placebo response rate, you can see that the magnitude of effect is higher than what has been shown with OCA. All other things considered, which are – the fact that there is no direct comparison, and this is not a placebo-controlled trial. But even if this were a placebo-controlled trial, I don’t think that especially with three pathologists, the level of response of a placebo arm would be as high as 60%, no way that could happen. So, I think there is a clear difference here. There is something quite clear, very difficult to compare with the other studies. The only other thing you could compare is with OCA because that’s the only other positive trial on fibrosis. And that comparison just between us – because you can’t say that in a scientific meeting, is in favor of this drug in the sense that the effect size versus placebo appears to be much higher. But that’s about as optimistic as I can get given the design of this trial and the one from – and the REGENERATE trial.

Great. Thanks for the question.

Sure. It’s very encouraging that because we really need drugs that work on fibrosis. And the disappointment in the – lately based on the results reported so far is that actually very few drugs have clearly shown an antifibrotic effect. So, it’s very good news that we have some strong candidates.

Absolutely. Thanks again.

And our next question is from the line of Steve Seedhouse with Raymond James. Please proceed with your question.

It’s Ryan Deschner, again, for Steve Seedhouse. I wanted to ask, can you give us any more detail on NASH resolution or how the individual components such as ballooning and steatosis and equals 20 cohort compared to the rest. And also what you are seeing in terms of weight loss across these cohorts? Thank you.

So, the other histological effects are being studied underway, and we haven’t presented them. We did not stress these results. We do not analyze fully these results for the moment. So, we keep that for the next scientific meeting because, obviously, this is particularly important. So, I cannot give you more detail. I give you everything we have so far. So, there is nothing that’s hidden here. So, you have got all the information that has been rigorously analyzed on a cleaned up database, you have got it all here. So, there is nothing else that can be shown so far. But it will come, stay tuned, and I am sure that each one of the two major meetings in the year, you will have additional information. And hopefully, when we get to the 50 patients, fully analyzes logically, then we will get also all the other details of the histological impact of the drug. But for the moment, that’s all we have so far.

Thank you. And then in terms of weight loss?

In terms of weight loss for the moment, there is no weight loss induced specifically by this drug. So, we will see whether it’s a larger number of patients, there is a change in that. But for the moment, there is no clear effect, it’s weight neutral.

Got it. Thank you. And then maybe one quick question, one last question. The ProC-3 data from these cohorts, it looks like it’s – I mean, definitely wide air bars, but it looks like it’s continuing possibly to improve from week 24 to week 48 where that doesn’t appear to be the case for ALT, AST, Fib-4, etcetera. How are you taking this into account in terms of how you are looking at this in terms of will you continue – do you think that you will continue to see ProC-3 improve? And what would the relationship theoretically be to further improvements in fibrosis?

Yes. I don’t know how much we can over-interpret that. As you say, the confidence intervals are wider than for aminotransferase and so on. It’s still a biomarker that we are investigating all of us. We were learning what it is worth and how it changes in regards to pharmacotherapy or other lifestyle changes. So, for the moment, I would not elaborate too much on a continuous reduction. Obviously, it’s good, it doesn’t shoot up after week 24. So, it’s sort of reassuring. I am very prudent myself in terms of interpreting the biomarkers of fibrosis. So to me, what will be really important is as a first step to document the histological effect and then see whether the biomarkers sort of reflect those histological changes or not. And if that is the case, then we will use those biomarkers based on that. I would not, today, use them primarily as an indication of the antifibrotic effect, but rather as supporting evidence, because we simply don’t know enough about that, plus there might be individual variability in how this particular biomarker response, which can be, to some extent, uncoupled from the individual variability in fibrosis itself. So, there are too many unknowns to be extrapolating too much from this continuous reduction in ProC-3. But obviously, it is probably a good sign that it continues to drop. But we will see with a larger number of patients if this holds true.

Got it. Thank you.

And we have reached the end of the first question-and-answer session. I will now turn the call back over to Allen Baharaff to continue.

