Good day, and welcome to the Galmed conference call to discuss Financial Results for the Second 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 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 a significant uncertainty about the duration and severity of the COVID-19 pandemic and its impact on Galmed’s business operations. We urge all investors to read carefully the risks and uncertainties disclosed in our filings with the SEC, including, without limitations, 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 obligations to update any forward-looking statements or information, which speaks 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, Mary. Good morning, and thank you for joining us on today’s conference call. I’m pleased to be here today with our CMO, Dr. Tali Gorfine; our CFO, Yohai Stenzler; and Dr. Liat Hayardeny, our CSO from Germany, to provide you with an update on our clinical development programs and report our financial results for the second quarter of 2020. We will be happy to take any questions you may have at the end of our prepared remarks. I also hope that you and your families are safe and well as we navigate the COVID-19 outbreak. Today, I will report on our three ongoing programs: ARMOR, our Phase III trial for Aramchol in NASH and fibrosis; Aramchol meglumine, an improved version of Aramchol; and Amilo-5MER, a new clinical program in our pipeline. Starting with updates on our ARMOR Phase III NASH study and the evolving impact of COVID-19 for the remainder of 2020, the Data Monitoring Committee of the ARMOR study met and recommended that we continue the trial without any changes to the protocol. NASH is a chronic condition where safety is crucial for any treatment addressing the unmet clinical need. Our second quarter report occurred during the onset of the COVID-19 pandemic, which led us to pause recruitment of patients for our study. At that time, we estimated that we could resume patient recruitment only in the last quarter of this year. In the meantime, we collaborated with our investigators, team, and CRO to launch an awareness campaign on social media and in research circles to prepare for resuming study activities. We are pleased to report positive indicators in recruitment starting in June, with increasing numbers of patients screened. We have opened sites in the USA, Canada, France, Mexico, Chile, Spain, Belgium, Turkey, and South Korea, which are steadily screening patients. However, many sites have yet to resume elective clinical activities, and we anticipate full capacity for the study during the first half of 2021. The pace of site openings and screenings is encouraging, and I remain cautiously optimistic, maintaining our guidance for completing recruitment for the first part of the ARMOR study in Q4 2021 and reporting top-line results in the second half of 2023. Naturally, the rapid development and changing nature of the COVID-19 pandemic make it difficult to predict its ultimate impact on the ARMOR study, and this situation is subject to change. I would like to take this opportunity to express our sincere gratitude to the ARMOR investigators and clinical teams who are working hard to ensure patient safety while progressing with the trial. Now let me update you on our Aramchol meglumine program. As discussed in our previous investor call, Galmed is developing Aramchol meglumine, which is a salt form of Aramchol free acid. This new formulation offers benefits of long-term patent protection and allows cross-reference to all accumulated data on Aramchol, including safety, tolerability, and efficacy, leading to more consistent blood levels in patients and the potential for higher efficacy. It is important to emphasize that while Aramchol meglumine is considered a new chemical entity, it circulates the same compound as Aramchol acid regardless of which formulation is used. We plan to approach regulatory agencies in Q1 2021 to discuss the Aramchol meglumine program. To prepare, we will conduct a preliminary bioequivalence study in Q3 this year to identify an equivalent dose to the 300-milligram BID Aramchol acid currently being used in ARMOR. This study will calibrate the regulatory bioequivalence study we plan to perform in Q2 2021 with the identified dose of Aramchol meglumine. Finally, I would like to announce the Phase I readiness of Amilo-5MER, as detailed in a separate press release issued today. Amilo-5MER is a 5-amino acid peptide that shares a sequence similarity with a specific MTADV sequence in human CD44 variant. It is being developed in collaboration between Galmed and the Lautenberg Center for General and Tumor Immunology at the Hebrew University, Hadassah Medical School in Jerusalem. This molecule originated from Professor David Naor's lab, who published findings on this sequence's role in inflammatory diseases in the Journal of Clinical Investigation. Amilo-5MER has a unique mechanism of action that binds to three pro-inflammatory amyloid proteins, two of which are only active in their aggregated forms. By binding to Serum Amyloid A, Amilo-5MER reduces serum amyloid A aggregation and inhibits the harmful autocrine self-amplifying cytokine loop that exacerbates inflammatory reactions. Notably, Amilo-5MER has shown significant reductions in chronic inflammation in animal models of rheumatoid arthritis, inflammatory bowel disease, and MS. Recent ex-vivo studies using human PBMCs stimulated by Serum Amyloid A demonstrated a substantial reduction in IL-6 secretion. These findings indicate that Amilo-5MER may play a role in treating patients with severe COVID-19-related acute respiratory distress syndrome (ARDS), which is marked by elevated serum levels of Serum Amyloid A and IL-6, driving cytokine storms in these patients. We are currently investigating the effects of PBMCs from COVID-19 patients, and if the results are positive, we will adjust our planned Phase I study of Amilo-5MER to support a proof-of-concept study in COVID-19 patients. Amilo-5MER is ready for Phase I, exhibiting an excellent safety profile so far. We intend to initiate a Phase I study in healthy volunteers in the UK in Q4 this year to support its development for IBD. Before I conclude, I want to mention our plans to virtually attend three investor conferences this quarter. Canaccord’s Annual Growth Conference will take place next week from August 11 to 13; the H.C. Wainwright Annual Global Investment Conference will be from September 14 to 16; and the Cantor Virtual Global Healthcare Conference will be from September 15 to 17. We would be happy to schedule one-on-one meetings during these events. Additionally, as communicated in our previous investor call, we plan to hold a virtual Analyst Day in late November or early December this year, where we will provide more details on the development of Amilo-5MER and report on the progress of the ARMOR study and Aramchol meglumine. Now I would like to turn the call over to Yohai Stenzler, our CFO, to review our financial results for the second quarter of 2020. Yohai?

