Galmed Pharmaceuticals Ltd (GLMD) 2020 Q3 法說會逐字稿

Good day and welcome to the Galmed conference call to discuss financial results for the third 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 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. In particular, there is significant uncertainty about the duration and severity of the COVID-19 pandemic and its impact on Galmed's business and operations.

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 call over to Allen Baharaff, President and Chief Executive Officer. Allen, please go ahead.

Thank you, Christine. 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, Dr. 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 third quarter of 2020. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.

I'd also like to say that I hope you and your family are safe and well as we work to overcome the COVID-19 outbreak. The news in the past weeks regarding the progress on the Pfizer vaccine has been particularly encouraging, and we look forward to putting this all behind us. Our business report this quarter is going to be relatively short. However, we are expecting to be able to report next month first-in-human PK data from our Aramchol meglumine program.

Earlier this quarter, we announced that we entered into a research agreement with Gannex Pharma, a wholly owned company of Ascletis Pharma, aimed at developing combination therapy of ASC41, an oral steroid hormone receptor beta agonist, and Aramchol. By combining ASC41, with its rapid reduction of liver fat and improved blood lipid profile with Aramchol that showed improvement in glycemic index and fibrosis, we believe physicians will have a good, solid additional tool in their toolbox.

Earlier this week, we announced a collaboration with MyBiotics, an Israeli-based company that develops microbiome-based products aimed at restoring microbiome equilibrium for the therapeutics and food markets. This collaboration is part of our overall plan to maximize Aramchol clinical efficacy. It's built on our work to date, which includes dosage optimization, 300 milligram BID resulted in higher exposure of Aramchol by 53%; product optimization, development of Aramchol meglumine with higher solubility and lower variability; and treatment duration optimization.

The microbiome is known to be a major driver of NASH and fibrosis and offers great promise as a new approach to treat this challenging disease. The growing interest, following the recent positive top line data from the SER-109 Phase III study, suggests that microbiome is a novel drug modality, both as a monotherapy and in combination with Aramchol.

The collaboration also aims to identify specific microbial biomarkers for Aramchol based on microbiome data collected from Galmed clinical studies that could serve as a biomarker for Aramchol at an early stage of treatment.

Now let me turn to update you on the ARMOR Phase III study. We have lifted some of the constraints in the U.S. in states identified as green states, allowing individual investigators to determine whether it is safe to resume screening activities and recruitment, and we have opened sites in 10 additional countries, including Korea, Turkey, Belgium, France, Spain, Canada, Mexico, Chile, Australia and the U.K.

However, the rapid ongoing spread of the COVID-19 pandemic as well as the second wave in multiple countries has prevented the activation of many of these sites. Moreover, many of the sites have been activated -- that have been activated have halted elective clinical activity due to local restrictions. We are in the process of developing a new recruitment plan, and this precludes us at this stage from providing an update time line for completion of enrollment and top line results.

To align our budget and burn rate with the new recruitment forecast, we are working together with our partners in the execution of the ARMOR Phase III study to significantly cut our expenses and tighten as much as possible to enroll patient activities. We are continuously assessing the situation and expect to provide additional information by mid-December.

Before I conclude, our virtual Analyst Day has been now scheduled for January 26 in order to allow the presentation of clinical data from our ARMOR meglumine and Amilo-5MER clinical programs. Save-the-date notices and contact details will be communicated by LifeSci Advisors.

I would like -- I would now like to turn the call over to Yohai Stenzler, our Chief Financial Officer, to review our financial results for the third quarter of 2020. Yohai?

Thank you, Allen, and good morning, everyone. This morning, I will be providing you with our financial results for the third quarter ended September 30, 2020. For more information, please refer to our report on Form-6K filed earlier today with the SEC, which, among other things, provides a summary of such financial results.

For the third quarter of 2020, our net loss totaled $6.9 million or $0.32 per share compared with a net loss of $4.5 million or $0.21 per share for the corresponding quarter in 2019. Research and development expenses totaled $6.5 million for the third quarter of 2020, as compared with $4.1 million for the third quarter in 2019. The increase resulted primarily from the increase in the clinical trial expenses in connection with our ongoing ARMOR trial.

Turning now to G&A, our general and administrative expenses for the quarter totaled $1.1 million compared with $1 million for the corresponding period in 2019. The increase resulted primarily from an increase in the cost of our D&O insurance policy premium.

During the 3 months ended September 30, 2020, we've had a net financial income of $0.7 million versus $0.5 million in the third quarter of 2019. The increase primarily relates to the realization of unrealized gains from prior periods.

