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spk00: Good day and welcome to the GALMED conference call to discuss financial results for the fourth quarter and year-end 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 risk under the heading risk factors described in our latest annual report on Form 20F filed with the SEC. Gallimant assumes no obligations 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 Alan Bariff, President and Chief Executive Officer. Alan, please go ahead.
spk04: Thank you, Peter. 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 Hayardeni, our Chief Financial Officer, Daron Cohen, and Chief Accounting Officer, Yochai Stensler, to provide you with an update on our clinical development programs, as well as report to you on our financial results for the 2021 fourth quarter and full year financial results. As always, we will be happy to take any question you may have at the conclusion of our prepared remarks. On April 28th, Gambit published interim results from the open-label part of the Armour Phase III study. As a quick reminder for those of you who are new to our story, the open-label part of the Armour study was designed to explore the effect size of the higher dose of Aramcol or NASH-induced fibrosis and the kinetics of histological outcome measure as a function of treatment duration in preparation for the registrational double-blind placebo-controlled part of the study. In simple words, the aim of the open-label study was to explore the speed and the extent of fibrosis reduction, testing the hypothesis that higher R-alcohol exposure results in an improved efficacy profile. Acknowledging the complexity, variability, and moderate reproducibility in liver pathology reading, the open label part was also used to further assess different methodologies that may support and improve fibrosis scoring. All slides were assessed using three histopathological reading methodologies. A central pathology committee scored the biopsies according to the conventional formal NASH-CRN scoring system, F1 to F4. Scoring was initially performed individually by the three independent pathologists, followed by consensus reading by the committee. Since peer reading may reflect real-world pathological assessment, the same central committee was also asked to perform a rank assessment, improvement, worsening, stable, of paired pre- and post-treatment biopsies, scrambled and blinded to sequence, i.e., not knowing which is the baseline and which is the post-baseline. Furthermore, artificial intelligence, AI-based tools, are at the forefront of the development of a more sensitive, automated, continuous scoring system for the detection of fibrosis change for future NASH and fibrosis clinical trials. Accordingly, the same slides were also read using Fibronest, a quantitative digital pathology image AI analysis, providing a continuous fibrosis composite severity score, FCS. This allow identifying fibrosis improvement that may be missed by the formal scoring as well as the statistical quantification of change from baseline. Results of post-baseline biopsies perform either at 24 weeks or 48 weeks from 46 subjects with NASH and F1 to 3 that received Aramcol, support the antifibrotic effect of Aramcol, and reinforce the favorable safety profile of Aramcol. Treatment with Aramcol 300 mg BID resulted in a high rate of subjects with fibrosis improvement across the three separate pathology reading methods. Both spirit and AI evaluations identified more subjects with fibrosis improvement, indicating greater sensitivity to detect change versus categorical scoring. For all methods, The treatment effect was larger at 48 compared to 24 weeks. At week 48, fibrosis improvement was identified in 40%, 65%, and 100% of patients according to NASH-CRN paired in AI, respectively. Quantification of change from baseline by AI demonstrated that reduction in fibrosis was statistically significant both at week 24, P of 0.017, and at week 48, P value smaller than 0.0001. Further analysis based on AI are being prepared for publication in upcoming scientific conferences. Altogether, we believe the results highlight the need to reassess histological analysis in future NASH studies. With regard to the initiation of the double-blind placebo-controlled registrational part of the Phase III study, it is our current assessment that despite considerable efforts from the scientific community and regulatory agencies, there are significant uncertainties that remain unresolved. This includes dependence on biopsies as the primary surrogate endpoint, with all the complexities described above. no significant progress in validation of non-invasive biomarkers, and a high screen failure rate that remain a substantial burden on NASH studies. In addition, Gamet is considering more robust changes to its development program for NASH. Changes may include focusing on higher-risk patients, F3, evaluating patients with