UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant
to Rule 13a-16 or 15d-16
Under the Securities Exchange Act of 1934
For the Month of August 2019
001-36345
(Commission File Number)
GALMED PHARMACEUTICALS LTD.
(Exact name of Registrant as specified in
its charter)
16 Tiomkin St.
Tel Aviv 6578317, Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover
Form 20-F or Form 40-F.
Form 20-F
x
Form 40-F
¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):
____
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):
____
This Form 6-K contains
the quarterly report of Galmed Pharmaceuticals Ltd. (the “Company”), which includes the Company’s unaudited consolidated
financial statements for the three and six months ended June 30, 2019, together with related information and certain other information.
The Company is not subject to the requirements to file quarterly or certain other reports under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended. The Company does not undertake to file or cause to be filed any such reports in the future, except
to the extent required by law.
On August 5, 2019,
the Company issued a press release announcing the filing of its financial results for the three and six months ended June 30, 2019
with the Securities and Exchange Commission. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
This Form 6-K and
the text under the heading “Financial Summary - Second Quarter 2019 vs. Second Quarter 2018” in Exhibit 99.1 is incorporated
by reference into the Company’s Registration Statement on Form S-8 (Registration No. 333-206292 and 333-227441) and the Company’s
Registration Statement on Form F-3 (Registration No. 333-223923).
FINANCIAL
INFORMATION
Financial Statements
GALMED PHARMACEUTICALS LTD.
|
Consolidated Balance Sheets
|
U.S. Dollars in thousands, except share data and per share data
|
|
|
As of
June 30,
2019
|
|
|
As of
December 31,
2018
|
|
|
|
Unaudited
|
|
|
Audited
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
25,778
|
|
|
$
|
24,159
|
|
Short-term deposits
|
|
|
15,282
|
|
|
|
6,067
|
|
Marketable debt securities
|
|
|
42,563
|
|
|
|
59,962
|
|
Other accounts receivable
|
|
|
705
|
|
|
|
218
|
|
Total current assets
|
|
|
84,328
|
|
|
|
90,406
|
|
|
|
|
|
|
|
|
|
|
Right of use assets
|
|
|
603
|
|
|
|
-
|
|
Property and equipment, net
|
|
|
180
|
|
|
|
194
|
|
Total non-current assets
|
|
|
783
|
|
|
|
194
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
85,111
|
|
|
$
|
90,600
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade payables
|
|
$
|
2,578
|
|
|
$
|
1,814
|
|
Other accounts payable
|
|
|
704
|
|
|
|
892
|
|
Total current liabilities
|
|
|
3,282
|
|
|
|
2,706
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Lease obligation
|
|
$
|
442
|
|
|
$
|
-
|
|
Total non-current liabilities
|
|
|
442
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares par value NIS 0.01 per share; Authorized 50,000,000; Issued and outstanding: 21,121,337 shares as of June 30, 2019; 21,018,919 shares as of December 31, 2018
|
|
|
58
|
|
|
|
58
|
|
Additional paid-in capital
|
|
|
175,424
|
|
|
|
174,322
|
|
Accumulated other comprehensive gain (loss)
|
|
|
41
|
|
|
|
(11
|
)
|
Accumulated deficit
|
|
|
(94,136
|
)
|
|
|
(86,475
|
)
|
Total stockholders' equity
|
|
|
81,387
|
|
|
|
87,894
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
85,111
|
|
|
$
|
90,600
|
|
The accompanying notes are an integral part of the interim consolidated
financial statements.