So, thank you very much, Professor Ratziu. And let me continue now. So, obviously, things are moving fast at Galmed. Giving the excitement and energy in the company from the data, we view the results we presented today a game changer for both the company and more importantly, for the treatment of liver fibrosis. Nonetheless, we hear the skepticism regarding the NASH space over the last years. As a result, government makes enormous efforts in optimizing its NASH program. We focus on fibrosis improvement, which is the most important endpoint. We increased the magnitude of the effect by over 50%, thus far, by elevating the dose. We employed a robust pathology reading process of three readers to minimize their primary endpoint discrepancies, and we designed a specific study to address the open question of optimal treatment duration. The data we are presenting today reinforces three main facts. One, down-regulation of SCD1 results in significant improvement in liver fibrosis. Aramchol’s mechanism of action directly targeting collagen production and fibrosis is translated into the results we are seeing today. 60% of patients experienced one point or more in fibrosis improvement with only one patient experienced a worsening. Two, the hypothesis that the higher dose results, result in significant clinical efficacy has been confirmed to-date. We have so far doubled our Aramchol on second fibrosis and may end up with a shorter and smaller conditional approval Phase 3 study. The data we are generating will allow us to have an evidence-based discussion with the FDA on these points. And three, data is corroborated by small and large cohorts. The totality of the data at this point is highly encouraging for the next milestones. With our open dialogue with the FDA, based on our fast track designation, we look forward to continuing our updates as the study proceeds. Now let me transfer the call to our CFO, Yohai Stenzler.

Thank you, Allen. This morning, I will be providing you with our financial results for the third quarter ended September 30, 2021. For more information, please refer to our Form 6-K filed earlier today with SEC which, among other things, provides a summary of such financial results. For the third quarter of 2021, our net loss totaled $7.7 million or $0.31 per share compared with a net loss of $6.9 million or $0.32 per share for the corresponding quarter in 2020. Research and development expenses totaled $6.5 million for the third quarter of 2021, the same is for the corresponding quarter in 2020. General and administrative expenses for the quarter totaled $1.3 million compared with $1.1 million for the corresponding period in 2020. Our cash balance as of September 30, 2021, which includes cash, cash equivalents, restricted cash and marketable securities totaled $42 million compared with $51 million on December 31, 2020. With that said, operator, please provide instructions for the second Q&A portion of the call.

Operator?

Our first question would be from the line of Ed Arce with H.C. Wainwright. Please proceed with your question.

Hello again everyone. This is Thomas Yip asking a couple of questions for Ed. First question, can you tell us when we should expect the double-blind portion of ARMOR to begin enrollment? And can you also discuss preparations for manufacturing of the new Aramchol meglumine formulation for a clinical trial?

Thank you, Thomas. So, as we have previously announced, we are planning to reinitiate the double-blind part of the study in the second half of next year of 2022. There is no need, in fact, to meet new protocols because the existing protocols allow us to shift from the open-label part to the double-blind part without the need for a protocol update. We will do that when – and we will have sufficient data to discuss with the FDA the new designs that we are anticipating, which we believe will be shorter. To remind you, at the moment, the design of the double-blind part is 72 weeks. I can almost certainly tell you that at this stage, we believe this is going to be shorter, that we will discuss with the FDA how short it will be and same is the effect size. Clearly, the design – the initial design was based on the Phase 2 study, on the ARREST study. We have doubled the effect on fibrosis. Hence, the effect size has changed, and we need to discuss with FDA the new number of patients that will be required for significant e-value. We are continuing in full force with the manufacturing of Aramchol meglumine clinical batches. We are preparing for beginning of next year the bioequivalent study between Aramchol twice daily, the BID, the current BID and Aramchol meglumine regulatory bioequivalence study. And once this is done and confirmed, we can initiate the double-blind study.

Okay. Got it. And perhaps a follow-up on that. When should we see the power equipment stay there, I suppose, as you said, ahead of the second half of 2022 when the randomized portion begins?

