Galmed Pharmaceuticals Ltd (GLMD) 2021 Q2 法說會逐字稿

Good day, and welcome to Galmed conference call to discuss financial results for the second 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 the expectations of the management of today and actual results, trends, timelines and projections relating to our financial position and projected development program 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 the 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, Emma. Good morning, and thank you for joining us on today's conference call. I'm pleased to be here today with our Chief Scientific Officer, Liat Hayardeny; and our Chief Financial Officer, Yohai Stenzler, to provide you with an update on our clinical development programs as well to report to you on our financial results for the second quarter of 2021. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.

Let me start with the news we reported earlier this week, announcing FDA agreement with our plan to use Aramchol meglumine in the randomized double-blind placebo-controlled part of the Phase III ARMOR study. In essence, the FDA agreed that we can proceed with our proposed clinical studies with Aramchol meglumine in lieu of Aramchol free acid without the need to repeat any nonclinical or clinical studies.

As you may recall, administration of Aramchol meglumine doubled the systemic exposure of Aramchol compared with us after dosing Aramchol free acid. Thus, once daily QD 383-mg Aramchol meglumine oral dosage corresponds to that of same with existing price daily BID 300 mg Aramchol free acid, which -- form which is currently being evaluated in the Phase III ARMOR study.

As a reminder, in addition to its longer IP protection until December 2034, the transition to Aramchol meglumine will benefit our patients in 2 meaningful ways. First, achieving the required exposure with 50% less API, means we can move back to once-daily regimen with a potential improvement in convenience and adherence in our Phase III registrational part. The second, benefits -- the second benefit is that we can potentially significantly reduce our target marketing price once Aramchol is approved, we have potential saving of approximately 50% of cost of goods. We consider the FDA agreement a significant validation of our consistent efforts to maximize the potential of Aramchol in developing enough treatment.

The transition to Aramchol meglumine is the final step in our drug product optimization, which included dose optimization, higher exposure, treatment duration optimization, 24, 48 and 72 weeks, and compound optimization, i.e. sole form, which can be given QD and allows longer patent protection. Now let me update you on the open-label part of our ARMOR Phase III study. As you may recall, the open label part will provide us highly valuable data on the optimization of treatment duration and potential noninvasive test NITs associated with NASH and fibrosis. This is aimed at derisking our clinical development plan, while increasing the probability of success of Aramchol's ARMOR registrational part of the ARMOR study.

Results from approximately 1/3 of the study population, about 50 subjects, the open label part of our ARMOR Phase III study that has completed the post-baseline liver biopsy are expected to be available in Q4 2021 as planned. Now shifting gear to our pipeline compounds, Amilo-5MER. As a brief reminder, Amilo-5MER is a highly potent inhibitor of chronic inflammation currently under development for IBD with targeted and specific mechanism of action.

Amilo-5MER down-regulate multiple pro-inflammatory cytokine secretion. In preclinical studies, Amilo-5MER demonstrated interference with Serum Amyloid A polymerization and aggregation, which is essential for the activity of Serum Amyloid A. Aggregated Serum Amyloid A is the main cause and the biomarker for chronic inflammation.

Amilo-5MER has a unique mode of action upstream to all pro-inflammatory cytokine production, which are currently being used in clinical trials and in clinical use.

Earlier in Q2, we announced the first dosing of a first-in-human Phase I clinical trial of Amilo-5MER for single and multiple dosing. I'm happy to report to you today that we completed Phase I dosing and top line data is expected later this quarter. We are currently developing Amilo-5MER as an oral treatment for mild-to-moderate ulcerative colitis. Typicall, the mechanism of action is relevant to other chronic inflammatory diseases, we are also looking at additional indications and are currently developing formulations accordingly.

Before I conclude, I would like to note that we are planning to virtually attend 3 investor conferences in the coming quarters. The first is Canaccord Annual Growth Conference to be held next week on August 10 to 12, 2021. The second is the HC Wainwright Annual Global Investment Conference to be held on September 13 to 15, 2021. And lastly, the Cantor Global Healthcare Conference to be held on September 27 to 30, 2021. We will be happy to schedule one-on-one meetings during these events.

Now let me transfer the call to our CFO, Yohai Stenzler.

Thank you, Allen. Good morning, and thanks for joining our call today. This morning, I'd be providing you with our financial results for the second quarter ended June 30, 2021. For more information, please refer to our report on Form 6-K filed earlier today with the SEC, which, among other things, provides a summary of such financial results. For the second quarter of 2021, our net loss totaled $8.4 million or $0.33 per share compared with a net loss of $5.8 million or $0.26 per share for the corresponding quarter in 2020.

Research and development expenses totaled $7 million for the second quarter of 2021. This compared to $5 million for the second quarter 2020, increase resulted primarily from an increase in clinical trial expenses in connection with the ARMOR trial.

