Galmed Pharmaceuticals Ltd (GLMD) 2021 Q1 法說會逐字稿

Good day, and welcome to the Galmed conference call to discuss financial results for the first 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 time lines 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 most recent annual report on Form 20-F filed with the SEC. Galmed assumes no obligation to update any forward-looking statements or information, which speaks as of to their respective dates only.

I will now turn the call over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead.

Thank you, Donna. 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; our Chief Financial Officer, Yohai Stenzler, to provide you with an update on our clinical development programs as well as report to you on our financial results for the first quarter of 2021. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.

As we had -- we have held our investors' year-end call only a few weeks ago, my report to you this time would be very short. Starting with our global Phase III registrational ARMOR study, and as previously reported, the addition of the open label part was approved in the U.S., Canada, Australia, U.K., France, Belgium, Spain, Israel, Chile and Turkey and is expected to be approved in the coming weeks in Korea and Mexico.

Based on our plans and the rapid regulatory approvals, I can reconfirm that results from approximately 1/3 of the study population, i.e. of 50 subjects that has completed the post-baseline label biopsy are expected to be available in Q4 2021 as planned. That being said, in Q4, we expect to have results on the efficacy of Aramchol with higher exposure on fibrosis and liver fat confirmed by liver biopsy.

Also reported earlier this month, ARMOR received an IND approval in China. We view the approval of the ARMOR study in China as a significant milestone in the development of Aramchol for NASH and fibrosis, which may accelerate the pace of randomization of patients with the double-blind part of the ARMOR study and also position Aramchol as one of the 4 most therapeutic candidates for NASH and fibrosis in this large and emerging market. We look forward to rapidly initiating enrollment in China as soon as practical.

As previously reported, ARMOR's double-blind placebo-controlled registration of the product is expected to initiate by the end of Q1 2022 and is expected to be based on Aramchol meglumine, which is a sole form of Aramchol free acid with an improved target product profile.

Earlier this month, we submitted to the FDA the result of Aramchol meglumine Phase I study with specific product development plan that will enable Galmed to replace Aramchol acid BID with Aramchol sole QD with the same exposure. Galmed is expecting, during Q3, to receive guidance from the FDA to allow us to introduce Aramchol meglumine into the double-blind placebo-controlled registrational part of the ARMOR Phase III study.

Now shifting gears to our partner compound, Amilo-5MER. As a brief reminder, Amilo-5MER is a highly potent inhibitor of chronic inflammation currently under development for IBD with a targeted and specific mechanism of action. Amilo-5MER down-regulates multiple pro-inflammatory cytokine secretion. In brief clinical studies, Amilo-5MER demonstrated interference with Serum Amyloid A polymerization and aggregation, which is the active form of Serum Amyloid A. Aggregated Serum Amyloid A is the main cause in the biomarker chronic inflammation.

Amilo-5MER treatment resulted in significant reduction of clinical symptoms in pathological characteristics of disease in multiple animal models. Amilo-5MER has a unique mode of action upstream to all chronic inflammatory cytokine production, which are currently being used in the clinical trials and in the clinical use.

Earlier this quarter, 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 today that we completed all single administrative doses starting from 10 milligrams up to 180 milligrams. Following excellent safety and proportional PK, we decided to go 1 dose even higher and a 360-milligram is currently being dosed. Top line data is expected in the second half of 2021.

A Phase Ib proof-of-concept study is planned for Q4 2021 and will include biomarkers for efficacy such as reducing Serum Amyloid A in the serum of patients and other inflammatory biomarkers such as ERP, et cetera. In this Phase Ib study, Amilo-5MER will be administrated subcutaneous and orally for 4 weeks with additional 4-week safety follow-up period. We are currently developing Amilo-5MER as an oral treatment for mild to moderate ulcerative colitis. However, if its mechanism of action is relevant to other chronic inflammatory diseases, we are also looking at additional indications and plan to develop targeted formulations accordingly.

