Galmed Pharmaceuticals Ltd.

(Nasdaq: GLMD)



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May 23, 2016 Issue

The Most Powerful Name In Corporate News and Information


New Drug Therapy to Treat Fatty Liver Disease Targeting the SCD1 Enzyme is Showing Promise of Returning an Unhealthy Liver Back to Complete Normal Function



Josh Blacher



Galmed Pharmaceuticals Ltd.

(Nasdaq: GLMD)


Interview conducted by:

Lynn Fosse, Senior Editor, CEOCFO Magazine, Published May 23, 2016


CEOCFO: Mr. Blacher, what is the focus at Galmed Pharmaceuticals today?

Mr. Blacher: We are focused on what we believe to be one of the largest lifestyle diseases in the western world today, which is advanced fatty liver disease. Sadly, the western diet has not only wrecked havoc on people’s cardiovascular systems, their blood work and their sugar numbers, but also on their liver function as well. The excess liver fat accumulation that comes in to the body affectively stunts the ability for the liver to do what it is supposed to do. Therefore, our therapeutic approach really is to clear out the system through our drug and return a very unhealthy liver back to its complete normal function.


CEOCFO: How does it work? What is the science?

Mr. Blacher: Our drug, which I should mention is in Phase IIb right now, works by effectively regulating a key enzyme that is responsible for fat metabolism in the liver. When excess fat comes into the liver, the liver naturally wants to store it up and build layers upon layers of fat, both in and around the liver. We effectively turn off that natural desire of the liver to do that and therefore metabolize that fat, turn it into energy and move it through the GI tract.


CEOCFO: How does it turn it off? What is actually happening in the body or in the liver?

Mr. Blacher: Aramchol, our developmental drug, targets an enzyme that is called SCD1. As I mentioned, SCD1 really is the key enzyme responsible for fat metabolism. In biotech you are either turning something on or turning something off. SCD1’s natural tendency is to build layers of fat. The liver was not created to digest or ingest the level of fat or the level of food that we have become accosted to in the West. Therefore, what we are doing effectively is introducing what the body and the liver view as toxins, in the same way the liver would react to excess alcohol. That is exactly what is going on with excess fat. We ramp up the capability of metabolizing or working through this excess toxin of fats.


CEOCFO: Are there methods today in use to removing excess fat? Are there drugs or treatments available today to help with this problem? Are you offering a better solution or a new solution?

Mr. Blacher: First of all there are no approved drugs for this disease. This disease is called non-alcoholic steatohepatitis, which is known in laymen’s terms as NASH. The NASH market is thought to be around forty billion dollars by several analysts in terms of commercial opportunity. There are two companies that have recently entered a Phase III and there are two companies that are currently in a Phase IIb; one of which is us. Then there are a handful of other companies that are behind us. However, there have been no effective therapeutic approaches to NASH before. There have been a couple of pivotal studies; one of which was with vitamin E. That was actually shown to be toxic, because the amount that needed to be administered was just an enormous amount and it was toxic to the body. One attribute that I would like to point out of our drug is that it is actually the synthetic conjugation of two naturally occurring compounds; bile acid and fatty acid, both of which are endogenous. The body knows them. Sometimes it makes them; at least the bile acid. Therefore, Aramchol is not what we might call a highly engineered molecule.


CEOCFO: Do you see an interest among the medical communities as well as the investment communities in the more natural approach?

Mr. Blacher: Absolutely! I would say that the largest level of interest in terms of the natural thing will ultimately be with the FDA. That is because we are talking about a disease that, first of all, is a mass market disease. We like to equate it to the high cholesterol market, which is a mass market disease. It affects a huge number of people and it is a lifestyle disease as well. It is generally caused by diet and exercise or a lack thereof. The same thing is true with NASH. Mass market disease, non-life threatening and it does not have symptoms. You do not have any pain from your liver. When you go for your annual checkup and they screen your blood they will see that your liver function markers are out of whack. At the end of the day, when you are talking about a drug such large number of possible patients, and an asymptomatic and non-life-threatening disease, safety is going to rule. That is really going to be very, very important. The other important point I’d like to stress is that the most likely cause of morbidity or mortality from NASH is actually not liver failure, surprisingly. Even though it is a disease that is manifest in the lever, the most likely cause of death is actually cardiovascular disease. Therefore, another important feature of our drug us the fact that we do not only have an ability to help resuscitate the health of the liver, but we also improve cardiovascular function as well. Therefore, because cardiovascular disease is going to be the leading cause of death for NASH patients, this attribute of Aramchol is really going to be something that differentiates us verses our competitors.


CEOCFO: Has the doctors been looking for an answer?

