Galmed Pharmaceuticals Ltd.
Annual Report 2014

Plain-text annual report

Morningstar® Document Research℠ FORM 20-FGalmed Pharmaceuticals Ltd. - GLMDFiled: March 31, 2015 (period: December 31, 2014)Annual and transition report of foreign private issuers under sections 13 or 15(d)The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549—————————Form 20-F £REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OrRANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014Or£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Or£SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-36345—————————GALMED PHARMACEUTICALS LTD.(Exact name of Registrant as specified in its charter) N/A(Translation of the Registrant’s name into English) State of Israel(Jurisdiction of incorporation) 8 Shaul Hamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel 6473307(Address of principal executive offices) Allen BaharaffPresident and Chief Executive Officer8 Shaul Hamelech Blvd., Amot Mishpat Bldg.Tel Aviv, Israel 6473307Tel: 972.3.693.8448Fax: 972.3.693.8447(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredOrdinary shares, par value NIS 0.01 per share Nasdaq Capital Market Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by theannual report. 11,100,453 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨¨ No xx If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934. Yes ¨¨ No xx Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes xx No ¨¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes xx No ¨¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨¨ Accelerated filer ¨¨ Non-accelerated filer xx Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP xx International Financial Reporting Standardsas issued by the International Accounting Standards Board ¨¨Other ¨¨ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has electedto follow: Item 17 ¨¨ Item 18 ¨¨ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨¨No xx (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨¨ No ¨¨ Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. TABLE OF CONTENTS PART I4ITEM 1. Identity of Directors, Senior Management and Advisers4ITEM 2. Offer Statistics and Expected Timetable4ITEM 3. Key Information5ITEM 4. Information on the Company41ITEM 4A. Unresolved Staff Comments81ITEM 5. Operating and Financial Review and Prospects81ITEM 6. Directors, Senior Management and Employees91ITEM 7. Major Shareholders and Related Party Transactions111ITEM 8. Financial Information113ITEM 9. The Offer and Listing113ITEM 10. Additional Information114ITEM 11. Quantitative and Qualitative Disclosures About Market Risk132ITEM 12. Description of Securities Other Than Equity Securities133 PART II134ITEM 13. Defaults, Dividend Arrearages and Delinquencies134ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds134ITEM 15. Controls and Procedures134ITEM 16. [RESERVED]135ITEM 16A. Audit Committee Financial Expert135ITEM 16B. Code of Ethics135ITEM 16C. Principal Accountant Fees and Services135ITEM 16D. Exemptions from the Listing Standards for Audit Committees136ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers136ITEM 16F. Change in Registrant’s Certifying Accountant136ITEM 16G. Corporate Governance136ITEM 16H. Mine Safety Disclosure137 PART III137ITEM 17. Financial Statements137ITEM 18. Financial Statements137ITEM 19. Exhibits138 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ABOUT THIS ANNUAL REPORT All references to “we,” “us,” “our,” “the Company” and “our Company”, in this Annual Report on Form 20-F, or our annual report, are to GalmedPharmaceuticals Ltd. and its subsidiaries, unless the context otherwise requires. All references to “shares” or “ordinary shares” are to our ordinary shares, NIS0.01 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 theUnited States. Unless otherwise stated, all of our financial information presented in this annual report has been prepared in accordance with U.S. GAAP. Anydiscrepancies in any table between totals and sums of the amounts listed are due to rounding. Unless otherwise indicated, or the context otherwise requires,references in this annual report 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 in the U.S. dollar. In this annual report, “NIS” means New Israeli Shekel, and “$,” “US$” and “U.S.dollars” mean United States dollars. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 20-F 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 ourrepresentatives 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 historicalmatters. These forward-looking statements may be included in, among other things, various filings made by us with the Securities and ExchangeCommission, or the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-lookingstatements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate tomatters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materiallyfrom any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materiallyfrom the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below: ·U.S. Food and Drug Administration, or FDA, approval of, or European Medicines Authority, or EMA, or other regulatory action with respectto, our product candidate, aramchol; ·the commercial launch and future sales of aramchol or any other future products or product candidates; ·our ability to achieve favorable pricing for aramchol; ·our expectations regarding the commercial market of Non-Alcoholic Steato-Hepatitis, or NASH, in patients who also suffer from obesity andinsulin resistance and our expectations regarding the commercial market of patients with cholesterol gallstones; ·third-party payor reimbursement for aramchol; ·our estimates regarding anticipated capital requirements and our needs for additional financing; ·the timing and cost of Phase IIb and Phase III trials for aramchol or whether such trials will be conducted at all; ·completion and receiving favorable results of Phase IIb and Phase III trials for aramchol; ·patient market size and market adoption of aramchol by physicians and patients; 3Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·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 andunknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to bematerially different from those anticipated by the forward-looking statements. We discuss many of these risks in this annual report in greater detail under theheading “Risk Factors” and elsewhere in this annual report. Given these uncertainties, you should not rely upon forward-looking statements as predictions offuture 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 theirentirety by the cautionary statements included in this annual report. We undertake no obligations to update or revise forward-looking statements to reflectevents or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, youshould consider these risks and uncertainties. EXPLANATORY NOTE Market data and certain industry data and forecasts used throughout this Annual Report on Form 20-F were obtained from internal company surveys,market research, consultant surveys commissioned by the Company, publicly available information, reports of governmental agencies and industrypublications and surveys. Industry surveys, publications, consultant surveys commissioned by the Company and forecasts generally state that theinformation contained therein has been obtained from sources believed to be reliable. However, this information may prove to be inaccurate because of themethod by which some of the data for the estimates is obtained or because this information cannot always be verified with complete certainty due to thelimits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a result, themarket and industry data and forecasts included or incorporated by reference in this Annual Report on Form 20-F, and estimates and beliefs based on thatdata, may not be reliable. We have relied on certain data from third-party sources, including internal surveys, industry forecasts and market research, whichwe believe to be reliable based on our management’s knowledge of the industry. However, we have not ascertained the underlying economic assumptionsrelied upon therein. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not necessarily know whatassumptions regarding general economic growth were used in preparing the forecasts we cite. Statements as to our market position are based to the best of ourknowledge on the most currently available data. While we are not aware of any misstatements regarding the industry data presented in this Annual Report onForm 20-F, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading“Risk Factors” in this annual report. PART I ITEM 1. Identity of Directors, Senior Management and Advisers. Not applicable. ITEM 2. Offer Statistics and Expected Timetable. Not applicable. 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 3. Key Information. A.Selected Financial Data. The following table sets forth our selected consolidated financial data for the periods ended and as of the dates indicated, which reflects the financialdata of Galmed Holdings Inc., a holdings company incorporated in the British Virgin Islands, or GHI, our predecessor, prior to the Reorganization (as definedbelow), as well as the financial data of the Company post Reorganization. The following selected consolidated financial data for our company should be readin conjunction with the financial information, “Item 5. Operating and Financial Review and Prospects” and other information provided elsewhere in thisAnnual Report on Form 20-F and our consolidated financial statements and related notes. The selected consolidated financial data in this section is notintended to replace the consolidated financial statements and is qualified in its entirety thereby. In the opinion of our management, our unauditedconsolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our financialposition, results of operations and cash flows as of and for the periods indicated therein. We derived the selected consolidated financial statements as of and for the years ended December 31, 2014, 2013, 2012 and 2011, as applicable,from our audited consolidated financial statements included elsewhere in this Annual Report on Form 20-F. Year ended December 31, 2011 2012 2013 2014 (in thousands) Research and development expenses $1,326 $2,443 $7,207 $6,664 General and administrative expenses 151 694 7,355 2,478 Capital loss — — 10 — Operating loss 1,477 3,137 14,572 9,142 Financial expenses (3) (6) (2,912) (10)Financial income — — — 50Taxes on income 2 6 1 1 Net loss 1,482 3,149 17,485 9,103 Other comprehensive income: Net unrealized gain on available for sale securities — — — 4 Comprehensive loss 1,482 3,149 17,485 9,099 Net loss per ordinary share (*) $0.30 $0.63 $3.45 $0.88 Number of ordinary shares used in computing loss per ordinary share (*) 4,995,837 4,995,837 5,096,466 10,323,686 (*) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization (as defined below). 5Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of December 31, Consolidated Balance Sheet data: 2012 2013 2014 (In thousands) Cash and cash equivalents 718 137 23,736 Other receivables 14 16 8,415 Fixed assets 30 13 774 Total assets 762 166 32,925 Total liabilities 2,741 2,117 1,518 B. Capitalization and Indebtedness. Not applicable. C. Reasons for the Offer and Use of Proceeds. Not applicable. D. Risk Factors. Risks Related to Our Financial Position and Capital Requirements We are a clinical-stage biopharmaceutical company with a history of operating losses. We expect to incur additional losses in the future and may never beprofitable. We are a clinical-stage biopharmaceutical company with an operating history limited to clinical development of one product and no approvedproducts. To date, we have focused nearly exclusively on developing our product candidate, aramchol. We have funded our operations to date primarilythrough proceeds from the private placement of ordinary shares, convertible debt and our initial public offering on March 18, 2014. In addition, we havelimited operating experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encounteredby companies in new and rapidly evolving fields, particularly in the pharmaceutical industry. We currently have no products approved for marketing in theUnited States or any other jurisdiction and have not generated any revenue from product sales to date. We have incurred operating losses in each year sincethe inception of our predecessor in 2000. Our loss attributable to holders of our ordinary shares for the years ended December 31, 2013 and 2014 wasapproximately $17.5 million and $9.1 million, respectively. As of December 31, 2014, we had an accumulated deficit of $36.7 million. Substantially all ofour operating losses resulted from costs incurred in connection with our development program and from general and administrative costs associated with ouroperations. Our ability to become profitable depends upon our ability to generate revenue in excess of our expenses. To date, we have not generated anyrevenue as our lead product candidate, aramchol, is still in clinical development and has not been approved by the FDA, nor has any other product candidate.We do not know when, or if, we will generate any revenue. We do not expect to generate revenue unless and until we obtain regulatory and marketingapproval of, and commercialize, aramchol, or any other product candidate. We will continue to incur research and development and general andadministrative expenses related to our operations. We expect to continue to incur losses for the foreseeable future, and these losses will likely increase as we: ·initiate and manage additional clinical trials for aramchol, and initiate additional research and development programs; ·seek regulatory approvals for our product candidate, or future product candidates, if any; ·implement internal systems and infrastructures, including, without limitation, hiring of additional personnel as needed and developingsales and marketing functions if and when our product candidate receives applicable regulatory approval; 6Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·seek to in-license additional products or technologies to develop; ·hire additional management and other personnel; and ·move towards commercialization of our product candidate and future product candidates, if any. We may out-license aramchol before it is approved by any applicable regulatory agency, commercialized and/or generates revenue, depending on anumber of factors, including our ability to: ·obtain favorable clinical results from and progress the clinical development of aramchol; ·develop and obtain regulatory approvals in the countries and for the uses we intend to pursue for aramchol; ·subject to successful completion of registration, clinical trials and perhaps additional clinical trials of aramchol, apply for and obtainmarketing approval in the countries we intend to pursue for aramchol; ·contract for the manufacture of commercial quantities of aramchol at acceptable cost levels if marketing approval is received; and ·establish external, and potentially in the future, internal, sales and marketing capabilities to effectively market and sell aramchol in theUnited States and other countries. Even if aramchol is approved for commercial sale for the treatment of NASH, or any other indications, it may not gain market acceptance or achievecommercial success. In addition, we anticipate incurring significant costs associated with seeking regulatory approval and commercialization. We may notachieve profitability soon after generating product revenue, if ever. If we are unable to generate product revenue, we will not become profitable and would beunable to continue operations without additional funding. We expect our research and development expenses to increase in connection with our planned clinical trials and potential initiation of clinical trialsfor other indications. In addition, if we obtain marketing approval for aramchol, we will likely initially incur significant expenses associated with sales,marketing and manufacturing by third parties, as well as continued research and development expenses. Furthermore, we expect to incur additional costsassociated with operating as a public company. As a result, we expect to continue to incur significant and increasing operating losses for the foreseeablefuture. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any futurelosses or when we will become profitable, if at all. Our limited operating history makes it difficult to evaluate our business and prospects. Our operating history is limited to clinical development of one product, and our operations to date have been limited primarily to research anddevelopment, raising capital and recruiting scientific and management personnel and third-party partners. Therefore, it may be difficult to evaluate ourbusiness and prospects. We have not yet demonstrated an ability to commercialize or obtain regulatory approval for any product candidate. Consequently,any predictions about our future performance may not be accurate, and you may not be able to fully assess our ability to complete development and/orcommercialize our product candidate, or any future product candidate, obtain regulatory approvals or achieve market acceptance or favorable pricing for ourproduct candidate or any future product candidate. We have not yet commercialized any products and we may never be able to do so, and even if we do, the products may not gain market acceptance. We have not yet commercialized any products and we may never be able to do so. We do not know when or if we will complete any of our productdevelopment efforts, obtain regulatory approval for any product candidates or successfully commercialize any approved products. Even if we are successfulin developing products that are approved for marketing, we will not be successful unless these products gain market acceptance for appropriate indications atfavorable reimbursement rates. The degree of market acceptance of these products will depend on a number of factors, including: 7Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the timing of regulatory approvals in the countries, and for the uses, we intend to pursue with respect to the commercialization of ourproduct candidates; ·the competitive environment; ·the acceptance by the medical community of the safety and clinical efficacy of our products and their potential advantages over othertherapeutic products; ·the development of a non-invasive diagnostic biomarker for the detection of NASH and ongoing management of the condition; ·the adequacy and success of distribution, sales and marketing efforts, including through strategic agreements with pharmaceutical andbiotechnology companies; and ·the pricing and reimbursement policies of government and third-party payors, such as insurance companies, health maintenanceorganizations and other plan administrators. Physicians, patients, third-party payors or the medical community in general may be unwilling to accept, utilize or recommend, and in the case ofthird-party payors, cover any of our planned future products. As a result, we are unable to predict the extent of future losses or the time required to achieveprofitability, if at all. Even if we successfully develop one or more products, we may not become profitable. We will likely need substantial additional capital in the future. If additional capital is not available, we will have to delay, reduce or cease operations. We currently estimate that our cash position will support our current clinical trials and operations into 2017, although there is no assurance of this.We will likely need to raise substantial additional capital to fund our operations and to develop aramchol beyond its current development stage, andultimately commercialize it. In addition, we may choose to expand our current research and development focus, or other clinical operations, which may alsorequire additional capital. As of December 31, 2014, we had a net working capital of $31.8 million and cash and cash equivalents of $23.7 million. Our futurecapital requirements may be substantial and will depend on many factors including: ·our clinical trial results; ·exploration of the possibility to develop aramchol for the treatment of other conditions or indications, or possible label expansion ofaramchol once its approved, if at all, for the treatment of other conditions or indications; ·the cost of filing and prosecuting patent applications and the cost of defending our patents; ·the cost of prosecuting infringement actions against third parties; ·the cost, timing and outcomes of seeking marketing approval of aramchol; ·the costs associated with commercializing aramchol if we receive marketing approval, including the cost and timing of establishingexternal, and potentially in the future, internal, sales and marketing capabilities to market and sell aramchol; ·subject to receipt of marketing approval, revenue received from sales of approved products, if any, in the future; ·any product liability or other lawsuits related to our future product candidates or products, if any; 8Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the demand for our products; ·the costs associated with developing and/or in-licensing other research and development programs; ·the expenses needed to attract and retain skilled personnel; and ·the costs associated with being a public company. Based on our current operating plan, we anticipate that our existing resources will be sufficient to enable us to maintain our currently plannedoperations, including our continued product development, into 2017, although there is no assurance of this. We believe these funds will enable us tocomplete any preparatory clinical and non-clinical work, as well as our planned Phase IIb clinical trial of aramchol for the treatment of patients with NASH inpatients suffering from obesity and insulin resistance, which we refer to as our ARREST Study, and Phase IIa clinical trial of aramchol for the treatment ofpatients with cholesterol gallstones. We will require significant additional funds to initiate and complete additional clinical trials, including but not limitedto a possible Phase III pivotal trial for the treatment of patients with NASH, and the FDA and EMA approval processes. However, changing circumstances maycause us to consume capital significantly faster than we currently anticipate, such as losing our Small and Medium Enterprise status at the EMA, whichentitles us to significant fee reductions. Because there are numerous risks and uncertainties associated with the development and commercialization of ourproduct candidates, we are unable to estimate the amount of increased capital outlays and operating expenditures associated with our anticipated clinicaltrials. We have no committed external sources of funds. Additional financing may not be available when we need it or may not be available on terms that arefavorable to us and additional financing may cause significant dilution to our existing shareholders. If adequate funds are not available to us on a timelybasis, or at all, we may be required to terminate or delay planned or ongoing clinical trials or other development activities for aramchol. Raising additional capital may be costly or difficult to obtain and will dilute current shareholders’ ownership interests. Any debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we obtain funding through a strategiccollaboration or licensing arrangement, we may be required to relinquish our rights to certain of our technologies, products or marketing territories. If we areunable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business, and we may not be able to continueoperating if we do not generate sufficient revenues from operations needed to stay in business. We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities lawcompliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certainsecurities we issue, such as convertible notes and warrants, which may adversely impact our financial condition and results of operations. Any additional capital raised through the sale of equity or equity-linked securities may dilute our current shareholders’ ownership in us and couldalso result in a decrease in the market price of our ordinary shares. The terms of those securities issued by us in future capital transactions may be morefavorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. We are unable to estimate our long-term capital requirements due to uncertainties associated with the development and commercialization of our productcandidate. If we fail to obtain necessary funds for our operations, we will be unable to maintain and improve our intellectual property and technology, andwe will be unable to develop and commercialize our product candidate. Our long-term capital requirements are expected to depend on many potential factors, including, among others: ·the number of product candidates in development; ·the size, duration and scope of future clinical trials; 9Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the regulatory path of our lead product candidate; ·the results of our clinical tests, which can be unpredictable in product candidate development; ·our ability to successfully commercialize our product candidates, including securing commercialization and out-licensing agreements withthird parties and favorable pricing and market share; ·the progress, success and cost of our clinical trials and research and development programs, including those associated with milestones androyalties; ·the costs, timing and outcome of regulatory review and obtaining regulatory approval of our lead product candidate and addressingregulatory and other issues that may arise post-approval; ·the breadth of the labeling, assuming that our product candidate is approved for commercialization by a relevant regulatory authority,which may not occur; ·our need, or decision, to acquire or in-license complementary technologies or new platform technologies or product candidate targets; ·the costs of enforcing our issued patents and defending intellectual property-related claims; ·the costs of investigating patents that might block us from developing potential product candidates; ·the costs of recruiting and retaining qualified personnel; ·our revenue, if any; and ·our consumption of available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner thananticipated. If we are unable to obtain the funds necessary for our operations, we will be unable to maintain and improve our intellectual property andtechnology, and we will be unable to develop and commercialize aramchol, or other product candidates, which would materially and adversely affect ourbusiness, liquidity and results of operations. We may become subject to the payment of taxes in connection with the Reorganization. On February 2, 2014, we underwent a reorganization, or the Reorganization, pursuant to which all of our current business (including our intellectualproperty) was transferred to us. The Reorganization was effected by way of share transfers and asset transfers, as follows: First, GHI, our predecessor,transferred the entire share capital of Galmed 2000 Inc., a holdings company incorporated in the British Virgin Islands, or GTTI, to the Company; next, GTTItransferred the entire share capital of Galmed International Limited, a company incorporated in Malta, a European Union, or EU, member state, or GIL, to theCompany; then, GIL transferred and assigned all of its intellectual property to Galmed Research and Development Ltd., a newly formed Israeli company, orGRD. GIL held all of the equity rights in and to Galmed Medical Research Ltd., an Israeli company, or GMR. In connection with the Reorganization, weobtained a tax pre-ruling, or the Tax Pre-Ruling, from the Israeli Tax Authority. The Tax Pre-Ruling confirms that the transfer of shares and assets resulting inthe Company as the parent company and 100% equity-owner of GRD, which holds all of the Group’s intellectual property, including the Company’s patentportfolio, GIL and GTTI, is not taxable pursuant to the provisions of Sections 131 and 132 of the Income Tax Ordinance (New Version) — 1961, or the IsraeliTax Ordinance, as long as certain requirements are met. However, we have not obtained a tax pre-ruling from the tax authorities in the British Virgin Islandswith respect to the transfer of the shares of GTTI and the transfer of the shares of GIL to the Company, or from the tax authorities in Malta with respect to thetransfer of the intellectual property of GIL to GRD. We believe that such transfers of shares and assets are not taxable in the British Virgin Islands and Malta,respectively. However, there can be no assurance that we will not become subject to the payment of taxes in the British Virgin Islands, with respect to thetransfers of shares as aforesaid, or in Malta, in connection with the transfer of the intellectual property as mentioned above. See also “Item 4. Information onthe Company—Historical Background and Corporate Structure” below. 10Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Risks Related to Our Business, Industry and Regulatory Requirements We depend largely on the success of our product candidate, aramchol, and we may not obtain regulatory approval of aramchol. We have invested almost all of our efforts and financial resources in the research and development of aramchol, which is currently our only productcandidate. As a result, our business is largely dependent on our ability to complete the development of, obtain regulatory approval for and successfullycommercialize aramchol in a timely manner. The process to develop, obtain regulatory approval for and commercialize aramchol is long, complex, costly anduncertain as to its outcome. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of drugs are subject to extensive regulation by the FDAand other regulatory agencies in other countries. These regulations differ from jurisdiction to jurisdiction. We are not permitted to market aramchol, or anyother product candidate, in the United States until we receive approval of a New Drug Application, or NDA, from the FDA, or in any foreign countries untilwe receive the requisite approval from the respective regulatory agencies in such countries. We have not received regulatory clearance to conduct the clinicaltrials that are necessary to file an NDA with the FDA or comparable applications to other regulatory authorities in other countries or received marketingapproval for aramchol. The results of clinical trials may be unsatisfactory, even if we believe those clinical trials to be successful, the FDA, or other regulatoryauthorities, may not approve our NDA should we be in a position to file one. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The timerequired to obtain approval in other countries might differ from that required to obtain FDA approval. The marketing approval process in other countries mayinclude all of the risks detailed above regarding FDA approval in the United States as well as other risks. In particular, in many countries outside the UnitedStates, it is required that a product receives pricing and reimbursement approval before the product can be commercialized. This can result in substantialdelays in such countries. In other countries, product approval depends on showing superiority to an approved alternative therapy. This can result insignificant expense for conducting complex clinical trials. Finally, we do not have any products approved for sale in any jurisdiction, including internationalmarkets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements ininternational markets or to obtain and maintain required approvals or if regulatory approvals in international markets are delayed, our target market will bereduced and our ability to realize the full market potential of our products will be harmed. Marketing approval in one jurisdiction does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in onejurisdiction may have a negative effect on the regulatory process in others. Failure to obtain marketing approval in other countries or any delay or setback inobtaining such approval would impair our ability to develop foreign markets for aramchol. This would reduce our target market and limit the full commercialpotential of aramchol. We may be forced to abandon development of aramchol, or other future product candidates, which will significantly impair our ability to generate productrevenues. Upon the completion of any clinical trial, the results might not support the claims sought by us. Further, success in earlier clinical trials does notensure that later clinical trials will be successful, and the results of later clinical trials may not replicate the results of prior clinical trials and preclinicaltesting. The clinical trial process may fail to demonstrate that aramchol is safe, tolerable and effective for the indicated uses. Any such failure may cause us toabandon aramchol and may delay development of other product candidates. Any delay in, or termination or suspension of, our clinical trials will delay therequisite filings with the FDA or other regulatory agencies and, ultimately, our ability to commercialize our product candidates and generate productrevenues. If the clinical trials do not support our product claims, the completion of development of such product candidate may be significantly delayed orabandoned, which will significantly impair our ability to generate revenues and will materially adversely affect our results of operations. 11Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we acquire or in-license additional technologies or product candidates, we may incur a number of costs, may have integration difficulties and mayexperience other risks that could harm our business and results of operations. We may acquire and in-license additional product candidates and technologies. Any product candidate or technologies we in-license or acquire willlikely require additional development efforts prior to commercial sale, including extensive preclinical or clinical testing, or both, and approval by the FDAand applicable foreign regulatory authorities, if any. All product candidates are prone to risks of failure inherent in pharmaceutical product development,including the possibility that the product candidate, or product developed based on in-licensed technology, will not be shown to be sufficiently safe andeffective for approval by regulatory authorities. In addition, we cannot assure you that any product candidate that we develop based on acquired or in-licensed technology that is granted regulatory approval will be manufactured or produced economically, successfully commercialized or widely accepted orcompetitive in the marketplace. Moreover, integrating any newly acquired or in-licensed product candidates could be expensive and time-consuming. If wecannot effectively manage these aspects of our business strategy, our business may not succeed. The clinical trial process is complex and expensive, and commencement and completion of clinical trials can be delayed or prevented for a number ofreasons. We may not be able to commence or complete the clinical trials that would support our submission of an NDA to the FDA, a MarketingAuthorization Application, or MAA, to the EMA or any similar submission to regulatory authorizes in other countries. Drug development is a long,expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. The fact that the FDA, EMA or other regulatoryauthorities permit a company to conduct human clinical trials is no guarantee that the trial will be successful. On the contrary, most candidate drugs that enterclinical trials do not prove to be successful and do not result in the filing of an NDA, MAA or similar filing. Drug candidates that prove successful at oneclinical trial phase may prove unsuccessful at a subsequent phase. Human clinical trials are very expensive and difficult to design and implement, in partbecause they are subject to rigorous regulatory requirements and in part because the results of clinical trials are inherently uncertain and unpredictable.Regulatory authorities, such as the FDA, may decline to permit a clinical trial to proceed or may suspend a clinical trial that it has previously cleared.Additionally, the clinical trial process is time-consuming, and failure can occur at any stage of the trials. We may encounter problems that cause us toabandon or repeat clinical trials. The commencement and completion of clinical trials may be delayed by several factors, including: ·difficulties obtaining regulatory clearance or approval to commence a clinical trial or complying with conditions imposed by a regulatoryauthority regarding the scope or duration of a clinical trial; ·delays in reaching or failing to reach agreement on acceptable terms with prospective contract research organizations, or CROs, and trialsites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ·insufficient or inadequate supply or quality of a product candidate or other materials necessary to conduct our clinical trials; ·difficulties in obtaining institutional review board, or IRB, approval to conduct a clinical trial at a prospective site; ·delays resulting from a decision of the FDA not to review an NDA for aramchol as a Breakthrough Therapy; ·challenges in recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including size and nature of patientpopulation, proximity of patients to clinical sites, eligibility and exclusion criteria for the trial, nature of trial protocol, the availability ofapproved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications. 12Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Clinical trials may also be delayed or terminated as a result of inconclusive or negative interim results. In addition, a clinical trial may be suspendedor terminated by us, the FDA or other regulatory authorities, the principal investigator at a site, the IRBs at the sites where such boards are overseeing a trialor the data safety monitoring board, or DSMB, that is overseeing the clinical trial at issue, or other regulatory authorities due to a number of factors,including: ·irregularities in conducting a clinical trial, including by way of example, failure to conduct the clinical trial in accordance with regulatoryrequirements or the FDA-cleared clinical protocols; ·inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities; ·unforeseen safety issues or lack of effectiveness; and ·lack of adequate funding to continue the clinical trials. Although we have not experienced many of the risks involved with conducting clinical trials, including but not limited to, increased expense andmaterial delay, to date, there can be no assurance that we will not experience such risks in the future as we progress with our planned clinical trials. To date,we have experienced a slight delay of approximately three months in the beginning of enrollment of our ARREST Study. Accordingly, we now expect torelease the interim results of our ARREST Study in the first half of 2016, instead of in the second half of 2015 as originally planned. Furthermore, positive results in previous clinical studies of aramchol may not be predictive of similar results in future clinical trials. Also, interimresults during a clinical trial do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industries havesuffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results from thecompleted preclinical studies and clinical trials for aramchol may not be predictive of the results we may obtain in later stage trials. Our clinical trials mayproduce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials. Moreover, clinical data areoften susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinicalstudies and clinical trials have nonetheless failed to obtain FDA or EMA, or other regulatory agency, approval for their products. In addition, we or regulatory authorities may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptablehealth risks or if the regulatory authorities find deficiencies in our regulatory submissions or the conduct of such trials. Any suspension of clinical trials willdelay possible regulatory approval, if any, and adversely impact our ability to develop products and generate revenue. Lack of a reliable non-invasive method for the diagnosis of NASH is likely to present a major challenge to our product candidate’s market penetration, ifever commercialized. Liver biopsy is the standard approach for the diagnosis of inflammation and fibrosis associated with NASH. However, the procedure-relatedmorbidity, sample errors, costs and lack of patient interest in participating in such studies limit its use. As such, only patients with a high risk of NASH, whichincludes patients with metabolic syndrome and an indication of Non-Alcoholic Fatty Liver Disease, or NAFLD, are sent for liver biopsy. Because NASH tendsto be asymptomatic, until the disease progresses, many individuals with NASH go undiagnosed until the disease has reached its late stages. The lack of areliable non-invasive method for the diagnosis of NASH is likely to present a major challenge to aramchol’s market penetration, as many practitioners andpatients may not be aware that a patient suffers from NASH and requires treatment. As such, use of aramchol might not be as wide-spread as our actual targetmarket and this may limit the commercial potential of aramchol. A further challenge to aramchol’s market penetration is that currently a liver biopsy is the standard approach for measuring improvement in NASHpatients. Because it would be impractical to subject all aramchol users to regular and repeated liver biopsies, it will be difficult to demonstrate aramchol’seffectiveness to practitioners and patients unless and until a reliable non-invasive method for the diagnosis and monitoring of NASH becomes available, as towhich there can be no assurance. 13Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Obtaining approval of an NDA, or other regulatory approval, even after clinical trials that are believed to be successful, is an uncertain process. Even if we complete our planned clinical trials and believe that the clinical data confirms that the drug is both safe and effective for its intended use,obtaining approval of an NDA, or similar regulatory application, is an extensive, lengthy, expensive and uncertain process, and the FDA and other regulatoryagencies may delay, limit or deny approval of aramchol for many reasons, including, without limitation, the fact that: ·we may not be able to demonstrate to the satisfaction of the applicable regulatory agencies that aramchol is safe and effective for anyindication; ·the results of clinical trials may not meet the level of statistical significance or clinical significance required by the applicable regulatoryagencies for approval; ·the applicable regulatory agencies may disagree with the number, design, size, conduct or implementation of our clinical trials; ·the applicable regulatory agencies may not find the data from preclinical studies and clinical trials sufficient to demonstrate that aramchol’sclinical and other benefits outweigh its safety risks; ·the applicable regulatory agencies may disagree with our interpretation of data from preclinical studies or clinical trials; ·the applicable regulatory agencies may not accept data generated at our clinical trial sites; ·the data collected from preclinical studies and clinical trials of aramchol may not be sufficient to support the submission of an NDA orsimilar regulatory application; ·the applicable regulatory agencies may not schedule an advisory committee meeting in a timely manner or the advisory committee mayrecommend against approval of our application or may recommend that the applicable regulatory agencies require, as a condition ofapproval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; ·the applicable regulatory agencies may require development of a risk evaluation and mitigation strategy as a condition of approval; ·the applicable regulatory agencies may require simultaneous approval for both adults and children, which would delay required approvals,or we may have successful clinical trial results for adults, but not children, or vice versa; ·the applicable regulatory agencies may change their approval policies or adopt new regulations that may impede consideration or approvalof our NDA, or similar regulatory application; ·the applicable regulatory agencies may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers, orsuppliers of active pharmaceutical ingredients, or APIs, with which we enter into agreements for clinical and commercial supplies; and ·the applicable regulatory agencies may require post-marketing approval studies, such as Phase IV clinical trials, in connection witharamchol. 14Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Before we can submit an NDA, or similar regulatory application, to the FDA, or other regulatory authorities, as applicable, we must conduct a PhaseIIb clinical trial and pivotal Phase III clinical trials that will be substantially broader than our Phase IIa trial. We will also need to agree on a protocol with theFDA for both the Phase IIb and Phase III clinical trials before commencing those trials in the United States. Phase III clinical trials frequently produceunsatisfactory results even though prior clinical trials were successful. Therefore, the results of these additional Phase IIb or Phase III clinical trials that weconduct may or may not be successful. The applicable regulatory agencies may suspend all clinical trials or require that we conduct additional clinical,nonclinical, manufacturing, validation or drug product quality studies and submit data from these additional studies before considering or reconsidering theNDA or similar regulatory application. Depending on the extent of these, or any other studies, approval of any applications that we submit may be delayed byseveral years, or may require us to expend more resources than we have available. It is also possible that additional studies, if performed and completed, maynot be considered sufficient by the applicable regulatory agencies to provide regulatory approval. If any of these outcomes occur, we would not receiveapproval for aramchol and may be forced to cease operations. Even if we obtain regulatory approval for aramchol, the approval might contain significant limitations related to the intended uses for which thedrug is approved, use restrictions including, without limitation, for certain labeled populations, age groups, warnings, precautions or contraindications, ormay be subject to significant post-marketing studies or risk mitigation requirements. If we are unable to successfully commercialize aramchol, we may beforced to cease operations. Aramchol may produce undesirable side effects that we may not detect in our clinical trials, which could prevent us from achieving or maintaining marketacceptance of this product candidate and could substantially increase commercialization costs or even force us to cease operations. Even if aramchol receives marketing approval, we or others may later identify undesirable side effects caused by the product, and in that event, anumber of potentially significant negative consequences could result, including, without limitation: ·regulatory authorities may suspend or withdraw their approval of the product; ·regulatory authorities may require the addition of labeling statements, such as warnings, so-called “black box warnings,” contraindicationsor restrictions on the product’s intended use; ·regulatory authorities may require us to issue specific communications to healthcare professionals, such as “Dear Doctor” letters; ·regulatory authorities may issue negative publicity regarding the affected product, including safety communications; ·we may be required to change the way the product is administered, conduct additional preclinical studies or clinical trials or restrict orcease the distribution or use of the product; and ·we could be sued and held liable for harm caused to patients. Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantiallyincrease commercialization costs or even force us to cease operations. Changes in regulatory requirements and guidance or unanticipated events during our clinical trials may occur, which may result in necessary changes toclinical trial protocols, which could result in increased costs to us, delay our development timeline or reduce the likelihood of successful completion of ourclinical trials. Changes in regulatory requirements and guidance or unanticipated events during our clinical trials may occur as a result of which we may need toamend clinical trial protocols. Amendments may require us to resubmit our clinical trial protocols to IRBs for review and approval, which may adverselyaffect the cost, timing or successful completion of a clinical trial. If we experience delays in the completion of, or if we terminate, any of our clinical trials, thecommercial prospects for aramchol would be harmed and our ability to generate product revenue would be delayed, possibly materially. We cannot be certain that the results of our potential Phase III clinical trials, even if all endpoints are met, will support regulatory approval of aramcholfor the treatment of NASH. Although progress has been made as indicated below, currently, the FDA and other regulatory agencies do not have any clear guidance on whichendpoints of a Phase III clinical trial would be sufficient for approval of a drug for the treatment of NASH. Therefore, notwithstanding this progress, thedevelopment pathway for aramchol is not entirely clear beyond Phase IIb, as no official guidelines have been published to date. 15Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For example, the FDA recognizes that because NASH is characterized by a long asymptomatic natural history, it may be difficult to demonstrateefficacy in a Phase III clinical trial. However, it is precisely this type of demonstration, evidencing the “substantive evidence of effectiveness” of a drug thatis required for drug approval. In certain limited and rare circumstances, the FDA permits drug developers to use a “surrogate endpoint” to demonstrate the clinical benefits of theirdrugs in the short term, the demonstration of which is sufficient for initial marketing approval. A surrogate endpoint is defined as a biomarker that is intendedto substitute for a clinical endpoint, and which is expected to predict the clinical benefit or harm associated with a drug. Although the FDA has indicated at a workshop held in association with the American Association for the Study of Liver Diseases, or AASLD, and inthe subsequent joint publication, that an acceptable surrogate endpoint for drugs targeting the early stages of NASH (i.e., fat infiltration and inflammation, asopposed to fibrosis) is resolution of NASH in liver biopsy, this has not been confirmed by any formal guidelines. It is possible that even if the results of ourPhase III clinical trial demonstrate resolution of NASH in liver biopsy, the FDA will require longer-term studies of aramchol, such as Phase IV studies, prior togranting marketing approval. Even if aramchol, or any other product candidate that we may develop, receives marketing approval, we will continue to face extensive regulatoryrequirements and any such product may still face future regulatory risks or new requirements. Even if we receive regulatory approval to market a particular product candidate, any such product will remain subject to extensive regulatoryrequirements, including requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distributionand recordkeeping. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the uses for which the product may bemarketed or the conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of theproduct, which could negatively affect us by reducing revenues or increasing expenses, and cause the approved product candidate not to be commerciallyviable. In addition, as clinical experience with a drug expands after approval, typically because it is used by a greater number and more diverse group ofpatients after approval than during clinical trials, side effects and other problems may be observed over time after approval that were not seen or anticipatedduring pre-approval clinical trials or other studies. Any adverse effects observed after the approval and marketing of a product candidate could result inlimitations on the use of the approved product, withdrawal of FDA approval of the previously approved product, or voluntary withdrawal from themarketplace of the approved product. Absence of long-term safety data may also limit the approved uses of our products, if any. If we fail to comply with theregulatory requirements of the FDA, and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approvedcommercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions orother setbacks, including the following: ·suspension or imposition of restrictions on operations, including costly new manufacturing requirements; ·refusal to approve pending applications or supplements to applications; ·suspension of any ongoing clinical trials; ·suspension or withdrawal of marketing approval; ·an injunction or imposition of civil or criminal penalties or monetary fines; ·seizure or detainment of products; ·banning or restriction of imports and exports; ·issuance of warning letters or untitled letters; 16Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·suspension or imposition of restrictions on operations, including costly new manufacturing requirements; or ·refusal to approve pending applications or supplements to applications. In addition, various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change from time totime. Costs arising out of any regulatory developments could be time-consuming and expensive and could divert management resources and attention and,consequently, could adversely affect our business operations and financial performance. Delays in regulatory approval, limitations in regulatory approval and withdrawals of regulatory approval may have a material adverse effect on theCompany. If we experience significant delays in testing or receiving approvals or sign-offs to conduct clinical trials, our product development costs willincrease and our ability to out-license product candidates may be impeded. If we obtain approval to commercialize aramchol outside of the United States, a variety of risks associated with international operations could materiallyadversely affect our business. If aramchol is approved for commercialization outside the United States, we will likely enter into agreements with third parties to commercializearamchol outside the United States. We expect that we will be subject to additional risks related to entering into or maintaining international businessrelationships, including, without limitation: ·different regulatory requirements for drug approvals in foreign countries; ·differing U.S. and foreign drug import and export rules; ·reduced protection for intellectual property rights in foreign countries; ·unexpected changes in tariffs, trade barriers and regulatory requirements; ·different reimbursement systems; ·economic weakness, including inflation, or political instability in particular foreign economies and markets; ·compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; ·foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident todoing business in another country; ·workforce uncertainty in countries where labor unrest is more common than in the United States; ·production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; ·potential liability resulting from development work conducted by these distributors; ·business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters; and ·risks associated with clinical co-development agreements in other jurisdictions prior to or post-regulatory approval. 17Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A failure to timely and effectively address the additional risks related to entering into or maintaining international business relationships could havea material adverse effect on our business, liquidity operating results and financial condition. If we receive marketing approval for aramchol, sales will be limited unless the product achieves broad market acceptance. The commercial success of aramchol and any other future product candidate for which we obtain marketing approval from the FDA, or otherregulatory authorities, will depend on the breadth of its approved labeling and upon the acceptance of the product by the medical community, includingphysicians, patients and healthcare payors. The degree of market acceptance of any approved product will depend on a number of factors, including, withoutlimitation: ·demonstration of clinical safety and efficacy compared to other products; ·ability of physicians to accurately diagnose NASH in its early stages; ·the relative convenience and ease of administration; ·the prevalence and severity of any adverse side effects; ·limitations or warnings contained in the product’s approved labeling; ·distribution and use restrictions imposed by the FDA, or other regulatory agencies, or agreed to by us as part of a mandatory or voluntaryrisk management plan; ·availability of alternative treatments, including, in the case of aramchol, a number of competitive products already approved or expected tobe commercially launched in the near future; ·pricing and cost effectiveness; ·the effectiveness of our, or any future collaborators’, sales and marketing strategies; ·our ability to obtain sufficient third-party coverage or reimbursement; and ·the willingness of patients to pay for drugs out of pocket in the absence of third-party coverage. If aramchol is approved, but does not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generatesufficient revenue from the product, and we may not become profitable. In addition, our efforts to educate the medical community and third-party payors onthe benefits of the product may require significant resources and may never be successful. The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found to haveimproperly promoted off-label uses, we may become subject to significant liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products. In particular, aproduct may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. In particular, any labeling approvedby FDA or other foreign regulatory agencies for aramchol necessarily limits its use for certain conditions in certain patient populations. Also, regulatoryagencies may impose further requirements or restrictions on the distribution or use of aramchol as part of a mandatory plan, such as limiting prescribing tocertain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiringtreated patients to enroll in a registry. If we receive marketing approval for aramchol, physicians may nevertheless prescribe aramchol to their patients in amanner that is inconsistent with the approved label. If we are found to have promoted such off-label uses or knowingly acquiesced in such off-label uses, wemay become subject to significant liability. In particular, the U.S. federal government has levied large civil and criminal fines against companies for allegedimproper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter intoconsent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. 18Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may be subject to extensive environmental, health and safety, and other laws and regulations in multiple jurisdictions. Our business involves the controlled use, through our service providers, of hazardous materials, various biological compounds and chemicals, and assuch, we, our agents and our service providers may be subject to various environmental, health and safety laws and regulations, including those governing airemissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous, radioactive and biological materials and wastesand the cleanup of contaminated sites. The risk of accidental contamination or injury from these materials cannot be eliminated. If an accident, spill or releaseof any regulated chemicals or substances occurs, we could be held liable for resulting damages, including for investigation, remediation and monitoring ofthe contamination, including natural resource damages, the costs of which could be substantial. We may incur substantial capital costs and operatingexpenses and may be required to obtain consents to comply with any environmental and health laws or regulations and the terms and conditions of anypermits required pursuant to such laws and regulations, including costs incurred by us to install new or updated pollution control equipment for our serviceproviders, modify our operations or perform other corrective actions at our facilities or the facilities of our service providers. In addition, fines and penaltiesmay be imposed on us, our agents and/or our service providers for noncompliance with environmental, health and safety and other laws and regulations or forthe failure to have, or comply with the terms and conditions of, required environmental or other permits or consents. We expect the healthcare industry to face increased limitations on reimbursement, rebates and other payments as a result of healthcare reform, whichcould adversely affect third-party coverage of our products and how much or under what circumstances healthcare providers will prescribe or administerour products. In both the United States and other countries, sales of our products will depend in part upon the availability of reimbursement from third-partypayors, which include governmental authorities, managed care organizations and other private health insurers. Third-party payors are increasinglychallenging the price and examining the cost effectiveness of medical products and services. Increasing expenditures for healthcare have been the subject of considerable public attention in the United States. Both private and governmententities are seeking ways to reduce or contain healthcare costs. Numerous proposals that would effect changes in the U.S. healthcare system have beenintroduced or proposed in U.S. Congress, or Congress, and in some state legislatures, including reducing reimbursement for prescription products andreducing the levels at which consumers and healthcare providers are reimbursed for purchases of pharmaceutical products. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Modernization Act, changed the wayMedicare covers and pays for most pharmaceutical products in a number of ways. Medicare is the single largest third-party payment program and isadministered by the Centers for Medicare & Medicaid Services, or CMS. Medicare traditionally covered prescription drugs administered by physicians. TheModernization Act introduced a new reimbursement methodology based on average sales prices for many of these drugs. The Modernization Act alsoestablished a new competitive acquisition program for the purchase of Part B drugs. This program, when fully implemented, will likely reduce the prices ofthese drugs. While the Medicare provisions of the Modernization Act apply only to drug benefits for Medicare beneficiaries, private payors often followMedicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results fromfederal legislation or regulation may result in a similar reduction in payments from private payors. Most notably, the Modernization Act also expanded coverage through a new Part D to include ordinary self-administered outpatient drugs.Medicare part D though operates through private insurers, and these insurers negotiate prices with pharmacies and with manufacturers. Intense negotiationscan result in reduced revenues to manufacturers. 19Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Increasing expenditures for healthcare have been the subject of considerable public attention in the United States. Both private and governmententities are seeking ways to reduce or contain healthcare costs. Numerous proposals that would effect changes in the U.S. healthcare system have beenintroduced or proposed in U.S. Congress, or Congress, and in some state legislatures, including reducing reimbursement for prescription products andreducing the levels at which consumers and healthcare providers are reimbursed for purchases of pharmaceutical products. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education AffordabilityReconciliation Act of 2010, or the Affordable Care Act, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth ofhealthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, imposenew taxes and fees on pharmaceutical and medical device manufacturers and impose additional health policy reforms. The Affordable Care Act expandedmanufacturers’ Medicaid rebate liability to include covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations,increased the minimum rebate due for innovator drugs from 15.1% of average manufacturer price, or AMP, to 23.1% of AMP. The rebate on innovator drugs isthe greater of 23.1% of the AMP per unit or the difference between the AMP and the best price per unit and adjusted by the Consumer Price Index-Urban(CPI-U) based on a launch date and current quarter AMP. The total rebate amount for innovator drugs is capped at 100.0% of AMP. The Affordable Care Actand subsequent legislation also narrowed the definition of AMP. Furthermore, the Affordable Care Act imposes a significant annual, nondeductible fee oncompanies that manufacture or import certain branded prescription drug products. Substantial new provisions affecting compliance were also been enacted,which may affect our business practices with healthcare practitioners. Although it is too early to determine the effect of the Affordable Care Act, it appearslikely to continue to put pressure on pharmaceutical pricing, especially under the Medicare and Medicaid programs, and may also increase our regulatoryburdens and operating costs. In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. More recently, in August 2011,President Obama signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction torecommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of an amount greater than$1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This includes aggregatereductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, starting in 2013. In January 2013, President Obama signed into law theAmerican Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several categories of healthcare providers and increasedthe statute of limitations period for the government to recover overpayments to providers from three to five years. If we ever obtain regulatory approval andcommercialization of aramchol, these new laws may result in additional reductions in Medicare and other healthcare funding, which could have a materialadverse effect on our customers and accordingly, our financial operations. Legislative and regulatory proposals have been made to expand post-approvalrequirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will beenacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals ofaramchol may be. Further, the Deficit Reduction Act of 2010, directed CMS to contract a vendor to determine “retail survey prices for covered outpatientdrugs that represent a nationwide average of consumer purchase prices for such drugs, net of all discounts and rebates (to the extent any information withrespect to such discounts and rebates is available).” This survey information can be used to determine the National Average Drug Acquisition Cost, orNADAC. Some states have indicated that they will reimburse based on the NADAC and this can result in further reductions in the prices paid for variousoutpatient drugs. Although we cannot predict the full effect on our business of the implementation of existing legislation or the enactment of additional legislationpursuant to healthcare and other legislative reform, we believe that legislation or regulations that would reduce reimbursement for, or restrict coverage of, ourproducts could adversely affect how much or under what circumstances healthcare providers will prescribe or administer our products. This could materiallyand adversely affect our business by reducing our ability to generate revenue, raise capital, obtain additional collaborators and market our products. Inaddition, we believe the increasing emphasis on managed care in the United States has and will continue to put pressure on the price and usage ofpharmaceutical products, which may adversely impact product sales. 20Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. It will be difficult for us to profitably sell aramchol, if reimbursement for the product is limited by government authorities and third-party payor policies. In addition to any healthcare reform measures which may affect reimbursement, market acceptance and sales of aramchol will depend on thereimbursement policies of government authorities and third-party payors. It will be difficult for us to profitably sell aramchol if reimbursement for the productis limited by government authorities or third-party payors. Government authorities and third-party payors, such as private health insurers and healthmaintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industryand elsewhere is cost containment. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amountof reimbursement for particular medications. We cannot be sure that coverage or reimbursement will be available for aramchol and, if coverage andreimbursement are available, the extent of coverage and the level of reimbursement. Reimbursement may affect the demand for, or the price of, any productfor which we obtain marketing approval. In addition, third-party payors are likely to impose strict requirements for reimbursement in order to limit off-labeluse of a higher priced drug. Reimbursement by a third-party payor may depend upon a number of factors including the third-party payor’s determination thatuse of a product is: •a covered benefit under its health plan; •safe, effective and medically necessary; •appropriate for the specific patient; •cost-effective; and •neither experimental nor investigational. Obtaining coverage and reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly processthat could require us to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payor. We may not be able toprovide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will beavailable for our future products. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our future products. Ifreimbursement is not available, or is available only to limited levels, we may not be able to commercialize our product candidate, or any future productcandidates, profitably, or at all, even if approved. In addition, if physicians, government agencies and other third-party payors do not accept the use orefficacy of aramchol, we will not be able to generate significant revenue, if any. Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any. In some countries, particularly the countries of the EU, the pricing of prescription pharmaceuticals is subject to governmental control. In thesecountries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtainreimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our productcandidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactorylevels, our business could be harmed, possibly materially. We are subject to federal anti-kickback laws and regulations. Our failure to comply with these laws and regulations could have adverse consequences tous. There are extensive U.S. federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significantcriminal and civil penalties. These federal laws include: The anti-kickback statute, which prohibits certain business practices and relationships, including thepayment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs; the physician self-referral prohibition, commonly referred to as the Stark Law; the anti-inducement law, which prohibits providers from offering anything to a Medicare orMedicaid beneficiary to induce that beneficiary to use items or services covered by either program; the False Claims Act, which prohibits any person fromknowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaidprograms; and the Civil Monetary Penalties Law, which authorizes the U.S. Department of Health and Human Services to impose civil penaltiesadministratively for fraudulent or abusive acts. In addition, the Affordable Care Act requires drug manufacturers to report to the government any payments tophysicians and certain hospitals for consulting services and the like. 21Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetarypenalties, imprisonment, denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs, or both, and debarment. Asfederal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts toroot out waste and to control fraud and abuse in governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due in largepart to amendments to the civil False Claims Act in 1986 and again in 2009 and 2010 that were designed to encourage private persons to sue on behalf of thegovernment. A violation of any of these federal and state fraud and abuse laws and regulations could have a material adverse effect on our liquidity andfinancial condition. An investigation into the use by physicians of any of our products, once commercialized, may dissuade physicians from eitherpurchasing or using them, and could have a material adverse effect on our ability to commercialize those products. If we or our manufacturers fail to comply with manufacturing regulations, our financial results and financial condition could be adversely affected. Before an NDA is approved, and before we begin the commercial manufacture of aramchol, contract manufacturers must obtain regulatory approvalof their manufacturing facilities, processes and quality systems. In addition, pharmaceutical manufacturing facilities are continuously subject to inspectionby the FDA and foreign regulatory authorities before and after product approval. Due to the complexity of the processes used to manufacture pharmaceuticalproducts and product candidates, any potential third-party manufacturer may be unable to continue to pass or initially pass federal, state or internationalregulatory inspections in a cost effective manner, if at all. The FDA and foreign regulators require manufacturers to register manufacturing facilities. The FDA and foreign regulators also inspect thesefacilities to confirm compliance with requirements that the FDA or foreign regulators establish. We do not intend to engage in the manufacture of ourproducts other than for preclinical and clinical studies, but we or our materials suppliers may face manufacturing or quality control problems causing productproduction and shipment delays or a situation where we or the supplier may not be able to maintain compliance with the FDA’s or foreign regulators’requirements necessary to continue manufacturing our product candidate. Drug manufacturers are subject to ongoing periodic unannounced inspections bythe FDA, the U.S. Drug Enforcement Agency, or DEA, and corresponding foreign regulators to ensure strict compliance with requirements and othergovernmental regulations and corresponding foreign standards. Any failure to comply with DEA, FDA or foreign regulatory requirements could adverselyaffect our clinical research activities and our ability to develop and market our product candidate and any future product candidates. If a third-party manufacturer with whom we contract is unable to comply with manufacturing regulations, we may be subject to fines, unanticipatedcompliance expenses, recall or seizure of our products, total or partial suspension of production and/or enforcement actions, including injunctions, andcriminal or civil prosecution. These possible sanctions could adversely affect our financial results and financial condition. Our market is subject to intense competition. If we are unable to compete effectively, aramchol or any other product candidate that we develop may berendered noncompetitive or obsolete. There are a number of products in development for NASH in patients who also suffer from obesity and insulin resistance, most of which are beingdeveloped by pharmaceutical companies that are far larger than us, with significantly greater resources and more experience than us. Further, our industry ishighly competitive and subject to rapid and significant technological change. Our potential competitors include large, fully-integrated pharmaceutical andbiotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. Allof these competitors currently engage in, have engaged in or may engage in the future in the development, manufacturing, marketing and commercializationof new pharmaceuticals, some of which may compete with aramchol or other product candidates. Smaller or early stage companies may also prove to besignificant competitors, particularly through collaborative arrangements with large, established companies. These companies may have products indevelopment that are superior to aramchol. Key competitive factors affecting the commercial success of aramchol and any other product candidates that wedevelop are likely to be efficacy, time of onset, safety and tolerability profile, reliability, convenience of dosing, price and reimbursement. 22Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Many of our potential competitors have substantially greater financial, technical and human resources than we do and significantly greaterexperience in the discovery and development of drug candidates, obtaining FDA and other regulatory approvals of products and the commercialization ofthose products. Accordingly, our competitors may be more successful than us in obtaining FDA and other marketing approvals for drugs and achievingwidespread market acceptance. Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercializeand may render aramchol or any other product candidates that we develop obsolete or non-competitive before we can recover the expenses of developing andcommercializing the product. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologiesbecome available. Finally, the development of new treatment methods for the diseases we are targeting could render aramchol, or any other product candidatethat we develop, non-competitive or obsolete. If we cannot successfully compete with new or existing products, our marketing and sales will suffer and wemay never be profitable. Our competitors currently include companies with marketed products and/or an advanced research and development pipeline. The majority ofcompetitors in the liver disease therapeutic field include Intercept Pharmaceuticals, Inc., Genfit S.A. and Gilead Sciences, Inc. See also “Item 4. Informationon the Company—Competition.” Moreover, several companies have reported the commencement of research projects related to NASH, including thosementioned in the preceding sentence. However, we are not aware if such projects are ongoing or have been completed and, to the best of our knowledge, thereis no approved drug currently on the market which is similar to aramchol, nor are we aware of any product candidate targeting NASH similar to aramchol withrespect to chemical profile and mechanism of action. We face potential product and other liability exposure, and, if claims are brought against us, we may incur substantial liability. Our products and product candidates could cause adverse events. These adverse events may not be observed in clinical trials, but may nonethelessoccur in the future. If any of these adverse events occur, they may render our product candidates ineffective or harmful in some patients, and our sales wouldsuffer, materially adversely affecting our business, financial conditions and results of operations. In addition, potential adverse events caused by our product candidates, or products, could lead to product liability claims. Product liability claimsmight be brought against us by consumers, healthcare providers or others coming into contact with our products. If we cannot successfully defend ourselvesagainst product liability claims, we could incur substantial liabilities. In addition, regardless of merit or eventual outcome, product liability claims may resultin, among other things: ·decreased demand for aramchol or any other product candidate for which we obtain marketing approval; ·impairment of our business reputation and exposure to adverse publicity; ·increased warnings on product labels; ·withdrawal of clinical trial participants; ·costs of related litigation; ·distraction of management’s attention from our primary business; ·substantial monetary awards to patients or other claimants; ·loss of revenue; and 23Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the inability to successfully commercialize aramchol or any other product candidate for which we obtain marketing approval. Although our clinical studies to date indicate that aramchol is safe and well-tolerated at single doses up to 900 mg, at doses up to 600mgadministered once-daily for up to ten days and at doses up to 300 mg administered once-daily for up to three months, there were incidences of non-seriousadverse events in four completed and fully analyzed clinical trials. Those four studies enrolled 168 patients. In our Phase Ia clinical trial we enrolled 17 healthy volunteers. A total of 34 adverse events were reported in nine subjects. All adverse events weremild or moderate and transient and resolved without sequelae. There were no serious adverse events, deaths or other significant adverse events observed inthis study. In our Phase Ib placebo-controlled clinical trial with 25 healthy and mildly overweight male volunteers a total of 64 adverse events were reported by80% of the patients. A higher proportion of patients reported drug-related adverse events in the placebo group (88.9%) compared to the 30 mg active group(55.6%) and the 300 mg active group (71.4%). All adverse events were mild or moderate and resolved without sequelae. There were no serious adverse events,deaths or other significant adverse events. We completed a pharmacokinetic, or PK, and food effect study in 66 healthy male volunteers consisting of three parts. Overall, over the three parts ofthe study, the vast majority of adverse events were mild and unrelated to aramchol and all of the adverse events were transient and gave no indication oftarget organ toxicity. All doses of aramchol administered during the study were safe and well-tolerated. No serious adverse events or deaths occurred duringthe study. No clinically significant abnormalities related to any aramchol dose were noted in electrocardiograms, or ECGs, laboratory results, vital signs orphysical examinations. In our Phase IIa placebo-controlled trial with 60 patients with steatosis due to NAFLD or NASH, most adverse events were mild and transient, exceptfor three (mild asthenia, mild nausea and moderate back pain), which were initially considered to be related to the study drug; however, after unblinding thestudy results it was found that the three adverse events occurred in the placebo group. There was one serious adverse event reported, acute appendicitis thatwas unrelated to study drug, which occurred in a patient taking the placebo. The patient fully recovered from the serious adverse event without sequelae andcompleted the study treatment. There were no deaths or other significant adverse events reported in this study. If we are unable to obtain adequate insurance to protect our business and property against damage, and from any losses or claims from third parties,our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. We may not be able to obtain insurancepolicies on terms affordable to us that would adequately insure our business and property against damage, loss or claims by third parties. To the extent ourbusiness or property suffers any damages, losses or claims by third parties, which are not covered, or adequately covered, by insurance, our financialcondition may be materially adversely affected. If product liability lawsuits are successfully brought against us, our insurance may be inadequate. We have obtained insurance coverage for our clinical trials in accordance with market standards and in compliance with applicable Israeli law.However, our insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becomingincreasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect usagainst losses due to liability. If and when we obtain marketing approval for aramchol, or any other product candidate, we intend to expand our insurancecoverage to include the sale of commercial products; however, we may be unable to obtain this product liability insurance on commercially reasonable terms.On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. The cost of any product liabilitylitigation or other proceedings, even if resolved in our favor, could be substantial. A successful product liability claim, or series of claims, brought against uscould cause our share price to decline and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business. 24Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The product liability insurance we will need to obtain in connection with the commercial sales of our product candidates, if and when they receiveregulatory approval, may be unavailable in meaningful amounts or at a reasonable cost. If we are the subject of a successful product liability claim thatexceeds the limits of any insurance coverage we obtain, we would incur substantial charges that would adversely affect our earnings and require thecommitment of capital resources that might otherwise be available for the development and commercial launch of our product programs. We manage our business through a small number of senior executive officers. We depend on them even more than similarly- situated companies. Our future growth and success depends on our ability to recruit, retain, manage and motivate our senior executive officers. The loss of the services ofour President and Chief Executive Officer, Chief Medical Officer, Dr. Maureen Graham and Dr. Antony Appleyard or the inability to hire or retainexperienced management personnel could adversely affect our ability to execute our business plan and harm our operating results. Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified seniorexecutive officers with scientific and technical experience. In particular, the loss of one or more of our senior executive officers could be detrimental to us ifwe cannot recruit suitable replacements in a timely manner. We do not currently carry “key person” insurance on the lives of members of senior management.The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to attract and retainqualified personnel necessary for the development of our business or to recruit suitable replacement personnel. Additionally, our ability to effectively recruit and retain qualified officers and directors could also be adversely affected if we experience difficultyin obtaining adequate directors’ and officers’ liability insurance. We may be unable to maintain sufficient insurance as a public company to cover liabilityclaims made against our officers and directors. If we are unable to adequately insure our officers and directors, we may not be able to retain or recruit qualifiedofficers and directors to manage the Company. Failure to build our finance infrastructure and improve our accounting systems and controls could impair our ability to comply with the financialreporting and internal control requirements for publicly traded companies. As a public company, we will operate in an increasingly challenging regulatory environment which requires us to comply with the Sarbanes-OxleyAct of 2002, or the Sarbanes-Oxley Act, and the related rules and regulations of the SEC and securities exchanges, expanded disclosures, acceleratedreporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporateoversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for us toproduce reliable financial reports and are important to help prevent financial fraud. However, our independent registered public accounting firm will not berequired to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, untilthe date we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, because we are takingadvantage of the exemptions contained in the JOBS Act. We will remain an emerging growth company until, subject to certain conditions, the earlier of (1)the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual grossrevenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is heldby non-affiliates exceeds $700.0 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debtduring the prior three-year period. To date, our independent public accountant has never conducted a review of our internal control for the purpose of providing the reports required bythese rules. During the course of our review and testing, we may identify deficiencies and be unable to remediate them before we must provide the requiredreports. Furthermore, if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and ourfinancial statements may be materially misstated. We or our independent registered public accounting firm may not be able to conclude on an ongoing basisthat we have effective internal control over financial reporting, which could harm our operating results, cause investors to lose confidence in our reportedfinancial information and cause the trading price of our stock to fall. 25Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. To build our finance infrastructure, we will need to improve our accounting systems, disclosure policies, procedures and controls. If we areunsuccessful in building an appropriate accounting infrastructure, we may not be able to prepare and disclose, in a timely manner, our financial statementsand other required disclosures, or comply with existing or new reporting requirements. Any failure to report our financial results on an accurate and timelybasis could result in sanctions, lawsuits, delisting of our shares from the Nasdaq Capital Market or other adverse consequences that would materially harm ourbusiness. