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 May 2022

 

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 ☒ 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 months ended March 31, 2022, 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 May 17, 2022, the Company issued a press release announcing the filing of its financial results for the three months ended March 31, 2022 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 - First Quarter 2022 vs. First Quarter 2021” 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. 333-254766).

 

 

 

 

FINANCIAL INFORMATION

 

Financial Statements

 

GALMED PHARMACEUTICALS LTD.

Consolidated Balance Sheets

U.S. Dollars in thousands, except share data and per share data

 

    As of     As of  
    March 31,     December 31,  
    2022     2021  
    Unaudited     Audited  
Assets                
                 
Current assets                
Cash and cash equivalents   $ 3,741     $ 2,884  
Restricted Cash     114       114  
Marketable debt securities     25,001       31,931  
Other receivable     843       1,125  
Total current assets     29,699       36,054  
                 
Right of use assets     361       406  
Property and equipment, net     136       145  
Total non-current assets     497       551  
                 
Total assets   $ 30,196     $ 36,605  
                 
Liabilities and stockholders’ equity                
                 
Current liabilities                
Trade payables   $ 4,835     $ 4,871  
Other payables     812       1,008  
Total current liabilities     5,647       5,879  
                 
Non-current liabilities                
Lease obligation   $ 183     $ 229  
Total non-current liabilities     183       229  
                 
Ordinary shares par value NIS 0.01 per share; Authorized 50,000,000; Issued and outstanding: 25,088,414 shares as of March 31, 2022 and December 31, 2021     70       70  
Additional paid-in capital     199,229       198,772  
Accumulated other comprehensive lossn     (616 )     (171 )
Accumulated deficit     (174,317 )     (168,174 )
Total stockholders’ equity     24,366       30,497  
                 
Total liabilities and stockholders’ equity   $ 30,196     $ 36,605  

 

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  
    March 31,  
    2022     2021  
Research and development expenses   $ 4,796     $ 7,380  
                 
General and administrative expenses     1,296       1,752  
                 
Total operating expenses     6,092       9,132  
                 
Financial expense (income), net     51       (227 )
                 
Net loss   $ 6,143     $ 8,905  
                 
Basic and diluted net loss per share   $ 0.24     $ 0.38  
Weighted-average number of shares outstanding used in computing basic and diluted net loss per share     25,088,414       23,374,061  

 

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  
    March 31,  
    2022     2021  
Net loss   $ 6,143     $ 8,905  
Other comprehensive loss:                
Net unrealized loss on available for sale securities     445       130  
Comprehensive loss   $ 6,588     $ 9,035  

 

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

 

                      Accumulated              
                Additional     other              
    Ordinary shares     paid-in     Comprehensive     Accumulated        
    Shares     Amount     capital     loss     Deficit     Total  
Balance - December 31, 2021     25,088,414     $ 70     $ 198,772     $ (171 )   $ (168,174 )   $ 30,497  
Stock-based compensation     -       -       457       -       -       457  
Unrealized loss from marketable debt securities     -       -       -       (445 )     -       (445 )
Net loss     -       -       -       -       (6,143 )     (6,143 )
Balance - March 31, 2022     25,088,414     $ 70     $ 199,229     $ (616 )   $ (174,317 )   $ 24,366  

 

                      Accumulated              
                Additional     other              
    Ordinary shares     paid-in     Comprehensive     Accumulated        
    Shares     Amount     capital     loss     Deficit     Total  
Balance - December 31, 2020     21,325,975     $ 58     $ 179,530     $ 272     $ (135,707 )   $ 44,153  
Stock based compensation     -       -       471       -       -       471  
Share issuance     3,739,203       12       17,356                       17,368  
Exercise of options     18,736       (*)       -       -       -       (*)  
Unrealized loss from marketable debt securities     -       -       -       (130 )     -       (130 )
Net loss     -       -       -       -       (8,905 )     (8,905 )
Balance - March 31, 2021     25,083,914     $ 70     $ 197,357     $ 142     $ (144,612 )   $ 52,957  

 

(*) Represents amount less than $1.