Thank you, Allen, and good morning to you all. This morning, I will be providing you with our financial results for the second quarter ended June 30, 2020. For more information, please refer to our report on Form 6-K filed earlier today with the SEC, which, among other things, provides the summary of such financial results. For the second quarter of 2020, our net debt totaled $5.5 million or $0.26 per share compared with a net loss of $4.2 million or $0.20 per share for the corresponding period in 2019. Research and development expenses totaled $5 million for the second quarter of 2020. This compared with $3.5 million for the second quarter in 2019. The increase resulted primarily from an increase in CMC and formulation expenses in connection with our manufacturing of Aramchol API to support the ARMOR trial and the development of our Aramchol meglumine. Turning now to G&A. Our general and administrative expenses for the quarter totaled $0.8 million compared with $1.2 million for the corresponding period in 2019. The decrease resulted primarily from a decrease in professional services expenses and investor relations-related expenses. During the three months ended June 30, 2020, we had a net financial income of $0.3 million versus $0.5 million in the comparable period in 2019. Additionally, the company recorded unrealized gains of $0.7 million during the three months ended June 30, 2020, as a result of a change in the market value of its marketable debt securities. Our cash balance as of June 30, 2020, which includes cash, cash equivalents, restricted cash, short-term deposits, and marketable debt securities, totaled $63.5 million compared with $75.6 million on December 31, 2019. With that said, operator, please provide instructions for the Q&A portion of our call.

The first question comes from the line of Steve Seedhouse.

Could you maybe discuss the bioequivalence study you mentioned planned for this quarter for Aramchol meglumine? Is, first, is that in healthy volunteers or NASH patients? Are you testing QD or BID doses? And also, what is the difference between that study and the one that I think I heard you say you were planning to start in the second quarter of next year to show bioequivalence?

Yes. Thank you, Steve. I will let Liat take this question, please.