compensated cirrhosis, F4, as well as change to study design, such as two smaller studies instead of one pivotal study, and the addition of a combination arm. Taking all the above into consideration, Gamet has decided to move the initiation of the double-blind placebo-controlled part of the study with Aramcol meglumine until the second half of 2023, subject to, among other things, the results of our open-label part, sufficient funding, and clarification of the regulatory approval process for NASH drugs, at which time a de-risk scrutinized clinical development plan can be put in place. Importantly, as you may remember, on January 2022, we announced that the United States Patent and Trademark Office, USPTO, granted GalMed new patents related to the use of Aramcol for the treatment of fibrosis and for their treatment for modulating gut microbiota. With this latest patent, GalMed is strengthening and extending the IP protection of its lead compound Aramcol until December 2038. This broad patent protection and the clinical data on NASH-induced fibrosis is broadening the potential of Aramcol in fibrosis treatment. The past 12 months have been an exciting time for GalMed As we reported positive interim data from the open-label part of the Armour Phase 3 study, we continue to advance our pipeline compound, amylo-5-MER. Amylo-5-MER is a synthetic peptide consisting of five amino acids that exerts anti-inflammatory effects by bonding to pro-inflammatory amyloid proteins. preventing polymerization of serum amyloid A, SAA, monomers, and thereby interfering with SAA-induced immune cell activation. On January 2022, we announced the positive results from the first in-human Phase I clinical trial of amylo-5-MER in healthy volunteers. The government is currently assessing a number of potential proof-of-concept studies designed to rapidly generate data that will drive the next steps of the Amilo 5 Merit Clinical Program with a clear and efficient route forward. We intend to provide more details in the next few months. Along with an update on our planned activities, we are pleased to welcome Doron Cohen earlier this year as our newly appointed CFO. Doron brings more than 25 years of experience in the global financial markets, including significant experience on the buy side of life sciences companies. Now let me transfer the call to our Chief Accounting Officer, Yochai Stensler. Yochai?
spk02: Thank you, Alan. This morning I will be providing you with our financial results for the fourth quarter in the year ended December 31, 2021. For more information, please refer to our report on phone 20F filed earlier today with the SEC, which, among other things, provides a summary of such financial results. Our net loss for the three and 12 months and then December 31st, 2021 was of $7.5 million and 32.5 million respectively, compared with the net loss of 10.3 million and 28.8 million for the corresponding period in 2020. As a result, our loss per share for the three and 12 months and then December 31st, 2021 was 13 cents per share and $1.32 per share respectively, as compared to $0.48 and $1.35 for the corresponding periods in 2020. Research and development expenses for the three and 12 months and in December 2021 totaled $6.3 million and $27.2 million, this compares with $9 million and $26.1 million for the corresponding periods in 2020. Turning now to G&A, our general and administrative expenses for the three and 12 months and in December 2021 was at 1.2 million and 5.7 million respectively, versus 1.3 million and 4.1 million for 2020. During the three and 12 months and in December 31st, 2021, we had a net financial income of 0.05 million and 0.4 million respectively, versus 0.1 million and 1.4 million during 2020. Our cash balance as of December 31st, 2021, which includes cash, cash equivalents, restricted cash, and marketable securities, was at 34.9 million. This compares with 51 million on December 31st, 2020. With that said, operator, please provide instructions for the Q&A portion of our call.
spk00: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. 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. One moment please while we poll for questions. Our first question is from the line of Steven Sears with Raymond James. Please go ahead. Mr. Sears, your line has been unmuted. You can proceed with your question.
spk05: Yeah, apologies. Can you hear me?
spk04: Yeah, we can hear you now. Hi, Steve. Sorry about that, guys.
spk07: Technical difficulties. I appreciate you taking the question. I wanted to ask about the histology data. I noticed you had two cohorts, 24 weeks and also greater than 48 weeks. And I wanted to ask if that meant patients just showing up a week or two late for the 48-week biopsy or if, in fact, that combines 48 and 72 weeks. paired biopsies, and if so, could you break out sort of how many of each you had and maybe what data from 72-week biopsies would be forthcoming? Thanks. Sure.