 

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

 

    Three months ended  
    March 31,  
    2022     2021  
Cash flow from operating activities                
                 
Net loss   $ (6,143 )   $ (8,905 )
                 
Adjustments required to reconcile net loss to net cash used in operating activities                
Depreciation and amortization     9       11  
Stock-based compensation expense     457       471  
Amortization of premium on marketable debt securities     31       21  
Interest income from short-term deposits     -       (4 )
Loss (Gain) from realization of marketable debt securities     145       15  
Finance expenses     (10 )     -  
Changes in operating assets and liabilities:                
Decrease in other accounts receivable     282       28  
Decrease in trade payables     (36 )     (1,243 )
Increase (decrease) in other accounts payable     (187 )     320  
Net cash used in operating activities     (5,452 )     (9,286 )
                 
Cash flow from investing activities                
Purchase of property and equipment     -       (1 )
Investment in available for sale securities     -       (10,007 )
Sale of short term deposits, net     -       2,005  
Consideration from sale of available for sale securities     6,309       6,359  
Net cash provided by (used in) investing activities     6,309       (1,644 )
                 
Cash flow from financing activities                
Proceeds from exercise of options (*)     -       (*)  
Issuance of Ordinary shares, net of issuance cost     -       17,368  
Net cash provided in financing activities     -       17,368  
                 
Increase in cash and cash equivalents and restricted cash     857       6,438  
Cash and cash equivalents and restricted cash at the beginning of the period     2,998       7,060  
Cash and cash equivalents and restricted cash at the end of the period   $ 3,855     $ 13,498  
                 
Supplemental disclosure of cash flow information:                
Cash received from interest   $ 77     $ 179  
Non-cash transactions:                
Recognition of right-of-use asset and lease liability from adoption of ASU 2016-02   $ -     $ 497  

 

(*) Represents amount less than $1.

 

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”) 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 in February 2019.

 

The Company also holds two additional wholly-owned subsidiaries, Galmed Research and Development Ltd and Galtopa Therapeutics Ltd., both of which are incorporated in Israel.

 

The Company is a clinical-stage biopharmaceutical company primarily focused on the development of therapeutics for the treatment of liver diseases. The Company has an operating history limited to pre-clinical and clinical drug development. To date, the Company has focused almost exclusively on developing its product candidates, Aramchol and Amilo-5MER. The Company funded its research and development programs and operations to date primarily through proceeds from private placements and public offerings. The Company currently has no products approved for marketing and has not generated any revenue from product sales to date. As of March 31, 2022, the Company had cash and cash equivalents of $3.7 million, restricted cash of $0.1 million, and marketable debt securities of $25.0 million.

 

The Company has incurred operating losses in each year since inception. The Company’s loss attributable to holders of its ordinary shares for the three months period ended March 31, 2022 was approximately $6.1 million. As of March 31, 2022, the Company had an accumulated deficit of $174.3 million. Substantially all of its operating losses resulted from costs incurred in connection with the Company’s development program and from general and administrative costs associated with its operations.

 

In May 2022, the Company announced that the Company will expand into new anti-fibrotic indications to maximize the potential of Aramchol while at the same time discontinuing the Open Label Part of the Armor Study having reached its objectives. Simultaneously, the Company is initiating a cost reduction plan and is evaluating its strategic options alternatives and its structuring to best optimize its resources to enhance shareholder value and achieve its goals.

 

The Company will need to raise substantial, additional capital to fund its operations and to develop Aramchol for, and beyond its current development stage and any future commercialization, as well as any additional indications.

 

Based on the Company’s current operating plan, the Company’s management currently estimates that its cash position will support its current clinical trials and operations as currently conducted for more than 12 months from the date of issuance of these financial statements.

 

These unaudited interim consolidated financial statements have been prepared as of March 31, 2022 and for the three 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, 2021 that are included in the Company’s Annual Report on Form 20-F, filed with the Securities and Exchange Commission on May 2, 2022 (the “Annual Report on Form 20-F”). The results of operations presented are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

 

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.

 

In May 2021, the FASB issued Update 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update affect all entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. The amendments that relate to the recognition and measurement of EPS for certain modifications or exchanges of freestanding equity-classified written call options affect entities that present EPS in accordance with the guidance in Topic 260, Earnings Per Share. The effect of implementing this ASU is immaterial.