GALMED PHARMACEUTICALS LTD.
|
Consolidated Statements of Operations (Unaudited)
|
U.S. Dollars in thousands, except share data and per share data
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
270
|
|
|
$
|
-
|
|
|
$
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
3,494
|
|
|
|
1,940
|
|
|
|
6,763
|
|
|
|
3,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
1,207
|
|
|
|
1,105
|
|
|
|
1,978
|
|
|
|
1,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
4,701
|
|
|
|
2,775
|
|
|
|
8,741
|
|
|
|
5,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income, net
|
|
|
532
|
|
|
|
90
|
|
|
|
1,080
|
|
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
4,169
|
|
|
$
|
2,685
|
|
|
$
|
7,661
|
|
|
$
|
5,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
0.20
|
|
|
$
|
0.17
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding used in computing basic and diluted net loss per share
|
|
|
21,120,085
|
|
|
|
15,711,736
|
|
|
|
21,102,306
|
|
|
|
15,243,785
|
|
The accompanying notes are an integral part of the interim consolidated
financial statements.
GALMED PHARMACEUTICALS LTD.
|
Consolidated Statements of Comprehensive Loss (Unaudited)
|
U.S. Dollars in thousands
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net loss
|
|
$
|
4,169
|
|
|
$
|
2,685
|
|
|
$
|
7,661
|
|
|
$
|
5,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss (gain) on available for sale securities
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(52
|
)
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
4,153
|
|
|
$
|
2,678
|
|
|
$
|
7,609
|
|
|
$
|
5,213
|
|
The accompanying notes are an integral part of the interim consolidated
financial statements.
GALMED PHARMACEUTICALS LTD.
|
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
|
U.S. Dollars in thousands, except share data and per share data
|
|
|
Ordinary shares
|
|
Additional
paid-in
|
|
|
Accumulated
other
Comprehensive
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
loss
|
|
|
Deficit
|
|
|
Total
|
|
Balance - December 31, 2017
|
|
|
14,435,161
|
|
|
$
|
40
|
|
|
$
|
92,381
|
|
|
$
|
(7
|
)
|
|
$
|
(76,619
|
)
|
|
$
|
15,795
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
330
|
|
Exercise of options and restricted stock units
|
|
|
37,253
|
|
|
|
(*)
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
Unrealized loss from marketable debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(29
|
)
|
|
|
-
|
|
|
|
(29
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,506
|
)
|
|
|
(2,506
|
)
|
Balance - March 31, 2018
|
|
|
14,472,414
|
|
|
$
|
40
|
|
|
$
|
92,723
|
|
|
$
|
(36
|
)
|
|
$
|
(79,125
|
)
|
|
$
|
13,602
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
87
|
|
|
|
-
|
|
|
|
-
|
|
|
|
87
|
|
Exercise of options and restricted stock units
|
|
|
291,080
|
|
|
|
1
|
|
|
|
867
|
|
|
|
-
|
|
|
|
-
|
|
|
|
868
|
|
Issuance of ordinary shares and warrants
|
|
|
1,000,000
|
|
|
|
3
|
|
|
|
5,962
|
|
|
|
|
|
|
|
|
|
|
|
5,965
|
|
Issuance of ordinary shares (Underwriter agreement)
|
|
|
5,000,000
|
|
|
|
14
|
|
|
|
70,290
|
|
|
|
|
|
|
|
|
|
|
|
70,304
|
|
Issuance of ordinary shares (ATM offering)
|
|
|
149,260
|
|
|
|
(*)
|
|
|
|
2,895
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,895
|
|
Unrealized gain from marketable debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
-
|
|
|
|
7
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,685
|
)
|
|
|
(2,685
|
)
|
Balance - June 30, 2018
|
|
|
20,912,754
|
|
|
$
|
58
|
|
|
$
|
172,824
|
|
|
$
|
(29
|
)
|
|
$
|
(81,810
|
)
|
|
$
|
91,043
|
|
|
|
Ordinary shares
|
|
|
Additional
paid-in
|
|
|
Accumulated
other
Comprehensive
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
loss
|
|
|
Deficit
|
|
|
Total
|
|
Balance - December 31, 2018
|
|
|
21,018,919
|
|
|
$
|
58
|
|
|
$
|
174,322
|
|
|
$
|
(11
|
)
|
|
$
|
(86,475
|
)
|
|
$
|
87,894
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
416
|
|
|
|
-
|
|
|
|
-
|
|
|
|
416
|
|
Exercise of options and restricted stock units
|
|
|
94,147
|
|
|
|
(*)
|
|
|
|
74
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
Unrealized gain from marketable debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36
|
|
|
|
-
|
|
|
|
36
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,492
|
)
|
|
|
(3,492
|
)
|
Balance - March 31, 2019
|
|
|
21,113,066
|
|
|
$
|
58
|
|
|
$
|
174,812
|
|
|
$
|
25
|
|
|
$
|
(89,967
|
)
|
|
$
|
84,928
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
591
|
|
|
|
-
|
|
|
|
-
|
|
|
|
591
|
|
Exercise of options and restricted stock units
|
|
|
8,271
|
|
|
|
(*)
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
|
Unrealized gain from marketable debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16
|
|
|
|
-
|
|
|
|
16
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,169
|
)
|
|
|
(4,169
|
)
|
Balance - June 30, 2019
|
|
|
21,121,337
|
|
|
$
|
58
|
|
|
$
|
175,424
|
|
|
$
|
41
|
|
|
$
|
(94,136
|
)
|
|
$
|
81,387
|
|
(*) Less than 1 thousand $.