spk04: So most of the patients came from the 48 weeks. We did combine the 48 and 72 groups. Approximately five patients came from the 72, and most of them came from the 48 weeks.
spk07: Can you comment on just the relative fibrosis improvement rates between 48 and 72 weeks? Thanks.
spk04: We think the numbers are too small for five patients to draw any conclusions. But in general, what we've seen before in the small numbers of the 20 patients, we see that also later on, but we don't draw any real conclusions from five patients. So we prefer to group the two together.
spk05: Okay, thanks for taking my question. Thank you, Steve.
spk00: Thank you. Our next question is from the line of Kristen Kloska with Cantor Fitzgerald. Please go ahead.
spk01: Hi, good morning and good afternoon. Thanks so much for taking my question. The first one I wanted to ask was on the second half of 2023 guidance in terms of the registrational study. So some of the factors that you cited are things that of course you as the company could control, like understanding which patient population to evaluate, but then some of the factors you cited were with things out of your control. So, you know, for example, understanding the biopsies is the primary surrogate endpoint. So I just wanted to understand a little bit about the timeline and what you hope to understand from the field more broadly by the time you plan to start this study next year.
spk04: So we believe that the field is developing in the right direction. And very recently, there was a liver forum where the FDA presented and many of the Pharma companies involved in the NAS space also participated. So we certainly see a very positive development, and AI in particular is a very important one. But we feel that it is still from, as I said, I mean, with all the enormous effort and work that are done by a number of consortiums, both from academia and industry, trying to develop biomarkers. And the better understanding of the biopsy reading, it is too risky now to initiate a registrational study when the primary endpoint is not very well defined. And we feel that we should wait and look And we believe that by the time that we plan the reinitiation, to reinitiate the study in the second half of 2023 means that we have to start working on that already early 2023. I hope that at that time we'll see some positive signs coming from all these efforts that many participants are making. are advancing and we will also, that will give us sufficient time to have a meeting with the FDA to discuss all these concerns and information, to share with them the information. The FDA is extremely supportive and we would like to show them the data that we have. I don't know if there are many companies that do this effort of reading the biopsies in three different methodologies. So this is very important data. We've submitted this data as a late breaker for EZL, and it's very valuable data for all NASH companies.
spk01: Okay, thank you for that. And then I wanted to ask how some of the recent data that you shared last week how you're thinking it could correlate to the one daily aramcol megalamine profile in light of some of the early PK work that you shared between the two drugs.
spk04: So as you recall, aramcol megalamine is circulated as aramcol. So the circulating moiety is aramcol. We're just talking about a different kind of formulation or a different dose. The advantage of iron-cold megalamine is that we'll be able to get to the same exposure that we see now with a twice-daily 300 mg with once-daily 300 and something, 380, about a milligram of iron-cold megalamine once-daily. So this is a great advantage, both in terms of compliance, in terms of patients, the cost of goods, and the patents, of course. This has a very long patent, as I alluded before. So, simultaneously, we continue the development of the megalomine, preparing it for the initiation of the double-blind, but I don't really see any difference between the data between the two formulations, Aramcol and Aramcol-megalomine.
spk01: Okay, thanks. And then the last question for me was just on a milo five murder you you highlighted that over the next couple months, you might share some plans in terms of proof of concept studies, but I just wanted to ask if you're still looking to first assess IBD. I know you first introduced a milo five murder while you had discussed a number of potential programs.
spk04: Thank you. So indeed, we have developed the first formulation for amyloprimer is an intercolonic oral formulation, and this is developed for IBD. Now, we look carefully at the space and the competitive landscape, and we are trying to create kind of an edge for amyloprimer in this competitive landscape. So one of the possibility would be a combination with another compound which will ease the recruitment, because we know that recruitment is very challenging, almost as much as challenging for NASH trials, but we can solve that if we do a combination treatment. And also the population, which population are we targeting, mild to moderate, moderate to severe, At the same time, we are also looking for the systemic exposure of amyloid 5-mer. And once we will confirm that, it will open for us a variety of other indications which serobamyloidase plays crucial role. And one, for instance, is FMF, familial Mediterranean fever, but I can name others which are highly relevant for us. And we are trying to do all inflammatory, looking for these inflammatory indications where amiloprimer can play an important role.