Turning now to G&A. Our general and administrative expenses for the quarter totaled $1.4 million compared with $0.8 million for the corresponding period in 2020. Increase resulted primarily from an increase in the cost of our D&O insurance policy premium, as well from an increase in in salaries and benefits. Our cash balance as of June 30, 2021, which includes cash, cash equivalents, restricted cash, short-term deposits and marketable securities totaled $51.2 million compared with $51 million on December 31, 2020.

With that said, operator, please provide instructions for the Q&A portion of our call.

(Operator Instructions) We will now take our first question from Edward Nash from Canaccord Genuity.

Congratulations guys on getting the go-ahead with Aramchol meglumine. That's a huge plus for you guys I know. So I just wanted to understand, and I thank you for that review on the Phase III design. But I just wanted to understand, again, we're going to be getting those first 50 patients in the fourth quarter of this year. Those patients will be the 24 weeks. Is that correct? And then the next 50 will be the 48; and the next 50, 72 weeks. Is that correct?

No, this is not correct. I mean those patients -- the patients are blinded, randomized into the 3 groups. So in this first 50 patients, we will have about half of them are going to be of 24 weeks and the rest are 48 and 72 weeks biopsies. These are patients that had transitioned from the double-blind part. So each group -- each 50 group is blinded and mix of the populations of 24, 48 and 72.

Perfect. Got it. Okay. Great. And then the -- for the analysis you still go forward in front of the FDA, obviously, this will give you additional safety data. But obviously, for powering and accelerated approval submission, that will all be from the -- clearly, the blinded part where you'll only be using the Aramchol meglumine, correct?

Yes, indeed. So as you know, the study is about efficacy kinetics. We are using this study for really 3 main reasons: one for safety, which will support the safety data of our NDA. Second is to learn what is the optimal treatment duration. When there is 24, 48 or 72, there is a difference, and if there is an association between the 2. And thirdly, is the powering of the study. Since the dose is much higher -- if the compare -- initially ARMOR study was powered based on the Phase IIb study. Now we are giving twice daily, which is 50% higher exposure. We are expecting that the effect size will change accordingly and hence the powering of the study and the number of patients will change accordingly.

We will now take our next question from Kristen Kluska from Cantor Fitzgerald.

And let me also add my congratulations to you on the outcome of this recent meeting with the FDA. First, I wanted to ask if you could provide us with more details around the planned limited pharmacology studies and associated timing here and whether you still think the end of the first quarter of 2022 is a good time point to start the next trial?

So I will let Liat take that. Hello, Kristen.

Hi, Kristen. We offer the FDA 3 very visible clinical pharmacology studies. First one is going to do with the dose range finding, our relevant doses twice daily 300-milligram Aramchol acid, and we will do dose range finding to match exactly the exposure of the 300 milligrams twice daily that we have, which is, as Allen alluded, higher exposure by 53% than they are (inaudible).

The second study that we offered is food effects, which is quite clear. And the final one is bioavailability, know that bioequivalence which is much like a -- so it's just regularly when you transfer from 1 entity to another when you expect exposure, you just have to match the exposure due to food effect and do one dose and match it with a twice daily, which is currently new. So it's quite regular clinical pharmacology, and it has -- all the other package, which we did as far is fully acknowledged by the regulators to those developments.

Now as to your question about the time line, it is very much dependent on the formulation. We are ready, all is set and ready. And the data -- the very relevant data that we get at the end of the year should allow us to better design the protocol amendment and decide on the, as I said before, duration and powering the statistical analysis plan of the study. So this is why -- and we -- and everything is done with the CMO in order to produce the formulation on time to initiate the double-blind part of the study which is Aramchol meglumine. So at the moment, we are still getting a clear guidance about -- once we received the clinical guidance from the FDA, we immediately had discussions with our drug product manufacturer to initiate the process and complete the formulation. We will keep you updated if there will be any delay, whether it would slip into Q2 from Q1, we would only know once we have more visibility as to the formulation development.

I appreciate that. And now that you have the official green light here from the agency just as it relates to some of your ongoing collaborations, particularly the combination study with ASC 41. Will you also look in the future to use meglumine forward here? And then as it relates -- you've made multiple comments in the past about using your therapy potentially as a backbone, but how might this data that we're getting in the fourth quarter here help you determine future plans as it relates to evaluating different types of combinations as well?

Absolutely. I mean from now onward, we are using Aramchol meglumine. So the first will be to incorporate Aramchol meglumine in the open-label study. And I hope that this will be done already by the end of the first quarter of 2022. And then all other combination studies, whether it's the ASC341 (sic) [ASC41] or the microbiome or others that we haven't planned and we've communicated are going to be done together with Aramchol meglumine. This is a product that we are taking forward. It's an improved product, and we would like all our patients to benefit from this improved products.

Okay. Appreciate that. And then my last question for you. Now that this -- again, this agreement is in place and you have an extended IP portfolio. Has this changed how you might think about the opportunities to commercialize specifically whether you would look to pursue partners in certain geographies, again, now that because the IP portfolio has strengthened?