The accompanying notes are an integral part of the interim consolidated
financial statements.
GALMED PHARMACEUTICALS LTD.
|
Consolidated Statements of Cash Flows (Unaudited)
|
U.S. Dollars in thousands
|
|
|
Six months ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,661
|
)
|
|
$
|
(5,191
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments required to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
18
|
|
|
|
118
|
|
Stock-based compensation expense
|
|
|
1,007
|
|
|
|
417
|
|
Interest income from short-term deposits
|
|
|
(215
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount on marketable securities
|
|
|
(71
|
)
|
|
|
(4
|
)
|
Loss (gain) from realization of marketable securities
|
|
|
(9
|
)
|
|
|
5
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in other accounts receivable
|
|
|
(487
|
)
|
|
|
(213
|
)
|
Increase in trade payables
|
|
|
764
|
|
|
|
70
|
|
Increase (decrease) in other accounts payable
|
|
|
(349
|
)
|
|
|
424
|
|
Decrease in deferred revenue
|
|
|
-
|
|
|
|
(538
|
)
|
Net cash used in operating activities
|
|
|
(7,003
|
)
|
|
|
(4,912
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(4
|
)
|
|
|
(1
|
)
|
Investment in available for sale securities
|
|
|
(68,717
|
)
|
|
|
(85,174
|
)
|
Investment in short-term deposits
|
|
|
(9,000
|
)
|
|
|
-
|
|
Consideration from sale of available for sale securities
|
|
|
86,248
|
|
|
|
3,173
|
|
Net cash provided in (used in) investing activities
|
|
|
8,527
|
|
|
|
(82,002
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares and warrants, net of issuance costs
|
|
|
-
|
|
|
|
79,164
|
|
Proceeds from exercise of options
|
|
|
95
|
|
|
|
880
|
|
Net cash provided in financing activities
|
|
|
95
|
|
|
|
80,044
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents
|
|
|
1,619
|
|
|
|
(6,870
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
|
24,159
|
|
|
|
13,021
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
25,778
|
|
|
$
|
6,151
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash received from interest
|
|
$
|
1,057
|
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Recognition of right-of-use asset and lease liability from adoption of ASU 2016-02
|
|
$
|
679
|
|
|
|
-
|
|
The accompanying notes are an integral part of the interim consolidated
financial statements.
GALMED PHARMACEUTICALS LTD.
|
Notes to Consolidated Financial Statements
|
Note
1 - Basis of presentation
Galmed
Pharmaceuticals Ltd. (the “Company”) is a clinical-stage biopharmaceutical company primarily focused on the development
of therapeutics for the treatment of liver diseases. The Company was incorporated in Israel on July 31, 2013 and commenced operations
on February 2, 2014. The Company holds a wholly-owned subsidiary, Galmed International Ltd., which was incorporated in Malta.