spk05: Thank you, Alan. Thank you, Christine.
spk00: Thank you. Our next question is from the line of Nav Rehman with Maxim Group. Please go ahead.
spk06: Hi, everyone. Thanks for taking our question. I have a few. First, I'm going to start on your recent data. Seeing how you used the three different methodologies, could you just sort of talk about what you sort of see as the clinical value of the different methodologies? And have you had any conversation with, like, KOLs or the FDA on these methodologies, seeing how the rates of fibrosome improvement were so different? Did you find that KOLs or potentially the FDA would prefer the more stricter CRNN methodology versus the AI methodology?
spk04: Yes. So thank you for the excellent question. All these methodologies are relevant to the question of sensitivity. And we need to really discuss the data with the FDA. Galmed is under the opinion and together with the KOLs. I mean, this is something, of course, we are consulting with the KOLs. The AI company we use was highly recommended to us by our KOLs. I know that there are eight other abstracts which this company is going to present at EZEL for other NASH companies. So clearly, they are at the forefront of AI. Now, we believe that there is a, and I think this is data that also presented, but it certainly will be presented during ESL, is the correlation between the AI and peer reading, for instance, and the high correlation between AI and peer reading. And this is important because pair reading is the closest methodology that we see for real life. And if we can support the pair reading together with AI, that would, I think, a combination of the two, and potentially that can be also validated by biomarkers, non-invasive biomarkers, All of that can bring the NASH space and in particular the fibrosis effect into a different category. It's simply the NASH CRN is limited by definition. And as you may recall in the hepatitis C studies, the ranking was not done through NASH CRN. It was done by pair reading. And we are going back to the traditional quote unquote reading that was used in Hep C clinical studies supported by the very novel AI technology which shows the improvement that is normally missed by the human eye. So we are very excited and we try as much as possible to move away from categorical reading, i.e. F1, 2, 3, into a continuous method, which is much more accurate.
spk06: Thanks. You actually brought up another point I was going to ask. During your statistical analysis, did you find any biomarker correlation with the AI reading, or any sensitive correlations with biomarkers and AI readings?
spk04: No. So I can't talk too much because otherwise Isel will not give me my late breaker. So unfortunately, I have to be very careful with the information that I disclose. But I can tell you these are very, very interesting. And I think what the interesting point is, again, as far as I know, our abstract is the first time that you have both the clinicians, the key, the KOLs and clinicians, together with the leading histopathologists on one paper, agreeing and raising the main issues and concerns, and basically putting it in a very, you know, open and frank way, the biopsy reading challenges, and hopefully that would support the entire space.
spk06: Just one last question. On the other side, Murr, have you considered or are you considering potentially partnering the product for future development and non-dilutive sources of financing?
spk04: Absolutely. Absolutely. And thank you again, Justin, for this question. Galmed is, I think, what we've demonstrated over the years is our core competence is to advance those preclinical assets quickly into clinical, preferably phase one and proof of concept studies. For longer studies and phase two B, phase three studies, collaborating with other biotech or pharma companies, I think especially nowadays, is the right way to move forward. And we will continue, and this is what we are trying to do, is form coalitions of partners that have the same ideas and the idea to advance the assets as much as quickly as we can into advanced clinical studies, no matter whether it is a pharma or another biotech company.
spk05: Thanks for taking my questions. Thank you.
spk00: Our next question is from the line of Ed. Please go ahead, sir.
spk03: Hi. Can you hear me? Yes. Hi, Ed. Great. Hi, Alan. Great. Thanks for taking my questions. First, I joined a bit late, but I understand that you were... moving the timeline for the phase three portion of our more to the second half of next year and having to do at least in part with the defining of the primary endpoint and working with the FDA. Could you perhaps just give us a bit more detail on some of the criteria that you were reviewing as you were considering pushing this back, just to give a better sense for why you thought this was necessary.
