5/13/2021

speaker
Donna
Conference Call Operator/Moderator

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 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. 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. SALMED 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 Alan Vajaroff, President and Chief Executive Officer. Alan, please go ahead.

speaker
Alan Vajaroff
President and Chief Executive Officer

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, Dr. Liata Yardeni, our Chief Financial Officer, Zohaish Chancellor, 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 have held our investors' year-end poll only a few weeks ago, my report to you this time will be very short. Starting with our global phase three registrational RMO study, and as previously reported, the addition of the open label part was approved in the U.S., Canada, Australia, the 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 one-third of the study population, i.e., about 50 subjects, that have completed the post-baseline labor biopsy are expected to be available in Q4 2021 head plans. That being said, In Q4, we expect to have results on the efficacy of Aramcol with higher exposure on fibrosis and liver fat confirmed by liver biopsy. Also reported earlier this month, Aramcol received an IND approval in China. We view the approval of the Aramcol study in China as a significant milestone in the development of Aramcol for national fibrosis, which may accelerate the pace of randomization of patients with the double-blind part of the ARMO study, and also position Aramcol as one of the foremost therapeutic candidates for national fibrosis in this large and emerging market. We look forward to rapidly initiating enrollment in China as soon as practical. As previously reported, ARMO's double-blind placebo-controlled registrational part is expected to initiate by the end of Q1 2022, and is expected to be based on aramcol megalamine, which is a salt form of aramcol-free acid with an improved target product profile. Earlier this month, we submitted to the FDA the results of aramcol megalamine Phase I study with specific product development plan that would enable Dalmed to replace aramcol acid BID with aramcol salt QD with the same exposure. Gambit is expecting, during Q3, to receive guidance from the FDA to allow us to introduce Aramcol Megalamine into the double-blind, placebo-controlled, registrational part of the Aramol Phase 3 study. Now, shifting gear to our partner compound, Amilophagmer. As a brief reminder, amylo-5-MER is a highly potent inhibitor of chronic inflammation currently under development for IDD with a targeted and a specific mechanism of action. Amylo-5-MER does regulate multiple pro-inflammatory cytokine secretion. In previous clinical studies, amylo-5-MER 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 and the biomarker of chronic inflammation. Amylo-5-MER treatment resulted in significant reduction of clinical symptoms and pathological characteristics of disease in multiple animal models. Amylo-5-MER has a unique mode of action upstream to all pro-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 one clinical trial of Amilop5MER for single and multiple dosing. I'm happy to report today that we completed all single-administrated doses starting from 10 milligrams up to 180 milligrams. Following excellent safety and proportional we decided to go one dose even higher, and at 360 milligrams, it's currently being dosed. Topline data is expected in the second half of 2021. Phase 1, the proof-of-concept study, is planned for Q4 2021 and will include biomarkers for efficacy, such as reducing serum amyloidase in the serum of patients and other inflammatory biomarkers, such as CRP, et cetera. In this Phase 1b study, amil-O5MER will be administrated subcutaneously and orally for four weeks with additional four-week safety follow-up period. We are currently developing amil-O5MER 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, Yochai Stentzler. Yochai?

speaker
Yochai Stentzler
Chief Financial Officer

Yochai Stentzler Thank you, Alan. Good morning and thanks for joining us for today. This morning I will be providing you with our financial results for the first quarter and March 31st, 2021. 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 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, compared with $5.6 million for the first quarter in 2020. Increased results were found from an increase in drug development expenses in connection with the manufacturing of Aramco Megalomide. 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 proceeds in under-recent public offerings and from our ATM equity facility. As a result of the fund raise and our net loss, Our cash balance as of March 31st, 2021, which includes cash, cash equivalents, restricted cash, short-term deposits, and marketable securities, was at $58.9 million, if compared with $51 million on December 31st, 2020. With that said, operator, please provide instructions for the Q&A portion of our call.

speaker
Donna
Conference Call Operator/Moderator

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star 1 to register a question at this time. Our first question is coming from Steven Seedhouse of Raymond James. Please go ahead.

speaker
Steven Seedhouse
Analyst, Raymond James

Great, thank you. Can you just talk about what you're seeing in the single ascending dose study for the amylo-5 MER? I mean, 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.

speaker
Dr. Liata Yardeni
Chief Scientific Officer

Thank you, Steve. No, PK and safety and tolerability. Okay. You have to understand that the method of action of amiloprimer is downregulation of serum amyloid A aggregation and polymerization. This only happens on time of inflammation. The healthy volunteers do not have hyperproduction and polymerization and aggregation of serum amyloid A. So there's no use in looking into downregulation of serum amyloid A, which is not elevated in healthy volunteers.

speaker
Steven Seedhouse
Analyst, Raymond James

Got it. Perfect. And then just regarding a RAM call, Megalamine, 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 third quarter? Thank you.

speaker
Dr. Liata Yardeni
Chief Scientific Officer

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 recent response from the FDA on our fully planned. They also got all their bioequivalent studies results that we had together with Aramco and Megumin as compared to Aramco Acid.

speaker
Alan Vajaroff
President and Chief Executive Officer

But the FDA has confirmed that this is done under type C meeting timetable, which is, as you know, a mandatory timetable for response.