Our cash balance as of September 30, 2020, which includes cash, cash equivalents, restricted shares, short-term deposits and marketable securities totaled $58.7 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.

(Operator Instructions) Our first question comes from the line of Steve Seedhouse with Raymond James.

I was hoping that you could just elaborate on the Gannex TR beta (sic) [THR-beta] that you've licensed. Maybe just comment on the selectivity and potency of that molecule for TR beta and also selectivity for the liver, if you could, just to compare and contrast it with the other clinical-stage TR betas.

Thank you, Steve. So of course, we are not at liberty to disclose any information from ongoing studies by Ascletis or by Gannex, where Gannex is a public company. But I will let Liat maybe talk a little bit about the specificity and what -- I guess what you also would like to know is the differentiation from Madrigal steroid data. So Liat, please go ahead.

Thank you, Steve. So we do know and we saw the pharmacokinetic data and the binding assays of Ascletis. And the ASC41 is more specific and should be -- and actually can be given in a much lower dose. We chose much higher specificity. We are currently checking the effects of these compounds, stand-alone -- Aramchol stand-alone and the combination in order to compare an in-vivo study.

The rationale -- the scientific rationale for the combination is quite clear. We do know that this compound can reduce liver fat quite fast, I would say, and should have a massive effect on liver fat. It's -- we are talking about 1/10 dose of Madrigal MGL-3196. So we are talking about much more specific.

We know that they have a very good liver steatosis data, and we do know that Aramchol will have very good liver fibrosis data, the natural solution and fibrosis improvement. So that being said, together, it will give us a much better natural solution in fibrosis improvement.

And it has a very good safety profile as far as we've seen so far, of course.

Yes. Well, it has a very good safety since it's -- as I said, it has -- it can be given as 1/10 dose of Madrigal compound. So we will have less safety issues, very good efficacy in places where Aramchol is going to be combined with.

Okay. Okay. And then the other question I just had was, Allen, you mentioned -- there's a lot of moving parts, obviously, geographically in the ARMOR study and a lot still left to play out with the pandemic. But I was hoping -- I think heading into the study, you had some idea of how the enrollment would split between U.S., Europe, I think, South America and Israel, at least.

And I was wondering if you already sort of had some sense of if that geographic distribution of enrollment that you had originally anticipated will, in fact, play out differently or if it's kind of still too early to tell, given all the moving parts.

So it is, unfortunately, too early to say. We are still -- just as a reminder, we were talking about between 40% to 50% of patients coming from the U.S., 35% coming from Europe and 10% coming from the Middle East and the rest coming from Latin America and the rest of the world -- Korea and the rest of the world, Asia, Australia, et cetera.

Unfortunately, the 2 main agents of the study, which is the U.S. and Europe, have slowed down significantly over the last quarter. I was hoping -- we've seen June, July, there was a pickup. Then with the second wave, it kind of slowed down again. So this is why I've asked the -- both our internal clinical team and together with our CRO to sit, talk to the investigators one by one, understand what is the capacity, what has changed in the hospitals, in the clinics, in the countries.

There are some countries like Australia, which are doing very well because there is no -- I mean COVID is quite contained. Korea is doing well, but all in all, those countries are capped and need the 2 big engines to act and, unfortunately, they are slowing down. So we need to see how we compensate.

We have good news coming from Brazil. We weren't expecting Brazil to come into play so early in the game. And what I've been hearing from our regulatory people is that we may be able to start and recruit patients already in January in Brazil.

This is good news because studies -- I can tell you that as far as I know, only the Tobira study, the Allergan study was recruiting in Brazil. Genfit and Intercept were not -- didn't recruit because of regulatory issues. We've passed these hurdles, and I hope that they can contribute many patients to the trial. But again, we all have to bear in mind, at the end of the day, 85% of the patients need to come from Europe and the U.S.

And just to add up, I mean, we are using -- as you know, this is not a time which is lost because, at the end of the day, we are planning to switch patients to Aramchol meglumine, and we are using this time to advance.

And this is why, if you recall from our previous guidance, we were not expecting to have clinical data from meglumine as early as this year. So we pushed the time line of Aramchol meglumine, and I hope that that would bring good news and will certainly have also an impact on our ARMOR, on the pivotal study. And this data will be presented in December.

Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald.

I wanted to ask about your recently announced collaboration with MyBiotics. So maybe I could first take a step back here and ask you to describe your view on the role of the microbiome as it relates to NASH. I know we've seen a lot of evidence so far in 2020 about the potential of these medicines and biomarker work in general.

