Galmed Pharmaceuticals Ltd. Q2 FY2020 earnings call

1. Updates on three ongoing programs: ARMOR Phase III NASH study, Aramchol meglumine program, and Amilo-5MER Phase I readiness. 2. ARMOR Phase III: COVID-19 led to suspension of screening, but recruiting started in June with sites in multiple countries; expects full capacity in H1 2021, maintains guidance for recruitment completion in Q4 2021 and top line results in H2 2023. 3. Aramchol meglumine: New chemical entity, plans to approach 8 regulatory agencies in Q1 2021, preliminary bioequivalence study in Q3 2020 to identify equivalent dose to Aramchol acid, followed by regulatory bioequivalence study in Q2 2021. 4. Amilo-5MER: Phase I ready, 5 amino acid peptide with potential in COVID-19; ex-vivo study on PBMCs from healthy subjects showed reduction in IL-6; plans Phase I study in UK Q4 2020 for IBD. 5. Financials: Net debt $5.5M, R&D expenses $5M, G&A $0.8M, net financial income $0.3M, unrealized gains $0.7M, cash balance $63.5M as of June 30, 2020.

No detailed product segment financials with revenue contributions provided in the transcript.

1. Maintains guidance for completion of recruitment of first part of ARMOR study in Q4 2021 and top line results in second half of 2023. 2. Plans preliminary bioequivalence study for Aramchol meglumine in Q3 2020 and regulatory bioequivalence study in Q2 2021. 3. Intends to initiate Phase I study of Amilo-5MER in healthy volunteers in UK Q4 2020.

Significant uncertainty about duration and severity of COVID-19 pandemic and its impact on business operations.

Q: Could you maybe discuss on 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?

A: Yes. Thank you, Steve. I will let Liat to take this question, please. Dr. Liat Hayardeny: Nice to hear from you. Thank you for your questions. For, we are starting with the twice-daily Aramchol meglumine versus Aramchol acid, but also once-daily as well. Just in order to say what’s the equivalent, 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, a formulation is already being developed. So we just need to know the exact value that we need in this bioequivalence to compare the Aramchol meglumine versus Aramchol acid. 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.

Q: 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?

A: Okay. So I think it’s interesting. I think what they actually did in the laboratory of Professor David Naor is the isolation of joint inflammatory cells, where they actually identified a sequence in a human CD44 variant that is responsible for higher inflammatory and for higher binding of FGF1 2D cells. They actually search in reporting data, what is this specific sequence of, 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. And it was the serendipity, we were looking for, what is this specific sequence it’s binding to? There were 3 pro-inflammatory proteins that this specific sequence is binding to. Of them, the most important one, which is ubiquitous, sad to say, in any inflammatory disease is the Serum Amyloid A, which we know serves as a biomarker for IBD severity for rheumatic arthritis and currently in the severe cytokine storm in COVID-19. So we aimed at the binding of 2, 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 is binding to these monomers and do not allow the monomers to become aggregate and then to stop the vicious circle of chronic inflammation when it starts.

Q: 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?

A: 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 have, if you’re developing a class IV compound, which is non-soluble, you see a lot of differences from PK point of view, from the exposure of the patient’s point of view in the blood among patients. Here, what we have with Aramchol meglumine, which is 30,000 higher from 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.

Q: 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 base part of the study. So do you have any updates related to the strategy as things continue to evolve?

A: Okay. Thank you, Kristen. So naturally, all the countries that are recruiting already approved. And I can’t recall on top of my head, but there probably might be 3 or 4 other countries that have been approved. But screening SIV, site initiation visits, have been delayed due to COVID-19, and we expect to do them either this month or early September. We have not, I mean, we have countries like Israel that was a backup country. We’ve heard from the site, since we ran the Phase II study in Israel, we didn’t need to go through the MOH, Ministry of Health, approval. So we know that we already got clearance from helping give from IRBs from the site. And we are going, very shortly, we are going to start screening patients here in Israel. Brazil is also on top of our list. It’s, we are holding discussions with the Brazilian corner, the regulatory agency. And Argentina, Poland, so I can’t remember off the top of my head. All in all, we are talking about 18 countries that would operate. Later second stage, we will have Bulgaria, Macedonia and China, of course, which we are awaiting. We’ve already had a pre-IND meeting in China. We are now submitting the full IND based on this pre-IND. So we expect that we’ll be able to start activity there early 2021. So everything is going as planned. That’s, I think that’s all we have to say, that we are, we have a plan. We have a recruitment strategy plan, and everything is working as planned and even ahead of plan, as I said earlier.

Q: Regarding the salt formulation, just based on the time line 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.

A: Okay. Thank you. So let me start with the last question, which is about the COVID-19 is working with these kind of studies, demand a very high level of safety requirements. And this is, of course -- so this is -- the reason of the delay is that the -- on the initiation really because the study by itself is a short study, but the actual execution of the study is slightly delayed. And we were hoping to show that the same effect that we’ve seen on PBMCs or healthy volunteers stimulated, where SAA was stimulated, we would see with COVID-19 patients, which already have a high-level, stimulated SAA level. So this data, I hope that we’ll be able to report this data before the next call, and, of course, we would issue a press release once we have this data in hand. As to your first question on, forgot what the, Liat could take, Liat, do you want to take the first one? Dr. Liat Hayardeny: Yes. I just want to add for the COVID-19, so with COVID 19, as you probably all know, there are two stages. Some of the patients are sick, but they are not severely sick. And there is another, let me say, phase in the disease only for very severe patients, which experience what we call cytokine storm. Cytokine storm is the exactly vicious cycle that we are talking about when we are talking about innovation of Serum Amyloid A, which is reported in multiple publications lately with the COVID-19 severe patients, which activates the immune system again and again. And the cytokine storm is what caused this main disease. Interfering with this ability of Serum Amyloid A with this vicious circle and inducing again and again same cytokines that is activation of the additional Serum Amyloid A is our main goal here. We are working with the company in England that has the ability to end, to recruit and to get PBMCs or fresh blood from COVID-19 patients to show first in lymphocyte what we call the, stop of this vicious cycle of the production of this cytokine storm. Once we have these results, we’ll be able to go directly to COVID-19 severe patients. And we already are in contact with some of these centers in London. With 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, on the beginning of second quarter of 2021. With these results, we will go again to the regulators because we do intend, as Allen just alluded. In the first quarter, we go to the regulators with the initial bioequivalence that we are doing here starting this September and asking their directions through the bio, regulatory bioequivalence full study in the beginning of the second quarter, which is going to be our bioequivalence to go the second time to the regulators to get approval on this product.