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

Thank you, Allen. Good morning, and thanks for joining our call today. This morning, I will be providing you with our financial results for the first quarter ended March 31, 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 first quarter of 2021, our net loss totaled $8.9 million or $0.38 per share compared with a net loss of $6.1 million or $0.29 per share for the corresponding quarter in 2020. Research and development expenses totaled $7.4 million for the first quarter of 2021, which compared with $5.6 million for the first quarter in 2020. The increase resulted primarily from an increase in drug development expenses in connection with the manufacturing of Aramchol meglumine.

Turning now to G&A. Our general and administrative expenses for the quarter totaled $1.7 million compared with $0.9 million for the corresponding period in 2020. During the quarter, we raised a total of approximately $17.4 million of net profit in an underwritten public offering and from our ATM equity facility. As a result of the fund raise and our net loss, our cash balance as of March 31, 2021, which includes cash, cash equivalents, restricted cash, short-term deposits and marketable securities totaled $58.9 million, this 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)

Our first question is coming from Steven Seedhouse of Raymond James.

Can you just talk about what you're seeing in the single ascending dose study for the Amilo-5MER? And you're doubling the highest dose, obviously, that you tested in the initial escalation. Just curious if that's based on PK alone or if that's based on some of the inflammatory biomarker data that you indicated you're collecting.

Thank you, Steve. And no, PK and safety and tolerability. You have to understand that the mechanism of action of Amilo-5MER is down-regulation of Serum Amyloid A aggregation and polymerization. This only happens on time of inflammation. The healthy volunteers do not have hyper-production and polymerization and aggregation of Serum Amyloid A. So there's no use in looking into down-regulation of Serum Amyloid A, which is not elevated in healthy volunteers.

Got it, perfect. And then just regarding Aramchol meglumine, can you just clarify if you've had a Type C meeting with FDA and the feedback you're expecting is subsequent to that? Or are you still planning on having a Type C meeting? Or are you just awaiting written feedback in the third quarter?

We are waiting for a written response. We submitted a request for meeting. I mean, due to COVID, we obviously cannot travel to Washington now. So we applied for the meeting and we also sent the package. And we expect in June to have a written response from the FDA on our fully plan. They also got all their bioequivalent studies results that we had together with Aramchol meglumine as compared to Aramchol acid.

But the FDA has confirmed that this is done under Type C meeting time table, which is a very -- as you know, mandatory timetable for response.

Our next question is coming from Ed Arce of H.C. Wainright.

This is Thomas Yip asking a couple of questions for Ed. Congrats on the progress made this quarter. Just wondering of the histology data from patients, (inaudible) study expected by fourth quarter 2021. How many patients will be F1, F2 and F3. And roughly how -- what's the percentage of patients that have been treated for 24 weeks or 48 weeks or 72 weeks?

Okay. Thank you, Thomas. So the majority, if not all patients, are going to be F2, F3. These are patients which have transitioned from the double-blind part. As you know, we recruited F2, F3 patients for this double-blind part. On top of my head, we are talking about 25 patients are going to be on the 48- and 72-weeks histology time, biopsy time and about 25 will be on the 24 weeks.

Okay. Thanks for the additional detail for the study. And then for the newly approved study in China, will the dosing there start with the new Aramchol meglumine formulation?

No. So what -- the IND that was approved was the existing protocol, i.e. protocol 3 of the ARMOR study, which is the twice-daily BID Aramchol with the enhanced exposure, the 50% higher exposure. This is the data that we will see also from the open-label study. We are -- the protocol 4 is the open-label study and this is now in process. We are now in discussion to approve this amendment, protocol 4 amendment. And protocol 5 is going to be the meglumine, which has to be first approved, of course, by the FDA, and then we will amend it globally, including China. So we are starting with Aramchol acid but hopefully, moving swiftly to Aramchol meglumine when allowed all over not only for China but all over the world.

Okay, sounds good. And perhaps 1 final question from us. For Amilo-5MER Phase Ib study, can you go over the rationale of going ahead with both subcutaneous and oral dosing in this Phase Ib?