Mr. Blacher: For sure. I can tell you that not only liver specialists think about it, but gastroenterologists, family doctors and cardiologists think about this NASH syndrome as one of the most contentious diseases that they have had to deal with for quite a while. Every doctor is aware of fatty liver disease. Right now, one of the issues that we are facing is that the general population is not too knowledgeable about the severity of this disease or even its existence. Just getting in front of the average, everyday family and bringing awareness to them about liver function and about the dangers of eating high fat and high sugary diets is critical to us.


CEOCFO: Are there any major side effects?

Mr. Blacher: That is one of the things that we are very proud of. In our four clinical studies to date, we have tested the drug in over one hundred and fifty patients and there has not been one severe adverse event, or drug-related adverse events. There have been a few of non-drug related, mild and transient adverse events, but nothing to write home about.


CEOCFO: Would this potentially work on any level of a problem or would it be for more severe cases? Can it be almost preventative in some instances?

Mr. Blacher: Yes! That is actually an excellent question! We know that we are exceptionally good at reducing liver fat. What we are trying to establish and prove in this current trial, the ARREST trial, which is a very large multi center Phase IIb trial, is that not only do we reverse the cause of the disease (excess liver fat), but there is a direct correlation between the reduction of liver fat and the inflammatory response of the liver. The actual inflammatory response is considered the liver damage or the liver injury and this is what the regulatory agencies ultimately want to treat. Excess liver fat is not considered a disease by itself, but we believe, and as we’ve seen in the scientific literature, it is the underlying cause of the disease. Therefore, we certainly know that we are effective at the very early end of the disease and most probably as a preventative measure as well. However, what we are trying to establish right now is this direct causation and correlation between the excess liver fat and the inflammatory response of the liver. I should also mention that regardless of what the outcome will be; and hopefully our data suggests that we are certainly heading in the right direction in what we certainly hope are very successful trials; independently we are looking at a combination therapy, where we layer on top of our drug, an anti fibrotic agent that is already approved in the marketplace and will not require a long regulatory pathway, but to look at the combination of Aramchol and this unnamed drug, because we are in an IP submission stage right now, so we cannot really talk about it. However, the combination of those two for the more advanced cases of NASH, once you already have a pretty damaged, pretty injured liver, a fibrotic liver and that is what we are looking for. However, we are really talking about two diseases now.


CEOCFO: How far will your current funding take you?

Mr. Blacher: We are in good shape from a funding standpoint. We have about twenty six million dollars in cash on our balance sheet, with not debt, no convertible notes, no preferred shares, no warrants or anything of that nature. It is a small company with very modest operations and our burn rate is currently ten million dollars. Therefore, we currently have enough money to complete this big trial along with some other proof of concept trials as well and it takes into 2017.


CEOCFO: Why the strategy to have the clinical trial in so many locations worldwide? How does that add to the effectiveness of the trial?

Mr. Blacher: We like to see different demography’s because people are built differently. Someone who is a first generation Mexican is going to have a substantially different metabolic process than a tenth generation American that came over on the Mayflower as well as someone who was born and bred in France. Therefore, you want to make sure that in the large commercial markets, especially when you are talking about a metabolic disease and understanding that the metabolic process and different ethnicities is different, that you are getting a big cross section of the largest territories that you would be looking for.


CEOCFO: Why is Galmed Pharmaceuticals noteworthy right now?

Mr. Blacher: Firstly, I would say that we have a very focused strategy with a broad vision. We are addressing a very significant and growing unmet medical need. Our technology is novel. It has proven to be safe and tolerable in four clinical studies, with no serious or drug related adverse events. The market opportunity is enormous. We believe that up to ten percent of the adult western population has NASH and we have a very strong track record of success. We are very execution focused. We are lean and mean and well funded. On top of all that, we believe that we have a very strong pipeline of both scientific and non-scientific catalysts to our stock. Our stock, which trades on the NASDAQ under ticker symbol GLMD, remains at a relatively discounted valuation relative to our peer group. We think that the drug has a lot of promise.


CEOCFO: Final thoughts?

Mr. Blacher: I think that you should consider us one of the very top contenders in this wide open space. Even the companies that are in Phase III; it is unclear to us and the investment community, whether that means they will hit the market first. It very well could be that although we are in Phase IIb right now, there could be an argument to be made where we quickly are able to surpass our competition and enter the market sooner than others.


“We are addressing a very significant and growing unmet medical need. Our technology is novel. It has proven to be safe and tolerable in four clinical studies, with no serious or drug related adverse events. The market opportunity is enormous.”

- Josh Blacher


Galmed Pharmaceuticals Ltd.

(Nasdaq: GLMD)


Josh Blacher






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