And then also, as you look at the NASH space, say, 5 to 10 years down line from now when we might potentially have some therapies on the market, I wanted to ask if you think that this is successful, whether tools like this could be used for precision medicine to try to identify potential responders from the very early stages.

Liat, please take that. Thank you, Kristen.

Okay. Thank you, Kristen, for doing this. I just want to say to put everything in kind of a perspective, we -- there were multiple activities around Aramchol in order to actually maximize its ability to treat NASH patients.

So as an overall plan, we elevated the exposure to Aramchol. We have a better product now with Aramchol meglumine, and we use the combination that I previously discussed with the thyroid hormone receptor agonist as well as the combination that we are planning with MyBiotics.

Now the science around the involvement of microbiome and the etiology of NAFLD and NASH goes all the way back to 2015 and onwards. It is now an emerging scientific evidence that it may be the cause or at least, I have to say, accompanied cause to enhance this disease. And patients that have different microbiota is more prone to develop NAFLD and NASH.

And more advanced publications are showing the specific microbiome profile for fibrosis. And so the -- I would say, the scientific eyes around this or the attention around this is really ongoing and growing. We were, actually, looking for 3 main outcomes of this combination --.

Collaboration.

Yes. Combination and collaboration. Yes, it's true. So the first one is going to be a collaboration to induce and to enhance the efficacy to Aramchol. Take into consideration, for example, that we have responses to Aramchol that we will be able to identify and see how the microbiome of the responders is different from the nonresponders and then see to change the microbiome of the nonresponders to the responders one, and by that, enhance the efficacy of Aramchol.

As a stand-alone therapy, microbiome change and the right flora can be a stand-alone potential therapy and, of course, we, as Galmed, looking for the combination of that stand-alone together with the Aramchol efficacy to create a better treatment to NASH patients. So if you look at this as an overall plan, we are looking at combination to Aramchol, we're looking at enhancement of Aramchol response rate, and we are looking at stand-alone therapy for NASH patients.

And biomarkers --.

We are also looking now at the microbiome as a biomarker to the response to Aramchol, taking into consideration that for maybe 3 months, you can also see -- you can already see the change. So if this is something that you can do in 3 months, for example, can give you a good biomarker to the efficacy of the compound.

And we have already incorporated, Kristen, in our ongoing clinical studies microbiome samples. We are collecting samples. We are collecting samples of healthy volunteers, of NASH patients, of treated -- Aramchol-treated patients. There is a lot of data that now we can provide and work together with MyBiotics, which is a leading company in the space, to [exert] everything that Liat just alluded.

Yes. I have to say we are going to start the multiple dosing of Aramchol meglumine. The single dose is underway, almost finalized. The multiple dosing will start as early as mid-December, and the microbiome samples is already implemented in...

In the protocol...

Multiple dosing of Aramchol meglumine as well. So it's going to be in all our studies onward.

Okay. Great. Yes. And then just the second part of that question is as the evidence of the microbiome role in general is emerging, and if you find, in your experience, that it is helping identify those patients in the combinations work, do you think that down the line we can look at NASH as something where precision medicine can come to play to really see which therapies may have the most potential, just from the get go rather than starting patients on treatment X and it doesn't work and moving them onto treatment Y?

Definitely. And it also will call for personalized medicine as well. I believe that in time we will, hopefully, have multiple medicine in the market of -- or in the NASH space. Yes, definitely, this is going to be accompanied therapy for -- and also biomarker for efficacy. So we look definitely at personalized medicine as well.

Thank you, Kristen.

(Operator Instructions) Our next question comes from the line of Ed Arce with H.C. Wainwright.

Thanks for the additional details on ARMOR and other aspects. So I recognize, as you said in your prepared remarks, Allen, that there are -- there is a new recruitment plan underway as you look at the various sites and -- across the globe and the different recruitment rates of those.

My question is -- and perhaps this is just too early to say yet, but you have current guidance for full enrollment by the end of next year. Is there a chance that that could be updated or revised when you get back to us perhaps next month some time on more details around the plan?

So thank you, Ed, and we are all -- actually, we are moving right away from this call to your conference. So if all the listeners -- Liat will be presenting or will be with you on a fireside chat, I think, in 30 minutes or so for your Israeli conference. Thank you for inviting us.

Ed, there are too many balls in the air. I mean this is where we have to decide. On the one hand, we are -- we want to push, and we are pushing as much as possible on recruitment and time lines for ARMOR and specifically in countries which are less affected by COVID-19, which is easier. But as I said before, U.S. and Europe are key countries and recruitment has slowed down significantly in these places.