 

Note 3 - Stockholders’ Equity

 

In February 2022, the Company granted options to purchase 40,000 ordinary shares of the Company to one of its officers. The options are exercisable at $1.61 per share, have a 10-year term and vest over a period of four years.

 

 

 

 

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 pivotal Phase 3 ARMOR trial, or the ARMOR Study, for our product candidate, Aramchol, or for any other pre-clinical or clinical trials;
     
  completion and receiving favorable results of the ARMOR Study for Aramchol or any other pre-clinical or clinical trial;
     
  the impact of the COVID-19 pandemic on our operations;
     
  regulatory action with respect to Aramchol or any other product candidate by the U.S. Food and Drug Administration, or the FDA, or the European Medicines Authority, or EMA, 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 or any other product candidate in the countries in which we seek to market the product;
     
  our ability to achieve favorable pricing for Aramchol or any other product candidate;
     
  our expectations regarding the commercial market for non-alcoholic steato-hepatitis, or NASH, in patients or any other targeted indication;
     
  third-party payor reimbursement for Aramchol or any other product candidate;
     
  our estimates regarding anticipated capital requirements and our needs for additional financing;
     
  market adoption of Aramchol or any other product candidate by physicians and patients;
     
  the timing, cost or other aspects of the commercial launch of Aramchol or any other product candidate;
     
  our ability to obtain and maintain adequate protection of our intellectual property;
     
  the possibility that we may face third-party claims of intellectual property infringement;
     
  our ability to manufacture our product candidates in commercial quantities, at an adequate quality or at an acceptable cost;

 

 

 

 

  our ability to establish adequate sales, marketing and distribution channels;
     
  intense competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do;
     
  the development and approval of the use of Aramchol or any other product candidate for additional indications or in combination therapy;
     
  our expectations regarding licensing, acquisitions and strategic operations;
     
  our ability to maintain the listing of our common stock on The Nasdaq Capital Market; and
     
  our ability to identify, evaluate and complete any strategic alternative that yields value for our shareholders.

 

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, 2021 filed with the SEC on May 2, 2022, 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.

 

We are also collaborating with the Hebrew University in the development of Amilo-5MER, a 5 amino acid synthetic peptide.

 

In May 2022, we announced that we will expand into new anti-fibrotic indications to maximize the potential of Aramchol while at the same time discontinuing the Open Label Part of the ARMOR Study having reached its objectives. Simultaneously, we are initiating a cost reduction plan and are evaluating our strategic options alternatives and our structuring to best optimize our resources to enhance shareholder value and achieve our goals.

 

Financial Overview

 

To date, we have funded our operations primarily through proceeds from private placements and public offerings. At March 31, 2022, we had current assets of $29.7 million, which includes cash and cash equivalents of $3.7 million, marketable debt securities of $25.0 million, other receivables of $0.8 million and restricted cash of $0.1 million. This compares with current assets of $36.0 million at December 31, 2021, which includes cash and cash equivalents of $2.9 million, marketable debt securities of $31.9 million, other receivables if $1.1 million and restricted cash of $0.1 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 expect that we will need to obtain additional funds to further develop our research and development programs.

 

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 and unpredictability of our evaluation of strategic alternatives, 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. Nevertheless, we expect to decrease our research and development expenses as a result of the discontinuation of the Open Label Part of the ARMOR Study and our evaluation of strategic alternatives.

 

 

 

 

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.

 

We anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors and officers insurance, increased legal and accounting costs and investor relations costs. Our general and administrative expenses may also increase due to increases in professional and advisory fees as we evaluate our strategic alternatives.

 

Financial expenses (income), Net

 

Our financial income, net consists mainly of interest income from marketable debt securities and foreign currency gains. Our financial expense consists of fees associated with banking activities and losses from realization of marketable debt securities.

 

Results of Operations

 

The table below provides our results of operations for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

 

    Three months ended March 31,  
    2022     2021  
    (unaudited)  
    (In thousands, except per share data)  
Research and development expenses     4,796       7,380  
General and administrative expenses     1,296       1,752  
Total operating expenses     6,092       9,132  
Financial expense (income), net     51       (227 )
Net loss     6,143       8,905  
Other comprehensive loss:     445       130  
Comprehensive loss     6,588       9,035  
Basic and diluted net loss per share   $ 0.24     $ 0.38  

 

Research and Development Expenses

 

Our research and development expenses amounted to approximately $4.8 million during the three months ended March 31, 2022, representing a decrease of approximately $2.6 million, or 35%, compared to approximately $7.4 million for the comparable period in 2021.