Galmed International Ltd. previously held a wholly-owned subsidiary, Galmed Medical Research Ltd., which was incorporated in Israel,
and had been an inactive company since 2015 and was liquidated during the first quarter of 2019. The Company also holds a wholly-owned
subsidiary, Galmed Research and Development Ltd., which was incorporated in Israel.
These unaudited interim consolidated
financial statements have been prepared as of June 30, 2019 and for the three and six months period then ended. Accordingly, certain
information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have
been omitted. These unaudited interim consolidated financial statements should be read in conjunction with the audited financial
statements and the accompanying notes of the Company for the year ended December 31, 2018 that are included in the Company's Annual
Report on Form 20-F, filed with the Securities and Exchange Commission on March 13, 2019 (the "Annual Report"). The results
of operations presented are not necessarily indicative of the results to be expected for the year ending December 31, 2019.
Note 2 - Summary of significant accounting policies
The significant accounting policies
that have been applied in the preparation of the unaudited consolidated interim financial statements are identical to those that
were applied in preparation of the Company’s most recent annual financial statements in connection with its Annual Report
on Form 20-F except for the adoption of Accounting Standards Update (‘ASU”) 2016-02.
In February 2016, the Financial
Accounting Standards Board issued ASU 2016-02
,
Leases (Topic 842)
. This ASU requires entities that lease assets
to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms
of more than 12 months. The Company adopted this ASU effective January 1, 2019 using the modified retrospective application, applying
the new standard to leases in place as of the adoption date. Prior periods have not been adjusted.
Recently
issued accounting pronouncements
In May 2019, the FASB issued
ASU 2019-05—Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. The amendments in ASU
No. 2019-05 provide an option to irrevocably elect the fair value option, on an instrument-by-instrument basis, for eligible financial
assets measured on an amortized cost basis upon adoption of the credit losses standard. The ASU is effective for the Company beginning
on January 1, 2020.
Note
3 - Stockholders' Equity
|
1.
|
During
the six months ended June 30, 2019, certain employees and consultants exercised options into an aggregate of 96,523 ordinary shares
of the Company, NIS 0.01 par value per share, for total consideration of $0.1 million.
|
|
2.
|
During
the six months ended June 30, 2019, restricted stock units held by certain officers and employees vested resulting in the issuance
of 5,895 ordinary shares of the Company, NIS 0.01 par value per share.
|
|
3.
|
In
May 2019, the Company granted options to purchase 47,500 ordinary shares of the Company to several employees. The options are
exercisable at $7.79 per share, have a 10 year term and vest over a period of four years. The aggregate grant date fair value
of such options was approximately $0.3 million.
|
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
All references to
“we,” “us,” “our,” “the Company” and “our Company”, in this Form 6-K
are to Galmed Pharmaceuticals Ltd. and its subsidiaries, unless the context otherwise requires. All references to “shares”
or “ordinary shares” are to our ordinary shares, NIS 0.01 nominal par value per share. All references to “Israel”
are to the State of Israel. “U.S. GAAP” means the generally accepted accounting principles of the United States. Unless
otherwise stated, all of our financial information presented in this Form 6-K has been prepared in accordance with U.S. GAAP. Any
discrepancies in any table between totals and sums of the amounts and percentages listed are due to rounding. Unless otherwise
indicated, or the context otherwise requires, references in this Form 6-K to financial and operational data for a particular year
refer to the fiscal year of our company ended December 31 of that year.
Our reporting currency
and financial currency is the U.S. dollar. In this Form 6-K, “NIS” means New Israeli Shekel, and “$,” “US$”
and “U.S. dollars” mean United States dollars.