I can tell you that places like France, U.K., Spain, Belgium, probably I'm missing another one or 2 European countries. We have not randomized a patient now for the last 2 months. So there's a very serious COVID-19 second wave in these countries, and I don't have to tell you what's going on in the U.S.

So we -- yes, we are pushing for putting -- adding more and more patients, but at the same time, we have to take into consideration the switch to Aramchol meglumine, which we want to make a very efficient switch, and we know that Aramchol meglumine is a better drug product at the end of the day. And we would like more and more of our patients to be able to enjoy Aramchol meglumine for a longer period.

So we are really -- it's kind of 2 conflicting worlds: on the one hand push as much as possible on recruitment; on the other hand, see the benefit for the patients. And we try to balance between the 2. And we have a meeting with the regulator, with the FDA and the European regulators to discuss this program and decide what is the best way in order to make that happen.

I hope that by December, when we come with the data with meglumine and the new recruitment plan, all of that will be revealed, and you will have a very clear guidance of time lines and of execution and catalysts. In our minds, everything is crystal clear. Unfortunately, it's not yet public information, so we cannot disclose that at this pace -- at this stage.

Right. That's fair enough. And that's a great -- that's a great segue, actually, to my next question. As you mentioned right at the beginning, your first-in-human PK data is expected for meglumine next month, as you mentioned.

So I'm wondering, given that this is key to your overall plan to move forward with the bioequivalence from the salt to meglumine, will you be identifying the equivalent dose next month to the 300 milligram BID of the salt? Is that part of what you're expecting to announce next month?

So Liat will take that.

So data from [distinctive] dose crossover design will be a need next month. So next middle December, we will know the single-dose exposure. Usually -- let's put it this way, the regulator sees bioequivalence as single dose in fast patients, and this is good enough.

Because Aramchol has a long half-life, we are waiting for 2 days and then start immediately selecting the dose -- for the multiple dosing, which will end by the end -- we will have data, hopefully, by the end of January already we will know the multiple dosing.

And then we will have to go -- I mean we go directly to the regulator to present the single dose, the multiple dose. Just in between, I can definitely tell you that while the [laboratories] are analyzing the Aramchol and Aramchol meglumine, we keep on with the full effects only to be in the safe (inaudible) that there's not going to be anything that the regulators will ask for, and we will not have to present.

So we will actually send the package with a single dose, multiple dose. And at that time, the single dose will have to provide us with some data that usually, if the regulator is good enough, it's -- the regulator is asking for 80% to 125% exposure data. So it's going to be good enough for us because of the long half-life. We will give them already the multiple dosing. So we will have a clue with regards to, are we going to be able to go back to the single dose or not with Aramchol meglumine.

We definitely know that we will be able to reach higher exposure. The lower dose will anyway be needed if it's going to be twice daily. Or if it's going to be once daily, then we will need higher dose but once daily. Homogeneity among patients will be much better. So we see much better product in here.

So in the mid-December, we'll publish the results of the single dose with the bioequivalence. We are -- we took 2 doses, 2 first-in-human of Aramchol meglumine and we compared it to the 300 milligram tablets that the patients are actually receiving in ARMOR, and we'll publish the results.

Great. That's helpful. One final question then for me, if I may, around this MyBiotics collaboration and combination that you announced on Monday. You mentioned earlier one of the objectives with these patients with the dysregulated microbiota is to enhance the efficacy, specifically of those nonresponders.

And I would imagine that the way that you do that is exactly the biomarker that they've developed. And so I'm wondering if you could give us a bit more detail around how exactly the company is able to identify potential responders or help you enhance the efficacy.

So imagine, Ed, that we are talking about the best way to characterize. You have a patient, you characterize his response by natural solution and fibrosis improvement. These are the regulatory endpoints for the clinical trial.

And you see that all of the patients that you have that responded well to Aramchol had a varied pattern, which is completely different from the nonresponders with microbiome or microbiota. And you know exactly what kind of microbiome change is accompanied Aramchol response.

What you are going to do is either change the microbiota of the nonresponders to fit to the Aramchol responder ones. And by that, you push the response to Aramchol even better to what it is.

We have no further questions at this time, Mr. Baharaff. I would now like to turn the floor back over to you for closing comments.

So thank you all for joining our call today, and I do hope that we -- you will follow our press releases -- during December. I think that there's a lot of exciting news that we are -- hopefully, that we will start and releasing by December and January coming from both the Aramchol meglumine.

But also I would like to remind you that Amilo-5MER, our pipeline product, is also entering first-in-human study early Q1. So hopefully, by the Analyst Day of the 26th -- of January 26, we'll be able to communicate some data from this study as well. Keep safe, and thank you all for joining the call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.