Galmed signs License Agreement for development of blood-based companion diagnostic tool

Jul 8 2015

Galmed Pharmaceuticals Ltd. (Nasdaq: GLMD) ("Galmed"), a clinical-stage biopharmaceutical company focused on the development and commercialization of a once-daily, oral therapy for the treatment of liver diseases, announced today that it has entered into a Research, Option and License Agreement ("License Agreement") and a Share Purchase Agreement with One Way Liver Genomics S.L. ("OWL"), for the development of a non-invasive, blood-based companion diagnostic tool. Under the License Agreement, Galmed and OWL will work together during Galmed's Phase IIb ARREST Study to develop a non-invasive blood test including metabolic markers biomarkers that could potentially predict therapeutic responses to Aramchol^TM, Galmed's once-daily, oral therapy for the treatment of Non-Alcoholic Steato-Hepatitis, or NASH.

The development of this proprietary non-invasive companion diagnostic for Aramchol^TM serves a dual purpose:

• Commercializing a companion diagnostic for Aramchol^TM that could replace liver biopsy in testing the ongoing efficacy of treatment, which may enhance Aramchol^TM market penetration,
• Improving NASH patient selection for Aramchol^TM, including for Galmed's potential future Phase III study.

Under the terms of the License Agreement, OWL will develop a proprietary companion diagnostic exclusive for Aramchol^TM, which will be co-funded by Galmed up to €437,000 over the course of the ARREST Study and paid based on reaching development milestones. Upon commercialization, OWL may earn 10% royalties on annual net sales of the companion diagnostic product.

Separately, under the terms of the Share Purchase Agreement, OWL stands to earn two milestone payments during the ARREST Study: The first payment of €75,000 will be paid upon the successful completion of the ARREST Study's interim results expected during the first half of 2016; the second milestone payment of €100,000 will be paid upon the successful completion of the ARREST Study. Through these two milestone payments, totaling €175,000, Galmed shall receive shares of OWL based on its most recent valuation. Finally, OWL has granted Galmed an option to purchase additional shares up to 19.9% of OWL.

Building on several years of collaboration between Galmed and OWL, today's announcement further positions the companies as front-runners in the treatment and diagnosis of NASH, and other liver diseases.

"In order to diagnose and treat the vast number of NASH patients, it's imperative that Galmed takes a comprehensive approach. It's critical that the medical and scientific community collaborate to find validated, non-invasive diagnostic tools. It's clear that today's standard of care for the diagnosis of NASH – an invasive liver biopsy – will become obsolete over the coming years and will not serve as a suitable follow-up tool to determine the success of treatment. Galmed is endeavoring to assume a leadership role in both the treatment and diagnosis of NASH," stated Allen Baharaff, Galmed's President and Chief Executive Officer. Mr. Baharaff continued, "The collaboration with OWL, one of the world's leading metabolomics companies, is an important milestone in our strategic development plan."

"Our team of liver research professionals are proud to be involved in the exciting and innovative clinical development of Aramchol^TM. OWL recognizes the unique synergies that will be created with Galmed in the development of Aramchol^TM. The studies that we will perform during the ARREST Study, will allow us to obtain a more advanced OWLiver® product, our non-invasive test to diagnose NASH and identify surrogate markers linked to Aramchol^TM response in patients suffering from NASH. We believe that regulatory agencies will recognize the benefits of non-invasive approaches for the diagnosis of NASH," commented Pablo Ortiz, MD, PhD, OWL's Chief Executive Officer.

Mr. Baharaff and Dr. Ortiz concluded, "Today's partnership, which is the first step in the identification of biomarkers capable of predicting an individual's response to Aramchol^TM is critical to the development of personalized strategies that will optimize therapeutic outcomes."

SOURCE Galmed Pharmaceuticals Ltd.