Cautionary
Note Regarding Forward-Looking Statements
This Form 6-K contains
forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development
efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, we or our
representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified
by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,”
“may,” “should,” “anticipate,” “could,” “might,” “seek,”
“target,” “will,” “project,” “forecast,” “continue” or their negatives
or variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical
matters. These forward-looking statements may be included in, among other things, various filings made by us with the SEC, press
releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements
relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements
relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause
our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors
could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking
statements, including, but not limited to, the factors summarized below:
|
·
|
the
timing and cost of our planned pivotal Phase 3/4 ARMOR trial, or the ARMOR Study, for our product candidate, Aramchol, or whether
a pivotal trial will be conducted at all;
|
|
·
|
completion
and receiving favorable results of the ARMOR Study for Aramchol or any other pre-clinical or clinical trial;
|
|
·
|
regulatory
action with respect to Aramchol by the U.S. Food and Drug Administration, or the FDA, or the European Medicines Authority, including
but not limited to acceptance of an application for marketing authorization, review and approval of such application, and, if
approved, the scope of the approved indication and labeling;
|
|
·
|
the
commercial launch and future sales of Aramchol and any future product candidates;
|
|
·
|
our
ability to comply with all applicable post-market regulatory requirements for Aramchol in the countries in which we seek to market
the product;
|
|
·
|
our
ability to achieve favorable pricing for Aramchol;
|
|
·
|
our
expectations regarding the commercial market for non-alcoholic steato-hepatitis, or NASH, in patients;
|
|
·
|
third-party
payor reimbursement for Aramchol;
|
|
·
|
our
estimates regarding anticipated capital requirements and our needs for additional financing;
|
|
·
|
market
adoption of Aramchol by physicians and patients;
|
|
·
|
the
timing, cost or other aspects of the commercial launch of Aramchol;
|
|
·
|
the
development and approval of the use of Aramchol for additional indications or in combination therapy; and
|
|
·
|
our
expectations regarding licensing, acquisitions and strategic operations.
|
We believe these forward-looking
statements are reasonable; however, these statements are only current predictions and are subject to known and unknown risks, uncertainties
and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to
be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in our Annual
Report on Form 20-F for the year ended December 31, 2018 filed with the SEC on March 13, 2019 in greater detail under the heading
“Risk Factors” and elsewhere in the Annual Report and this Form 6-K. Given these uncertainties, you should not rely
upon forward-looking statements as predictions of future events.
All forward-looking
statements attributable to us or persons acting on our behalf speak only as of the date hereof and are expressly qualified in their
entirety by the cautionary statements included in this report. We undertake no obligations to update or revise forward-looking
statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
In evaluating forward-looking statements, you should consider these risks and uncertainties.
Overview
We are a clinical-stage
biopharmaceutical company focused on the development of Aramchol, a liver targeted stearoyl-coenzyme A desaturase-1, or SCD1, modulator,
first in class, novel, oral therapy for the treatment of NASH for variable populations. In June 2018, we announced top line data
from our ARREST Phase 2b clinical study, a multicenter, randomized, double blind, placebo-controlled study, designed to evaluate
the efficacy and safety of Aramchol in 247 subjects with NASH, who are overweight or obese, and who are pre-diabetic or type-II-diabetic.
We are currently focused on preparing for our Phase 3/4 pivotal ARMOR Study which we plan on commencing in the third quarter of
2019.
Financial Overview
To date, we have funded
our operations primarily through proceeds from private placements and public offerings. At June 30, 2019, we had current assets
of $84.3 million, which includes cash and cash equivalents of $25.8 million, short-term deposits of $15.3 million and marketable
debt securities of $42.6 million. This compares with current assets of $90.4 million at December 31, 2018, which consisted of cash
and cash equivalents of $24.2 million, short-term deposits of $6.1 million and marketable debt securities of $60.0 million. Although
we provide no assurance, we believe that such existing funds will be sufficient to continue our business and operations as currently
conducted for more than 12 months from the date of issuance of this Form 6-K. However, we will continue to incur operating losses,
which may be substantial over the next several years, and we may need to obtain additional funds to further develop our research
and development programs.