Nice to hear from you. Thank you for your questions. We are starting with the twice-daily Aramchol meglumine versus Aramchol acid, but also once-daily as well. Just in order to determine what the equivalent is, we do expect, based on our previous bioequivalence that we had in dogs, that we will have higher exposure. And therefore, we need to know exactly the formulation that is already being developed. The second quarter in 2021 will be a full regulatory bioequivalence checking twice-daily, 300-milligram once with Aramchol acid, which is the formulation that is currently being given in ARMOR to the selected dose of Aramchol meglumine, either if we’re going to have a high exposure enough once-daily Aramchol meglumine or twice-daily, most probably lower dose of Aramchol meglumine in a fully regulatory registered study to submit to the regulators. So that’s the difference. I hope I answered your question.

Yes. No, that’s helpful. And a couple of questions...

And it’s going to be healthy volunteers with regard to that.

Great. On Amilo-5MER, can you touch on how this peptide was discovered? Was it through like phage display or something similar? Or is this actually a naturally occurring peptide? And I have a couple of other questions, but let’s start with that.

Okay. So I think it’s interesting. In the laboratory of Professor David Naor, they actually isolated joint inflammatory cells, where they identified a sequence in a human CD44 variant that is responsible for higher inflammatory and for higher binding of FGF1 2D cells. They actually searched in reporting data what this specific sequence is that you can find in the CD44 variant. This is the paper that I think we attached, or if you want, I can send it to you, from JCI. This specific sequence that is responsible for the variability of this specific human CD44 was the MTADV, which we call today Amilo-5MER. It was serendipity; we were looking for what this specific sequence binds to. There were 3 pro-inflammatory proteins that this specific sequence binds to. Of these, the most important one, which is ubiquitous in any inflammatory disease is Serum Amyloid A, which we know serves as a biomarker for IBD severity for rheumatoid arthritis and currently in the severe cytokine storm in COVID-19. So we aimed at the binding of Serum Amyloid A sequencing by inflammatory cells as the monomers, but it’s only efficacious in creating this vicious circle of chronic inflammation as an aggregate. The AMILO-5MER binds to these monomers and does not allow the monomers to become aggregated and then stops the vicious circle of chronic inflammation when it starts.

Okay. It looks also like a completely unmodified peptide just based on the structure. And the deck that you guys have, I’m wondering, what is the half-life or anticipated half-life in vivo? And then, also, it looks like you’re dosing once daily. I’m curious what the mode of administration is there.

Yes. So the half-life, at the major fraction, I’d divide it into 2 fractions. The major fraction is about 1.5 hours, to be precise 1.5. So there is a minor fraction of the total exposure, which has what we call a tail in the PK, which is less than 1%. And the half-life is higher than 9 hours. We are currently administering it in the Phase I subcutaneously, and we developed an oral formulation parallel to that. We just didn’t want to wait.

Your next question comes from the line of Ed Arce from H.C. Wainwright.

A couple on Amilo-5MER. First, I’m just wondering, as you described here, the particular reduction in IL-6, what led you to look at IBD, in particular, before other potential indications here, given there are a number that could benefit from that effect?

Thanks. We have extensive data on rheumatoid arthritis as well. We are starting Phase I with healthy volunteers, testing single and multiple doses for the first time in humans. We are focusing on IBD, and numerous studies have highlighted Serum Amyloid A as a biomarker and a key factor in the disease's pathology. The presence of a clear and easily measurable blood biomarker like Serum Amyloid A, which can be elevated by up to 1000 times in disease states, facilitates development. While we are beginning with IBD or potential IBD, we will conduct single and multiple doses in healthy volunteers, but we are also considering multiple indications. I agree that this compound has strong potential for immune modulation in various chronic inflammatory conditions that lead to tissue damage. As mentioned, our initial trials are with healthy volunteers using single and multiple doses. I think Allen might want to discuss the potential for additional indications from a business perspective.

Yes. Thank you, Liat. So clearly, as you alluded, the potential is extremely large. As a small company, we have been very selective. Our core competence is in the liver, autoimmune diseases, so IBD, Crohn's. Mild to moderate was our first choice, but, as Liat explained, we are advancing the molecule into clinical studies. I don’t rule out the possibility of collaborating on other indications with either some of these Serum Amyloid A-related indications or geographical-related diseases, some of which are in Japan or in Asia, others in the Middle East. So we are open for collaboration with geographical licensing in other ways, joint ventures in other ways, which will not burden our cash balance, to advance this molecule. And I would not rule out also sometime in the future a combination together with Aramchol since Serum Amyloid A has an important role in NASH.

