Galmed Pharmaceuticals Ltd. (NASDAQ:GLMD) Q4 2015 Earnings Conference Call March 22, 2016 8:30 AM ET
Josh Blacher - CFO
Allen Baharaff - President & CEO
Maya Halpern - CMO
Vernon Bernardino - FBR
Nikolai Voronin - SHN Investment
Good day, and welcome to the Galmed Pharmaceuticals' Fourth Quarter 2015 Earnings Call. Today's call is being recorded. And at this time, I would like to turn over to Josh Blacher. Please go ahead.
Thank you, Kiva. Good morning and thank you everybody for joining today's conference call. I'm pleased to be joined here today with President and CEO, Allen Baharaff; and Chief Medical Officer, Dr. Maya Halpern to report to you on our financial reports for the fourth quarter of 2015, as well as the full year 2015, as well as provide you with an update on our clinical development programs. As always, we will be happy to take any questions you may have at the conclusion of our prepared remarks.
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 our -- 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 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 speaks as of the respective dates only. This morning, we will be providing you with our financial results for the period ended December 31, 2015. For more information, please refer to our Quarterly Report on Form 20-F filed earlier today with the SEC, which among other things provide the summary of such financial statements.
For the fourth quarter, our net loss totaled $3.2 million or $0.29 per share, compared with a net loss of $2.0 million or $0.17 per share for the corresponding quarter in 2014. During the fourth quarter of 2015, total R&D expenses increased $1.7 million to $2.8 million and total G&A expenses decreased $359,000 to $559,000. This quarter's net loss included $160,000 of non-cash stock-based compensation versus $131,000 of non-cash stock-based compensation expenses incurred during the corresponding period in 2014. For the full year, our net loss totaled $10.6 million or $0.96 per share compared with a net loss of $9.1 million or $0.88 per share for 2014.
During 2015, total R&D expenses increased $965,000 or 14% to $7.6 million, and total G&A expenses increased $768,000 or 31% to $3.2 million. In addition, 2015 net loss included $970,000 non-cash stock-based compensation versus $601,000 of non-cash stock-based compensation expenses incurred during the corresponding period of 2014.
Research and development remains our largest expense, which for the fourth quarter of 2015 totaled $2.8 million. This compares with $1.1 million for the corresponding period in 2014. The increase during the fourth quarter of 2015 is primarily attributable to lower drug manufacturing costs, offset by an anticipated increase in expenses directly related to the ARREST study as the trial continues to progress, as well as research and preclinical studies as our R&D expense expands to our next generation activities.
For the full year of 2015, R&D expenses totaled $7.6 million compared with $6.7 million for 2014. The increase during the full year 2015 is mainly the result of higher expenses in clinical studies related to ARREST study, as well as they were partially offset by lower cost in chemistry and formulation studies due to the completion of manufacturing of Aramchol for the ARREST study.
Turning now to G&A, our general and administrative expenses for the quarter totaled $0.6 million versus $0.9 million for the fourth quarter of 2014. The reduction in G&A was attributed to investor relation and in business development expenses as well as lower stock based compensation expenses. For the full year 2015 G&A expenses totaled $3.2 million compared with $2.5 million for 2014. The increase during full year 2015 is due to higher expenses in salaries, in non-cash based compensation as a result of hiring additional employees as well as the increase in professional services including legal, accounting and investor relations related expenses.
Looking at our balance sheet, at December 31, 2015 current assets totaled $23.4 million compared with $32.2 million as of December 31, 2014. The decrease in 2015 primarily resulted from our expand on ongoing clinical studies and operating activities. Galmed continues to expect that its cash balance will be sufficient to maintain its current operations into the second half of 2017.
I would now like to turn the call over to Allen Baharaff, President and CEO. Allen?
Thanks, Josh. Good morning and thank you for joining us today. Most importantly, I would like to provide you data & trends with resulted in the advancement of ARREST study. All the data I am about mention is of March 20, 2016. Worldwide we have now screened a total of over 400 subjects for ARREST study. Of the total, we have screened 128 subjects or 38% of total in the U.S., 126 subjects or 30% in Europe or Israel and 166 subjects or 40% in Latin America primarily Mexico, these geographic breakdown of the screening is consistent with our expectations.