Revenues
We have entered into
a license agreement with Samil Pharma. Co., Ltd., or the Samil Agreement, for the commercialization of Aramchol in Korea. Under
the terms of the Samil Agreement, we have received upfront and milestone payments of $3.6 million, and may be eligible to receive
up to approximately $4.5 million in additional payments for development and regulatory milestones for Aramchol in the licensed
territories.
During 2018, when we
determined that the achievement of our first milestone was probable, we included the variable consideration of $1.5 million as
a part of the transaction price allocated to the combined performance obligation including the delivery of the license and completion
of the ARREST study. We will re-evaluate the transaction price in each reporting period when events whose outcomes are resolved
or other changes in circumstances occur that would indicate it is appropriate to recognize variable consideration as revenue.
Costs and Operating Expenses
Our current costs and
operating expenses consist of two components: (i) research and development expenses; and (ii) general and administrative expenses.
Research and Development Expenses
Our research and development
expenses consist primarily of outsourced development expenses, salaries and related personnel expenses and fees paid to external
service providers, patent-related legal fees, costs of pre-clinical studies and clinical trials and drug and laboratory supplies.
We account for all research and development expenses as they are incurred. We expect our research and development expense to remain
our primary expense in the near future as we continue to develop Aramchol. Increases or decreases in research and development expenditures
are primarily attributable to the number and/or duration of the pre-clinical and clinical studies that we conduct.
We expect that a substantial
amount of our research and development expense in the future will be incurred in support of our current and anticipated pre-clinical
and clinical development projects. Due to the inherently unpredictable nature of pre-clinical and clinical development studies,
we are unable to estimate with any certainty the costs we will incur in the continued development of Aramchol for NASH and other
indications in our pipeline for potential partnering and/or commercialization. Clinical development timelines, the probability
of success and development costs can differ materially from expectations. We currently expect to continue testing Aramchol in pre-clinical
studies for toxicology, safety and efficacy, and to conduct additional clinical trials for Aramchol.
While we are
currently focused on advancing Aramchol's development, our future research and development expenses will depend on the
clinical success of Aramchol, as well as ongoing assessments of Aramchol’s commercial potential. As we obtain results
from clinical trials, we may elect to discontinue or delay clinical trials for our product candidate in certain indications
in order to focus our resources on more promising indications for such product candidate. Completion of clinical trials may
take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended
use of a product candidate.
We expect our research
and development expenses to increase in the future from current levels as we continue to advance our clinical product development
and, potentially, the in-licensing of additional product candidates.
The lengthy process
of completing clinical trials and seeking regulatory approval for Aramchol requires the expenditure of substantial resources. Any
failure or delay in completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating product
revenue and cause our research and development expenses to increase and, in turn, have a material adverse effect on our operations.
Because of the factors set forth above, we are not able to estimate with any certainty when we would recognize any net cash inflows
from our projects.
General and Administrative Expenses
General and administrative
expenses consist primarily of compensation for employees in executive and operational roles, including finance/accounting, legal
and other operating positions in connection with our activities. Our other significant general and administrative expenses include
non-cash stock-based compensation costs and facilities costs (including the rental expense for our offices in Tel Aviv, Israel),
professional fees for outside accounting and legal services, travel costs, investors relations, insurance premiums and depreciation.
Financial Income, Net
Our financial income
consists of interest income from marketable securities and our financial expense consists of fees associated with banking activities
and losses from realization of marketable securities.
Results of Operations
The table below provides
our results of operations for the three and six months ended June 30, 2019 as compared to the three and six months ended June 30,
2018.