So, that will be in parallel. I mean, these are the same clinical batches that will be used. We are working with the clinical batches that, first, of course, we will have to demonstrate the bioequivalence and then we can move to the double-blind. But we are preparing the manufacturing and packaging, supply and etcetera, of the drugs or the second part for the double-blind part.

Right. Okay. Got it. And then perhaps one final question. When should we expect to see the next update for ? I know you guys have made a lot of progress for Aramchol.

So here, we are struggling between two forces. We have the scientific conferences, NASH-TAG, HEP DART, EASL, we are presenting – we just presented the data recently in the fibrosis conference. So, we are – have to juggle between the financial community and the scientific community, and we will do our utmost to satisfy both. So, we are restricted with embargo data, embargo, of course, by scientific committees that we would like very much to have the data presented there. And at the same time, we try to synchronize that as we did this time with AASLD. So, around EASL, I would expect around EASL, we will release another set of data.

Okay. Understood. Thank you again for taking our questions and we look forward to a very exciting upcoming programs.

Thank you for joining our call.

Our next question comes from the line of Kristen Kluska with Cantor. Please proceed with your question.

Hello. This is Rick on again, for Kristen. Congrats on the data again, and we like to look at the new Galmed website. One thing in particular, you have always emphasized is the greater attention you have taken to individual sites and the number of countries you are enrolling in even despite looking at the speed of the U.S. trial site enrollments. So, we wanted to ask based off this recent Nature Medicine publication, if you could speak to the diversity of this patient population and any key finding is observed there?

Okay. So, we still envisage very much that the population for the double-blind part would be about – 50% would come from the U.S., and the rest would come from the rest of the world. And with that said, it’s – we have of course, Europe and we have Latin America, and we have Korea and we have China, and we have Australia. So, we have not changed the demographics that because – we are looking at potentially different partnering deals with different – in different geographical areas. And we need to satisfy the number of patients which are needed for approval in every single jurisdiction. So, this has not changed. We are working with a selective number of sites in the U.S. We are a partner with a group called OG Health that they are – the majority of the U.S. patients comes from OG Health together, of course, with the leading universities that usually participate in our studies. Same for Europe, Europe, we have London and France and Germany and Italy and Spain and Belgium, etcetera. So, all of the leading sites, university sites that you would find in other NASH studies are also participating and will participate in the double-blind part.

Okay. And maybe just one more quick one. Could you please discuss the Phase 1 data readout for Amilo-5MER? And perhaps how you are thinking about gating steps in initiating a Phase 1b proof-of-concept study?

So, we are in the process of finalizing the data with the – in life as we completed, in fact, of the three phases. There is one additional phase that we have added. So, we are really in the process. This is not a public information yet, so of course, we cannot give any data. But we are proceeding, as you have alluded to quickly embark into a 1b and potentially 2a study early next year.

Great. Thank you very much.

Thank you.

And our next question comes from the line of Steve Seedhouse of Raymond James.

Hi. This is Ryan Deschner, again, on for Steve Seedhouse. The – in the recent data set, the ALT reduction looks like it could be a little more pronounced and equals 20 cohort? Are you seeing a correlation between ALT reduction and baseline ALT or fibrosis state? And can you tell us what the baseline ALT levels for cohorts were? Thank you.

So, as Professor Ratziu alluded, we presented all the data that we have. We did not run any correlations or any other analysis apart from the ones that we have provided.

Okay. Got it. Thank you.

And we have reached the end of the question-and-answer session. We will now turn the call back over to Allen Baharaff for closing remarks.

So, thank you all for joining our conference call today. And thank you again for Professor Ratziu for your presentation. Today’s presentation will be uploaded on our website under the Events and Presentations section and you will have a great opportunity also to view our new website, which very soon will include also additional link to the ARMOR study. And as always, we welcome any question that comes during the quarter. You can communicate directly with – to me or to anyone in the team, and we are very happy to correspond. Thank you very much, and have a nice day.

This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.