speaker
Steven Seedhouse
Analyst, Raymond James

Yep, makes sense. Thanks, Alan. Thanks, Leah.

speaker
Donna
Conference Call Operator/Moderator

Thank you, Steve. I'm sorry. Our next question is coming from Ed Carsey of A.T. Wainwright. Please go ahead.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

Hello, everyone. This is Thomas Yip asking a couple of questions for Ed. Congrats on all the progress made this quarter. Just wondering off the histology data from 50 patients in the EMS study, expected by fourth quarter of 2021, how many patients will be F1, F2, and F3? And roughly, what's the percentage of patients that have been treated for 24 weeks or 48 weeks or 72 weeks? Okay, thank you.

speaker
Alan Vajaroff
President and Chief Executive Officer

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, and as you know, we have only 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.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

Okay, thanks for the additional details for the study. And then for the newly approved study in China, Will the dosing there start with the new Aramco-Mechamine formulation?

speaker
Alan Vajaroff
President and Chief Executive Officer

No. So what the IND that was approved was the existing protocol, i.e. Protocol 3, of the ARMO study, which is the twice-daily BID Aramco with the enhanced exposure, the 50% higher exposure, This is the data that we will see also from the open-label study. 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 megalamine, 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 RM coal acid, but hopefully moving swiftly to RM coal megalamine when allowed all over, not only for China, but all over the world.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

Okay, sounds good. And perhaps one final question from us. For Miro5MIR, phase 1B study, Can you go over the rationale of going ahead with both secretinase and oral dosing in this Phase 1b?

speaker
Dr. Liata Yardeni
Chief Scientific Officer

Yes, definitely. We are developing amyloside there in two formulations. One of the formulation is going to be oral directed to ulcerative colitis. That means that it's going to be open in a certain pH. in the GI. Parallel, we do want to see an exposure of subcutaneous use. So we go with a both formulation into phase 1b2.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

Okay, sounds good. Thank you so much for the kind of question.

speaker
Alan Vajaroff
President and Chief Executive Officer

That kind of development would allow us to go to multiple indications because some indications, as RA, for instance, require lyophilized injectable administration, where others require local injections. oral, like Elias alluded, for the GI tract. So we are working in parallel with two formulations to allow us to expand the development program to other indications. The first one we see is the one that we described, of course, for IBD for obstructive colitis.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

I see. Yeah, so that's for the additional indications that you did mention.

speaker
Alan Vajaroff
President and Chief Executive Officer

Exactly.

speaker
Thomas Yip
Analyst (asking questions on behalf of Ed Carsey, A.T. Wainwright)

Okay. Thank you so much, and we look forward to the day that we announce.

speaker
Donna
Conference Call Operator/Moderator

Thank you. Our next question is coming from Kristen Kleska of Cantor Fitzgerald. Please go ahead.

speaker
Rick (on behalf of Kristen Kleska)
Analyst, Cantor Fitzgerald

Hi, team. 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 and histology results, the RAM call. Do you believe these results could tailor your inclusion-exclusion criteria for reinitiating the study by the end of first quarter 22?

speaker
Alan Vajaroff
President and Chief Executive Officer

So as our VP of clinical affairs, Shai Sankar, 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 ALMO study, about 55 sites which were less affected by COVID-19. Israel, fortunately, I mean, in terms 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 PIs just recently, we confirmed the timelines, and all is going well as planned for the reinitiation of the double-blind part of our mall by Q1 2022.

speaker
Rick (on behalf of Kristen Kleska)
Analyst, Cantor Fitzgerald

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

speaker
Dr. Liata Yardeni
Chief Scientific Officer

Thanks for that. We are targeting autarkic colitis patients mild to moderate. The safety and tolerability and efficacy of amylose 5-MER will be superior as we see it now in animal models, TK, tolerability in healthy volunteers to all other cytokine that are currently in the market. You have to understand that all the kinds of valuable compounds in the market, they are extremely efficacious so their ability is not so easy and the immune system is not the same and if these other compounds are I would say harming the ability of the patient to form a good immune response and to mount a good immune response. Amiloplasma, 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. from benefit-risk ratio for long-term disease use, and the safety margin is going to be extremely better.

speaker
Alan Vajaroff
President and Chief Executive Officer

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 and immune system suppressors. And we see that many of the patients which have been treated on the biologics and all those very infectious drugs, unfortunately, were exposed to COVID-19. And we believe that there is room in the lessons learned from COVID-19 for drugs that such as with a profile such as amyloprimer and we are looking forward to demonstrate all these superior safety and tolerability and efficacy data in our Phase 1B and Phase 2A studies.

speaker
Rick (on behalf of Kristen Kleska)
Analyst, Cantor Fitzgerald

Understood. Thank you for that and be well. Thank you.

speaker
Donna
Conference Call Operator/Moderator

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

speaker
Alan Vajaroff
President and Chief Executive Officer

So thank you all for joining our call. As always, you are very welcome to contact us within the quarter before our next quarterly call. And we are looking forward to... Finally, see you in person. I hope that with 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.

speaker
Donna
Conference Call Operator/Moderator

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.

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