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(In thousands, except per share data)
|
|
Revenue
|
|
|
-
|
|
|
|
270
|
|
|
|
-
|
|
|
|
538
|
|
Research and development expenses
|
|
|
3,494
|
|
|
|
1,940
|
|
|
|
6,763
|
|
|
|
3,884
|
|
General and administrative expenses
|
|
|
1,207
|
|
|
|
1,105
|
|
|
|
1,978
|
|
|
|
1,988
|
|
Total operating expenses
|
|
|
4,701
|
|
|
|
2,775
|
|
|
|
8,741
|
|
|
|
5,334
|
|
Financial income, net
|
|
|
532
|
|
|
|
90
|
|
|
|
1,080
|
|
|
|
143
|
|
Net loss
|
|
|
4,169
|
|
|
|
2,685
|
|
|
|
7,661
|
|
|
|
5,191
|
|
Other comprehensive loss (income):
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(52
|
)
|
|
|
22
|
|
Comprehensive loss
|
|
|
4,153
|
|
|
|
2,678
|
|
|
|
7,609
|
|
|
|
5,213
|
|
Basic and diluted net loss per share
|
|
$
|
0.20
|
|
|
$
|
0.17
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
Revenue
During the three and
six months ended June 30, 2019, we had no licensing revenue, as compared to approximately $0.3 million and $0.5 million respectively,
for three and six months ended June 30, 2018. The revenue in 2018 resulted from the amortization of the up-front payments under
the license agreement with Samil Pharm.
Research
and Development Expenses
Our research and development
expenses amounted to approximately $3.5 million and approximately $6.8 million during the three and six months ended June 30, 2019,
respectively, representing an increase of approximately $1.6 million, or 84%, and approximately $2.9 million, or 74%, respectively,
compared to approximately $1.9 million and approximately $3.9 million for the comparable period in 2018.
The increase during
the three and six months ended June 30, 2019 primarily resulted from an increase in clinical and pre-clinical studies and drug
development expenses in an amount of approximately $1.0 million and $1.9 million, respectively, related to continuing preparations
of the ARMOR trial.
General
and Administrative Expenses
Our general and administrative
expenses amounted to approximately $1.2 million and approximately $2.0 million during the three and six months ended June 30, 2019,
respectively, representing an increase of approximately $0.1 million, or 9% for the three months ended June 30, 2018 and no change
for the six months ended June 30, 2018, compared to approximately $1.1 million and approximately $2.0 million for the comparable
period in 2018.
The increase during
the three months ended June 30, 2019 primarily resulted from an increase of approximately $0.2 million in both non-cash stock-based
compensation, as compared to such expenses for the comparable period in 2018.
Operating
Loss
As a result of the
foregoing, for the three and six months ended June 30, 2019, our operating loss was approximately $4.7 million and approximately
$8.7 million, respectively, representing an increase of $1.9 million, or 68%, and an increase of $3.4 million, or 64%, respectively,
as compared to approximately $2.8 million and approximately $5.3 million for the comparable period in 2018.
Financial
Income, Net
Our financial income,
net amounted to approximately $0.5 million and approximately $1.1 million during the three and six months ended June 30, 2019,
respectively, compared to $0.1 million and $0.15 million for the comparable period in 2018.
The increase during
the three and six months ended June 30, 2019 primarily resulted from an increase in interest income from marketable debt securities
and short-term deposits, as compared to such expenses for the comparable period in 2018.
Net
Loss
As a result of the
foregoing, for the three and six months ended June 30, 2019 and 2018, our net loss was approximately $4.2 million and approximately
$7.7 million, respectively, representing an increase of $1.5 million, or 56%, and an increase of $2.5 million, or 48%, respectively,
as compared to approximately $2.7 million and approximately $5.2 million for the comparable period in 2018.
Liquidity and Capital Resources
To date, we have funded
our operations primarily through proceeds from private placements and public offerings. Under our existing “at the
market” equity offering program, or the ATM offering, as of the date hereof, we may sell, from time to time, up to approximately
$32.0 million of additional ordinary shares.
We have incurred substantial
losses since our inception. As of June 30, 2019, we had an accumulated deficit of approximately $94.1 million and positive working
capital (current assets less current liabilities) of approximately $81.0 million. We expect that operating losses will continue
for the foreseeable future.