 

The decrease during the three months ended March 31, 2022 primarily resulted from a decrease in drug development expenses.

 

General and Administrative Expenses

 

Our general and administrative expenses amounted to approximately $1.3 million during the three months ended March 31, 2022, representing a decrease of approximately $0.5 million, or 28%, compared to approximately $1.8 million for the comparable period in 2021. The decrease in general and administrative expenses for the three months ended March 31, 2022 resulted primarily from a decrease in salaries and benefits expenses.

 

Operating Loss

 

As a result of the foregoing, for the three months ended March 31, 2022, our operating loss was approximately $6.1 million, representing a decrease of $3.0 million, or 33%, as compared to approximately $9.1 million for the comparable period in 2021.

 

Financial expenses (Income), Net

 

Our financial expenses, net amounted to approximately $0.05 million during the three months ended March 31, 2022, compared to a financial income of $0.2 million for the comparable period in 2021.

 

The financial expenses, net for the three months ended March 31, 2022 primarily relates to a loss from realization of marketable debt securities partially offset by interest income from marketable debt securities.

 

Net Loss

 

As a result of the foregoing, for the three months ended March 31, 2022, our net loss was approximately $6.1 million, representing a decrease of $2.8 million, or 31%, as compared to approximately $8.9 million for the comparable period in 2021.

 

 

 

 

Liquidity and Capital Resources

 

To date, we have funded our operations primarily through proceeds from private placements and public offerings and we have incurred substantial losses since our inception. As of March 31, 2022, we had an accumulated deficit of approximately $174.3 million and positive working capital (current assets less current liabilities) of approximately $24.1 million. We expect that operating losses will continue for the foreseeable future.

 

As of March 31, 2022, we had cash and cash equivalents of approximately $3.7 million, restricted cash of approximately $0.1 million and marketable debt securities of approximately $25.0 million invested in accordance with our investment policy, totaling approximately $28.9 million, as compared to approximately $2.9 million, $0.1 million and $31.9 million as of December 31, 2021, respectively, totaling approximately $34.9 million. The decrease is mainly attributable to the $5.5 million negative cash flow from operating activities during the three months ended March 31, 2022.

 

We had negative cash flow from operating activities of approximately $5.5 million for the three months ended March 31, 2022, as compared to negative cash flow from operating activities of approximately $9.3 million for the three months ended March 31, 2021. The negative cash flow from operating activities for the three months ended March 31, 2022 is mainly attributable to our net loss of approximately $6.1 million.

 

We had positive cash flow from investing activities of approximately $6.3 million for the three months ended March 31, 2022, as compared to a negative cash flow from investing activities of approximately $1.6 million for the three months ended March 31, 2021. The positive cash flow from investing activities for the three months ended March 31, 2022 was primarily due to the net sale of available for sale securities.

 

We had no cash flow from financing activities for the three months ended March 31, 2022, as compared to a positive cash flow from financing activities of approximately $17.4 million for the three months ended March 31, 2021.

 

On March 26, 2021, we entered into a Sales Agreement with Cantor Fitzgerald & Co. and Canaccord Genuity LLC, as sales agents, pursuant to which we may offer and sell ordinary shares “at the market” having an aggregate offering price of up to $50.0 million from time to time through the sales agents subject to the limits of General Instruction I.B.5 to Form F-3, also known as the baby shelf rule.

 

Although we provide no assurance, we believe that our 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 Report on Form 6-K. However, additional funding will be necessary to fund our ARMOR Study, our Amilo-5MER program and ongoing research and development work, to advance our product candidates through regulatory approval and into commercialization, if approved and the evaluation of our strategic alternatives. We intend to obtain additional funding through debt or equity financings, governmental grants or through entering into collaborations, strategic alliances or license agreements to increase the funds available to support our operating and capital needs. Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining additional financing on terms acceptable to us. Specifically, the COVID-19 pandemic and the invasion of Ukraine has significantly disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our liquidity. 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 Aramchol, Amilo-5MER and/or our other pre-clinical and clinical programs. This may raise substantial doubts about our ability to continue as a going concern.