At December 31, 2015, we had a total of 42 sites activated. That said, the 42 sites in Israel have already completed our quota for Israeli based subjects so they are no longer actively screening. Therefore, as of January 2016 we had de facto 25 sites actively screening. In the first quarter of 2016 we added another five sites, three in the U.S. and two in Mexico, both high-screening countries. During the second quarter of 2016 we expect to activate 30 additional sites which are logging in from Italy and Germany.
Now, as of March 20, 2016 we had randomized 75 patients and another 68 subjects are called in within the screening process including 15 subjects that are eligible to be randomized. We don't assumption mind, we now expect the 120th patient to be randomized by the end of Q2, 2016 and the 240th patient by the year end. I wanted to provide some additional commentary retrospectively. As you well know there are several new entrants in market with over 50 clinical studies which are constantly being conducted worldwide. When most of the trials are early or proof of point that phase two studies many of which are competing on the same patient population left us only two people of the studies recently approved. Nonetheless, we believe in our initial strategy to open 80 sites across four continents have proven to be prudent and has allowed us to perform according to our plan notwithstanding the more competitive recruitment landscape.
There is one other important point which I want to make. As you know we are only enrolling bad sequence firm's NASH patients with a NASH score of 4 or above which we consider moderate to severe NASH. This accord significantly increases our rate of screen failure and slows our limitations. As a result we believe our study population is more congenial and thus is more likely to show a clear cut assess. According to our study protocol, 120 patients completed six months of treatment and initial analysis will be conducted. Initially, the interim analysis was designed for two purposes; the first, was to provide safety data according to which independent safety board will decide whether to continue the trial with both doses, 400 mg and 600 mg, or move all patients to one dose if one is found to be better than the other. The second reason was to provide the futility analysis based on the MRIs data.
That being said since we designed our study protocol more than two years ago, it has been made clear that ecological data demonstrating Aramchol effect under resolution of NASH is measured by the disappearance of ballooning is critical to the story. As such, we believe the previously designated specific analysis would no longer add any material value and they raise the risk of stopping a potentially successful study prematurely without having the benefit of seeing the full clinical data. Clearly, these data will only be available after the study have been completed with 240 patients who have undergone second biopsy following a 12 month of treatment.
Finally, this will also relive the additional burden on the patient as well as saving valuable shareholder capital. Accordingly, we have decided not to conduct the feasibility analysis as part of the interim analysis as we originally anticipated. Based on the estimate provided above, we are taking this opportunity to update our previous estimated time lines. We can't expect results from interim analysis to be available by December 2016 or early first quarter 2017 and top line data for the complete study by the first quarter of 2018 including-- inclusive of the three months follow-up period.
Now let me update you on our ARRIVE study. As we mentioned couple of weeks ago, we were onto the first patient in this investigator initiated trial. The ARRIVE study is a proof-of-concept study that will evaluate the safety and efficacy of Aramchol in up to 50 patients with HIV-associated lipodystrophy and NAFLD. In patients with HIV, liver diseases is amongst the leading causes of death. The prevalence of NAFLD is higher individual with HIV infection than in the general population. Today there are no therapies for treatment of HIV-associated lipodystrophy and the clinical trial in this area is being less.
Before I conclude, I want to take this opportunity to bid farewell to our Chief Medical Officer, Dr. Maya Halpern. Maya has been my partner and confidante over the last five years. Together we laid the foundation of the company what we are today. The responses that we have received from the scientific, medical and investment community upon the announcement of her retirement demonstrates Maya's remarkable achievement during her time with us. With all the personal hardship I respect Maya's decision to retire and together with all my colleagues we wish her much happiness.
Going forward, we have already begun our search for a replacement. We have interviewed a number of candidates already and we are retaining a U.S. based executive search firm to fill this position.
With that said operator, please provide instructions for the Q&A portion of our call.
[Operator Instructions] We will take our first from Vernon Bernardino with FBR.
Hi, guys. Thanks for taking my question. And yes we will definitely be missing Maya. She was definitely very instrumental in the early days and excellent Chief Medical Officer. The question I had regarding the ARREST study is can you reiterate again the definition of randomization here? The reason why I ask is because the patients are randomized and then when will they be actually given their first treatment of Aramchol?