As of June 30, 2019,
we had cash and cash equivalents of approximately $25.8 million, short-term deposits of approximately $15.3 million and marketable
securities of approximately $42.6 million invested in accordance with our investment policy, totalling approximately $83.6 million,
as compared to approximately $24.2 million, $6.1 million and $60.0 million as of December 31, 2018, totalling approximately $90.2
million. The decrease is mainly attributable to our $7.0 million negative cash flow from operations during the six months ended
June 30, 2019.
We had negative cash
flow from operating activities of approximately $7.0 million for the six months ended June 30, 2019, as compared to negative cash
flow from operating activities of approximately $4.9 million for the six months ended June 30, 2018. The negative cash flow from
operating activities for the six months ended June 30, 2019 is mainly attributable to our net loss of approximately $7.7 million.
We had positive cash
flow from investing activities of approximately $8.5 million for the six months ended June 30, 2019, as compared to negative cash
flow from investing activities of approximately $82.0 million for the six months ended June 30, 2018. The positive cash flow from
investing activities for the six months ended June 30, 2019 was primarily due to the net investment of marketable securities, partially
offset by an investment in short-term deposits.
We had positive cash
flow from financing activities of approximately $0.1 million for the six months ended June 30, 2019, as compared to positive cash
flow from financing activities of approximately $80.0 million for the six months ended June 30, 2018. The positive cash flow from
financing activities for the six months ended June 30, 2019 was due to the proceeds from exercise of options.
Although there can
be no assurance, we believe that our existing cash resources will be sufficient to fund our projected cash requirements for more
than 12 months from the date of issuance of this Form 6-K.
Our future capital
requirements will depend on many other factors, including:
|
·
|
the
progress and costs of our pre-clinical studies, clinical trials and other research and development activities;
|
|
·
|
the
scope, prioritization and number of our clinical trials and other research and development programs;
|
|
·
|
the
amount of revenues and contributions we receive under future licensing, development and commercialization arrangements with respect
to Aramchol;
|
|
·
|
the
costs of the development and expansion of our operational infrastructure;
|
|
·
|
the
costs and timing of obtaining regulatory approval for Aramchol;
|
|
·
|
the
ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under
our potential future licensing agreements;
|
|
·
|
the
costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;
|
|
·
|
the
costs and timing of securing manufacturing arrangements for clinical or commercial production;
|
|
·
|
the
costs of contracting with third parties to provide sales and marketing capabilities for us;
|
|
·
|
the
costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or platforms;
|
|
·
|
the
magnitude of our general and administrative expenses; and
|
|
·
|
any
cost that we may incur under future in- and out-licensing arrangements relating to Aramchol.
|
Until we can generate
significant recurring revenues, we expect to satisfy our future cash needs through the net proceeds from equity financings (such
as the ATM Offering) or by out-licensing applications of Aramchol. We cannot be certain that additional funding will be available
to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of or eliminate
research or development plans for, or commercialization efforts with respect to, one or more applications of Aramchol. This may
raise substantial doubts about the Company’s ability to continue as a going concern.
Trend
Information
We are a development
stage company, and it is not possible for us to predict with any degree of accuracy the outcome of our research, development or
commercialization efforts. As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties,
demands, commitments or events that are reasonably likely to have a material effect on our net sales or revenues, income from continuing
operations, profitability, liquidity or capital resources, or that would cause financial information to not necessarily be indicative
of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments
and events are in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Controls
and Procedures
As a “foreign
private issuer”, we are only required to conduct the evaluations required by Rules 13a-15(b) and 13a-15(d) of the Exchange
Act as of the end of each fiscal year and therefore have elected not to provide disclosure regarding such evaluations at this time.
EXHIBIT INDEX
Exhibit No.
|
|
Description
|
|
|
|
99.1
|
|
Press Release, dated August 5, 2019
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Document
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
Galmed Pharmaceuticals Ltd.
|
|
|
|
Date: August 5, 2019
|
By:
|
/s/ Allen Baharaff
|
|
|
Allen Baharaff
|
|
|
President and Chief Executive Officer
|
Galmed Pharmaceuticals (NASDAQ:GLMD)
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