Okay. That’s helpful. Next question is about the half-life you just disclosed, which is approximately 1.5 hours. I’m curious how you consider that in relation to dosing, especially since you are still working through pharmacokinetics and pharmacodynamics.

Yes. So first, I have to say, working on Copaxone for 16 years, that did not have any pharmacokinetics. I think we, especially in Galmed, have a lot of people that worked in Copaxone for quite a long time. It’s a small peptide. You have to take into consideration that when we are taking pharmacokinetics, and when I’m telling you that the half-life is 1.5 hours, that means that this is the half-life that we find the compound in the blood. It doesn’t mean that tissue distribution is not actually in place. And you also have to take into consideration that once the Amilo-5MER, which is a very small peptide, is binding to Serum Amyloid A, it is being reduced. You don’t see it as a single in the blood. You see it as a bound. And as a bound, you don’t really check it, okay? So that doesn’t mean for how long does it really stay in the body still active? It only says what’s the free fraction that you actually check in the blood.

Understood. One last question, if I may, on the meglumine compound. Around the bioequivalence study that you’re starting, have you seen or is there any evidence to suggest that you’re receiving or seeing any time-dependent increases in bioavailability?

I think the major benefit, Allen, if I may, the major benefit that we can see with Aramchol meglumine is the consistency, the higher consistency with all the patients. So if you are developing a class IV compound, which is non-soluble, you see a lot of differences from a PK point of view, from the exposure of the patients in the blood among patients. Here, what we have with Aramchol meglumine, which is 30,000 times higher from a solubility point of view. You have consistent exposure over time, and you have homogeneity among patients, which definitely is going to reveal better efficacy over time.

The next question comes from Kristen Kluska from Cantor Fitzgerald.

And congrats on all of the updates and pipeline expansion that’s been occurring behind the scenes. So the first one is just related to the Phase III study. And I think that recruitment has been resumed across 9 countries, which is great to see. Could you comment on how many countries have approved this study to date? And then, also, I know that in March, when the COVID-19 pandemic was really starting to emerge across the globe, you had discussed looking at potential backup sites or regions where you were originally expecting to enroll patients in the clinical phase part of the study. So do you have any updates related to the strategy as things continue to evolve?

Thank you, Kristen. All the countries that are currently recruiting have been approved. While I can’t recall the exact number, there are likely 3 or 4 additional countries that have also received approval. Site initiation visits for screening have been delayed due to COVID-19, but we anticipate conducting them either this month or early September. For example, Israel was a backup country, and since we conducted the Phase II study there, we did not need to obtain Ministry of Health approval. We have already received clearance from the IRBs at the site, and we plan to begin patient screening in Israel very soon. Brazil is high on our list, and we are in discussions with the Brazilian regulatory agency. Argentina and Poland are also on our radar, though I can’t recall the exact details at the moment. In total, we are considering 18 countries for this operation. In the later second stage, we will include Bulgaria, Macedonia, and China, for which we are waiting. We've already had a pre-IND meeting in China and are now submitting the full IND based on that meeting. We expect to begin activities there in early 2021. Everything is proceeding as planned, and I want to emphasize that we have a solid recruitment strategy in place that is functioning well, even ahead of schedule.

Okay. And then as it relates to Amilo-5MER, just from quickly scanning the literature this morning, it seems there’s a clear rationale related to the role of SAA as a biomarker for some of these indications. So could you discuss what you would hope to achieve by 12 weeks in this Phase Ib/IIa study? And then also, do you see any potential for clear differences as it relates to this role from both Crohn’s disease and ulcerative colitis?