So yes, we'll always have openly said -- I mean, we are working under the assumption that we are developing Aramchol meglumine and taking it into Phase III. Our door is open, and we are definitely looking for global geographical joint venture, any form of collaboration. I think that we have built a very nice package for any pharmaceutical company that would look at the data. Because on the 1 hand, we are -- we've optimized the API and the drug product. We did all the heavy lifting in terms of getting the regulation from -- all the way from Australia to Brazil to China, U.S., of course, Middle East, Korea, whatever. I mean we're talking to 18 countries, agreements with more than 250 sites around the globe, around 5 continents.

So all these heavy lifting, together with the optimization of the drug product, is, on the 1 hand. And on the other hand, given the partner and opportunity to influence the protocol because I'm sure that everyone wants to make and to review before you initiate the double-blind part makes -- they want to make their own adjustments and fine-tuning. And we are very open to that. So between today and until we start the double-blind part of the study, we are open for discussions for any commercial discussion.

We will now take our next question from Steve Seedhouse from Raymond James.

This is Timur Ivannikov, on for Steve Seedhouse. So -- also would like to congratulate you on the agreement for Aramchol meglumine. And just to make sure I understood correctly. So the main gatekeeper that's holding you back before you could start a randomized Phase III study. So you were talking about material needing to be manufactured, but you also obviously need to see some label Aramchol data. So could you just talk about what kind of data you would need to see before you can proceed with a randomized study, sort of what is the benchmark for that data?

Thank you for the question because I think this is a very important issue. I'm -- here at Galmed, we are looking at the data very carefully, not only in our data, on the competitive landscape data as well. And we have to ensure that our data is in line and our -- what is the product profile of Aramchol meglumine is in line of the NASH -- of the development in this space. We are very much aware of the recent NASH study -- NASH resolution studies and data on whether it's the semaglutide or other compounds that have a very significant effect on NASH resolution.

On the other hand, the very mild effect that we will observe on fibrosis from the obeticholic acid. So altogether, we are trying to build the best package. With best package, the benefit is precious to our patients, that will give both NASH resolution, fibrosis improvement and safety. And this is the kind of the data that we anticipate to see from the open-label study. Maybe the first 50 patients will not be enough. Maybe we need to wait for 100 to 150.

We are hoping that there'll be a signal -- strong enough signal with the first 50 patients. But if we will look at the data and we want to wait another quarter or another 2 quarters until we see 100 patients and then decide to embark on this large extensive Phase III study, double-blind part of the study, we'll definitely do that. This is because I think we have the -- this is responsibility to our patients and to our investors. And we want to make sure that once we go into that route, of initiating this double-blind part of the study, we've significantly derisked the program and increased the probability of success.

I think that we have -- we planned the 2 programs to cross. So we developed Aramchol meglumine. We gave it to formulation. We are doing the best formulation for Aramchol meglumine. And at the same time, data will arrive from the kinetics of efficacy. And as we noted, the data will somehow approximately will cross. So when we will have finally -- final formulation stability and everything that we have with Aramchol meglumine, at that time approximately, we will probably have the data on the kinetics so that we will have a full, very good design of Phase III clinical trials, the regulatory clinical trial.

Okay. And can you also talk about the cadence of additional cohorts from the open-label study? I think if I remember, you were saying every 6 months. I'm not sure if your next cohort data will still be around mid-2022? Or is that timing difference?

No, this is correct. The next cohort is anticipated by the second quarter of 2022. So this is the 100 patients. So the first 50 and then another 50 by mid-2022.

Okay. Great. And then before -- 1 question for Amilo-5MER. So I think you talked about going after oral and subcu for Phase Ib for different indications. Can you just talk about, in terms of your oral formulation, still systemically distributed versus minimally absorbed. And just to clarify, Phase Ia, that's only right.

So the Phase Ia was done subcu and with healthy volunteers. And now we are working on 2 types of formulations. We are working on oral local formulation, which is for the ulcerative colitis for the GI tract. So we're working with a specific formulation that would be -- we will open in the right place where we wanted to open and create the local effect in the GI tract. This is designed -- this formulation is designed for a Phase IIa study of ulcerative colitis patients. At the same time, we are also working with on localized formulation. This would be injectable again, for different indication, probably RA, which would be injectable to the joint. This formulation, we may also look at other indications, but it's too early to talk about.

That will conclude our Q&A session for today's call. I will now turn the call back to Allen Baharaff for any closing remarks.

So thank you all for joining our call today. I hope that we'll be able to come with some more good news in the coming quarter. And eventually, of course, to communicate the Phase -- this open-label part of the study. We are -- again, I would like to reiterate our participation in the 3 conferences in the Canaccord Annual Growth Conference, the HC Wainwright Conference and the Cantor conference, which we welcome any questions and would like very much to meet as many of you. And of course, I hope to see you this time probably virtually also at AASLD, where we submitted a number of abstracts, which I hope will be accepted, and we can -- that would be an additional catalyst for our activity. Thank you.

Ladies and gentlemen, that will conclude today's conference. You may now all disconnect.