 

The extent of 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 impact of the COVID-19 pandemic on our operations;
     
  the scope, prioritization and number of our clinical trials and other collaboration, research and development programs;
     
  the amount of revenues and contributions we receive under future licensing, development and commercialization arrangements with respect to Aramchol, Amilo-5MER or any other product candidate;
     
  the costs of the development and expansion of our operational infrastructure;

 

 

 

 

  the costs and timing of obtaining regulatory approval for Aramchol, Amilo-5MER or any other product candidate;
     
  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;
     
  any cost that we may incur under future in- and out-licensing arrangements relating to Aramchol, Amilo-5MER or any other product candidate;
     
  market conditions; and
     
  our ability to identify, evaluate and complete any strategic alternative that yields value for our shareholders.

 

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 loss, 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.

 

Risks Factors

 

Any investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information we include in this Report on Form 6-K, including our unaudited consolidated financial statements and accompanying notes, and the additional information in the other reports we file with the Securities and Exchange Commission along with the risks described in our Annual Report on Form 20-F for the fiscal year ended December 31, 2021. These risks may result in material harm to our business and our financial condition and results of operations. In this event, the market price of our ordinary shares may decline and you could lose part or all of your investment. We have described below those risks that reflect substantive changes from, or additions to, the risks described in our Annual Report on Form 20-F for the fiscal year ended December 31, 2021.

 

Our activities to evaluate and pursue strategic alternatives may not be successful.

 

In May 2022, we announced that we will expand into new anti-fibrotic indications to maximize the potential of Aramchol while at the same time discontinuing the Open Label Part of the ARMOR Study having reached its objectives. Simultaneously, we are initiating a cost reduction plan and are evaluating our strategic options alternatives and our structuring to best optimize our resources to enhance shareholder value and achieve our goals. We expect to devote significant time and resources to identifying and evaluating strategic transactions; however, there can be no assurance that such activities will result in any agreements or transactions that will enhance shareholder value. In addition, potential strategic transactions that require shareholder approval may not be approved by our shareholders or a counterparty’s shareholders. Further, any strategic transaction that is completed ultimately may not deliver the anticipated benefits or enhance shareholder value.

 

We also may acquire additional businesses, products or product candidates. Integrating any newly acquired business, product or product candidate could be expensive and time-consuming. We may not be able to integrate any acquired business, product or product candidate successfully. If we do acquire any additional business, products, or product candidates, our future financial performance will depend, in part, on our ability to manage any future growth effectively and our ability to integrate any such acquired businesses, products or product candidates.

 

 

 

 

Any strategic transaction may require us to incur non-recurring or other charges, may increase our near- and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results. For example, these transactions may entail numerous operational and financial risks, including:

 

  exposure to unknown liabilities;
     
  incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions;
     
  higher than anticipated acquisition and/or integration costs;
     
  write downs of assets or goodwill or impairment charges;
     
  increased amortization expenses;
     
  difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;
     
  impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and
     
  the inability to retain our key employees or our other service providers or those of any acquired businesses.

 

Accordingly, there can be no assurance that we will undertake or successfully complete any strategic transactions of the nature described above and any transactions that we do complete may be subject to the foregoing or other risks and could have a material adverse effect on our business, financial condition and prospects.

 

We are substantially dependent on our remaining employees to facilitate the consummation of a strategic transaction. We could lose such key employees.

 

Our cash conservation activities may yield unintended consequences, such as attrition and reduced employee morale, which may cause remaining employees to seek alternative employment. Our ability to successfully complete a strategic transaction depends in large part on our ability to retain certain personnel. Despite our efforts to retain these employees, one or more may terminate their employment on short notice. The loss of the services of any of these employees could potentially harm our ability to evaluate and pursue strategic alternatives, as well as fulfill our reporting obligations as a public company.

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   Press Release, dated May 17, 2022

 

 

 

 

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: May 17, 2022 By: /s/ Allen Baharaff
    Allen Baharaff
    President and Chief Executive Officer

 

 

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