spk04: Thank you, Ed. To start with the screen failure, when you look at other NAS studies, including our study, The screen failure for the NASH studies is about between 80 to 90%. It means you have to biopsy 10 patients in order to get one eligible patient. I don't think that running, you know, in order to run a 1,000 patient pivotal study, you would need to biopsy 10,000 patients. This is something which I don't think no one should expect. And we should wait and see and find together with everyone who is working on biomarkers, validated biomarkers, how we reduce these numbers into sensible numbers because it's not only for the cost of the study, but also I'm thinking of the patients, all these patients that need to do these unnecessary biopsies and the frustration of... the frustration of the both the PI and the patient. And we are looking for a method which is better, with a better sensitivity, will allow a smaller sample size. For instance, AI. So this is to start with the screening. And then I'm moving to the end of the study, the results. You can't run a study when the rules of the, how do you say, we started playing basketball and we are moving and playing hockey or cricket. I mean, this is something which is, again, when you see the discrepancy between the different methodologies and no one can, and there is no clear guidance, which one is the one that we should use This is probably the reason why we see so many NASH studies at sea. So these two by itself, I think, demand, in addition to what I've said earlier, the ability to better design the studies. Think about the population, whether we should go for a more advanced population, whether we should go for two smaller studies rather than one large pivotal study. whether we should test combination in the, and there's still no guidance on combination, how do you include a combination arm in this kind of study. So I hope that by the time that we initiate the, reinitiate the double-blind part of the study, we will get answers to all these questions.
spk03: Okay, great. So the next question is regarding your data, your initial data out of Fibrinus and the fibrosis composite score. Obviously, truly compelling data on the reduction of at least 0.3 units over that time period. And I understand that this does not correlate well with the NASH CRM definition of histology. And in fact, if you were really trying to devise a better method, you wouldn't necessarily want to have it correlate to histology. So you have, in the end, and have the space has had for several years sort of a catch-22, trying to move away from histology and yet still having to correlate to it. So the question is, with this data in hand, are you intending to have discussions with the FDA that can say basically moving to essentially a better method and not having to continue to tie things to a biopsy? Or is the FDA more inclined to listen to some of these groups like in the U.S. and Europe that are large, large databases of patients that are being worked on over several years.
spk04: So thank you, Ed. I think this is a very important question. We are trying to move from a categorical method into a sequential method. which by definition is more sensitive and more accurate. And hence, we could also demonstrate a p-value, which you cannot demonstrate on a categorical number. Now, I think that in the first stage, it would be a combination with the AI support. You know that FDA has now already allowed to use AI as a force reader. There are three readers, and there's another AI reading. But this is not good enough, because that keeps us with the NASH CRS and creates additional noise. And we are not alone. As I said, there are eight other abstract adhesives. Other companies, large pharma, are in the same basket. and trying to better define, and together with the FDA, find ways where we can use the biopsies, because I don't see in the near future any validated biomarker that can replace the biopsies. So still use the biopsies, and then But using it in a different way, as I said before, for instance, a combination of deferred and AI. Now, we still expect top-line correlations between methods. So, for example, the 24 is better than 48. So, there is very clear data set that we already see. from these numbers, notwithstanding the fact that we are using three different methodologies. And this is, by the way, across all methodologies. The 48 better than 24, the direction is the same. So whether it's CRN, paired, or AI, you see the direction is the same, and this gives a lot of confidence in the Parrot and AI.
spk05: Great. Thanks, Alan. Thanks for taking my questions.
spk00: Thank you, Ed. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I would now like to turn the call back to Alan Marris for closing remarks.
spk04: So thank you very much, everyone, for joining our today's call. And as always, we're available for any follow-up questions. And we look forward to seeing you on next 2023 first quarter call, which is just around the corner. Sorry, 2022 first quarter call. Thank you all. Bye-bye.
spk00: Thank you. This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.
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