Yes, definitely. We are developing Amilo-5MER in 2 formulations. One of the formulation is going to be oral directed to ulcerative colitis. That means that it's going to be opened in a certainty age in the GI. Parallel, we do want to see an exposure of subcutaneous use so we go with both formulation into Phase Ib.

That kind of development would allow us to go to multiple indications because some indication at RA, for instance, require localized injectable administration, where others require local oral like Liat alluded for the GI track. So we are working in parallel with the 2 formulations to allow us to expand the development program to other indications. Once we start the first one with this the one that we described, of course, for IBD for ulcerative colitis.

I see. Yes. So yes, that's for the additional indications that you did mention.

Exactly.

Our next question is coming from Kristen Kluska of Cantor Fitzgerald.

This is Rick on for Kristen today. Congrats on the quarter. And I just wanted to ask a couple of questions. In light of the ongoing pandemic, I wanted to ask about the team's confidence in being able to have a comprehensive data set for those first 50 patients in histology results of Aramchol. Do you believe these results could tailor your inclusion/exclusion criteria for reinitiating the study by the end first quarter '22?

So as our VP of Clinical Affairs, Shai Feinsod just returned back from a trip in the U.S., visiting our U.S. sites -- some of our U.S. sites. As you may recall, we've carefully selected, out of the 215 sites which are active in the ARMOR study, about 55 sites which were less affected by COVID-19.

Israel, fortunately, I mean, in terms of working here from Israel, we are almost back to normal. We have other problems but nothing to do with COVID-19. But Europe, we see some delays but we are not expecting many patients coming from Europe at that time. And in our forecast, the majority of patients would come from the U.S. And we've selected areas in the U.S. sites which were less affected by COVID-19 and meeting with the PI's just recently, we confirmed the timelines and that all is going well as planned for the reinitiation of the double-blind part of ARMOR by Q1 2022.

Understood. And maybe just 1 more. Given the complexity of the IBD market, I know you kind of maybe alluded to this earlier, but is there -- there's certainly a large and diverse patient population to serve. As far as knowing the best segment of the market to target with Amilo-5MER, what specific signals are you looking for and proof-of-concept data in order to better inform what kind of patient populations subset of the market you would really target in later trials?

Thanks for that. We are targeting ulcerative colitis patients, mild to moderate. The safety and tolerability and efficacy of Amilo-5MER will be superior as we see it now in animal models, PK, tolerability in healthy volunteers, to all other cytokine reducers that are currently in the market. We have to understand that all the client available compound in the market, they are extremely efficacious. Tolerability is not so easy, and the immune system is, as to say, is not the same.

And it's -- these other compounds are, I would say, harming the ability of the patients to form good immune response and to mount a good immune response. Amilo-5MER, which is very safe, very focused and the mechanism of action is very specific, upstream to all the cytokines produced in highly inflammatory is going to be the best benefit-risk ratio long-term disease use. And the safety margin is going to be extremely better.

One of the things that COVID-19 has taught us is that one of the additional lessons is that there is a room for immune system modulators than immune system suppressor. And we see that many of the patients which have been treated on the biologics and all those very efficacious drugs, unfortunately, were exposed to COVID-19. And we believe that there is room in the lessons learned from COVID-19 for drugs that's structured with a profile such as Amilo-5MER, and we are looking forward to demonstrate all these superior safety and tolerability and efficacy data in our Phase Ib and Phase IIa study.

Thank you. At this time, I would like to turn the floor back over to Mr. Baharaff for closing comments.

So thank you all for joining our call. As always, you are very welcome to contact us within the next -- within the quarter before our next quarterly call. And we are looking forward to finally see you in person. I hope that with the EASL coming very soon and certainly for AASLD traveling with -- travel restrictions will be lifted and we'll be able to come and visit you very soon, both in the U.S. and Europe. Thank you all for joining the call.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and have a wonderful day.