Okay, randomized means already dosed, so these patients are already dosed. So, 75 patients have already dosed, as I said 15 subjects are eligible to be randomized and normally the process takes between 8 weeks to 6 weeks between screenings to dosing.
Okay, perfect and again can you remind us what are the criteria, you had mentioned in the past, that make it somewhat more rigorous as far as the screening process is concerned?
Maya maybe you would like to take that?
Hi, Vernon. Same quarter, nice work and of course solid, that including price area are not diagnosed by biopsy with enough score. This is the activity of course of four or above. Now this makes it -- our population homogenous, if you will probably remember, Genset [ph], took patient which were less than four from biopsy. They had a NASH score of three or so, and this population was -- had the same response as the placebo, and this is why the study did not reach the statistical significance in the primary end fold. So from the beginning, we do not want to say the earlier NASH patients as the nature of history might have situations which would blur the result, and NASH of four and above means moderate to severe NASH and those patients usually do not return to the fatty liver spontaneously. So this is why our population is more homogenous and is more prone to show the true effect of after-true [ph] effect.
The second criteria is the fat content on an MRS and the diabetics which are also important, diabetic or pre-diabetic who is overweight or obesity, as those patients usually advance quicker than non-diabetic to fibrosis and cirrhosis. So this is a population which is in need of treatment and also if they do not have so many spontaneous situations as non-diabetic population.
It's perfect, and that's very helpful detail. Now, last question before I get back in the queue. You have screened over 400 subjects, do you anticipate the screening might be have a higher success rates now that you, after adding these additional sites, for example you had mentioned Mexico and then 30 additional that include Italy?
No. Frankly, we think resulting also with the authorities that participated in the other study, and this is the same almost in all NASH study, we see the same screen failure, and we had not anticipated. As Maya had said with the two, the steps that we are taking, the diabetic and the pre-diabetic, and they have to be controlled diabetic because as you know the new anti-diabetic drug the new GLP generation, GLP-1R had shown effect on affected liver. So we have to insure that those patients will not be administered of this drug. So yes, we know, I mean, it is painful in a way they die with kidney failures, but this data is not wasted. First of all, we use the data to look at biomarkers for development of non-invasive diagnostic tool. We are taking -- we have the full data on both, blood and biopsy of all these patients. So this is a very, very valuable data that we keep. And we may -- we have some ideas about future clinical studies that we may have like to have these patients participate, the one which I'm not eligible for the study.
Thank you. And if I may, one follow-up. Which drug for diabetes is it that you're trying to avoid having the patients been used during the screening, I mean to pre-screening?
Victoza. Victoza, the -- there was one small study showing the effect on Victoza on -- at various beneficial effects on NASH.
Okay. Yes, and that was a study long ago, yes?
That was a year ago. That was something that was prevented in ASLV [ph].
Okay, yes, but it was started some time ago. Thank you very much. I appreciate all the questions and follow up.
Thank you very much.
[Operator Instructions] We will take our first from Nikolai Voronin with SHN Investment.
Hi. How are you? I have a question. Can you please elaborate a little bit more regarding what we will exactly see in the interim analizations end of this year? Will it be only safety as I understand?
Yes, the interim analysis is done from mere lethal safety and we would like to continue and demonstrate the superior effective profile of Aramchol as we have shown so far. It's very important and we say that if there will be any patient signal, we will merge the two doses but it is quite unlikely. We did not see any value including the additional burden of MRS and making this as I said before, a futility study and futility analysis.
I understand. Thank you. And the last question, when do you anticipate to see any results on the HIV patients which you initiated, the study that you initiated recently?
I think that -- I mean, I'm very cautious here because as you know, these are very -- it's a very sick population and I did investigate the initiative study, so we have no location selection and the whole study process is managing an arm's length, so we are not taking part of that. But according to the plan it should be by 2018.
Is there anything else?
But we believe that the data should come, hopefully early, so maybe at the same time as our rest.
Okay. Thank you very much.
Thank you, Nick.
[Operator Instructions] With no further questions in queue, I'd like to turn it back to our speakers for any additional or closing remarks.
That's all, Kiva. I would like to thank everybody who took the time to participate in the teleconference and we look forward to speaking with you and meeting with you shortly in the future.
That concludes today's conference. We thank you for your participation.
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