So what do we hope to see? You're right about that. I'll start over. There are many publications discussing Serum Amyloid A as a biomarker for the severity of the disease and even for the relapsing and remitting status of certain diseases. You're absolutely correct. Serum Amyloid A is involved in the disease, and this is still discussed in recent literature. I'm happy to share that with you. It's not just a biomarker; it is actually a main cause of the disease. In our 12-week clinical study, we hope to see a difference in mucosal healing. We will consistently use Serum Amyloid A as a biomarker. Having such a clear biomarker simplifies conducting clinical trials, notably with a significant reduction in Serum Amyloid A concentration in the blood. This biomarker is very sensitive, even more so than CRP, as indicated in the literature. A reduction of 20% or 30% in Serum Amyloid A can be significant, and you can definitely observe this as early as 2 or 3 weeks after treatment. By 12 weeks, you should see mucosal healing through colonoscopy and a reduction in Serum Amyloid A as a blood biomarker.

Great. Thank you. And then turning back over to NASH. Could you talk about whether you think there are any interesting studies or techniques that you’re following related to some of the non-invasive alternatives to liver biopsy and identifying patients? I know that GENFIT had published some results from the NIS for blood-based diagnostics earlier this week.

We are actively monitoring all recent studies and the available public information, including the Lancet publication that GENFIT released. However, there isn't sufficient data for us to provide any comments at this time. This topic remains a top priority for us, especially following the letter of rejection we received, specifically the Complete Response Letter from the FDA. We recognize that biopsy is a significant consideration for the FDA, and we are fortunate to stay updated with earlier studies and receive feedback from the FDA based on those findings. While we are keeping a close eye on this matter, we do not have any updates to share regarding changes to our protocols or statistical analysis plan.

Okay. Great. Thank you so much for taking my questions.

And the next question comes from the line of Jason McCarthy from the Maxim Group. Please go ahead.

Hi, everyone. It’s Dave online for Jason. So regarding the salt formulation, just based on the timeline of that line, I was just hoping you could shed some color on when you think you’d be able to start utilizing the salt formulation in the ARMOR study? And then with respect to the Amilo-5MER peptide, you mentioned that it may have potential indications with COVID-19 just based on preclinical data. I was hoping you could perhaps shed some color on what the next steps would be in that specific indication.

Thank you. Let me address the last question about COVID-19. Conducting these studies requires a significant level of safety precautions, which is why there has been a slight delay in starting the study. We were optimistic about observing the same effect in COVID-19 patients that we noted in healthy volunteers, where SAA levels were stimulated. We aim to share this data before the next call and will issue a press release once we have the findings. As for your first question, Liat, would you like to address that?

Yes. I just want to add for COVID-19 that, as you probably all know, there are two stages. Some patients are sick, but they are not severely sick. There is another, let me say, phase in the disease only for severely affected patients, which experience what we call a cytokine storm. Cytokine storm is the exact vicious cycle we are discussing when we look at the innovation of Serum Amyloid A, which is reported in multiple publications lately with severe COVID-19 patients. This activates the immune system again and again. Interfering with this ability of Serum Amyloid A to break this vicious circle and to stop the recurrence of cytokine storms is our main goal here. We are working with a company in England that has the ability to recruit and obtain PBMCs or fresh blood from COVID-19 patients to show first in lymphocyte the stop of this vicious cycle of cytokine production. Once we have these results, we can directly approach COVID-19 severe patients. We are already in contact with some of these centers in London. Regarding Aramchol meglumine, as to your question, we will be ready with the formulated compounds to be given, tablets to be given to patients in after bioequivalence, which is going to be regulatory-based, in the beginning of the second quarter of 2021. With these results, we will go to the regulators because we plan, as Allen just alluded, to approach the regulators in Q1 with the initial bioequivalence that we're doing here starting this September and ask for their guidance through the regulatory bioequivalence full study in the beginning of the second quarter, which will be our bioequivalence to go to the regulators again to get approval on this product.

Mr. Baharaff, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Thank you, Mary, and thank you all for joining our call today. As always, we are happy to take calls, meetings, during conferences, as I mentioned, and looking forward to our next call. Stay safe. Thank you for joining today.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.