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could loseconfidence in our reported financial information. We will need to significantly increase the size of our organization, and we may experience difficulties in managing growth. We may experience rapid and substantial growth in order to achieve our operating plans, which will place a strain on our human and capitalresources. Successful implementation of our business plan will require management of growth, which will result in an increase in the level of responsibilityfor management personnel. We currently have a minimum number of employees and in order to continue the development and the commercialization of ourproducts, we will need to substantially increase our operations, including expanding our employee base of managerial, operational and financial personnel.We currently intend to establish our infrastructure in the United States and therefore we may require additional funds. Any future growth will imposesignificant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. To thatend, we must be able to, among other things: ·manage our clinical trials and the regulatory process effectively; ·develop our administrative, accounting and management information systems and controls; ·hire and train additional qualified personnel; and ·integrate current and additional management, administrative, financial and sales and marketing personnel. If we are unable to establish, scale-up and implement improvements to our control systems in an efficient or timely manner, or if we encounterdeficiencies in existing systems and controls, investors may choose not to invest in us, which could cause our share price to decline and negatively impactour ability to successfully commercialize our product candidate and future product candidates. Failure to attract and retain sufficient numbers of talented employees will further strain our human resources and could impede our growth or resultin ineffective growth. If we are unable to manage our growth effectively, our losses could materially increase and it will have a material adverse effect on ourbusiness, results of operations and financial condition. Our business, including our ability to raise capital, may be affected by macroeconomic conditions. A deterioration in global economic conditions and uncertainties may have an adverse effect on our business. For instance, interest rates, the liquidityof the credit markets and the volatility of the capital markets could also affect the value of our investments, if any, and our ability to liquidate suchinvestments in order to fund our operations. Interest rates and the ability to access credit markets could also adversely affect the ability of patients anddistributors to purchase, pay for and effectively distribute our products. Moreover, in past years, the U.S. and global economies have taken a downturn as the result of the deterioration in the credit markets and relatedfinancial crisis as well as a variety of other factors including, among other things, extreme volatility in security prices, diminished liquidity and creditavailability, ratings downgrades of certain investments and declining valuations of others. The U.S. and certain foreign governments have recently takenactions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to the financial markets. If theactions taken by these governments are not successful, the continued economic decline may cause a significant impact on our ability to raise capital, ifneeded, on a timely basis and on acceptable terms or at all. In addition, we rely and intend to rely on third-parties, including our clinical researchorganizations, third-party manufacturers and second source suppliers, and certain other important vendors and consultants. As a result of the current volatileand unpredictable global economic situation, there may be a disruption or delay in the performance of our third-party contractors and suppliers. If such third-parties are unable to satisfy their contractual commitments to us, our business could be severely adversely affected. The Israeli Ministry of Health may not permit us to conduct multiple biopsies as contemplated in our ARREST Study of aramchol in Israel. On March 9, 2015, we announced that we had begun the enrollment stage of our Phase IIb ARREST Study of aramchol in 240 biopsy-diagnosedNASH patients. While the primary endpoint of the study is a significant reduction of liver fat, as measured by magnetic resonance spectroscopy, or MRS, themain secondary endpoint of the ARREST Study is resolution of NASH on biopsies, which can be assessed only at the completion of the study and byrepeated liver biopsies. We are conducting a portion of our ARREST Study in Israel. While, the Israeli Ministry of Health has granted us approval to conductour ARREST Study in 14 centers in Israel, it has taken exception to the necessity of conducting a second biopsy at the end of the trial period, as specified bythe trial protocol. As this position is inconsistent with the already established guidance by the FDA and the EMA, it was unexpected. We are not expectingthat the Israeli Ministry of Health will reverse its preliminary position, and as such, we reconfigured our recruitment targets in Israel to include patients whohave undergone liver biopsies no more than six months prior to enrolling in the ARREST Study. However, there is still a possibility of the Israeli Ministry ofHealth reversing its preliminary position as multiple parties unrelated to us, including leading Israeli hematologists and gastroenterologists, are conductingongoing discussions with the Israeli Ministry of Health to attempt to convince it to reconsider its original position for a variety of reasons. Notwithstandingthe foregoing, we will also continue a close dialogue with the Israeli Ministry of Health, especially after we obtain the interim results from the ARRESTStudy, to continuously assess the Israeli Ministry of Health’s willingness to allow a second biopsy. 26Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Contemporaneously, we also announced on March 9, 2015 that we had expanded our clinical activities to include patient recruitment for theARREST Study in the United States. Professor Vlad Ratziu, from the University Pierre et Marie Curie in Paris, an internationally acclaimed key opinionleader, is the ARREST Study’s global principal investigator, and Professor Rohit Loomba, from the University of California San Diego School of Medicine, isthe ARREST Study’s U.S.-based principal investigator. We expanded our patient recruitment into the United States because we believe that U.S.-basedpatient recruitment will shorten the recruitment time for our ARREST Study, especially considering the Israeli Ministry of Health’s current position on therequirement of a second liver biopsy. We also believe that expanding our clinical activities into the United States will improve the ARREST Study’s breadthand relevance, including potentially allowing us to immediately commence Phase III clinical trials in NASH in the United States without any additionclinical requirements, although there is no assurance. Phase IIb clinical operations in the United States may divert a significant amount of Company resources and may ultimately be unsuccessful. We are expanding our clinical operations for Phase IIb to the United States, which will require significant time, funds and Company resources. Webelieve that the United States has a larger population of potential patients from which we can recruit for our ARREST Study than Israel, and we believe thatthe FDA is more likely to accept our trial protocol, which requires repeated liver biopsies, than the Israeli Ministry of Health. In March 2015, we submitted tothe FDA an update of our existing Investigational New Drug, or IND, filing, in order to initiate the ARREST Study in the United States. However, there is noassurance that the FDA will clear our updated IND request. Furthermore, even if the FDA clears our updated IND request, we may not have the time, funds orresources necessary to complete the ARREST Study in the United States. Moreover, even to the extent the ARREST Study is conducted, such study mayultimately prove to be unsuccessful. Risks Related to Our Reliance on Third Parties We have no manufacturing capacity and anticipate reliance on third-party manufacturers for our products. We do not currently operate manufacturing facilities for the production of aramchol or its API. We still have not, and may never, develop facilitiesfor the manufacture of product candidates or products for clinical trials or commercial purposes. We rely, and for the foreseeable future, will continue to rely,on third-party manufacturers to produce bulk drug products required for our clinical trials. We plan to initially rely upon contract manufacturers and,potentially, collaboration partners, to manufacture commercial quantities of our product candidates, if and when approved for marketing by the applicableregulatory authorities. Our contract manufacturers have not completed process validation for aramchol or the aramchol API manufacturing processes. If ourcontract manufacturers and their facilities, as applicable, are not approved by the FDA, or other applicable regulatory authorities, our commercial supply ofthe drug substance will be significantly delayed and may result in significant additional costs. We purchase finished aramchol from a third-party under aclinical supply agreement. If we need to identify an additional finished product manufacturer, we would not be able to do so without significant delay andlikely significant additional cost. Our contract manufacturer’s failure to achieve and maintain high manufacturing standards, in accordance with applicable regulatory requirements, orthe incidence of manufacturing errors, could result in patient injury or death, product shortages, product recalls or withdrawals, delays or failures in producttesting or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers often encounter difficulties involvingproduction yields, quality control and quality assurance, as well as shortages of qualified personnel. Our existing manufacturers and any future contract manufacturers may not perform as agreed or may not remain in the contract manufacturingbusiness. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable to replace a third-party manufacturer in a timelymanner and the production of aramchol would be interrupted, resulting in delays and additional costs. We intend to rely primarily on third parties to market and sell aramchol. We have no sales or distribution capabilities. To the extent we rely on third parties to commercialize aramchol, if marketing approval is obtained, wemay receive less revenue than if we commercialize aramchol ourselves. In addition, we would have less control over the sales efforts of any third partiesinvolved in our commercialization efforts. In the event we are unable to collaborate with a third-party marketing and sales organization to commercializearamchol, particularly for broader patient populations, our ability to generate revenue will be limited. Although we may ultimately develop a marketing and sales force with technical expertise and supporting distribution capabilities in the longerterm, we do not currently intend to do so and as such, we will be unable to market our product candidate directly in the near future. To promote any of ourpotential products through third parties, we will have to locate acceptable third parties for these functions and enter into agreements with them on acceptableterms, and we may not be able to do so. Any third-party arrangements we are able to enter into may result in lower revenues than we could achieve by directlymarketing and selling our potential products. In addition, to the extent that we depend on third parties for marketing and distribution, any revenues wereceive will depend upon the efforts of such third parties, as well as the terms of our agreements with such third parties, which cannot be predicted in mostcases at this time. As a result, we might not be able to market and sell our products in the United States or overseas, which would have a material adverseeffect on us.27Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop andcommercialize our current and potential future product candidates. We intend to seek collaboration arrangements with pharmaceutical or biotechnology companies for the development and commercialization of ourcurrent and potential future product candidates. We will face, to the extent that we decide to enter into collaboration agreements, significant competition inseeking appropriate collaborators. Moreover, collaboration arrangements are complex and time consuming to negotiate, document and implement. We maynot be successful in our efforts to establish and implement collaborations or other alternative arrangements. The terms of any collaborations or otherarrangements that we may establish may not be favorable to us. Any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the effortsand activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to thesecollaborations. Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead todelays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement.These disagreements can be difficult to resolve if neither of the parties has final decision making authority. Moreover, collaborations with pharmaceutical orbiotechnology companies and other third parties are often terminated or allowed to expire by the other party. Any lack of effort or ability by our collaboratorsor any such disagreement, termination or expiration could adversely affect us financially and could harm our business reputation. We depend on third parties to conduct our clinical trials. We rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to oversee mostof the operations of our clinical trials and to perform data collection and analysis. As a result, we may face additional delays outside of our control if theseparties do not perform their obligations in a timely fashion or in accordance with regulatory requirements. If these third parties do not successfully carry outtheir contractual duties or obligations and meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain iscompromised due to the failure to adhere to our clinical protocols or for other reasons, our financial results and the commercial prospects for aramchol or anyother potential product candidates could be harmed, our costs could increase and our ability to obtain regulatory approval and commence product salescould be delayed. Risks Related to Our Intellectual Property The failure to obtain or maintain patents, licensing agreements and other intellectual property rights that are sufficiently broad and protective couldimpact our ability to compete effectively. To compete effectively, we must develop and maintain a proprietary position with regard to our own technologies, intellectual property, licensingagreements, product candidates and business. Legal standards relating to the validity and scope of claims in the biotechnology and biopharmaceutical fieldsare still evolving. We cannot predict the scope and extent of patent protection for aramchol because the patent positions of pharmaceutical products arecomplex and uncertain. Therefore, the degree of future protection for our proprietary rights in our core technologies and any product candidates or productsthat might be developed using these technologies is also uncertain. The risks and uncertainties that we face with respect to our patents and other proprietaryrights include, but are not limited to, the following: ·while the patents we own have been issued, pending patent applications we have filed may not result in issued patents or may take longerthan we expect to result in issued patents; ·we may be subject to interference or reexamination proceedings; ·we may be subject to opposition proceedings in foreign countries; ·any patents that are issued may not provide meaningful protection for any significant period of time, if at all; ·any issued patents may not be broad or strong enough to prevent competition from other products including identical or similar products; ·we may not be able to develop additional proprietary technologies that are patentable; ·there may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim; ·there may be other patents or pending patent applications existing in the patent landscape for aramchol that will affect our freedom tooperate; ·other companies may challenge and invalidate patents licensed or issued to us or our customers; 28Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·a court could determine that a competitor’s technology or product does not infringe our patents; ·other companies may independently develop similar or alternative technologies, or duplicate our technologies; ·other companies may design around technologies we have licensed or developed; ·if we are not awarded patents or if issued patents expire or are declared invalid or not infringed, there may be no protections againstcompetitors making generic equivalents; ·enforcement of patents is complex, uncertain and expensive, and our patents may be found invalid or enforceable; ·our patents could irretrievably lapse due to failure to pay fees or otherwise comply with regulations, or could be subject to compulsorylicensing; and ·if we encounter delays in our development or clinical trials, the period of time during which we could market our products under patentprotection would be reduced. We cannot be certain that patents will be issued as a result of any of our pending applications, and we cannot be certain that any of our issuedpatents, whether issued pursuant to our pending applications or licensed from third parties, will give us adequate protection from competing products. Forexample, issued patents may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope. In addition, because publication ofdiscoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we were the first to make our inventions or tofile patent applications covering those inventions. If any of our composition of matter patents, or pending applications, was subject to a successful challengeor failed to issue, our business and competitive advantage could be significantly affected. Our current patents will expire or they may otherwise cease toprovide meaningful competitive advantage, and we may be unable to adequately develop new technologies and obtain future patent protection to preserveour competitive advantage or avoid adverse effects on our business. The composition of matter patents pertaining to aramchol will expire on March 25, 2019 worldwide outside of Israel and on April 8, 2018 in Israel.We do not expect that we will be able to submit an NDA seeking approval of aramchol prior to the composition of matter patents’ expiration date. However,because aramchol may be a new chemical entity, or NCE, following approval of an NDA, if we are the first applicant to obtain NDA approval, we may beentitled to five years of data and market exclusivity in the United States with respect to such NCE. Analogous data and market exclusivity provisions, ofvarying duration, may be available in Europe and other foreign jurisdictions. The Company also has rights under its pharmaceutical use issued patents withrespect to aramchol, which provide patent exclusivity within the Company’s field of activity until the last of such patents expires in 2030. While theCompany believes that it may be able to protect its exclusivity in its field of activity through such use patent portfolio and such period of exclusivity, thelack of composition of matter patent protection may diminish the Company’s ability to maintain a proprietary position for its intended uses of aramchol.Moreover, the Company cannot be certain that it will be the first applicant to obtain an FDA approval for any indication of aramchol and it cannot be certainthat it will be entitled to NCE exclusivity. Such diminution of aramchol’s proprietary position could have a material adverse effect on our business, results ofoperation and financial condition. Others may obtain issued patents that could prevent us from commercializing our product candidates or require us to obtain licenses requiring thepayment of significant fees or royalties in order to enable us to conduct our business. As to those patents that we have licensed, our rights depend onmaintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so. In addition to patents and patent applications, we depend upon trade secrets and proprietary know-how to protect our proprietary technology. Werequire our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure of confidentialinformation to any other parties. We also require our employees and consultants to disclose and assign to us their ideas, developments, discoveries andinventions. These agreements may not, however, provide adequate protection for our trade secrets, know-how or other proprietary information in the event ofany unauthorized use or disclosure. 29Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our potential development of aramchol salts may not result in improved bioavailability compared to the existing form of aramchol. Furthermore,although we have submitted patent applications for our aramchol salts in development, there is no assurance that we will receive any patents for them, andeven if we receive one or more patents for our aramchol salts in development, they may be of little or no commercial value. As part of our ongoing pre-formulation studies, we have confirmed that several aramchol salts have improved solubility and intestinal permeabilityas compared to the existing form of aramchol. We have recently submitted new patent applications to protect such salts. In addition, we intend to plan andconduct further formulation development in order to test the possibility of using aramchol salts in future clinical studies. If we decide to develop theformulations of aramchol salts due to the improvement in solubility and bioavailability and longer patent protection, we may conduct an appropriatebioequivalence study, or studies of the biological equivalence of two proprietary preparations of a drug, prior to administering an aramchol salt formulationto patients in our clinical studies. If we commence animal PK studies and formulation development in order to test the bioavailability of the aramchol salt compounds, the resultsmight not support the claims sought by us. Success in our earlier pre-formulation studies does not ensure that later studies will be successful, and the resultsof later studies may not replicate the results of our prior pre-formation studies. Furthermore, either or both of the animal PK and formulation developmentstudies may fail to demonstrate that the aramchol salts result in an improvement in solubility and bioavailability. Any such failure may cause us to abandonthe aramchol salt compounds and may delay development of other product candidates. If the animal PK studies do not support our claims, the completion ofdevelopment of such potential product candidates may be significantly delayed or abandoned, which will significantly impair our ability to generaterevenues and will materially adversely affect our results of operations. There can be no assurance that the U.S. Patent and Trademark Office, or the USPTO, will issue any patents based on the patent applications that wesubmitted to protect our aramchol salts, nor, should the USPTO issue any patents to us with respect to the aramchol salts, that we will be provided withadequate protection against potentially competitive products. Furthermore, if the USPTO issues us one or more patents for the aramchol salts, there can be noassurance that the issued patents will be of any commercial value, or that private parties or competitors will not successfully challenge these patents orcircumvent these patents in the United States or abroad. In the absence of adequate patent protection, our business may be adversely affected by competitorswho develop comparable technology or products. We may not be able to enforce our intellectual property rights throughout the world. This risk is exacerbated for us because we expect aramchol will bemanufactured and used in a number of foreign countries. The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companieshave encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This risk is exacerbated for usbecause we expect aramchol will be manufactured and used in a number of foreign countries. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual propertyprotection, especially those relating to life sciences. This could make it difficult for us to stop the infringement of our other intellectual property rights. Forexample, several foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, somecountries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents mayprovide limited or no benefit. Although most jurisdictions in which the Company has applied for, intends to apply for, or has been issued patents have patent protection lawssimilar to those of the United States, some of them do not. For example, the Company expects to do business in South America, Eurasia, China and Indochinain the future and the countries in these regions may not provide the same or similar protection as that provided in the United States. Additionally, due touncertainty in patent protection law, the Company has not filed applications in many countries where significant markets exist, including South Americancountries, Eurasian countries, African countries and Taiwan. 30Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from otheraspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in thelaw and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and theenforcement of intellectual property. We may be unable to protect the intellectual property rights of the third parties from whom we may license certain of our intellectual property or withwhom we have entered into other strategic relationships, which could have a material adverse effect on our business, results of operations and financialcondition. Certain of our intellectual property rights may be licensed from third parties, including universities and/or strategic partners. Such third parties maydetermine not to or fail to protect the intellectual property rights that we license from them and we may be unable to defend such intellectual property rightson our own or we may have to undertake costly litigation to defend the intellectual property rights of such third parties. There can be no assurances that wewill continue to have proprietary rights to any of the intellectual property that we license from such third parties or otherwise have the right to use throughsimilar strategic relationships. Any loss or limitations on use with respect to such intellectual property licensed from third parties or otherwise obtained fromthird parties with whom we have entered into strategic relationships could have a material adverse effect on our business, results of operations and financialcondition. We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing,or increase the costs of commercializing, our products. Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of thirdparties. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do notinfringe, but that we may ultimately be found to infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. Thepublication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries weremade and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unawarethat may later result in issued patents that our products infringe. For example, pending applications may exist that provide support or can be amended toprovide support for a claim that results in an issued patent that our product infringes. Third parties may assert that we are employing their proprietary technology without authorization. If a court held that any third-party patents arevalid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our productcandidates or products unless we obtained a license under the applicable patents, or until the patents expire. In addition to litigation proceedings which maybe filed against us, we may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Anyinability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture orsale of products by us. We may be unable to adequately prevent disclosure and unauthorized use of trade secrets and other proprietary information by third parties. Our ability to obtain and maintain patent protection and trade secret protection for our intellectual property and proprietary technologies, ourproducts and their uses is important to our commercial success. We rely on a combination of patent, copyright, trademark and trade secret laws, non-disclosure and confidentiality agreements, licenses, assignment of inventions agreements and other restrictions on disclosure and use to protect ourintellectual property rights. We also rely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patent protectionis appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants,outside scientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information. These agreements maynot effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure ofconfidential information. In addition, others may independently discover our trade secrets and proprietary information. Costly and time-consuming litigationcould be necessary to enforce and determine the scope of our proprietary rights. Failure to obtain or maintain trade secret protection could enable competitorsto use our proprietary information to develop products that compete with our product candidates or products or cause additional material adverse effectsupon our competitive business position. 31Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We cannot be certain that the steps that we have taken will prevent the misappropriation or other violation of our confidential information and otherintellectual property, particularly in foreign countries in which laws may not protect our proprietary rights as fully as in the United States and otherdeveloped economies. Moreover, if we lose any key personnel, we may not be able to prevent the unauthorized disclosure or use of our technical knowledgeor other trade secrets by those former employees. If we are unable to maintain the security of our proprietary technology, this could materially adversely affectour competitive advantage, business and results of operations. Under applicable U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitorsfrom benefiting from the expertise of some of our former employees. In addition, employees may be entitled to seek compensation for their inventionsirrespective of their agreements with us, which in turn could impact our future profitability. We generally enter into non-competition agreements with our employees and certain key consultants, or our employment and consulting agreementscontain non-competition provisions. These agreements, to the extent they are in place and in effect, prohibit our employees and certain key consultants, ifthey cease working for us, from competing directly with us or working for our competitors or clients for a limited period of time. We may be unable to enforcethese agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefittingfrom the expertise our former employees or consultants developed while working for us. For example, Israeli courts have required employers seeking toenforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limitednumber of material interests of the employer which have been recognized by the courts, such as the secrecy of a company’s confidential commercialinformation or the protection of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent ourcompetitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished. In addition, Chapter 8 to the Israeli Patents Law, 5727-1967, or the Patents Law, deals with inventions made in the course of an employee’s serviceand during his or her term of employment, whether or not the invention is patentable, or service inventions. Section 134 of the Patents Law provides that ifthere is no agreement that explicitly determines whether the employee is entitled to compensation for the service inventions and the extent and terms of suchcompensation, such determination will be made by the Compensation and Rewards Committee, a statutory committee of the Israeli Patents Office. Althoughour employees have agreed to assign to us service invention rights, we may face claims demanding remuneration in consideration for assigned inventions.Recent decisions by the Compensation and Rewards Committee and Israeli courts have created some uncertainty in this area, as it was held that employeesmay be entitled to remuneration for their service inventions despite having specifically waived any such rights. As a consequence of such claims, we could berequired to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negativelyaffect our business. Any lawsuits relating to infringement of intellectual property rights necessary to defend ourselves or enforce our rights will be costly and time consuming. We may be required to initiate litigation to enforce our rights or defend our activities in response to alleged infringement of a third-party. Inaddition, we may be sued by others who hold intellectual property rights and who claim that their rights are infringed by aramchol or any of our futureproducts or product candidates. These lawsuits can be very time consuming and costly. There is a substantial amount of litigation involving patent and otherintellectual property rights in the biotechnology and pharmaceutical industries generally. A third-party may claim that we are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operationsand activities, such as research, development and the sale of any future products. Such lawsuits are expensive and would consume time and other resources.There is a risk that such court will decide that we are infringing the third-party’s patents and will order us to stop the activities claimed by the patents,redesign our products or processes to avoid infringement or obtain licenses, which may not be available on commercially reasonable terms. In addition, thereis a risk that a court will order us to pay the other party damages for infringement. 32Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Moreover, there is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities claimedby the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In addition, third parties may, in the future,assert other intellectual property infringement claims against us with respect to our product candidates, technologies or other matters. In addition, our patents and patent applications could face other challenges, such as interference proceedings, opposition proceedings and re-examination proceedings. Any of these challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our patents andpatent applications subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend andresolve and would divert our management’s time and attention. Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining andenforcing patents in the biopharmaceutical industry involve both technological and legal complexity. Therefore, obtaining and enforcing pharmaceuticalpatents is costly, time-consuming and inherently uncertain. In particular, the United States has recently enacted, and is currently implementing, wide-rangingpatent reform legislation. The United States Supreme Court has ruled on several patent cases in recent years, and could do so again in the future, eithernarrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition toincreasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value ofpatents, once obtained. Depending on decisions by applicable courts and legislatures in the countries in which we may pursue patent protection, includingthose of the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents and the interpretations of such laws could change inunpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirementsimposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and otherprovisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application,resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier thanwould otherwise have been the case. Risks Related to Ownership of Our Ordinary Shares The market price of our ordinary shares is volatile and you may sustain a complete loss of your investment. Since our initial public offering, the trading price of our ordinary shares has been volatile and is likely to continue to be volatile. In addition, thetrading volume is and has been volatile and sometimes relatively illiquid. The following factors, some of which are beyond our control, in addition to otherrisk factors described in this section, may have a significant impact on the market price and trading volume of our ordinary shares: ·inability to obtain the approvals necessary to commence further clinical trials; ·delays in existing clinical trials due to an inability to enroll patients at the expected pace, among other factors; ·unsatisfactory or inconclusive results of clinical trials; 33Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changesor delays in the regulatory review process; ·announcements of therapeutic innovations or new products by us or our competitors; ·adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketingactivities; ·changes or developments in laws or regulations applicable to aramchol; ·any adverse changes to our relationship with manufacturers or suppliers; ·any product liability actions or intellectual property infringement actions in which we may become involved; ·announcements concerning our competitors or the pharmaceutical industry in general; ·achievement of expected product sales and profitability or our failure to meet expectations; ·our commencement of, or involvement in, litigation; ·any major changes in our board of directors, or our Board, management or other key personnel; ·legislation in the United States, Europe and other foreign countries relating to the sale or pricing of pharmaceuticals; ·announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments; ·expiration or terminations of licenses, research contracts or other collaboration agreements; ·public concern as to the safety of drugs we, our licensees or others develop; ·success of research and development projects; ·variations in our and our competitors’ results of operations; ·changes in earnings estimates or recommendations by securities analysts, if our ordinary shares are covered by analysts; ·developments by our licensees, if any; and ·future issuances of ordinary shares or other securities. These factors and any corresponding price fluctuations may materially and adversely affect the market price and trading volume of our ordinaryshares and result in substantial losses by our investors. In addition, the stock market in general, and the Nasdaq Capital Market and the market for biotechnology companies in particular, have experiencedextreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of small companies. Broad market andindustry factors may negatively affect the market price of our ordinary shares, regardless of our actual operating performance. Further, a systemic decline inthe financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly. Price volatility of our ordinaryshares might be worse if the trading volume of our ordinary shares is low. Following periods of market volatility, shareholders may institute securities classaction litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and attention of management from ourbusiness, even if we are successful. Future sales of our ordinary shares could also reduce the market price of such stock. Any adverse determination inlitigation could also subject us to significant liabilities. 34Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Moreover, the liquidity of our ordinary shares is limited, not only in terms of the number of shares that can be bought and sold at a given price, butby delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us, if any. These factors may result in lower prices forour ordinary shares than might otherwise be obtained and could also result in a larger spread between the bid and ask prices for our ordinary shares. Inaddition, without a large float, our ordinary shares are less liquid than the stock of companies with broader public ownership and, as a result, the tradingprices of our ordinary shares are more volatile. In the absence of an active public trading market, an investor may be unable to liquidate its investment in ourordinary shares. Trading of a relatively small volume of our ordinary shares may have a greater impact on the trading price of our stock than would be thecase if our public float were larger. We cannot predict the prices at which our ordinary shares will trade in the future. Our principal shareholders, President and Chief Executive Officer and directors currently own approximately 39.7% of our outstanding ordinary shareson a fully diluted basis. They will therefore be able to exert significant control over matters submitted to our shareholders for approval. Our President and Chief Executive Officer, directors and shareholders that own more than 5% of our outstanding ordinary shares own approximately39.7% of our ordinary shares on a fully diluted basis. As a result, these shareholders, if they acted together, could significantly influence or even unilaterallyapprove matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other business combinationtransactions. The interests of these shareholders may not always coincide with our interests or the interests of other shareholders. This significantconcentration of share ownership may adversely affect the trading price for our ordinary shares because investors often perceive disadvantages in owningstock in companies with controlling shareholders. Sales of a substantial number of our ordinary shares in the public market by our existing shareholders could cause our share price to fall. Sales of a substantial number of our ordinary shares in the public market, or the perception that these sales might occur, could depress the marketprice of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effectthat sales may have on the prevailing market price of our ordinary shares. Prior to the consummation of our initial public offering and in accordance with theterms of the Tax Pre-Ruling, the holders of substantially all of our then-outstanding ordinary shares and options agreed, not to sell or dispose of our ordinaryshares for a period of two years following the consummation of the Reorganization, subject to certain exceptions. Substantially all of our outstanding shareswill become eligible for unrestricted sale upon expiration of such lockup period. In addition, shares issued or issuable upon exercise of options and warrantsvested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of shares by these shareholders could have a material adverse effecton the trading price of our ordinary shares. Raising additional capital would cause dilution to our existing shareholders, and may restrict our operations or require us to relinquish rights. We may seek additional capital through a combination of private and public equity offerings, at-the-market issuances, debt financings,collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, yourownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Debtfinancing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting ourability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration,strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams orproduct candidates, or grant licenses on terms that are not favorable to us. 35Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our U.S. shareholders may suffer adverse tax consequences due to our classification as a passive foreign investment company, or PFIC. Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of our assets are held for the production of, orproduce, passive income, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. Based upon ourreview of our financial data, we have determined that we are currently a PFIC, and we likely will continue to be a PFIC, at least until we develop a source ofsignificant operating revenues. If we were to be characterized as a PFIC for U.S. federal income tax purposes in any taxable year during which a U.S. Holder,as defined in “Item 10. Additional Information—E. Taxation— Certain U.S. Federal Income Tax Considerations,” owns ordinary shares, such U.S. Holdercould face adverse U.S. federal income tax consequences. For example, such U.S. Holder could be liable to additional taxes and interest charges upon certaindistributions by us and any gain recognized on a sale, exchange or other disposition of our shares, whether or not we continue to be characterized as a PFIC.One way in which certain of the adverse consequences of PFIC status can be mitigated is for a U.S. Holder to make an election to treat us as a qualifiedelecting fund, or QEF. A shareholder making the QEF election is required for each taxable year to include in income a pro rata share of the ordinary earningsand net capital gain of the QEF, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. An election to treat usas a QEF will not be available if we do not provide the information necessary to make such an election. It is not expected that a U.S. Holder will be able tomake a QEF election because we do not intend to provide U.S. Holders with the information necessary to make a QEF election. See also “Item 10. AdditionalInformation—E. Taxation— Certain U.S. Federal Income Tax Considerations.” If we are unable to satisfy the requirements of Section 404 as they apply to a foreign private issuer and emerging growth company, or our internal controlsover financial reporting are not effective, the reliability of our financial statements may be questioned and our share price may suffer. We became subject to the requirements of the Sarbanes-Oxley Act when our ordinary shares were listed on the Nasdaq Capital Market. Section 404requires companies subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its subsidiaries’ internalcontrols over financial reporting. To comply with this statute, we will be required to document and test our internal control procedures and our managementwill be required to assess and issue a report concerning our internal controls over financial reporting. Pursuant to the JOBS Act, we will be classified as an“emerging growth company.” Under the JOBS Act, emerging growth companies are exempt from certain reporting requirements, including the auditorattestation requirements of Section 404(b) of the Sarbanes-Oxley Act. Under this exemption, our auditor will not be required to attest to and report onmanagement’s assessment of our internal controls over financial reporting during a five year transition period. We will need to prepare for compliance withSection 404 by strengthening, assessing and testing our system of internal controls to provide the basis for our report. However, the continuous process ofstrengthening our internal controls and complying with Section 404 is complicated and time-consuming. Furthermore, as our business continues to growboth domestically and internationally, our internal controls will become more complex and will require significantly more resources and attention to ensureour internal controls remain effective overall. During the course of its testing, our management may identify material weaknesses or significant deficiencies,which may not be remedied in a timely manner to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess theeffectiveness of our internal controls over financial reporting, or our independent registered public accounting firm identifies material weaknesses in ourinternal controls, investor confidence in our financial results may weaken, and the market price of our securities may suffer. Nevertheless, as a foreign privateissuer that is an emerging growth company, we are not be required to comply with the auditor attestation requirements of Section 404 for up to five fiscalyears after the date of our initial public offering. See “Item 5. Operating and Financial Review and Prospects—Jumpstart Our Business Startups Act of 2012”for more detail regarding our status as an emerging growth company. If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely changetheir recommendations or publish negative reports regarding our business or our shares, our share price and trading volume could be negatively impacted. The trading market for our ordinary shares is influenced by the research and reports that industry or securities analysts may publish about us, ourbusiness, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us orprovide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorablerelative recommendations about our competitors, our share price would likely decline. If any analyst who may cover us were to cease coverage of ourcompany or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could negatively impact our share price ortrading volume. 36Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Because we do not intend to declare cash dividends on our ordinary shares in the foreseeable future, shareholders must rely on appreciation of the value ofour ordinary shares for any return on their investment. We have never declared or paid cash dividends on our ordinary shares. We currently anticipate that we will retain future earnings for thedevelopment, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. Moreover, theIsraeli Companies Law, 5759-1999, as amended, or the Companies Law, imposes certain restrictions on our ability to declare and pay dividends. See “Item 8.Financial Information—Consolidated Financial Statements and Other Financial Information—Dividend Policy” for additional information. The requirements associated with being a public company require significant company resources and management attention. We are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act, the listingrequirements of the Nasdaq Capital Market, on which our ordinary shares are traded, and other applicable securities rules and regulations. The Exchange Actrequires that we file periodic reports with respect to our business and financial condition and maintain effective disclosure controls and procedures andinternal control over financial reporting. In addition, subsequent rules implemented by the SEC and the Nasdaq Capital Market may also impose variousadditional requirements on public companies. As a result, we incurred and will continue to incur additional legal, accounting and other expenses that we didnot incur as a privately-held company, particularly after we are no longer an “emerging growth company” as defined in the JOBS Act. Further, the need toestablish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our development plans. Wehave made and will continue to make changes to our corporate governance standards, compensation policy, disclosure controls and financial reporting andaccounting systems to meet our reporting obligations and applicable law. The measures we take, however, may not be sufficient to satisfy our obligations as apublic company, which could subject us to delisting of our ordinary shares, fines, sanctions and other regulatory action and potentially civil litigation. The JOBS Act will allow us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and toreduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adverselyaffect the market price of our ordinary shares. For so long as we remain an “emerging growth company” as defined in the JOBS Act, we intend to take advantage of certain exemptions fromvarious requirements that are applicable to public companies that are not “emerging growth companies” including: ·the provisions of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report onthe effectiveness of our internal control over financial reporting; ·the “say on pay” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, requiringa non-binding shareholder vote to approve compensation of certain executive officers, and the Dodd-Frank Act’s “say on goldenparachute” provisions requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers inconnection with mergers and certain other business combinations and some of the disclosure requirements of the Dodd-Frank Act relatingto compensation of our President and Chief Executive Officer; ·any rules that may be adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotationor a supplement to the auditor’s report on the financial statements; and ·our ability to furnish two rather than three years of income statements and statements of cash flows in various required filings. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find ourordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares, and our share price may become more volatile anddecline. As a “foreign private issuer,” we are permitted to and currently do follow certain home country corporate governance practices instead of otherwiseapplicable SEC and Nasdaq Capital Market requirements, which may result in less protection than is accorded to investors under rules applicable todomestic U.S. issuers. As a “foreign private issuer,” we are permitted to, and currently do, follow certain home country corporate governance practices instead of thoseotherwise required under the Listing Rules of the Nasdaq Capital Market for domestic U.S. issuers. For instance, we currently follow home country practice inIsrael with regard to, among other things, director nomination procedures, quorum requirements and approval of compensation of officers. In addition, wemay follow our home country law instead of the Listing Rules of the Nasdaq Capital Market that require that we obtain shareholder approval for certaindilutive events, such as the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of thecompany, certain transactions other than a public offering involving issuances of a 20% or greater interest in the company, and certain acquisitions of thestock or assets of another company. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S.company listed on the Nasdaq Capital Market may provide less protection to you than what is accorded to investors under the Listing Rules of the NasdaqCapital Market applicable to domestic U.S. issuers. See “Item 16G. Corporate Governance.” 37Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, as a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act related to the furnishing and contentof proxy statements and certain individual executive compensation information, and our officers, directors and principal shareholders are exempt from thereporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. Furthermore, as a “foreign private issuer,” we are also notsubject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. These exemptions and leniencies reduce the frequencyand scope of information and protections to which you are entitled as an investor. Because our ordinary shares may be a “penny stock,” it may be more difficult for investors to sell their ordinary shares, and the market price of ourordinary shares may be adversely affected. Our ordinary shares may be a “penny stock” if, among other things, the stock price is below $5.00 per share, it is not listed on a national securitiesexchange or we have not met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers ofthese stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature andlevel of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations andinformation regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, andobtain the purchaser’s written agreement to the purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with suchbroker-dealer a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to an investor in violation ofthe penny stock rules, the investor may be able to cancel its purchase and get its money back. If applicable, the penny stock rules may make it difficult for investors to sell their ordinary shares. Because of the rules and restrictions applicable toa penny stock, there is less trading in penny stocks and the market price of our ordinary shares may be adversely affected. Also, many brokers choose not toparticipate in penny stock transactions. Accordingly, investors may not always be able to resell their ordinary shares publicly at times and prices that theyfeel are appropriate and the market price of our ordinary shares may be adversely affected. Our ordinary shares are listed on the Nasdaq Capital Market. As such, we must meet the Nasdaq Capital Market’s continued listing requirements andother Nasdaq rules, or we may risk delisting. Delisting could negatively affect the price of our ordinary shares, which could make it more difficult for us tosell securities in a financing and for you to sell your ordinary shares. Our ordinary shares are listed on the Nasdaq Capital Market. As such, we are required to meet the continued listing requirements of the NasdaqCapital Market and other Nasdaq rules, including those regarding director independence and independent committee requirements, minimum stockholders’equity, minimum share price and certain other corporate governance requirements. In particular, we are required to maintain a minimum bid price for ourlisted ordinary shares of $1.00 per share. If we do not meet these continued listing requirements, our ordinary shares could be delisted. Delisting of ourordinary shares from the Nasdaq Capital Market would cause us to pursue eligibility for trading on other markets or exchanges, or on the pink sheets. In suchcase, our shareholders’ ability to trade, or obtain quotations of the market value of, our ordinary shares would be severely limited because of lower tradingvolumes and transaction delays. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our securities. There can be noassurance that our ordinary shares, if delisted from the Nasdaq Capital Market in the future, would be listed on a national securities exchange, a nationalquotation service, the Over-The-Counter Markets or the pink sheets. Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potentialdelisting, would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our ordinaryshares, reduce security analysts’ coverage of us and diminish investor, supplier and employee confidence. In addition, as a consequence of any such delisting,our share price could be negatively affected and our shareholders would likely find it more difficult to sell, or to obtain accurate quotations as to the prices of,our ordinary shares. Risks Related to Israeli Law and Our Operations in Israel Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic andmilitary instability in Israel. Our executive offices are located in Tel-Aviv, Israel. In addition, the majority of our officers and directors are residents of Israel. Accordingly,political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armedconflicts have taken place between Israel and its neighboring countries. Any hostilities involving Israel or the interruption or curtailment of trade betweenIsrael and its trading partners could adversely affect our operations and results of operations. During the winter of 2008-2009, the autumn of 2012 and thesummer of 2014, Israel was engaged in armed conflicts with Hamas, a militia group and political party operating in the Gaza Strip. The last conflict, as well asthe previous round of escalation, involved missile strikes against civilian targets in various parts of Israel, including areas in which our employees, serviceproviders and some of our consultants are located. During the summer of 2006, Israel was also engaged in armed conflicts with Hezbollah, a Lebanese IslamistShiite militia group and political party, which also involved missile strikes against civilian targets in the northern part of Israel. The continuation of suchstrikes may negatively affect business conditions in Israel. 38Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Since February 2011, riots and uprisings in several countries in the Middle East and neighboring regions have led to severe political instability inseveral neighboring states and to a decline in the regional security situation. Such instability may affect the local and global economy, could negativelyaffect business conditions and, therefore, could adversely affect our operations. To date, these matters have not had any material effect on our business andresults of operations; however, the regional security situation and worldwide perceptions of it are outside our control, and there can be no assurance that thesematters will not negatively affect us in the future. In addition, the political and security situation in Israel may result in parties with whom we haveagreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to forcemajeure provisions in such agreements. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East.Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts ofwar, we cannot assure you that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred.Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region wouldlikely negatively affect business conditions generally and could harm our results of operations. Further, in the past, the State of Israel and Israeli companies have been subjects of economic boycotts. Several countries still restrict business withthe State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition orthe expansion of our business. Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service. Many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty until they reach the age of 40 (orolder, for reservists who are officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. In response toincreases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-upsin the future. Our operations could be disrupted by such call- ups, which may include the call-up of our employees or the employees of our Israeli businesspartners. Such disruption could materially adversely affect our business, financial condition and results of operations. Exchange rate fluctuations between the U.S. dollar, Euro and the New Israeli Shekel currencies may negatively affect our earnings. Our functional currency is the U.S. dollar. We incur expenses in U.S. dollars, Euros and New Israeli Shekels, or NIS. As a result, we are exposed to therisks that the Euro and the NIS may appreciate relative to the U.S. dollar, or, if either the Euro and the NIS devalue relative to the U.S. dollar, that the inflationrate in the EU and in Israel may exceed such rate of devaluation of the Euro and the NIS, or that the timing of such devaluation may lag behind inflation inthe EU and in Israel. In any such event, the U.S. dollar cost of our operations in the EU and in Israel would increase and our U.S. dollar-denominated results ofoperations would be adversely affected. The average exchange rate for the year ended December 31, 2014 was $1.00 = Euro 0.83 and $1.00 = NIS 3.89. Wecannot predict any future trends in the rate of inflation in the EU and in Israel or the rate of devaluation, if any, of either the Euro or the NIS against the U.S.dollar. As of the date hereof, neither the inflation rate in the EU nor in Israel has exceeded the rate of devaluation of the Euro or the NIS, respectively, duringthe calendar years 2012, 2013 or 2014. The Tax Pre-Ruling imposes restrictions and limitations that may adversely affect our ability to raise funds by selling our ordinary shares and our abilityto commercialize our product candidate. The Tax Pre-Ruling we obtained from the Israeli Tax Authority in connection with the Reorganization includes certain restrictions and limitations.Under the Tax Pre-Ruling, during the two year period following the consummation of the Reorganization, which ends in February 2016, or the RestrictionPeriod, we may not sell or otherwise dispose of our intellectual property, other than in the ordinary course of business, which may prevent us from completingcollaboration arrangements with pharmaceutical or biotechnology companies necessary for the commercialization of our product candidate. Pursuant to the Tax Pre-Ruling, at any time following our initial public offering and until the end of the Restriction Period, we may not issue morethan 49% of our share capital in a public or private offering, including the shares sold in our initial public offering. Such restrictions and limitations maylimit our ability to raise funds by selling and issuing our ordinary shares, which in turn could delay the development and commercialization of our productcandidate or could force us to cease our operations. In addition, pursuant to the Tax Pre-Ruling, our shareholders and optionholders as of immediately after the consummation of the Reorganizationmay not sell or otherwise transfer or dispose of more than 10% of their respective shares and options, subject to a certain exemptions. Substantially all of suchshareholders and option holders agreed, in accordance with the terms of the Tax Pre-Ruling, not to sell or dispose of our ordinary shares for a period of twoyears following the consummation of the Reorganization. 39Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If during the Restriction Period, we or our shareholders or optionholders who held rights immediately after the consummation of the Reorganization,or the Rights Holders, violate one or more of the restrictions described under “Item 10. Additional Information—E. Taxation—Certain Israeli TaxConsiderations—Pre-Ruling Regarding a Reorganization of Our Corporate Structure” below, or a Violation, the transfer of shares and assets in connectionwith the Reorganization will become subject to taxation based on the greater of the transferred assets’ fair market value on the day of such Violation or taxesthat, but for the Tax Pre-Ruling, would be payable in connection with the transfer of such assets and shares plus Israeli consumer price index linkagedifferentials and interest from the day of the actual transfer of such assets and shares until the day of payment of such taxes, unless the Israeli Tax Authority issatisfied that such Violation was a result of special circumstances beyond our control. Provisions of Israeli law and our articles of association, or Articles, may delay, prevent or otherwise impede a merger with, or an acquisition of, ourcompany, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders. Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals fortransactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. Forexample, a merger may not be consummated unless at least 50 days have passed from the date on which a merger proposal is filed by each merging companywith the Israel Registrar of Companies and at least 30 days have passed from the date on which the shareholders of both merging companies have approvedthe merger. In addition, a majority of each class of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’sissued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital.Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless, followingconsummation of the tender offer, the acquirer would hold at least 98% of the Company’s outstanding shares. Furthermore, the shareholders, including thosewho indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, petition an Israeli court toalter the consideration for the acquisition, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisalrights. Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence doesnot have a tax treaty with Israel exempting such shareholders from Israeli tax. See “Item 10. Additional Information—E. Taxation—Certain Israeli TaxConsiderations” for additional information. Our Articles also contain provisions that could delay or prevent changes in control or changes in our management without the consent of our Board.These provisions will include the following: ·no cumulative voting in the election of directors, which limits the ability of minority shareholders to elect director candidates; and ·the exclusive right of our Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death orremoval of a director, which prevents shareholders from being able to fill vacancies on our Board. Provisions of the Companies Law and anti-takeover provisions in our Articles could make it difficult for our shareholders to replace or remove our currentBoard and could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of ourordinary shares. Under the Companies Law, as amended, a merger is generally required to be approved by the shareholders and board of directors of each of themerging companies. Unless an Israeli court determines differently, a merger will not be approved if it is objected to by shareholders holding a majority of thevoting rights participating and voting at the meeting, after excluding the shares held by the other party to the merger, by any person who holds 25% or moreof the other party to the merger or by anyone on their behalf, including by the relatives of or corporations controlled by these persons. In addition, upon therequest of a creditor of either party to the proposed merger, an Israeli court may delay or prevent the merger if it concludes that there exists a reasonableconcern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger. Further, a mergergenerally may not be completed until the passage of certain time periods. In addition, subject to certain exceptions, an acquisition of shares in a publiccompany must be made by means of a tender offer to the extent that as a result of such acquisition the acquirer will hold 25% or more of the voting rights inthe company if there is no other holder of 25% or more of the company’s voting rights, or hold 45% or more of the voting rights in the company if there is noother holder of 45% or more of the company’s voting rights. In addition, Israeli tax law treats some acquisitions, including stock-for-stock swaps between anIsraeli company and a foreign company, less favorably than U.S. tax law. Israeli tax law may, for instance, subject a shareholder who exchanges ordinaryshares for shares in a non-Israeli corporation to immediate taxation. Certain provisions of our Articles may have the effect of rendering more difficult or discouraging an acquisition of the Company deemedundesirable by the Board. Those provisions include: ·limiting the ability of our shareholders to convene general meetings of the Company; ·controlling procedures for the conduct of shareholder and our Board meetings, including quorum and voting requirements; and ·the election and removal of directors. 40Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Moreover, the classification of our Board into three classes with terms of approximately three years each, which was approved by shareholders of theCompany, the requirement of affirmative vote of at least 75% of the voting rights represented personally or by proxy and voting thereon at a general meetingin order to amend or replace our Articles and the requirement under the Companies Law to have at least two external directors who cannot readily be removedfrom office, together with the other provisions of the Articles and Israeli law, could deter or delay potential future merger, acquisition, tender or takeoveroffers, proxy contests or changes in control or management of the Company, some of which could be deemed by certain shareholders to be in their bestinterests and which could affect the price some investors are willing to pay for our ordinary shares. It may be difficult to enforce a judgment of a United States court against us, our officers, directors and the Israeli experts named in this annual report inIsrael or the United States, to assert United States securities laws claims in Israel or to serve process on our officers, directors and these experts. We were and continue to be organized in Israel. Substantially all of our executive officers and directors reside outside of the United States, and all ofour assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons,including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may notnecessarily be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United States or to assert U.S.securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an actionwith respect to United States securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of United States securities lawsreasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it maydetermine that Israeli law and not United States law is applicable to the claim. If United States law is found to be applicable, the content of applicable UnitedStates law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governedby Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing ajudgment against us in Israel, you may not be able to collect any damages awarded by either a United States or foreign court. Your rights, liabilities and responsibilities as a shareholder will be governed by Israeli law and differ in some material respects from those under U.S. law. Because we are an Israeli company, the rights and responsibilities of our shareholders are governed by the Articles and Israeli law. These rights,liabilities and responsibilities differ in some material respects from the rights, liabilities and responsibilities of shareholders in a U.S. corporation. Inparticular, a shareholder of an Israeli company has a duty to act in good faith towards the company and other shareholders and to refrain from abusing his, heror its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters. Israeli law provides that theseduties are applicable to shareholder votes on, among other things, amendments to a company’s articles of association, increases in a company’s authorizedshare capital, mergers and interested party transactions requiring shareholder approval. In addition, a controlling shareholder, a shareholder who knows that itpossesses the power to determine the outcome of a shareholders’ vote or a shareholder who has the power to appoint or prevent the appointment of a directoror executive officer in the company, has a duty of fairness towards the company. However, Israeli law does not define the substance of this duty of fairness.Because Israeli corporate law has undergone extensive revisions in recent years, there is little case law available to assist in understanding the implications ofthese provisions that govern shareholder behavior. See Item 10.—B Memorandum and Articles of Association—Shareholder Duties” for additionalinformation. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typicallyimposed on shareholders of U.S. corporations. Any of the risk factors referred to above could significantly and negatively affect our business, results of operations or financial condition, whichmay reduce our ability to pay dividends and lower the trading price of our ordinary shares. The risks referred to above are not the only ones that may exist.Additional risks not currently known by us or that we deem immaterial may also impair our business operations. ITEM 4. Information on the Company. Historical Background and Corporate Structure Our Company, Galmed Pharmaceuticals Ltd., was incorporated in Israel on July 31, 2013 as a privately held company. However, our business hasbeen operating since 2000 under a different group of companies established in the same year, or the Group. Originally, we operated under the parentcompany, GHI. GHI held all of the equity rights in and to GTTI. GTTI held all of the equity rights in and to GIL (other than one share held by GRD). GIL heldall of the equity rights in and to GMR. Our intellectual property was held by GIL. The research and development was conducted by GMR as a service to GILon a cost plus basis. GIL was responsible for all product development. On February 2, 2014, we underwent the Reorganization, pursuant to which all of our current business (including our intellectual property) wastransferred to us. The Group was reorganized by share transfers and asset transfers, resulting in the Company as the parent company and 100% equity-ownerof the following companies: (1) GRD, which holds all the Group’s intellectual property, including the Company’s patent portfolio; (2) GIL, which mayprovide research and development services to GRD on a cost plus basis; and (3) GTTI, which is an inactive company that we expect to liquidate at orfollowing the end of 2015. GIL holds GMR, which became an inactive company in 2014. The Reorganization was conducted in order to simplify our capitalstructure, reduce our operating cost and to improve our ability to raise funds. Immediately prior to the Reorganization, all our shareholders collectively held9,739 ordinary shares of GHI. In connection with the Reorganization, and in accordance with the Tax Pre-Ruling, we issued to all such shareholders ordinaryshares of the Company, such that upon the Reorganization all our shareholders collectively held 7,099,731 ordinary shares of the Company, in the sameproportion among all shareholders, which reflected a ratio of 729 ordinary shares of the Company for each ordinary share of GHI. 41Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In connection with the Reorganization, we obtained the Tax Pre-Ruling, which includes certain restrictions and limitations, including with respectto the transfer of our intellectual property and our ordinary shares and options during a two year period following the completion of our initial publicoffering, as more fully described in “Item 10. Additional Information—E. Taxation—Certain Israeli Tax Considerations” below. Among other things, the TaxPre-Ruling required that as of immediately prior to the completion of the Reorganization, the shareholders, option holders and other rights holders of GHIand the Company had to be identical, and that their respective holdings in each of GHI and the Company also had to be identical. The following is a diagram of our corporate structure following the liquidation of GTTI: During May 2014, we completed our initial public offering in the United States. In connection with our initial public offering, we listed our ordinaryshares on the Nasdaq Capital Market and issued 3,363,010 of our ordinary shares in consideration of approximately $39.7 million, after deductingunderwriting discounts, commissions and other estimated offering expenses. Our principal executive offices and registered office in Israel are located at 8 Shaul Hamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel, 6473307and our telephone number is +972 3-6938448. Our website address is http://www.galmedpharma.com. The information contained on, or that can be accessedthrough, our website is neither a part of nor incorporated into this report. We have included our website address in this annual report solely as an inactivetextual reference. Puglisi & Associates serves as our authorized representative in the United States. Its address is 850 Library Avenue, Newark, Delaware19711. Other than as described in “Item 5. Operating and Financial Review and Prospects—Contractual Obligations”, we currently do not have and did nothave any material commitments for capital expenditures, including any anticipated material acquisition of plant and equipment or interests in othercompanies, as of December 31, 2014. Business Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of a novel, once-daily, oral therapy for thetreatment of liver diseases and cholesterol gallstones utilizing our proprietary first-in-class synthetic fatty-acid/bile-acid conjugate, or FABAC, calledaramchol. We believe that aramchol has the potential to be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic diseasethat we believe constitutes a large unmet medical need. NASH is a severe form of NAFLD in which patients suffer from inflammation and fat accumulation in the liver. NAFLD, which is the first stage ofliver disease, is characterized by an accumulation of more than 6% of fat in the liver of people who drink little or no alcohol, and it is mostly associated withobesity or genetic predisposition, as well as in people with a combination of a high fat, fructose-rich diet and a sedentary lifestyle. Recent studies suggest thatwhereas NAFLD can be a benign condition, NASH may lead to progressive fibrosis that dramatically increases the risk of late-stage severe liver diseases, suchas cirrhosis, carcinoma and end-stage liver disease, each potentially requiring liver transplantation. NASH is also associated with increased risk for metabolicand cardiovascular diseases. Both the medical community’s and the public’s awareness of NASH and its complications, as well as its economic burden, haveincreased in recent years. There is currently no approved drug for the treatment of NASH. According to a joint workshop held on September 5 - 6, 2013,sponsored by the FDA and the AASLD to develop guidance on diagnostic and therapeutic modalities for NASH, the FDA is currently working on guidelinesfor the development of therapies for the treatment of NASH. A recently published manuscript that summarizes the discussion at this joint workshop entitled“CHALLENGES AND OPPORTUNITIES IN DRUG AND BIOMARKER DEVELOPMENT FOR NONALCOHOLIC TEATOHEPATITIS: FINDINGS ANDRECOMMENDATIONS FROM AN AMERICAN ASSOCIATION FOR THE STUDY OF LIVER DISEASES (AASLD) - FOOD AND DRUGADMINISTRATION (FDA) JOINT WORKSHOP” clarified, among other things, that the reversal of steatohepatitis with no evidence of progression toadvanced fibrosis (stage 3 or 4), may be an acceptable surrogate endpoint suitable both for Phase IIb and Phase III trials that enroll patients with NASH andevidence of early fibrosis. 42Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. According to an article in the Journal of Gastroenterology and Hepatology in 2013, NAFLD is believed to affect up to 30% of the population indeveloped countries and up to 75% of Western populations with diabetes and obesity. Also according to an article in the Journal of Gastroenterology andHepatology in 2013, approximately 12% of the general population in the United States and in the five most-populated countries in the EU, the UnitedKingdom, France, Spain, Germany and Italy, has NASH. According to an article in the Journal of Hepatology in 2008, and as summarized in an article in theJournal of Hepatology in 2010, the risk that persons with NASH will suffer a liver disease-related death is ten-times higher than that of the generalpopulation, and according to these sources, as well as an article in the Journal of Gastroenterology in 2005, NASH increases overall mortality by between35% and 85%. NASH patients are also twice as likely to die from cardiovascular disease as the global general population. Publications over the last five yearsthat addressed the connection between NASH and its cardiovascular complications include data from 18 studies with a total of 263,000 patients, with afollow up between 4.6 - 24 years. These studies reveal that the presence of NASH and NAFLD increases the risk of cardiovascular events by between 50% infemales and up to 600% in males. An article in the European Scientific Journal in 2013 indicates that the presence of NASH increases the cardiovascular riskby a multiple of 2.4 in addition to the other metabolic risk factors, such as type 2 diabetes, and stresses the importance of treating NASH to preventcardiovascular disease in addition to the known hepatic complications. The estimated size of the NASH patient population in the United States and in the five most-populated EU countries is presented in the diagrambelow. We are initially developing aramchol for the treatment of NASH in patients who also suffer from obesity and insulin resistance. These patients are at thehighest risk of developing both the cardiovascular and hepatic complications associated with NASH. Aramchol is a synthetic conjugate of cholic acid, or atype of bile acid, and arachidic acid, or a type of saturated fatty acid, both of which, in their non-synthetic forms, are naturally occurring. The conjugatedmolecule acts upon important metabolic pathways, reducing fat accumulation in the liver and regulating the transport of cholesterol, which is essential formaintaining cholesterol balance in the body. The ability of aramchol to decrease liver fat content may also reduce the risk of cardiovascular complicationsassociated with NASH. Independent third-party epidemiologic studies suggest that certain levels of fat reduction may reduce, and ultimately eliminate, liverinflammation in patients who have undergone bariatric surgery or other weight loss programs. We believe that aramchol’s ability to reduce liver fat withoutobservable adverse side effects in our studies to date will enable it to be an effective treatment for NASH and prevent the hepatic and cardiovascularcomplications associated therewith. 43Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On February 1, 2015, we began our ARREST Study, a multi-center, randomized, double-blind, placebo-controlled, dose-ranging Phase IIb clinicaltrial of aramchol, which we intend to conduct in 240 biopsy-diagnosed NASH patients who also suffer from obesity and insulin resistance. We have initiallyinitiated this study in Israel, and depending on the timing of the respective National Regulatory Authorities’ approval, we may also initiate the study inEurope and Latin America. Furthermore, we have also submitted to the FDA an update of our existing IND filing, including the results of chronic toxicologyand human PK studies, in order to initiate the study in the United States. Our ARREST Study for aramchol in NASH patients is in accordance with the studydesign recommended by the Medicines and Healthcare Products Regulatory Agency, or MHRA, and has been deemed acceptable by Bundesinstitut fürArzneimittel und Medizinprodukte, a German medical agency, or BfArM, and deemed satisfactory by Agence nationale de sécurité du médicament, a Frenchmedical agency, or ANSM. The study design has been confirmed by the FDA in a written pre-IND advice as acceptable for a Phase IIb study. The BfArM andANSM also confirmed, in minutes of each of their respective scientific advisory meetings, that if successful, this Phase IIb trial may serve as a basis for PhaseIII pivotal trials of aramchol. The FDA and MHRA invited us to discuss the next steps in the development of aramchol after we analyze the results of theARREST Study. If the Phase III trials are successful, we intend to submit an NDA to the FDA and an MAA to the EMA for the approval of aramchol for thetreatment of NASH in patients who also suffer from obesity and insulin resistance in the United States and Europe. We currently expect complete results fromour ARREST Study to be available at the end of 2016. Once 120 patients in our ARREST Study complete six months of treatment, we intend to conduct aninterim analysis for safety and futility of aramchol based on MRS analysis. The interim analysis will provide safety data according to which an independentsafety board will decide whether to continue studying both doses or move all patients to one dose, if one is found safer than the other. The MRS, will providedata for a futility decision, namely the decision to stop the study if no trend of reduction in liver fat content is found. We do not anticipate the interim resultsto lead to the stoppage of the ARREST Study, but no assurance can be given. This highlights the importance of the main secondary endpoint of theresolution of NASH in biopsies, which can be assessed only at the completion of the study and by repeated liver biopsies. We currently expect results fromthe interim analysis to be available in the first half of 2016. Depending on a number of factors, including, but not limited to, having sufficient resources andthe completion of a pre-clinical study in juvenile animals, we may conduct in the future, but give no assurance that we will conduct or when we will conduct,an open-label Phase I clinical trial of aramchol in children. We are also exploring other indications for the use of aramchol, including the treatment of cholesterol gallstones. On November 13, 2014, weannounced the first administration of aramchol in a proof-of-concept Phase IIa clinical trial for the treatment of newly formed cholesterol gallstones followingbariatric surgery. The Phase IIa trial is a multi-center, randomized, double blind, placebo controlled study, designed to evaluate the efficacy and safety of aonce-daily dose of aramchol for three months in 36 adult patients and is being conducted in four medical centers in Israel. The primary endpoint of the trial isthe complete dissolution of newly formed cholesterol gallstones following bariatric surgery. Secondary endpoints include a decrease of more than 50% in thenumber of newly formed gallstones, prevention of the formation of additional gallstones during the trial period and dissolution of biliary sludge. Wecurrently anticipate reporting top line results in the second half of 2015. Approximately 5% of the general population in most countries develops cholesterolgallstones and the current standard of care is surgery, either laparoscopic or open cholecystectomy. On April 28, 2014, we commenced PK and food effect studies of aramchol. In written correspondence from December 2013 regarding a requestedpre- IND application meeting, the FDA recommended that we conduct such studies prior to commencing our Phase IIb ARREST Study of aramchol for thetreatment of NASH. We conducted the PK study at the Sourasky Medical Center in Tel Aviv, Israel. We enrolled 66 healthy male volunteers who receivedthree doses of aramchol: 200mg, 400mg and 600mg. The two higher doses will be used in our ARREST Study. In December 2014, we completed thestatistical analysis of the PK study of the three doses of aramchol and observed no serious adverse events. Such PK study provides additional safety data tofurther support existing safety data from our pre-clinical studies and our Phase I and Phase IIa clinical trials of aramchol. To date, we have successfully completed four clinical trials of aramchol. The first was a single dose, double-blind, placebo- controlled, Phase Iastudy with ascending doses of aramchol in healthy volunteers in one center in Israel. All doses proved to be well-tolerated and no serious adverse side effectswere observed. An additional Phase Ib repeated dose trial completed on healthy volunteers in one center in Israel also showed that aramchol has noobservable adverse side effects and confirmed the suitability of a once-daily dose of aramchol. A multi-center, randomized, double-blind, placebo-controlledPhase IIa trial of aramchol in 60 NAFLD and NASH patients in 12 centers in Israel, whose study design was deemed acceptable by the FDA in 2007 at a pre-IND scientific advisory meeting, suggested that aramchol reduced liver fat in a dose dependent manner, as evidenced by a statistically significant reductionof liver fat over a three month treatment period of once-daily 300 mg doses of aramchol, and induced positive trends of changes in several metabolicparameters. The fourth was a single-site, randomized, partially double-blind, placebo-controlled PK and food effect study conducted in three parts. The firsttwo parts of the study assessed PK, safety and tolerability of aramchol tablets administered in single doses of 200 mg, 400 mg and 600 mg either following aten-hour overnight fast or a high-fat, high-calorie meal. The third part of the study assessed PK, safety and tolerability of aramchol tablets administered in thesame three doses as the first two parts of the study for ten consecutive days, in each case within one hour after a light breakfast. We did not observe anyserious adverse side effects in the PK and food effect study. 44Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Based on our Phase IIa proof-of-concept results, we established a development plan that we believe may confirm that aramchol (i) is safe, (ii) can beadministered as a once-daily oral therapy, (iii) targets NASH, (iv) can effectively treat inflammation and thus prevent the progression of NASH and (v) cantreat the underlying condition of NASH, metabolic syndrome, by improving insulin resistance and other parameters of metabolic syndrome, such as HOMAlevels, or homeostatic model assessment levels, which is a method used to quantify insulin resistance and beta-cell function, which are each biologicalmarkers of metabolic syndrome, and adiponectin levels. Our Development Pipeline Based on the potential metabolic effects of aramchol, we are considering additional indications with meaningful potential market opportunities,with the view of expanding aramchol’s therapeutic applications to cholesterol gallstones and other cholestatic diseases and lipodystrophy, a medicalcondition characterized by abnormal or degenerative conditions of adipose tissue, or body fat, including the loss of body fat from various regions of the bodyand its redistribution and accumulation in other areas. The pipeline chart below shows the current stage of development of aramchol for each of theseindications and the next planned clinical trial in respect of each such indication, as applicable, as well as the preclinical programs for aramchol. IndicationPlanned NextClinical TrialExpected Number ofPatientsAnticipated Key EventsNon-AlcoholicSteatohepatis (NASH) Phase IIb 240 patients Conduct interim analysis of 120 patients in Phase IIb trial who havecompleted six months of treatment in the first half of 2016 Release top-line results from Phase IIb trial at the end of 2016 Lipodystrophy (as describedbelow) Phase IIa, Investigator-Initiated Study 50 patients Release top-line results in the first half of 2016 Our Competitive Strengths The pharmaceutical industry is characterized by rapidly evolving technology, intense competition and a highly risky, costly and lengthy researchand development process. Adequate protection of intellectual property, successful product development, adequate funding and retention of skilled,experienced and professional personnel are among the many factors critical to success in the pharmaceutical industry. We believe we are strategicallypositioned to address the unmet medical needs of NASH patients who also suffer from obesity and insulin resistance. Our competitive strengths include: ·A once-daily oral drug without observable adverse side effects to date in development for the chronic treatment of NASH. We believethat the characteristics of aramchol, including its ability to reduce liver fat content without observable adverse side effects in our studies todate, which we believe may result in an anti-inflammatory effect, its ability to modulate the transport of cholesterol in the body and simpleand convenient delivery through once-daily oral administration, position it well against the competition in the treatment of NASH. Webelieve that such characteristics may also lead to aramchol’s acceptance and adoption by the medical community, including patients, as analternative to the medical treatments used today, which are not approved by applicable regulatory authorities for NASH as their efficacy hasnot been proven in well-designed clinical studies. We believe aramchol is well-positioned against drugs in development for NASH, some ofwhich may require intravenous delivery or may cause adverse events, such as itching or an increase in low-density lipoproteins, or LDL(i.e., “bad cholesterol”), which can be highly inconvenient for patients with chronic diseases, such as NASH, and may result in low patientcompliance. 45Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Extensive knowledge and expertise in the treatment of liver diseases, the development of FABACs and working with lipid molecules.We believe our management team, scientific advisors and personnel, have extensive knowledge and experience in the treatment of liverdiseases and cholesterol gallstones, developing FABACs, such as aramchol, for the treatment of liver diseases and cholesterol gallstonesand working with lipid molecules, which due to their special physiochemical characteristics, are difficult to synthesize, develop and workwith. We believe that such knowledge and expertise makes us competitive in the NASH and cholesterol gallstones fields. ·Non-invasive diagnostic tools for the assessment of aramchol’s effect. If we are successful in our clinical trial correlating fat reduction inthe liver as measured by MRS, an FDA validated and commonly used test for the measurement of liver fat content, with aramchol’s effect oninflammation in the liver, MRS may become a non-invasive biomarker that is able to measure the effect of aramchol in patients followingtreatment with aramchol. Additionally, we intend to co-develop a non-invasive biomarker, which can identify the metabolomic, or amapping of lipids and proteins in different body components, such as blood and liver tissue, profile for NASH patients responding toaramchol treatment and thus would be able to predict individual responses to aramchol prior to treatment. We believe that such biomarkersmay facilitate aramchol’s market penetration and accelerate its acceptance and adoption by the medical community and NASH patients as atreatment option, thereby increasing our competitiveness in the NASH market. On September 29, 2014, we purchased 60 EndoPAT™devices and accessories from, and entered into a collaboration with, Itamar to include an assessment of endothelial, or arterial, function inour Phase IIb ARREST Study of aramchol in NASH patients. In the completed Phase IIa study we observed a trend of improvement inendothelial function in patients treated with 300mg. of aramchol. The EndoPAT™ device will allow for a validated, consistentmeasurement of endothelial function in all patients participating in the study. As mentioned, NASH patients develop cardiovascularcomplications and present with endothelial dysfunction as a marker of their propensity for atherosclerosis, or hardening of the arteries. Asignificant improvement in endothelial function, if found, will provide an additional advantage for patients treated with aramchol and willbe a differentiating factor for aramchol among other NASH drugs in development. Our Strategy Our strategy is to build a specialized biopharmaceutical company that discovers, develops and commercializes novel FABAC drugs and potentiallyother molecules for the treatment of liver diseases and cholesterol gallstones, beginning with the treatment of fatty liver disorders, primarily NASH, andcholesterol gallstones. We focus on drugs and drug conjugates for liver diseases and cholesterol gallstones with global market potential and we seek to createglobal partnerships with academic institutions and biotechnology or pharmaceutical companies to effectively assist us in developing our portfolio andmarketing our products. Using this approach, we have successfully advanced aramchol into various stages of clinical development. Key elements of ourstrategy include: ·Continuing to advance our development of aramchol for the treatment of NASH. Our development of aramchol for treatment of NASHcurrently includes our Phase IIb ARREST Study of aramchol for the treatment of NASH in patients who also suffer from obesity and insulinresistance. If our ARREST Study is successful, the results will serve as a basis for potential Phase III pivotal trials in Europe and Israel forthe same indication and as a basis for discussion for potential Phase III pivotal trials in the United States for the same indication. If thePhase III trials are completed successfully, we intend to seek regulatory approval of aramchol in the United States and Europe for thetreatment of NASH in patients who also suffer from obesity and insulin resistance. 46Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Exploring other indications for the use of aramchol, which currently includes the treatment of cholesterol gallstones. We havecommenced an open-label Phase IIa proof-of-concept clinical trial of aramchol for the treatment of cholesterol gallstones and expect that wewill report the top line results in the second half of 2015. ·Establishing a development and commercialization partnership for aramchol upon completion of our ARREST Study or after thesuccessful completion of the first of the potential Phase III trials of aramchol for the treatment of NASH. Following applicableregulatory approval, which we provide no assurance we will receive, we intend to commercialize aramchol, and our other future products,through outlicensing agreements with major pharmaceutical or biotechnology companies that possess experience, resources andinfrastructure to execute a successful market launch and provide sales support for aramchol. Such companies may perform any or all of thefollowing tasks: Completing development, securing regulatory approvals, manufacturing, marketing and sales. We may ultimately, in thefuture, consider building an internal commercial infrastructure. ·Advancing existing collaborations for the discovery and validation of diagnostic tools and biomarkers for the diagnosis of liverdisease. We intend to advance our existing collaborations and strategic arrangements for the discovery and validation of non-invasivediagnostic tools and biomarkers for the diagnosis of liver disease, including NASH. We are currently collaborating with One Way LiverGenomics S.L., or OWL, on the development of a non-invasive biomarker which, if successful, may help to stratify patients for our plannedPhase III clinical trial and may help to predict individual responses to aramchol for the treatment of liver diseases. OWL also granted us aright of first refusal, exercisable upon completion of our ARREST Study, to enter into a business transaction with OWL regarding thecommercial exploitation of the data generated during the collaboration. Additionally, we purchased 60 EndoPAT™ devices andaccessories from and collaborated with Itamar in September 2014 to include an assessment of endothelial, or arterial, function in ourARREST Study of aramchol in NASH patients. Endothelial dysfunction, an early sign of atherosclerosis, is often present in NASH patients.In the Phase IIa study, we observed improvement in endothelial function in patients treated with aramchol. Our ARREST Study is designedto confirm aramchol’s positive effect on endothelial function by measuring the endothelial function in all participating patients. In thePhase IIa study, all patients measured their own endothelial function by flow-mediated dilation, or FMD, in one center in Israel. Due to thegeographic spread of our ARREST Study, we searched for a validated method to measure endothelial function that would not be dependentupon the test performer. We determined that the EndoPAT™ device is best-suited, easy to operate device for measuring endothelialfunction and perhaps the only method to measure endothelial function consistently across a number of patients. ·In-license, develop or acquire additional drug candidates for the treatment of liver diseases. Aramchol is directed at the treatment ofliver diseases, particularly NASH, that have major global markets and cholesterol gallstones. Our intent is to explore opportunities to in-license, develop or acquire other molecules and/or conjugates for the treatment of liver diseases. We believe that our strategy will increase the likelihood of advancing clinical development and potential commercialization of aramchol, as well asincrease awareness of liver disease and cholesterol gallstones, our brand and our potential market share. Overview of NAFLD and NASH NAFLD. NAFLD is a spectrum of conditions characterized by the accumulation of fat in the liver, encompassing fatty liver, a relatively benignincrease in liver fat content, NASH, or fat infiltration and inflammation of the liver, and liver cirrhosis, or scarring of the liver tissue. Although some fat in theliver is normal, if fat comprises more than 6% of the liver, it may lead to inflammation and subsequent liver disease. In some cases, over time, liver cells maybe replaced by scar tissue, which causes cirrhosis. When this happens, the liver is unable to function properly, necessitating a liver transplant or leading toliver cancer, and potentially liver-related death. The following diagram demonstrates the progression of liver disease. 47Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. According to the Journal of Gastroenterology and Hepatology in 2013, NAFLD is believed to affect up to 30% of the population in developedcountries, and up to 75% of Western populations with diabetes and obesity. According to the World Gastroenterology Organization, in 2012, 30%, 25%,25% and 15%, respectively, of the general population in each of the United States, Europe, the Middle East and Asia, respectively, had NASH. Associated with the Western diet, which is rich in processed foods with high fat and sugar content, and a sedentary lifestyle, NAFLD’s prevalence israpidly growing in parallel with metabolic syndrome, obesity and diabetes, each of which are on the rise in Western countries. Metabolic syndrome is aserious health condition caused by obesity, physical inactivity and genetic factors that results in a higher risk of cardiovascular disease, diabetes, stroke andNAFLD. According to the Journal of Gastroenterology and Hepatology in 2013, NAFLD is associated with insulin resistance and its physical andbiochemical manifestations, such as obesity, visceral adiposity, type 2 diabetes, hypertriglyceridemia and arterial hypertension. Recently, the medicalcommunity has widely come to consider NAFLD as the liver disease of metabolic syndrome, which is the cause of atherosclerosis and its associatedcomplications. Concordant studies over the last five years in Europe and Japan have indicated that over a follow-up period of five to six years, individualswith NAFLD also develop major cardiovascular complications, such as myocardial infarction, more frequently than those without NAFLD. Further, an articlein the Journal of Gastroenterology and Hepatology in 2013 acknowledges a causal relationship between the progression of metabolic syndrome and theoccurrence of NAFLD. The 2013 handbook, Non-Alcoholic Fatty Liver Disease: A Practical Guide, notes that the amount of liver fat influences the severityof insulin resistance, such that patients with fat accumulation in the liver have substantially more insulin resistance than those without such accumulation.Moreover, according to an article in the Journal of Hepatology in 2014, patients with NAFLD develop atherosclerosis earlier than those without NAFLD. It istherefore considered by the medical community that NAFLD is not only a manifestation of metabolic syndrome, but may also be involved in its developmentand severity. The current management of NAFLD demands lifestyle changes such as weight reduction and physical activity, which are hard to achieve andlong-term compliance is difficult. NASH. NASH is a severe form of NAFLD characterized by inflammation in the liver in addition to the presence of excess fat. A subset ofapproximately 30% to 50% of individuals with NAFLD in all age groups, including children, develop NASH, although this more often occurs in obeseindividuals. Independent third-party studies suggest that whereas simple fatty liver can be a benign condition, in NASH patients, for reasons that are still notcompletely understood, the fat build-up in the liver induces chronic inflammation which leads to progressive fibrosis that can lead to cirrhosis with a highrisk of carcinoma and to end-stage liver disease. According to an article in the Journal of Gastroenterology, NASH is currently the third leading indication forliver transplantation in the United States, and according to articles in the Journal of Digestive Diseases in 2011 and the Journal of Hepatology in 2010, NASHwill become the leading cause for liver transplantation in the United States by 2020. Based on research and discussions, we believe that the size of the NASH market is somewhere between $10 billion and $40 billion, although therecan be no assurance of the market size. NASH is often discovered incidentally, frequently by observation of elevated liver enzyme levels in blood tests. NASH patients may beasymptomatic or suffer from fatigue, with other symptoms occurring as the liver disease advances. Diagnosis of NASH is based on the exclusion of otherreasons for liver disease, such as the use of medications, viral hepatitis or excessive use of alcohol; followed by non-invasive imaging tests, such asultrasound, Computed Tomography scan, or CT scan, and magnetic resonance imaging, or MRI. Liver biopsy is currently the standard procedure for thediagnosis of NASH. 48Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The underlying pathophysiology, or the explanation of the physiological processes or mechanisms whereby abnormal or undesired conditionsdevelop and progress, of NASH is not well understood. The disease is multifactorial, involving both genetic and environmental factors that regulate lipidmetabolism and the transportation of fat to, within and from the liver cells. Insulin resistance and subsequent hyperinsulinemia, or increased blood insulinlevels as compared to blood glucose levels, lead to alterations in the hepatic metabolism of free fatty acids and ultimately to an accumulation of lipids in theliver cells. As the disease progresses, persistent fatty infiltration and inflammation cause liver damage marked by fibrosis and gradual loss of normal livercells, which in turn could lead to cirrhosis with a high risk of carcinoma and end-stage liver disease. Beside its hepatic complications, NASH is also associated with increased risk for the cardiovascular complications associated with metabolic syndrome. Aposition statement on NAFLD and NASH from the European Association for the Study of the Liver’s, or the EASL, 2009 Special Conference found extra-hepatic complications of NAFLD and NASH. The EASL position statement noted that “[b]eyond damage to the liver, steatosis can also worsen and/or induceinsulin resistance, worsen glycemic control in patients with type 2 diabetes, and predict subsequent development of metabolic syndrome; it is also associatedwith increased cardiovascular risk and events and with essential arterial hypertension.” The American Journal of Gastroenterology noted in 2012 that “[t]helong-term outcomes of patients with NASH have been reported in several studies… [whose] findings can be summarized as follows: (a) patients with NAFLDhave increased overall mortality compared to matched control populations; (b) the most common cause of death in patients with NASH is cardiovasculardisease; and (c) patients with NASH (but not NAFL) have an increased liver-related mortality rate. Currently Available Treatment Options for NASH Modification of risk factors, such as obesity and hyperlipidemia, and proper diabetic control is generally recommended for the treatment of NASH,and the standard of care includes lifestyle changes to promote weight loss, including low-calorie, low-fat diets and physical activity. Although weight losscan be potentially significant in delaying the progression of NASH, we believe that for most individuals, it is generally very difficult to maintain over thelong-term, even following bariatric surgery. There are currently no drugs approved by regulatory authorities for the treatment of NASH. Even though certain drugs, such as insulin sensitizersand antihyperlipidemic agents, are prescribed for some NASH patients, they are not approved for the treatment of NASH and their efficacy has not beenproven in well-designed clinical studies. Such prescription or use of unapproved drugs is typically known as “off-label” prescription or use. According topress releases issued in mid-2011 by the FDA and EMA, the use of other drugs that have historically also been used off-label to treat NASH has beenrestricted due to their severe side effects, including adverse cardiovascular effects and liver toxicity, or suspected carcinogenicity. Bariatric surgery can beperformed in obese patients with NASH, but is not an established procedure to treat NASH. Lastly, vitamin E was found to be beneficial for non- diabeticpatients with biopsy proven NASH, but not for diabetics with NASH, NAFLD or liver cirrhosis. As such, the use of vitamin E is fairly limited. Based on the foregoing, we believe that there is a significant unmet need for a NASH-specific therapy. We believe that aramchol has the potential toprovide significant benefits in the treatment of this liver disease due to its ability to reduce liver fat in a dose dependent manner, lack of observable adverseside effects in our studies to date and ease of use through once-daily oral administration. Moreover, based in part on the Journal of Gastroenterology andHepatology, we believe the increasing rates of diabetes and obesity worldwide likely means that a significant number of patients will be eligible for, and willbe interested in, receiving a new therapy for the treatment of NASH if it becomes available on the market. We believe that aramchol’s observed positivemetabolic effects, if confirmed in future studies, will position it as a valuable tool in the treatment of NASH in early stages of the disease, for helping toprevent both hepatic and cardiovascular complications. Aramchol for NASH Overview Our product candidate, aramchol, is a first-in-class synthetic FABAC which we are initially developing for the once-daily oral treatment of NASH inpatients who also suffer from obesity and insulin resistance. 49Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Early in its development, aramchol’s ability to modulate hepatic lipid metabolism was observed and validated in numerous preclinical trials withdifferent animal species. Mice fed a high fat diet and treated with aramchol did not develop fatty liver, as opposed to the control mice that were fed a high fatdiet, but were not treated with aramchol, in which fatty liver was observed. In such early studies, we also observed that the mechanism of this effect was not aresult of malabsorption of fat in the intestines because the FABAC-treated mice gained weight throughout the test periods to a similar degree as the controlmice. This led us to conclude that FABAC therapy triggers a beneficial modulation of intra-hepatic lipid metabolism and thus reduces liver fat content. Theimages below show the reduction of liver fat content in rodents after treatment with aramchol. In in-vitro studies, aramchol partially inhibited the Stearoyl-Coenzyme A Desaturase1, or the SCD1 enzyme, an enzyme recognized as playing animportant role in the metabolism of fatty acids. The SCD1 enzyme is essentially the gateway that regulates the use and storage of fat in the body byconverting saturated fatty acids to monounsaturated fatty acids. Experimental animal studies showed that inhibition of the SCD1 enzyme protects againstdiet-induced obesity, hepatic steatosis, or fatty liver, and insulin resistance by instructing the body to use, rather than store, all fatty acids. However, variousanimal studies have indicated that complete SCD1 enzyme inhibition has dangerous side effects, such as inflammation, atherosclerosis and pancreatic betacell dysfunction. As observed by us in our studies and subsequently published in the European Journal of Gastroenterology and Hepatology and Archives ofMedical Research in 2008 and 2010 respectively, one of aramchol’s unique characteristics is that it triggers a partial SCD1 enzyme inhibition without anysignificant adverse events. Aramchol also has the ability to up-regulate ABCA1, an enzyme that induces “reverse cholesterol transport.” Each cell in the body has a specificreceptor for cholesterol entry, the LDL receptor, and a transporter, the ABCA1 transporter that pumps cholesterol out of the cell towards the high-densitylipoprotein, or HDL, which transports it towards the liver to be excreted into the intestine. This pathway from the cell to the liver is called the “reversecholesterol transport” and is essential for maintaining cholesterol balance in the body. Excess levels of “bad” cholesterol are deposited mainly in vascularwalls, causing atherosclerosis, or a vascular disease in which an artery wall thickens as a result of the accumulation of calcium and fatty materials, such ascholesterol. Activation of the reverse cholesterol transport reduces the bad cholesterol deposited in vascular walls and is therefore beneficial. As published inthe Biochemical Journal, the Archives of Medical Research and the Current Opinion in Lipidology in 2006, 2010 and 2014, respectively, in severalexperimental models in animals, aramchol has been shown in independent studies to increase ABCA1 activity by between 300% and 400%, therebystimulating reverse cholesterol transport, reducing cholesterol levels and preventing atherosclerosis. An article in the April 2014 issue of Biochimie furthersupports the importance of the regulation of ABCA1-induced reverse cholesterol transport on the pathogenesis of NASH. The Company expects aramchol to reduce and eventually eliminate liver inflammation by the mechanism of action described above, while alsomitigating cardiovascular comorbidities. 50Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We commenced our Phase IIb ARREST Study on February 1, 2015, to evaluate the efficacy and determine the safest and most efficient dose ofaramchol as a novel treatment for NASH patients with obesity and insulin resistance. We filed an IND application with the FDA in order to use the results ofour previously conducted, and to be conducted clinical studies in Europe, Latin America and Israel, as a basis for the FDA’s future approval to conduct ourARREST Study and the pivotal Phase III clinical trials for NASH and other clinical trials in the United States. On July 22, 2014, the FDA cleared this INDapplication, permitting us to conduct clinical trials of aramchol in the United States for the treatment of fatty liver disorders, and in September 2014, the FDAgranted Fast Track designation status to aramchol for the treatment of NASH. Fast Track designation may accelerate the development process and mayexpedite the review of INDs that show promise in treating serious, life-threatening medical conditions for which no other drug either exists or is as effective.In March 2015 we submitted to the FDA an updated IND request, which, if cleared, will allow us to conduct the Phase IIb ARREST Study in the United States. Summary of Aramchol Clinical Trials Our Phase IIb ARREST Study for Aramchol We are currently conducting our Phase IIb ARREST Study to determine the safest and most effective dose of aramchol for the treatment of NASH. Inorder to be eligible to participate in our ARREST Study, patients must be affected by NASH, as diagnosed by a biopsy, and also suffer from overweight orobesity, measured by a Body Mass Index between 26 and 29 and 30 or greater, respectively and insulin resistance, measured by fasting plasma glucose levelsof 100 mg/dl or greater. We target this specific population as it is at the greatest risk of developing the complications that are associated with NASH.Although we do not expect aramchol to reduce the fibrosis levels of such patients, we include both fibrotic and non-fibrotic patients in the trial. Patients arerandomized into one of three trial groups taking either one of two different once-daily oral doses of aramchol or a placebo. The treatment part of the trial isdesigned to be 12 months in duration and patients completing this phase will be observed for a three month follow-up period. This trial is designed to enroll240 patients (89 patients in the 400 mg aramchol group, 89 patients in the 600 mg aramchol group and 62 patients in the placebo group) acrossapproximately 60 clinical sites in the United States, Israel, Europe and Latin America, and we currently expect results from the trial to be available at the endof 2016. The primary endpoint of the 12-month double-blind portion of the trial is a statistically significant reduction in liver fat concentration, whichaccording to the trial design, would be a reduction in liver fat of 10% more than the placebo group, as measured by MRS, which is a surrogate endpoint thatis generally accepted by the FDA with respect to Phase I and Phase II NASH studies. 51Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Secondary endpoints of the trial are changes in diagnosis as measured by a biopsy, such as the resolution of NASH, and/or a two point reduction inthe NAFLD activity score, or NAS (a measurement of the disease severity that measures the parameters of fat, ballooning and inflammation), which reductionis caused by more than one parameter, with no worsening of fibrosis. Other secondary endpoints are improved liver and metabolic biomarker levels andexploratory endpoints, such as FibroMax, which is a non-invasive comprehensive biomarker for the diagnosis of the most common liver diseases, includingNASH, and metabolomics. The Company believes that finding a non-invasive test which correlates well with biopsy findings would significantly increase thelikelihood of the future use of aramchol in an outpatient setting, where biopsies, which are expensive and painful, are not the standard diagnostic procedures. During the trial, we plan to conduct an interim analysis for safety and futility with respect to 120 participants who have completed six months oftreatment. An independent expert committee, the DSMB, will review the interim safety data to determine whether emergent safety issues are present, and if so,whether they are dose-related. Depending on its severity, any emergent safety issues may warrant a suspension of the higher dose used in the trial or of theentire trial itself. Our pre-specified interim criterion for futility is a trend of reduction in liver fat content measured by MRS in treated patients compared toplacebo-treated patients. If this interim criterion is met, the trial will continue for the full period and number of patients, as planned. If this result is notreached, however, the trial will be suspended. With respect to conducting trials in the United States, on December 13, 2013, in connection with a pre-IND meeting that we requested with the FDAfor aramchol for the treatment of NASH in obese patients with insulin resistance, the FDA provided a written response, or the FDA Response, regarding ourplanned ARREST Study design, including its primary and secondary endpoints and inclusion and exclusion criteria. The FDA Response and priorcorrespondence confirmed that we may conduct our planned ARREST Study in the United States, but recommended that we perform a PK and a food effectstudy prior to doing so. We have since completed the PK study and the statistical analysis showed no observable serious adverse events. The FDA alsoindicated that it will require data from nine-month toxicology studies in animals prior to the initiation of any year-long clinical trial conducted within theUnited States; the EU, Israel and Latin America only require six-month toxicology data. In September 2014, we successfully completed two six-monthchronic toxicology studies of aramchol with no observed significant adverse events and continued these studies into December 2014 to satisfy the aboveinitial requirement of the FDA to complete nine-month pre-clinical toxicology studies of aramchol prior to conducting clinical trials in the United States. InFebruary 2015, we successfully completed the nine-month pre-clinical toxicology studies of aramchol with no observed significant adverse events. As such,we intend to include U.S.-based sites in our ARREST Study of aramchol. The FDA also recommended that future clinical studies should be discussed at an end-of-Phase II meeting with the FDA to take place within threemonths from the date we complete the analysis of the results of our ARREST Study, where the data captured in such trial will be taken into consideration. TheFDA Response further noted that we must discuss with the FDA a methodology for our drug development processes as our development of aramcholprogresses to determine which surrogate endpoints, if any, the FDA will allow us to use to predict the clinical benefit of aramchol. In light of the publicationof the FDA and AASLD joint workshop minutes, we speculate that the discussion will focus on the appropriateness of the resolution of NASH, as measured bybiopsies. Potential Phase III Program for Aramchol The development work we have completed to date with regard to aramchol was deemed appropriate for the initiation of a phase IIb study by theFDA, MHRA, BfArM and ANSM, and our ARREST Study design is in accordance with the study design recommended by the MHRA, deemed acceptable byBfArM and deemed satisfactory by ANSM. In, addition, the FDA recently confirmed in a written pre-IND advisory letter that such study design wasacceptable for our ARREST Study. BfArM and ANSM also confirmed, in minutes of each of their respective scientific advisory meetings, that, if our ARRESTStudy is successful in reaching its primary endpoint, we may proceed to pivotal randomized, double-blind, placebo-controlled, Phase III trials. We expect theprimary end-points of such trials to be the resolution of inflammation in the liver. The FDA, in the FDA Response, and the MHRA invited us to discuss thenext steps in the development of aramchol after we complete the analysis of the results of our ARREST Study, where the data captured in such trial will betaken into consideration. In July 2014, the FDA granted Fast Track designation to aramchol, which designation may accelerate the development process andmay expedite the review of INDs that show promise in treating serious, life-threatening medical conditions for which no other drug either exists or is aseffective. 52Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Phase IIa Trial: Aramchol Treatment in NAFLD or NASH Patients In January 2012, we completed a 60 patient multi-center, randomized, double-blind, placebo-controlled Phase IIa clinical trial of aramchol inpatients with NAFLD or NASH between the ages of 18 and 75 in 12 centers in Israel. The Phase IIa study results were published in July 2014 in the peer-reviewed medical journal, Clinical Gastroenterology and Hepatology Journal. In accordance with the AASLD’s guidelines for Phase IIa studies in NAFLD orNASH, the trial was performed in patients with either NAFLD or NASH, rather than only in NASH patients. The trial’s primary efficacy endpoint was areduction in liver fat content, and did not consider inflammation or fibrosis, which can only be diagnosed by liver biopsy. We believe that the short studyduration of three months of treatment followed by a one-month follow-up period did not warrant repeated biopsies. The trial evaluated the effects on liver fatcontent of 100 mg and 300 mg once-daily doses of aramchol compared to a placebo. At the end of the three month treatment period, statistically significantreductions in liver fat concentration as measured by MRS, a noninvasive and sensitive method for quantification of the amount of fat in the liver, wereobserved in the 300 mg patient group. Specifically, a 12.57% mean liver fat content reduction was observed in the 300 mg group, as compared to a meanreduction of 2.89% in the 100 mg group and a mean increase of 6.39% in the placebo-treated patients, indicating that the effects of aramchol are dose-dependent, as demonstrated in the graph below, which presents the results with respect to the 57 patients who completed the entire treatment period andexperienced no protocol violations. Relative Change in MRS from Baseline After Three Months of Treatment The difference between baseline and liver fat concentration at the end-of-treatment, as measured by MRS, for patients diagnosed with NASH andwith NAFLD is presented in the following table, which also presents the results with respect to the 57 patients who completed the entire treatment period andexperienced no protocol violations. Relative Change in Liver Fat Concentrations in the NASH and NAFLD Groups Liver MRSAramchol 300 mg/dMean ± SDAramchol 100 mg/dMean ± SDPlaceboMean ± SDNASH -35.42 ± 50.09 (N=2) -9.82 ± 4.57 (N=2) 19.24 ± 29.69 (N+2)NAFLD -10.03 ± 18.22 (N+18) -6.05 ± 26.10 (N=16) 4.88 ± 37.44 (N+17) N = number of patients SD = standard deviation The graph and table above show that the primary endpoint of the study was attained. The study demonstrated a statistically significant, dosedependent reduction in fat content in the livers of patients treated with aramchol, with a 19% difference between the 300 mg dose group and the placebogroup, while the difference between the 100 mg dose group and the placebo group was not statistically significant. No statistically significant changes in body weight were observed between the three groups, suggesting that weight-loss did not influence theobserved reduction in liver fat content experienced in the aramchol treated groups. 53Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, both treated patients and the placebo group showed a trend of reduction in alanine aminotransferase, or ALT, levels, which is a marker ofhepatocellular injury and an indicator of liver disease. We believe that the reason the treated and placebo groups showed such a trend may be a result of thefact that the individuals in the placebo may have changed their lifestyle based on the guidance they received from the Company on adopting a healthylifestyle. The aramchol treated groups’ ALT values relapsed 30 days post-treatment, indicating that after the cessation of aramchol treatment, the patientsexperienced recurring liver inflammation. The placebo group did not demonstrate a relapse in ALT levels. This supports the supposition that aramchol has areal biological effect. Total cholesterol and LDL cholesterol levels were determined as safety parameters in our Phase IIa study. Differences between low-dose aramchol(100 mg/d), high-dose aramchol (300 mg/d) and the placebo were also analyzed for secondary efficiency endpoints. The graphs below show no statisticallysignificant differences among the three treatment groups for cholesterol and LDL. Adiponectin is a protein that modulates metabolic processes, including the regulation of glucose levels and fatty acid breakdown in the body.Adiponectin has an anti-inflammatory and antifibrotic effect on the liver. Adiponectin deficiency, or low amounts of adiponectin, results in insulinresistance, glucose intolerance, abnormal levels of fat in the blood and vascular injury, all of which are characteristic of metabolic syndrome. The graphbelow shows the change in serum adiponectin levels from baseline during treatment. At the end of the three month treatment period, increased serumadiponectin levels were observed in the aramchol treated patient groups, indicating that aramchol increases serum adiponectin levels in a dose dependentmanner, suggesting that aramchol may act as a protective factor for the prevention of metabolic syndrome, as increased serum adiponectin is itself such anindependent protective factor. 54Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Change in Serum Adiponectin Levels from Baseline During Three Months of Treatment The arterial endothelium is a target for the atherosclerotic process. Atherosclerosis is associated with endothelial dysfunction in the very early stagesof the disease process. Several studies have shown that metabolic syndrome is associated with endothelial dysfunction as an early pathogenic event. Thus,assessing endothelial function serves as an early marker for both metabolic syndrome and atherosclerosis. In the present study, endothelial function wasassessed using flow-mediated dilation, a noninvasive ultrasound-based method that measures the ability of a large conduit artery to dilate in response to ashear stress stimulus, or an external force acting on the blood vessel. At the end of the three month treatment period, improved endothelial function wasobserved in the 300 mg aramchol treated patient group. The table and graph below present the change in endothelial function, as measured by flow mediateddilation observed between baseline and the end-of-treatment for the 48 patients who performed two flow mediated dilation examinations. Change in Endothelial Function between Baseline and the End-of-Treatment FMD (mm Hg) Aramchol 300 mg/dMean ± SDN=20 Aramchol 100 mg/dMean ± SDN=18 PlaceboMean ± SDN=19Pre-treatment 4.6 ± 2.5 5.4 ±2.8* 6.4 ±2.9Post-treatment 5.9±2.1 5.7±3.9 6.6±2.3Change 1.28±2.92 0.27±3.42 0.23±2.42P value** 0.453 0.8979 N = number of patients SD = standard deviation *N = 16 for this data point. **P value is determined according to an analysis of covariance using the Dunnett method, or a multiple comparison method, for the difference betweentreatment group and placebo, adjusted for age, gender, diagnosis, baseline HbA1c and baseline weight. 55Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The improvement in endothelial function suggests a positive effect on metabolic syndrome, specifically on vascular function. Furthermore, treatment with aramchol was well-tolerated. There were no notable changes in biochemical, hematological, cardiovascular or othersafety parameters, and there were no serious drug related adverse events during the three month treatment period or the subsequent recovery period.Aramchol’s adverse event profile was comparable to that of the placebo, as portrayed in the chart below. The results of our Phase IIa clinical trial of aramchol in the peer-reviewed Clinical Gastroenterology and Hepatology Journal were published inDecember 2014. The trial manuscript, entitled “The Fatty Acid-Bile Acid Conjudgate Aramchol Reduced Liver Fat Content in Patients with NonalcoholicFatty Liver Disease,” provides the full report of the Phase IIa trial, which was completed in January 2012 and presented at the 47th Annual Meeting of theEuropean Association for the Study of the Liver in 2012. 56Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Phase I Trials Aramchol was evaluated in two Phase I clinical trials to study its safety, tolerability and PK profile in healthy volunteers, in both single and multipledose administrations. The first Phase I clinical trial was an escalating single-dose trial conducted in 16 subjects testing single aramchol doses in the range of30 mg to 900 mg. The subsequent Phase I clinical trial was a repeated-dose trial conducted over four days in 25 subjects testing repeated daily doses ofaramchol of 30 mg and 300 mg. The profiles for the groups were similar and the maximal plasma concentration of aramchol increased with the higher doses.The PK profile demonstrated that aramchol is suitable at each dose for once-daily administration and there were neither significant adverse events observedin either Phase I trial nor any notable changes in biochemical, hematologic, cardiovascular or other safety parameters. Additional Preclinical and Clinical Studies Required for Regulatory Submissions The tolerability of aramchol has been demonstrated in toxicity studies performed in rats (up to six months) and dogs (up to nine months), as well asreproductive studies in rats and rabbits. More recently, we conducted a food effect and PK study in 66 healthy volunteers to evaluate the PK of aramcholfollowing single and multiple escalating doses (200mg, 400mg and 600mg), as well as to evaluate the effect of a high-fat, high-calorie meal on the PK ofaramchol following a single dose (600mg) in healthy volunteers. The safety and tolerability of aramchol was assessed during the study period. The results showed dose-related, but less than dose-proportional, increases in the mean aramchol plasma concentrations, or Cmax, area under the curve, orAUC (0-t), and AUC (inf) of 200 mg, 400 mg and 600 mg doses administered under fasting conditions or following a light meal, both at single and repeateddose administration. Cmax and AUC are metrics used to indicate the significance of a drug’s exposure. Steady-state was achieved by 144 hours (day seven).Administration of aramchol after a high-fat, high-calorie meal afforded a 2.6 fold increase in exposure, as measured by Cmax, AUC(0-t), and AUC(inf)compared to the fasting group. The clinical exposure level observed after daily repeat dosing at 600 mg for ten days was used to determine a safety margin of greater than 50 timeswhen compared to the maximum exposure levels detected in the nine month dog toxicology study (after allometric scaling). The safety assessment demonstrated that all doses of aramchol administered during the study were safe and well-tolerated. No serious adverse eventsor deaths occurred during the study and only one patient withdrew due to an adverse event, which was categorized as unrelated to aramchol. Of the 27adverse events reported in the study, 24 were considered to be unrelated to aramchol and three were considered to be possibly related (all three of which weremild). No clinically significant abnormalities related to any aramchol dose were noted in ECGs, laboratory results, vital signs or physical examinations. Chronic Toxicology studies Since the completion of the Phase IIa study, additional non-clinical chronic toxicology studies have been conducted in pharmacologically-relevantspecies to support the initiation of our ARREST Study and Phase III clinical studies. These studies were performed in compliance with the EMA’s ICH M3(R2) guidelines by WIL Research, a global contract research organization, at its facility in Holland. The studies are required in advance of the commencementof human clinical trials and marketing authorization for pharmaceuticals in Europe and the United States. The toxicity program for aramchol included repeatdose studies of up to six months in rats and up to nine months in dogs by oral administration, the intended clinical dose route. These studies demonstratedthat aramchol was well-tolerated at the dose levels investigated with no-observed-adverse-effect-level, values of 1000 mg/kg/day in rats and 1500 mg/kg/dayin dogs, the maximum feasible dose in both species. There were no observations noted in the rat study. The findings in the dog study were limited to changesin plasma lipids, including decreases in total blood cholesterol levels, LDL, HDL and phospholipids, and a slight increase in the size of the adrenal glands,which were considered to be an extension of the primary pharmacology of aramchol and non-toxic effects, and skin scales from week 13 onwards in allaramchol-treated groups, with a dose-related incidence. The decrease in total blood cholesterol levels in the dog study further supports our understanding ofthe positive effect of aramchol on lipids as we previously observed in our preclinical studies in other animals. After six months this was not accompanied byany microscopic alteration of the skin and therefore considered not toxicologically relevant. Preliminary results from the study show that after nine monthsthe presence of scales in all aramchol-treated groups was accompanied by minor test item-related microscopic findings in the skin: Hyperkeratosis of theepidermis, correlating to the scales, and keratin plugs in the hair follicles (in males at 750/500 and 1500 mg/kg). After a 12-week treatment-free recoveryperiod, fewer scales were noted and microscopically there was partial recovery. As these findings were minor and no clinical symptoms like scratching werenoted, these findings were considered not adverse. 57Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Aramchol was non-mutagenic in vitro in the Ames test and chromosomal aberrations test, each of which is a test to determine whether the subjectchemical can cause mutations in the DNA of an organism. In addition, aramchol was not clastogenic, or a mutagenic agent giving rise to or inducingdisruption or breakages of chromosomes, nor aneugenic, or a chemical agent that promotes the number of chromosomes in the nucleus of a cell to not be anexact multiple of the monoploid number of a particular species, in bone marrow micronucleus test in male rats at a 2000 mg/kg oral dose (the maximumrecommended dose in accordance with ICH S2 (R1)). Embryo-fetal development toxicity was assessed in rats and rabbits. No maternal or fetal development toxicity was observed in either species. TheNOAEL for maternal and development toxicity was at least 1000 mg/kg in rats and 750 mg/kg in rabbits (the maximum feasible dose in both species). No maximum tolerated doses were reached in the studies. A 50 fold safety margin exposure multiple was achieved in dogs but not in rats. However,for rats, at least three of the four ICH M3(R2) safety margin criteria were met, and for dogs all four criteria were met. Blood tests revealed a decrease in totalblood cholesterol levels, including LDL, HDL and phospholipids, and there was a slight increase in the size of the adrenal glands of the dogs, which WILResearch assessed as a physiologic compensatory response to the decrease in blood cholesterol levels. WIL Research did not consider the decrease in bloodcholesterol levels or the physiologic response of the adrenal glands as a toxic effect, but rather as a pharmacodynamic effect, which is a biochemical andphysiological effect of the drug on the body. Based on the above, WIL Research concluded that the overall safety data for aramchol is sufficient to supportthe proposed Phase IIb clinical trial. Aramchol Formulation Development There has been a progression of the formulations of aramchol used so far in the preclinical and clinical studies. In the Phase IIa study, weadministered a simple compressed tablet form that was developed directly from the suspension used in the Phase Ia and Ib studies and the preclinical studiesin animals. Upon completion of our Phase IIa study, drug product formulation options were reviewed comprehensively, leading to the development of animmediate release tablet formulation for aramchol. Based on this formulation, aramchol tablets with matching placebos at 400 mg and 200 mg strengths havebeen developed to enable the convenient administration of 400 mg and 600 mg doses (for a 600 mg dose, patients will administer one 400 mg tablet and one200 mg tablet). At the end of our Phase IIb study, we expect to determine the efficacious dose (400 mg or 600 mg). In case we select 600 mg, there may be anadditional development of a single dose tablet of 600 mg. Notwithstanding the foregoing, the optimized conventional tablet for the aramchol free acid form may be suitable for Phase III clinical trial andcommercial use, subject to minor alterations for dosage strength after confirmation of the efficacious dose. If we decide to develop the formulations ofaramchol salts due to the improvement in solubility and bioavailability and longer patent protection, we may conduct an appropriate bioequivalence studiy,or studies of the biological equivalence of two proprietary preparations of a drug, prior to administering an aramchol salt formulation to patients in ourclinical studies. Potential Use of Aramchol to Treat Cholesterol Gallstones Cholesterol gallbladder stones, or cholesterol gallstones, are mostly composed of cholesterol, for which bile is the only significant pathway forexcretion from the body. Given that phospholipids have been recognized as the major natural cholesterol solubilizers in bile, and which also possess anti-crystallizing activity, we hypothesize that aramchol, which increases the proportion of phospholipids in bile, will be able to prevent or reduce theprecipitation of cholesterol gallstones and also clear existing stones. Preliminary in-vivo and in-vitro studies conducted by the Company have shown thataramchol prevents the formation of cholesterol crystals in the gallbladders of hamsters and mice and is able to dissolve existing cholesterol crystals. The chartbelow shows that the levels of cholesterol crystallization in human bile is lower after the addition of FABACs to the bile, including aramchol (C-20). 58Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Cholesterol gallstones is a common disorder in the Western world, largely due to dietary and life style factors. According to Schiff’s Diseases of theLiver in 2006, gallstones are present in about 10% of the general population, and cholesterol gallstones comprise approximately 80% of such gallstones. Inaddition, patients who undergo bariatric surgery commonly develop gallstones as a result of such surgery. Almost a quarter of all cholesterol gallstonecarriers develop pain as a result of their cholesterol gallstones, as well as complications, and up to half of these carriers eventually undergo surgery to havetheir cholesterol gallstones removed. Currently, laparoscopic cholecystectomy is the main treatment option for cholesterol gallstones. Surgery is, however,expensive and may cause morbidity and even mortality in high-risk populations, such as the elderly and those with co-morbidities. We expect that thedissolution of cholesterol gallstones using aramchol will only cost a fraction of the price of surgery and will eliminate the mortality and morbidity associatedwith laparoscopic and open surgery. We also expect aramchol to become an alternative treatment for patients for whom surgery carries a high risk, such as theelderly population, patients with suspected abdominal adhesions and patients with heart, lung or renal problems. Further studies are required to determinewhether intermittent maintenance therapy will be required following dissolution of the cholesterol gallstones. On November 13, 2014, we commenced an open-label Phase IIa proof-of-concept clinical trial of aramchol for the treatment of cholesterolgallstones. The Phase IIa trial is being conducted at the Assuta Medical Center in Tel Aviv, Israel and is a single center, randomized, double blind, placebocontrolled study, designed to evaluate the efficacy and safety of a once-daily dose of aramchol for three months in 36 adult patients. The primary endpoint ofthe trial is a complete dissolution of newly formed cholesterol gallstones following bariatric surgery. Secondary endpoints include a decrease of more than50% in the number of newly formed gallstones, prevention of the formation of additional gallstones during the trial period and dissolution of biliary sludge.We anticipate reporting top line results in the second half of 2015. We are party to an agreement with Aventis Pharma Deutschland GmbH, or Aventis, which merged with Sanofi S.A. and the company is now calledSanofi S.A., pursuant to which we are obligated to pay Aventis a 10% royalty on sales of aramchol that are indicated for the treatment and prevention ofcholesterol gallstones. See “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, Research Arrangements and otherMaterial Agreements—Aventis Pharma Deutschland GmbH.” 59Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Potential Use of Aramchol to Treat Lipodystrophy Lipodystrophy is a medical condition characterized by abnormal or degenerative conditions of adipose tissue, or body fat, including the loss ofbody fat from various regions of the body and its redistribution and accumulation in other areas. Lipodystrophy may be hereditary, but is commonlyassociated with HIV and AIDS patients who develop lipodystrophy from treatment with highly active antiretroviral therapies, or HAARTs, or other proteaseinhibitors. There is currently no approved medical treatment for lipodystrophy or its associated conditions. According to AIDS Reviews, 2005, approximately40% of HIV patients treated for over one year with a protease inhibitor will develop induced lipodystrophy. Patients with HAART-induced lipodystrophymay also develop NAFLD with some of such patients progressing to cirrhosis, hypertriglyceridemia, or high triglyceride blood levels, or diabetes. In ourPhase IIa clinical trial of aramchol in 60 NAFLD patients, we observed a significant reduction in liver fat and improvement of certain metabolic parameters. InFebruary 2015, we entered into an Investigator Initiated Trial Agreement with the University of California, San Diego to conduct a proof-of-concept phase IIastudy in 50 HIV-positive patients with lipodystrophy and nonalcoholic fatty liver disease, or the LD Study. The LD Study principal investigator is Dr. RohitLoomba, a member of our scientific advisory board. The LD Study will be a single center, randomized, double blinded, placebo-controlled study. The LDStudy is designed to evaluate the efficacy of a 600 mg oral, daily dosing of aramchol in HIV-positive patients with lipodystrophy and nonalcoholic fattyliver disease over 16 weeks of treatment. The primary endpoint of the trial is the improvement in hepatic steatosis assessed by MRS. The secondary endpointincludes the improvement of total body fat content and serum alanine aminotransferase, an enzyme found mainly in the liver that is present in higher thannormal levels in the blood when the liver is damaged or diseased, and aspartate aminotransferase, an additional enzyme found in red blood cells and livertissue, among other places, that is present in higher than normal levels in the blood when the liver is diseased or damaged. On June 9, 2014, we filed a provisional patent application in the United States for the use of aramchol for the treatment of lipodystrophy. Other Indications After conducting market research, at this point in time we have decided not to pursue the indications of feline fatty liver or chemotherapy-associatedsteatohepatitis for aramchol due to what we believe is limited commercial potential for aramchol for such indications. Potential Future Biomarkers for Non-Invasive Diagnosis of NAFLD and NASH Currently, the initial diagnosis of NAFLD and/or NASH is based on elevated levels of liver enzymes, such as serum ALT levels, in blood tests. Oncefurther evaluation excludes other reasons for liver disease, such as medications, viral hepatitis or excessive alcohol use, non-invasive imaging tests such asultrasound, CT scans and MRS are good indicators of the presence of NAFLD and/or NASH. However, such tests are not reliable in assessing the degree ofinflammation and fibrosis which would distinguish between the diseases. Moreover, some of these tests suffer from high rates of false negatives; up to 20% inultrasound and CT scans. Necro inflammation, or premature cell death coupled with inflammation, hepatocellular ballooning, or a form of liver cell death,and the degree of fibrosis strongly predict the risk of disease progression, all are based on histology. Therefore, the liver biopsy is the standard approach forthe diagnosis of inflammation and fibrosis associated with NASH and NAFLD, and the differentiation between them. However, the procedure-relatedmorbidity, pain, sample errors and costs limit its use. The current lack of specific, non-invasive diagnostic tools for patient monitoring and clinical drug development for NAFLD and NASH presents amajor challenge to the scientific and medical communities. Initiation of treatment depends on an accurate diagnosis of NASH, which for now can only bearrived at by biopsy, thus limiting patient care and prognosis. We believe that a non-invasive, reliable diagnostic tool is also needed for the assessment of theefficacy of treatment in a particular patient with NAFLD or NASH, once treatment is initiated. In light of this unmet need, new non-invasive methods for the diagnosis of NASH have been developed or are currently under development. Amongthose, MRS is a validated, commonly used and non-invasive technique for in-vivo fat quantification. According to an article in the Journal of Hepatology in2004, MRS is routinely used for measuring triglycerides and potentially other liver fat components and is increasingly being used as an endpoint in clinicaltrials and observational studies, as is the case in our ARREST Study of aramchol. If we are successful in our clinical trials in correlating fat reduction in theliver as measured by MRS with aramchol’s effect on inflammation in the liver, MRS may become a non-invasive biomarker with the ability to measure theeffect of aramchol in patients following treatment with the drug. However, MRS does not measure inflammation, and thus the need for additional markers must still be addressed. As such, there is currently agrowing interest in clinical prediction algorithms and biomarkers, such as the NAFLD fibrosis score, Enhanced Liver Fibrosis panel score and circulatingbiomarkers, such as CK-18, which is a marker of inflammation. 60Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Recognizing this unmet need, we are collaborating with OWL, which developed the proprietary OWL LIVERTest®, a test seeking to stratify patientsaccording to their metabolites profile. By correlating the findings of OWL LIVERTest® with liver biopsies in the patients enrolled in our studies, we areworking towards finding a specific non-invasive test which would predict individual responses to aramchol, which we believe could increase the likelihoodof success of our Phase III trials and facilitate the market adoption of aramchol, although there is no assurance. On February 6, 2015, we entered into a termsheet with OWL with respect to the foregoing. See “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, ResearchArrangements and other Material Agreements—OWL.” We hope that our efforts will lead to the identification of specific biomarkers, which will differentiate NASH from NAFLD patients without the needfor liver biopsy, and serve as a tool for the prediction and assessment of aramchol’s efficacy. The identification of such specific biomarkers would greatlyimprove aramchol’s chances of qualifying for reimbursement from third-party payors, by providing an indication of the patients who are most likely tobenefit from treatment with aramchol. We do not expect to generate any revenue directly from such biomarkers. Strategic Collaborations, Research Arrangements and other Material Agreements OWL On February 6, 2015, we entered into a non-binding term sheet with OWL, or the OWL Term Sheet, with respect to developing a companiondiagnostic tool that would predict individual responses to aramchol, which we believe could increase the likelihood of success of our Phase III trials andfacilitate the market adoption of aramchol. Pursuant to the OWL Term Sheet, we or GRD have an option, which is exercisable at any time until December 31,2016, to obtain a worldwide, exclusive license for all indications for a companion diagnostic based on OWL liver technologies, or OWLiverGAL.OWLiverGAL is intended to be a set of biomarkers detectable in the plasma or serum of patients suffering from NAFLD/NASH that will allow physicians andother authorities to treat and follow-up with the patients without the need for a liver biopsy. The OWL Term Sheet provides that we and OWL will use ourbest efforts to enter into definitive agreements within four months following a two month due diligence period. We may terminate the OWL Term Sheet uponthirty days’ prior written notice to OWL. Upon execution of the OWL Term Sheet, we advanced to OWL €50,000, which is to be applied by OWL to research and development as set forth inthe work plan included in the OWL Term Sheet. If we enter into a definitive agreement with OWL, then at such time we will fund the first year of the workplan, less a credit for the €50,000 that we already advanced to OWL. Additionally, we will fund the second year of the work plan on a quarterly basis inadvance of each applicable quarter. We have also agreed to make certain milestone payments to OWL in the amounts of €75,000 and €100,000 uponobtaining successful interim results of the ARREST Study and the successful completion of the ARREST Study, respectively, and in return for such milestonepayments, OWL will issue us a corresponding number of OWL’s shares of common stock. Furthermore, we will have the option to purchase additional sharesof OWL’s common stock during any of OWL’s subsequent financing rounds on the same terms and conditions as the most senior class of shareholdersparticipating in such financing round. If aramchol becomes commercially available, we will pay OWL 10% of the cash payments we receive for the sale of theOWLiverGAL kit. We will own any new intellectual property associated with the companion diagnostic for aramchol that results from our collaboration withOWL. Itamar Medical Ltd. On September 29, 2014, we purchased 60 EndoPAT™ devices and accessories from, and entered into a collaboration with, Itamar to include anassessment of endothelial, or arterial, function in our ARREST Study of aramchol in NASH patients suffering from obesity and insulin resistance. Thepurchase price for the EndoPAT™ devices and accessories was approximately $750,000. 61Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Aventis Pharma Deutschland GmbH In September 2002, we entered into an agreement, which we refer to as the Aventis Agreement, with Aventis, which merged with Sanofi S.A. and thecompany is now called Sanofi S.A., in connection with the settlement of court proceedings regarding an invention covered by Israeli patent application123998 and PCT/IL99/00173. The invention relates to certain FABACs, pharmaceutical compositions containing FABACs and the use of FABACs fordissolving cholesterol gallstones in bile and preventing the formation thereof, as well as for the prevention and reduction of atherosclerosis, or the hardeningof the arteries. Such court proceedings resulted from a claim filed by us and Prof. Tuvia Gilat, our founder, in the Tel- Aviv District Court seeking adeclaratory judgment that Prof. Gilat was the sole inventor of the invention and the owner of all rights in and to the invention and the patent application withrespect thereto, and that neither Aventis nor anyone on its behalf has any rights in or to the invention or such patent application. We filed the claim with Prof.Gilat based on assertions by Aventis that it had certain rights to the invention as a result of the participation of one of its employees in the discovery of thesame. Under the Aventis Agreement, Aventis agreed that we had the exclusive worldwide right to commercialize the invention and we agreed to pay Aventisa royalty of 10% in respect of all income that we or our affiliates may receive from the commercialization of such invention for the prevention and treatmentof cholesterol gallstones (less certain standard deductions, including taxes, credits, allowances, rebates, freight and insurance costs), for as long as there is avalid patent or pending patent application covering such invention. Once all valid patents covering the invention expire, which will occur in 2018, andprovided that one of Aventis’ other patents that covers an aspect of the invention is still valid and has received marketing approval prior to the expiration ofall the patents covering the invention, the royalty will be reduced to 5%. The Aventis Agreement does not contain any diligence obligations that require us to exert any special efforts to develop a product for theprevention and treatment of cholesterol gallstones, nor are we contractually required to meet any milestones in respect of the development orcommercialization of the invention. We have not yet paid, nor do we currently owe, any amounts to Aventis under the Aventis Agreement. Perrigo API Ltd. On January 28, 2015, the Company entered into a Manufacturing Services Agreement, or the Perrigo Agreement, with Perrigo API Ltd., or Perrigo, asubsidiary of Perrigo Company plc, for, among other things, the large-scale production of aramchol’s API and the scale-up and manufacturing processoptimization for large-scale production of the aramchol API. As such, the Company is currently in the process of transferring the development and scale-upprocess of the manufacturing process from Cambridge Major Laboratories to Perrigo. Pursuant to the Perrigo Agreement, Perrigo will provide manufacturingprocess optimization services for large-scale production of the aramchol API, manufacture the aramchol API pursuant to current good manufacturingpractices, or cGMP, and perform additional development services regarding scale-up and manufacturing optimization for the aramchol API. In considerationfor the services to be provided by Perrigo, the Company agreed to pay in accordance with the Perrigo Agreement a maximum aggregate amount ofapproximately $3.6 million U.S. dollars to Perrigo. The Perrigo Agreement also provides Perrigo, under certain circumstances, with the option to manufacturecommercial supplies of the aramchol API in the future. University of California, San Diego On February 2015, we entered into an Investigator Initiated Trial Agreement with the University of California, San Diego to conduct the LD Study.The LD Study principle investigator is Dr. Rohit Loomba, a member of our scientific advisory board. The LD Study will be a single center, randomized,double blinded, placebo-controlled study. The LD Study is designed to evaluate the efficacy of a 600 mg oral, daily dosing of aramchol in HIV-positivepatients with lipodystrophy and nonalcoholic fatty liver disease over 16 weeks of treatment. The primary endpoint of the trial is the improvement of hepaticsteatosis assessed by MRS. The secondary endpoint includes the improvement of total body fat content and serum alanine aminotransferase and aspartateaminotransferase. Competition The pharmaceutical industry is characterized by rapidly evolving technology, intense competition and a highly risky, costly and lengthy researchand development process. Adequate protection of intellectual property, successful product development, adequate funding and retention of skilled,experienced and professional personnel are among the many factors critical to success in the pharmaceutical industry. We believe that aramchol offers key potential advantages over other drugs in development that could enable aramchol, if approved for theseindications, to capture meaningful market share. We believe that aramchol’s ability, as observed in our studies to date, to reduce liver fat content withoutadverse side effects, which we believe may prove to have an anti-inflammatory effect, and convenient once-daily oral administration make aramchol apotentially valuable drug for the treatment of liver disease. 62Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Other companies, including Intercept Pharmaceuticals, Inc., Genfit S.A. and Gilead Sciences, Inc. have agonists and antibodies in Phase II or earlierstages of clinical development for the treatment of NASH and the fibrosis associated therewith. Antibodies cannot be delivered orally. Some of thesecompanies are focusing their trials on NASH patients with advanced fibrosis, whereas our studies relate to NASH, or the onset of fat accumulation in andinflammation of the liver, in which we expect that aramchol will reduce and eventually eliminate liver inflammation by reducing the fat content of the liver. We believe that the characteristics of aramchol, as exhibited in our clinical studies to date, including its convenient once-daily oral administrationand lack of observable adverse side effects, position it well against the potential competition in the NASH market. Currently used treatments are not approvedby applicable regulatory authorities for the indication they are prescribed or used for as they have not proven efficacious in well-designed clinical studies. Inaddition, drugs in development for the treatment of NASH may, according to published data, be injectable or require intravenous delivery and may cause sideeffects, such as dyslipidemia, or an abnormal amount of lipids in the blood, severe itching, which can be highly inconvenient for patients with chronicdiseases, such as NASH, and which may result in low patient compliance. Aside from laparoscopic cholecystectomy surgery, the only therapeutic product available for the treatment of cholesterol gallstones and for theprevention of cholesterol gallstones in selected cases, is the bile acid known as ursodeoxycholic acid, both of which have been shown in clinical studies tohave low efficacy, slow action and are characterized by cholesterol gallstone recurrence. We are not aware of any other company that has a new productcandidate in development for the treatment of cholesterol gallstones. Our preclinical studies demonstrated that aramchol prevents and treats cholesterolgallstones without adverse effects, and we currently have an ongoing proof-of-concept Phase IIa clinical trial for the treatment of patients with cholesterolgallstones. Notwithstanding the foregoing, see “Item 3. Key Information—Risk Factors—Risks Related to Our Business, Industry and Regulatory Requirements—Our market is subject to intense competition. If we are unable to compete effectively, aramchol or any other product candidate that we develop may berendered noncompetitive or obsolete.” Intellectual Property and Patent Strategy The proprietary nature of, and protection for, our product candidates and our discovery programs, processes and know-how are important to ourbusiness. We own patent rights to aramchol in various jurisdictions worldwide, including within and outside of Israel. We have sought patent protection inthe United States and internationally for aramchol and our discovery programs, and any other inventions to which we have rights, where available and whenappropriate. We expect that patent protection covering the use of aramchol for the treatment of fatty liver will not expire until 2022 (2021 in Israel), subjectto any applicable extensions then-available. Within Israel, we agreed to negotiate the grant of an exclusive license to Unipharm Ltd., or Unipharm, withrespect to the use of patents within our first patent family covering the composition of matter of aramchol on to-be-agreed upon terms and conditions. We arenot in negotiations with Unipharm and no definitive agreement has been executed as of the date hereof. Should we decide to commercialize aramchol for thetreatment and prevention of cholesterol gallstones in any country of the world, we will be obligated to pay Aventis a 10% royalty on related sales. See “Item4. Information on the Company—Business Overview—Potential Use of Aramchol to Treat Cholesterol Gallstones”, “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, Research Arrangements and other Material Agreements.” and “Item 10. Additional Information—MaterialContracts.” Our policy is to pursue, maintain and defend patent rights, whether developed internally or licensed from third parties, and to protect thetechnology, inventions and improvements that are commercially important to the development of our business. We also rely on trade secrets that may beimportant to the development of our business. Patent Portfolio for Aramchol (First-in-Class Synthetic FABAC) The patent portfolio for aramchol contains patents and pending patent applications directed to composition of matter, manufacturing methods andmethods of use. As of February 5, 2015, we own five U.S. patents, one pending U.S. patent application and corresponding foreign patents and pending patentapplications, as detailed below. We have also recently filed a PCT patent application for second generation FABAC compounds. 63Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The first patent family discloses and claims FABACs, including aramchol, as well as methods for preventing or dissolving cholesterol gallstones inbile and reducing or preventing arteriosclerosis using FABACs. This patent family includes three issued U.S. patents and an issued European patent that wasvalidated in Austria, Belgium, Cyprus, Denmark, Finland, France, Germany Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Monaco, Netherlands,Portugal, Romania, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. Corresponding patents have been granted in Australia, Brazil, Canada,China, Czech Republic, Eurasia, Hungary, Indonesia, Israel, Japan, Korea, Mexico, New Zealand, Norway, Poland, Turkey and the Ukraine. Foreign patentapplications are pending in the Czech Republic and Norway, and patent applications in Brazil and Hungary have been allowed. If the appropriatemaintenance, renewal, annuity or other governmental fees are paid, the non-extended patent term for this patent family is due to expire on March 25, 2019,with the exception of the Israeli patent, which is due to expire on April 8, 2018. The second patent family discloses and claims additional FABACs with different conjugation moieties, as well as the use of these and thecompounds disclosed in the first patent family above, including aramchol, in the treatment of fatty liver, reduction of serum cholesterol and treatment ofhyperglycemia and diabetes. This patent family includes a U.S. patent directed to the treatment of fatty liver and a U.S. patent directed to reduction of serumcholesterol by administering additional forms of FABACs. A Continuation-in-Part application is directed to the treatment of a disease or disorder associatedwith an altered glucose metabolism or insulin action, such as hyperglycemia, diabetes, insulin resistance and obesity. The application has been allowed withclaims directed to the treatment of hyperglycemia and diabetes. This patent family also includes two European patents that were validated in Austria,Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Monaco, Netherlands, Portugal, Spain, Sweden, Switzerland,Turkey and the United Kingdom, as well as patents in Australia, Canada, China, Czech Republic, Eurasia, Indonesia, Japan, Korea, Israel, Mexico, NewZealand, Norway, Poland and the Ukraine. Foreign patent applications are pending in Hungary and the Czech Republic. If the appropriate maintenance,renewal, annuity or other governmental fees are paid, the non-extended patent term for this patent family is due to expire on April 15, 2022, with theexception of the Israeli patent, which is due to expire on April 17, 2021. The terms of the U.S. patents in this family have been extended due to patent termadjustments of 567 days for U.S. Patent 7,501,403, which is directed to the treatment of fatty liver, and 24 days for U.S. Patent 8,110,564, which is directed toreduction of serum cholesterol. A third patent family that is due to expire on February 1, 2030, discloses the use of FABACs in the treatment, prevention and inhibition ofprogression of Alzheimer’s Disease, cerebral amyloid angiopathy and other brain diseases characterized by amyloid plaque deposits. This patent familyincludes pending patent applications in the United States, Europe (decision to grant issued) and Israel. A fourth patent family, including one PCT patent application, discloses and claims second generation FABAC compounds. A fifth patent family, including one provisional patent application, covers the use of aramchol for the treatment of lipodystophy. It is possible that the term of the patents issued in the United States within our first patent family, which includes the composition of matter patents,may be extended up to five additional years under the provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act. Patent term extension or supplementary protection certificates may be available in certain foreign countries upon regulatory approval.Independent of patent term extensions, five years of data exclusivity may be provided for this patent in the United States automatically from the day ofreceiving FDA approval of an NCE in the United States. If the Company pursues commercialization of aramchol in other jurisdictions, longer periods of dataexclusivity may pertain. 64Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and futureproduct candidates and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party challenges.Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent to which we have rights undervalid and enforceable patents or trade secrets that cover these activities. We believe that our patents provide broad and comprehensive coverage for the use ofaramchol for the treatment of certain liver diseases. However, the patent positions of biopharmaceutical companies, such as ourselves, are generally uncertainand involve complex legal and factual questions. Our ability to maintain and solidify our proprietary position for the technology will depend on our successin obtaining effective claims and enforcing those claims once granted. There is no certainty that any of the Company’s pending patent applications willresult in the issuance of any patents. The issued patents and those that may be issued in the future, may be challenged, narrowed, circumvented or found to beinvalid or unenforceable, which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that wemay have for our products. In addition, our competitors may independently develop similar technologies or duplicate any technology developed by us, andthe rights granted under any issued or future patents may not provide us with any meaningful competitive advantages against these competitors. Furthermore,because of the extensive time required for development, testing and regulatory review of a potential product, before any of our products can becommercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage ofsuch patent. For more risks associated with the protection of our licensed intellectual property, see “Item 3. Key Information—Risk Factors—Risks Related toOur Intellectual Property.” Trade Secrets In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. Trade secrets and know-how can bedifficult to protect. We seek to protect our proprietary processes, in part, by confidentiality agreements and invention assignment agreements with ouremployees, consultants, scientific advisors, contractors and commercial partners. These agreements are designed to protect our proprietary information. Wealso seek to preserve the integrity and confidentiality of our data, trade secrets and know-how by maintaining physical security of our premises and physicaland electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, such agreementsor security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known orbe independently discovered by competitors or others. Seasonality Our business and operations are generally not affected by seasonal fluctuations or factors. Raw Materials and Suppliers We believe that the raw materials that we require to manufacture aramchol are readily available commodities commonly used in the pharmaceuticalindustry. Demand for certain of the required raw materials, such as cholic acid, has recently increased, resulting in a price increase. Although there is noassurance, we anticipate that the price levels of cholic acid will revert back to prior levels and will not experience continued volatility as a result of theentrance of additional manufacturers into the cholic acid market. Manufacturing We do not own or operate manufacturing facilities for the production of our product candidates, nor do we have plans to develop our ownmanufacturing operations in the foreseeable future. We currently rely on third-party contract manufacturers for all of our required raw materials, API andfinished product for our preclinical research and clinical trials, including our ARREST Study for aramchol for the treatment of NASH. We do not have long -term agreements with any of these third parties. We also do not have any current contractual relationships for the manufacture of commercial supplies of ourproduct candidate if it is approved; however, the Perrigo Agreement (as described below) provides Perrigo with the option to negotiate an exclusivecommercial contract for the manufacture of commercial supplies of the aramchol API in the future for a minimum term of five years. If our product candidateor future product candidates are approved by any regulatory agency, we intend to enter into agreements with a third-party contract manufacturer and one ormore back-up manufacturers for the commercial production of those products. Development and commercial quantities of any products that we develop willneed to be manufactured in facilities, and by processes, that comply with the requirements of the FDA and the regulatory agencies of other jurisdictions inwhich we are seeking approval. We currently employ internal resources to manage our manufacturing contractors. The relevant manufacturers of our drugproducts for our current preclinical and clinical trials have advised us that they are compliant with both cGMP and current Good Laboratory Practices, orcGLP. 65Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. There can be no assurance that our product candidate, if approved, can be manufactured in sufficient commercial quantities, in compliance withregulatory requirements and at an acceptable cost. We and our contract manufacturers are, and will be, subject to extensive governmental regulation inconnection with the manufacture of any pharmaceutical products or medical devices. We and our contract manufacturers must ensure that all of the processes,methods and equipment are compliant with cGMP and cGLP for drugs on an ongoing basis, as mandated by the FDA and other regulatory authorities, andconduct extensive audits of vendors, contract laboratories and suppliers. We currently use Cambridge Major Laboratories, a leading provider of chemistry services to the global pharmaceutical industry, to develop andmanufacture aramchol clinical API. However, on January 28, 2015, we entered into the Perrigo Agreement with Perrigo, a subsidiary of Perrigo Company plc,for, among other things, the large-scale production of aramchol’s API and the scale-up and manufacturing process optimization for large-scale production ofthe aramchol API. As such, the Company is currently in the process of transferring the development and scale-up of the manufacturing process fromCambridge Major Laboratories to Perrigo. See “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, ResearchArrangements and other Material Agreements—Perrigo API Ltd.” for a more information regarding the Perrigo Agreement. Contract Research Organizations We outsource certain clinical trial activities to CROs. Our clinical CROs comply with guidelines from the International Conference onHarmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, which attempt to harmonize the FDA, the EMA, and thePharmaceuticals and Medical Devices Agency of Japan regulations and guidelines. We create and implement the drug development plans and manage theCROs according to the specific requirements of the drug candidate under development. To the extent clinical research is overseen by the CROs (or us in thefuture), compliance with certain federal regulations, including but not limited to 21 C.F.R. parts 50, 54, 56, 58 and 312, which pertain to, among other things,IRBs, informed consent, financial conflicts of interest by investigators, correct administration of treatment, follow up of adverse events, good laboratorypractices and submitting IND applications, may be required. Marketing, Sales and Commercialization Given our stage of development, we do not have any internal sales, marketing or distribution infrastructure or capabilities. In the event we receiveregulatory approval for aramchol, we intend, where appropriate, to pursue commercialization relationships, including strategic alliances and licensing, withpharmaceutical companies and other strategic partners, which are equipped to market and/or sell our products, if any, through their well-developed sales,marketing and distribution organizations in order to gain access to global markets. In addition, we may out-license some or all of our worldwide patent rightsto more than one party to achieve the fullest development, marketing and distribution of any products we develop. Over the longer term, we may considerultimately building an internal marketing, sales and commercial infrastructure. Environmental Matters We, our agents and our service providers, including our manufacturers, may be subject to various environmental, health and safety laws andregulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous,radioactive and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, operations and facilities, including, toour knowledge, those of our agents and service providers, are being operated in compliance in all material respects with applicable environmental and healthand safety laws and regulations. All information with respect to any chemical substance is filed and stored as a Material Safety Data Sheet, as required byapplicable environmental regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have amaterial adverse effect on us. However, significant expenditures could be required in the future if we, our agents or our service providers are required tocomply with new or more stringent environmental or health and safety laws, regulations or requirements. 66Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Government Regulation and Product Approval Governmental authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things,the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing and export and import ofproducts such as those we are developing. Our product candidates must be approved by the FDA through the NDA process before they may be legallymarketed in the United States and by the Committee on Human Medicinal Products, or CHMP, via the EMA and European Commission through the MAAprocess before they may be legally marketed in Europe. Our product candidate and future product candidates will be subject to similar requirements in othercountries prior to marketing in those countries. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state,local and foreign statutes and regulations require the expenditure of substantial time and financial resources. We are conducting a global development program for aramchol for the treatment of NASH in patients who also suffer from obesity and insulinresistance, and we may make our submissions for regulatory approval in parallel; initially in Europe and in the United States. Typically, approval time in theUnited States with the FDA for an NDA is faster than that within Europe with the EMA and the European Commission for an MMA, especially when thenovelty of the submission is considered. First in class, high medical need and rare disease drugs can experience faster review. Nevertheless, marketing andpricing approval presents a further delay in many countries that should be considered in addition to the regulatory approvals noted above. United States Government Regulation NDA Approval Processes In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and implementing regulations. Failureto comply with the applicable U.S. requirements at any time during the product development process or approval process, or after approval, may subject anapplicant to administrative or judicial sanctions, any of which could have a material adverse effect on us. These sanctions could include refusal to approvepending applications, withdrawal of an approval, imposition of a clinical hold, warning letters, product seizures, total or partial suspension of production ordistribution, or injunctions, fines, disgorgement, and civil or criminal penalties. The process required by the FDA before a drug may be marketed in the United States generally involves the following: ·completion of nonclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices, orGLPs, or other applicable regulations; ·submission to the FDA of an IND application, which must become effective before human clinical trials may begin; ·performance of adequate and well-controlled human clinical trials according to Good Clinical Practices, or GCPs, to establish the safety andefficacy of the proposed drug for its intended use; ·submission to the FDA of an NDA; ·satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assesscompliance with current Good Manufacturing Practices, or cGMPs, to assure that the facilities, methods and controls are adequate topreserve the drug’s identity, strength, quality and purity; ·satisfactory completion of FDA inspections of clinical sites and GLP toxicology studies; and ·FDA review and approval of the NDA. 67Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our productcandidates will be granted on a timely basis, if at all. Once a product candidate is identified for development, it enters the preclinical or nonclinical testing stage. Preclinical tests include laboratoryevaluations of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, togetherwith manufacturing information and analytical data, to the FDA as part of the IND. Some preclinical testing may continue after the IND is submitted. Inaddition to including the results of the nonclinical studies, the IND will also include a clinical trial protocol detailing, among other things, the objectives ofthe clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the first phase lends itself to an efficacydetermination. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the IND onclinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin. A clinical hold may occurat any time during the life of an IND, due to safety concerns or non-compliance, and may affect one or more specific studies or all studies conducted under theIND. All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs and relevant FDAregulations. These regulations include the requirement that all research subjects provide informed consent. Further, an IRB must review and approve the planfor any clinical trial before it commences at any institution. An IRB considers, among other things, whether the risks to individuals participating in the trialsare minimized and are reasonable in relation to anticipated benefits. The IRB also approves the information regarding the trial and the consent form that mustbe provided to each trial subject or his or her legal representative and must monitor the study until completed. All clinical trials must be conducted underprotocols detailing the objectives of the trial, dosing procedures, research subject inclusion and exclusion criteria and the safety and effectiveness criteria tobe evaluated. Each protocol must be submitted to the FDA as part of the IND, and progress reports detailing the status of the clinical trials must be submittedto the FDA annually. Sponsors must also report within set timeframes to FDA serious and unexpected adverse reactions, any clinically important increase inthe rate of a serious suspected adverse reaction over that listed in the protocol or investigation brochure, or any findings from other studies or animal or in-vitro testing that suggest a significant risk in humans exposed to the drug. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: ·Phase I. The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism,distribution and elimination. In the case of some products for severe or life-threatening diseases, such as cancer, especially when theproduct may be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. ·Phase II. Clinical trials are performed on a limited patient population intended to identify possible adverse effects and risks, topreliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. ·Phase III. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population atgeographically dispersed clinical study sites. Phase III clinical trials are conducted to provide sufficient data for the statistically validevidence of safety and efficacy. Human clinical trials are inherently uncertain and Phase I, Phase II and Phase III testing may not be successfully completed. The FDA or the sponsormay suspend a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to anunacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted inaccordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. 68Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to thesubmission of an IND, at the end of Phase II and before an NDA is submitted. Meetings at other times may be requested. These meetings can provide anopportunity for the sponsor to share information about the data gathered to date and for the FDA to provide advice on the next phase of development.Sponsors typically use the meeting at the end of Phase II to discuss their Phase II clinical results and present their plans for the pivotal Phase III clinical trialthat they believe will support the approval of the NDA. If a Phase II clinical trial is the subject of discussion at the end of Phase II meeting with the FDA, asponsor may be able to request a Special Protocol Assessment, or SPA, the purpose of which is to reach agreement with the FDA on the Phase III clinical trialprotocol design and analysis that will form the primary basis of an efficacy claim. According to published guidance on the SPA process, a sponsor which meets the prerequisites may make a specific request for an SPA and provideinformation regarding the design and size of the proposed clinical trial. The FDA is supposed to evaluate the protocol within 45 days of the request to assesswhether the proposed trial is adequate, and that evaluation may result in discussions and a request for additional information. An SPA request must be madebefore the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it will be documented andmade part of the record. The agreement will be binding on the FDA and may not be changed by the sponsor or the FDA after the trial begins except with thewritten agreement of the sponsor and the FDA or if the FDA determines that a substantial scientific issue essential to determining the safety or efficacy of thedrug was identified after the testing began. There is no indication that we will be able to meet the requirements necessary for an SPA. Concurrent with clinical trials, sponsors usually complete any remaining animal safety studies and also develop additional information about thechemistry and physical characteristics of the drug and finalize a process for manufacturing commercial quantities of the product in accordance with cGMPrequirements. The manufacturing process must be capable of consistently producing quality batches of the drug and the manufacturer must develop methodsfor testing the quality, purity and potency of the drug. Additionally, appropriate packaging must be selected and tested and stability studies must beconducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its proposed shelf-life. The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests andother control mechanisms, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market theproduct. The submission of an NDA is subject to the payment of user fees, but a waiver of such fees may be obtained under specified circumstances. We willseek a waiver of these fees as a small company submitting its first marketing application. If the waiver is granted it would not extend to establishment orproduct fees. The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. It mayrequest additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. Theresubmitted application also is subject to review before the FDA accepts it for filing. In addition, under the Pediatric Research Equity Act, or PREA, an NDA or supplement to an NDA must contain data to assess the safety andeffectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatricsubpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Submission of a pediatricassessment is not required for an application to market a product for an orphan-designated indication, and waivers are not needed at this time. However, ifonly one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for thenon- orphan indication(s). Once the submission is accepted for filing, the FDA begins an in-depth review. NDAs receive either standard or priority review. A drug representing asignificant improvement in treatment, prevention or diagnosis of disease may receive priority review. The FDA may refuse to approve an NDA if theapplicable regulatory criteria are not satisfied or may require additional clinical or other data. Even if such data are submitted, the FDA may ultimately decidethat the NDA does not satisfy the criteria for approval. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective forits intended use and whether its manufacturing is cGMP-compliant. The FDA may refer the NDA to an advisory committee for review and recommendation asto whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but itgenerally follows such recommendations. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured andtested. The FDA will also inspect selected clinical sites that participated in the clinical studies and may inspect the testing facilities that performed the GLPtoxicology studies cited in the NDA. 69Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Expedited Review and Approval NDAs receive either standard or priority review. A drug representing a significant improvement in treatment, prevention or diagnosis of disease mayreceive priority review. The FDA has various specific programs, including Fast Track, Breakthrough Therapy, Accelerated Approval and Priority Review,which are each intended to expedite the process for reviewing drugs, and in certain cases involving Accelerated Review, permit approval of a drug on thebasis of a surrogate endpoint. Even if a drug qualifies for one or more of these programs, the FDA may later decide that the drug no longer meets theconditions for qualification or that the time period for FDA review or approval will be shortened. Generally, drugs that are eligible for these programs arethose for serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existingtreatments. For example, Fast Track is a process designed to facilitate the development and expedite the review of drugs to treat serious or life-threateningdiseases or conditions and fill unmet medical needs, and Breakthrough Therapy designation is designed to expedite the development and review of drugsthat are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement overavailable therapy on a clinically significant endpoint(s). Priority review is designed to give drugs that offer major advances in treatment or provide atreatment where no adequate therapy exists an initial review within six months as compared to a standard review time of ten months. Although Fast Track,Breakthrough Therapy designation and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent meetingswith a sponsor of a Fast Track or Breakthrough Therapy designated drug and expedite review of the application for a drug designated for priority review. TheFDA will also provide Breakthrough Therapy designated drugs intensive guidance on an efficient drug development program and provide these drugdevelopers with an organizational commitment from the FDA involving senior managers. Since sponsors can design clinical trials in a number of ways, inproviding its guidance for drugs designated as breakthrough therapies, the FDA will seek to ensure that the sponsor of the product designated as abreakthrough therapy receives timely advice and interactive communications in order to help the sponsor design and conduct a development program asefficiently as possible. During these interactions, the FDA may suggest, or a sponsor can propose, alternative clinical trial designs (e.g., adaptive designs, anenrichment strategy, use of historical controls) that may result in smaller trials or more efficient trials that require less time to complete. Such trial designscould also help minimize the number of patients exposed to a potentially less efficacious treatment (i.e., the control group treated with available therapy).Accelerated Approval, which is described in 21 C.F.R. § 314.500 et seq., provides for an earlier approval for a new drug that is intended to treat a serious orlife-threatening disease or condition and that fills an unmet medical need based on a surrogate endpoint. A surrogate endpoint is a laboratory measurement orphysical sign used as an indirect or substitute measurement representing a clinically meaningful outcome. As a condition of approval, the FDA may requirethat a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post- marketing clinical trials. Priority Review and AcceleratedApproval do not change the standards for approval, but may expedite the approval process. If a product receives regulatory approval, the approval may be significantly limited to specific diseases, subpopulations, and dosages or theindications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require us to conduct PhaseIV testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing andsurveillance programs to monitor the safety of approved products which have been commercialized. Food and Drug Administration (FDA) Regulatory Pathways The FDA has two main pathways for drug development. The first pathway is the “regular” or “traditional” pathway for drug approval, in which adrug is approved based on either a clinical benefit endpoint or a surrogate endpoint that is known to predict clinical benefit on irreversible morbidity ormortality. A clinical endpoint is one that affects how a patient feels, functions or survives. The second option is the Accelerated Approval Pathway (21 CFR 314.510 and 601.41, Subpart H and E). Accelerated approval applies to drugs andbiologics that are intended to treat serious and life threatening illness AND that provide meaningful therapeutic benefit over existing treatments. 70Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Accelerated approval is based on effects of a surrogate endpoint that is “reasonably likely, based on epidemiologic, therapeutic, pathophysiologic,or other evidence to predict benefit” on irreversible morbidity or mortality. The Agency may grant accelerated approval to a product for a serious or life-threatening condition upon a determination that the product 1) has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or, 2)an effect on a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality and is reasonably likely to predict an effecton irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability orlack of alternative treatments. The term “reasonable likely” implies that some uncertainty remains about the relationship of the surrogate to the clinicalbenefit to the patient. Therefore, accelerated approval is usually contingent on a sponsor’s agreement to conduct additional post-approval studies to verifyand describe the drug’s clinical benefit. This regulatory pathway requires that when marketing approval is granted based on the surrogate, or a clinicalendpoint other than survival or irreversible morbidity, clinical trials must be carried out after marketing approval to verify and describe the drug’s clinicalbenefit. The preamble to the Accelerated Approval Rule, (Federal Register/Vol.57, No.239/Friday. December 11, 1992/Rules and Regulations),acknowledged that surrogate endpoints can be used for regular or traditional approval when these surrogates are validated by definitive studies. It states that“Ordinarily, products used to treat serious or life-threatening illness, for which approval is based on a surrogate endpoint that is recognized as validated bydefinitive studies, will be considered for approval under the traditional process rather that under accelerated approval.” The Agency’s draft Guidance forIndustry - Expedited Programs for Serious Conditions––Drugs and Biologics(http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM35 8301.pdf) states: “For purposes of acceleratedapproval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predictclinical benefit, but is not itself a measure of clinical benefit. Depending on the strength of the evidence supporting the ability of a marker to predict clinicalbenefit, the marker may be a surrogate endpoint that is known to predict clinical benefit (a validated surrogate endpoint, which could be used for traditionalapproval), a surrogate endpoint that is reasonably likely to predict a drug’s intended clinical benefit (which could be used for accelerated approval), or amarker for which there is insufficient evidence to support reliance on the marker as either kind of surrogate endpoint (and thus cannot be used to supporttraditional or accelerated approval of a marketing application). Change in the rate of decline in renal function as measured by creatinine clearance, andchanges in blood pressure and Hg A1C have been accepted as validated surrogates to support traditional drug approvals. However, the preamble does notspecifically define the criteria for “validated by definitive studies” that allows a surrogate to be used for traditional approval. Therefore the level of evidencenecessary to determine if a surrogate is validated (i.e., acceptable for traditional or regular approval pathways), or if a surrogate is reasonably likely to predictclinical benefit is made on a case-by-case basis by the Agency. Whether an endpoint is reasonably likely to predict clinical benefit is a function of thebiological plausibility of the relationship between the disease, endpoint, and the desired effect, and the empirical evidence to support that relationship. Theempirical evidence may include “epidemiological, pathophysiological, therapeutic, pharmacologic, or other evidence developed using biomarkers, forexample, or other scientific methods or tools.” Clinical data should be provided to support the assertion that a relationship of the surrogate or intermediateclinical endpoint to the outcome is reasonably likely, and should be relevant to the relationship between the specific endpoint to be used and the specificintended clinical benefit of the drug. What is clear is that there are pitfalls with using surrogates, i.e., examples of where a plausible surrogate that showedimprovement with treatment resulted in an overall poor outcome for the patient. Some of these unexpected outcomes may be from off-target effects of a drug.Several things should be taken into consideration when evaluating a surrogate for use in the regular approval pathway. A surrogate that directly measurestissue loss or organ function e.g. liver failure is particularly plausible for use as an endpoint. Also helpful are the results of controlled trials that show therelationship of the effect on outcomes in trials of other drugs, especially trials involving drugs with different mechanisms, as is the case for example withantihypertensives. See Guidance “Expedited Programs for Serious Conditions––Drugs and Biologics”: http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM358301.pdf for further details. Asnoted above, surrogate endpoints can be used as part of the regular approval pathway if these endpoints have been validated by definitive trials to predictoutcomes on clinically meaningful endpoints. Surrogates may be used to support accelerated approval when there is not an established link of the surrogateto the clinical outcome. The long duration over which NASH evolves before patients develop clinical outcomes, and the inability to identify the populationthat will progress, creates a major challenge in designing and conducting clinical trials for those with early stage NASH. This challenge, however, does notdiminish the need to develop therapeutics in these patients, and identify who is at risk of progression, given the growing contribution of progressive NASH tothe burden of chronic liver disease. It is also important to identify endpoints that can be achieved within a reasonable time interval and that are reliablesurrogates for meaningful outcomes. Moreover, these endpoints should both reflect changes in the disease process and be ‘biologically plausible’, in otherwords, linked mechanistically to the disease’s pathogenesis. 71Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Liver histology currently offers the best short-term method for tracking the progression of NASH. Certain features on histopathology provide someprognostic information regarding risk for progression. Steatohepatitis, not isolated fatty liver, is associated with a substantial increase in the long-term risk ofdeveloping cirrhosis and liver-related outcomes (15, 35). This is believed to be related to the underlying inflammation and activation of pro-fibrogenicpathways in NASH. Based on this current understanding of the pathogenesis of NASH, one would expect that reversal of steatohepatitis would reduce the riskof developing cirrhosis. However, steatosis and inflammation can decrease as fibrosis advances (37). Therefore, the reversal of steatohepatitis with noevidence of progression to advanced fibrosis (stage 3 or 4), may be an acceptable surrogate endpoint suitable both for phase 2b and 3 trials that enrollpatients with NASH and evidence of early fibrosis. On September 23, 2014, the FDA granted Fast Track designation status to aramchol for the treatment of NASH. Patent Term Restoration and Marketing Exclusivity Depending upon the timing, duration and specifics of FDA approval of the use of our product candidates, U.S. patents may be eligible for limitedpatent term extension under the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patentterm lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patentbeyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of anIND, and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Only one patentapplicable to an approved drug is eligible for the extension and the application for extension must be made prior to expiration of the patent. The USPTO, inconsultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for restorationsof patent term for some of our currently owned patents to add patent life beyond their current expiration date, depending on the expected length of clinicaltrials and other factors involved in the submission of the relevant NDA. Market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five yearperiod of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is anew chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsiblefor the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all thedata required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement.The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an approved NDA if new clinical investigations,other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of theapplication, for example, for new indications, dosages or strengths of an existing drug. This three year exclusivity covers only the conditions associated withthe new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five year and three yearexclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain aright of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Post-approval Requirements Once an approval is granted, the FDA, European authorities and other regulatory authorities may withdraw the approval if compliance withregulatory requirements is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with aproduct may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of changes to theapproved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further regulatory authority reviewand approval. Some of these modifications, especially adding indications, would likely require additional clinical studies. In addition, the FDA may requiretesting and surveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limitfurther marketing of a product based on the results of these post-marketing programs. 72Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any drug product manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including, amongother things record-keeping requirements; reporting of adverse experiences with the drug; providing the FDA with updated safety and efficacy information;drug sampling and distribution requirements; notifying the FDA and gaining its approval of specified manufacturing or labeling changes; and complyingwith FDA promotion and advertising requirements. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishmentswith the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and some state agencies for compliance with cGMPand other laws. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products. Future FDA andstate inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or requiresubstantial resources to correct. From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing theapproval, manufacturing and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised or reinterpreted by theagency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDAregulations, guidance or interpretations changed or what the impact of such changes, if any, may be. Reimbursement Sales of our products will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as governmenthealth programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly challenging the prices charged formedical products and services. Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices ofdrugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of pricecontrols and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit ournet revenue and results. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover ourproducts after approved as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitablebasis. The Modernization Act imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries under Part B.Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescriptiondrugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans.Unlike Medicare Parts A and B, Part D reimbursement is not set by the government, but rather by private insurers. Moreover, Part D prescription drug plansponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will coverand at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs,though not necessarily all the drugs in each category or class. Recently, the Centers for Medicare & Medicaid Services proposed a rule that would enable PartD plans to offer fewer drugs than would otherwise be the case. The impact of this proposed rule on a product such as ours cannot be predicted at this time, butit could have a material adverse impact on our product were it being marketed at this time. Any formulary used by a Part D prescription drug plan must bedeveloped and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand forour products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likelybe lower than the prices we might otherwise obtain. Moreover, while the Modernization Act applies only to drug benefits for Medicare beneficiaries, privatepayors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from theModernization Act may result in a similar reduction in payments from non-governmental payors. 73Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to compare the effectiveness of differenttreatments for the same illness. A plan for the research will be developed by the Department of Health and Human Services, the Agency for HealthcareResearch and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures will be made toCongress. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or private payors, it is notclear what effect, if any, the research will have on the sales of any product, if any such product or the condition that it is intended to treat is the subject of astudy. It is also possible that comparative effectiveness research demonstrating benefits in a competitor’s product could adversely affect the sales of ourproduct candidates. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover ourproducts as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis. The Affordable Care Act, enacted in March 2010, is expected to have a significant impact on the health care industry. The Affordable Care Act isexpected to expand coverage for the uninsured while at the same time containing overall healthcare costs. With regard to pharmaceutical products, amongother things, the Affordable Care Act is expected to expand and increase industry rebates for drugs covered under Medicaid programs and make changes tothe coverage requirements under the Medicare Part D program. We cannot predict the impact of the Affordable Care Act on pharmaceutical companies. See“Item 3. Key Information—Risk Factors—Risks Related to Our Business, Industry and Regulatory Requirements—We expect the healthcare industry to faceincreased limitations on reimbursement, rebates and other payments as a result of healthcare reform, which could adversely affect third-party coverage of ourproducts and how much or under what circumstances healthcare providers will prescribe or administer our products.” In addition, in some non-U.S. jurisdictions, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirementsgoverning drug pricing vary widely from country to country. For example, the EU provides options for its member states to restrict the range of medicinalproducts for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A memberstate may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the companyplacing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations forpharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU donot follow price structures of the United States and generally tend to be significantly lower. Anti-Kickback and False Claims Laws In the United States, the research, manufacturing, distribution, sale and promotion of drug products and medical devices are potentially subject toregulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions ofthe U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice, state Attorneys General, and otherstate and local government agencies. For example, sales, marketing and scientific/educational grant programs must comply with the Medicare-MedicaidAnti-Fraud and Abuse Act, as amended (the “Anti-Kickback Statute”), the False Claims Act, as amended, the privacy regulations promulgated under theHealth Insurance Portability and Accountability Act, or HIPAA, and similar state laws. Pricing and rebate programs must comply with the Medicaid DrugRebate Program requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veterans Health Care Act of 1992, as amended. Ifproducts are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirementsapply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws. In the United States, we are subject to complex laws and regulations pertaining to healthcare “fraud and abuse,” including, but not limited to, theAnti-Kickback Statute, the federal False Claims Act, and other state and federal laws and regulations. The Anti- Kickback Statute makes it illegal for anyperson, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remunerationthat is intended to induce the referral of business, including the purchase, order, or prescription of a particular drug, for which payment may be made under afederal healthcare program, such as Medicare or Medicaid. 74Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (includingMedicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, orclaims for medically unnecessary items or services. There are also an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information. Many ofthese laws contain ambiguities as to what is required to comply with the laws. In addition, a similar federal requirement requires manufacturers to track andreport to the federal government certain payments made to physicians and teaching hospitals made in the previous calendar year. These laws may affect oursales, marketing, and other promotional activities by imposing administrative and compliance burdens on us. In addition, given the lack of clarity withrespect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state and federal authorities. European Economic Area In addition to approval in the United States, we currently intend to seek regulatory approval of aramchol in the EU. As such, a summary of the EUregulatory processes follows below. A medicinal product may only be placed on the market in the European Economic Area, or EEA, composed of the 28 EU member states, plusNorway, Iceland and Lichtenstein, when a marketing authorization has been issued by the competent authority of a member state pursuant to Directive2001/83/EC (as recently amended by Directive 2004/27/EC), or an authorization has been granted under the centralized procedure in accordance withRegulation (EC) No. 726/2004 or its predecessor, Regulation 2309/93. There are essentially three community procedures created under prevailing Europeanpharmaceutical legislation that, if successfully completed, allow an applicant to place a medicinal product on the market in the EEA. Centralized Procedure Regulation 726/2004/EC now governs the centralized procedure when a marketing authorization is granted by the European Commission, acting inits capacity as the European Licensing Authority on the advice of the EMA. That authorization is valid throughout the entire community and directly or (asto Norway, Iceland and Liechtenstein) indirectly allows the applicant to place the product on the market in all member states of the EEA. The EMA is theadministrative body responsible for coordinating the existing scientific resources available in the member states for evaluation, supervision andpharmacovigilance of medicinal products. Certain medicinal products, as described in the Annex to Regulation 726/2004, must be authorized centrally.These are products that are developed by means of a biotechnological process in accordance with Paragraph 1 to the Annex to the Regulation. Medicinalproducts for human use containing a new active substance for which the therapeutic indication is the treatment of acquired immune deficiency syndrome, orAIDS, cancer, neurodegenerative disorder or diabetes must also be authorized centrally. Starting on May 20, 2008, the mandatory centralized procedure wasextended to autoimmune diseases and other immune dysfunctions and viral diseases. Finally, all medicinal products that are designated as orphan medicinalproducts pursuant to Regulation 141/2000 must be authorized under the centralized procedure. An applicant may also opt for assessment through thecentralized procedure if it can show that the medicinal product constitutes a significant therapeutic, scientific or technical innovation or that the granting ofauthorization centrally is in the interests of patients at the community level. For each application submitted to the EMA for scientific assessment, the EMA isrequired to ensure that the opinion of the Committee for Medicinal Products for Human Use, or CHMP, is given within 210 days after receipt of a validapplication. This 210 days period does not include the time that the applicant to answer any questions raised during the application procedure, the so-called‘clock stop’ period. If the opinion is positive, the EMA is required to send the opinion to the European Commission, which is responsible for preparing thedraft decision granting a marketing authorization. This draft decision may differ from the CHMP opinion, stating reasons for diverging for the CHMPopinion. The draft decision is sent to the applicant and the member states, after which the European Commission takes a final decision. If the initial opinionof the CHMP is negative, the applicant is afforded an opportunity to seek a re-examination of the opinion. The CHMP is required to re-examine its opinionwithin 60 days following receipt of the request by the applicant. All CHMP refusals and the reasons for refusal are made public on the EMA website. Withouta centralized marketing authorization it is prohibited to place a medicinal product that must be authorized centrally on the market in the EU. 75Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Mutual Recognition and Decentralized Procedures With the exception of products that are authorized centrally, the competent authorities of the member states are responsible for granting marketingauthorizations for medicinal products placed on their national markets. If the applicant for a marketing authorization intends to market the same medicinalproduct in more than one member state, the applicant may seek an authorization progressively in the community under the mutual recognition ordecentralized procedure. Mutual recognition is used if the medicinal product has already been authorized in a member state. In this case, the holder of thismarketing authorization requests the member state where the authorization has been granted to act as reference member state by preparing an updatedassessment report that is then used to facilitate mutual recognition of the existing authorization in the other member states in which approval is sought (theso-called concerned member state(s)). The reference member state must prepare an updated assessment report within 90 days of receipt of a valid application.This report together with the approved Summary of Product Characteristics, or SmPC (which sets out the conditions of use of the product), and a labeling andpackage leaflet are sent to the concerned member states for their consideration. The concerned member states are required to approve the assessment report,the SmPC and the labeling and package leaflet within 90 days of receipt of these documents. The total procedural time is 180 days. The decentralized procedure is used in cases where the medicinal product has not received a marketing authorization in the EU at the time ofapplication. The applicant requests a member state of its choice to act as reference member state to prepare an assessment report that is then used to facilitateagreement with the concerned member states and the grant of a national marketing authorization in all of these member states. In this procedure, the referencemember state must prepare, for consideration by the concerned member states, the draft assessment report, a draft SmPC and a draft of the labeling andpackage leaflet within 120 days after receipt of a valid application. As in the case of mutual recognition, the concerned member states are required to approvethese documents within 90 days of their receipt. For both mutual recognition and decentralized procedures, if a concerned member state objects to the grant of a marketing authorization on thegrounds of a potential serious risk to public health, it may raise a reasoned objection with the reference member state. The points of disagreement are in thefirst instance referred to the Co-ordination Group on Mutual Recognition and Decentralized Procedures, or CMD, to reach an agreement within 60 days of thecommunication of the points of disagreement. If member states fail to reach an agreement, then the matter is referred to the EMA and CHMP for arbitration.The CHMP is required to deliver a reasoned opinion within 60 days of the date on which the matter is referred. The scientific opinion adopted by the CHMPforms the basis for a binding European Commission decision. Irrespective of whether the medicinal product is assessed centrally, de-centrally or through a process of mutual recognition, the medicinal productmust be manufactured in accordance with the principles of good manufacturing practice as set out in Directive 2003/94/EC and Volume 4 of the rules governing medicinal products in the European community. Moreover, community law requires the clinicalresults in support of clinical safety and efficacy based upon clinical trials conducted in the European community to be in compliance with the requirementsof Directive 2001/20/EC, which implements good clinical practice in the conduct of clinical trials on medicinal products for human use. Clinical trialsconducted outside the European community and used to support applications for marketing within the EU must have been conducted in a way consistentwith the principles set out in Directive 2001/20/EC. The conduct of a clinical trial in the EU requires, pursuant to Directive 2001/20/EC, authorization by therelevant national competent authority where a trial takes place, and an ethics committee to have issued a favorable opinion in relation to the arrangements forthe trial. It also requires that the sponsor of the trial, or a person authorized to act on his behalf in relation to the trial, be established in the community. 76Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. National Procedure This procedure is available for medicinal products that do not fall within the scope of mandatory centralized authorization. Specific procedures andtimelines differ between member states, but the duration of the procedure is generally 210 days and based on a risk/efficacy assessment by the competentauthority of the member state concerned, followed by determination of SmPC, package leaflet and label text/layout and subsequently grant of the marketingauthorization. Marketing authorizations granted on this basis are not mutually recognized by other member states. There are various types of applications for marketing authorizations: ·Full Applications. A full application is one that is made under any of the community procedures described above “stands alone” in thesense that it contains all of the particulars and information required by Article 8(3) of Directive 2001/83 (as amended) to allow thecompetent authority to assess the quality, safety and efficacy of the product and in particular the balance between benefit and risk. Article8(3)(l) in particular refers to the need to present the results of the applicant’s research on (i) pharmaceutical (physical-chemical, biologicalor microbiological) tests, (ii) preclinical (toxicological and pharmacological) studies and (iii) clinical trials in humans. The nature of thesetests, studies and trials is explained in more detail in Annex I to Directive 2001/83/EC. Full applications would be required for productscontaining new active substances not previously approved by the competent authority, but may also be made for other products. ·Abridged Applications. Article 10 of Directive 2001/83/EC contains exemptions from the requirement that the applicant provide the resultsof its own preclinical and clinical research. There are three regulatory routes for an applicant to seek an exemption from providing suchresults, namely (i) cross-referral to an innovator’s results without consent of the innovator, (ii) well established use according to publishedliterature and (iii) consent to refer to an existing dossier of research results filed by a previous applicant. Cross-referral to Innovator’s Data Articles 10(1) and 10(2)(b) of Directive 2001/83/EC provide the legal basis for an applicant to seek a marketing authorization on the basis that itsproduct is a generic medicinal product (a copy) of a reference medicinal product that has already been authorized, in accordance with community provisions.A reference product is, in principle, an original product granted an authorization on the basis of a full dossier of particulars and information. This is the mainexemption used by generic manufacturers for obtaining a marketing authorization for a copy product. The generic applicant is not required to provide theresults of preclinical studies and of clinical trials if its product meets the definition of a generic medicinal product and the applicable regulatory resultsprotection period for the results submitted by the innovator has expired. A generic medicinal product is defined as a medicinal product: ·having the same qualitative and quantitative composition in active substance as the reference medicinal product; ·having the same pharmaceutical form as the reference medicinal product; and ·whose bioequivalence with the reference medicinal product has been demonstrated by appropriate bioavailability studies. Applications in respect of a generic medicinal product cannot be made before the expiry of the protection period. Where the reference product wasgranted a national marketing authorization pursuant to an application made before October 30, 2005, the protection period is either six years or 10 years,depending upon the election of the particular member state concerned. Where the reference product was granted a marketing authorization centrally, pursuantto an application made before November 20, 2005, the protection period is 10 years. For applications made after these dates, Regulation 726/2004 andamendments to Directive 2001/83/EC provide for a harmonized protection period regardless of the approval route utilized. The harmonized protection periodis in total 10 years, including eight years of research data protection and two years of marketing protection. The effect is that the originator’s results can bethe subject of a cross-referral application after eight years, but any resulting authorization cannot be exploited for a further two years. The rationale of thisprocedure is not that the competent authority does not have before it relevant tests and trials upon which to assess the efficacy and safety of the genericproduct, but that the relevant particulars can, if the research data protection period has expired, be found on the originator’s file and used for assessment ofthe generic medicinal product. The 10 year protection period can be extended to 11 years where, in the first eight years post-authorization, the holder of theauthorization obtains approval for a new indication assessed as offering a significant clinical benefit in comparison with existing products. 77Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If the copy product does not meet the definition of a generic medicinal product or if certain types of changes occur in the active substance(s) or inthe therapeutic indications, strength, pharmaceutical form or route of administration in relation to the reference medicinal product, Article 10(3) of Directive2001/83/EC provides that the results of the appropriate preclinical studies or clinical trials must be provided by the applicant. Well-established Medicinal Use Under Article 10a of Directive 2001/83/EC, an applicant may, in substitution for the results of its own preclinical and clinical research, presentdetailed references to published literature demonstrating that the active substance(s) of a product have a well- established medicinal use within thecommunity with recognized efficacy and an acceptable level of safety. The applicant is entitled to refer to a variety of different types of literature, includingreports of clinical trials with the same active substance(s) and epidemiological studies that indicate that the constituent or constituents of the product have anacceptable safety/efficacy profile for a particular indication. However, use of the published literature exemption is restricted by stating that in nocircumstances will constituents be treated as having a well- established use if they have been used for less than 10 years from the first systematic anddocumented use of the substance as a medicinal product in the EU. Even after 10 years’ systematic use, the threshold for well-established medicinal use mightnot be met. European pharmaceutical law requires the competent authorities to consider among other factors the period over which a substance has been used,the amount of patient use of the substance, the degree of scientific interest in the use of the substance (as reflected in the scientific literature) and thecoherence (consistency) of all the scientific assessments made in the literature. For this reason, different substances may reach the threshold for well-established use after different periods, but the minimum period is 10 years. If the applicant seeks approval of an entirely new therapeutic use compared withthat to which the published literature refers, additional preclinical and/or clinical results would have to be provided. Informed Consent Under Article 10c of Directive 2001/83/EC, following the grant of a marketing authorization the holder of such authorization may consent to acompetent authority utilizing the pharmaceutical, preclinical and clinical documentation that it submitted to obtain approval for a medicinal product toassess a subsequent application relating to a medicinal product possessing the same qualitative and quantitative composition with respect to the activesubstances and the same pharmaceutical form. Law Relating to Pediatric Research Regulation (EC) 1901/2006 (as amended by Regulation (EC) 1902/2006) was adopted on December 12, 2006. This Regulation governs thedevelopment of medicinal products for human use in order to meet the specific therapeutic needs of the pediatric population. It requires any application formarketing authorization made after July 26, 2008 in respect of a product not authorized in the European Community on January 26, 2007 (the time theRegulation entered into force), to include the results of all studies performed and details of all information collected in compliance with a pediatricinvestigation plan agreed by the Pediatric Committee of the EMA, unless the product is subject to an agreed waiver or deferral or unless the product isexcluded from the scope of Regulation 1902/2006 (generics, hybrid medicinal products, biosimilars, homeopathic and traditional (herbal) medicinalproducts and medicinal products containing one or more active substances of well-established medicinal use). Waivers can be granted in certaincircumstances where pediatric studies are not required or desirable. Deferrals can be granted in certain circumstances where the initiation or completion ofpediatric studies should be deferred until appropriate studies in adults have been performed. The EMA does not evaluate an application for marketauthorization if there is no agreed PIP, deferral or waiver. Moreover, this regulation imposes the same obligation from January 26, 2009 on an applicantseeking approval of a new indication, pharmaceutical form or route of administration for a product already authorized and still protected by a supplementaryprotection certificate granted under Regulation EC 469/2009 and its precursor (EEC) 1768/92 or by a patent that qualifies for the granting of such asupplementary protection certificate. The pediatric Regulation 1901/2006 also provides, subject to certain conditions, a reward for performing such pediatricstudies, regardless of whether the pediatric results provided resulted in the grant of a pediatric indication. This reward comes in the form of an extension of sixmonths to the supplementary protection certificate granted in respect of the product, unless the product is subject to orphan drug designation, in which casethe 10 year market exclusivity period for such orphan products is extended to 12 years. If any of the non-centralized procedures for marketing authorizationhave been used, the six month extension of the supplementary protection certificate is only granted if the medicinal product is authorized in all memberstates. 78Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Post-authorization Obligations In the pre-authorization phase the applicant must provide a detailed pharmacovigilance plan that it intends to implement post- authorization. Anauthorization to market a medicinal product in the EU carries with it an obligation to comply with many post- authorization organizational and behavioralregulations relating to the marketing and other activities of authorization holders. These include requirements relating to post-authorization efficacy studies,post-authorization safety studies, adverse event reporting and other pharmacovigilance requirements, advertising, packaging and labeling, patient packageleaflets, distribution and wholesale dealing. The regulations frequently operate within a criminal law framework and failure to comply with the requirementsmay not only affect the authorization, but also can lead to financial and other sanctions levied on the company in question and responsible officers. As aresult of the currently on-going overhaul of EU pharmacovigilance legislation the financial and organizational burden on market authorization holders willincrease significantly, such as the obligation to maintain a pharmacovigilance system master file that applies to all holders of marketing authorizationsgranted in accordance with Directive 2001/83/EC or Regulation (EC) No 726/2004. Marketing authorization holders must furthermore collect data onadverse events associated with use of the authorized product outside the scope of the authorization. Pharmacovigilance for biological products andmedicines with a new active substance will be strengthened by subjecting their authorization to additional monitoring activities. The EU is currently in theprocess of issuing implementing regulations for the new pharmacovigilance framework. Any authorization granted by member state authorities, which within three years of its granting is not followed by the actual placing on the marketof the authorized product in the authorizing member state ceases to be valid. When an authorized product previously placed on the market in the authorizingmember state is no longer actually present on the market for a period of three consecutive years, the authorization for that product shall cease to be valid. Thesame two three year periods apply to authorizations granted by the European Commission based on the centralized procedure. Israel Clinical Testing in Israel In order to conduct clinical testing on humans in Israel, special authorization must first be obtained from the ethics committee and general managerof the institution in which the clinical studies are scheduled to be conducted, as required under the Guidelines for Clinical Trials in Human Subjectsimplemented pursuant to the Israeli Public Health Regulations (Clinical Trials in Human Subjects), as amended from time to time, and other applicablelegislation. In addition, these regulations also require authorization from the Israeli Ministry of Health, in the case of genetic trials, certain fertility trials andin such other matters as set forth by the Ministry of Health, which also include our ARREST Study for aramchol. The institutional ethics committee must,among other things, evaluate the anticipated benefits that are likely to be derived from the project to determine if it justifies the risks and inconvenience tobe inflicted on the human subjects, and the committee must ensure that adequate protection exists for the rights and safety of the participants as well as theaccuracy of the information gathered in the course of the clinical testing. Because we intend to perform a portion of the clinical studies on certain of ourtherapeutic candidates in Israel, we obtained authorization from the ethics committee and general manager of each institution in which we intend to conductour clinical trials, and from the Israeli Ministry of Health. Israeli Ministry of Health Israel’s Ministry of Health, which regulates medical testing, has adopted guidelines that correspond, generally, to those of the FDA and the EMA,making it comparatively straightforward for studies conducted in Israel to satisfy FDA and the EMA requirements, thereby enabling medical technologiessubjected to clinical trials in Israel to reach U.S. and EU commercial markets in an expedited fashion. Many members of Israel’s medical community haveearned international prestige in their chosen fields of expertise and routinely collaborate, teach and lecture at leading medical centers throughout the world. 79Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Other Countries In addition to regulations in the United States, the EU and Israel, we are subject to a variety of other regulations governing clinical trials andcommercial sales and distribution of drugs in other countries. Whether or not our product candidate or future product candidates receive approval from theFDA, approval of such product candidates must be obtained by the comparable regulatory authorities of countries other than the United States before we cancommence clinical trials or marketing of the product in those countries. The approval process varies from jurisdiction to jurisdiction, and the time may belonger or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials and product licensing vary greatly fromcountry to country. The requirements that we and our collaborators must satisfy to obtain regulatory approval by government agencies in other countries prior tocommercialization of our products in such countries can be rigorous, costly and uncertain. In the European countries, Canada and Australia, regulatoryrequirements and approval processes are similar in principle to those in the United States. Additionally, depending on the type of drug for which approval issought, there are currently two potential tracks for marketing approval in the European countries: Mutual recognition and the centralized procedure. Thesereview mechanisms may ultimately lead to approval in all EU countries, but each method grants all participating countries some decision-making authorityin product approval. Foreign governments also have stringent post-approval requirements including those relating to manufacture, labeling, reporting, recordkeeping and marketing. Failure to substantially comply with these on-going requirements could lead to government action against the product, us and/or ourrepresentatives. Related Matters From time to time, legislation is drafted, introduced and passed in governmental bodies that could significantly change the statutory provisionsgoverning the approval, manufacturing and marketing of products regulated by the FDA or EMA and other applicable regulatory bodies to which we aresubject. The estimated size of the NASH patient population in the United States and in the five most-populated EU countries is presented in the diagrambelow. In addition, regulations and guidance are often revised or reinterpreted by the national agency in ways that may significantly affect our business andour therapeutic candidates. It is impossible to predict whether such legislative changes will be enacted, whether FDA or EMA regulations, guidance orinterpretations will change, or what the impact of such changes, if any, may be. We may need to adapt our business and therapeutic candidates and productsto changes that occur in the future. For information regarding the Company’s corporate structure and its subsidiaries, see also “Item 4. Information on theCompany—Historical Background and Corporate Structure” below. Description of Property and Facilities Our corporate headquarters are located at 8 Shaul Hamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel, 6473307, where we lease and occupy approximately78 square meters of space. The lease for our office expires in April 2016. The aggregate monthly rental payment, together with the maintenance fees, isapproximately $2,542. Our headquarters do not include laboratory or product manufacturing facilities. Due to an increase in the number of employees, wehave entered into a sublease agreement with GEMS Investment Research Ltd., for approximately 250 square meters of additional space in the same building,which expires on March 31, 2015. The aggregate monthly rental payment for the additional space is approximately $4,615, including maintenance fees andtaxes. On March 22, 2015, we entered into a lease agreement with Mintz K. Construction Company Ltd., for approximately 356 square meters of space, whichwe refer to as the New Lease. The initial term of the New Lease expires on March 21, 2019, but we have an option to extend the term of the New Lease for twoadditional years after the expiration of the initial term. The aggregate monthly rental payment under the New Lease for the initial term, together withadjustments and the maintenance fees, is approximately $8,159. In addition, in April 2014, we entered into a sublease agreement with Radix Organization Inc. for one office, which expires in May 2015. The aggregatemonthly rental payment is approximately $1,980. 80Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 4A. Unresolved Staff Comments. Not applicable. ITEM 5. Operating and Financial Review and Prospects. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Item 3. KeyInformation—Selected Financial Data” above and our financial statements and related notes that appear elsewhere in this annual report. In addition tohistorical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual resultscould differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include thosediscussed below and elsewhere in this prospectus, particularly in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-LookingStatements.” Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of a novel, once-daily, oral therapy for thetreatment of liver diseases and cholesterol gallstones utilizing our proprietary first-in-class synthetic FABAC called aramchol. We believe that aramchol hasthe potential to be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic disease that we believe constitutes a largeunmet medical need. On February 1, 2015, we began our ARREST Study, a multi-center, randomized, double-blind, placebo-controlled, dose-ranging Phase IIb clinicaltrial of aramchol in 240 biopsy-diagnosed NASH patients who also suffer from obesity and insulin resistance. Our ARREST Study for aramchol in NASHpatients is in accordance with the study design recommended by the MHRA and has been deemed acceptable by the BfArM and deemed satisfactory by theANSM. The study design has been confirmed by the FDA in a written pre-IND advice as acceptable for a Phase IIb study. The BfArM and ANSM alsoconfirmed, in minutes of each of their respective scientific advisory meetings, that if successful, this ARREST Study may serve as a basis for Phase III pivotaltrials of aramchol. The FDA and MHRA invited us to discuss the next steps in the development of aramchol after we analyze the results of the ARRESTStudy. If the Phase III trials are successful, we intend to submit an NDA to the FDA and an MAA to the EMA for the approval of aramchol for the treatment ofNASH in patients who also suffer from obesity and insulin resistance in the United States and Europe. We currently expect complete results from the ARRESTStudy to be available at the end of 2016. Once 120 patients in the ARREST Study complete six months of treatment, we intend to conduct an interim analysisof the efficacy and safety of aramchol based on MRS analysis. The interim analysis will provide safety data according to which an independent safety boardwill decide whether to continue studying both doses or move all patients to one dose, if one is found to be safer than the other. The MRS will provide data fora futility decision, namely the decision to stop the study if no trend of reduction in liver fat content is found. We do not anticipate the interim results to leadto the stoppage of our ARREST Study, but no assurance can be given. This reflects the importance of the main secondary endpoint of the resolution of NASHin biopsies, which can be assessed only at the completion of the study and by repeated liver biopsies. We currently expect results from the interim analysis tobe available in the first half of 2016. We are also exploring other indications for the use of aramchol, including the treatment of cholesterol gallstones. On November 13, 2014, weannounced the first administration of aramchol in a proof-of-concept Phase IIa clinical trial for the treatment of newly formed cholesterol gallstones followingbariatric surgery. The Phase IIa trial is a multi-center, randomized, double blind, placebo controlled study, designed to evaluate the efficacy and safety of aonce-daily dose of aramchol for three months in 36 adult patients and is being conducted in four medical centers in Israel. The primary endpoint of the trial isa complete dissolution of newly formed cholesterol gallstones following bariatric surgery. Secondary endpoints include a decrease of more than 50% in thenumber of newly formed gallstones, prevention of the formation of additional gallstones during the trial period and dissolution of biliary sludge. Wecurrently anticipate reporting top line results in the second half of 2015. Approximately 5% of the general population in most countries develops cholesterolgallstones and the current standard of care is surgery, either laparoscopic or open cholecystectomy. 81Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On April 28, 2014, we commenced PK and food effect studies of aramchol. In written correspondence from December 2013 regarding a requestedpre- IND, application meeting, the FDA recommended that we conduct such studies prior to commencing our ARREST Study of aramchol for the treatment ofNASH. We conducted the PK study at the Sourasky Medical Center in Tel Aviv, Israel. We enrolled 66 healthy male volunteers who received three doses ofaramchol: 200 mg, 400 mg and 600 mg. The two higher doses will be used in our ARREST Study. In December 2014, we completed the statistical analysis ofthe PK study of the three doses of aramchol and observed no serious adverse events. Such PK study provides additional safety data to further support existingsafety data from our pre-clinical studies and our Phase I and Phase IIa clinical trials of aramchol. To date, we have successfully completed four clinical trials of aramchol, one of which, the PK study, was conducted pursuant to an FDA-cleared IND. The firstwas a single dose, double-blind, placebo- controlled, Phase Ia study with ascending doses of aramchol in healthy volunteers in one center in Israel. All dosesproved to be well-tolerated and no serious adverse side effects were observed in our studies to date. An additional Phase Ib repeated dose trial completed onhealthy volunteers in one center in Israel also showed that aramchol has no observable adverse side effects and confirmed the suitability of a once-daily doseof aramchol. A multi-center, randomized, double-blind, placebo-controlled Phase IIa trial of aramchol in 60 NAFLD and NASH patients in 12 centers in Israel,whose study design was deemed acceptable by the FDA in 2007 at a pre-IND scientific advisory meeting, suggested that aramchol reduced liver fat in a dosedependent manner, as evidenced by a statistically significant reduction of liver fat over a three month treatment period of once-daily 300 mg doses ofaramchol, and induces positive trends of changes in several metabolic parameters. The fourth was a single-site, randomized, partially double-blind, placebo-controlled PK and food effect study conducted in three parts. The first part of the study assessed the PK, safety and tolerability of aramchol tablets at singledoses of either 200 mg or 400 mg under fasting conditions. The second part of the study evaluated the effect of a high-calorie, high-fat meal on thebioavailability of a single 600 mg dose of aramchol and assessed the safety and tolerability. The third part of the study assessed the PK and comparativebioavailability, safety and tolerability of aramchol tablets after repeated administrations of three different doses (200 mg, 400 mg and 600 mg) for tenconsecutive days, with dosing occurring following the consumption of a light meal. No serious adverse events have been observed in any study. All observedadverse events were generally minimal to mild and transient. Furthermore, no clinically significant abnormalities related to aramchol were noted in the ECGor laboratory data. To date, we have not generated revenue from the sale of any product, and we do not expect to generate any significant revenue unless and until wecommercialize aramchol. As of December 31, 2014, the Company had an accumulated deficit of approximately $36.7 million. Our financing activities are described below under “Liquidity and Capital Resources.” Obtaining approval of an NDA, MMA, or other similarapplication is an extensive, lengthy, expensive and uncertain process, and the FDA, EMA and other regulatory agencies may delay, limit or deny approval ofour product. Financial Overview Since inception, we have incurred significant losses in connection with our research and development and have not generated any revenue. AtDecember 31, 2013, we had an accumulated deficit of $27.6 million and at December 31, 2014, we had an accumulated deficit of $36.7 million. We have funded our operations primarily through the sale of equity and debt securities in private equity offerings and debt financings in Israel toour affiliates, shareholders and third-party investors. As of December 31, 2014, we had $23.7 in cash and cash equivalents and $8.2 million in short-termdeposit and marketable securities, and an accumulated deficit of approximately $36.7 million. Although we provide no assurance, we believe that suchexisting funds and the proceeds from our initial public offering will be sufficient to continue our business and operations as currently conducted into 2017,although there is no assurance of this. However, we will continue to incur operating losses, which may be substantial over the next several years, and we mayneed to obtain additional funds to further develop our research and development programs. 82Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Costs and Operating Expenses Our current costs and operating expenses consist of two components: (i) research and development expenses; and (ii) general and administrativeexpenses. Research and Development Expenses Our research and development expenses consist primarily of outsourced development expenses, salaries and related personnel expenses and feespaid to external service providers, patent-related legal fees, costs of preclinical studies and clinical trials, drug and laboratory supplies and costs for facilitiesand equipment. We charge all research and development expenses to operations as they are incurred. We expect our research and development expense toremain our primary expense in the near future as we continue to develop our products. Increases or decreases in research and development expenditures areattributable to the number and/or duration of the preclinical and clinical studies that we conduct. We expect that a large percentage of our research and development expense in the future will be incurred in support of our current and futurepreclinical and clinical development projects. Due to the inherently unpredictable nature of preclinical and clinical development processes, we are unable toestimate with any certainty the costs we will incur in the continued development of aramchol for NASH and other indications in our pipeline for potentialcommercialization. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We expect tocontinue to test our product candidate in preclinical studies for toxicology, safety and efficacy, and to conduct additional clinical trials for our productcandidate. While we are currently focused on advancing our product development, our future research and development expenses will depend on the clinicalsuccess of our product candidate, as well as ongoing assessments of the candidate’s commercial potential. As we obtain results from clinical trials, we mayelect to discontinue or delay clinical trials for our product candidate in certain indications in order to focus our resources on more promising indications forsuch 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 the advancement of our clinicalproduct development and to the extent we in-license new product candidates. The lengthy process of completing clinical trials and seeking regulatoryapproval for our product candidate requires the expenditure of substantial resources. Any failure or delay in completing clinical trials, or in obtainingregulatory approvals, could cause a delay in generating product revenue and cause our research and development expenses to increase and, in turn, have amaterial 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 anynet 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 accounting,finance, legal and investor relations. Our other significant general and administrative expenses include non-cash stock-based compensation costs andfacilities 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 expect our general and administrative expenses, such as accounting and legal fees, to increase as we grow and operate as a public company, andwe expect an increase in our salary and benefits expense as a result of the additional management and operational personnel that we hired since our initialpublic offering to address the anticipated growth of our company. Financial Expenses, Net Our financial expense consists of bank fees and loan interest. Our financial income consists of income from short term bank deposits. 83Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Critical Accounting Policies and Estimates We prepare our financial statements in accordance with accounting principles generally accepted in the United States, or GAAP. In doing so, wemust make estimates and assumptions that affect our reported amounts of assets, liabilities and expenses, as well as related disclosure of contingent assets andliabilities. In some cases, we could reasonably have used different accounting policies and estimates. Changes in the accounting estimates are reasonablylikely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differencesbetween these estimates and actual results, our financial condition or results of operations will be affected. For further significant accounting policies pleasesee Note 2 to our audited consolidated financial statements of this annual report. We believe that our accounting policies contained therein are critical infully understanding and evaluating our financial condition and operating results. Jumpstart Our Business Startups Act of 2012 We are an emerging growth company within the meaning of the rules under the Securities Act of 1933, as amended, or the Securities Act, and we willutilize certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. We couldremain an “emerging growth company” for up to five years from the date of our first sale of common equity securities pursuant to an effective registrationstatement under the Securities Act, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1 billion (as suchamount is indexed for inflation every five years by the SEC to reflect the change in the Consumer Price Index for All Urban Consumers published by theBureau of Labor Statistics, setting the threshold to the nearest $1.0 million) or more, (b) the date that we become a “large accelerated filer” as defined in Rule12b-2 under the Exchange Act, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700.0 million as of thelast business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debtduring the preceding three year period. The JOBS Act also permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with certain new orrevised accounting standards if such standards apply to companies that are not issuers. We are choosing to “opt out” of this provision and, as a result, we willcomply with new or revised accounting standards when they are required to be adopted by issuers. This decision to opt out of the extended transition periodunder the JOBS Act is irrevocable. Stock-Based Compensation and Fair Value of Ordinary Shares We apply ASC 718-10, “Share-Based Payment,” which requires the measurement and recognition of compensation expense for all share-basedpayment awards made to employees and directors, including employee stock options under the Company’s stock plans, based on estimated fair values. ASC718-10 requires companies to estimate the fair value of equity-based payment awards on the date of the grant using an option-pricing model. The value of theportion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidatedstatement of operations. The foregoing estimates of fair value that the Company has made are highly complex and subjective. The estimates of the fair valueof the Company’s ordinary shares will not be necessary to estimate the fair value of new awards as the shares started trading on the Nasdaq Capital Market asof March 2014. We recognize compensation expense for the value of non-employee awards, which have graded vesting, based on the accelerated attribution methodover the requisite service period of each award, net of estimated forfeitures. We recognize compensation expense for the value of employee awards that havegraded vesting, based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. In determining the fair value of our ordinary shares that was used to value previous equity issuances, we relied upon previous offering valuationswhile taking into account the clinical development of the Company’s product candidate. We believe that the fair value of our ordinary shares hascontinuously increased since inception as the development of our product candidate has continuously progressed. The valuations were performed contemporaneously with the offerings of ordinary shares to which such valuations relate. Such valuations wereconducted by us and were directly observable in the marketplace. Such valuations were in accordance with the provisions of ASC 820-35 and based on thepurchase price paid by new external and independent investors with pharmaceutical or financial expertise, who purchased our convertible notescontemporaneously with or around the time of our equity issuances. Increases in the Company’s valuations were based upon the progress in the clinicaldevelopment of our product candidate, submissions of new families of patent applications for new potential indications and new formulations of our productcandidate, an investment round and our initial public offering in March 2014. 84Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Information regarding each such issuance, on a post-Reorganization(1) basis, is included in the following table: Year ofissuanceof equity Instrument issued Number of shares derived from theinstrument issued Number ofoptions/warrants Consideration ($) Exerciseprice ($)2000 Ordinary shares 3,754,350 — 650,000 —2002 Options — 38,637 — 1.472005 – 2008 Ordinary shares upon conversion of convertible notes 1,241,487 — 3,596,778 —2012 Warrants (2) — 241,299 — 3.572012 Options — 241,299 — 3.572013 Ordinary shares upon conversion of the Convertible Loan Agreement(3) 1,043,928 — 3,724,462 —2013 Ordinary shares upon conversion of the Bridge Loans 511,029 — 1,824,300 —2013 Ordinary shares upon conversion of the Convertible Security Notes (4) 515,403 — 4,717,641 —2013 Options — 1,219,617 — 0.01 – 3.572013 Ordinary Shares 33,534 120,000 2014 Ordinary shares 560,224 — 2,000,000 —2014 Option — 25,749 — 3.572014 Ordinary shares upon initial public offering (5) 3,263,010 — 39,856 —2014 Cashless exercise of options 177,488 (241,299) — —2014 Options (6) — 330,000 — 5.49 (1)Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization.(2)The warrant was issued with several performance conditions to its exercise. The Company estimated that the conditional performances set forth in thewarrant would not be met and accordingly did not record expenses due to such warrant, which expired in May 2013.(3)The convertible loan agreement, dated December 21, 2011, by and among GHI, its shareholders and Shirat HaChaim Ltd., or the Convertible LoanAgreement, was entered into in 2011, but for accounting purposes it was deemed issued in January 2012 and was classified as an equity instrument. In2013, the Convertible Loan Agreement was converted into ordinary shares.(4)In August and September 2013, GHI issued to its shareholders convertible security notes, or the Convertible Security Notes, convertible into ordinaryshares of GHI, or any of its successors, with an aggregate face value of $1.84 million. The Company revalued the Convertible Security Notes based ontheir fair value as a result of a modification of their conversion price in December 2013. For further elaboration see the notes to our financialstatements contained elsewhere herein.(5)Net of offering expenses in the amount of $ 4,204.(6)Excluding the grant of 330,000 options to purchase our ordinary shares to certain Office Holders (as such term is defined below and includesexecutive officers and directors), of which (i) 310,000 are subject to shareholder approval and certain of which are also subject to obtaining a tax pre-ruling from the Israeli Tax Authority; and (ii) 20,000 are subject to obtaining a tax pre-ruling from the Israeli Tax Authority only. For further details,see below under “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Certain Information Concerning Equity Awards toOffice Holders.” The intrinsic value of the Company’s vested and unvested options outstanding as of March 15, 2015 and 2014, based on the market price per share,was $12.2 million and $17.7 million, respectively. Results of Operations The table below provides our results of operations (which reflect the results of operations of GHI, our predecessor, prior to the Reorganization, aswell as the financial data of the Company (the successor) post Reorganization) for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013 and for the year ended December 31, 2013 as compared to the year ended December 31, 2012. Year Ended December 31, 2011 2012 2013 2014 (in thousands) Research and development expenses $1,326 $2,443 $7,207 $6,664 General and administrative expenses 151 694 7,355 2,478 Capital Loss — — 10 - Operating loss 1,477 3,137 14,572 9,142 Financial income (expenses), net (3) (6) (2,912) 40 Operating loss post-finance expense & other income, net 1,480 3,143 17,484 9,102 Taxes on income 2 6 1 1 Net loss $1,482 $3,149 $17,485 $9,103 Other comprehensive income: Net unrealized gain on available for sale securities — — — 4 Comprehensive loss $1,482 $3,149 $17,485 $9,099 Loss per share (*) $0.30 $0.63 $3.45 $0.88 (*) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization. 85Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Research and Development Expenses Our research and development expenses amounted to $6.7 million during the year ended December 31, 2014, representing a decrease of $0.5million, or 8%, as compared to such expenses for the year ended December 31, 2013. The decrease primarily resulted from a decrease in non-cash-stock-basedcompensation of $4.3 million offset by an increase in research and development subcontractor expenses in connection with aramchol for the treatment ofNASH in obese patients with insulin resistance of $3.2 million and an increase of $573,000 in salaries and benefits paid to five new employees hired since thecomparable prior year period, including Chief Medical Officer, Director of Clinical Operations, Director of Drug Development, Clinical Project Manager andClinical Research Associate. Our research and development expenses amounted to $7.2 million for the year ended December 31, 2013, representing an increase of $4.8 million, or195%, as compared to such expenses for the year ended December 31, 2012. This increase primarily resulted from stock-based compensation of $4.3 millionand increased studies in connection with aramchol for the treatment of NASH in obese patients with insulin resistance. General and Administrative Expenses Our general and administrative expenses amounted to $2.5 million for the year ended December 31, 2014, representing a decrease of $4.9 million, or66%, as compared to such expenses for the year ended December 31, 2013. This decrease primarily resulted from a decrease in non-cash stock-basedcompensation of $6.0 million offset by an increase in salaries and benefits paid to employees of $443,000 and an increase in professional services expensesof $516,000, which primarily includes legal, accounting and consulting services. Our general and administrative expenses amounted to $7.4 million during the year ended December 31, 2013, representing an increase of $6.7million, or 960%, as compared to such expenses for the comparable prior year period. This increase primarily resulted from an increase in salaries and benefitsas a result of greater non-cash stock-based compensation to employees of $6.4 million and greater professional fees of $496,000. Operating Loss As a result of the foregoing research and development and general and administrative expenses, as well as our failure to generate operating revenuessince our inception, our operating loss for the year ended December 31, 2014 was $9.1 million, representing a decrease in our operating loss of $5.4 million,or 37%, as compared to our operating loss for the year ended December 31, 2013. This decrease primarily resulted from a decrease in non-cash stock-basedcompensation of $10.3 million offset by an increase in our research and development subcontractor expenses of $3.2 million and an increase in our salariesand benefits expenses of $1.0 million. Our operating loss for the year ended December 31, 2013 was $14.6 million, representing an increase of $11.4 million, or 364%, as compared to ouroperating loss for the comparable prior year period. This increase primarily resulted from an increase in non-cash stock-based compensation to employees of$10.8 million as compared to $208,000 for the comparable prior year period. Financial Income (Expense), Net Our financial income (expense), net, for the year ended December 31, 2014 was $40,000, representing a decrease of $2.9 million of financialexpense, or 100%, as compared to such expenses for the comparable prior year period. This decrease resulted from recording the difference between the fairvalue of new convertible notes and the net carrying amount of the extinguished notes, in the amount of approximately $2.9 million, in the statement ofoperations report for the year ended December 31, 2013. Our financial income (expense), net, for the year ended December 31, 2013 was $(2.9) million, representing an increase of $2.9 million, or 484%, ascompared to such expense for the comparable prior year period. This increase resulted from recording the difference between the fair value of new convertiblenotes and the net carrying amount of the extinguished notes, in the amount of approximately $2.9 million, in the statement of operations report for the yearended December 31, 2013. Net Loss As a result of the foregoing research and development and general administrative expenses as well as our failure to generate revenue since ourinception, our net loss for the year ended December 31, 2014 was $9.1 million, representing a decrease of $8.4 million, or 48%, as compared to our net lossfor the year ended December 31, 2013. This decrease primarily resulted from a decrease in non-cash stock-based compensation of $10.3 million offset by anincrease in our research and development subcontractor expenses of $3.2 million, an increase in our salaries and expenses of $1.0 million and a decrease inour financial income (expense), net, of $2.9 million. 87Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For the year ended December 31, 2013 our net loss was $17.5 million, representing an increase of $14.3 million, or 455%, as compared to our netloss for the comparable prior year period. The increase was primarily due to an increase in non-cash stock-based compensation of $10.8 million and financeincome (expense), net, of $(2.9) million. Liquidity and Capital Resources Overview We have incurred substantial losses since our inception. As of December 31, 2014, we had an accumulated deficit of approximately $36.7 millionand working capital (current assets less current liabilities) of $31.0 million. We expect that losses will continue for the foreseeable future. As of December 31, 2014, we had cash and cash equivalents of $23.7 million and short—term deposits and marketable securities of $8.3 millioninvested in accordance with our investment policy, primarily with a view towards liquidity and capital preservation with an average maturity of 1.5 years, ascompared to $137,000 and $0 as of December 31, 2013, respectively. This increase was primarily due to net proceeds from our initial public offering ofapproximately $39.9 million offset by our negative cash flow from operating activity in the amount of $9.2 million. As of December 31, 2013, we had cash and cash equivalents of $137,000 as compared to $718,000 as of December 31, 2012. This decrease of$581,000 was primarily due to our net loss of $17.5 million during the year ended December 31, 2013, an increase in trade payables in the amount of$954,000, an increase in accounts receivable in the amount of $228,000, the issuance of a convertible note in the amount of $1.8 million, a non-cashfinancial expense due to convertible note modification in the amount of $2.9 million and a stock based compensation expense in the amount of $10.8million. Cash Flow from Operating Activities We had negative cash flow from operating activities of $9.2 million for the year ended December 31, 2014 as compared to a negative cash flow fromoperating activities of $2.5 million for the year ended December 31, 2013. The negative cash flow from operating activities for the year ended December 31,2014 was mainly attributable to our net loss of $9.1 million We had negative cash flow from operating activities of $2.5 million for the year ended December 31, 2013 as compared to a negative cash flow fromoperating activities of $3.1 million for the year ended December 31, 2012. The negative cash flow from operating activities for the year ended December 31,2013 was mainly attributable to our net loss of $17.5 million, a non cash financial expense due to convertible note modification in the amount of $2.9million and a stock based compensation expense in the amount of $10.9 million. Cash Flow from Investing Activities We had negative cash flow from investing activities of $9.0 million for the year ended December 31, 2014 as compared to a positive cash flow frominvesting activities of $3,000 for the year ended December 31, 2013. The negative cash flow from investing activities for the year ended December 31, 2014was due to an investment in short-term deposits and marketable securities in the amount of $8.3 million and the purchase of medical equipment in theamount of $750,000. We had positive cash flow from investing activities of $3,000 for the year ended December 31, 2013 as compared to a negative cash flow frominvesting activities of $32,000 for the year ended December 31, 2012. The positive cash flow from investing activities for the year ended December 31, 2013was due to the sale of equipment in the amount of $16,000 less the investment in such equipment in the amount of $13,000, while the negative cash flowfrom investing activities for the year ended December 31, 2012 was due to the investment in such equipment. 88Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Cash Flow from Financing Activities We had positive cash flow from financing activities of $41.9 million for the year ended December 31, 2014 as compared to a positive cash flow fromfinancing activities of $1.9 million for the year ended December 31, 2013. The positive cash flow from financing activities for the year ended December 31,2014 was primarily due to the issuance of our ordinary shares in our initial public offering for net proceeds of approximately $39.9 million and the issuanceof our ordinary shares in the amount of $2.0 million in a private placement financing completed in February 2014, prior to the consummation of our initialpublic offering. We had positive cash flow from financing activities of $1.9 million for the year ended December 31, 2013 as compared to a positive cash flow fromfinancing activities of $3.7 million for the year ended December 31, 2012. The positive cash flow from financing activities for the year ended December 31,2013 was primarily due to the issuance of a convertible note in the amount of $1.8 million, while the positive cash flow from financing activities for the yearended December 31, 2012 was primarily due to the issuance of a capital note in the amount of $3.7 million. We believe that our existing cash resources and the net proceeds from our initial public offering will be sufficient to fund our projected cashrequirements approximately into 2017, although there is no assurance of this. Nevertheless, we will require significant additional financing in the future tofund our operations if and when we progress into Phase III trials of aramchol and clinical trials for other indications, obtain regulatory approval of aramcholand commercialize the drug. Current Outlook According to our estimates and based on our budget, if we are not successful in obtaining additional capital resources, there is substantial doubt thatwe will be able to continue our activities beyond 2017. Even with the funds raised in our initial public offering, we believe that we will need to raisesignificant additional funds before we have any cash flow from operations, if at all. Developing drugs, conducting clinical and preclinical trials and commercializing products is expensive and we will need to raise substantialadditional funds to achieve our strategic objectives. We believe that our existing cash resources and the net proceeds from our initial public offering will besufficient to fund our projected cash requirements approximately into 2017, although there is no assurance of this. Nevertheless, we will require significantadditional financing in the future to fund our operations, including if and when we progress into Phase III trials of aramchol for the treatment of NASH inpatients who also suffer from obesity and insulin resistance and clinical trials for other indications, obtain regulatory approval for aramchol andcommercialize the drug. We currently anticipate that we will utilize approximately $12.0 million for clinical trial activities over the course of the next 12months. Our future capital requirements will depend on many factors, including: ·the progress and costs of our preclinical 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 respectto our product candidate; ·the costs of the development and expansion of our operational infrastructure; ·the costs and timing of obtaining regulatory approval for our product candidate; ·the ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under ourpotential future licensing agreements; ·the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; 89Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·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 our product candidate. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through the net proceeds from our initial publicoffering, debt or equity financings or by out-licensing applications of our product candidate. We cannot be certain that additional funding will be availableto 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 our product candidate. This may raise substantial doubts about the Company’sability to continue as a going concern. Contractual Obligations The following table summarizes our significant contractual obligations (which reflect the significant contractual obligations of GHI, ourpredecessor, prior to the Reorganization) at December 31, 2014. Total Less than 1 year 1 – 3 years More than 3 years (in thousands) Facility leases (1) $30 $30 $- $- Termination payment (2) 426 280 - 146 Total $456 $310 $- $146 (1)For a more detailed description of the facility leases, see “Description of Property and Facilities” above. (2)Consists of remuneration for our CEO’s non-competition undertakings, in the event of termination of his employment, other than for cause, and thesettlement with the beneficiaries of the late Professor Tuvia Gilat, which was paid during the first quarter of 2015. We enter into contracts in the ordinary course of business with CROs for clinical trials and clinical supply manufacturing and with vendors forpreclinical research studies and other services and products for operating purposes, which generally provide for termination within 30 days of notice, andtherefore are cancelable contracts and not included in the Contractual Obligations table above. Other than as described below, we did not have any material commitments for capital expenditures, including any anticipated material acquisition ofplant and equipment or interests in other companies, as of December 31, 2014. 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, developmentor 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 “Operating and Financial Review and Prospects.” 90Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Off-Balance Sheet Arrangements The Company currently does not have any off-balance sheet arrangements that have had, or are reasonably likely to have, a current or future effecton our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources thatare material to investors. ITEM 6. Directors, Senior Management and Employees. A. Directors and Senior Management. Set forth below is information concerning the directors, senior management and executive officers of the Company as of March 15, 2015. Thebusiness address for each of our directors, senior management and corporate officers is c/o Galmed Pharmaceuticals Ltd., 8 Shaul Hamelech Blvd., AmotMishpat Bldg., Tel Aviv, Israel 6473307. Name Age PositionChaim Hurvitz(1) 54 Chairman of the Board, Class III Director; Chairperson of the R&DCommitteeAllen Baharaff 50 President and Chief Executive Officer, Class II DirectorDr. Maya Halpern 62 Chief Medical Officer, Class I DirectorJosh Blacher(2) 42 Chief Financial OfficerGeorge Tonelli(3) 55 Vice President of Clinical OperationsDr. Maureen Graham 58 Vice President – Regulatory Affairs & Project ManagementDr. Antony Appleyard 40 Vice President – Drug DevelopmentWilliam Marth(1)(4) 60 Class III DirectorShmuel Nir(4)(5)(6) 53 Class II DirectorTali Yaron-Eldar(4)(5)(6)(7) 51 Director; External DirectorDavid Sidransky, M.D. (1)(4)(5)(6)(7) 54 Director; External Director_____________ (1)A member of our research & development committee, or our R&D Committee. (2)On October 7, 2014, the Company and Mr. Ray Morris, the Company’s former Chief Financial Officer, mutually agreed to terminate the consultingagreement dated March 4, 2014, pursuant to which Mr. Morris served as the Company’s Chief Financial Officer. The termination was effective as ofDecember 31, 2014. On December 30, 2014, the Company approved the appointment of Josh Blacher, effective as of January 1, 2015, to replace Mr.Morris and serve as Chief Financial Officer. Mr. Blacher’s employment with the Company was consummated on October 19, 2014, where he previouslyserved as Senior Director, Corporate Development. (3)On March 6, 2015, the Company entered into a Consulting Agreement to engage Mr. Tonelli to provide consulting services in connection with theCompany's clinical trials, subject to the Company's remuneration committee and Board approval. Such approvals were granted on March 30, 2015. Inproviding such services Mr. Tonelli, shall act as the Company’s Vice President of Clinical Operations. (4)Independent director under applicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board. (5)A member of our audit committee, or our Audit Committee. (6)A member of our remuneration committee, or our Remuneration Committee. (7)An external director under the Companies Law, approved by our shareholders. 91Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Chaim Hurvitz, our chairman of the Board and a member of our R&D committee, joined our Board in 2011. Mr. Hurvitz currently serves as the CEOof CH Health, a private venture capital firm, a position he has held since May 2011. Mr. Hurvitz served as a member of the board of directors of TevaPharmaceuticals Industries Ltd. from 2010 to 2014. Previously, he was a member of the senior management of Teva Pharmaceuticals Industries Ltd., servingas the President of Teva International Group from 2002 until 2010, as President and CEO of Teva Pharmaceuticals Europe from 1992 to 1999 and as VicePresident - Israeli Pharmaceutical Sales from 1999 until 2002. Mr. Hurvitz presently serves as a member of the management of the Manufacturers Associationof Israel and head of its pharmaceutical branch. Mr. Hurvitz holds a Bachelor of Arts degree in political science and economics from Tel Aviv University,which was awarded in 1985. Allen Baharaff, our controlling shareholder, President and Chief Executive Officer and a member of our Board, who co-founded the Group in 2000and served as the Chief Financial Officer of GHI since 2000, as our Chief Executive Officer since January 2012 and as our President since March 2015. Priorto which, he held a number of senior executive positions, including a Senior Vice President position at Isramex Projects Ltd., an energy project financingcompany, and Managing Director of T+M Trusteeship & Management Services (Israel) Ltd., a subsidiary of a Swiss company providing trust and similarservices. Since 2001, Mr. Baharaff also serves as a member of the board of directors of the Tel-Aviv Museum of Arts, chairing its educational activities and,since 2005, Mr. Baharaff serves as a Director of the Rubin Museum. Mr. Baharaff holds a Bachelor of Science degree in economics from the London School ofEconomics, University of London and LLB and MA degrees from Cambridge University. Since 1993, Mr. Baharaff has been a member of the Israel BarAssociation. Dr. Maya Halpern, our Chief Medical Officer and a member of our Board since 2011, is a Medical Advisor at CH Health, an Israeli private venturecapital company controlled by our Chairman since 2011, prior to which, from 2000 to 2010, Dr. Halpern worked in the pharmaceutical industry as a medicaldirector of Teva Pharmaceutical Industries Ltd. in Israel and in Teva’s international group of subsidiaries. Dr. Halpern’s experience covers managing clinicaltrials, as well as medical and ethical aspects of drug marketing. Dr. Halpern holds a Medical Degree from Hadassah Medical School, the Hebrew University,Jerusalem and an M.A. in philosophy from the Tel Aviv University. Josh Blacher, our Chief Financial Officer, has served in such capacity since January 2015. Prior to that, Mr. Blacher joined the Company in October2014 as Senior Director, Corporate Development. Mr. Blacher has six years of experience in biotech-related business development, operations and investing,as well as 14 years in capital markets. Prior to joining the Company, among other things, Mr. Blacher served as Director of Business Development at TevaInnovative Ventures, Teva Pharmaceuticals’ early- and mid-stage investment and in-licensing arm from 2008 to 2011. In that capacity, Mr. Blacher helpedbuild and manage Teva’s portfolio of approximately 20 equity investments in biotech companies, spanning a wide range of development stage companiesfrom pre-clinical through Phase III projects, as well as various therapeutic areas. Previously, from 1995 to 2005. Mr. Blacher also held positions in portfoliomanagement at Deutsche Asset Management and equity research at Morgan Stanley, as well as in mergers & acquisitions at Lehman Brothers. Mr. Blacherholds an MBA in Finance from Columbia Business School and a BA in Economics from Yeshiva University, which he was awarded in 2001 and 1995,respectively. George Tonelli, our Vice President of Clinical Operations, has served in such capacity since March 2015. Mr. Tonelli has 20+ years of progressiveexperience in clinical development operations and regulatory affairs. Prior to joining the Company, Mr. Tonelli planned and executed multiple clinical trialsin the therapeutic area of Diabetes Mellitus at MannKind Corporation from 2005 to 2014, culminating in the FDA approval of Afrezza®. Prior to that, Mr.Tonelli held several leadership positions in clinical development and project management at Innapharma. He began his career in regulatory affairs in theMedical Research Division of American Cyanamid (Lederle Labs). He holds a Bachelor of Science degree from Rutgers University. Dr. Maureen Graham, our Vice President - Regulatory Affairs and Project Management, has served in such capacity since 2012. Dr. Graham has over25 years of experience within the pharmaceutical industry and has worked for several different companies, including GlaxoSmithKline from 1982 to 1985,Merck & Co from 1985 to 1994, IVAX Pharmaceuticals, Inc. from 1994 to 1998 and Amgen Inc. from 1998 to 2004. She has held a number of directorships,including within Niche Generics Limited, where she served from 2004 to 2005, and has served as the European Director of Regulatory Affairs at Amgen. Dr.Graham founded, and is the managing director of, Diamond BioPharm Limited in 2005, which is a leading technical and scientific consulting group ofcompanies serving the biotechnology and pharmaceutical industry. Dr. Graham has direct experience with many types of products, including biotechnology,gene-therapy, new chemical entities and generics as well as experience and expertise in regulatory and product development issues associated with medicinalproducts for rare indications. Her extensive experience covers products at all stages of development ranging from preclinical to registration. Dr. Graham is apharmacist by trade with a Ph.D. in Pharmaceutical Sciences from De Montfort University, Leicester, United Kingdom, which was awarded in 1983, and aDiploma in Regulatory Affairs from Cardiff University, Cardiff, Wales, United Kingdom, which was awarded in 2001. 92Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Dr. Antony Appleyard, our Vice President - Drug Development and head of chemistry manufacturing and controls, or CMC, has served in suchcapacity since 2013. Dr. Appleyard is also Head of Development Projects at Diamond BioPharm Ltd., providing product development, regulatory and projectmanagement services with over 15 years of experience in research and development, drug discovery, drug delivery, new chemical entities, biologics,formulation, manufacturing and technology transfer. Prior to joining the Company, Dr. Appleyard was an Associate Director of Natural Products Chemistry atNovacta Biosystems Ltd, or Novacta, from 2009 to 2011 and at Cantab Biopharmaceuticals Ltd from 2012 to 2013, where he also held the developmentpositions of CMC Lead and Head of Analysis for development programs. Prior to Novacta, from 2003 to 2004, Dr. Appleyard was engaged in internationaltechnology transfer activities for MAb processes at Abbott Laboratories in Dartford, England. He was awarded a degree in chemistry with honors in 1995 anda Ph.D. in biochemistry in 2001, both from the University of Leeds. From 2001 to 2003, Dr. Appleyard carried out post- doctoral research in the Departmentsof Chemistry and Biochemistry at the University of Cambridge. He is a Fellow of The Royal Society of Chemistry and a Chartered Chemist. William Marth, a director of the Company since March 2014, serves as president and chief executive officer elect of Albany Molecular Research Inc.since January 2014 and serves as the chairman of the board of directors of Sorrento Therapeutics since January 2014. Previously, Mr. Marth has served aschairman of the Board of Albany Molecular Research Inc. from May 2012 to December 2013, prior to which he served as President and Chief ExecutiveOfficer of Teva Pharmaceutical Industries Ltd. in the Americas from June 2010 to November 2012. From January 2008 to June 2010, he served as Presidentand Chief Executive Officer of Teva North America and as President and Chief Executive Officer of Teva USA from January 2005 to January 2008. From July1999 to January 2002, he was the Executive Vice President and Vice President of Sales and Marketing for Teva USA. Prior to joining Teva USA, he heldvarious positions with the Apothecon division of Bristol-Myers Squibb. In February 2008, Mr. Marth was elected Chairman of the Generic PharmaceuticalAssociation where he is also a member of the executive committee. He is a licensed pharmacist and serves on various boards and committees, including TheUniversity of the Sciences in Philadelphia, the American Society for Health-System Pharmacists and the Board of Ambassadors for John Hopkins’ ProjectRESTORE. Mr. Marth earned his B.Sc. in pharmacy from the University of Illinois in 1977 and his M.B.A. in 1989 from the Keller Graduate School ofManagement, DeVry University. Shmuel Nir, a director since 2007, serves as President and Chief Executive Officer of Tushia Consulting Engineers Ltd., an investment andmanagement services company, and Chairman of the board of directors of Matan Digital Printers Ltd. From March 1998 to January 2008, he served asPresident and Chief Executive Officer of Macpell Industries Ltd., a leading industrial group. Between January 1991 and March 1998, Mr. Nir was anExecutive Vice President of Operations at Macpell Industries Ltd. and President and Chief Executive Officer of two of its subsidiaries, New Net IndustriesLtd. and New Net Assets Ltd. Prior to January 1991, Mr. Nir had held various positions with Intel Corporation in Jerusalem, Israel and Tefen ManagementConsulting. Between 1999 and 2006, Mr. Nir served as managing partner at Spring Venture Capital Fund. Mr. Nir holds a B.Sc. in Industrial Engineering andManagement from the Technion - Israel Institute of Technology in Haifa, which was awarded in 1989. Tali Yaron-Eldar, a director of the Company since March 2014 and an external director since June 2014, is an Israeli attorney specializing intaxation. Ms. Yaron-Eldar co-founded Yaron-Eldar, Paller, Schwartz & Co., Law Offices, in January 2013. Prior to January 2013, she was a partner at the lawfirm of Tadmor & Co. from March 2007 until December 2012 and a partner at the law firm of Cohen, Yaron-Eldar & Co. from 2004 until March 2007. FromJanuary 2004 until January 2008, Ms. Yaron-Eldar served as the Chief Executive Officer of Arazim Investment Company and she has also served in a varietyof public positions, including as the Chief Legal Advisor of the Customs and V.A.T department of the Finance Ministry of the State of Israel from 1998 to2001 and as the Commissioner of Income Tax and Real Property Tax Authority of the State of Israel from 2002 to 2004. Ms. Yaron-Eldar also serves as adirector of a number of public companies, including Alliance Tire Company Ltd., Rossetta Genomics Ltd., Medtechnica Ltd., Magicjack Vocaltec Ltd.,Lodgia Rotex Investments Ltd. and Tadea Technological Development and Automation Ltd. Ms. Yaron- Eldar holds an M.B.A. specializing in finance fromTel Aviv University which was awarded in 1995 and an LL.B. from Tel Aviv University which was awarded in 1987. Ms. Yaron-Eldar is also a member of theIsraeli Bar Association. 93Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. David Sidransky, M.D., has been an external director of the Company since June 2014. Dr. Sidransky is a renowned oncologist and research scientistnamed and profiled by TIME magazine in 2001 as one of the top physicians and scientists in America, recognized for his work with early detection of cancer.He serves as the Director of the Head and Neck Cancer Research Program at the Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins University.He is a Professor of Oncology, Otolaryngology, Cellular & Molecular Medicine, Urology, Genetics, and Pathology at John Hopkins University and Hospital.Dr. Sidransky has written over 450 peer-reviewed publications, and has contributed to more than 60 cancer reviews and chapters. Dr. Sidransky is a founder ofa number of biotechnology companies and holds numerous biotechnology patents. He has been the recipient of many awards and honors, including the1997 Sarstedt International prize from the German Society of Clinical Chemistry, 1998 Alton Ochsner Award Relating Smoking and Health by the AmericanCollege of Chest Physicians and the 2004 Hinda Rosenthal Award presented by the American Association of Cancer Research. Dr. Sidransky has served asVice Chairman of the Board of Directors of ImClone. He is Chairman of the Board of Champions Oncology and Tamir Biotechnology and is on the boardof directors of Rosetta Genomics Ltd., Celsus Therapeutics Plc and Advaxis, Inc. He is serving and has served on scientific advisory boards of corporationsand institutions, including Amgen, MedImmune, Roche and Veridex, LLC (a Johnson & Johnson diagnostic company), among others. In addition,Dr. Sidransky served as Director of American Association for Cancer Research from 2005 to 2008. Dr. Sidransky received his B.A. from Brandeis Universityand his M.D. from the Baylor College of Medicine. There are no family relationships between any director or executive officer. There are no arrangements orunderstandings with major shareholders, customers, suppliers or others, pursuant to which any director or executive officer was selected as a director ormember of senior management, as the case may be. Basic Research Scientific Advisory Board and Clinical Advisory Board We seek advice from our Basic Research Scientific Advisory Board and our Clinical Advisory Board generally on scientific and medical matters.Our Basic Research Scientific Advisory Board includes: Prof. Jose Mato, from CIC bioGUNE and CIC biomaGUNE, Spain, Prof. Zamir Halpern, from theGastroenterology Institute of the Tel Aviv Sourasky Medical Center (Ichilov) in Tel Aviv, Israel; Prof. Fred Konikoff, Head of the Department ofGastroenterology and Hepatology at Meir Medical Center in Kfar Saba, Israel; Professor Kenichi Ikejima from Juntendo University in Tokyo, Japan; Dr. P.Jane Armstrong from the College of Veterinary Medicine at the University of Minnesota in Minneapolis, Minnesota, and who is also a member of theWSAVA Liver Study Group; Prof. Albert K. Groen from the University of Groningen in Groningen, Netherlands; and Prof. Paolo Parini from the department ofLaboratory Medicine at the Karolinska Institute in Stockholm, Sweden. Our Clinical Advisory Board includes Professor Vlad Ratziu, from the UniversityPierre et Marie Curie in Paris, France and coordinator of the EU FP7 FLIP consortium; Professor Arun Sanyal, from the Virginia Commonwealth University inRichmond, Virginia; Dr. Rohit Loomba, from the University of California San Diego School of Medicine in San Diego, California; Professor Ran Oren fromHadassah University Hospital in Ein Kerem, Jerusalem, Israel and Prof. Eric Gershwin, Chief, Division of Rheumatology Allergy and Clinical Immunology ofUniversity of California at Davis, in Davis, California. B. Compensation. Certain Approvals Required for Office Holders’ Compensation of the Companies Law Pursuant to the Companies Law, the Company was required to adopt a compensation policy regarding the Terms of Office and Employment of itsOffice Holders (as such terms are defined below), including exemption and release of the Office Holders from liability for breach of his or her duty of care tothe Company, an undertaking to indemnify the Office Holder, post factum indemnification or insurance; any grant, payment, remuneration, compensation, orother benefit provided in connection with termination of service; and any benefit, other payment or undertaking to provide any payment as aforesaid, or theTerms of Office and Employment. The Company’s compensation policy with respect to the Terms of Office and Employment of the Company’s OfficeHolders, or the Compensation Policy, was approved by the Board in November 2014 after considering the recommendations of the Remuneration Committeeand was adopted by the Company’s shareholders in December 2014. 94Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The term ‘Office Holder’ as defined in the Companies Law includes a general manager, chief executive officer, executive vice president, vicepresident, any other person fulfilling or assuming any of the foregoing positions without regard to such person’s title, as well as a director, or a managerdirectly subordinate to the general manager or the chief executive officer. As of March 2015, in addition to the seven members of the Board, the Companyconsiders four other individuals, including its Chief Financial Officer, its Vice President of Clinical Operations, its Vice President – Drug Development andits Vice President – Regulatory Affairs & Project Management to be Office Holders. Pursuant to the Companies Law, arrangements between the Company and its office holders must generally be approved by the RemunerationCommittee and the Board, and be consistent with the Compensation Policy. However, under certain circumstances, the Company may approve anarrangement that is not consistent with the Compensation Policy, if such arrangement is approved by a majority of the Company’s shareholders, providedthat (i) such majority includes a majority of the votes cast by shareholders who are not controlling shareholders and who do not have a personal interest in thematter, present and voting (abstentions are disregarded), or (ii) the votes cast by shareholders who are not controlling shareholders and who do not have apersonal interest in the matter who were present and voted against the arrangement constitute two percent or less of the voting power of the company, or theSpecial Majority. The Terms of Office and Employment of directors (including an officer who is a director but is not a controlling shareholder) further require theapproval of the shareholders by a simple majority; with respect to a chief executive officer or an officer who is a controlling shareholder, the approval of theshareholders must be made by the Special Majority. In addition, under certain circumstances, a company may be exempt from receiving the shareholders’approval with respect to the Terms of Office and Employment of a non-affiliated candidate for chief executive officer. Under certain circumstances, if the Terms of Office and Employment of Office Holders (who are not directors or controlling shareholders) are notapproved by the shareholders, where such approval is required, the Remuneration Committee and the Board may subsequently override the resolution of theshareholders following a new discussion of the matter and for specified reasons. In addition, amendment of Terms of Office and Employment of OfficeHolders (who are not directors or controlling shareholders) requires the approval of the Remuneration Committee only, if the Remuneration Committeedetermines that the amendment is not material. Aggregate Executive Compensation The aggregate compensation, including share-based compensation, paid by us to all of our Office Holders as a group, with respect to the year endedDecember 31, 2014 was approximately $1.7 million. This amount includes approximately $96,000 set aside or accrued to provide pension, severance,retirement, vacation or similar benefits or expenses, but does not include business travel, relocation, professional and business association dues and expensesreimbursed to Office Holders, and other benefits commonly reimbursed or paid by companies in our industry. In addition to the seven members of the Board,the Company considers three other individuals, namely its former Chief Financial Officer, its VP Drug Development and its VP Regulatory Affairs & ProjectManagement, to have been Office Holders in 2014. As of December 31, 2014, options to purchase 940,977 of our ordinary shares granted to our Office Holders as a group were outstanding, of whichoptions to purchase 746,331 of our ordinary shares were vested, with a weighted average exercise price of $0.51 per ordinary share. In addition, the Boardapproved the allocation of options to purchase 330,000 of our ordinary shares to certain Office Holders, of which (i) 310,000 are subject to shareholderapproval and certain of which are also subject to obtaining a tax pre-ruling from the Israeli Tax Authority; and (ii) 20,000 are subject to obtaining a tax pre-ruling from the Israeli Tax Authority only. For outstanding equity-based awards granted to our Office Holders, see below under “Item 6. Directors, SeniorManagement and Employees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” 95Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Individual Compensation of Covered Executives The following table sets forth the compensation granted to the Company’s Office Holders with respect to the year ended December 31, 2014. Allamounts reported in the table reflect the cost to the Company, as recognized in its financial statements for the year ended December 31, 2014. The fiveindividuals for whom disclosure is provided are referred to herein as “Covered Executives.” Information Regarding the Covered Executives Compensation for Services(1) Name and Principal Position(1) Base Salary($) Benefits andPerquisites($)(2) CashBonus($)(3) Equity-BasedCompensation($)(4) Other($)(5) Total ($) Allen Baharaff (President and Chief Executive Officer and Director) 240,000 73,363 200,000 413,295 30,000 956,657 Maya Halpern (Chief Medical Officer and Director) 67,078 19,626 5,590 - 30,000 122,294 Antony Appleyard (Vice President Drug Development) 186,351 - - - - 186,351 Shmuel Nir (Director) - - - 94,970 30,000 124,970 William Marth (Director) - - - 49,957 30,000 79,957 (1)Mr. Baharaff is a full-time employee of the Company; Dr. Halpern and Dr. Appleyard are part-time employees of the Company. Dr.Appleyard is employed through a service provider. Mr. Baharaff and Dr. Halpern also serve as members of our Board. Messrs. Nir and Marthserve solely as members of our Board. Cash compensation amounts denominated in currencies other than the Dollar were converted intoDollars at an exchange rate of NIS 3.58 = $1.00, which reflects the average conversion rate for fiscal year ended December 31, 2014. (2)Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits andperquisites may include, to the extent applicable to the Covered Executives, payments, contributions and/or allocations for savings funds,pension, severance, vacation, car allowance, medical insurances and benefits, risk insurance (e.g., life, disability, accident), telephone,convalescence pay, relocation, payments for social security and other benefits and perquisites consistent with the Company’s policies. (3)Amounts reported in this column refer to the cash bonuses provided by the Company with respect to 2014, which have been provided for inthe Company’s financial statements for the year ended December 31, 2014 (including if such bonuses were paid during 2015). Theyexclude bonuses paid during 2014 which were provided for in the Company’s financial statements for previous years. The amounts reportedin this column do not include ad-hoc cash bonuses of $10,285 and $40,000 to Mr. Baharaff and Dr. Halpern, respectively, which wereapproved by the Board and the Remuneration Committee on December 30, 2014, and are subject to shareholder approval. 96Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (4)Amounts reported in this column represent the expense recorded in the Company’s financial statements for the year ended December 31,2014 with respect to equity-based compensation. Assumptions and key variables used in the calculation of such amounts are discussed inNote 10 to the Financial Statements. For outstanding equity-based awards granted to Covered Executives see below under “Item 6.Directors, Senior Management and Employees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” (5)Amounts reported in this column include payments made during 2014 and recorded in the financial statements for the year ended December31, 2014 relating to directors’ fees. Compensation of Directors As approved by our shareholders at our 2014 annual meeting of shareholders, in connection with their services as directors of the Company, each ofour directors from time to time, including external directors, is entitled to an annual payment of $30,000, plus value-added tax, or VAT, if applicable, payablequarterly at the end of each quarter. For the outstanding equity-based awards granted to our directors, see below under “Item 6. Directors, Senior Management and Employees—E. ShareOwnership—Certain Information Concerning Equity Awards to Office Holders.” Compensation of External Directors Each of our external directors is entitled to an annual amount of $30,000, plus VAT, if applicable, payable in quarterly installments at the end ofeach quarter. The compensation of external directors is also subject to the provisions of the Israeli regulations promulgated pursuant to the Companies Lawgoverning the terms of compensation payable to external directors, or the Compensation Regulations, which provide that such compensation will not be lessthan the Minimum Amount (as such term is defined in the Compensation Regulations). According to the Compensation Regulations, the Minimum Amountis adjusted twice annually based on the Israeli Consumer Price Index and are a function of the Company’s shareholders’ equity. See also “Item 6. Directors,Senior Management and Employees—C. Board Practices—External Directors & Financial Experts” below. Employment Agreements and Arrangements with Directors and Related Parties We entered into written employment agreements with each of our executive officers. These agreements provide for notice periods of varyingduration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue to receive basesalary and benefits. These agreements also contain customary provisions regarding non-competition, confidentiality of information and assignment ofinventions. However, the enforceability of the non-competition and assignment of inventions provisions may be limited under applicable law. See “Item 3.Key Information—Risk Factors—Risks Related to Our Business, Industry and Regulatory Requirements.” Employment Agreement with Our President and Chief Executive Officer We entered into an employment agreement, dated December 23, 2013, with our President and Chief Executive Officer, Mr. Allen Baharaff, who isalso a controlling shareholder, which was approved and ratified by our shareholders on December 30, 2013. Under the terms of his employment agreement,Mr. Baharaff is entitled to a gross monthly salary of $20,000. In addition, Mr. Baharaff will be eligible to receive (i) an annual bonus in an amount of two tosix times his monthly base salary, to be determined based on the achievement of certain milestones set by our Board and (ii) upon the termination of hisemployment, special remuneration of nine times his gross monthly salary as consideration for certain noncompetition provisions contained in hisemployment agreement. Mr. Baharaff has received a special bonus of $200,000 in recognition of his efforts and contribution with respect to theconsummation of our initial public offering. Mr. Baharaff will also receive other benefits required under Israeli law or that are customary for senior executivesin Israel such as reimbursement for cellular telephone expenses, automobile maintenance expenses, and Company contributions equivalent to 5%, 8.33%,2.5% and 7.5% of his gross monthly base salary towards certain pension, or a manager’s insurance policy, severance, disability and tax-advantaged savingsfunds, or a study fund, respectively. Mr. Baharaff will also contribute 5% and 2.5% of his gross monthly salary towards the manager’s insurance policy andstudy fund, respectively. Mr. Baharaff’s employment agreement is terminable by either party upon 90 days’ prior written notice, and contains customaryprovisions regarding noncompetition, confidentiality of information and assignment of inventions. 97Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For cash bonuses granted to Mr. Baharaff see “Item 6. Directors, Senior Management and Employees— B. Compensation—Individual Compensationof Covered Executives.” For outstanding equity-based awards granted to Mr. Baharaff see below under “Item 6. Directors, Senior Management andEmployees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” Employment Agreement with Our Chief Medical Officer We entered into an employment agreement with Dr. Maya Halpern, our Chief Medical Officer and a member of our Board, dated December 23, 2013,on a part-time basis. Under her employment agreement, which became effective as of February 2014, Dr. Halpern is entitled to a gross monthly salary of NIS20,000 (which is equivalent to US$ 5,602, based on an exchange rate of NIS 3.58 per US$ 1.00, which reflects the average exchange rate for the year endedDecember 31, 2014) per month. In addition, Dr. Halpern will be eligible to receive other benefits required under Israeli law or that are customary for seniorexecutives in Israel, including entitlement for travel expenses and Company contributions equivalent to 6%, 8.33% and 7.5% of her gross monthly basesalary towards certain pension, or a manager’s insurance policy, severance and tax-advantaged savings funds, or a study fund, respectively. Dr. Halperin willalso contribute 5.5% and 2.5% of her gross monthly salary towards the manager’s insurance policy and study fund, respectively. The employment agreementis terminable by either party upon 60 days’ prior written notice and contains customary provisions regarding noncompetition, confidentiality of informationand assignment of inventions. For cash bonuses granted to Dr. Halpern, see “Item 6. Directors, Senior Management and Employees— B. Compensation—Individual Compensationof Covered Executives.” For outstanding equity-based awards granted to Dr. Halpern see below under “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” 2013 Incentive Share Option Plan We maintain one equity-based incentive plan, our 2013 Incentive Share Option Plan, or our 2013 Plan. As of March 15, 2015, a total of 2,340,492shares were reserved for issuance under our 2013 Plan, of which options to purchase 1,575,366 ordinary shares were issued and outstanding thereunder (i.e.,were granted but not canceled, expired or exercised) and 435,126 shares remain unallocated for future equity awards pursuant to our 2013 Plan. In addition,the Board approved conditional grants of 330,000 options to certain of its Office Holders, which are not reflected in the issued and outstanding options or theunallocated share amounts set forth above. Our Board has approved an increase in the number of shares reserved for issuance under our 2013 Plan from2,340,492 to 3,090,492, subject to shareholder approval under Israeli law. Our 2013 Plan, which was adopted by our Board on September 2, 2013, andapproved by our shareholders in December 30, 2013 provides for the grant of options to purchase our ordinary shares and the issuance of restricted shares toour and our affiliates’ respective directors, employees, office holders, service providers and consultants. Our 2013 Plan provides for such equity-basedcompensation under various and different tax regimes, including those detailed below. The 2013 Plan is administered by our Board, which, on its own or upon the recommendation of our Remuneration Committee or any other similarcommittee of the Board, shall determine, subject to applicable law, the identity of grantees of awards and various terms of the grant. Consistent with ourCompensation Policy, the 2013 Plan provides for granting options to purchase our ordinary shares pursuant to Section 102 of the Israeli Income TaxOrdinance, or the Ordinance, under the capital gains route, to directors, officers and employees who are Israeli residents holding )or have a right to hold or topurchase) less than 10% of our total share capital and do not have a right to receive 10% or more of the Company’s profits. Subject to shareholder approval,our Board has approved an amendment to the 2013 Plan, which sets off the terms and conditions with respect to the issuance of restricted share units underthe 2013 Plan. 98Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Section 102 of the Ordinance allows Israeli employees, directors and officers, who are not controlling shareholders to receive favorable tax treatmentfor compensation in the form of shares or options. However, under this route we are not allowed to deduct any expense with respect to the issuance of theoptions or shares. Israeli non-employee service providers, consultants and shareholders who hold 10% or more of our total share capital or are otherwisecontrolling shareholders, may be granted options pursuant to Section 3(i) of the Ordinance, which does not provide for similar tax benefits. In order tocomply with the terms of the capital gains route pursuant to Section 102 of the Ordinance, the granted options as well as the ordinary shares issued uponexercise of these options and other shares received subsequently following any realization of rights with respect to such options (such as share dividends andshare splits), must be granted to a trustee for the benefit of the relevant grantee and should be held by the trustee for at least two years after the date of thegrant. If such options or shares are sold by the trustee or are transferred to the grantee before the end of the two year period, then the grantee would be taxed attop marginal rates upon selling the shares. For residents, or deemed residents, of the United States, the 2013 Plan provides grants, which are pursuant to Section 422 of the Internal RevenueCode of 1986, as amended, or the Code, as Incentive Stock Options, or ISOs, and any other participants which do not qualify for ISOs, as Non-statutory StockOptions, or NSOs, pursuant to the Code. Section 422 of the Code allows employees, directors and officers, who are non-controlling shareholders (e.g., less than 10% shareholders) and areconsidered residents of the United States or those who are deemed to be residents of the United States for purposes of the payment of tax, or are otherwisesubject to taxation in the United States with respect to the grant of awards, to receive favorable tax treatment for compensation in the form of shares or ISOs.10% shareholders or persons which are not service providers will receive NSOs, which do not entitle them to receive similar tax benefits. Section 422(b) ofthe Code provides for the ISO track such that the individual does not have to pay ordinary income tax (nor employment taxes) on the difference between theexercise price and the fair market value of the shares issued (however, the holder may have to pay U.S. alternative minimum tax instead). However, if theshares are held for one year from the date of exercise and two years from the date of grant, then the profit (if any) made on sale of the shares is taxed as long-term capital gain. Section 422 of the Code requires that any grant of awards shall not be made at a price which is less than 100% of the fair market value ofsuch awards on the date of the grant, all pursuant to the terms of Section 409A of the Code. However, under this ISO track, we are not allowed to deduct anyexpense with respect to the issuance of the options or shares. In order to comply with the terms of the ISO track, the option granted thereunder must meet therequirements of Section 422 of the Code when granted and at all times until the exercise thereof. Options granted under the 2013 Plan will vest in accordance with the vesting dates as determined by the Board following the recommendation of theRemuneration Committee or any other similar committee of the Board with respect to each grant. Generally, options that are not exercised within ten yearsfrom the grant date expire, unless otherwise determined by the Board and the Remuneration Committee, as applicable, provided however, that, pursuant toour Compensation Policy, any equity-based awards to Office Holders must include both a minimum vesting period of not less than one year from the date ofgrant, and an exercise period of no more than ten years from the date of grant. In case of termination for reasons of disability or death, the grantee or his legal successor may exercise options that have vested prior to terminationwithin a period of twelve months from the date of disability or death. If we terminate a grantee’s employment or service for cause, all of the grantee’s vestedand unvested unexercised options will expire and terminate on the date of termination. If a grantee’s employment or service is terminated for any otherreason, the grantee may exercise his or her vested options within 90 days of the date of termination or within a longer period under specified circumstances.Any expired or unvested options shall return to the option pool reserved under the 2013 Plan for reissuance. In the event of a merger or consolidation of our company subsequent to which we would no longer exist as a legal entity, or a sale of all, orsubstantially all, of our ordinary shares or assets or other transaction having a similar effect on us, or a Transaction, any unexercised options then outstandingwill be cancelled. Notwithstanding the foregoing, the Board, or the relevant committee of the Board, may determine that the options will not be cancelled butwill be assumed or substituted for an appropriate number of the same type of shares or other securities of the successor company as were distributed to theCompany or the shareholders in connection with the Transaction. In addition, the Board, or the relevant committee of the Board, may determine to include incertain option agreements either a clause that provides for acceleration of vesting of all or part of the unvested options in the event of a Transaction or theoccurrence of another event or a clause which provides that if the optionee’s employment with the successor company is terminated by the successorcompany without cause within a certain period, not to exceed two years from the closing of such Transaction, all or part of the unvested options shall beaccelerated. 99Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. C. Board Practices. We are incorporated in Israel, and, therefore, we are subject to various corporate governance practices under Israeli law relating to such matters asexternal directors, independent directors, audit committee, remuneration committee and internal auditors. These Israeli law requirements are in addition to therequirements of the Listing Rules of the Nasdaq Capital Market and other relevant provisions of U.S. securities laws. Under such Listing Rules, a foreignprivate issuer may generally follow its home country practices for corporate governance in lieu of such comparable Listing Rules’ requirements, except forcertain matters such as composition and responsibilities of the audit committee and the SEC-mandated standards for the independence of its members. Seebelow under “Item 16G. Corporate Governance” for further information. Membership of the Board Under our Articles, the Board consists of three classes of directors (not including the two external directors, each of whom are not part of any class)which are appointed for fixed terms of office in accordance with the Companies Law and our Articles, with one class being elected each year for a term ofapproximately three years by our shareholders at our annual general meeting. Directors so elected cannot be removed from office by the shareholders until the expiration of their term of office. The directors do not receive anybenefits upon the expiration of their term of office. The three classes of directors are Class I Directors, Class II Directors and Class III Directors. The term of the initial Class I Directors will expire at theannual general meeting of shareholders to be held in 2015; the term of the initial Class II Directors will expire at the annual general meeting of shareholdersto be held in 2016; and the term of the initial Class III Directors will expire at the annual general meeting of shareholders to be held in 2017. Dr. Halpern isthe initial Class I Director; Mr. Shmuel Nir and Mr. Allen Baharaff are the initial Class II Directors; and Mr. William Marth and Mr. Chaim Hurvitz are theinitial Class III Directors. In accordance with the Articles, any vacancies on the Board of, including unfilled positions, may be filled by a vote of a majority ofthe directors then in office, and each director chosen in this manner would hold office until the next annual general meeting of the Company (or until theearlier termination of his or her appointment as provided for in the Companies Law or the Articles). The Articles provide that the minimum number of members of the Board is three and the maximum number is eleven. The Board presently comprisesseven members, two of whom are external directors. A nominee for service as a director in a public company may not be elected without submitting a declaration to the company, prior to election,specifying that he or she has the requisite qualifications to serve as a director, independent director or external director, as applicable, and the ability todevote the appropriate time to performing his or her duties as such. A director, including an external director or an independent director, who ceases to meet the statutory requirements to serve as a director, externaldirector or independent director, as applicable, must notify the company to that effect immediately and his or her service as a director will expire uponsubmission of such notice. External Directors & Financial Experts Under the Companies Law and the regulations promulgated pursuant thereto, Israeli companies whose shares have been offered to the public, or thatare publicly traded outside of Israel, which we refer to as a public company, are required to appoint at least two natural persons as “external directors.” Noperson may be appointed as an external director if such person is a relative of a controlling shareholder or if such person, a relative, partner or employer ofsuch person, or anyone to whom such person is directly or indirectly subordinate, or any entity under such person’s control, has or had, on or within the twoyears preceding the date of such person’s appointment to serve as an external director, any affiliation with the company to whose board of directors theexternal director is proposed to be appointed, with any controlling shareholder of the company, with a relative of such controlling shareholder, or with anyentity controlled by the company or by a controlling shareholder of the company, or, if the company has no controlling shareholder or a shareholder holding25% or more of the company’s voting rights, any affiliation, at the time of the appointment, to the chairman of the board of directors, the chief executiveofficer or the most senior financial officer of the company, or to a shareholder holding 5% or more of the outstanding shares or voting rights of the company.The term “affiliation” includes an employment relationship, a business or professional relationship maintained on a regular basis or control, as well as serviceas an office holder (as such term is defined in the Companies Law and which term includes a director), except for a term of a director appointed in order toserve as an external director of a company that is about to offer its shares to the public for the first time. The Israeli Minister of Justice, in consultation withthe Israeli Securities Authority, may determine that certain matters will not constitute an affiliation, and has issued certain regulations with respect thereof. 100Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, no person may serve as an external director if: (i) the person’s other positions or other business activities create, or may create, a conflictof interest with the person’s service as an external director or interfere with the person’s ability to serve as an external director; (ii) at the time such personserves as a non-external director of another company on whose board of directors a director of the reciprocal company serves as an external director; (iii) theperson is an employee of the Israel Securities Authority or of an Israeli stock exchange; (iv) such person or such person’s relative, partner, employer or anyoneto whom such person is directly or indirectly subordinate, or any entity under such person’s control, has business or professional relations with any person orentity he or she should not be affiliated with, as described in the previous paragraph, unless such relations are negligible; or (v) such person receivedcompensation, directly or indirectly, in connection with such person’s services as an external director, other than as permitted under the Companies Law andthe regulations promulgated thereunder. If, at the time of election of an external director, all other directors who are not controlling shareholders of suchcompany or their relatives, are of the same gender, then the designated external director must be of the other gender. Pursuant to the Companies Law, an external director is required to have either financial and accounting expertise or professional qualificationsaccording to criteria set forth in regulations promulgated under the Companies Law, provided that at least one of the external directors has financial andaccounting expertise. The board of directors must make the determination as to the financial and accounting expertise, and as to the professionalqualifications, of a director taking into consideration those criteria and matters set forth in the regulations. In addition, the boards of directors of publiccompanies are required to make a determination as to the minimum number of directors who must have such financial and accounting expertise based on,among other things, the type of company, its size, the volume and complexity of the company’s activities and the number of directors. The Board hasdetermined that the minimum number of directors with financial and accounting expertise, in addition to the external director or directors who have suchexpertise, will be one, and that Mr. Marth qualifies as such. The external director who qualifies to have such expertise is Ms. Yaron-Eldar. Each of Ms. Yaron-Eldar and Mr. Marth qualifies as an audit committee financial expert pursuant to the applicable SEC rules, and accordingly as having the necessary financialsophistication as required by the Nasdaq Capital Market rules. External directors are elected for a term of three years at the general meeting of shareholders by a simple majority, provided that the majorityincludes at least a majority of the shareholders who are not controlling shareholders and who do not have a personal interest in the matter as a result of anaffiliation with a controlling shareholder, who are present and voting (abstentions are disregarded), or that the non-controlling shareholders or shareholderswho do not have a personal interest in the matter as a result of an affiliation with a controlling shareholder who are present and voted against the electionhold 2% or less of the voting power of the company. External directors may be re-elected for two additional terms of three years each, provided that with respect to the appointment for each suchadditional three year term, one of the following has occurred: (i) the reappointment of the external director has been proposed by one or more shareholdersholding together 1% or more of the aggregate voting rights in the company and the appointment was approved at the general meeting of the shareholders bya simple majority, provided that: (1)(x) in calculating the majority, votes of controlling shareholders or shareholders having a personal interest in theappointment as a result of a relationship with a controlling shareholder and abstentions are disregarded and (y) the total number of shares of shareholders whodo not have a personal interest in the appointment as a result of a relationship with a controlling shareholder and/or who are not controlling shareholders,present and voting in favor of the appointment exceed 2% of the aggregate voting rights in the company, and (2) the external director so reappointed is not arelated or competing shareholder, or a relative of such shareholder, at the time of the appointment, and does not and did not have, any affiliation with arelated or competing shareholder, on or within the two years preceding such person’s reappointment to serve as another term as external director. The term“related or competing shareholder” means the shareholder(s) proposing the reappointment or a shareholder holding 5% or more of the outstanding shares orvoting rights of the company, provided that at the time of the reappointment, such shareholder(s), a controlling shareholder of such shareholder(s), or acompany controlled by such shareholder(s), have a business relationship with the company or are competitors of the company; the Israeli Minister of Justice,in consultation with the Israeli Securities Authority, may determine that certain matters, under his conditions, will not constitute a business relationship orcompetition with the company; or (ii) the reappointment of the external director has been proposed by the board of directors and the appointment wasapproved by the majority of shareholders required for the initial appointment of an external director. 101Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. However, under regulations promulgated pursuant to the Companies Law, companies whose shares are listed for trading on specified exchangesoutside of Israel, including the Nasdaq Capital Market, may elect external directors for additional terms that do not exceed three years each, beyond the threeyear terms generally applicable, provided that, if an external director is being re-elected for an additional term or terms beyond three year terms: (i) the auditcommittee and board of directors must determine that, in light of the external director’s expertise and special contribution to the board of directors and itscommittees, the re-election for an additional term is to the company’s benefit; (ii) the external director must be re-elected by the required majority ofshareholders as described above; and (iii) the term during which the nominee has served as an external director and the reasons given by the audit committeeand board of directors for extending his or her term of office must be presented to the shareholders prior to their approval. Following termination of service as an external director, a public company, a controlling shareholder thereof and any entity controlled by acontrolling shareholder, may not grant any benefit, directly or indirectly, to any person who served as an external director of such public company, or to hisor her spouse or child, including, not appointing such person, or his or her spouse or child, as an office holder of such public company or of any entitycontrolled by a controlling shareholder of such public company, not employing such person or his or her spouse or child and not receiving professionalservices for pay from such person, either directly or indirectly, including through a corporation controlled by such person, all until the lapse of two years fromtermination of office with respect to the external director, his or her spouse or child; and until the lapse of one year from termination of office with respect toother relatives of the former external director. Each committee of the Board that is authorized to exercise powers of a company’s board of directors must include at least one external director. Theaudit and remuneration committees of a company’s board of directors must include all of such company’s external directors. Under the Companies Law, an external director cannot be dismissed from office unless: (i) the board of directors determines that the external directorno longer meets the statutory requirements for holding the office, or that the external director is in breach of his or her duty of loyalty to the company and theshareholders vote, by the same majority required for the appointment, to remove the external director after the external director has been given theopportunity to present his or her position; (ii) a court determines, upon a request of a director or a shareholder, to dismiss the external director after findingthat such external director no longer meets the statutory requirements of an external director or that the external director is in breach of his or her duty ofloyalty to the company; or (iii) a court determines, upon a request of the company or a director, shareholder or creditor of the company, to dismiss theexternal director after finding that such external director is unable to fulfill his or her duty or has been convicted of specified crimes. Ms. Yaron-Eldar and Dr. Sidransky are the current external directors, appointed by our Board and approved by our shareholders to serve as such.Each external director will serve for an initial term of three years until June 2017. Independent Directors Under the Companies Law Under the Companies Law an “independent director” is either an external director or a director appointed or classified as such who meets the samenon-affiliation criteria as an external director, as determined by the audit committee, and who has not served as a director of the company for more than nineconsecutive years. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature ofsuch director’s service. An independent director may be removed from office in the same manner that an external director may be removed and, upontermination of service as an independent director, is subject to the same restrictions with respect to receipt of benefits, service as an office holder, employmentand provision of professional services as are applicable to external directors. 102Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Regulations promulgated pursuant to the Companies Law provide that a director in a public company whose shares are listed for trading onspecified exchanges outside of Israel, including the Nasdaq Capital Market, such as the Company, who qualifies as an independent director under therelevant non-Israeli rules relating to independence standards for audit committee membership and who meets certain non-affiliation criteria, which are lessstringent than those applicable to external directors, would be deemed an “independent” director pursuant to the Companies Law provided: (i) he or she hasnot served as a director for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or herremuneration shall be in accordance with the Compensation Regulations. For these purposes, ceasing to serve as a director for a period of two years or lesswould not be deemed to sever the consecutive nature of such director’s service. Furthermore, pursuant to these regulations, such company may reappoint a person as an independent director for additional terms, beyond nineyears, which do not exceed three years each, if the audit committee and the board of directors determine that in light of the independent director’s expertiseand special contribution to the board of directors and its committees, the reappointment for an additional term is to the company’s benefit. Committees of the Board Our Articles also provide that the Board may delegate any, or all, of its powers to one or more committees of the Board, and may entrust to andconfer upon a “managing director” such of its powers as it deems appropriate. However, the Companies Law provides that certain powers and authorities (forexample, the power to approve the financial statements) may not be delegated and may be exercised only by the Board. Notwithstanding the foregoing, wecurrently do, and intend to continue to, comply with the corporate governance requirements of the Nasdaq Capital Market, except to the extent indicatedelsewhere in this annual report, including as set forth under “Item 16G. Corporate Governance” below. The Companies Law requires public companies suchas the Company to appoint an audit committee and a remuneration committee. Audit Committee The Companies Law requires public companies to appoint an audit committee comprised of at least three directors, including all of the externaldirectors, the majority of whom must be independent directors under the Companies Law. The Companies Law further stipulates that the following may notbe members of the audit committee: (i) the chairman of the board of directors; (ii) any director employed by or providing services on an ongoing basis to thecompany, to a controlling shareholder of the company or an entity controlled by a controlling shareholder of the company; (iii) a director whose livelihooddepends on a controlling shareholder; and (iv) a controlling shareholder or any relative of a controlling shareholder. The Companies Law further requires that: (i) the chairperson of the audit committee must be an external director; (ii) generally, any person who isnot entitled to be a member of the audit committee may not attend the audit committee’s meetings and voting sessions, unless such person was invited by thechairperson of the committee for the purpose of presenting a specific subject matter thereof; and (iii) the quorum required for the convening of meetings ofthe audit committee and for adopting resolutions by the audit committee be a majority of the members of the audit committee, provided that the majority ofthe members present are independent directors and at least one of them is an external director. The responsibilities of the audit committee under the Companies Law include: (i) identifying flaws in the management of a company’s business andmaking recommendations to the board of directors as to how to correct them; (ii) with respect to certain actions involving conflicts of interest and withrespect to certain related party transactions, deciding whether such actions are material actions and whether such transactions are extraordinary transactions,respectively, all for the purpose of approving such actions or transactions; (iii) reviewing and deciding whether to approve certain related party transactionsand certain actions involving conflicts of interest; (iv) reviewing the internal auditor’s work program; (v) examining the company’s internal control structureand processes, the performance of the internal auditor and whether the internal auditor has at his or her disposal the tools and resources required to performhis or her duties, considering, inter alia, the special needs of the company and its size; (vi) examining the external auditor’s scope of work as well as theexternal auditor’s fees and providing its recommendations to the appropriate corporate organ; (vii) providing for arrangements as to the manner in which thecompany will deal with employee complaints with respect to deficiencies in the management of the company’s business and the protection to be provided tosuch employees; and (viii) with respect to related party transactions with a controlling shareholder, regardless of whether such transactions are extraordinarytransactions, that prior to entering into such transaction, to establish the requirement of having a competitive process under the supervision of the auditcommittee or any individual, committee or body on its behalf and according to criteria established by the audit committee and to determine procedures forapproving certain related party transactions with a controlling shareholder, which were determined by the audit committee to be non-extraordinarytransactions, but which are not negligible transactions. 103Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our Board has adopted an audit committee charter setting forth the responsibilities of the Audit Committee consistent with the rules of the SEC andthe Listing Rules of the Nasdaq Capital Market, as well as the requirements for such committee under the Companies Law, as described below. Our Audit Committee oversees the accounting and financial reporting processes of the Company. It also provides assistance to the Board infulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting and internal control functions ofthe Company. In carrying out its duties, our Audit Committee meets with management at least once a year, at which time, among other things, it reviews, andeither approves or disapproves, the financial results of the Company for the immediately preceding fiscal year and conveys its conclusions in this regard tothe Board. Our Audit Committee also monitors generally the services provided by the Company’s external auditors to ensure their independence, and reviewsall audit and non-audit services provided by them. The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the Company’s external auditors. These services mayinclude audit services, tax services and other consulting services. Additional services may be pre-approved by the Audit Committee on an individual basis.Once services have been pre-approved, the Company’s external auditors and management then report to the Audit Committee on a periodic basis regardingthe extent of services actually provided in accordance with the applicable pre-approval, and regarding the fees for the services performed. Such fees for 2014were pre-approved by the Audit Committee in accordance with these procedures. The Company’s external and internal auditors also report regularly to our Audit Committee at its meetings, and our Audit Committee discusses withthe Company’s external auditors the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and theclarity of disclosures in the Company’s financial statements, as and when it deems it appropriate to do so. Under the provisions of the Sarbanes-Oxley Act, the audit committee is directly responsible for the appointment, compensation and oversight of thework of the company’s external auditors. However, under Israeli law, the appointment of external auditors and their compensation require the approval of theshareholders of a public company. Pursuant to Israeli law, the shareholders may delegate the authority to determine the compensation of the external auditorsto the board of directors. In addition, pursuant to the Companies Law, the audit committee is required to examine the external auditors’ fees and to provide itsrecommendations with respect thereto to the appropriate corporate body. Accordingly, the appointment of the external auditors is required to be approvedand recommended to the shareholders by our Audit Committee and approved by the shareholders. The compensation of the external auditors for auditservices is required to be approved and recommended to the Board by our Audit Committee and approved by the Board. The Board has delegated itsauthority to approve the compensation of external auditors for non-auditing services to the Audit Committee. Mr. Nir, Ms. Yaron-Eldar and Dr. Sidransky are the current members of our Audit Committee, with Ms. Yaron-Eldar serving as chairperson. Each ofthem is an “independent director” in accordance with the Nasdaq Capital Market corporate governance requirements, as affirmatively determined by ourBoard, and Ms. Yaron-Eldar and Dr. Sidransky also meet the qualifications for service as an “external director” under the Companies Law and the regulationspromulgated thereunder, also as affirmatively determined by our Board and our shareholders. In addition, our Board has affirmatively determined that Ms.Yaron-Eldar also qualifies as an audit committee financial expert pursuant to the applicable SEC rules, and accordingly has the necessary financialsophistication as required by the Nasdaq Capital Market rules, and as a financial and accounting expert under the Companies Law. 104Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Remuneration Committee The Companies Law requires public companies to appoint a remuneration committee comprised of at least three directors, including all of theexternal directors, who must generally also constitute a majority of the members. All other members of the committee, who are not external directors, must bedirectors who receive compensation consistent with that of external directors and that is in compliance with the Compensation Regulations. In addition, thechairperson of the remuneration committee must be an external director. The Companies Law further stipulates that directors who are not qualified to serve on the audit committee, as described above, may not serve on theremuneration committee either and that similar to the audit committee, generally, any person who is not entitled to be a member of the remunerationcommittee may not attend the remuneration committee’s meetings. Our Board has adopted a remuneration committee charter setting forth the responsibilitiesof our Remuneration Committee, as described below. The responsibilities of the remuneration committee under the Companies Law include: (i) making recommendations to the board of directors withrespect to the approval of the compensation policy and any extensions thereto; (ii) periodically reviewing the implementation of the compensation policyand providing the board of directors with recommendations with respect to any amendments or updates thereto; (iii) reviewing and resolving whether or notto approve transactions with respect to the terms of office and employment of office holders; and (iv) resolving, under certain circumstances prescribed underthe Companies Law, whether or not to exempt a transaction with a candidate for chief executive officer who meets non-affiliation criteria from shareholderapproval. Our Remuneration Committee also oversees the administration of the Company’s various compensation plans and arrangements, in particular, theincentive compensation, deferred compensation and equity based plans of the Company (and to the extent appropriate, of the subsidiaries of the Company)and assists the Board in fulfilling its responsibilities relating to the compensation of directors, the Chief Executive Officer and other office holders of theCompany. In carrying out these duties, our Remuneration Committee meets on an ad hoc basis. Under the Companies Law, our Remuneration Committeemay need to seek the approval of the Board and the shareholders for certain compensation decisions as described above. Each member of our RemunerationCommittee is an “independent director” in accordance with the Nasdaq Capital Market corporate governance requirements, as affirmatively determined byour Board. Mr. Nir, Ms. Yaron-Eldar and Dr. Sidransky are the current members of our Remuneration Committee, with Ms. Yaron-Eldar serving as chairperson. Nominating Committee Our Board does not currently have a nominating committee, as director nominees are presented by our Board to our shareholders based upon thenominations made by the Board itself, or in certain circumstances as prescribed by the Companies Law, by a shareholder or group of shareholders. Pursuant tothe Listing Rules of the Nasdaq Capital Market, we currently intend to rely upon the exemption for foreign private issuers from the Nasdaq Capital Marketcorporate governance requirements related to independent director oversight of nominations to our Board and the adoption of a formal written charter orboard resolution addressing the nominations process. See “Item 16G. Corporate Governance.” R&D Committee Our R&D Committee, which was established by the Board on May 2014, advises and assists the Board in its oversight of our research anddevelopment programs, including the rationale and timeline of clinical trials and other studies, as well as market surveys in connection therewith. The R&DCommittee operates in accordance with the purposes and objectives determined by the Board from time to time. Mr. Hurvitz, Dr. Sidransky and Mr. Marth arethe current members of our R&D Committee, with Mr. Hurvitz serving as chairperson. 105Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Internal Auditor Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor recommended by the auditcommittee and nominated by the board of directors. The role of the internal auditor is to examine, among other things, our compliance with applicable lawand orderly business procedures. An internal auditor should comply with the requirements of the Companies Law and the Internal Audit Law, 5752-1992, andmay not be: (a) a person (or a relative of a person) who holds more than 5% of the Company’s outstanding shares or voting rights; (b) a person (or a relative of a person) who has the power to appoint a director or the general manager of the Company; (c) an office holder, including a director, of the Company (or a relative thereof); or (d) a member of the Company’s independent accounting firm, or anyone on his or her behalf. Pursuant to Israeli law, an internal auditor’s tenure cannot be terminated without his or her consent, nor can he or she be suspended from suchposition unless the board of directors of the company has so resolved following the recommendations of the company’s audit committee and, after providingthe internal auditor with the opportunity to present his or her position to the board of directors of the company and to the audit committee. On November 2, 2014, our Board appointed Mr. Alon Amit, CPA, from Raveh Ravid & Co. CPA, Tel Aviv, Israel, as the Company’s internal auditor,effective as of January 1, 2015, for a period of two years. Exculpation and Indemnification of Directors and Officers Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company mayexculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of the dutyof care but only if a provision authorizing such exculpation is included in its articles of association. Our Articles include such a provision. The Companymay not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders. Under the Companies Law, a company may indemnify, or undertake in advance to indemnify, an office holder for the following liabilities andexpenses, imposed on office holder or incurred by office holder due to acts performed by him or her as an office holder, provided its articles of associationinclude a provision authorizing such indemnification: ·financial liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’saward approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, thensuch an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activitieswhen the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable underthe circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria; ·reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or proceeding institutedagainst him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed againstsuch office holder as a result of such investigation or proceeding; and (ii) no financial liability was imposed upon him or her as a substitute forthe criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect toan offense that does not require proof of criminal intent or as a monetary sanction; and 106Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted againsthim or her by the company, on its behalf, or by a third-party, or in connection with criminal proceedings in which the office holder wasacquitted, or as a result of a conviction for an offense that does not require proof of criminal intent. Under the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as anoffice holder if and to the extent provided in the company’s articles of association: ·a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe thatsuch act would not prejudice the company; ·a breach of the duty of care to the company or to a third-party; and ·a financial liability imposed on the office holder in favor of a third-party. Nevertheless, under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following: ·a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company in the event officeholder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; ·a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; ·an act or omission committed with intent to derive unlawful personal benefit; or ·a fine, monetary sanction, penalty or forfeit levied against the office holder. Under the Companies Law, exculpation, indemnification and insurance of office holders require the approval of the remuneration committee, boardof directors and, in certain circumstances, the shareholders, as described above under “Item 6—Directors, Senior Management and Employees—B.Compensation.” Our Articles permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted by the Companies Law. Each of our officeholders have entered into an indemnification agreement with us. In addition, have entered into agreements with each of our office holders, that becameeffective immediately upon consummation of our initial public offering, which superseded and replaced each indemnification agreement previously enteredinto by such office holders with the Company, exculpating them, to the fullest extent permitted by Israeli law, from liability to us for damages caused to us asa result of a breach of the duty of care and undertaking to indemnify them to the fullest extent permitted by Israeli law, including with respect to liabilitiesresulting from certain acts performed by such office holders in their capacity as an office holder of the Company, our subsidiaries or our affiliates. Inaccordance with each such new indemnification agreement, we agree to indemnify our office holders for certain liabilities resulting from our initial publicoffering. The indemnification is limited both in terms of amount and coverage. In the opinion of the SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is against publicpolicy and therefore unenforceable. Agreements with Directors Other than with our President and Chief Executive Officer, as detailed in “Item 7. Major Shareholder and Related Party Transactions—Related PartyTransactions—Employment Agreements and Arrangements with Directors and Related Parties—Employment Agreement with Our President and ChiefExecutive Officer,” we do not have written agreements with any director providing for benefits upon the termination of his or her services with our Company. 107Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. D. Employees. As of December 31, 2014, we had 15 employees, of which 11 were full-time employees, two were part-time employees and two were consultants.Nine of such employees were involved in our product development operations and six served in general and administrative capacities. Thirteen of ouremployees were located in Israel and two of our research and development employees were located in the United Kingdom. The increase in the number ofemployees from 2013 by seven employees was the result of our growing activity in connection with our clinical studies, and drug development operations,which require more employees in research and development, as well as in administration and operations. In connection with our future U.S. clinical trials, weintend to hire a vice president for clinical operations, who we expect will be responsible for, among other things, establishing and building a clinical researchinfrastructure in the United States, including for the Phase III clinical trials, communications with the scientific and medical communities and physicians,which we believe may increase our operations and presence within the United States. In March 2015, we engaged George Tonelli to serve as our VicePresident of Clinical Operations. While none of our employees located in Israel are party to any collective bargaining agreements or represented by any labor unions, certainprovisions of the Israeli labor laws and certain collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and theCoordination Bureau of Economic Organizations (including the Industrialists’ Associations) are applicable to our employees by order of the Israel Ministryof Economics. These provisions primarily concern the length of the workday, minimum daily wages for professional workers, pension fund benefits for allemployees, insurance for work-related accidents, procedures for dismissing employees, determination of severance pay and other conditions of employment.We generally provide our employees with benefits and working conditions beyond the required minimums. We have never experienced any employment-related work stoppages and believe our relationship with our employees is good. E. Share Ownership. As of March 15, 2015, there were 59 record holders of our ordinary shares holding an aggregate of 85.91% of our ordinary shares on a fully dilutedbasis. Certain Information Concerning Ordinary Shares Owned by Office Holders The following table sets forth information regarding beneficial ownership of our ordinary shares as of March 15, 2015 held by our directors andexecutive officers, individually and as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to ordinary shares.Ordinary shares issuable under share options, warrants or other conversion rights currently exercisable or that are exercisable within 60 days after March 15,2015 are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options, warrants or other conversion rights,but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Percentage of shares beneficially owned is basedon 11,100,453 ordinary shares outstanding on March 15, 2015, which does not include an aggregate of 2,340,492 ordinary shares that were either subject tooutstanding equity awards granted or available for grant, of which: (i) 1,944,003 were subject to outstanding options (of which: (a) 1,239,752 were vested orwill be vested within 60 days as of the date hereof; and (b) 330,000 were allocated by the Board to certain Office Holders and are subject to shareholderapproval and/or obtaining a tax pre-ruling from the Israeli Tax Authority); and (ii) 435,126 remained available for future equity awards pursuant to our 2013Plan. 108Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of March 15, 2015 Number ofordinary sharesbeneficiallyowned Percentage ofordinary sharesbeneficiallyowned Allen Baharaff(1)(3) 4,130,140 35.0%Chaim Hurvitz(2)(3) 1,003,873 9.0%Dr. Maya Halpern 64,152 * Shmuel Nir(3)(4) 50,021 * Dr. Maureen Graham 9,477 * William Marth 5,720 * Dr. Antony Appleyard 9,477 * Josh Blacher(5) 4,000 * George Tonelli(6) — * Tali Yaron-Eldar — * David Sidransky — * All directors and executive officers as a group (11 persons)(6) 5,276,861 44.6%__________________ *Less than 1%. (1)Ordinary shares beneficially owned consist of (i) 3,420,823 ordinary shares, of which 3,416,823 are held through G. Yarom Medical Research Ltd., acompany incorporated under the laws of the State of Israel, of which Mr. Baharaff is the controlling shareholder and the chairman of its Board ofDirectors and (ii) options to purchase 709,317 ordinary shares that are currently exercisable within 60 days from March 15, 2015, of which 567,162 havean exercise price per share of NIS 0.01 and will expire in September 2023, and 142,155 have an exercise price of $0.53 and will expire in September2023. All such options were granted on December 30, 2013. Of the 4,130,140 ordinary shares, Mr. Baharaff exercises sole voting and dispositive powerover 713,317 shares beneficially owned and shared voting and dispositive power with G. Yaron Medical Research Ltd. over 3,416,823 shares. (2)Ordinary shares beneficially owned consist of 1,003,873 ordinary shares, of which 776,385 shares are held through Shirat HaChaim Ltd., a companyincorporated under the laws of the State of Israel, of which Mr. Hurvitz is the controlling shareholder and the chairman of its Board of Directors. Of the1,003,873 ordinary shares, Mr. Hurvitz exercises sole voting and dispositive power over 227,488 ordinary shares and shared voting and dispositivepower with Shirat HaChaim Ltd. over 776,385 shares. (3)All options included are either currently exercisable or will be exercisable within 60 days from the date hereof. (4)Ordinary shares beneficially owned consist of (i) options to purchase 8,583 shares that are currently exercisable or will be exercisable within 60 daysfrom the date hereof, all of which have an exercise price per share of $3.57, will expire in February 2024 and were granted on February 21, 2014, and (ii)41,438 ordinary shares held through Tushia Consulting Engineers Ltd., of which Shmuel Nir is its controlling shareholder. (5)On October 7, 2014, the Company and Mr. Morris mutually agreed to terminate the consulting agreement dated March 4, 2014, pursuant to which Mr.Morris served as the Company’s Chief Financial Officer. The termination was effective December 31, 2014. On January 5, 2014, the Companyannounced the appointment of Josh Blacher, effective January 1, 2014, to replace Mr. Morris and serve as Chief Financial Officer. 109Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (6)On March 6, 2015, the Company entered into a Consulting Agreement to engage Mr. Tonelli to provide consulting services in connection with theCompany's clinical trials, subject to the Company's remuneration committee and Board approval. Such approvals were granted on March 30, 2015. Inproviding such services Mr. Tonelli, shall act as the Company’s Vice President of Clinical Operations. This table is based upon information supplied by officers and directors and is believed to be accurate. Except as indicated in footnotes to this table,we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned bythem, based on information provided to us by such shareholders. Unless otherwise noted below, each shareholder’s address is: c/o Galmed PharmaceuticalsLtd., 8 Shaul Hamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel 6473307. Certain Information Concerning Equity Awards to Office Holders The following table sets forth information, as of March 15, 2015, concerning all outstanding option awards to Office Holders. Mr. Morris, our formerChief Financial Officer, did not receive any equity awards. On March 6, 2015, the Company entered into a Consulting Agreement to engage Mr. Tonelli toprovide consulting services in connection with the Company's clinical trials, subject to the Company's remuneration committee and Board approval. Suchapprovals were granted on March 30, 2015. In providing such services Mr. Tonelli, shall act as the Company’s Vice President of Clinical Operations. As ofMarch 15, 2015, Mr. Tonelli had not received any equity awards. Name of Office Holder Date of grant Exercise price per share ($) Shares subject to the option Shares vested and unexercised Sharesunvested Schedule date of expirationChaim Hurvitz(1) December 30, 2014 $5.49 10,000(1)(2) 0 10,000 Dec-30-2024 Allen Baharaff December 22, 2013 NIS0.01 266,085 266,085 0 Sep-2-2023 December 22, 2013 $0.53 174,960 131,220 43,740 Sep-2-2023 December 22, 2013 NIS0.01 150,903 150,903 0 Sep-2-2023 December 22, 2013 NIS0.01 150,174 150,174 0 Sep-2-2023 December 30, 2014 $5.49 140,000(1)(2) 0 140,000 Dec-30-2024 Maya Halpern December 22, 2013 $3.57 64,152 64,152 0 Sep-2-2023 December 30, 2014 $5.49 120,000(1)(2) 0 120,000 Dec-30-2024 William Marth March 18, 2014 $3.57 17,166 4,290 12,876 Sep-02-2023 December 30, 2014 $5.49 10,000(1) 0 10,000 Dec-30-2024 Shmuel Nir February 21, 2014 $3.57 8,583 8,583 0 Sep-02-2023 December 30, 2014 $5.49 10,000(1)(2) 0 10,000 Dec-30-2024 Tali Yaron-Eldar December 30, 2014 $5.49 10,000(1) 0 10,000 Dec-30-2024 David Sidransky December 30, 2014 $5.49 10,000(1) 0 10,000 Dec-30-2024 Josh Blacher December 30, 2014 $5.49 90,000 0 90,000 Dec-30-2024 Maureen Graham December 22, 2013 $3.57 9,477 9,477 0 Sep-2-2023 December 30, 2014 $5.49 10,000(1)(2) 0 10,000 Dec-30-2024 Antony Appleyard December 22, 2013 $3.57 9,477 9,477 0 Sep-2-2023 December 30, 2014 $5.49 10,000(1)(2) 0 10,000 Dec-30-2024 (1)This option grant is subject to shareholder approval, following the approval and recommendation of the Board and the Remuneration Committee, datedDecember 30, 2014. (2)This option grant is subject to obtaining a tax pre-ruling from the Israeli Tax Authority. 110Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 7. Major Shareholders and Related Party Transactions. A. Major Shareholders. Except as set forth in “Item 6. Directors, Senior Management and Employees—E. Share Ownership”, to the best of our knowledge, no other personwho we know beneficially owns 5.0% or more of the Company’s ordinary shares outstanding as of March 15, 2015. None of our shareholders has differentvoting rights from other shareholders. Other than as described herein, to the best of our knowledge, we are not owned or controlled, directly or indirectly, byanother corporation, by any foreign government or by any natural person or legal persons, severally or jointly, and we are not aware of any arrangement thatmay, at a subsequent date, result in a change of control of our company. B. Related Party Transactions. The following is a summary description of the material terms of those transactions with related parties to which we, or our subsidiaries, are party andwhich were in effect within the past fiscal year. Share Purchase Agreement (February 2014) On February 3, 2014 we entered into a share purchase agreement with certain of our shareholders and new investors, or the Share PurchaseAgreement, pursuant to which we issued to such existing shareholders and new investors 560,224 ordinary shares at a price per share of $3.57 for a totalinvestment amount of $2.0 million. Registration and Information Rights Agreement On December 30, 2013, in connection with the Reorganization, we entered into a registration and information rights agreement, on substantially thesame terms as, and to replace, a prior investors’ rights agreement entered into on December 21, 2011 between GHI and certain of its shareholders, or theRegistration Rights Agreement. As of the date hereof, each of the holders of at least 1% of our ordinary shares is entitled to be a party to the RegistrationRights Agreement, either as an original signatory or as an assignee or transferee of our ordinary shares, including Shirat HaChaim Ltd., which is an entitycontrolled by our Chairman, G. Yarom Medical Research Ltd., which is controlled by President and our Chief Executive Officer, David and Debora Goldfarband Medgal Holdings S.A. We will refer to these shareholders, excluding Shirat HaChaim Ltd., as the Other Shareholders. The Registration Rights Agreementcontains provisions regarding registration rights as set forth below. Demand Registration Rights. At any time beginning six months following the effective date of our initial public offering, upon a request eitherShirat HaChaim Ltd. or at least 40% of the registrable securities held by the Other Shareholders, we are required to use commercially reasonable efforts toregister such requesting shareholders’ ordinary shares under the Securities Act, but only if the aggregate offering price of the shares to be registered is at least$5,000,000. We are not required to effect more than two demand registrations; one registration upon the request of Shirat HaCahim Ltd. and the other upon arequest of at least 40% of the registrable securities held by the Other Shareholders. Piggyback Registration Rights. All of our shareholders that are a party to the Registration Rights Agreement have the right to request that weinclude their registrable securities in any registration statement that we file in connection with public offerings of our shares and resale registrations, exceptfor certain excluded registrations, such as registrations of shares issued under employee benefit plans, a registration relating to a corporate reorganization or aregistration on a form that does not include substantially the same information as would be required to be included in a registration statement covering thesales of registrable securities. If such public offering is underwritten, the right of any shareholder to include shares in the registration related thereto isconditioned upon the shareholder accepting the terms of the underwriting agreement between us and the underwriters, and then only in such quantity as theunderwriters in their sole discretion determine will not materially and adversely jeopardize the success of such offering. Form F-3 Registration. At any time after we become eligible under applicable securities laws to file a registration statement Form F-3, upon a writtenrequest of Shirat HaChaim Ltd. or the holders of at least 40% of the registrable securities held by the Other Shareholders, we will be required to register suchshareholders ordinary shares under the Securities Act, but only if the aggregate offering price of the shares to be registered is at least $3,000,000. We are notrequired to effect more than two registrations on Form F-3 in any 12 month period. Registration Preference. In the event that we register shares of our shareholders in a public offering or in a subsequent registration, Shirat HaChaimLtd. has a preference over all other shareholders to register and sell its shares. In which case, the shares of all other shareholders to be registered will bereduced accordingly. However, in any registration initiated by us, the shares held by us or to be issued by us have such a preference over all othershareholders, including Shirat HaChaim Ltd. Expenses. We have agreed to pay all expenses incurred in carrying out the above registrations, including the reasonable fees one counsel chosen bythe selling shareholders that are a party to the Registration Rights Agreement, but excluding discounts or commissions payable to any underwriter; providedhowever, with respect to any registration initiated pursuant to a shareholder’s demand rights, as set forth above, we will not be required to pay for anyexpenses if the registration is later withdrawn at the request of a majority holders of the shares to be registered, unless such holders agree to forfeit their rightto each of their respective demand registrations. 111Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Registration Rights Agreement is silent with respect to term and termination provisions. However, it provides that we are not required to registershares of holders of less than 1% of our ordinary shares on a fully diluted basis if such shares may be sold pursuant to Rule 144 under the Securities Act. Shareholders Rights Agreement On December 30, 2013, in connection with the Reorganization prior to our initial public offering, we entered into a shareholders rights agreement,on substantially the same terms as, and to replace, a prior shareholders’ rights agreement entered into on December 21, 2011 between GHI and certain of itsshareholders, or the Shareholders Rights Agreement. Pursuant to the Shareholders Rights Agreement, the shareholders party thereto agreed to vote theirordinary shares for the election of our directors as follows: Two directors designated by G. Yarom Medical Research Ltd., one director designated by ShiratHachaim Ltd., one director designated by the holders of the majority of the ordinary shares held by David and Debora Goldfarb and Medgal Holdings S.A.and additional directors (including any additional directors whose office may become vacated from time to time) designated by the majority vote of thedirectors then in office or by the shareholders of the Company at a general meeting. The Shareholders Rights Agreement was terminated upon theconsummation of our initial public offering in March 2014. Confirmation and Release Letter from the Beneficiaries of the late Professor Tuvia Gilat The late Professor Tuvia Gilat, our co-founder, was employed by GHI, our predecessor, as its chief executive officer between January 2001 andDecember 2010, at which time he left due to severe illness. Professor Tuvia Gilat passed away in 2011. On December 18, 2011, we reached a final andconclusive settlement, or the Settlement, with all of Prof. Gilat’s beneficiaries, which includes our current President and Chief Executive Officer andcontrolling shareholder, Mr. Allen Baharaff, pursuant to his last will and testament, or the Beneficiaries. The Settlement related to Prof. Gilat’s rights andentitlements in connection with his employment with the Company and its predecessor, and the termination thereof, including, without limitation, all socialbenefit deductions under Israeli law. Following the approval and recommendation of the Audit Committee and the Board, on December 15, 2014, theshareholders approved to accelerate the payment due under the Settlement and to pay such amount from the Company’s current net capital, as opposed to netprofits, which was previously contemplated by the terms of the Settlement. The total Settlement amount outstanding, including interest, payable to theBeneficiaries was $279,999, which was fully paid to them during the first quarter of 2015. Financing Agreement with GRD Following the completion of our initial public offering in the United States, we provide financing to GRD from time to time, pursuant to which, theCompany and GRD have executed several capital notes for an aggregate outstanding principal amount of $35.5 million. The par value of such notes is inNIS, and they bear no interest nor repayment date. Provided however, that no repayment shall be made before the fifth anniversary from the issuance date ofeach note. Agreements with Directors and Officers Employment and Consulting Agreements. We have entered into written employment or consulting agreements with certain of our Office Holders. Theseagreements provide for notice periods of varying duration for termination of the agreement by us or by the relevant Office Holder, during which time theOffice Holder will continue to receive base salary and benefits. We have also entered into customary non-competition, confidentiality of information andownership of inventions arrangements with these Office Holders. However, the enforceability of the noncompetition provisions may be limited underapplicable law. Options. Since our inception we have granted options to purchase our ordinary shares to certain of our Office Holders. Such option agreements maycontain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our 2013 Plan under “Item 6. Directors,Senior Management and Employees—B. Compensation—2013 Incentive Share Option Plan.” If the relationship between us and an Office Holder isterminated, except for cause (as defined in the 2013 Plan and/or the applicable option award agreement), options that are vested will generally remainexercisable for 90 days after such termination. C. Interests of Experts and Counsel. Not applicable. 112Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 8. Financial Information. A. Consolidated Financial Statements and Other Financial Information. See “Item 18. Financial Statements” for a list of all financial statements filed as part of this Annual Report on Form 20-F. Legal Matters We are neither party to any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and thoseinvolving any third-party, nor any governmental proceedings pending or known to be contemplated, which may have, or have had in the recent past,significant effects on the company’s financial position or profitability. Dividend Policy We have never declared or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future.Payment of cash dividends, if any, in the future will be at the discretion of our Board and will depend on then-existing conditions, including our financialcondition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board may deem relevant. Payment of dividends may also be subject to Israeli withholding taxes. See “Item 10. Additional Information—E. Taxation—Certain Israeli TaxConsiderations” for additional information. B. Significant Changes. No significant changes with respect to our consolidated financial statements have occurred since December 31, 2014. ITEM 9. The Offer and Listing. 9.A.4 Offer and Listing Details Our ordinary shares have been listed on the Nasdaq Capital Market under the symbol “GLMD” since March 13, 2014. Prior to that date, there was nopublic trading market for our ordinary shares. Our initial public offering was priced at $13.50 per share. The following table sets forth for the periodsindicated the high and low sales prices per ordinary share as reported on the NASDAQ Capital Market: Annual Information: Low High 2014 $4.58 $14.00 Quarterly Information First Quarter 2014 (commencing March 13, 2014) $10.85 14.00 Second Quarter 2014 6.38 12.44 Third Quarter 2014 5.83 11.48 Fourth Quarter 2014 4.58 8.56 Monthly Information: September 2014 $6.02 11.48 October 2014 6.09 8.56 November 2014 5.33 6.80 December 2014 4.58 6.85 January 2015 5.54 8.99 February 2015 6.33 10.00 March 2015 (through 15) 10.85 14.00 9.B. Plan of distribution Not applicable. 9.C. Market for Ordinary Shares Our Ordinary Shares have been quoted on the NASDAQ Global Market since September 17, 2014 under the symbol “FOMX.” 113Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 9.D. Selling shareholders Not applicable. 9.E. Dilution Not applicable. 9.F. Expenses of the issue Not applicable. ITEM 10. Additional Information. A. Share Capital. Not applicable. B. Memorandum and Articles of Association. Our original articles of association were registered with the Israeli Registrar of Companies at the time of incorporation of the Company on July 31,2013, under our registration number 51-495351-2. At the 2014 annual general meeting of shareholders, our shareholders adopted our Articles, which becameeffective on the consummation of our initial public offering in the United States in March 2014, whereby the Company became a public company under theCompanies Law. Under the Articles, the purpose of the Company is to engage in any lawful activity. The following description of our share capital and provisions of our Articles are summaries and do not purport to be complete and are qualified intheir entirety by the complete text of the Articles, which are filed as exhibits to this report and incorporated by reference herein, and by Israeli law. Election of Directors The Board consists of three classes of directors (not including external directors who do not form part of any class), with one class being elected eachyear by shareholders at the Company’s annual general meeting for a term of approximately three years. In accordance with our Articles, directors so electedcannot be removed from office by the shareholders until the expiration of their term of office. Ordinary shares do not have cumulative voting rights. As aresult, the holders of ordinary shares that represent a simple majority of the voting power represented at a shareholders’ meeting and voting at the meetinghave the power to elect all of the directors put forward for election, subject to specific requirements under the Companies Law with respect to the election ofexternal directors. For further information as to these appointments, see “Item 6—Directors, Senior Management and Employees—C. Board Practices.” Under the Articles, a director shall vacate his or her office if that director dies; is declared bankrupt; is declared to be legally incompetent; resignssuch office by notice in writing given to the Company; is not re-elected by the shareholders upon expiration of his or her term at the relevant annual generalmeeting of shareholders; or otherwise as provided in the Companies Law. Our Articles provide that a director may, by written notice to the Company, appoint another person to serve as an alternate director provided thatsuch appointment is approved by a majority of the directors then in office, and that such appointing director may remove such alternate director. Anyalternate director shall be entitled to notice of meetings of the Board and of relevant committees and to attend and vote accordingly, except that the alternatehas no standing at any meeting at which the appointing director is present or at which the appointing director is not entitled to participate as provided in theCompanies Law. A person who is not qualified to be appointed as a director, or a person who already serves as a director or an alternate director, may not beappointed as an alternate director. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the earlier of (i) theappointing director ceasing to be a director; (ii) the appointing director terminating the appointment; or (iii) the occurrence, with respect to the alternate, ofany of the circumstances under which a director shall vacate his or her office. The appointment of an alternate director does not in itself diminish theresponsibility of the appointing director, as a director. An alternate director is solely responsible for his or her actions and omissions and is not deemed anagent of the appointing director. Under the Companies Law, external directors cannot generally appoint alternate directors, and a person who is not qualifiedto be appointed as an “independent” director may not be appointed as an alternate to an independent director. See “Item 6—Directors, Senior Managementand Employees—C. Board Practices.” At present, there are no effective appointments of alternate directors for our Board. For discussions relating to certain compensation-related requirements of the Companies Law, external directors and financial experts, committees ofthe Board, and exculpation and indemnification of directors and officers, see “Item 6 - Directors, Senior Management and Employees”. 114Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Approval of Related Party Transactions under Israeli Law Fiduciary Duties of Directors and Executive Officers The Companies Law codifies the fiduciary duties that office holders owe to a company. Each person listed in the table under “Item 6. Directors,Senior Management and Employees—A. Directors and Senior Management” is an Office Holder under the Companies Law. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level ofcare with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an officeholder act in good faith and in the best interests of a company. The duty of care includes a duty to use reasonable means to obtain: ·information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and ·all other important information pertaining to these actions. The duty of loyalty requires an office holder to act in good faith and for the benefit of a company, and includes a duty to: ·refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs; ·refrain from any activity that is competitive with the company; ·refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and ·disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or herposition as an office holder. Disclosure of Personal Interests of an Office Holder The Companies Law requires that an office holder promptly disclose to the board of directors any personal interest that he or she may haveconcerning any existing or proposed transaction with a company, as well as any substantial information or document with respect thereof. An interestedoffice holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction isconsidered. A personal interest includes an interest of any person in an act or transaction of a company, including a personal interest of one’s relative or of acorporate body in which such person or a relative of such person is a 5% or greater shareholder, director or general manager or in which he or she has the rightto appoint at least one director or the general manager, but excluding a personal interest stemming from one’s ownership of shares in a company. A personalinterest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the interest of the office holder with respectto his or her vote on behalf of the shareholder for whom he or she holds a proxy, even if such shareholder itself has no personal interest in the approval of thematter. An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of a relative of such office holderin a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is defined as any of thefollowing: ·a transaction other than in the ordinary course of business; ·a transaction that is not on market terms; or ·a transaction that may have a material impact on a company’s profitability, assets or liabilities. Approval Procedure If an office holder has a personal interest in a transaction, approval by the board of directors is required for the transaction, unless the articles ofassociation of a company provide for a different method of approval. Our Articles do not provide for any such different method of approval. Further, so longas an office holder has disclosed his or her personal interest in a transaction, the board of directors may approve an action by the office holder that wouldotherwise be deemed a breach of the duty of loyalty. However, a company may not approve a transaction or action that is adverse to such company’s interestor that is not performed by the office holder in good faith. Approval first by a company’s audit committee and subsequently by the board of directors isrequired for an extraordinary transaction in which an office holder has a personal interest. Arrangements regarding the Office Holders’ Terms of Office andEmployment (which includes compensation, indemnification or insurance) generally require the approval of the remuneration committee, board of directorsand, in certain circumstances, the shareholders, in that order, and must generally be consistent with the Company’s Compensation Policy, as described undersee “Item 6—Directors, Senior Management and Employees—B. Compensation.” 115Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may notbe present at such a meeting or vote on that matter unless a majority of the directors or members of the audit committee have a personal interest in the matter,or unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present thetransaction that is subject to approval. Generally, if a majority of the members of the audit committee and/or the board of directors has a personal interest inthe approval of a transaction, then all directors may participate in discussions of the audit committee and/or the board of directors on such transaction and thevoting on approval thereof, but shareholder approval is also required for such transaction. Transactions with Controlling Shareholders Pursuant to Israeli law, the disclosure requirements regarding personal interests that apply to directors and executive officers also apply to acontrolling shareholder of a public company. In the context of a transaction involving a controlling shareholder or an officer who is a controlling shareholderof a company, a controlling shareholder also includes any shareholder who holds 25% or more of the voting rights if no other shareholder holds more than50% of the voting rights. Two or more shareholders with a personal interest in the approval of the same transaction are deemed to be a single shareholder andmay be deemed a controlling shareholder for the purpose of approving such transaction. Under the Companies Law, an Extraordinary Transaction is defined as any of the following: (i) a transaction other than in the ordinary course ofbusiness; (ii) a transaction that is not on market terms; or (iii) a transaction that may have a material impact on a company’s profitability, assets or liabilities. Extraordinary Transactions, including private placement transactions, with a controlling shareholder or in which a controlling shareholder has apersonal interest, and engagements with a controlling shareholder or his or her relative, directly or indirectly, including through a corporation under his orher control, require the approval of the audit committee, the board of directors and the shareholders of a company by a Special Majority, in that order. Arrangements regarding the Terms of Office and Employment of a controlling shareholder who is an Office Holder, and the terms of employment of acontrolling shareholder who is an employee of a company, require the approval of the remuneration committee, board of directors and the shareholders by aSpecial Majority, in that order, as further described above under “Item 6—Directors, Senior Management and Employees—B. Compensation” with respect toOffice Holders’ compensation. To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once everythree years, unless, with respect to extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, theaudit committee determines that the duration of the transaction is reasonable given the circumstances related thereto. Dividends and Dividend Policy Dividends may be distributed only out of profits available for dividends as determined by the Companies Law, provided that there is no reasonableconcern that the distribution will prevent the Company from being able to meet its existing and anticipated obligations when they become due. Generally,under the Companies Law, the decision to distribute dividends and the amount to be distributed is made by a company’s board of directors. The Articlesprovide that the Board may from time to time declare, and cause the Company to pay, such dividends as may appear to it to be justified by the profits of theCompany and that the Board has the authority to determine the time for payment of such dividends and the record date for determining the shareholdersentitled to receive such dividends, provided the date is not before the date of the resolution to distribute the dividend. Declaration of dividends does notrequire shareholder approval. We have never declared or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future.Payment of cash dividends, if any, in the future will be at the discretion of our Board and will depend on then-existing conditions, including our financialcondition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board may deem relevant. 116Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Payment of dividends may also be subject to Israeli withholding taxes. See “Taxation — Israeli Tax Considerations” for additional information. Transfer of Shares Ordinary shares which have been fully paid-up are transferable by submission of a proper instrument of transfer to the Company or its transfer agenttogether with the certificate of the shares to be transferred and such other evidence, if any, as the directors may require to prove the rights of the intendingtransferor in the transferred shares. Our ordinary shares that are fully paid for are issued in registered form and may be freely transferred under our Articles, unless the transfer isrestricted or prohibited by applicable law or the rules of a stock exchange on which the shares are traded. The ownership or voting of our ordinary shares bynon-residents of Israel is not restricted in any way by our Articles or the laws of the State of Israel, except for ownership by nationals of some countries thatare, or have been, declared as enemies of Israel. Shareholder Meetings The Articles provide that an annual general meeting must be held at least once in every calendar year, not later than 15 months after the lastpreceding annual general meeting, at such time and place as may be determined by the Board. The Board may, in its discretion, convene additionalshareholder meetings and, pursuant to the Companies Law, must convene a meeting upon the demand of two directors or one quarter of the directors in officeor upon the demand of the holder or holders of 5% of the Company’s issued share capital and 1% of its voting rights or upon the demand of the holder orholders of 5% of its voting rights. All demands for shareholder meetings must set forth the items to be considered at that meeting. Pursuant to the CompaniesLaw, the holder or holders of 1% of the Company’s voting rights may request the inclusion of an item on the agenda of a future shareholder meeting,provided the item is appropriate for discussion at a shareholder meeting. The agenda for a shareholder meeting is determined by the Board and must include matters in respect of which the convening of a shareholdermeeting was demanded and any matter requested to be included by holder(s) of 1% of the Company’s voting rights, as detailed above. According toregulations promulgated pursuant to the Companies Law and governing the terms of notice and publication of shareholder meetings of public companies, orthe General Meeting Regulations, holder(s) of one percent or more of the Company’s voting rights may propose any matter appropriate for deliberation at ashareholder meeting to be included on the agenda of a shareholder meeting, generally by submitting a proposal within seven days of publicizing theconvening of a shareholder meeting, or, if the Company publishes a preliminary notice at least 21 days prior to publicizing the convening of a meeting(stating its intention to convene such meeting and the agenda thereof), within fourteen days of such preliminary notice. Any such proposal must furthercomply with the information requirements under applicable law and the Articles. Pursuant to the Companies Law and regulations promulgated thereunder with respect to the convening of general meetings in a public company,shareholder meetings generally require prior notice of not less than 21 days, and for certain matters specified in the Companies Law, not less than 35 days.The function of the annual general meeting is to elect directors in accordance with the Articles, receive and consider the profit and loss account, the balancesheet and the ordinary reports and accounts of the directors and auditors, appoint auditors and fix their remuneration and transact any other business whichunder the Articles or applicable law may be transacted by the shareholders of a company in general meeting. The quorum required for either an annual (regular) or an extraordinary (special) general meeting of shareholders consists of at least two shareholderspresent in person or by proxy holding shares comprising in the aggregate more than 33% of the voting rights of the Company. If a meeting is convened bythe Board upon the demand of shareholders or upon the demand of less than 50% of the directors then in office or directly by such shareholders or directorsand no quorum is present within half an hour from the time appointed, it shall be cancelled. If a meeting is otherwise called and no quorum is present withinsuch time, the meeting is adjourned to the same day one week later at the same time and place or at such other time and place as the Board may determine andspecify in the notice of the general meeting and it shall not be necessary to give notice of such adjournment. If a quorum is not present within half an hourfrom the time stated for such adjourned meeting, any shareholders present in person or by proxy at such meeting shall constitute a quorum. Generally, underthe Companies Law and the Articles, shareholder resolutions are deemed adopted if approved by the holders of a simple majority of the voting rightsrepresented at a meeting and voting unless a different majority is required by law or pursuant to the Articles. The Companies Law provides that resolutions oncertain matters, such as amending a company’s articles of association, assuming the authority of the board of directors in certain circumstances, appointingauditors, appointing external directors, approving certain transactions, increasing or decreasing the registered share capital and approving most mergers mustbe made by the shareholders at a general meeting. A company may determine in its articles of association certain additional matters in respect of whichresolutions by the shareholders in a general meeting will be required. 117Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Shareholder Duties Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward a company and other shareholdersand to refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and at classshareholder meetings with respect to the following matters: ·an amendment to the company’s articles of association; ·an increase of the company’s authorized share capital; ·a merger; or ·approval of interested party transactions and acts of office holders that require shareholder approval. In addition, a shareholder also has a general duty to refrain from discriminating against other shareholders. Certain shareholders have a further duty of fairness toward a company. These shareholders include any controlling shareholder, any shareholder whoknows that it has the power to determine the outcome of a shareholder vote or a shareholder class vote and any shareholder who has the power to appoint orto prevent the appointment of an office holder of the company or other power towards the company. The Companies Law does not define the substance ofthis duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to actwith fairness. Mergers and Acquisitions under Israeli Law (i) Merger Under the Companies Law, a merger is generally required to be approved by the shareholders and board of directors of each of the mergingcompanies. If the share capital of the company that will not be the surviving company is divided into different classes of shares, the approval of each class isalso required, unless determined otherwise by the court. Similarly, unless the court determines differently, a merger will not be approved if it is objected to byshareholders holding a majority of the voting rights participating and voting at the meeting, after excluding the shares held by the other party to the merger,by any person who holds 25% or more of the other party to the merger or by anyone on their behalf, including by the relatives of or corporations controlledby these persons. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that thereexists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger.Also, a merger can be completed only after all approvals have been submitted to the Israeli Registrar of Companies and 30 days have passed from the timethat shareholder resolutions were adopted in each of the merging companies and 50 days have passed from the time that a proposal for approval of the mergerwas filed with the Israeli Registrar of Companies. (ii) Special Tender Offer The Companies Law also provides that, subject to certain exceptions, an acquisition of shares in a public company must be made by means of atender offer if, as a result of the acquisition, the purchaser would become a holder of 25% or more of the voting power at general meetings. This rule does notapply if there is already another holder of 25% or more of the voting power at general meetings. Similarly, the Companies Law provides that, subject tocertain exceptions, an acquisition of shares in a public company must be made by means of a tender offer if, as a result of the acquisition, the purchaser wouldbecome a holder of more than 45% of the voting power of the company. This rule does not apply if someone else already holds more than 45% of the votingpower of the company. 118Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (iii) Full Tender Offer Under the Companies Law, a person may not acquire shares in a public company if, after the acquisition, he will hold more than 90% of the shares ormore than 90% of any class of shares of that company, unless a tender offer is made to purchase all of the shares or all of the shares of the particular class. TheCompanies Law also provides (subject to certain exceptions with respect to shareholders who held more than 90% of a company’s shares or of a class of itsshares as of February 1, 2000) that as long as a shareholder in a public company holds more than 90% of the company’s shares or of a class of shares, thatshareholder shall be precluded from purchasing any additional shares. In order that all of the shares that the purchaser offered to purchase be transferred tohim by operation of law, one of the following must have occurred: (i) the shareholders who declined or do not respond to the tender offer hold less than 5% ofthe company’s outstanding share capital or of the relevant class of shares and the majority of offerees who do not have a personal interest in accepting thetender offer accepted the offer or (ii) the shareholders who declined or do not respond to the tender offer hold less than 2% of the company’s outstandingshare capital or of the relevant class of shares. A shareholder that had his or her shares so transferred, whether he or she accepted the tender offer or not, has the right, within six months from thedate of acceptance of the tender offer, to petition the court to determine that the tender offer was for less than fair value and that the fair value should be paidas determined by the court. However, the purchaser may provide in its offer that shareholders who accept the tender offer will not be entitled to such rights. If the conditions set forth above are not met, the purchaser may not acquire additional shares of the company from shareholders who accepted thetender offer to the extent that following such acquisition, the purchaser would own more than 90% of the company’s issued and outstanding share capital. The above restrictions apply, in addition to the acquisition of shares, to the acquisition of voting power. Anti-takeover Measures under Israeli Law The Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including sharesproviding certain preferred rights, distributions or other matters and shares having preemptive rights. As of the date hereof, no preferred shares are authorizedunder our Articles. In the future, if we do authorize, create and issue a specific class of preferred shares, such class of shares, depending on the specific rightsthat may be attached to it, may have the ability to frustrate or prevent a takeover or otherwise prevent our shareholders from realizing a potential premiumover the market value of their ordinary shares. The authorization and designation of a class of preferred shares will require an amendment to our Articles,which requires the prior approval of the holders of a majority of the voting power of our issued and outstanding shares at a general meeting of shareholders.The convening of the general meeting, the shareholders entitled to participate and the majority vote required to be obtained at such a meeting will be subjectto the requirements set forth in the Articles and the Companies Law as described above in “— Shareholder Meetings.” Also, we have not adopted a rights plan, also known as a “poison pill.” The legality of such rights plans as an additional anti-takeover measure hasnot been determined by the courts in Israel. In addition, certain provisions of the Articles may have the effect of rendering more difficult or discouraging an acquisition of the Company deemedundesirable by the Board. Those provisions include: (i) limiting the ability of the Company’s shareholders to convene general meetings of the Company (asdiscussed above); (ii) controlling procedures for the conduct of shareholder and Board meetings, including quorum and voting requirements; and (iii) theelection and removal of directors. Moreover, the classification of the Board into three classes with terms of approximately three years each, and therequirement under Companies Law to have at least two external directors, who cannot readily be removed from office, may make it more difficult forshareholders who oppose the policies of the Board to remove a majority of the then current directors from office quickly. It may also, in some circumstances,together with the other provisions of the Articles and Israeli law, deter or delay potential future merger, acquisition, tender or takeover offers, proxy contestsor changes in control or management of the Company, some of which could be deemed by certain shareholders to be in their best interests and which couldaffect the price some investors are willing to pay for ordinary shares. 119Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Changes in Capital On July 31, 2013, the Company’s incorporation date, the registered share capital of the Company was NIS 500,000 divided into 50,000,000 ordinaryshares, NIS 0.01 par value per share. Our Articles enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must beapproved by a resolution duly passed by our shareholders at a general meeting by voting on such change in the capital. In addition, transactions that have theeffect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits and an issuance of sharesfor less than their nominal value (under certain circumstances), require the approval of both our Board and an Israeli court. C. Material Contracts The following are summary descriptions of certain material agreements to which we are a party. The descriptions provided below do not purport tobe complete and are qualified in their entirety by the complete agreements, which are attached as exhibits to this annual report on Form 20-F. For a description of our material agreements relating to our strategic collaborations and research arrangements and other material agreements, pleaserefer to “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, Research Arrangements and other Material Agreements.” Inaddition, we have previously entered into the agreements described below, but we no longer deem these to be material to the Company. Zora Biosciences Oy On December 19, 2013, we entered into a memorandum of understanding with Zora Biosciences, or the Zora MOU, to explore opportunities tocollaborate in order to develop a NASH clinical diagnostic tool, as well as a clinical diagnostic tool for patients receiving aramchol treatment. Zora performslipidomic profiling analyses in order to generate molecular lipid quantification data. According to the Zora MOU, in connection with our ARREST Study of aramchol, we will collect and provide to Zora liver tissue samples frombiopsies and serum samples from the patients screened and enrolled in the Israeli-based centers in the trial and Zora will perform lipidomic profiling analysisbased on such samples. Once Zora has performed its analysis, Zora is permitted to verify its results by comparing them to the results of the liver biopsies thatwill be taken from the trial participants and from their MRIs. We expect this to enable Zora to evaluate the performance of its lipidomic profiles and developa NASH disease clinical diagnostic tool and generate lipidomic profiles correlated with disease progression of patients. We also expect that this will enableZora to develop a clinical diagnostic tool for patients receiving aramchol treatment, which would be intellectual property owned by us. We will not receive any financial payment from Zora. However, we will be obligated to pay to-be-agreed upon fees to Zora in respect of its lipidomicanalysis activities, and if such activities generate patentable intellectual property for Zora, then we will receive a reimbursement of 40% of such fees. According to the Zora MOU, we will own all clinical data and Zora will own all lipidomic data, each as generated by our collaboration. We alsoagreed to grant Zora a free license to use such clinical data only to develop biomarkers and related diagnostics in the field of NASH. Zora will grant to us afree license to use their lipidomic data generated by the clinical trial for developing a clinical diagnostic tool for patients receiving treatment with aramchol.Zora will also grant us a right of first discussion, exercisable upon completion of the ARREST Study, to enter into a business transaction with Zora, separatefrom the transaction and relationship contemplated in the Zora MOU, regarding the commercial exploitation of its NASH disease clinical diagnostic toolbased upon the data generated during the collaboration. We agreed to enter into a definitive agreement with Zora on the basis of the principles detailed in theZora MOU, but no such definitive agreement has been executed as of yet and at this stage we have no intention to pursue such an agreement. The Zora MOUis silent as to term, termination and whether or not it is binding. 120Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Guangdong Xianqiang Pharmaceutical Co., Ltd. On November 27, 2013, we entered into a non-binding memorandum of understanding, or the Xianqiang MOU, with Xianqiang, to explorecollaborative opportunities to expand the potential market for aramchol into China. According to the Xianqiang MOU, we expressed an interest in entering into a definitive agreement with Xianqiang that would grant it an exclusive,non-transferable, non-assignable and non-sublicenseable license to test, manufacture, sell, market and distribute aramchol in China, excluding Hong Kong,Taiwan and Macau, for the treatment of liver diseases only. Such license will be for such period and include such terms and conditions, including royalties, aswill be agreed between the parties in such definitive agreement. Pursuant to such definitive agreement, all patent applications in connection with aramcholwould be filed in our name and Xianqiang would finance all trials, test, clinical studies and other activities necessary to secure marketing approval ofaramchol from the relevant regulatory authorities in China for the sale of aramchol in China. Thereafter, Xianqiang would fund the marketing, sales anddistribution of aramchol in China. Furthermore, according to the Xianqiang MOU, the parties would agree on a development plan funded by Xianqiang, withXianqiang owning the results generated in connection with such development plan. The parties agreed to negotiate and execute the relevant definitiveagreements within sixty (60) days of entering into the Xianqiang MOU, but no such definitive agreement has been executed as of yet and at this stage wehave no intention to pursue such an agreement. Enterome Bioscience On October 30, 2012, we entered into a memorandum of understanding with Enterome, or the Enterome MOU, to explore opportunities tocollaborate in the field of gut microbiota and metabolic disorders by joining our efforts and expertise for the development of biomarkers and patientstratification tools. Enterome develops gut microbiota biomarkers based on quantitative metagenomic analysis for metabolic disorders and immune mediateddiseases. According to the Enterome MOU, in connection with our ARREST Study of aramchol, Enterome will be permitted to collect stool samples from thepatients screened and enrolled in the trial and to perform gut microbiota metagenomic analysis from such samples. Once Enterome has performed its analysis,Enterome is permitted to verify its diagnostic results by comparing them to the results of the liver biopsies that will be taken from the trial participants andfrom their MRIs. We expect this to enable Enterome to evaluate the performance of its proprietary metagenomic profiles for stratifying patients and togenerate metagenomic profiles correlated with patient disease progression. We, in turn, expect to use Enterome’s findings to evaluate the correlation betweenaramchol’s dose response data and patient metagenomic profiles in order to stratify potential patients for our future Phase III clinical trials, if any, and toidentify NAFLD patients that are at risk of progression to NASH. We will not receive any financial payment from Enterome and we are not obligated to make any financial payment to Enterome in respect of suchactivities. According to the Enterome MOU, we will own all clinical data and Enterome will own all gut microbiota metagenomic data, each as generated byour collaboration. We also agreed to grant Enterome a free license to use such clinical data only to develop biomarkers and related diagnostics to stratifyNAFLD patients according to their risk of developing NASH. This license will include the right to use the clinical data associated with the metagenomic datafor medical and regulatory development, as well as commercial development. Enterome will grant to us a free license to use their metagenomic data generatedby the clinical trial for scientific, clinical and regulatory purposes in developing aramchol, but not for commercial use for developing or promoting adiagnostic product. Enterome will also grant us a right of first refusal, exercisable upon completion of the PARREST Study, to enter into a businesstransaction with Enterome, separate from the transaction and relationship contemplated in the Enterome MOU, regarding the commercial exploitation of itsmetagenomic profiles and metagenomic data generated during the collaboration. We agreed to enter into a definitive agreement with Enterome on the basisof the principles detailed in the Enterome MOU, but no such definitive agreement has been executed as of yet and at this stage we have no intention topursue such an agreement. The Enterome MOU is silent as to term, termination and whether or not it is binding. 121Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Employment Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Arrangements with Directors andRelated Parties.” D. Exchange Controls. There are no Israeli government laws, decrees or regulations that restrict or that affect our export or import of capital or the remittance of dividends,interest or other payments to non-resident holders of our securities, including the availability of cash and cash equivalents for use by us and our wholly-owned subsidiaries, except for ownership by nationals of certain countries that are, or have been, declared as enemies of Israel or otherwise as set forth under“Item 10. Additional Information—E. Taxation.” E. Taxation. The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of ourordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequencesthat may arise under the laws of any state, local, foreign, including Israel, or other taxing jurisdiction. Certain Israeli Tax Considerations The following is a brief summary of the material Israeli income tax laws applicable to us. This section also contains a discussion of material Israelitax consequences concerning the ownership and disposition of our ordinary shares. This summary does not discuss all the aspects of Israeli tax law that maybe relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment underIsraeli law. Examples of this kind of investor include residents of Israel or investors in securities who are subject to special tax regimes not covered in thisdiscussion. To the extent that the discussion is based on new tax legislation that has not yet been subject to judicial or administrative interpretation, wecannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. This summary is based on laws andregulations in effect as of the date hereof and does not take into account possible future amendments which may be under consideration. General Corporate Tax Structure in Israel Israeli resident companies (as defined below), such as the Company, are generally subject to corporate tax at the rate of 26.5% of their taxableincome, as of January 1, 2014 (and 25% in 2013). Capital gains derived by an Israeli resident company are generally subject to tax at the same rate as the corporate tax rate. Under Israeli taxlegislation, a corporation will be considered an “Israeli resident” if it meets one of the following: (i) it was incorporated in Israel; or (ii) the control andmanagement of its business are exercised in Israel. Law for the Encouragement of Industry (Taxes), 5729-1969 The Law for the Encouragement of Industry (Taxes), 5729-1969, which we refer to as the Industry Encouragement Law, provides several tax benefitsfor “Industrial Companies,” which are defined as Israeli resident-companies of which 90% or more of their income in any tax year is derived from an“Industrial Enterprise” that it owns, or an enterprise whose principal activity in a given tax year is industrial production. Eligibility for benefits under theIndustry Encouragement Law is not contingent upon approval of any governmental authority. 122Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following corporate tax benefits, among others, are available to Industrial Companies: ·amortization over an eight year period of the cost of purchasing a patent, rights to use a patent and rights to know-how, which are used forthe development or advancement of the company, commencing in the year in which such rights were first exercised; ·under limited conditions, an election to file consolidated tax returns with related Industrial Companies; and ·deductions of expenses related to a public offering in equal amounts over a three year period. Currently, we are not qualified as an Industrial Company within the meaning of the Industry Encouragement Law, and there can be no assurance thatwe will qualify as an Industrial Company in the future or that, even if we qualify as an Industrial Company, the benefits described above will be available tous at all. Law for the Encouragement of Capital Investments, 5719-1959 The Law for the Encouragement of Capital Investments, 5719-1959, which we refer to as the Investment Law, provides certain incentives for capitalinvestments in production facilities (or other eligible assets). The Investment Law was significantly amended effective April 1, 2005 and further amended asof January 1, 2011, or the 2011 Amendment. The 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of theInvestment Law in effect prior to the 2011 Amendment. Tax Benefits Under the 2011 Amendment The 2011 Amendment canceled the availability of the benefits granted to Industrial Companies under the Investment Law prior to 2011 and,instead, introduced new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms are defined in theInvestment Law) as of January 1, 2011. The definition of a Preferred Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and that has,among other things, a Preferred Enterprise and is controlled and managed from Israel. Under a recent amendment announced in August 2013, or the 2013Amendment, beginning in 2014 and in each year thereafter, a Preferred Company may only be entitled to reduced corporate tax rates of 16%, unless thePreferred Enterprise is located in a specified development zone, in which case the rate will be 9%. Income derived by a Preferred Company from a “SpecialPreferred Enterprise” (as such term is defined in the Investment Law) would be entitled, during a benefit period of ten years, to further reduced tax rates of 8%,or 5% if the Special Preferred Enterprise is located in a certain development zone. As of January 1, 2014, dividends paid out of income attributed to a Preferred Enterprise are subject to withholding tax at source at the rate of 20%unless a different tax rate is provided under an applicable tax treaty. However, if such dividends are paid to an Israeli company, no tax is required to bewithheld. A Beneficiary Company may elect to file a notice until May 31st of each year in order to avail itself of the benefits of the 2011 Amendments to itpursuant to Sections 131 and 132 of the Income Tax Ordinance (New Version) - 1961, referred to herein as the Israeli Tax Ordinance, and such benefits willapply on the tax year subsequent to the year in which such notice was filed. Currently, we are not entitled to receive the tax benefits described above and there can be no assurance that we will be entitled to receive suchbenefits at any time in the future. Furthermore, there can be no assurance that even if in the future we meet the relevant requirements for such tax benefits, thatsuch tax benefits will be available to us at all. Taxation of Our Israeli Individual Shareholders on Receipt of Dividends Israeli residents who are individuals are generally subject to Israeli income tax for dividends paid on our ordinary shares (other than bonus shares orshare dividends) at a rate of 25%, or 30% if the recipient of such dividend is a Substantial Shareholder (as defined below) at the time of distribution or at anytime during the preceding 12 month period. Beginning in 2013, an additional tax at a rate of 2% may be imposed upon shareholders whose annual taxableincome from all sources exceeds a certain amount. 123Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A “Substantial Shareholder” is generally a person who alone, or together with his or her relative or another person who collaborates with him or heron a regular basis, holds, directly or indirectly, at least 10% of any of the “means of control” of a corporation. “Means of control” generally include the rightto vote, receive profits, nominate a director or an officer, receive assets upon liquidation or instruct someone who holds any of the aforesaid rights regardingthe manner in which he or she is to exercise such right(s), all regardless of the source of such right. With respect to individuals, the term “Israeli resident” is generally defined under Israeli tax legislation as a person whose center of life is in Israel.The Israeli Tax Ordinance (as amended by Amendment Law No. 132 of 2002), states that in order to determine the center of life of an individual,consideration will be given to the individual’s family, economic and social connections, including: (i) place of permanent residence; (ii) place of residentialdwelling of the individual and the individual’s immediate family; (iii) place of the individual’s regular or permanent occupation or the place of his or herpermanent employment; (iv) place of the individual’s active and substantial economic interests; (v) place of the individual’s activities in organizations,associations and other institutions. The center of life of an individual will be presumed to be in Israel if: (i) the individual was present in Israel for 183 days ormore in the tax year; or (ii) the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual’s presence in Israel inthat tax year and the two previous tax years is 425 days or more. Such presumption may be rebutted either by the individual or by the assessing officer. Taxation of Israeli Resident Corporations on Payment of Dividends Israeli resident corporations are generally exempt from Israeli corporate income tax with respect to dividends paid on ordinary shares held by suchIsraeli resident corporations as long as the profits out of which the dividends were paid were derived in Israel. Capital Gains Taxes Applicable to Israeli Resident Shareholders The income tax rate applicable to real capital gains derived by an Israeli individual resident from the sale of shares that were purchased after January1, 2012, whether listed on a stock exchange or not, is 25%. However, if such shareholder is considered a Substantial Shareholder at the time of sale or at anytime during the preceding 12 month period, such gain will be taxed at the rate of 30%. In addition, as noted above, beginning in 2013, an additional tax at arate of 2% may be imposed upon shareholders whose annual taxable income from all sources exceeds a certain amount. Moreover, capital gains derived by a shareholder who is a dealer or trader in securities, or to whom such income is otherwise taxable as ordinarybusiness income, are taxed in Israel at ordinary income rates (currently 26.5% for corporations and up to 50% for individuals). Taxation of Non-Israeli Shareholders on Receipt of Dividends Non-Israeli residents are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25% (or 30% forindividuals, if such person is a Substantial Shareholder at the time he or she receives the dividend or on any date in the 12 months preceding such date),which tax will be withheld at source, unless a different rate is provided under an applicable tax treaty between Israel and the shareholder’s country ofresidence. A non-Israeli resident who has dividend income derived from or accrued in Israel, from which the full amount of tax was withheld at source, isgenerally exempt from the duty to file tax returns in Israel in respect of such income; provided that (i) such income was not derived from a businessconducted in Israel by the taxpayer and (ii) the taxpayer has no other taxable sources of income in Israel. For example, under the Convention Between the Government of the United States of America and the Government of Israel with Respect to Taxes onIncome, as amended, or the U.S.-Israel Tax Treaty, Israeli withholding tax on dividends paid to a U.S. resident for treaty purposes may not, in general, exceed25%, or 15% in the case of dividends paid out of the profits of a Benefited Enterprise (as such term is defined in the Investment Law), subject to certainconditions. Where the recipient is a U.S. corporation owning 10% or more of the voting shares of the paying corporation during the part of the payingcorporation’s taxable year which precedes the date of payment of the dividend and during the entirety of its prior taxable year (if any) and the dividend is notpaid from the profits of a Benefited Enterprise, the Israeli tax withheld may not exceed 12.5%, subject to certain conditions. 124Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Capital Gains Income Taxes Applicable to Non-Israeli Shareholders Non-Israeli resident shareholders are generally exempt from Israeli capital gains tax on any gains derived from the sale, exchange or disposition ofour ordinary shares, provided that such shareholders did not acquire their shares prior to January 1, 2009 and such gains were not derived from a permanentbusiness or business activity of such shareholders in Israel. However, non-Israeli corporations will not be entitled to the foregoing exemptions if an Israeliresident (i) has a controlling interest of more than 25% in such non-Israeli corporation or (ii) is the beneficiary of or is entitled to 25% or more of the revenuesor profits of such non-Israeli corporation, whether directly or indirectly. In addition, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty.For example, under the U.S.-Israel Tax Treaty, the sale, exchange or disposition of our ordinary shares by a shareholder who is a U.S. resident (for purposes ofthe U.S.-Israel Tax Treaty) holding the ordinary shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the U.S.-Israel TaxTreaty, or a Treaty U.S. Resident, is generally exempt from Israeli capital gains tax unless: (i) such Treaty U.S. Resident is an individual and was present inIsrael for 183 days or more during the relevant taxable year; (ii) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of ourvoting power of the Company during any part of the 12 month period preceding such sale, exchange or disposition, subject to certain conditions; or (iii) thecapital gains arising from such sale, exchange or disposition are attributable to a permanent establishment of the Treaty U.S. Resident located in Israel,subject to certain conditions. In any such case, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to the extentapplicable. However, under the U.S.-Israel Tax Treaty, such Treaty U.S. Resident would be permitted to claim a credit for such taxes against U.S. federalincome tax imposed on any gain from such sale, exchange or disposition, under the circumstances and subject to the limitations specified in the U.S.-IsraelIncome Tax Treaty. Regardless of whether shareholders may be liable for Israeli income tax on the sale of our ordinary shares, the payment of the consideration may besubject to withholding of Israeli tax at the source. Accordingly, shareholders may be required to demonstrate that they are exempt from tax on their capitalgains in order to avoid withholding at source at the time of sale. Estate and Gift Tax Israeli law presently does not impose estate or gift taxes. Pre-Ruling Regarding a Reorganization of Our Corporate Structure In connection with the Reorganization, as detailed under “Item 4. Information on the Company—Historical Background and Corporate Structure”above, we obtained a pre-ruling from the Israeli Tax Authority. The Tax Pre-Ruling confirms that the transfer of shares and assets resulting in the Company asthe parent company and 100% equity-owner of GRD, which holds all the Group’s intellectual property, including the Company’s patent portfolio, GIL andGTTI, is not taxable pursuant to the provisions of the Israeli Tax Ordinance as long as certain requirements are met. Pursuant to the Tax Pre-Ruling, certainrestrictions under the Israeli tax laws will apply to the Company and its subsidiaries, as well as to those shareholders and option holders and other holders ofrights in the share capital of the Company (on a fully diluted basis), who participated in the Reorganization and held such rights immediately after theconsummation of the Reorganization, or the Rights Holders. In this section, each of the terms “Rights” and/or “share capital (on a fully diluted basis)”includes shares, options to purchase shares and any other “right” in “a body of persons” as such term is defined in the Israeli Tax Ordinance. Theserestrictions generally restrict these entities and Rights Holders from making any disposition of their Rights in the transferred assets and shares for a two yearperiod following the consummation of the Reorganization, which ends in February 2016, or the Restriction Period. During the Restriction Period, theserestrictions include the following: ·we may not sell or otherwise dispose of our intellectual property, other than out-licensing in the ordinary course of business; 125Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the Rights Holders immediately following the Reorganization must not change, subject to the following restriction and to the reliefdetailed below; ·the Rights Holders may not sell or otherwise transfer or dispose of more than 10% of their respective Rights, subject to the exemptions andrelief detailed below; ·we must not sell or otherwise transfer or dispose of any of our shares in GTTI, GHI or GIL; ·we may not deduct for tax purposes any expenses related to the Reorganization; and ·during the two tax years following the end of the year in which the Reorganization was completed we may not offset losses (whetherbusiness or capital losses) incurred in the year in which the Reorganization was completed or in the years preceded that year up to the fairmarket value of the transferred asset. Notwithstanding the foregoing restrictions, so long as the aggregate holdings of the Rights Holders, collectively, is 51% or more of the total sharecapital of the Company (on a fully diluted basis), then at any time during the Restriction Period, the following changes described below might be permittedunder the Israeli Tax Ordinance and guidelines issued by the Israeli Tax Authorities: ·Sale of Shares or Other Rights. One or more of the Rights Holders will be allowed to sell more than 10% of its Rights in the Company,subject to the following: §other Rights Holders give their consent to such sale of Rights; and §the aggregate number of ordinary shares and other Rights sold by all Rights Holders, collectively as a group, will not exceed 10%of the total Rights then-outstanding. ·Public Offering. We may issue up to 49% of our share capital (on a fully diluted basis) following such issuance in a public offering of ourordinary shares involving the listing of such shares on a securities exchange, which included our initial public offering and the listing ofour ordinary shares on the Nasdaq Capital Market. ·Private Placement. We may issue securities in a private placement to a person(s) who did not hold Rights in the Company prior to suchissuance, or a New Investor, provided that such private placement either (i) is in an amount which does not exceed 20% of our total sharecapital (on a fully-diluted basis) then-outstanding following such issuance in one or more separate transactions or (ii) does not exceed, inthe aggregate, 49% of our total share capital following such issuance, each New Investor will not receive more than 20% of our total sharecapital (on a fully-diluted basis) after such issuance and each New Investor does not participate in subsequent offerings or privateplacements, even if such New Investor purchased less than 20% in such preceding private placement. If during the Restriction Period, we or the Rights Holders commit a Violation, the transfer of shares or other rights and/or assets in connection withthe Reorganization will become subject to taxation based on the greater of the transferred assets’ fair market value on the day of such Violation or taxes that,but for the Tax Pre-Ruling, would be payable in connection with the transfer of such assets and shares at the time of the Reorganization linked to the Israeliconsumer price index linkage differentials and interest from the day of the actual transfer of such assets and shares until the day of payment of such taxes,unless the Israeli Tax Authority is satisfied that such Violation was a result of special circumstances beyond our control. The foregoing restrictions do not apply to any sale of company securities issued after the date of the Tax Pre-Ruling to new investors who are notRights Holders, including our ordinary shares issued to new investors who are not Rights Holders pursuant to the Share Purchase Agreement and the sharesissued in connection with the initial public offering. 126Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Certain U.S. Federal Income Tax Considerations The following is a general summary of what we believe to be certain material U.S. federal income tax consequences relating to the purchase,ownership and disposition of our ordinary shares by U.S. Holders (as defined below). This summary is based on the Internal Revenue Code, or the Code, theregulations of the U.S. Department of the Treasury issued pursuant to the Code, or the Treasury Regulations, the income tax treaty between the United Statesand Israel, or the U.S.-Israel Tax Treaty, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subjectto change, possibly with retroactive effect, or to different interpretation. No ruling has been sought from the IRS with respect to any U.S. federal income taxconsequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This summary is no substitute forconsultation by prospective investors with their own tax advisors and does not constitute tax advice. This summary does not address all of the taxconsiderations that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S.federal income tax law (including, without limitation, banks, insurance companies, tax-exempt entities, retirement plans, regulated investment companies,partnerships, dealers in securities, brokers, real estate investment trusts, certain former citizens or residents of the United States, persons who acquire ourordinary shares as part of a straddle, hedge, conversion transaction or other integrated investment, persons who acquire our ordinary shares through theexercise or cancellation of employee stock options or otherwise as compensation for their services, persons that have a “functional currency” other than theU.S. dollar, persons that own (or are deemed to own, indirectly, or by attribution) 10% or more of our shares, or persons that mark their securities to market forU.S. federal income tax purposes). This summary does not address any U.S. state or local or non-U.S. tax considerations, any U.S. federal estate, gift oralternative minimum tax considerations, or any U.S. federal tax consequences other than U.S. federal income tax consequences. As used in this summary, the term “U.S. Holder” means a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes, (i) anindividual citizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created ororganized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federalincome tax regardless of its source, or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over itsadministration and one or more U.S. persons have the authority to control all of its substantial decisions, or that has a valid election in effect under applicableTreasury Regulations to be treated as a “United States person.” If an entity treated as a partnership for U.S. federal income tax purposes holds our ordinary shares, the tax treatment of such partnership and eachpartner thereof will generally depend upon the status and activities of the partnership and such partner. A holder that is treated as a partnership for U.S. federalincome tax purposes should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase,ownership and disposition of our ordinary shares. Prospective investors should be aware that this summary does not address the tax consequences to investors who are not U.S. Holders. Prospectiveinvestors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and dispositionof our ordinary shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws. Taxation of U.S. Holders Distributions. Subject to the discussion below under “Passive Foreign Investment Company,” a U.S. Holder that receives a distribution with respectto an ordinary share generally will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Israeli taxwithheld from such distribution) when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulatedearnings and profits (as determined under U.S. federal income tax principles). Any distributions in excess of our earnings and profits will be applied againstand will reduce (but not below zero) the U.S. Holder’s tax basis in its ordinary shares, and, to the extent they exceed that tax basis, will be treated as gain fromthe sale or exchange of our ordinary shares. 127Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we were to pay dividends, we expect to pay such dividends in NIS. A dividend paid in NIS, including the amount of any Israeli taxes withheld,will be includible in a U.S. Holder’s income as a U.S. dollar amount calculated by reference to the exchange rate in effect on the date such dividend isreceived, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted to U.S. dollars on the date of receipt, a U.S.Holder generally will not recognize a foreign currency gain or loss. However, if the U.S. Holder converts the NIS into U.S. dollars on a later date, the U.S.Holder must include, in computing its income, any gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the differencebetween (i) the U.S. dollar value of the amount included in income when the dividend was received and (ii) the amount received on the conversion of the NISinto U.S. dollars. Such gain or loss will generally be ordinary income or loss and will be U.S. source income or loss for U.S. foreign tax credit purposes. U.S.Holders should consult their own tax advisors regarding the tax consequences to them if we pay dividends in NIS or any other non-U.S. currency. Subject to certain significant conditions and limitations, any Israeli taxes paid on or withheld from distributions from us and not refundable to a U.S.Holder may be credited against the U.S. Holder’s U.S. federal income tax liability or, alternatively, may be deducted from the U.S. Holder’s taxable income.The election to deduct, rather than credit, foreign taxes, is made on a year-by-year basis and applies to all foreign taxes paid by a U.S. Holder or withheld froma U.S. Holder that year. Dividends paid on the ordinary shares generally will constitute income from sources outside the United States and be categorized as“passive category income” or, in the case of some U.S. Holders, as “general category income” for U.S. foreign tax credit purposes. Because the rulesgoverning foreign tax credits are complex, U.S. Holders should consult their own tax advisors regarding the availability of foreign tax credits in theirparticular circumstances. Dividends paid on the ordinary shares will not be eligible for the “dividends-received” deduction generally allowed to corporate U.S. Holders withrespect to dividends received from U.S. corporations. For taxable years beginning on or after January 1, 2013, certain distributions treated as dividends that are received by an individual U.S. Holder froma “qualified foreign corporation” generally qualify for a 20% reduced maximum tax rate so long as certain holding period and other requirements are met. Anon-U.S. corporation (other than a corporation that is treated as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year)generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States whichthe Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of informationprogram, or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. Dividendspaid by us in a taxable year in which we are not a PFIC and with respect to which we were not a PFIC in the preceding taxable year are expected to be eligiblefor the 20% reduced maximum tax rate, although we can offer no assurances in this regard. However, any dividend paid by us in a taxable year in which weare a PFIC or were a PFIC in the preceding taxable year will be subject to tax at regular ordinary income rates (along with any applicable additional PFIC taxliability, as discussed below). As discussed below under “Passive Foreign Investment Company,” we have determined that we are a PFIC and likely willcontinue to be a PFIC, at least until we develop a source of significant operating revenues. The additional 3.8% “net investment income tax” (described below) may apply to dividends received by certain U.S. Holders who meet certainmodified adjusted gross income thresholds. Sale, Exchange or Other Disposition of Ordinary Shares. Subject to the discussion under “Passive Foreign Investment Company” below, a U.S.Holder generally will recognize capital gain or loss upon the sale, exchange, or other disposition of our ordinary shares in an amount equal to the differencebetween the amount realized on the sale, exchange, or other disposition and the U.S. Holder’s adjusted tax basis (determined under U.S. federal income taxrules) in such ordinary shares. This capital gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in our ordinary shares exceedsone year. Preferential tax rates for long-term capital gain (currently, with a maximum rate of 20% for taxable years beginning on or after January 1, 2013) willapply to individual U.S. Holders. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sourceswithin the United States for U.S. foreign tax credit purposes, subject to certain possible exceptions under the U.S.-Israel Tax Treaty. The additional 3.8% “netinvestment income tax” (described below) may apply to gains recognized upon the sale, exchange, or other taxable disposition of our ordinary shares bycertain U.S. Holders who meet certain modified adjusted gross income thresholds. 128Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax consequences of receiving currency other than U.S. dollarsupon the disposition of their ordinary shares. Passive Foreign Investment Company In general, a non-U.S. corporation will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% ofits gross income is “passive income,” or (ii) on average at least 50% of its assets by value produce passive income or are held for the production of passiveincome. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities andsecurities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason ofthe temporary investment of funds, including those raised in a public offering. Assets that produce or are held for the production of passive income includecash, even if held as working capital or raised in a public offering, marketable securities and other assets that may produce passive income. In determiningwhether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a25% interest (by value) is taken into account. A foreign corporation’s PFIC status is an annual determination that is based on tests that are factual in nature, and our status for any year will dependon our income, assets, and activities for such year. Based upon our review of our financial data, we have determined that we are currently a PFIC, and welikely will continue to be a PFIC, at least until we develop a source of significant operating revenues. U.S. Holders should be aware of certain tax consequences of investing directly or indirectly in us due to our classification as a PFIC. A U.S. Holder issubject to different rules depending on whether the U.S. Holder makes an election to treat us as a “qualified electing fund,” referred to herein as a “QEFelection,” for the first taxable year that the U.S. Holder holds ordinary shares makes a “mark-to-market” election with respect to the ordinary shares, or makesneither election. An election to treat us as a QEF will not be available if we do not provide the information necessary to make such an election. It is notexpected that a U.S. Holder will be able to make a QEF election because we do not intend to provide U.S. Holders with the information necessary to make aQEF election. QEF Election. One way in which certain of the adverse consequences of PFIC status can be mitigated is for a U.S. Holder make a QEF election.Generally, a shareholder making the QEF election is required for each taxable year to include in income a pro rata share of the ordinary earnings and netcapital gain of the QEF, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. An election to treat us as a QEFwill not be available if we do not provide the information necessary to make such an election. It is not expected that a U.S. Holder will be able to make a QEFelection because we do not intend to provide U.S. Holders with the information necessary to make a QEF election. Mark-to-Market Election. Alternatively, if our ordinary shares are treated as “marketable stock,” a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our ordinary shares, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructionsand related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any,of the fair market value of our ordinary shares at the end of the taxable year over such holder’s adjusted tax basis in such ordinary shares. The U.S. Holderwould also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in our ordinary shares over their fair marketvalue at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to- market election. A U.S.Holder’s tax basis in our ordinary shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or otherdisposition of our ordinary shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of our ordinary shareswould be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder,and any loss in excess of such amount will be treated as capital loss. Amounts treated as ordinary income will not be eligible for the favorable tax ratesapplicable to qualified dividend income or long-term capital gains. 129Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable TreasuryRegulations. A class of stock is regularly traded on an exchange during any calendar year during which such class of stock is traded, other than in de minimisquantities, on at least 15 days during each calendar quarter. To be marketable stock, our ordinary shares must be regularly traded on a qualifying exchange (i)in the United States that is registered with the SEC or a national market system established pursuant to the Exchange Act or (ii) outside the United States thatis properly regulated and meets certain trading, listing, financial disclosure and other requirements. Our ordinary shares are expected to constitute“marketable stock” as long as they remain listed on the Nasdaq Capital Market and are regularly traded. A mark-to-market election will not apply to our ordinary shares held by a U.S. Holder for any taxable year during which we are not a PFIC, but willremain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any PFIC subsidiary that we own.Each U.S. Holder is encouraged to consult its own tax advisor with respect to the availability and tax consequences of a mark-to-market election with respectto our ordinary shares. Each U.S. Holder should consult its own tax adviser with respect to the applicability of the “net investment income tax” (discussed below) where amark-to-market election is in effect. Default PFIC Rules. A U.S. Holder who does not make a timely QEF election (we do not currently intend to prepare or provide the information thatwould enable a U.S. Holder to make a QEF election) or a mark-to-market election, referred to in this summary as a “Non-Electing U.S. Holder,” will be subjectto special rules with respect to (i) any “excess distribution” (generally, the portion of any distributions received by the Non-Electing U.S. Holder on theordinary shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing U.S. Holder in the three precedingtaxable years, or, if shorter, the Non-Electing U.S. Holder’s holding period for the ordinary shares), and (ii) any gain realized on the sale or other dispositionof such ordinary shares. Under these rules: ·the excess distribution or gain would be allocated ratably over the Non-Electing U.S. Holder’s holding period for such ordinary shares; ·the amount allocated to the current taxable year and any year prior to us becoming a PFIC would be taxed as ordinary income; and ·the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class oftaxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributableto each such other taxable year. If a Non-Electing U.S. Holder who is an individual dies while owning our ordinary shares, the Non-Electing U.S. Holder’s successor would beineligible to receive a step-up in tax basis of such ordinary shares. Non-Electing U.S. Holders should consult their tax advisors regarding the application ofthe “net investment income tax” (described below) to their specific situation. To the extent a distribution on our ordinary shares does not constitute an excess distribution to a Non-Electing U.S. Holder, such Non-Electing U.S.Holder generally will be required to include the amount of such distribution in gross income as a dividend to the extent of our current or accumulatedearnings and profits (as determined for U.S. federal income tax purposes) that are not allocated to excess distributions. The tax consequences of suchdistributions are discussed above under “Taxation of U.S. Holders—Distributions.” Each U.S. Holder is encouraged to consult its own tax advisor withrespect to the appropriate U.S. federal income tax treatment of any distribution on our ordinary shares. If we are treated as a PFIC for any taxable year during the holding period of a Non-Electing U.S. Holder, we will continue to be treated as a PFIC forall succeeding years during which the Non-Electing U.S. Holder is treated as a direct or indirect Non-Electing U.S. Holder even if we are not a PFIC for suchyears. A U.S. Holder is encouraged to consult its tax advisor with respect to any available elections that may be applicable in such a situation, including the“deemed sale” election of Code Section 1298(b)(1) (which will be taxed under the adverse tax rules described above). 130Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may invest in the equity of foreign corporations that are PFICs or may own subsidiaries that own PFICs. If we are classified as a PFIC, underattribution rules, U.S. Holders will be subject to the PFIC rules with respect to their indirect ownership interests in such PFICs, such that a disposition of theordinary shares of the PFIC or receipt by us of a distribution from the PFIC generally will be treated as a deemed disposition of such ordinary shares or thedeemed receipt of such distribution by the U.S. Holder, subject to taxation under the PFIC rules. There can be no assurance that a U.S. Holder will be able tomake a QEF election or a mark-to-market election with respect to PFICs in which we invest. Each U.S. Holder is encouraged to consult its own tax advisorwith respect to tax consequences of an investment by us in a corporation that is a PFIC. In addition, U.S. Holders should consult their tax advisors regarding the IRS information reporting and filing obligations that may arise as a result ofthe ownership of ordinary shares in a PFIC, including IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company orQualified Electing Fund. The U.S. federal income tax rules relating to PFICs, QEF elections, and mark-to market elections are complex. U.S. Holders are urged toconsult their own tax advisors with respect to the purchase, ownership and disposition of our ordinary shares, any elections available with respect tosuch ordinary shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of our ordinary shares. Certain Reporting Requirements Certain U.S. Holders are required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and certain U.S. Holders maybe required to file IRS Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, reporting transfers of cash or otherproperty to us and information relating to the U.S. Holder and us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply. See thediscussion regarding Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, above. In addition, recently enacted legislation requires certain U.S. Holders to report information on IRS Form 8938, Statement of Specified ForeignFinancial Assets, with respect to their investments in certain “foreign financial assets,” which would include an investment in our ordinary shares, to the IRS. U.S. Holders who fail to report required information could become subject to substantial penalties. U.S. Holders should consult their tax advisorsregarding the possible implications of these reporting requirements arising from their investment in our ordinary shares. Backup Withholding Tax and Information Reporting Requirements Generally, information reporting requirements will apply to distributions on our ordinary shares or proceeds on the disposition of our ordinary sharespaid within the United States (and, in certain cases, outside the United States) to U.S. Holders other than certain exempt recipients, such as corporations.Furthermore, backup withholding (currently at 28%) may apply to such amounts if the U.S. Holder fails to (i) provide a correct taxpayer identificationnumber, (ii) report interest and dividends required to be shown on its U.S. federal income tax return, or (iii) make other appropriate certifications in therequired manner. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment may be credited against a U.S. Holder’s U.S.federal income tax liability and such U.S. Holder may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with the IRSand furnishing any required information in a timely manner. New Legislative Developments With respect to taxable years beginning on or after January 1, 2013, certain U.S. persons, including individuals, estates and trusts, will be subject toan additional 3.8% Medicare surtax, or “net investment income tax,” on unearned income. For individuals, the additional net investment income tax appliesto the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or$125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions thatare allocable to such income. Investment income generally includes, among other things, passive income such as interest, dividends, annuities, royalties,rents, and capital gains. U.S. Holders are urged to consult their own tax advisors regarding the implications of the additional net investment income taxresulting from their ownership and disposition of our ordinary shares. 131Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCETO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAXCONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES IN LIGHT OF THEINVESTOR’S OWN CIRCUMSTANCES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS. F. Dividends and Paying Agents. Not applicable. G. Statements by Experts. Not applicable. H. Documents on Display. You may read and copy this Annual Report on Form 20-F, including the related exhibits and schedules, and any document we file with the SECwithout charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may also obtain copies of the documents atprescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet website that contains reports and other informationregarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website athttp://www.sec.gov. As a “foreign private issuer,” we are subject to the information reporting requirements of the Exchange Act that are applicable to foreign privateissuers, and under those requirements file reports with the SEC. Those other reports or other information may be inspected without charge at the locationsdescribed above. As a “foreign private issuer,” we are exempt from the rules under the Exchange Act related to the furnishing and content of proxystatements, and our officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions contained inSection 16 of the Exchange Act with respect to their purchases and sales of ordinary shares. Furthermore, as a “foreign private issuer,” we are also not subjectto the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. We maintain a corporate website at http://www.galmedpharma.com. Information contained on, or that can be accessed through, our website is notincorporated by reference into this annual report and does not constitute a part of this annual report. We have included our website address in this annualreport solely as an inactive textual reference. I. Subsidiary Information. Not applicable. ITEM 11. Quantitative and Qualitative Disclosures About Market Risk. Quantitative and Qualitative Disclosure About Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position,results of operations or cash flows due to adverse changes in financial market prices and rates, including interest rates and foreign exchange rates, of financialinstruments. 132Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Foreign Currency Exchange Risk Our foreign currency exposures give rise to market risk associated with exchange rate movements of the Euro and NIS mainly against the U.S. dollarbecause a large portion of our expenses are denominated in Euros and NIS. Our Euro expenses consist principally of payments made to sub-contractors andconsultants for preclinical studies, clinical trials and other research and development activities. Our NIS expenses consist principally of payments made toemployees, sub-contractors and consultants for preclinical studies, clinical trials, professional services, other research and development activities and generaland administrative activities. We anticipate that a large portion of our expenses will continue to be denominated in currencies other than the U.S. dollar. Ourfinancial position, results of operations and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. Our results of operationsand cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due tochanges in foreign exchange rates. Approximately 32% of our expenses are denominated in Euros. Changes of 5% and 10% in the U.S. dollar to Euroexchange rate will increase/decrease our operation expenses by 1.6% and 3.2%, respectively. Approximately 31% of our expenses are denominated in NIS.Changes of 5% and 10% in the U.S. dollar to NIS exchange rate will increase/decrease our operation expenses by 1.6% and 3.1%, respectively. To date,fluctuations in the exchange rates have not materially affected our results of operations or financial condition for the periods under review. To date, we have not engaged in hedging our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactionsto decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may notadequately protect us from the material adverse effects of such fluctuations. Interest Rate Risk We have an exposure to interest income sensitivity, which is affected by changes in the general level of Israeli interest rates. We currently do nothedge against interest rate exposure. Because of the short-term maturities of our cash equivalents and investment securities, we do not believe that an increasein market rates would have any significant impact on the realized value of our investment securities. If a 10% change in interest rates would not have amaterial effect on the fair value of our investment portfolio. ITEM 12. Description of Securities Other Than Equity Securities. A. Debt Securities. Not applicable. B. Warrants and Rights. Not applicable. C. Other Securities. Not applicable. D. American Depositary Shares. Not applicable. 133Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART II ITEM 13. Defaults, Dividend Arrearages and Delinquencies. Not applicable. ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds. A.Not applicable. B.Not applicable. C.Not applicable. D.Not applicable. E. Use of Proceeds. On March 18, 2014, we completed our initial public offering of 3,263,010 ordinary shares at a public offering price of $13.50 per share, whichincluded 425,610 ordinary shares issued upon the exercise in full of the underwriters’ option to purchase additional ordinary shares to cover over-allotments,for aggregate gross proceeds of approximately $44.1 million. Maxim Group LLC acted as sole book-running manager of the offering, and MLV & Co. andFeltl and Company acted as co-managers of the offering. The offer and sale of all of the shares in the offering were registered under the Securities Act pursuantto a registration statement on Form F-1, which was declared effective on March 12, 2014 (File No. 333-193792), and a registration statement on Form F-1filed pursuant to Rule 462(b) of the Securities Act (File No. 333-194526). We received aggregate net proceeds from the offering of approximately $39.9 million, after deducting approximately $3.1 million of underwritingdiscounts and commissions and approximately $1.1 million of estimated offering expenses directly payable by us. None of the underwriting discounts andcommissions or other offering expenses were incurred or paid to our directors or officers or their associates or to persons owning ten percent or more of ourordinary shares or to any of our affiliates. As of December 31, 2014, the net proceeds from our initial public offering were held in cash and cash equivalents, short-term deposits andmarketable securities. Since then, we have deployed approximately $20.0 million into a variety of additional capital preservation investments, includingshort-term, investment grade, interest-bearing instruments, such as corporate debt securities, and certain short-term money market investments. We usedapproximately $750,000 of such net proceeds to pay for EndoPAT™ medical equipment purchased from Itamar. We have broad discretion in the use of thenet proceeds from our initial public offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of ourordinary shares. We have no current understandings, commitments or agreements with respect to any material acquisition of or investment in any technologies,products or companies. ITEM 15. Controls and Procedures. Disclosure Controls and Procedures We performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that information required to bedisclosed in this Annual Report on Form 20-F and filed with the SEC is recorded, processed, summarized and reported timely within the time period specifiedin the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports that it files or submits under the Exchange Act, is accumulated and communicated to the issuer’smanagement, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure. There can be no assurance that our disclosure controls and procedures will detect or uncover all failures of personswithin our Company to disclose information otherwise required to be set forth in our reports. Nevertheless, our disclosure controls and procedures aredesigned to provide reasonable assurance of achieving the desired control objectives. Based on our evaluation, our management, including our President andChief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d) -15(e) of the Exchange Act) as of the end of the period covered by this report are effective at such reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting This annual report does not include a report of management’s assessment regarding internal control over financial reporting due to a transitionperiod established by rules of the SEC for newly public companies. 134Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Attestation Report of the Registered Public Accounting Firm This annual report does not include a report of management’s assessment regarding internal control over financial reporting due to a transitionperiod established by rules of the SEC for newly public companies. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2014 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 16. [RESERVED] ITEM 16A. Audit Committee Financial Expert. Our Board has determined that Ms. Yaron-Eldar qualifies as an audit committee financial expert pursuant to the applicable SEC rules and that Ms.Yaron-Eldar is “independent” in accordance with the Nasdaq Capital Market corporate governance requirements. For information relating to Ms. Yaron-Eldar’s qualifications and experience, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.” ITEM 16B. Code of Ethics. We have adopted a Code of Business Conduct and Ethics applicable to all of our directors and employees, including our President and ChiefExecutive Officer, Chief Financial Officer, controller or principal accounting officer or other persons performing similar functions, which is a “code of ethics”as defined in Item 16B of Form 20-F promulgated by the SEC and as required by the Nasdaq Capital Market Listing Rules, which refers to Section 406(c) ofthe Sarbanes-Oxley Act. Section 406(c) of the Sarbanes-Oxley Act provides that a “code of ethics” means such standards as are reasonably necessary topromote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professionalrelationships; (ii) full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the issuer; and (iii) compliance withapplicable governmental rules and regulation. The full text of the Code of Business Conduct and Ethics [is] posted on our website at www.galmedpharma.com. Information contained on, or thatcan be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. We will provide a copy of suchcode of ethics without charge upon request by mail or by telephone. If we make any amendment to the Code of Business Conduct and Ethics or grant anywaivers, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics, we will disclose the nature of such amendment orwaiver on our website to the extent required by the rules and regulations of the SEC. ITEM 16C. Principal Accountant Fees and Services. Brightman Almagor Zohar & Co., a member firm of Deloitte Touche Tohmatsu Limited, an independent registered public accounting firm, served asour independent public accountants for the fiscal years ended December 31, 2013 and 2014, for which audited financial statements appear in this AnnualReport on Form 20-F. The following table presents the aggregate fees for professional services rendered by such accountants to us during their respective term as ourprincipal accountants in 2013 and 2014. 2014 2013 (US$ in thousands) (US$ in thousands) Audit Fees (1) 60 60 Audit-Related fees (2) 141 - All Other Fees (3) 13 - Total 214 60 (1) Includes professional services rendered in connection with the audit of our annual financial statements and the review of our interim financial statements. (2) Includes fees for our initial public offering in the United States in 2014. (3) Includes professional fees related to an EU governmental incentive plan. 135Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Audit Committee Pre-Approval Policies and Procedures One of our Audit Committee’s main roles is to assist the board of directors in fulfilling its responsibility for oversight of the quality and integrity ofthe accounting, auditing and reporting practices of the Company. The Audit Committee oversees the appointment, compensation, and oversight of the publicaccounting firm engaged to prepare or issue an audit report on the financial statements of the Company. [Our Audit Committee and Board have adopted apre-approval policy for the engagement of our independent registered public accounting firm to perform certain audit and non-audit services. Pursuant to thispolicy, which is designed to assure that such engagements do not impair the independence of our auditors, the Audit Committee pre-approves annually a listof specific audit and non-audit services in the categories of audit services, audit-related services, tax services and other services that may be performed by ourindependent registered public accounting firm. Notwithstanding pre-approval by the Audit Committee of certain audit and non-audit services, our Boardrequires that the Audit Committee’s chairperson approve any such audit or non-audit service in advance of engaging the service provider to provide suchaudit or non-audit service. If a type of service that is to be provided by our auditors has not received such general pre-approval, it will require specific pre-approval by our Audit Committee. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-auditfunctions defined in applicable SEC rules. ITEM 16D. Exemptions from the Listing Standards for Audit Committees. Not applicable. ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. Not applicable. ITEM 16F. Change in Registrant’s Certifying Accountant. Not applicable. ITEM 16G. Corporate Governance. Our shares are listed on the Nasdaq Capital Market under the symbol “GLMD.” In addition to the corporate governance requirements of theSarbanes-Oxley Act and the related rules implemented by the SEC, we must comply with the Listing Rules of the Nasdaq Capital Market. Under those ListingRules, we may elect to follow certain corporate governance practices permitted under the Companies Law in lieu of compliance with corresponding corporategovernance requirements otherwise imposed by the Listing Rules of the Nasdaq Capital Market for U.S. domestic issuers. In accordance with Israeli law and practice, and subject to the exemption set forth in Rule 5615 of the Listing Rules of the Nasdaq Capital Market,we follow the provisions of the Companies Law, rather than the Listing Rules of the Nasdaq Capital Market, with respect to the following requirements: ·Distribution of certain reports to shareholders. As opposed to the Listing Rules of the Nasdaq Capital Market, which require listed issuers to makecertain reports, such as annual reports, interim reports and quarterly reports, available to shareholders in one of a number of specific manners, Israelilaw does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not todistribute such reports to shareholders, but to make such reports available through a public website. In addition to making such reports available ona public website, we plan to make our audited financial statements available to our shareholders at our offices and will only mail such reports toshareholders upon request. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules. See “Item 10. AdditionalInformation—Documents on Display” for a description of our Exchange Act reporting obligations. ·Nomination of directors. With the exception of our external directors and directors elected by our Board due to vacancy, our directors are elected byan annual meeting of our shareholders to hold office until the next annual meeting following three years from his or her election. See “Item 6.Directors, Senior Management and Employees—C. Board Practices.” The nominations for directors, which are presented to our shareholders by ourBoard, are generally made by the Board itself, in accordance with the provisions of our Articles and the Companies Law. One or more shareholders ofa company holding at least 1% of the voting power of the company may nominate a currently serving external director for an additional three yearterm. ·Compensation of officers. We follow the provisions of the Companies Law with respect to matters in connection with the composition andresponsibilities of our Remuneration Committee, Office Holder compensation and any required approval by the shareholders of such compensation.Israeli law and our Articles do not require that the independent members of our Board, or a remuneration committee composed solely of independentmembers of our Board, determine an executive officer’s compensation, as is generally required under the Listing Rules of the Nasdaq Capital Marketwith respect to the Chief Executive Officer and all other executive officers of a company. Instead, our Remuneration Committee and conducts itselfin accordance with the provisions governing the composition of and the responsibilities of a remuneration committee as set forth in the CompaniesLaw. Furthermore, remuneration of Office Holders is determined and approved by our Remuneration Committee, and in general, by our Board aswell, and in certain circumstances, by our shareholders, as detailed above. The requirements for shareholder approval of any Office Holdercompensation, and the relevant majority or Special Majority for such approval, are all as set forth in the Companies Law. Thus, we seek shareholderapproval for all corporate actions with respect to Office Holder compensation requiring such approval under the requirements of the Companies Law,including for our Compensation Policy and for certain Office Holder Compensation, rather than seeking approval for such corporate actions inaccordance with Listing Rules of the Nasdaq Capital Market. All members of our Remuneration Committee are independent directors underapplicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board. See “Item 6. Directors, Senior Management andEmployees—B. Compensation.” 136Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Independent directors. Although Israeli law does not require that a majority of the directors serving on our Board be “independent,” as definedunder Nasdaq Capital Market Listing Rule 5605(a)(2), but rather requires we have at least two external directors who meet the requirements of theCompanies Law, as described above under “Item 6. Directors, Senior Management and Employees—C. Board Practices—External Directors.” Amajority of our Board is independent based on the Nasdaq Capital Market rules. We are required, however, to ensure that all members of our AuditCommittee are “independent” under the applicable Nasdaq Capital Market and SEC criteria for independence (as we cannot exempt ourselves fromcompliance with that SEC independence requirement, despite our status as a foreign private issuer) and we must also ensure that a majority of themembers of our Audit Committee are “unaffiliated directors” as defined in the Companies Law. However, while not required by Israeli law ourindependent directors will conduct regularly scheduled meetings at which only such independent directors are present, as required by the NasdaqCapital Market Listing Rules. Our Board has affirmatively determined that each of Mr. Nir, Ms. Yaron-Eldar, Mr. Marth and Dr. Sidransky qualifiesas “independent” under the Nasdaq Capital Market independence standards. ·Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under requirements of the CompaniesLaw, rather than seeking approval for corporate actions in accordance with Nasdaq Capital Market Listing Rule 5635. In particular, under thisNasdaq Capital Market rule, shareholder approval is generally required for: (i) an acquisition of shares or assets of another company that involvesthe issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in thetarget company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption or amendment of equitycompensation arrangements; and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisablefor, equity) of a listed company via a private placement (or via sales by directors, officers or 5% shareholders) if such equity is issued (or sold) atbelow the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among otherthings: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for anyother position that they may hold at a company), for which approvals of the remuneration committee, board of directors and shareholders are allrequired, (ii) Extraordinary Transactions with controlling shareholders of publicly held companies, which require the special approval describedunder “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli Law—Transactions with Controlling Shareholders,” and (iii) terms of office and employment or other engagement of the controlling shareholder of theCompany or such controlling shareholder’s relative, which require the special approval described under “Item 6. Directors, Senior Management andEmployees—B. Compensation” and “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related PartyTransactions under Israeli Law.” In addition, under the Companies Law, a merger requires approval of the shareholders of each of the mergingcompanies. See also “Compensation of officers” above. ITEM 16H. Mine Safety Disclosure. Not applicable. PART III ITEM 17. Financial Statements. We have responded to Item 18 in lieu of responding to this item. ITEM 18. Financial Statements. Please refer to the financial statements beginning on page F-1. The following financial statements, financial statement schedules and related notesare filed as part of this Annual Report on Form 20-F, together with the report of the independent registered public accounting firm.  Page Report of Independent Registered Public Accounting FirmF-1Consolidated Balance SheetsF-2Consolidated Statements of OperationsF-3Consolidated Statements of Comprehensive LossF-4Consolidated Statements of Changes in Shareholders’ EquityF-5Consolidated Statements of Cash FlowsF-6Notes to Consolidated Financial StatementsF-7 - F-25 137Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders ofGALMED PHARMACEUTICALS LTD. We have audited the accompanying consolidated balance sheets of Galmed Pharmaceuticals Ltd. ("the Company") and its subsidiaries as of December 31,2014 and 2013, and the related consolidated statements of operations and changes in shareholders' equity (deficiency) and cash flows for each of the threeyears in the period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company's board of directors andmanagement. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controlover financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basisfor our opinion. In our opinion, such consolidated financial statements, present fairly, in all material respects, the financial position of the Company and its subsidiaries as ofDecember 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, inconformity with accounting principles generally accepted in the United States of America. Brightman Almagor Zohar & Co.Certified Public AccountantsA member firm of Deloitte Touche Tohmatsu Limited Tel Aviv, IsraelMarch 31, 2014 F-1Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Consolidated Balance Sheets U.S. Dollars in thousands, except share data and per share data As of December 31, 2014 2013 Assets Current assets Cash and cash equivalents 3 $23,736 $137 Short-term deposit 3 6,000 – Marketable securities 3 2,250 – Other accounts receivable 4 165 16 Total current assets 32,151 153 Property and equipment, net 5 774 13 Total assets $32,925 $166 Liabilities and stockholders’ equity (deficiency) Current liabilities Trade payables 875 1,355 Other accounts payable 6 243 334 Total current liabilities 1,118 1,689 Long-term liabilities Related parties 8 400 428 Total long-term liabilities 400 428 Stockholders’ equity (deficiency) Ordinary shares, par value NIS 0.01 per share; Authorized 50,000 shares; Issued and outstanding: 11,100,453 shares as of December 31, 2014 10 32 – Ordinary shares, par value $1 per share; Authorized 50,000 shares; Issued and outstanding: 9,739 shares as of December 31, 2013 10 – 10 Additional paid-in capital 68,116 25,681 Accumulated other comprehensive income 4 – Accumulated deficit (36,745) (27,642)Total stockholders’ equity (deficiency) 31,407 (1,951) Total liabilities and stockholders’ equity (deficiency) $32,925 $166 The accompanying notes are an integral part of the consolidated financial statements. F-2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Consolidated Statements of Operations U.S. Dollars in thousands, except share data and per share data Year ended December 31, 2014 2013 2012 Research and development, expenses 11 $6,664 $7,207 $2,443 General and administrative expenses 12 2,478 7,355 694 Capital loss – 10 – Total operating expenses 9,142 14,572 3,137 Financial expenses (income), net (40) 2,912 6 Loss before income taxes 9,102 17,484 3,143 Income taxes 13 1 1 6 Net loss $9,103 $17,485 $3,149 Basic and diluted net loss per share from continuing operations $0.88 $3.45 $0.63 Weighted-average number of shares outstanding used incomputing basic and diluted net loss per share *) 10,323,686 5,069,466 4,955,837 *) Retroactively adjusted to reflect the 729:1 share split, which occurred upon consummation of the Reorganization. The accompanying notes are an integral part of the condensed interim consolidated financial statements. F-3Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Consolidated Statements of Comprehensive Loss U.S. Dollars in thousands, except share data and per share data Year ended December 31, 2014 2013 2012 Net loss $9,103 $17,485 $3,149 Other comprehensive income: Net unrealized gain on available for sale securities 4 – – Comprehensive loss $9,099 $17,485 $3,149 The accompanying notes are an integral part of the condensed interim consolidated financial statements. F-4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Consolidated Statements of Changes in Shareholder’s Equity (Deficiency) U.S. Dollars in thousands, except share data and per share data Ordinary shares Additionalpaid-in Capital Accumulatedothercomprehensive Accumulated Shares amount capital note income deficit Total Balance - January 1, 2012 6,853 $7 $4,239 $52 $– $(7,008) $(2,710)Capital note – – – 3,672 - 3,672 Stock based compensation – – 208 – – 208 Net loss – – – – (3,149) (3,149) Balance - December 31, 2012 6,853 $7 $4,447 $3,724 $– $(10,157) $(1,979)Conversion of capital notes in December 2013 1,432 2 3,722 (3,724) – – – Stock-based compensation expenses – – 10,851 – – – 10,851 Conversion of loans, December 2013 1,408 1 6,541 – – – 6,542 Issuance of ordinary shares, December 2013 46 – 120 – – – 120 Net loss – – – – (17,485) (17,485) Balance - December 31, 2013 9,739 $10 $25,681 $– $– $(27,642) $(1,951)Reorganization and stock split *) 7,099,731 20 25,671 – – (27,642) (1,951)Issuance of ordinary shares in February 2014 560,224 2 1,998 – – – 2,000 Issuance of ordinary shares upon initial publicoffering, net in March 2014 **) 3,263,010 9 39,847 – – – 39,856 Cashless exercise of options 177,488 1 (1) – – – – Stock based compensation – – 601 – – – 601 Unrealized gain from marketable securities – – – 4 – 4 Net loss – – – – (9,103) (9,103)Balance - December 31, 2014 11,100,453 $32 $68,116 $– $4 $(36,745) $31,407 *) See also Note 1. **) Net of offering costs in the amount of $4,204. The accompanying notes are an integral part of the condensed interim consolidated financial statements. F-5Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Consolidated Statements of Cash Flows U.S. Dollars in thousands, except share data and per share data Year ended December 31, 2014 2013 2012 Cash flow from operating activities Net loss for the year $(9,103) $(17,485) $(3,149)Adjustments required to reconcile net loss to net cash used in operatingactivities: Depreciation and amortization 9 4 5 Capital loss – 10 – Non-cash financial expenses due to convertible notes modification – 2,878 – Stock-based compensation expense 601 10,851 208 Changes in operating assets and liabilities: Decrease (Increase) in other accounts receivable (149) (2) (11)Increase (decrease) in trade payables (480) 954 (89)Increase (decrease) in other accounts payable (91) 228 (103)Increase (decrease) in related party (28) 38 60 Net cash provided by (used in) operating activities (9,241) (2,524) (3,079) Cash flow from investing activities Purchase of property and equipment (770) (13) (32)Proceeds from sale of property and equipment – 16 – Investment in securities, available for sale (2,246) – – Investment in short-term deposit (6,000) – – Net cash provided by (used in) investing activities (9,016) 3 (32) Cash flow from financing activities Credit from bank – – (9)Receipt of short term loan from bank – – 26 Repayments of short-term loan from bank – (20) (6)Receipt of convertible notes – 1,840 – Issuance of ordinary shares 2,000 120 – Issuance of ordinary shares upon IPO, net *) 39,856 – – Issuance of capital note – – 3,672 Net cash provided by financing activities 41,856 1,940 3,683 Increase (decrease) in cash and cash equivalents 23,599 (581) 572 Cash and cash equivalents at the beginning of the year 137 718 146 Cash and cash equivalents at the end of the year $23,736 $137 $718 Non cash activity: Conversion of convertible loans into ordinary shares – $6,542 – Conversion of capital note into ordinary shares – $3,724 – Supplemental disclosure of cash flow information: $4 – – *) Net of offering costs in the amount of $4,204. The accompanying notes are an integral part of the consolidated financial statements. F-6Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 1 – General Galmed Pharmaceuticals Ltd. (the “Company”) is a clinical-stage biopharmaceutical company primarily focused on the development and commercializationof therapeutics for the treatment of liver diseases and cholesterol gallstones. The Company was incorporated in Israel on July 31, 2013 and has not commenced operations until February 2, 2014. On February 2, 2014, upon a pre-rulingfrom the Israeli Tax Authorities, the Company underwent a reorganization (the “Reorganization”) pursuant to which all of Galmed Holdings Inc.’s business,including shares in its fully owned subsidiary, Galmed 2000, which was incorporated in British virgin island) and net assets, was transferred to the Company.Contemporaneously, Galmed Pharmaceuticals Ltd. effected a stock split of 729:1. This Reorganization is considered a restructuring under common control inwhich the Company is the Successor (the “Successor”) and Galmed Holdings Inc. (which, as of the date of the Reorganization, was owned in the same holdingpercentage by the same shareholders who owned the Company) is the predecessor (the “Predecessor”). Accordingly, the Company succeeded the Predecessor's activities and comparative amounts which is presented on these financial statements. All the data in the accompanying notes regarding the amount of shares, options, warrants, capital notes, convertible notes, per share and par value isretroactively adjusted to reflect the 729:1 share split, which occurred upon consummation of the Reorganization. The Company holds a wholly owned subsidiary, Galmed International Ltd., which was incorporated in Malta. Galmed International Ltd. holds a whollyowned subsidiary, Galmed Medical Research Ltd., which was incorporated in Israel. The Company also holds a wholly owned subsidiary, Galmed Research and Development Ltd., which was incorporated in Israel. Note 2 – Significant Accounting Policies A.Basis of presentation The consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles ("U.S.GAAP"). B.Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect theamounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. F-7Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2 – Significant Accounting Policies (Cont.) C.Financial statement in U.S. dollars The functional currency of the Company and its subsidiaries is the U.S dollar (the “dollar”), because the dollar is the currency of the primaryeconomic environment in which the Company and its subsidiaries operate, and expect to continue operating in the foreseeable future.Transactions and balances denominated in dollars are presented in their original amounts. Non-dollar transactions and balances have been re-measured to dollars in accordance with the provisions of ASC 830-10, “Foreign Currency Translation.” All transaction gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financialincome or expenses, as appropriate. D.Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Galmed Research andDevelopment Ltd, Galmed 2000 Inc., Galmed International Ltd., and Galmed Medical Research Ltd. All intercompany balances and transactionswere eliminated upon consolidation. E.Cash and cash equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to cash with maturities of three months or less as of thedate acquired. F.Short-term bank deposits Short-term bank deposits are deposits with maturities of more than three months but less than one year. The short-term bank deposits arepresented at their cost. As of December 31, 2014, the Company’s bank deposits were in U.S. dollars and bore interest at a weighted -averageinterest rate of 0.6%. G.Marketable securities Marketable securities are considered to be available for sale and are carried at fair value. Unrealized gains and losses, if any, are reported as aseparate component of stockholders’ equity. The cost of marketable securities classified as available for sale is adjusted for amortization ofpremiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income. Realized gains and losses, ifany, are also included in other income, net. The cost of securities sold is based on the specific identification method. F-8Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2 – Significant Accounting Policies (Cont.) H.Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over theestimated useful lives of the assets. The annual depreciation rates are as follows: % Office furniture and equipment 7 Computer software, electronic and medical equipment 15–33 I.Impairment of long-lived assets The Company’s and its subsidiaries’ long-lived assets are reviewed for impairment in accordance with ASC 360-10, “Accounting for theImpairment or Disposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of an asset maynot be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the futureundiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized ismeasured by the amount by which the carrying amount of the assets exceeds their fair value. During 2014 and 2013, no impairment losses wereidentified. J.Severance pay The Company’s liability for severance pay is calculated in accordance with Israeli law, based on the most recent salary paid to each employeeand the length of employment with the Company. Part of the liability is funded through individual insurance policies purchased from outsideinsurance companies, which are not under the Company’s control. The Company employees are included under section 14 of the SeveranceCompensation Act, 1963 (“Section 14”) for a portion of their salaries. According to Section 14, these employees are entitled to monthly depositsat a rate of 8.33% of their monthly salary, made in their name with such insurance companies. Under the Severance Compensation Act, 1963,payments in accordance with Section 14 release the Company from any future severance payments to those employees. The aforementioneddeposits are not recorded as an asset in the Company’s balance sheet. F-9Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2 – Significant Accounting Policies (Cont.) K.Fair value of financial instruments The estimated fair value of financial instruments was determined by the Company using available market information and valuationmethodologies. Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the amounts theCompany could realize in a current market exchange. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: The carrying amounts of cash and cash equivalents, short-term bank deposits, marketable securities and trade payables approximate their fairvalue due to the short-term maturity of such instruments. Fair value is an exit price representing the amount that would be received upon selling an asset or that would be paid to transfer a liability in anorderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based onassumptions used by market participants in pricing an asset or a liability. A three-tier fair-value hierarchy was established as a basis for considering such assumptions and for inputs used in the valuation methodologiesin measuring fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2 - Other inputs that are directly or indirectly observable in the marketplace; and Level 3 - Unobservable inputs that are supported by little or no market activity The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs whenmeasuring fair value. F-10Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2 - Significant Accounting Policies (Cont.) L.Convertible notes The Company examines its issued convertible notes under ASC 470-20, “Debt with Conversion and Other Options,” according to which theproceeds from the sale of debt securities with a conversion feature and or other options are allocated to each of the issued securities based ontheir relative fair value. The Company also examined its issued convertible notes under ASC Topic 815, “Derivatives and Hedging,” which generally provides criteriathat, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivativefinancial instruments. These three criteria are: (i) the economic characteristics and risks of the embedded derivative instrument are not clearlyand closely related to the economic characteristics and risks of the host contract; (ii) the hybrid instrument that embodies both the embeddedderivative instrument and the host contract is not re-measured at fair value under otherwise-applicable generally accepted accounting principleswith changes in fair value reported in earnings; and (iii) a separate instrument with the same terms as the embedded derivative instrument wouldbe considered a derivative instrument subject to the requirements of ASC Topic 815. In determining whether an embedded derivative should be bifurcated, the Company considers all other scope exceptions provided by that topic.One scope exception particularly relevant to convertible instruments is whether the embedded conversion feature is both indexed to, andclassified in, the Company’s equity. The Company further considered whether, under ASC 470-20-25, a beneficial conversion feature exists. If so, then the Company should haveallocated the beneficial conversion feature to an equity component based on the benefit of the conversion terms granted to purchasers on theissuance date. The Company examined and determined that no beneficial conversion feature exists under ASC 470-20. The Company also examined anddetermined that no derivative financial instrument exists that is subject to the requirements of ASC Topic 815 that should be bifurcated andseparately accounted for as a derivative financial instrument. F-11Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2- Significant Accounting Policies (Cont.) M.Accounting for stock-based compensation The Company applies ASC 718-10, “Share-Based Payment,” which requires the measurement and recognition of compensation expense for allshare-based payment awards made to employees and directors, including employee stock options under the Company’s stock plans, based onestimated fair values. ASC 718-10 requires companies to estimate the fair value of equity-based payment awards on the date of grant using anoption-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite serviceperiods in the Company’s consolidated statement of operations. The Company recognizes compensation expense for the value of non-employee awards, which have graded vesting, based on the acceleratedattribution method over the requisite service period of each award, net of estimated forfeitures. The Company recognizes compensation expenses for the value of employee awards, which have graded vesting, based on the straight-linemethod over the requisite service period of each of the awards, net of estimated forfeitures. The Company estimates the fair value of restricted shares based on the market price of the shares at the grant date, and estimates the fair value ofstock options granted using a Black-Scholes option-pricing model. The option-pricing model requires a number of assumptions, the mostsignificant of which are the expected stock-price volatility and the expected option term (the time from the grant date until the options areexercised or expire). The Company’s calculations of the expected volatility were based upon actual historical stock-price movements over the period, which wasequal to the expected option term. The expected option term was calculated for options granted to employees and directors in accordance withASC-718-10-S99, using the “simplified” method, and grants to non-employees were based on the contractual term. Historically, the Companyhas not paid dividends, and has no foreseeable plans to do so. The risk-free interest rate is based on the yield from U.S. Treasury zero-couponbonds with an equivalent term. The following assumptions were used for the fiscal year 2014 and 2013 grants: dividend yield of 0.00% for both periods; risk-free interest ratebetween 0.91% and 1.68%; an expected life between five and six years; and a volatility rate ranging between 76% to 80% N.Research and development expenses Research and development expenses are charged to the statement of operations as incurred. F-12Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 2 - Significant Accounting Policies (Cont.) O.Income taxes The Company accounts for income taxes utilizing the asset and liability method in accordance with ASC 740, “Income Taxes.” Current taxliabilities are recognized for the estimated taxes payable on tax returns for the current year. Deferred tax liabilities or assets are recognized for theestimated future tax effects attributable to temporary differences between the income-tax bases of assets and liabilities and their reportedamounts in the financial statements and for tax loss carry forwards. Measurement of current and deferred tax liabilities and assets is based onprovisions of enacted tax laws, and deferred tax assets are reduced, if necessary, by the amount of tax benefits, the realization of which is notconsidered more likely than not based on available evidence. ASC 740-10 requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position forrecognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained onaudit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amountthat is more than 50% likely of being realized upon ultimate settlement. P.Basic and diluted net loss per share Basic net loss per share is computed based on the weighted-average number of shares outstanding during each year. Diluted net loss per share iscomputed based on the weighted-average number of shares outstanding during each year, plus the dilutive potential of the ordinary sharesconsidered outstanding during the year, in accordance with ASC 260-10, “Earnings Per Share.” All outstanding stock options and warrants were excluded from the calculation of the diluted loss per share for the years ended December 31,2014 and 2013 because all such securities have an anti-dilutive effect. F-13Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 3 – Investments The following table summarizes the Company’s cash, cash equivalents, and investments as of December 31, 2014 and 2013 As of December 31, 2014 Cost Basis GrossUnrealized Gains GrossUnrealized Losses Estimated Fair Value (in thousands) Cash and cash equivalents $23,736 $– $– $23,736 Short-term deposit 6,000 – – 6,000 Marketable securities 2,246 7 (3) 2,250 Total cash, cash equivalents and investments $31,982 $7 $(3) $31,986 As of December 31, 2013 Cost Basis Gross Unrealized Gains GrossUnrealized Losses Estimated Fair Value (in thousands) Cash and cash equivalents $137 $– $– $137 Total cash and cash equivalents $137 $– $– $137 F-14Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 4 – Other Accounts Receivable As of December 31 2014 2013 (in thousands) Government institutions $51 $11 Interest receivable 13 – Prepaid expenses 101 5 $165 $16 Note 5 – Property and equipment, net As at December 31 2014 2013 (in thousands) Medical equipment $750 $– Office furniture and equipment 5 3 Computer software and electronic equipment 45 27 800 30 Accumulated depreciation 26 17 Net book value $774 $13 Note 6 – Other Accounts Payable As of December 31 2014 2013 (in thousands) Accrued expenses $81 $236 Employees and related institutions 84 22 Accrued vacation *) 78 76 $243 $334 *)Including inter alia due to a related party in the amount of $68 thousand and $70 thousand, as of December 31, 2014 and 2013, respectively. F-15Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 7 – Convertible Notes From August through October 2013, the Company issued short-term convertible notes to various investors (the “Investors”) in the aggregatedamount of $1.84 million. Such notes were convertible into ordinary shares of the Company based on a price per share of $7.45. On December 1,2013, the Company and the Investors signed an amendment that changed the conversion price per share to $3.57. The amendment was in linewith a negotiation held simultaneously with an investor, which resulted in an issuance of ordinary shares (see note 10.A.5), reflecting a priceper share of $3.57. The shares were issued at a discount from the Company’s estimation regarding its own fair value due to the necessity ofraising additional funds in order to finance its operational activity. The Company applied the provisions of ASC 470-50, “Modifications and Extinguishments,” to account for debt modification. The Companyfirst determined that the exchange was not considered a troubled debt, mainly due to the fact that no concession was granted by the creditor.Based on the provisions of ASC 470-50, the Company determined that the exchange resulted in an extinguishment of the old convertible notesand the issuance of new convertible notes. The Company recorded the new convertible notes by its measured fair value. The difference between the fair value of the new convertible notesand the net carrying amount of the extinguished notes, approximately $2.9 million—was recorded in the statement-of- operations report as afinancial expense for the year ended December 31, 2013. The Company measured the fair value of the new convertible notes according to present value techniques that are commensurate withvaluation techniques used in valuation of convertible notes, which includes the fair value of the loan and the fair value of the conversionfeature. The following assumptions were used for measuring the fair value of the new convertible notes: dividend yield of 0.00%; risk-free interest rateof 1.71%; expected life of five years; volatility rate of 70%; and a discount rate of 20%. On December 10, 2013, upon request of the convertible-notes holders, the notes fully converted into 515,403 ordinary shares with a par valueof NIS 0.01. In December 2013, upon request of the convertible-notes holders, the Company converted all of its outstanding convertible notes into1,026,432 ordinary shares with a par value of NIS 0.01 per share. F-16Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 8 – Related Parties A.Balances 1.On January 1, 2007, the Company entered into a consulting agreement with a consulting company (the "Consulting Company") owned by amember of the Company's Board of Directors, who is also the Company's CEO and a shareholder of the Company. The maximum monthlyconsideration for the services provided pursuant to the agreement is $10 thousand. In January 2012, the Consulting Company increased the scope of its services and, accordingly, the monthly fee was increased to $20 thousand.Later in 2012, the Consulting Company agreed to waive the majority of its 2012 fees. On December 23, 2013, the company entered into an employment agreement with its CEO, who and therefor the agreement with the ConsultingCompany was terminated. As of December 31, 2014, the Company had no debt, related to the mentioned Consulting agreement. 2.As of December 31, 2014 and 2013, the Company had an accrual in the amount of $255 thousand and $223 thousand, respectively, pursuant toan employment agreement with its CEO. 3.In December 2011, the Company signed an agreement with the beneficiaries of one of its cofounders, which stated that the beneficiaries areentitled to an aggregate amount of $263 thousand as a result of outstanding obligations of the Company owed to the late co-founder. Suchamount is subject to annual interest equal to LIBOR + 1%. As of December 31, 2014 and 2013, the aggregated outstanding amount of the aforementioned liabilities was $280 thousand and $275 thousand,respectively. B.Transactions 1.During 2013 and 2012, the Company recognized consulting fees and expenses owed to the Consulting Company in the amount of $10 thousandand $20 thousand, respectively. 2.During 2014, 2013 and 2012, the Company recorded salary expenses in the amount of $512 thousand, $34 thousand and $55 respectively,pursuant to an employment agreement with its CEO. 3.In 2012, the Company issued 241,299 options in order to purchase ordinary shares of the Company to the chairman of its board of directors.During 2014, 2013 and 2012, the stock-based compensation expenses with respect to the options amounted to $43 thousand, $101 thousand and$208 thousand, respectively. See also Note 10.A.7. F-17Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 8 – Related Parties (Cont.) B.Transactions (Cont.) 4.During the years 2009 through 2011 and the year 2013, the Company received convertible notes in the amount of $1.2 million and $574thousand, respectively, from various existing shareholders. In December 2013, upon the request of the convertible-notes holders, the notes were fully converted. See also Note 7. 5.In December 2013, the Company granted 806,274 options to purchase ordinary shares of the Company with a NIS 0.01 par value to certaindirectors. The options will vest over various periods not exceeding two years and will expire in September 2023. The exercise price is between$0.01 and $3.57 per share. As of December 31, 2014, the amount of vested Options is 762,534. The aggregate grant date fair value of suchoptions is $7.8 million. During the year 2014 and 2013, with respect to the above-mentioned options, the Company recorded stock-basedcompensation expenses in the amount of $413 thousand and $7,0 nillion, respectively,. See also Note 10. 6.During 2014, the Company granted 685,749 options to purchase ordinary shares of the Company with a NIS 0.01 par value to certain directors.The options will vest over various periods not exceeding four years and will expire 10 years from the grant date. The exercise price is between$3.57 and $5.49 per share. The grant of 310,000 options to certain directors is subject to the approval of the general shareholders’ meeting. As ofDecember 31, 2014, the amount of vested Options is 21,456. The aggregate grant date fair value of such options, excluding the options that arewaiting the general shareholders' meeting approval, is $285 thousand. During the year 2014 the Company recorded stock-based compensationexpenses in the amount of $142 thousand with respect to the above-mentioned options. See also Note 10. Note 9 – Commitments and Contingencies In 2002, the Company entered an agreement with Aventis Pharma Deutschland GmbH. (“Aventis”), in which Aventis agreed that the Companywill have the exclusive worldwide right to commercialize an invention covered by Israeli patent application 123998 and PCT/IL99/00173, andthe Company agreed to pay Aventis a royalty of 10% in respect of all income that the Company or its affiliates may receive from thecommercialization of such invention which is related to the prevention and treatment of gallstones. F-18Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 10 – Shareholders’ Equity (Deficiency) A.Ordinary shares 1.Ordinary shares confer upon the holders the right to receive notice to participate and vote in general meetings of the Company and the rightto receive dividends, if declared. 2.During the period of September 11, 2000 (date of inception) through 2009, a total of 4,995,837 ordinary shares were issued by theCompany in consideration of $4.2 million. 3.In December 2013, upon the request of convertible-notes holders, the Company converted all of its outstanding convertible notes into1,026,432 ordinary notes. 4.In December 2013, upon the capital-notes holders’ request, the Company converted all of its capital notes into 1,043,928 ordinary shareswith a par value of NIS 0.01 per share. 5.On December 31, 2013, the Company signed an agreement with an investor in the Company in which the Company issued the investor33,534 ordinary shares in consideration of $120 thousand. 6.On February 3, 2014, the Company entered into a share purchase agreement with certain of its shareholders and new investors, pursuant towhich the Company issued to such existing shareholders and new investors 560,224 ordinary shares at a price per share of $3.57 for a totalconsideration in the amount of approximately $2 million. 7.During 2012, the Company granted Options to purchase 241,299 of its ordinary shares with a par value NIS 0.01 per share to the Chairmanof its Board of Directors. On March 12, 2014, upon the IPO, the Chairman exercised the Options by way of a cashless exercise into 177,488ordinary shares of the Company based upon the initial public offering price of $13.50 per share. 8.On March 12, 2014, the Company completed an initial public offering (the “IPO”) and listed its ordinary shares on the NASDAQ CapitalMarket under the ticker symbol GLMD. In the IPO, the Company issued under 3.3 million shares to the market at a price of $13.50 per share (par value NIS 0.01 per share),for a total consideration of approximately $40 million, net of offering costs in the amount of approximately $4.2 million. F-19Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 10 – Shareholders' Equity (deficiency) (Cont.) B.Capital notes During the years 2012 and 2011, the Company signed share-purchase agreements with various investors, according to which the Companyissued such investors capital notes in the aggregate amount of $3.7 million. The capital notes are instruments of equity and not debt. The capital-notes holders had the right to convert the face-value amount of thecapital notes, in whole or in part and without additional consideration, into ordinary shares of the Company; however, prior to suchconversion, if at all, the capital notes (i) do not grant their holders with any of the rights of the Company’s shareholders; (ii) have nomaturity date, do not carry interest, are not linked to any index, and are not redeemable; and (iii) are not registered. Accordingly, the Company classified such capital notes as an equity component. In 2013 the capital notes were fully converted into1,043,298 ordinary shares. C.Stock-based compensation 1.During 2002, the Company granted 38,637 Options to purchase ordinary shares of the Company to a service supplier (the “ServiceSupplier”). The Options were fully vested at the grant date, as set forth in the agreement signed by the parties. The options exercise price is$1.50 per share. As of December 31, 2014, all the aforementioned options were outstanding. 2.In December 2013, the Company granted 1,219,617 Options to purchase ordinary shares of the Company to certain consultants anddirectors. The options will vest over various periods not exceeding two years and will expire in September 2023. The option exercise priceis between $0.01 and $3.57 per share. As of December 31, 2014, the amount of vested Options is 825,228. 3.In February 2014, the Company granted options to purchase 8,583 of its ordinary shares to a member of the board of directors. The optionsare fully vested and expire in September 2023. The exercise price is $3.57 per share, and the fair value of such options at the grant date was$95 thousand. 4.In March 2014, the Company granted Options to purchase 17,166 of its ordinary shares to a member of the board of directors. The optionsvest over three years and expire in September 2023. The exercise price is $3.57 per share, and the fair value of such options at the grant datewas $190 thousand. As of December 31, 2014, the amount of vested options is 4,290. F-20Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 10 – Shareholders' Equity (deficiency) (Cont.) C.Stock-based compensation (Cont.) 5.In December 2014, the Company granted 660 thousand Options to purchase ordinary shares of the Company to certain employees,consultants, and directors. The options will vest over four years and will expire in December 2024. The exercise price is $5.49 per share. The grant of 330 thousand options to certain employees and directors is subject to the approval of the general shareholders’ meeting. As ofDecember 31, 2014, none of such options were vested. 6.A summary of the status of the Company’s option plans as of December 31, 2014 and 2013 and changes during the years then ended arepresented below: December 31, 2014 2013 *) Number ofshare options Weightedaverageexerciseprice Number ofshareoptions Weightedaverageexerciseprice Options outstanding at beginning of year 1,499,553 $1.17 279,936 $3.28 Granted **) 355,749 $5.35 1,219,617 $0.64 Exercised (241,299) $3.57 – – Outstanding at end of year 1,614,003 $1.70 1,499,553 $1.13 Options exercisable at year end 1,227,387 $1.40 1,331,154 $1.02 *) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization. **) Excluding grant of 330 thousand options subject to approval of the general shareholders’ meeting. As of December 31, 2014 and 2013, the weighted-average remaining contractual term of the outstanding and exercisable options, excluding the38,637 Options granted in 2002 that have no expiration date, is 8.74 and 8.74 years, respectively. F-21Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 10 – Shareholders' Equity (Deficiency) (Cont.) C.Stock-based compensation (Cont.) As of December 31, 2014 and 2013, all of the outstanding and exercisable options are “in the money” with aggregate intrinsic value of $6.6million and $115 thousand, respectively. The unrecognized compensation expense calculated under the fair-value method for stock options expected to vest as of December 31, 2014 isapproximately $1.9 million and is expected to be recognized over a weighted-average period of two years. D.Warrants During 2012, the Company granted an investor (the “Investor”), who is to assist the Company in creating business connections andopportunities; negotiating with third parties; and raising funds. For such services the Investor was granted 241,299 warrants to purchaseordinary shares of the Company with a par value of NIS 0.01. The warrants shall vest fully upon the occurrence of several performanceconditions as set forth in the agreements signed by the parties. The exercise price would be $3.57. The warrants expired in May 2013. Note 11 – Research and Development Expenses Year ended December 31, 2014 2013 2012 (in thousands) Chemistry and formulation studies $3,923 $2,081 $1,759 Salaries and benefits 573 – – Stock-based compensation – 4,285 – Research and preclinical studies 865 711 409 Clinical studies 1,148 128 171 Regulatory and other expenses 155 2 104 $6,664 $7,207 $2,443 F-22Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 12 – General and Administrative Expenses Year ended December 31, 2014 2013 2012 (in thousands) Stock-based compensation $601 $6,566 $208 Professional fees 625 496 1 Salaries and benefits 588 145 184 Traveling and conference costs 30 46 83 Rent and office-maintenance fees 284 46 38 Investor relations and business development 337 – – Other 13 56 67 $2,478 $7,355 $694 Note 13 – Income Taxes A.General The Company is assessed for tax purposes on an unconsolidated basis. Each of the Company’s subsidiaries is subject to the tax rules prevailingin its country of incorporation. B.Corporate Taxation Israeli subsidiary: On July 30, 2013, the Knesset plenum approved, in a third reading, the budget bill and the bill to change the national priorities in 2013 and 2014(the “Law”). In conjunction with this legislation there will be an increase of the corporate income-tax rate from January 1, 2014 to 26.5% (1.5%increase). Maltese subsidiary: Taxable income of Maltese companies is subject to tax at the rate of 35% in 2013 and 2014 (“Regular Tax Rate”). C.Net Operating Loss Carry forward As of December 31, 2014, the Company had approximately $20.7 million net-operating-loss carry forwards, consisting of approximately $11.6million of Maltese net-operating-loss carry forwards and approximately 9.1 million Israeli net-operating-loss carry forward. The Maltese and theIsraeli loss carry forwards have no expiration date. F-23Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 13 – Income Taxes (Cont.) D.Deferred income taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial-reporting purposes and the amounts used for income-tax purposes. Significant components of the Company’s and its subsidiaries’ assets are as follows As of December 31, 2014 2013 (in thousands) Deferred tax assets Maltese subsidiary net-operating-loss carry forward $4,058 $5,516 Israeli subsidiary net-operating-loss carry forward 2,381 – Other reserves and allowances 107 115 Total deferred-tax assets 6,546 5,631 Valuation allowance (6,546) (5,631)Net deferred-tax assets $– $– Deferred-tax assets for carry forward losses in Malta and Israel are calculated using the applicable tax rate at the time of expected realization ofthe carry forward losses. The Company has provided full valuation allowances in respect of deferred-tax assets. Management currently believes that it is more likely thannot that those deferred taxes will not be realized in the foreseeable future. D.Tax assessments The Israeli subsidiary has received final tax assessments through the year ended December 31, 2010. A reconciliation of the Company’s effective tax expense to the Company’s theoretical statutory tax benefit is as follows F-24Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 13 – Income Taxes (Cont.) Year ended December 31, 2014 2013 2012 (in thousands) Loss before taxes on income, as reported in the consolidated statements ofoperations $9,102 $17,484 $3,143 Statutory tax rate 26.5% 25% 25% Theoretical tax benefit 2,412 4,371 786 Losses and other items for which a valuation allowance was provided or benefitfrom loss carry forwards (2,412) (4,371) (786)Other 1 1 6 Actual tax expense $1 $1 $6 F-25Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 19. Exhibits. Exhibit No. Description 1.1 Form of Amended and Restated Articles of Association of Galmed Pharmaceuticals Ltd. (English Translation) (1) 2.1 Specimen share certificate (1) 4.1 Registration and Information Rights Agreement, dated December 2013, by and among Galmed Pharmaceuticals Ltd., Shirat HaChaim Ltd.,David & Debora Goldfarb, Medgal S.A. and G. Yarom Medical Research Ltd. (2) 4.2 Form of Indemnification Agreement (1) 4.3 Galmed Pharmaceuticals Ltd. 2013 Incentive Share Option Plan (2) 4.4 Agreement, dated 2002, by and between Galmed International Limited and Aventis Pharm Deutschland GmbH (2) 4.5 Personal Employment Agreement, dated December 23, 2013, by and between Galmed Medical Research Ltd. and Allen Baharaff (2) 4.6 Personal Employment Agreement, dated December 23, 2013, by and between Galmed Medical Research Ltd. and Maya Halpern (2) 4.7 Confirmation & Release Letter, dated December 18, 2011, from Beatrice Gilat, Jacob Gilat, Roni Gilat-Baharaff, Michael Gilat and AllenBaharaff to Galmed Medical Research Ltd. (2) 4.8 Equipment Purchase Agreement, dated September 24, 2014, between Itamar Medical Ltd. and Galmed Research and Development Ltd.* 4.9 Development and Manufacturing Services Agreement, dated January 27, 2015, between Galmed Research and Development Ltd. andPerrigo API Ltd.* 4.10 Investigator Initiated Clinical Trial Agreement, dated February 8, 2015, between Galmed Research and Development Ltd. and theUniversity of California, San Diego* 8.1 List of subsidiaries of Galmed Pharmaceuticals Ltd. (1) 11.1 Code of Business Conduct and Ethics of Galmed Pharmaceuticals Ltd. 12.1 Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 ofthe Sarbanes-Oxley Act of 2002 138Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit No. Description 12.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002 13.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b) and 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ________________ (1)Incorporated herein by reference to Amendment No. 1 to the Registration Statement on Form F-1 filed with the SEC on February 28, 2014.(2)Incorporated herein by reference to the Registration Statement on Form F-1 filed with the SEC on February 6, 2014.* Portions of this exhibit were omitted and have been filed separately with the Secretary of the Securities and Exchange Commission pursuant to theRegistrant’s application requesting confidential treatment under Rule 24b-2 of the Exchange Act. 139Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersignedto sign this annual report on its behalf. GALMED PHARMACEUTICALS LTD. By: /s/ Allen Baharaff Allen Baharaff President and Chief Executive Officer Date: March 31, 2015 140Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.8 CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST.COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. EQUIPMENT PURCHASE AGREEMENT This EQUIPMENT PURCHASE AGREEMENT (the “Agreement”), effective as of September 24th , 2014 (the “Effective Date”), is made by and betweenITAMAR-MEDICAL LTD., a company organized under the laws of the State of Israel, having a place of business at 9 Halamish St., Industrial Park, Caesarea38900, Israel, (“Itamar” or the “Company”), and GALMED RESEARCH AND DEVELOPMENT LTD., a company organized under the laws of the State ofIsrael with offices at 8, Shaul Hamelech Blvd., Tel Aviv 64733, Tel-Aviv, Israel (“Galmed”). WITNESSETH WHEREAS, the Company wishes to enable Galmed to purchase certain Products as defined herein, all under the terms and conditions set forth herein. NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, it is agreed by and between the parties as follows: 1. Sale of Products. Subject to the provisions of this Agreement, the Company, will sell Products (“Products”) and subject to receiving certain study dataas agreed between the parties in advance, will provide certain support to Galmed with regard to the Products, as set forth in Exhibit A hereto. 2. Sale Process; Delivery; Upon signing the agreement Itamar will ship the Products into a location provided by Galmed in advance, in the quantity, asspecified in Exhibit A. Any time Galmed wishes to purchase additional Products, it shall issue a written Purchase Order (“PO”) to the Company detailing thetype and number of Products required and the location to which these products are requested to be shipped. Such notification shall be delivered to theCompany at least 30 days prior to the desired date of shipment. The cost of such additionally ordered Products is specified in Exhibit B.3. Consideration; Payment Terms; The consideration for the sale of Products and the payment terms are set forth in Exhibit A hereto. All prices set forthin Exhibit A and Exhibit B are based on delivery ex works, Itamar's Caesarea, Israel facilities, as that term is defined in Incoterms 2010, ICC Rules for the Useof Domestic and International Trade Terms, ICC Publication No. 715EF (the “Delivery Point”). Galmed assumes all risks of loss or damage to the Productsfrom any cause, as well as any fees or taxes incurred after delivery. 4. Terms of Use. 4.1 Galmed will make sure that the Products are maintained in good operating condition, and are serviced and repaired when necessary to keep theProducts in good operating condition. All use and maintenance must be done according to the Company's requirements or recommendations as described inthe Product's Operating Manual provided by the Company. All maintenance must also comply with any legal and/or regulatory requirements. Galmed shallpay all costs related to compliance with the provisions of this Section. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4.2 The Company has a right, upon prior notice coordinated with Galmed to inspect the Products and to ensure compliance with the terms hereof. 4.3 The Products will not be altered, tampered with or modified without the Company's prior written consent. 5. All proprietary and sensitive information, disclosed by or on behalf of Galmed to the Company including any of the Company’s representatives orlearned by the Company and/or its representatives in connection with and in the course of performing of this Agreement, regardless of form, and anyproprietary and sensitive information generated or resulting from the use of the Product (“Galmed's Confidential Information”), shall be treated asconfidential both during the term of the Agreement and following its termination for a period of five (5) years. During such time period, the Companyundertakes to maintain Galmed's Confidential Information in confidence and to use all reasonable efforts to ensure that its representatives maintain Galmed'sConfidential Information in confidence, except as otherwise provided in this Agreement. The foregoing restrictions shall not apply to Galmed's ConfidentialInformation which is, or becomes part of the public domain through no act or omission of the Company and/or was lawfully obtained by the Company fromanother source. The Company shall be liable for any breach of this section by any of its personnel, including by its representatives. Also, the Company shallnot publicize the results of any non-public data derived from Galmed’s “ARAMCHOL005 study” and "ARAMCHOL007 study" without Galmed’s priorconsent. 6. Warranty; Defects; Limitation of Liability. 6.1 EXCEPT AS SET FORTH IN THIS SECTION 6, THE COMPANY MAKES NO WARRANTIES OF ANY KIND HEREUNDER, WHETHEREXPRESS, IMPLIED OR ARISING FROM TRADE USAGE, CONTRACT, TORT OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTIES OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL THE COMPANY BE LIABLE FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOST PROFITS OR REVENUESARISING OUT OF THIS AGREEMENT OR IN CONNECTION WITH THE USE OR PERFORMANCE OF, OR RESULTS OBTAINED OR NOT OBTAINEDFROM THE USE OF THE PRODUCTS, BY GALMED, HOSPITALS, OR OTHERWISE. 6.2 Subject to 4.1, 4.2, 4.3, 11, the Company hereby warrants to Galmed that: (1) each Product to be delivered hereunder will be free of defects inmaterial and workmanship under normal use and service for a period of twenty seven months from the date of delivery (the “Warranty Period”). 6.3 If, during the Warranty Period, a Product or any component of the Products becomes defective by reason of material or workmanship, and providedthat Galmed immediately notifies the Company, the Company will as an option immediately repair the defect on site or supply a replacement which will beshipped within 48 hours and request the return of defective equipment to Company's premises for repair in accordance with Company's warranty and repairprocedures. 6.4 The site coordinator in each site will receive the product in every site and check the Product for defects and whether the Product arrived in wholeand will immediately notify Galmed and the Company if errors occurred and/or defected Products were identified. The Company's staff trainer shall then alsocheck the Products for defects and whether the Product arrived in satisfactory condition and shall immediately notify Galmed and the Company if errorsoccurred and/or defected were identified. 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6.5 The parties shall share the cost of shipping replacements and returning defected products. 6.6 This warranty shall not apply to any Products or component parts, that (a) have been damaged by improper operation, tampering with, impropermaintenance, misuse, accident, or neglect, or were subject to any prohibited activities; (b) have been used in a manner not in accordance with the instructionssupplied by the Company; (c) have had changes or repairs made without written authorization of the Company to do so; (d) were incorporated into anotherproduct without the prior written approval of the Company; or (e) were stored in conditions and/or for a period of time contrary to the guidelines of theCompany which proves to be inadequate or unreasonable. 7. All rights and title to and/or interests in the results derived from using the Products by Galmed in the “ARAMCHOL005 and ARAMCHOL007studies” are and shall be owned by and are and will be the exclusive property of Galmed, and shall be deemed the confidential information of Galmed. 8. Indemnification. Galmed agrees to indemnify the Company and hold it harmless from and against any and all liability, fines, suits, claims, demands,actions, costs and expenses of any kind that arise or be claimed against the Company by any person as a result of an act of negligence or omission to use theProducts by Galmed, its employees and service providers, including, but not limited to its obligations under Section 4 above, except for such damages orlosses resulting from the use of the Products conducted in accordance with section 4 above. 9. Default. If Galmed is in default on any provision of the terms of this Agreement, all of Galmed’s payment obligations to the Company shallimmediately become due and payable, and the Company may, without notice, decline to make further shipments, deliveries or terminate Galmed’soutstanding POs, without affecting any other right or remedy the Company may have, including, but not limited to, any right to cancellation charges. Forpurposes of this Agreement, a “default” shall occur in the event that Galmed is more than five (5) days delinquent in any payment to the Company, becomesinsolvent, is adjudicated bankrupt, petitions for or consents to any relief under any bankruptcy reorganization statutes, has a receiver appointed or makes anassignment for the benefit of creditors, or is otherwise unable to meet its financial obligations as they become due. Continued shipment by the Companyfollowing Galmed’s default shall not constitute a waiver nor shall it affect Galmed’s legal obligations hereunder. 10. Term and Termination of this Agreement. 10.1 This Agreement enters into effect on the Effective Date and shall remain in effect until the earliest of (i) the completion of Galmed's phase IIb clinicaltrial entitled ARAMCHOL005 and Galmed's receiving all final Core Lab reports from the Company and the Company receiving all data agreed between theparties in advance (ii) occurrence of termination by either party in an event of a breach of a material provision hereof that has not been remedied during aperiod of 14 days after the delivery of a notice thereof by the non-breaching party to the party in breach. 10.2 In any event of termination of this Agreement, except for event of a material breach by Galmed, the relevant provision of Section 3, 4, 5, 6, 8, 9, 10and 12 of this Agreement shall remain in effect with respect to Products at such time. 11. Assignment. Without the prior written consent of the Company, Galmed shall not (1) assign, transfer, pledge or hypothecate this agreement, or anypart thereof, or any interest therein except to a successor in case of a merger, acquisition or as part of a transaction transferring all or substantially all thebusiness or assets of Galmed or (2) sublet or lend the Products or permit them to be used by anyone other than Galmed, Galmed’s employees and any ofGalmed’s agents conducting clinical studies. 3Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 12. Disclosure. Neither Party shall disclose, publicize or advertise in any manner the discussions or negotiations contemplated by the Agreement without theprior written consent of the other Party, except as may be required by law. 13. Governing Law; Disputes. This Agreement shall be governed by and construed in accordance with the laws of Israel. The competent courts and tribunalssituated in Tel Aviv, Israel shall have sole and exclusive jurisdiction in any dispute or controversy arising out of or relating to this Agreement. 14. This Agreement is not intended by the parties to constitute or create a joint venture, pooling arrangement, partnership, agency, employer-employeerelationship or a formal business organization of any kind. 15. Publication. The Company shall not publicize the data shared with the Company and results of any non-public data derived from Galmed’sARAMCHOL005 study and ARAMCHOL007 study without prior consent of Galmed. 16. This Agreement, together with the Exhibit(s), sets forth the entire agreement between the parties on the subject hereof and supersedes any previousagreement, understanding, memorandum, letter of intent or representation on the subject matter hereof. This Agreement may be amended only by writtenagreement signed by the duly empowered representatives of both parties. 17. Insurance. The Company warrants that it maintains, at its sole cost and expense, an adequate policies of general liability insurance in amounts of $1million per occurrence and $2 million in the annual aggregate to insure its obligations hereunder. IN WITNESS WHEREOF, each of the parties has caused this Agreement by a duly authorized representative on the dates entered herein below. ITAMAR-MEDICAL LTD. GALMED RESEARCH AND DEVELOPMENT LTD. By:/s/ Gilad Glick By: /s/ Allen Baharaff Name:Gilad Glick Name: Allen Baharaff Title:CEO Title: CEO Date:24 November 2014 Date: 24 Sept 2014 By:/s/ Shaul Sharoni Name:Shaul Sharoni Title:CFO Date:24 November 2014 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT APRODUCTS AND PRICES I.The Company’s Product: The Product includes:1.EndoPAT kit composed of¨EndoPAT device¨Two hand supports¨High pressure occluding cuff¨Manometer2.Preconfigured laptop with the EndoPAT software3.A box of single-use EndoPAT probes includes 6 (Six) pairs of single use probes in the box – one pair is required per test4.An envelope with the necessary equipment certificates and list of contents that are necessary for shipment (the "Shipment Documents") In consideration for and subject to providing EndoPAT test results and study demographics to the Company that shall be used for internal purposesonly, Galmed will be granted the following support at no additional cost:1.A project manager will be assigned to the study at the Company and will serve as a focal point for the participating sites and Galmed.2.The Company's representative’s participation in and presenting at investigator’s meetings will involve reimbursement of travel costs only as pre-approved by Galmed.3.A hotline with a toll-free number for technical support will be provided to each participating study site at any reasonable time.4.An on-site installation and staff training by the Company's experts for each participating site.5.A core lab for the EndoPAT testing that includes:a.EndoPAT data analysis (test result) and test quality score (good, fair, inadequate) for each test.b.Fast feedback to sites on the first recordings of the study, to minimize the learning curve and prevent any sub-optimal performance entering thestudy.c.The Company shall submit a final Core Lab written report to Galmed, summarizing its data, findings and the results of deriving from the use of theProducts in connection with Galmed's ARAMCHOL005 study and ARAMCHOL007 study, as well as a detailed interpretation of such data ("CoreLab Report"), within 30 days after data lock up of each study. II. Quantity of Products to be provided by the Company to Galmed:1.Sixty (60) EndoPAT devices including 60 envelops of Shipment Documents.2.Sixty (60) Preconfigured laptop with the EndoPAT software3.One hundred thirty two (132) boxes of single use EndoPAT probesIII. Total Cost to be paid by Galmed: A total cost of 750,000 USD, not including taxes, for the Products in Item II referenced above, provided that theagreement is signed and all Products specified in Item II above are shipped to Galmed by September 29th, 2014. 5Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. I.Terms of payment: Payment of the total cost referenced in Item II, including taxes shall be paid in full no later than December 30th, 2014. 6Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT B COST LIST FOR ADDITIONAL PRODUCTS THAT MAY BE PURCHASED BY GALMED UNDER THE TERMS OF THIS AGREEMENT 1.Additional EndoPAT device(s), each at [***] USD (a [***]% discount will be applied if the terms of the first order as specified in EXHIBIT A havebeen met).2.Preconfigured laptop with the EndoPAT software at [***] USD (a [***]% discount will be applied if the terms of the first order as specified inEXHIBIT A have been met).3.Box of 6 pairs of single use EndoPAT probes at [***] USD (a [***]% discount will be applied if the terms of the first order as specified in EXHIBITA have been met). CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 7 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.9 CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST.COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Development and Manufacturing Services Agreement This Development and Manufacturing Services Agreement (the "Agreement") is made and entered into as of January 26, 2015 (the “Effective Date”) by andbetween Perrigo API Ltd., an Israeli company, having its principal offices at 29 Lehi Street, Bnei Brak 51200, Israel (“Perrigo”), Galmed Research andDevelopment Ltd. an Israeli company having its principal offices at 8, Shaul Ha'Melech Blvd., Tel Aviv 6473307, Israel (“Galmed”). The parties identifiedabove are sometimes hereinafter individually referred to as a “Party” and collectively as the “Parties”. WHEREAS, Perrigo is in the business of development, production and marketing of various active pharmaceutical ingredients and finished dose formulationproducts and owns facilities for GMP manufacture of active pharmaceutical ingredients located at Neot Hovav, Israel ("Perrigo's Facility"); and WHEREAS, Galmed is in the process of developing a novel final dosage pharmaceutical product for the treatment of Non Alcoholic Fatty Liver disorders,including Non-Alcoholic Steato-Hepatitis, named Aramchol (the "Product"), which is currently in clinical trials Phase IIb; and WHEREAS, the active pharmaceutical ingredient contained in the Product (the "API") is currently manufactured for Galmed by Cambridge MajorLaboratories Netherlands ("CML") in accordance with a manufacturing process that was developed by CML for Galmed and is owned by Galmed (the"Manufacturing Process") as generally defined in the Route Of Synthesis attached hereto as Annex A ; and WHEREAS, Galmed and Perrigo wish to set forth the terms with respect to technology transfer, improvement of the Manufacturing Process and scale up tocommercial scale of the API as set forth herein (hereinafter the "Project"); and WHEREAS, the Parties wish to negotiate a definitive exclusive manufacturing and supply agreement, all as further detailed below; Now Therefore, in consideration for the mutual covenants set forth herein and other good and valuable consideration, the receipt of which is herebyacknowledged, the Parties agree as follows. 1. Definitions For the purpose of this Agreement, the terms set forth below will have the meaning given below. “Affiliate” shall mean, with respect to any party hereto, any person, organization or entity directly or indirectly controlling, controlled by or under commoncontrol with, such party. For purposes of this definition only, “control” of another person, organization or entity shall mean the ability, directly or indirectly,to direct the activities of the relevant entity, and shall include, without limitation (i) ownership or direct or indirect control of fifty percent (50%) or more ofthe outstanding voting stock or other ownership interest of the other organization or entity, or (ii) possession of, or the power to elect or appoint fifty percent(50%) or more of the members of the governing body of the organization or other entity. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. "Batch" means a batch of the API produced during the same cycle of manufacture. “Batch Record” means the detailed production instructions for manufacture, production and control of a Batch, including documenting each step in themanufacture, processing, packing and labeling of the API, produced in accordance with GMP. "Change of Control" means (i) consolidation or merger of a party or its ultimate parent company with or into any other company, or any other entity orperson; (ii) corporate reorganization in which a party shall not be the continuing or surviving entity of such reorganization; (iii) sale, license or lease of all orsubstantially all of a party's assets; (iv) transaction or a series of related transactions in which a person or entity acquires more than fifty percent (50%) of theissued and outstanding shares, or fifty percent (50%) or more of the outstanding voting power of a party (treating any convertible preferred shares on an as-converted to ordinary share basis); (v) transaction or a series of related transactions in which a person or entity or “group,” as such term is defined andinterpreted under Rule 13d-5 of the U.S. Securities Exchange Act of 1934, as amended, acquires the right to control the appointment or the voting for theelection of more than fifty percent (50%) of the directors of a party. “Confidential Information” means any information and materials disclosed by a Party or an Affiliate of such Party or otherwise on its behalf (the "Discloser")to the other Party or its Affiliate(s) (the "Recipient"), regarding, without limitation, the technology, intellectual property, know-how, business, operationsfacilities and other affairs of the Discloser or affiliates thereof, whether disclosed in oral, written, electronic, visual or any other form, which informationincludes, but is not limited to: any information relating to or concerning the API or the Product, the processes and methods employed in the manufacture ofAPI or the Product; Batch Records, Specifications; information related to Perrigo's Facilities or the CML facility; information related to manufacturingprocesses and/or technologies or to any products produced at Perrigo Facility or the CML facility; API Information; any prices and costs of the Parties;regulatory filings for the API or the Product; the Parties' business, regulatory plans and strategies, patent disclosures, patent applications, structures, models,techniques, formulas, processes, compositions, compounds, apparatus, designs sketches, photographs, plans, drawings, specifications, samples, reports,customer lists, price lists, studies, findings, inventions and other data and information disclosed or exchanged under this Agreement. “GMP” shall mean all applicable good manufacturing practices as established by the respective Regulatory Authorities, as applicable for investigational newdrugs in clinical phase III trials, including as established by the USFDA and EU-EMA (Investigational Medicinal Product) and as also adjusted as and in caserequired by the Regulatory Authorities in Colombia, Brazil, Peru, Chile and Mexico, as per their applicable guidelines for investigational new drugs inclinical phase III trials supplied by Galmed prior to the execution of this Agreement. “Intellectual Property” means all patents and other patent rights, trade secrets, trademarks, service marks, registered designs, applications for any of theforegoing, trade and business names, unregistered trademarks and service marks, copyrights, rights in designs, inventions, developments, know-how,discoveries, improvements, methods, processes, techniques, specifications, models, procedures, rights under licenses, and rights of the same or similar effector nature, in any part of the world, whether or not registered, published or unpublished, and registrations and applications for registration thereof, and allrights therein whether provided by international treaties or conventions or otherwise. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. “Invention” means any concept, discovery, development, improvement, formula, process, composition of matter, formulation, method of use or delivery,specification, computer program or model (whether patentable or not) and any related and/or supporting documentation and data. “API Information” all information and data relating to the API, including but not limited to formulae, methods of manufacture, product descriptions, testmethods, validation of test methods, specifications, and all other supporting documentation, data and reports provided by Galmed to Perrigo, or developed oracquired by Perrigo or any of its affiliates during the term of this Agreement in connection with the manufacture and supply of API, including the informationregarding the Process Stabilization the information regarding Scale Up, the Results and the Reports, as well as all applications, submissions, filings andcorrespondence of Galmed with or to FDA or any other governmental or Regulatory Authority with respect to the API. "Specifications" means the specifications and technical characteristics of the API provided by Galmed as detailed in Annex B, as may be updated by Galmedfrom time to time in writing as set forth in Section 7A.1 below. “Regulatory Authority” means any governmental authority (whether Federal, State, municipal or other), regulating the development, clinical testing ,manufacture, packaging, labeling, storage, import, export, distribution, marketing, sale and/or intended use of the API in the United States (USFDA), theEuropean Union (EMA) (and each of its respective member states), Colombia, Brazil, Peru, Chile and Mexico and any other additional country, as will beagreed upon by the Parties in writing. "Qualified Person (QP)" pursuant to European Union pharmaceutical regulation (Directive 2001/83/EC for Medicinal products for human use), or pursuantto equivalent regulations by other Regulatory Authorities. 2. Scope and Purpose of this Agreement 2.1 This Agreement sets forth the terms upon which Perrigo will provide Galmed with services concerning the Project. For that purpose, the Parties agreethat: (i) Galmed will transfer to Perrigo the documents, information, materials and know-how necessary to provide the services contemplated under thisAgreement and establish the Manufacturing Process at Perrigo's Facility (the "Technology Transfer"); (ii) Perrigo will perform for Galmed certain laboratorystudies for gap closing and stabilization of the current Manufacturing Process (the "Process Stabilization"), (iii) Perrigo will manufacture and supply 60kgGMP of the API at Perrigo's Facility (the "Tech Transfer Batches"); (iv) Perrigo will perform for Galmed additional laboratory studies for further improvingand optimizing the Manufacturing Process the "Process Improvement"); and (v) Perrigo will scale up the Manufacturing Process to commercial scale, andmanufacture and supply 900kg GMP of the API at Perrigo's Facility (the "Scale Up Batches"); all as more fully detailed below. Each of the foregoing shall bedeemed a "stage" of the Project. For the avoidance of doubt, it is clarified that the Tech Transfer Batches and Scale Up Batches shall be, as per the Route ofSynthesis detailed in Annex A, manufactured in Perrigo's Facility in Neot Hovav. 2.2 Subject to each Parties' performance of its obligation hereunder, and except as otherwise specifically agreed in this Agreement, the Parties agree tonegotiate an exclusive commercial contract manufacturing and supply agreement for a minimum term of five years of commercial supply (the "SupplyAgreement"), pursuant to which Perrigo will also provide further services to validate the Manufacturing Process and compile a DMF and will be assigned asGalmed's exclusive manufacturer and supplier of the API, as further set forth in Section 9 below. The supply of the API shall be made from Perrigo's Facility inNeot Hovav. Perrigo's Facility in India may be added as an additional manufacturing site as may be agreed upon in writing by the Parties and subject to a QPaudit on behalf of Galmed, and subject to Galmed's agreement, at its sole discretion, which will not be unreasonably delayed or withheld. The foregoingundertaking is subject to the parties agreeing on the terms of the Supply Agreement, including, without limitation, the consideration and terms of supply. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.3 Perrigo undertakes during the term of this Agreement and the Supply Agreement, not to directly or indirectly develop, manufacture or sell the API, exceptfor Galmed. In addition, Perrigo shall not, during the term of this Agreement, provide any contract development and manufacturing services to any third partywith respect to any cholic acid derivative investigational new drug. 3. Technology Transfer 3.1 To the extent not already provided to Perrigo at the date of this Agreement, Galmed will transfer to Perrigo (or shall cause CML to provide toPerrigo, as applicable) the documents, information, materials and know-how necessary to provide the services contemplated under this Agreement andestablish the Manufacturing Process at Perrigo's Facility. The steps to be undertaken and their required time frames are set forth in a technology transferprotocol attached at Annex C (the "Technology Transfer Protocol"). 3.2 Galmed acknowledges and agrees that the timely and complete transfer of the Galmed and/or CML deliverables under the Technology TransferProtocol are essential for the timely start, performance and completion of the activities contemplated for the Technology Transfer and the Project. Any delayin the timeframes set forth in the Technology Transfer Protocol caused by Galmed or any third party on its behalf shall, to the extent reasonably possible andsubject to Perrigo's production schedule, push forward the timeframes of the Project in the least amount of days. To the extent of any such delay, Perrigoundertakes to notify Galmed of such delay promptly upon its occurrence. 3.3 It is noted that Perrigo has already sent a qualified process engineer to CML's facility in the Netherlands for the purpose of observing theManufacturing Process at CML's facility. Galmed will reimburse Perrigo for the travel and accommodation expenses of these two visits at actual cost, which isNIS 15,950 (Including VAT). In the event that Perrigo determines that an additional visit is required in order to observe additional critical aspects of themanufacturing cycle, Galmed will bear the additional travel and accommodation expenses of Perrigo's process engineer for such additional period, providedthat these are reasonable and have been approved in advance by Galmed. 4. Process Stabilization 4.1 Perrigo will perform certain laboratory services with respect to the Process Stabilization in the scope defined and set forth in Annex D (the "ProcessStabilization Scope") and, subject to the performance of Galmed's obligations detailed in Section 4.2 hereunder, in the timeframes set forth therein in AnnexD. The Process Stabilization Scope will, subject to the provisions herein, be completed by April 30, 2015. Perrigo will perform the Process StabilizationScope in a professional, timely and diligent manner, in accordance with the specifications set forth in the Process Stabilization Scope and the representationsset forth in Section 12. For removal of doubt, without derogating from Perrigo's undertaking to perform its obligations set forth in Annex D, it is noted thatPerrigo cannot warrant or guarantee the outcome of the Process Stabilization. 4.2 For Perrigo to perform the Process Stabilization, Galmed shall provide Perrigo with the necessary support, as detailed in the Process StabilizationScope. Galmed's initial contact person for this shall be Dr. Mizhiritskii Michael, Galmed's CMC consultant, who may be replaced by Galmed from time totime by a written notice to be sent to Perrigo ("Galmed's Consultant"). Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4.3 Following the completion of the Process Stabilization, Perrigo will, in consultation with Galmed, prepare Batch Records for the implementation ofthe Manufacturing Process at Perrigo's Facility in Neot Hovav based on the existing batch records developed by CML and the outcome of the ProcessStabilization Scope. In the framework of the preparation of the Batch Records as aforesaid, Galmed will request from CML to send a process engineer toPerrigo's Facility in Neot Hovav to assist with the preparation of the Batch Record, and Galmed will bear the costs and expenses of such visit, it beingclarified that Galmed cannot guaranty that CML will agree to such visit. Galmed will approve and sign the Batch Records prior to manufacture of the TechTransfer Batches by Perrigo as contemplated in Section 5. 5. Tech Transfer Batches 5.1 Following the completion of the transfer of the Manufacturing Process to Perrigo in accordance with the Technology Transfer Protocol and thecompletion of the Process Stabilization, Galmed shall purchase and Perrigo shall manufacture and deliver the Tech Transfer Batches to Galmed (60kg of theAPI) for the consideration set forth in Section 11.1.2, which will be manufactured in accordance with the Specifications and as further set forth in Section 12.The Tech Transfer Batches shall be used by Galmed only for conducting clinical trials for the Product and shall not be used otherwise for any commercialpurpose or sale of the Product. 5.2 The Tech Transfer Batches shall be delivered by September 30, 2015. Delivery terms of the Tech Transfer Batches shall be according to Incoterms2010 EXW (“ex works”) Perrigo's Facility Neot Hovav, Israel.Any delay in the timeframes of the Technology Transfer or the Process Stabilization Scope caused by Galmed shall, to the extent reasonably possible andsubject to Perrigo's production schedule, push forward the timeframes of the Project in the least amount of days. To the extent of any such delay, Perrigoundertakes to notify Galmed of such delay promptly upon its occurrence. As Perrigo intends to commence with the process of manufacturing the Tech Transfer Batches immediately following the execution of this Agreement, it isagreed that, except in the event of breach of this Agreement by Perrigo, Galmed shall be obliged to purchase the Tech Transfer Batches. 5.3 Galmed's Consultant shall be reasonably available, during normal business hours, during the production of the Tech Transfer Batches, to providesupport to the critical production stages, either via phone, or to the extent Perrigo, in consultation with Galmed, shall deem necessary and in coordinationwith Galmed's Consultant, by being present at Perrigo's Facility (in Israel). 5.4 For the purpose of Section 5.3 above, it is clarified that Galmed cannot guaranty the cooperation of CML in the performance of its obligations under thisAgreement, and any non-compliance and/or non-performance on part of CML under this Agreement shall not constitute a breach of this Agreement byGalmed. Galmed understands and acknowledges, however, that any such lack of cooperation by CML may cause delays in the timelines of the Project andany delay or inability to perform any of Perrigo's obligations due to such lack of cooperation shall not constitute a breach of this Agreement by Perrigo,provided that Perrigo undertakes to notify Galmed of such delay promptly upon its occurrence. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6. Process Improvement Following the manufacture of the Tech Transfer Batches, Perrigo will perform certain laboratory services for the improvement and optimization of theManufacturing Process in the scope defined and set forth in Annex E (the "Process Improvement Scope") and in the timeframes set forth therein. The ProcessImprovement Scope will be completed by March 31, 2016 (subject to delays caused solely by Galmed or any third party on its behalf, which will, to theextent reasonably possible and subject to Perrigo's production schedule, delay the aforementioned date in the least amount of days). Perrigo will perform theProcess Improvement Scope in a timely, professional and diligent manner, however, for removal of doubt, it is noted that Perrigo cannot warrant or guaranteethe successful outcome of the Process Improvement Scope.During the Process Improvement Scope period, upon Galmed's request Perrigo shall keep Galmed informed of the progress of the Process Improvement (byway of an update by phone every two weeks, and monthly report, and a final report), and shall provide Galmed with all information it reasonably requestsfrom time to time in connection therewith. In the final report with respect to the Process Improvement Scope, Perrigo shall put into writing all the informationregarding the Process Improvement Scope as detailed in Annex E, including a detailed report on how the manufacturing process was made more efficient, thesteps that were taken, a list of the suppliers, a list of other outsourced contractors, copies of lab reports, lab notebooks and logs, as well as any otherinformation related to the Process Improvement Scope reasonably requested by Galmed. Within a week following the completion of the Process Improvement, and prior to the manufacture by Perrigo of the Scale-Up Batches, Perrigo shall provideGalmed with a sample of the API produced, in order for Galmed to test such samples and confirm that it complies with the Specifications. Galmed shall testsuch samples and provide Perrigo with its written input within thirty (30) days from the receipt thereof. 7. Scale-Up Batches 7.1 Following the completion of the Process Improvement (whether successful or not), Galmed shall purchase and Perrigo shall manufacture and deliverthe Scale-Up Batches (900 kg GMP of the API) from Perrigo, for the consideration set forth in Section 11.1.4, which will be manufactured in accordance withthe Specifications and with the representations set forth in Section 12. The Scale-Up Batches shall be used by Galmed only for the purpose of conductingclinical trials for the Product and shall not be used otherwise for any commercial purpose or sale of the Product. 7.2 The first half of the Scale-Up Batches (450kg GMP) shall be delivered by June 30, 2016. The Second half of the Scale-Up Batches (450kg GMP)shall be delivered by August 15, 2016 (subject to delays caused solely by Galmed or any third party on its behalf, which, to the extent reasonably possibleand subject to Perrigo's production schedule, will delay the aforementioned date in the least amount of days). 7.3 Delivery terms of the Scale-Up Batched shall be according to Incoterms 2010 EXW (“ex works”) Perrigo's Facility Neot Hovav, Israel. 7A. Additional Provisions and Regulatory Matters With respect to the Tech Transfer Batches, the Scale-Up Batches and any other API manufactured by Perrigo under this Agreement, the following shall apply: 7A.1 The Specifications may be updated by Galmed from time to time due to regulatory changes or otherwise, by providing Perrigo with written noticeand the updated Specifications. In such event, Perrigo shall notify Galmed within fourteen (14) days the estimated consequences of such changes, andwhether or not such changes result in an increase to the timeframe or costs; in the event that such change results in an increase to the timeframe or costs, theparties shall discuss such change to timeframes or costs within five (5) days of receipt of Perrigo's reply as aforesaid. In the event that the Parties agree on achange to the Specifications as aforesaid, then Annex B shall be revised accordingly. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7A.2 During the Project, Perrigo shall send Galmed monthly written reports detailing the progress of the current stage of the Project, and the achievementsto date (the "Report"). Said Report shall be in a format that is mutually acceptable to the Parties, and may include additional information reasonablyrequested by Galmed. Following the completion of each stage of the Project, Perrigo will provide Galmed with a written final report, setting forth in detail allthe information regarding such stage. Without derogating from the above, to the extent that Galmed shall request to be informed of specific events relating tothe progress of the Project, Perrigo shall provide Galmed with all material information it requests from time to time in connection therewith. 7A.3 Perrigo shall be responsible for testing the APIs in accordance with the protocols and test methods provided by Galmed or developed by Perrigo (andapproved in writing by Galmed) during the Project for testing the API that Perrigo manufactures under this Agreement. Perrigo shall promptly inform Galmedof any deviations from the Specifications following such test methods and protocols. In addition, Perrigo shall provide Galmed with the results of suchtesting promptly upon their occurrence. Perrigo will also be responsible to ensure that each API Batch is appropriately labeled and traceable. 7A.4 Perrigo will deliver to Galmed one copy of the Batch Records with respect to each Batch of API manufactured and delivered to Galmed pursuant tothis Agreement. Perrigo represents and warrants that all Batch Records and other documentation furnished to Galmed under this Agreement concerning themanufacture of the API will be accurate and complete. If Galmed requires supplemental documents from Perrigo in order to obtain or in connection with anyRegulatory Authority approvals, Perrigo agrees to cooperate with Galmed and to make available to Galmed such additional or supplemental documentationin its possession as may reasonably be requested by Galmed. If further work is required from Perrigo with respect to the above, the Parties shall discuss ingood faith the consideration that Perrigo will receive for performance of such additional work, provided that such consideration will be agreed in advanceand in writing. Perrigo will retain originals of all Batch Records, any and all other records or documentation generated by it in connection with themanufacturing and testing of API under the terms of this Agreement. 7A.5 Regulatory Inspections. Perrigo agrees to notify Galmed promptly of any inspections by the FDA or other Regulatory Authorities which pertain tothe API or the Perrigo Facility where the API is manufactured, and shall promptly and within seven (7) days of their receipt/sending provide to Galmed copiesof all material reports, observations, notices, findings and replies to such findings and other material pertinent to such inspections all as may be relevant tothe API. Perrigo shall have the right to redact from any such copies only such segments that do not relate in any manner to API and do not affect Perrigo'sperformance under this Agreement. Perrigo will allow, and will provide Galmed with any required authorization to allow, the FDA or any other RegulatoryAuthority to inspect, audit and review the facilities at which the APIs are manufactured and all procedures, practices, books, records, and documents to theextent requested by the FDA and any other Regulatory Authority relating to the API. Perrigo will permit Galmed representatives (subject to signing aconfidentiality and non-use agreement) to be present during such inspections. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7A.6 Access to Perrigo's Facility. Galmed (or any party on Galmed’s behalf) shall have the right, once every 36 months, or upon the occurrence of an eventthat Galmed determines requires inspection (such as adverse drug event, product complaint or other event that requires inspection in the course of Galmed'sclinical trials), or as required by the drug manufacturer of the Product to conduct a QP audit (subject to such drug manufacturer signing of a standardconfidentiality and non- use agreement), upon reasonable notice to Perrigo and during normal business hours, to audit Perrigo's Facilities for the API (toensure that the APIs are being manufactured, packaged and stored in compliance with the Specifications, and all applicable laws and regulations, includingwithout limitation, GMP and Galmed's quality and other standards). During such audits, Perrigo shall permit Galmed to contact and question the appropriateknowledgeable personnel of Perrigo. Perrigo will cooperate with Galmed with respect to a request to audit any Perrigo third party supplier or subcontractorinvolved in the manufacture and/or supply of the API (“Perrigo’s Suppliers”) responsible for manufacturing, packaging and storing the API. Perrigo shallmake available to Galmed and its duly authorized representatives and agents (subject to the signing of a confidentiality and non-use agreement) all its and,subject to their approval, Perrigo's Suppliers’ books, records and documents which in any way pertain to the manufacture or quality control, testing andcompliance procedures of the API. It is clarified for the avoidance of doubt, that any audit as aforesaid shall not derogate in any manner from Perrigo'sresponsibility hereunder. 7A.7 Record Retention. Perrigo will retain originals of all Batch Records, financial records and all other records or documentation generated by it inconnection with the processing and testing of API under the terms of this Agreement, and all records which are necessary in the event of a product recall oradverse drug event or product complaint, for not less than seven (7) years after the expiration date of the API to which the documentation relates and, iflonger, such period as is required by applicable law. 8. API Acceptance 8.1 Galmed shall have the right to return any shipment to Perrigo, at Perrigo's expense, for visually detectable defects within thirty (30) days ofreceiving the API, or if Galmed determines that the API does not conform to the Specifications by testing and inspection in accordance with industrystandards, within the earlier of fourteen (14) days following the completion of testing of the API by Galmed (or by the QP of Galmed's drug manufacturer) orthree (3) months of delivery of the API. 8.2 Any disputes between the Parties as to whether all or any part of a shipment rejected by Galmed conforms to the API Specifications shall be firstresolved between the Parties, which shall cooperate to mutually investigate the route-cause for the discrepancy in the analytical results (for example:repeating the analytical tests of the original sample, resampling and repeat the analytical tests, replace analytical instrument, the analyst performing the tests,and any other measures as will be decided between the Parties). If the Parties are unable to agree as to whether a rejected shipment conforms to theSpecifications the dispute shall be finally resolved by a mutually acceptable third party independent expert (the "Expert"), who, if required according to saidexpert's discretion, may engage a third party analytical laboratory, which shall be referred to within fourteen (14) days of the Parties establishing the dispute.The determination of the said Expert shall be binding on the Parties, and all the expenses related to such testing and shipment, if required, will be borne bythe Party at fault. In the event that the shipment was justifiably rejected, Galmed shall return the rejected shipment to Perrigo, which shall replace the rejectedshipment (either by reprocessing or manufacturing of additional material). In the event that the Expert shall determine that the rejected shipment wasunjustifiably rejected, Galmed shall [covered in one before previous sentence] pay for such shipment. Galmed shall have the right to request Perrigo to reprocess/replace the API which is disputed prior to receiving the determination of the Expert. In that event,Galmed shall return the disputed shipment to Perrigo, and Perrigo will reprocess/replace the API and the costs of such reprocessed/replaced API shall be borneby the Party at fault according to the determination of the Expert. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST.COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 9. Supply Agreement 9.1 As mentioned above, the Parties wish to negotiate a Supply Agreement, pursuant to which Perrigo will also provide further services to validate theManufacturing Process and compile a DMF and will be assigned as Galmed's exclusive manufacturer and supplier of the API, subject to (i) the successfulcompletion of Clinical Phases II and III of the Project and obtaining a marketing authorization for the marketing of the Product by a Regulatory Authorityand (ii) agreement between the Parties on the terms of the Supply Agreement, as set forth in Section 9.2 below. 9.2 The fees for these additional services and the commercial terms of said Supply Agreement shall be discussed and agreed between the Parties in goodfaith. The contract manufacturing shall also take into account annual volumes of production. The Supply Agreement shall also include customary provisionsand customary representations and warranties by the Parties, as well as the supply terms as applicable to such agreements, as shall be discussed between theparties in good faith. 9.3 For the avoidance of doubt, it is acknowledged that neither Party shall be under obligation to enter into the Supply Agreement, including in theevent that the Parties do not agree on the terms of the Supply Agreement. Furthermore, it is acknowledged that nothing in the foregoing shall limit Galmed's right to negotiate other proposals with third party manufacturers. 10. Project Management and Communication The Parties will establish a Project management team, to which each Party will delegate at least one representative. Perrigo and Galmed will keep each otherinformed about the progress of the Project and the services contemplated hereunder, periodically discuss the progress and results and, if needed, jointly agreeon adjustments to the annexures hereto. 11. Consideration 11.1 For the services contemplated hereunder Galmed shall pay Perrigo the following consideration: 11.1.1 Upon completion of the Technology Transfer and Process Stabilization Galmed shall pay to Perrigo [***] ([***]US Dollars. 11.1.2 For the manufacture of the Tech Transfer Batches (60kg of API) as per Section 5 above, Galmed shall pay Perrigo $[***] ([***] US Dollars)per kg of API, in two installments as follows: (a) An advance payment of [***] ([***] US Dollars) shall be paid to Perrigo upon execution of this Agreement. Galmed acknowledgesthat the said advance payment will be used by Perrigo to purchase the materials necessary for the manufacture of the Tech Transfer Batches and isnot refundable. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST.COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. (b) The balance amount shall be invoiced by Perrigo upon delivery of the Tech Transfer Batches ex works in accordance with Section5.2. 11.1.3 Upon completion of the Manufacturing Process Improvement in accordance with Section 6 (and in accordance with Annex E), Galmedshall pay Perrigo [***] ([***] US Dollars). 11.1.4 For the manufacture of the Scale Up Batches as per Section 7 above, Galmed shall pay Perrigo [***] ([***] US Dollars) per kg of API, in twoinstallments as follows: (a) An advance payment equal to the costs of the purchase of the required raw materials, estimated at [***] ([***] US Dollars) shall bepaid to Perrigo no later than six months prior to the then expected delivery of the Scale Up batches (the "Advance Payment"). Galmedacknowledges that the said advance payment will be used by Perrigo to purchase the materials necessary for manufacture of the Scale Up Batchesand is not refundable. Alternatively, Galmed may, not later than seven months prior to the expected delivery of the Scale Up Batches notify Perrigoof its wish to make direct payments to the suppliers of the raw materials required for the manufacture of the API, in which case, such cost of directpayment to suppliers by Galmed will be reduced from the consideration due to Perrigo under this Section 11.1.4 of the Agreement. (b) The balance amount shall be invoiced by Perrigo upon delivery of the Scale Up Batches ex works in accordance with Section 7.3. Perrigo will make an effort to improve the quote for the price for the commercial supply under the Supply Agreement such that it will aim to be lower than[***] per kg of API, subject to the outcome and extent of the cost improvements achieved during the Manufacturing Process Improvement. It is clarified thatthe price of [***] per kg of API is not Galmed's target price, and that a competitive price is one of the considerations that are important to Galmed in decidingwhether or not to enter into the Supply Agreement. 11.2 All payments to Perrigo by Galmed for work performed by Perrigo under the Agreement shall be made in New Israeli Shekels equivalent to the U.SDollars amount at the official exchange rate applicable on the date of invoice. The above consideration is final and inclusive of all taxes and/or duties ofwhatever nature which are imposed or may be imposed with regard to the consideration, other than value added tax which will be added to all amountsmentioned in this Agreement, at the appropriate rate as required by law. Payments shall be made by wire transfer, money order or other method of paymentapproved in writing by Perrigo, within 30 (thirty) days of Perrigo's invoice for the same. Any payment due to Perrigo by Galmed that is not paid when it is dueshall accrue interest, from the date when the same was due and payable, at the rate of 12 month LIBOR plus [***] (LIBOR as quoted by BBA – BritishBankers' Association - http://www.bba.org.uk), compounded annually, payable on demand. 11.3 For removal of doubt it is noted that the full and timely payment of any part of the consideration hereunder is considered a material obligation.Without derogating from any of the rights available to Perrigo, it may withhold services until full payment for services/APIs is settled. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 11.4 Payments to Perrigo shall be done without any deduction on account of taxes. Perrigo shall provide Galmed with a current and valid tax exemptioncertificate of the Israeli Tax Authority that indicates that no amount due to Perrigo under this Agreement needs to be withheld. 11.5 Galmed acknowledges that Perrigo shall exert a considerable effort in time and resources in providing the services contemplated under thisAgreement and would have not entered into this Agreement unless for the obligation to purchase from it the Scale Up Batches and negotiate the SupplyAgreement in good faith. 11.6 Perrigo acknowledges that Galmed is a clinical-stage company, and as such, time is of the essence, and it is dependent on the timely delivery of theProject and each of its stages under this Agreement by Perrigo (including timely delivery of the APIs), and would have not entered into this Agreement unlessfor Perrigo's foregoing acknowledgement as aforesaid, and its undertaking and obligation, subject to the provisions of this Agreement and the timelyperformance of Galmed's (and third parties on its behalf) obligation hereunder, to timely deliver the Project and each of its stages. The timely performance ofPerrigo's obligations as aforesaid is considered a material obligation. 12. Warranty; Representations; Undertakings. 12.1 Representations Warranties and Undertakings of Perrigo. Perrigo represents, warrants and undertakes to Galmed that: (i) it is acknowledged that theProduct that includes the API will be used to undergo clinical trials and accordingly, the API must comply with the GMP ; (ii) it shall obtain and maintain allnecessary permits, registrations and licenses required, if required, to manufacture and supply the API under this Agreement, including without limitation FDAand any other applicable Regulatory Authority; (iii) it will comply in all material respects with all laws, rules and regulations applicable to the performanceof its obligations under this Agreement, including all GMP of the Regulatory Authority applicable to its manufacture, labeling, packaging, storage andshipment of the API in effect from time to time as applicable for investigational new drugs in clinical Phase III trials; (iv) the API supplied pursuant to thisAgreement shall fully conform with the Specifications, free of any defects, will be manufactured in compliance with GMP and other applicable laws, rules andregulations of the Regulatory Authorities as applicable for investigational new drugs in clinical Phase III trials and shall be capable of maintaining such untilany expiration of shelf life date for the API; (v) Perrigo's Facility was audited by one or more third party QP audits in the last calendar quarter of 2014, andthat there were no adverse findings discovered in any of the QP processes which have not been cured; (vi) it will perform the Services under this Agreement ina competent and professional manner, and the API shall be manufactured only by personnel who are highly qualified to provide services of the type of theServices; (vii) Perrigo has full right and authority to enter into this Agreement without the consent or approval of any third party.Furthermore, Perrigo represents, warrants and undertakes towards Galmed that: (a) it has not during the last calendar year been found by the FDA or any otherRegulatory Authority or any state or other authorized government official to have violated any statutes, rules, or regulations; or (b) it has not, during the lastcalendar year, received any relevant warning letter, observations, findings or the like from the FDA or other Regulatory Authority, which have not beencured; and Perrigo further undertakes to promptly notify Galmed in the event that it receives a warning letter, observations, findings or the like from the FDAor other Regulatory Authority during the term of this Agreement, to the extent that it relates to the API. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Other than the foregoing representations, Perrigo makes no representation or warranty regarding the Project or the API, including but not limited to warrantieswith respect to safety or effectiveness of the API and/or the Product. Galmed acknowledges and agrees that, Perrigo and Perrigo personnel (i) have notparticipated in and are not responsible for the invention, development, testing, clinical and/or safety evaluation of the API; (ii) have not evaluated and willnot evaluate and are not responsible for the API's safety or suitability for use in humans or others; and (iii) have not participated in the development of theManufacturing Process. 12.2 Representations and Warranties of Galmed. Galmed represents and warrants to Perrigo that, (i) to the best of its knowledge it has the requisite IntellectualProperty rights related to the API and the Manufacturing Process; (ii) the performance of Perrigo's obligations under this Agreement shall not give rise to acause of action by a third party against Perrigo for infringement or another violation of Intellectual Property rights relating to the API; (iii) it will comply inall material respects with all laws, rules and regulations, GMP, and Regulatory Authority regulations applicable to the API and the Product. Withoutderogating from the generality of the afore-mentioned, Galmed shall specifically comply with the U.S. Foreign Corrupt Practices Act (“FCPA”), the UK Anti-Bribery Act 2010 and any local anti-bribery and anti-corruption laws, a breach of which is considered for the purposes of this Agreement a material breach;and (iv) that it has full right and authority to enter into this Agreement without the consent or approval of any third party. 13. Confidential Information Each Recipient will hold, and cause their respective representatives and advisers to hold at all times, any Confidential Information disclosed by the Discloserin strict confidence from any person (other than its affiliates or their representatives or advisers), and undertakes to maintain the Confidential Information instrict confidence and not to disclose or transfer it to others and not to make any use of the Confidential Information, for personal or other needs, without theprior written consent of the Discloser. Recipient shall use the same degree of care to preserve the secrecy and confidentiality of the Confidential Informationand to avoid the unauthorized disclosure of the Confidential Information to third parties as it uses with respect to its own confidential, proprietary or tradesecret information, but in any event no less than a reasonable degree of care. Notwithstanding the foregoing, disclosure by the Recipient in the event such Recipient is compelled to disclose the Confidential Information by judicial oradministrative authority and process shall not be deemed a breach of the confidentiality undertaking provided, however, if the Recipient becomes subject toa demand for discovery or disclosure of the Discloser’s Confidential Information under lawful process, the Recipient (a) shall, to the extent permitted by law,give immediate notice to the Discloser prior to furnishing the Confidential Information so that the Discloser may seek an appropriate protective order, (b)shall not (unless expressly required) provide such disclosure until the Discloser has had the opportunity to obtain such protective order, (c) shall discloseonly that portion of the Confidential Information which falls within the scope of such lawful process, and (d) shall cooperate in seeking reasonable protectivearrangements requested by the Discloser. The foregoing confidentiality undertaking shall not apply to the extent that: 13.1 The Confidential Information was in the public domain (either prior to or after the furnishing of such documents or information hereunder)through no fault and by reason other than a breach of this Agreement of such Recipient; or 13.2 The Confidential Information was already in the possession of a party as demonstrated by competent evidence or was later acquired by theRecipient from another legitimate source if the receiving party is not aware that such source is under an obligation to another party hereto to keep suchdocuments and information confidential; or Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 13.3 It can be shown that the Confidential Information was independently developed by the Recipient without reliance on the ConfidentialInformation disclosed by the Discloser; or 13.4 Information set forth in Section 14.2 below. This Agreement does not constitute the conveyance of ownership with respect to or a license to any Confidential Information, except as otherwise providedin this Agreement. Upon the expiration or termination of this Agreement for any reason, each party agrees, except as otherwise provided in this Agreement, toreturn to the other party all documentation or other tangible evidence or embodiment of Confidential Information belonging to the other party and not to usesame, unless otherwise agreed later. This Section 13 shall survive the expiration or termination of this Agreement for a period of fifteen (15) years. 14. Public Disclosure 14.1 No disclosure (whether or not in response to an inquiry) of the terms and conditions of this Agreement shall be made by any Party heretounless approved by the other Party prior to release. Such approval shall not be unreasonably denied or delayed. 14.2 Notwithstanding the foregoing, either Party may disclose such terms as are required to be disclosed in its publicly-filed financialstatements or other public statements, pursuant to applicable securities laws, regulations and stock exchange rules; provided that, to the extent practicable,such Party shall provide the other Party with a copy of the proposed text of such statements or disclosure at least forty eight (48) hours in advance of thescheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment upon the proposed text (includingredacted versions of this Agreement). 15. Intellectual Property Provision 15.1 Each Party acknowledges that all Confidential Information, background information and Intellectual Property rights ("IPR") owned, obtained orgenerated before or outside the Project by the other Party will at all times remain in the ownership of the other Party. 15.2 All Confidential Information such as raw data, information, test material, reference materials, and other Intellectual Property rights relating to theAPI and provided by Galmed to Perrigo pursuant to this Agreement shall remain the property of Galmed. Galmed grants Perrigo a non-exclusive,nontransferable, royalty free license, during the term of this Agreement, to use the foregoing in connection with the performance of the Services hereunder. Furthermore, any Inventions specific to the API discovered by Perrigo in the course of this Agreement or any Inventions specific to the API discovered as aresult of performing the Project or the Services, and the results and deliverables (as defined in Annex D and Annex E;) (collectively, the "Results") will beowned exclusively by Galmed and vested with Galmed, regardless of the Party that develops same, with the exception of the Perrigo Inventions (as definedbelow). Perrigo shall disclose the Results promptly to Galmed within the Report, and shall cooperate with Galmed in defending or taking steps necessary oras requested by Galmed to vest title to such Results in Galmed, at Galmed’s expense. Galmed shall promptly reimburse Perrigo for any reasonable costs madein this respect. Only Galmed is entitled to acquire industrial and/or intellectual property rights anywhere in the world for its IPR (including, for the avoidanceof doubt, the Results). Galmed will at all times have an unrestricted right to use the Results. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 15.3 Perrigo will own all IPR and Inventions discovered in the course of this Agreement related to the research development and manufacturingmethodologies which are not specific to the API (the "Perrigo Inventions"). The Perrigo Inventions shall, as far as generated or developed by Perrigo, becomeand remain the exclusive property of Perrigo and only Perrigo is entitled to acquire industrial and/or intellectual property rights anywhere in the world for itsIPR. Where necessary, Galmed will co-operate in the acquisition of Perrigo Inventions by Perrigo, at Perrigo’s expense. Notwithstanding the foregoing,subject to the payment by Galmed of the consideration for the Tech Transfer, Tech Transfer Batches and the Process Improvement, Perrigo hereby grantsGalmed a non-exclusive, irrevocable, royalty free license, unlimited in time, to make use of the Perrigo Inventions solely for the purpose of manufacturing theAPI or the Product, either by Galmed, its Affiliates or any third party on Galmed's behalf (the "License"). The License shall be transferrable, solely inconnection with or as part of an Assignment under Section 20.10 below, in which event the assignee shall receive a License at the same terms stipulatedherein. 15.4 The Parties further acknowledge and agree that Galmed is engaging Perrigo as an independent contractor to manufacture and supply the API inaccordance with the Specifications and this Agreement and that all API Information is and shall be the sole property of Galmed.Galmed will grant Perrigo the right to use all such API Information and know-how owned or licensed by Galmed which is necessary for, and for the solepurpose of, the manufacture of the Products for Galmed, on and subject to the terms of and only for the duration of this Agreement.Upon the termination of this Agreement, or upon Galmed's written request, Perrigo shall deliver to Galmed all the Batch Records and API Information relatingto the manufacture of the API. 16. Indemnification and Limitation of Liability. 16.1 Galmed shall indemnify and hold harmless Perrigo and its Affiliates and their respective officers, directors, employees and agents (collectively"Perrigo Indemnitees") from and against any and all claims, damages, costs and expenses of any kind (including reasonable attorneys' and experts' fees)(collectively: "Claims") arising out of or resulting from any third party claims made or suits brought against Perrigo which arise or result from (i) the breach ofany of Galmed's representations, warranties, covenants, obligations or agreements set forth in this Agreement; (ii) Galmed's negligence or willful misconductin the performance of this Agreement; (iii) the use of the Product; except in the event of (i), (ii) or (iii) above, to the extent caused by the negligence or willfulmisconduct or breach of this Agreement by a Perrigo Indemnitee; or (iii) any third-party Intellectual Property infringement claims relating to the APIs or theProduct. 16.2 Perrigo shall indemnify, defend and hold Galmed and its Affiliates and their respective officers, directors, employees and agents (collectively "GalmedIndemnitees") harmless from and against any and all Claims arising out of or resulting from any third party claims made or suits brought against Galmedwhich arise or result from (i) the breach of any of Perrigo's representations, warranties, covenants or agreements set forth in this Agreement, or (ii) Perrigo'snegligence or willful misconduct in the performance of this Agreement; except in each case, to the extent caused by any Galmed Indemnitee's negligence orwillful misconduct or breach of this Agreement. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 16.3 In the event that any party seeks indemnification under the terms of this Section 16 (the "indemnified party"), it shall as soon as reasonablypossible inform the other party (the "indemnifying party") in writing of the Claim, provided, however, that the failure to give such notification shall notaffect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure. Theindemnified party shall permit the indemnifying party to assume direction and control of the defense of the Claim and shall cooperate as requested (at theexpense of the indemnifying party) in the defense of the Claim. The indemnifying party shall not settle any Claim with the indemnified party's prior writtenconsent, which consent shall not be unreasonably withheld or delayed. 16.4 EACH PARTY HEREBY AGREES THAT SUBJECT TO APPLICABLELAW, AND EXCEPT IN THE EVENT OF (I) BREACH OFCONFIDENTIALITY OBLIGATION UNDER THIS AGREEMENT, OR (II) FRAUD OR WILLFUL MISCONDUCT, THE OTHER PARTY'SLIABILITY TO SUCH PARTY FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES, WHATSOEVER, ARISING OUT OFOR IN ANY WAY RELATED TO THE WORK PERFORMED BY PERRIGO UNDER THE AGREEMENT, FROM ANY CAUSE OR CAUSES,INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, ERRORS, OMISSIONS OR STRICT LIABILITY, SHALL NOT EXCEED THE SUM OFTWO MILLION USD ($2,000,000). 16.5 EXCEPT IN THE EVENT OF (I) BREACH OF CONFIDENTIALITY OBLIGATION UNDER THIS AGREEMENT, OR (II) FRAUD ORWILLFUL MISCONDUCT IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF ITS AFFILIATES FOR ANYCONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION,LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN CONNECTIONWITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 17. Security and Safety Procedures. Galmed and CML personnel authorized to have access to the Perrigo facility in connection with the work performed by Perrigo under the Agreement shallabide by the security and safety procedures established by Perrigo. Galmed shall be liable for any breaches of security and/or safety by Galmed or CMLpersonnel. All Galmed personnel shall agree to abide by Perrigo policies and standard operating procedures established by Perrigo. 18. Force Majeur Neither Party will be liable for any failure to perform or for delay in performance resulting from any cause beyond its reasonable control, strikes, lockouts,labour troubles, restrictive government or judicial orders, or decrees, riots, insurrection, war, terror, or Acts of God, provided that payment of sums due shallnot be excused due by any such force majeure. A Party seeking to claim Force Majeure must give the other party prompt notice of the Force Majeure withreasonably full particulars and an estimate of the extent and duration of its delay in performance, or inability to perform, and use all possible diligence toremove the Force Majeure as quickly as possible. If the delay continues beyond sixty (60) days after the notice given, the Parties must meet to discuss ingood faith a mutually satisfactory resolution of the problem and if unable to achieve such resolution within a further 14 days, either Party may elect toterminate this Agreement by fourteen (14) days prior written notice to the other. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 19. Term and Termination 19.1 This Agreement is valid from the date of signature by both Parties and shall remain in force and effect for the duration of the provision of theservices contemplated hereunder. 19.2 This Agreement may be terminated by either Party upon thirty (30) days prior written notice in the event of a breach of term of this Agreement bythe other Party, provided that the breach is not cured within such 30 day notice period. 19.3 This Agreement may be terminated by either Party upon thirty (30) days prior written notice to the other Party if the other Party is declaredbankrupt, becomes insolvent, ceases its business activities or has been operating under court appointed receivership. 19.4 Galmed shall have the right, at any time, on thirty (30) days prior written notice to Perrigo, subject to the provisions of this Agreement, to terminatethis Agreement, in the event that due to the failure or inconclusive results in clinical trials that it is conducting or will conduct, or in any other event thatGalmed shall decide at its discretion to finally not proceed with the commercialization of the Product. 19.5 In the event of a substantial delay by either party in the timeline of the Project (of more than three months in total), the parties shall discuss in goodfaith a new timeframe for the Project. In the event that the parties cannot agree on such new timeframe, the other Party may terminate this Agreement withfourteen (14) days prior written notice. 19.6 In the event of a Change of Control of Perrigo, or in the event that Perrigo publically announces that it has entered into an agreement pursuant towhich a Change of Control of Perrigo will occur, Galmed shall have the right, but not the obligation to terminate this Agreement on thirty (30) days priorwritten notice to Perrigo. In the event that Galmed chooses not to terminate this Agreement, Perrigo’s rights and obligations shall be fulfilled by Perrigo’ssuccessors. 19.7 In the event of a change of control of Galmed, including without limitation the license by Galmed of substantially all of Galmed's rights in theProduct or IPR related to the Product, Galmed shall, subject to the payment of a break-up fee of two-hundred and fifty thousand USD ($250,000) and subjectfurther to the full payment of the consideration for the Tech Transfer Batches, have the right, but not the obligation to terminate this Agreement on thirty (30)days prior written notice to Perrigo. 19.7 Notwithstanding anything to the contrary in this Agreement, except in the event of termination of the Agreement by Galmed in accordance withSection 19.2 above due to a breach by Perrigo, Galmed shall remain obliged to pay Perrigo for the Tech Transfer and the Tech Transfer Batches as per andsubject to the terms of Sections 5.2, 11.1.1 and 11.1.2 and subject to the terms thereof (including, for the avoidance of doubt, delivery of the Tech TransferBatches in accordance with Sections 5.1 and 5.2). 19.8 The termination of this Agreement for any reason shall be without prejudice to, and shall not affect any other rights of either Party and all suchrights of both shall survive any such termination. In addition, any termination of this Agreement shall not release the Parties from liabilities and obligationsaccrued until the time of termination. Notwithstanding anything to the contrary that may be contained herein, in the event of the termination or expiration ofthis Agreement, Sections 7A.5 (Regulatory Inspections), 7A.6 (Access to Perrigo's Site), 7A.7 (record retention), 12 (representations and warranties) 13(confidentiality), 15 (intellectual property), 16 (indemnification and limitation on liability), 19 (term and termination) and 20 (miscellaneous) shall survivethe termination or expiration of this Agreement and continue in effect. Furthermore, the obligation of Galmed to pay any amounts which are due under theAgreement as of the date of termination shall survive termination of this Agreement. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 20. Miscellaneous 20.1 Severability: In the event that any part, article, paragraph, sentence, section or clause of this Agreement shall be held to be invalid or otherwiseunenforceable, the invalid or unenforceable provision shall be deemed deleted, and the remaining part of the Agreement shall continue in the full force andeffect. If any tribunal or court of competent jurisdiction deems any provision hereof unenforceable, such provision shall be modified only to the extentnecessary to render it enforceable and this Agreement shall be valid and enforceable and the Parties hereto agree to be bound by and perform same as thusmodified 20.2 Independent Contractors. Nothing in this Agreement shall create any relationship of agency, joint venture, partnership employer/employee orsimilar relationship between the Parties. Each Party is an independent contractor of the other Party. 20.3 Amendments. Any amendment or supplement to this Agreement shall be effective only if made in writing and signed by both Parties 20.4 Waiver. A waiver by either Party of any term or condition of this Agreement in any one instance shall not be deemed or construed to be a waiver ofsuch terms or conditions for any similar instance in the future or of any subsequent breach hereof 20.5 Entire Agreement. This Agreement sets forth the entire agreement between the Parties regarding the subject matter hereof and supersedes all prioragreements, whether written or oral, between the Parties with respect to such subject matter. 20.6 Further Assurances. The Parties agree to execute any and all documents reasonably necessary and to cooperate with each other in order to consummate,implement and give full force and effect to the obligations of the Parties under this Agreement. Perrigo shall transfer all documentation in Perrigo'spossession, as may be reasonably necessary by Galmed from time to time for regulatory purposes; and any documentation (including the API Information) inits possession reasonably required by Galmed in the event transferring the API Information, including following the termination of this Agreement.Furthermore, Perrigo undertakes to reasonably cooperate with Galmed following the termination of this Agreement in the technology transfer of themanufacturing process of the API from Perrigo to a third party, including transferring the API Information and manufacturing procedure from Perrigo toanother facility of a third party, in consideration for the payment to Perrigo of reasonable fees for any additional work that may be required and time actuallyspent in connection therewith (including reimbursement of expenses), to be agreed by the Parties at such time. Additional scope of work (not specificallydescribed in this Section 20.6 or elsewhere in this Agreement), may be agreed upon by the Parties in writing. 20.7 Notices. Any notice or other communication required or permitted to be delivered to any Party under this Agreement shall be in writing and shall bedeemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to theaddress for such Party first set forth above (or to such other address or facsimile telephone number as such Party shall have specified in a written notice givento the other Parties hereto). Furthermore, day to day correspondences may be sent by email with confirmation receipt. 20.7 Equitable Remedies. Each of the Parties acknowledges and agrees that, in the event of a breach or threatened breach of this Agreement by any Party orthe failure of a Party to perform in accordance with the specific terms hereof, the other party hereto maybe irreparably damaged and that monetary damagesmay not provide an adequate remedy. Accordingly, it is agreed that, in addition to any and all other rights which may be available, at law or in equity, thenon-breaching party shall be entitled to seek injunctive relief and/or specifically to enforce the terms and provisions hereof in any court of competentjurisdiction. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 20.8 Remedies Cumulative. The rights and remedies given in this Agreement to a non-defaulting party shall be deemed cumulative, and the exercise of oneof such remedies shall not operate to bar the exercise of any other rights and remedies reserved to a non-defaulting party under the provisions of thisAgreement or, subject to the provisions of this Agreement, given to a non-defaulting party at law or in equity. 20.9 Governing Law This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of Israel. The competent courts of Tel Aviv shallhave exclusive jurisdiction over any dispute between the Parties arising hereunder or in connection herewith (including non-contractual claims), whichcannot be promptly resolved on an amicable basis. 20.10 AssignmentThis Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.Galmed shall be entitled, at any time, to assign this Agreement to an Affiliate of Galmed, provided Galmed shall remain jointly responsible for any and allfinancial liabilities hereunder, or to a successor in case of a merger, acquisition or as part of a transaction transferring all or substantially all the business orassets of Galmed relating to this Agreement (collectively, an "Assignment").Subject to Section 19.5 above, Perrigo shall not assign its rights and obligations under this Agreement without first obtaining the written consent of Galmed. [Signature Page Follows] Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first written above. PERRIGO API LTD.: GALMED RESEARCH AND DEVELOPMENT LTD.: By:/s/ Yoav Grinberg By:/s/ Chaim Hurvitz Name:Yoav Grinberg Name:Chaim Hurvitz Title:General Manager Title:Chairman Date:27/1/2015 Date:1/27/15 By:/s/ Allen Baharaff Name:Allen Baharaff Title:CEO Date:27.1.2015 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annex A Route of Synthesis CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL TABLE OF CONTENTS 3.2.S.2.2Description ofManufacturing Process and Process Controls2 LIST OF FIGURES Figure 1.Synthetic Route B2Figure 2.Flow Chart for Route B Step i5Figure 3.Flow Chart for Route B Step ii6Figure 4.Flow Chart for Route B Step iii (Part A, [***])7Figure 5.Flow Chart for Route B Step iii (Part B, [***])8Figure 6.Flow Chart for Route B Step iv10Figure 7.Flow Chart for Route B Step v11 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL 3.2.S.2.2 Description of Manufacturing Process and Process Controls Aramchol is a conjugated bile acid formed by the amide coupling of the carboxylic acid in Arachidic acid (C20:0) to an amine containing derivative ofcholic acid. The starting materials are derived from cholic acid and arachidic acid. To date Aramchol has been manufactured by two similar synthetic routes. The present synthetic route is described by Route B (Figure 1). In this scheme the starting material is [***] which is purchased from anapproved supplier. Aramchol is then synthesized via a five step process as described below and in the flow charts in Figure 2 to Figure 7. Current processesafford approximately [***] Kg of Aramchol per reaction / lot. The contents of several lots can be pooled into a final batch which is then controlled by finalrelease testing. Figure 1. Synthetic Route B [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Step i [***] Step ii An [***] is charged with [***] [***]. The reactor is rinsed with [***] and then the reaction is [***] to obtain a slight reflux. The reaction is [***]. In process control testing is performed to determine the extent of conversion. [***] is dosed into the reaction whilst maintaining the [***]. The [***] of the reaction is monitored and is stirred. The[***] by-product is [***] and the [***] is retained. An [***] [***] of the [***] is performed. [***] ischarged to the reactor and is concentrated by [***] prior to addition of [***]. The contents of the reactor are concentrated again and then [***] which effects a solvent switch to begin to induce crystallisation. The contents of the reactor are then concentrated once more and then[***] is added. The contents of the reactor [***] and the resulting crystalline mass is collected by filtration. The cake is washed with [***] and then the [***] product is dried on the filter. In process control testing is performed for purity; [***] ; LOD, Karl Fischeranalysis and then dry [***] product is discharged. Step iii [***] (product from step ii) and [***] is charged into an [***]. The suspension [***] to obtain a solution. [***] ischarged to the reactor and the [***] solution is stirred. The reaction is [***] and then [***] is charged to the reactor. The reaction is [***] withstirring. The contents of the reactor are filtered on a [***] and the [***] is washed with [***]. A phase separation is performed and the lowerorganic layer is collected and dried with [***]. The [***] is removed by [***] and the [***] is charged into a reactor and part of the [***] solvent is removed by [***]. In process testing of the solution of [***] is performed for purity. 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 3Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL [***] is charged to the [***] in the reactor. The lines of the reactor are rinsed with [***]. A solution of [***] is dosed into thereactor. The dosing line is rinsed with [***]. The reaction is stirred at [***]. In-process testing is performed to determine the extent ofconversion. A solution of [***] (as much as is required to complete conversion) is dosed in to the reactor. The dosing line is rinsed with [***]. The reaction is stirred at [***]. In-process testing is performed to determine the extent of conversion to [***]. [***] is charged to the reactor and the [***] is stirred. Once the layers have separated the lower organic layer is collected and[***] is removed by [***]. [***] is charged to the reactor. Further [***] is removed by [***]. The contents of the reactor are[***] and then [***] is charged to the reactor. Further [***] is removed by [***] . [***] is charged to the reactor and the contentsof the reactor are [***] to obtain a solution. The solution is [***] to induce crystallisation. If crystallization does not occur then [***] mustbe added. The solution/slurry is [***]. The crystalline mass is [***] and is then isolated by [***] and the cake is [***] with [***] and then[***] . In process testing is performed to determine purity. Crude [***] is discharged from the filter and is then dissolvedin [***]. The solution is [***] to allow crystallization. The solution is [***] and is then [***]. The product is collected by filtrationand the cake is washed with [***]. The pure [***] is dried on the filter. In process testing is performed for LOD and purity. Pure anddry [***] [***] is discharged. Step iv [***], water and [***] is charged into an [***]. [***][***] is charged to the reactor. The dosing lines of the reactor are [***]. The reaction is stirred at [***]. In-process testing is performed to determine the extent of conversion. To the reaction concentrated [***] is added and the[***]. The reaction is [***] and then the [***]. The [***] are collected by filtration and the cake is washed with [***]. Crystallineproduct is dried on the filter. In process control testing is performed for purity. The crystalline cake is [***] with [***] at [***] [***]. The product iscollected and dried on the filter with [***]. In-process testing is performed for LOD and purity. Pure [***] is discharged from the reactor. In some instances full release testing then takes place on [***] once it has been discharged from the reactor. However, the [***] active substance can be[***] prior to release testing. Step v [***] are transferred to an [***] configured such that fumes pass through an [***]. The reaction is [***]. [***] is dosed into the reaction, keeping the [***]. The reactor dosing lines are rinsed with [***]. The reaction is stirred andreaction progress monitored. The reaction is [***] to in-process testing is performed to determine the extent of conversion prior to discharge of[***] solution for use in step [***]. 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 2. Flow Chart for Route B Step i [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 5Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 3. Flow Chart for Route B Step ii [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 6Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 4. Flow Chart for Route B Step iii (Part A, [***]) [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 7Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 5. Flow Chart for Route B Step iii (Part B, [***]) [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 8Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 9Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 6. Flow Chart for Route B Step iv [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 10Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AramcholGalmed Pharmaceuticals Ltd.IND 79,200CONFIDENTIAL Figure 7. Flow Chart for Route B Step v [***] 3.2.S Drug SubstanceCERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 11Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annex B Specifications Analytical R&D Annex B – API Specifications Material name: Aramchol Stage: End Product Identification code: 3ARMCN0 Ed. 01Project code: ARMC Superseded Ed. No.: N/A from: N/A Changes: This document is Perrigo Company confidential and proprietary information. Individuals printing a copy of a Perrigo procedural document are responsiblefor ensuring that it is the most current revision. 3ARMCN0-01Page 1 of 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Analytical R&D Material name: Aramchol Stage: End Product Identification code: 3ARMCN0 Ed. 01Project code: ARMC Approvals Name Signature DateIssued by Analytical R&D Department Approved by Synthetic R&D Manager Approved by QC Manager Approved by QA Engineer Test Requirement MethodDescription White to off white powder ARMC-01Identification: a)HPLC Complies with Retention time of RS ARMC-06 b) IR IR absorption spectrum of the test sample complies with theIR spectrum of the RS ARMC-02 c) XRD XRD-gram corresponds to reference ARMC-03 d) Melting point [***] ARMC-04Water content Not more than [***] ARMC-05Residue on ignition* Not more than [***] ARMC-09Assay by HPLC (as is) [***] ARMC-06 This document is Perrigo Company confidential and proprietary information. Individuals printing a copy of a Perrigo procedural document are responsiblefor ensuring that it is the most current revision. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 3ARMCN0-01Page 2 of 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Analytical R&D Test Requirement MethodRelated substances: RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] ARMC-07RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] RRT [***] Not more than [***] Any other unknown Not more than [***] Total Not more than [***] Residual solvents:* [***] Not more than [***] Not more than [***] Not more than [***] ARMC-08 Not more than [***] Not more than [***] Not more than [***] Heavy Metals:* [***] Not more than [***] Not more than [***] ARMC-10 Not more than [***] Not more than [***] [***]Content Not more than [***] ARMC-11[***] Not more than [***] ARMC-12PSD* Report value ARMC-13 [***] * Not to be performed for stability studies. This document is Perrigo Company confidential and proprietary information. Individuals printing a copy of a Perrigo procedural document are responsiblefor ensuring that it is the most current revision. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. 3ARMCN0-01Page 3 of 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Analytical R&D Legend of impurities: Perrigo Name Chemical Formula Chemical Name This document is Perrigo Company confidential and proprietary information. Individuals printing a copy of a Perrigo procedural document are responsiblefor ensuring that it is the most current revision. 3ARMCN0-01Page 4 of 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annex C Technology Transfer Protocol Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 1 of 19 Name of the API AramcholTechnology Provider CML, Netherlands for Galmed Ltd. Prepared byAnat Shatkin Process Engineer Perrigo APISign / DateReviewed byRaya Abu Process department Perrigo APISign / Date Silvina Guernik Quality control manager Perrigo APISign / Date Revital ben Daniel R&D manager Perrigo APISign / Date Shira Webshat Facility manager Perrigo APISign / Date Alex Rutman Quality control Perrigo APISign / DateApproved byName GalmedSign / DateIssued byAnat Shatkin Process Engineer Perrigo APISign / Date Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 2 of 19 INDEX Sr. No. Contents Page No. 1. Objective / Purpose 3 2. Scope 3 3. Distribution 3 4. Responsibilities 4 5. Receiving team's Responsibilities 6 6. List of current process documents to be received from CML 8 7. List of materials to be received from CML 11 8. Transfer plan 12 9. Production plan 13 10. Critical and Important Process Parameters 14 11. Comparison of the process equipment, analytical laboratory instruments & risk analysis 15 12. Acceptance criteria for the success of transfer 19 13. Annexure A- Standards requirements 20 14. Annexure B- Representative samples requirements 20 15. Annexure C- Method transfer requirements 21 16. Annexure D- Raw materials requirements 21 17. Annexure E- In process requirements 22 18. Annexure F- Bill of materials 24 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 3 of 19 1.Objective / Purpose: The Objectives / Purpose of this protocol are: ·To establish and provide guidelines for technology transfer of the Aramchol process from CML to Perrigo API (PAPI). ·To provide the plan for the various activities to be completed during the technology transfer. ·To provide acceptance criteria for the success of the technology transfer. 2.Scope: Aramchol was developed by Galmed LTD and is currently produced in CML, Netherlands. This plan covers the technology transfer of Aramchol from CML, Netherland to Perrigo API, Neot Hovav (PAPI).[***] 3.Distribution: ·QA (Perrigo API)- Original ·Process Manager (Perrigo API)- Copy ·QC (Perrigo API)- Copy ·R&D (Perrigo API)- Copy ·Production Manager at each site- Copy ·Business Development (Perrigo API)- Copy ·Core team members at each site- Copy 4.Responsibilities: The members of technology transfer and receiving teams and the responsibilities for various activities are given below: CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 4 of 19 4.1.Team from the Receiving Site- PAPI: The team from the receiving site shall drive the total technology transfer activity. Team Leader:Yael Gafni – R&D Project Manager [***] Core Team Responsible for Phone EmailAnat Shatkin Process [***] [***]Shiran Yehoshua Magal Manufacturing [***] [***]Shira Webshat Manufacturing [***] [***]Silvina Guernik QC [***] [***]Roza Marcu QC [***] [***]Alex Rutman QA [***] [***]Yakir Geron QA [***] [***]Mali Lahav Raw materials & Procurement [***] [***]Yulia Rudinski Ecology [***] [***]Yair Markowitz Safety [***] [***]Revital Ben-Daniel Analytical & Synthetic R&D [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 5 of 19 4.2.Team from Transferring Site- CML: The team from the transferring site shall provide all the documents & information related to the product for the successful technology transfer. Team Leader: Production manager, Remy Litjens (Phone:____________ , E-mail: [***]) (Please add the team members' names, phone and email) Core Team Responsible for Phone Email Process Manufacturing QC QA Raw materials & Procurement Ecology Safety Analytical Development ….. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 6 of 19 5.Receiving Team's Responsibilities- PAPI: 5.1.For the transfer of process: Name Department Responsible forRaya Abu Manufacturing [***]Anat Shatkin Shira Webshat Shiran Yehoshua-Magal R&D Yulia Rudinski Ecology [***]Yair Markovitz Safety [***] 5.2.For the transfer of analytical methods: Name Department Responsible forSilvina Guernik QC [***]Roza Marcu R&D CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 7 of 19 5.3.For the Transfer of QA & Regulatory documents: Name Department Responsible forAlex Rutan QA [***] Yakir Geron QA [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 8 of 19 6.List of Current Process documents to be received from CML: Sr. No. Description Target date Responsibility Status1. [***] [***] [***] [***]2. [***] [***] [***] [***]3. [***] [***] [***] [***]4. [***] [***] [***] [***]5. [***] [***] [***] [***]6. [***] [***] [***] [***]7. [***] [***] [***] [***]8. [***] [***] [***] [***]9. [***] [***] [***] [***]10. [***] [***] [***] [***]11. [***] [***] [***] [***]12. [***] [***] [***] [***]13. [***] [***] [***] [***]14. [***] [***] [***] [***]15. [***] [***] [***] [***]16. [***] [***] [***] [***]17. [***] [***] [***] [***]18. [***] [***] [***] [***]19. [***] [***] [***] [***]20. [***] [***] [***] [***]21. [***] [***] [***] [***]22. [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 9 of 19 Sr. No. Description Target date Responsibility Status23. [***] [***] [***] [***]24. [***] [***] [***] [***]25. [***] [***] [***] [***]26. [***] [***] [***] [***]27. [***] [***] [***] [***]28. [***] [***] [***] [***]29. [***] [***] [***] [***]30. [***] [***] [***] [***]31. [***] [***] [***] [***]32. [***] [***] [***] [***]33. [***] [***] [***] [***]34. [***] [***] [***] [***]35. [***] [***] [***] [***]36. [***] [***] [***] [***]37. [***] [***] [***] [***]38. [***] [***] [***] [***]39. [***] [***] [***] [***]40. [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 10 of 19 7.List of materials to be received from CML for QC: Sr. No. Description Required quantity Target date ResponsibilityFrom R&D/ QC/ Production1. [***] [***] [***] [***]2. [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 11 of 19 8.Transfer plan: Sr. No. Parameter Responsibility Target date1. [***] [***] [***]2. [***] [***] [***]3. [***] [***] [***]4. [***] [***] [***]5. [***] [***] [***]6. [***] [***] [***]7. [***] [***] [***]8. [***] [***] [***]9. [***] [***] [***]10. [***] [***] [***] [***] [***] [***] [***]11. [***] [***] [***] [***] [***] [***] [***]12. [***] [***] [***]13. [***] [***] [***]14. [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 12 of 19 Sr. No. Parameter Responsibility Target date15. [***] [***] [***]16. [***] [***] [***] 9.Production plan: Type Batch size(RM Input) Batch size (output) Number ofbatches[***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 13 of 19 10. Critical and important Process Parameters: [***] 11. Comparison of process equipment, analytical laboratory instruments & risk analysis: During the assessment of risks due to change in Process equipments and Instruments & controls (given below), we shall ensure that the changes do notaffect the critical process parameters (given above). 11.1.Comparison of Process Equipment: (please enter here the equipment used along the process for each step in the CML column; please includedetails such as the volume of the vessels, material of construction, filtration area, etc.)- prepared in a separate file during the visit to CML Process step Equipment(CML) Equipment(PAPI) Comments, Risk assessment, actions required[***] [***] [***] [***] [***] [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 14 of 19 11.2.Comparison of Instrumentation & control system: (please enter here the equipment used along the process in the CML column. Add rows ifneeded) Critical process automation Related Equipment(CML) Related Equipment(PAPI) Comments, Risk assessment, actions required[***] [***] [***] [***] [***] [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 15 of 19 11.3. Comparison of analytical laboratory instruments: (please enter here the equipment used along the process in the CML column) Test Instrument(CML) Instrument(PAPI) Comments, Risk assessment, actions required[***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***][***] [***] [***] [***] [***] [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 16 of 19 12. Acceptance criteria for the success of transfer: [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 17 of 19 13. Annexures: Annexure A ARAMCHOL – Standards Requirements Sr. No. Name CML Code Qty (gr)1 [***] [***] [***]2 [***] [***] [***]3 [***] [***] [***]4 [***] [***] [***]5 [***] [***] [***]6 [***] [***] [***]7 [***] [***] [***]8 [***] [***] [***] Annexure B ARAMCHOL – Representative Samples Requirements Sr. No. Name CML Code Qty (gr)1 [***] [***] [***]2 [***] [***] [***]3 [***] [***] [***]4 [***] [***] [***]5 [***] [***] [***]6 [***] [***] [***]7 [***] [***] [***]8 [***] [***] [***]9 [***] [***] [***] Annexure C ARAMCHOL – Method Transfer Requirements Sr. No. Name CML Code Qty (gr)1 [***] [***] 2 [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFERPROTOCOLEffective DatePage 18 of 19 Annexure D ARAMCHOL – Raw Materials Requirements Sr.No. Name Requirement from CML Remarks1 [***] [***] [***]2 [***] [***] [***]3 [***] [***]4 [***] [***] 5 [***] [***] 6 [***] [***] [***]7 [***] [***] [***]8 [***] [***] Annexure E ARAMCHOL – In-Process Requirements Sr. No. Name Requirement from CML Remarks1 [***] [***] [***]2 [***] [***] [***]3 [***] [***] [***]4 [***] [***] [***]5 [***] [***] [***]6 [***] [***] 7 [***] [***] [***]8 [***] [***] [***]9 [***] [***] [***]10 [***] [***] [***]11 [***] [***] [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Document No.: Ed. 1TECHNOLOGY TRANSFER PROTOCOLEffective DatePage 19 of 19 Annexure F- Bill of materials [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annex D Process Stabilization Scope Aramchol Process Stabilization Scope of Work Stage 1 of production – [***] [***] Stage 2 of production – [***] [***] Stage 3 of production – [***] [***] Stage 4 of production – [***] [***] Analytical Development Scope [***] General ·The studies described above will be carried out over a period of [***]. Additional 1 month lead time for ordering advanced intermediates / startingmaterials is required. ·[***] will be ordered from Glamed's current source [***] ·[***] will be ordered from [***] (Galmed's current source) [***]. ·3 final lab samples of about 30gr will be produced ·Once completed, an evaluation will be carried out to decide whether process can be transferred directly to [***] or pilot scale up [***] isrecommended first. Such pilot scale up will require [***] of additional work. Other Working Assumptions ·All analytical standards will be supplied by Galmed / CML. ·Galmed will provide API sample that was used for passing the TOX study. This sample will serve as a standard to set the API specifications. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Page 1 of 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. oAny method that will be developed by Perrigo API will be applied on this standard. oThe API specifications will be set in accordance with the impurity profile of this sample. ·Any new impurity that will be discovered throughout Perrigo API campaign that was not observed in the batch that was used for TOX study is notquoted in the suggested quotation and will be re-quoted. ·[***]. Galmed would define the scope of Solid State study if required. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Page 2 of 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annex E Process Improvement Scope Aramchol Process Improvement Scope of Work Stage 1 of production – [***] [***] Stage 2 of production – [***] [***] Stage 3 of production – [***] [***] Stage 4 of production – [***] [***] General (All Production Stages): [***] CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Page 1 of 1 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.10 CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OFTHIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGECOMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Investigator-Initiated Clinical Trial Agreement This Clinical Trial Agreement (“Agreement”) is made and entered into effective as of the full execution hereof (“Effective Date”), by and between TheRegents of the University of California, a California constitutional corporation, on behalf of its San Diego campus, located at 9500 Gilman Drive, La Jolla,CA 92093, California (“Institution”), and Galmed Research and Development Ltd., a private company having its principal place of business at 8, ShaulHamelech Blvd., Tel Aviv, 6473307, Israel (“Company”), (each may be individually referred to as a “Party” and collectively, as “the Parties”). Whereas, Dr. Rohit Loomba, M.D., an employee of Institution (“Principal Investigator”), desires to conduct a clinical study (“Study”) under a protocolentitled “Aramchol Versus Placebo for the Treatment of HIV-associated NAFLD” UCSD#20150180 (“Protocol”), a copy of which is attached hereto asExhibit A; Whereas, Principal Investigator has authored the Protocol and Institution and Principal Investigator have the expertise and facilities to conduct the Study; Whereas, Company is providing financial support in accordance with the budget attached hereto as Exhibit C for use in the Study; Whereas, the Study is intended to advance scientific and medical knowledge and Institution considers the Study to be research done in the public interest; Now, therefore, in consideration of the mutual promises set forth in this Agreement, the Parties hereby agree as follows: 1.Scope of Work. 1.1Principal Investigator. The Institution shall conduct the Study under the direction of the Principal Investigator. Principal Investigator may appointsuch other appropriate and qualified institution employees to provide services on behalf of Institution to conduct such Study (“Study Staff”). IfPrincipal Investigator becomes unable or unwilling to continue to conduct the Study, and a mutually acceptable substitute Principal Investigator(“Substitute Investigator”) is not identified by the parties, then either Party shall have the option to terminate the Study upon thirty (30) days priorwritten notice and pursuant to Section 8.4 below. Upon the approval of such Substitute Investigator by the Parties as aforesaid, although not a party,the Substitute Investigator shall execute this Agreement as having read and understood Principal Investigator obligations under the agreement, andshall be considered as the “Principal Investigator” for any purpose under this Agreement. 1.2Institution as Study Sponsor. If applicable, Institution and Principal Investigator shall act as “Sponsor” of the Study, as such term is defined by theU.S. Food and Drug Administration (“FDA”) Federal Code of Regulations. 1Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.3Study Staff. Institution, through Principal Investigator, shall supervise Study Staff in their performance of the Study and ensure that all Study Staffare qualified to perform the duties assigned to such person. Institution shall take reasonable steps to inform Study Staff of their obligations under thisAgreement. 1.4Conduct of the Study. Institution shall, and shall cause the Principal Investigator and Study Staff (collectively, “Study Team”) to, conduct the Studyin accordance with this Agreement, the Protocol, and all applicable federal and state laws and regulations (“Applicable Law”); provided, however,that Institution may deviate from the Protocol and such instructions to the extent that the safety of Study subjects so requires. For clinical Studies,such conduct includes compliance with International Conference on Harmonization Good Clinical Practice (ICH GCP), but only to the extent thatthe ICH GCP guidelines comport with FDA regulations, the Helsinki Declaration, rules and regulations for protecting the rights, safety and welfare ofhuman subjects and for the control of new drugs under investigation, including relevant data protection laws, the International Conference onHarmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use, as well as all applicable laws and regulationspertaining to the protection of the personal data of subjects (“Rules and Regulations”). 1.5Manner of Conduct. Institution represents that it and the Principal Investigator have the requisite skills, knowledge, experience and human resourcesto undertake and conduct the Study in accordance with the provisions of this Agreement. Principal Investigator and Institution represent and warrant,that they, and the Study Staff have all training, information, licenses, approvals or certifications necessary for safely, adequately and lawfullyperforming the Study, and all such training, licenses, approvals or certifications shall be properly maintained throughout the course of the Study. 1.6Investigational New Drug Application (“IND”)/lnvestigational Device Exemption (“IDE”). To the extent required to do so by Applicable Law,Institution will obtain and maintain an IND/IDE pursuant to FDA regulations. 1.7IRB Approval. Institution shall obtain approval of the Study, the Protocol, and an informed consent from the appropriate institutional review board(“IRB”) and shall seek any other approvals required for the Study from applicable safety or review boards or other authorities. 1.8Informed Consent. Prior to a Study subject’s participation in Study, Institution shall obtain from each Study subject participating in the Study orsuch Study subject’s legal representative an informed consent, which includes a waiver of medical confidentiality, signed by the Study subject or hisor her legal representative, unless such signature is waived by the IRB. Institution shall ensure that such informed consent shall be granted onlyunder circumstances that provide the prospective Study Subject (or his or her legal representative) with reasonable and sufficient opportunity toconsider whether or not to participate in the Study and that minimize the possibility of coercion or undue influence. Such written informed consentshall be obtained in compliance with all Applicable Law, standards and guidelines. Institution shall further ensure that each Study subject shallexecute an authorization form intended to give the Study subject’s permission to use his or her personal data as necessary to accomplish the goals ofthe Study. 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.9 Protocol Ownership and Changes to the Protocol. Company acknowledges that Investigator is the author of the Study Protocol and research designof the Study. The Protocol and research design of the Study is the property of the Institution. Institution shall inform Company of any changes to theProtocol. Protocol changes shall be in writing and will not take effect until approved by the IRB. 1.10 Multi-Center Study. In the event of a multi-center Study, Institution agrees that each site involved in the Study (each a “Study Site” andcollectively “Study Sites”) shall enter into a written agreement with Institution regarding its participation in the Study. Institution and Investigatorshall be solely responsible for the conduct of the Study at all Study Sites, and shall ensure that the Study Sites comply with the terms and conditionsof this Agreement and all Applicable Laws. Upon request by Company, Institution and Investigator shall provide a list of participating sites and anyupdates thereto. Institution shall prepare the form of the agreement to be used with the Study Sites, which shall afford Company all rights as set forthin this Agreement. 1.11 Provision of Study Drug and Study Supplies. Company shall provide to Institution, without cost, a certain quantity agreed by the parties ofCompany’s study drug called Aramchol, to conduct the Study pursuant to the Protocol (“Study Drug”), as well as any other compounds, comparatordrugs, and/or equipment (collectively, “Study Supplies”) which is agreed by the Company and specified in the Protocol. Company shall alsoprovide Institution with written instructions and prescriptions governing the administration of the Study Drug, and Institution shall maintain properand complete records concerning the administration of the Study Drug as well as maintain an inventory log regarding the current inventories of theStudy Drug and shall verify that such log is completed and updated on an ongoing basis. Institution and the Principal Investigator shall not modifyor reverse engineer the Study Drug and will maintain, safeguard and store the Study Drug in a safe and secure manner consistent with ICH GCP andin strict compliance with the Protocol, Applicable Law and the Rules and Regulations, and keep or cause to be kept records of all Study Drugreceived, used, dispensed, disposed of and/or returned to Company. All Study Supplies, including the Study Drug, provided for the purpose ofcarrying out the Study may not be used for any other purpose whatsoever. Principal Investigator and Institution are responsible for the security andaccountability of all such Study Supplies. Where Company requests, Institution shall store the Study Drug in Institution’s pharmacy (the“Pharmacy”). In such case, the Study Drug shall be stored according to the instructions of Company, in compliance with the Pharmacy’s practiceand policy regarding storage of drugs. 3Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2Access and Auditing. 2.1Access to Study Data. Upon prior written request to Institution, at mutually agreeable times during Institution’s regular business hours, and subject tothe terms of this Agreement and Applicable Law, Company or its agents may access Institution’s Study data in the form in which it is available,except that direct identifiers of any Study subject, including, but not limited to. Study subject’s name, birth date, street address, telephone, socialsecurity or health plan beneficiary numbers (“Direct Identifiers”) shall not be made available to Company. In the event Study data contains DirectIdentifiers, such Direct Identifiers shall be redacted. Company shall be responsible for all costs to Institution for making such Study data available,including any costs associated with redaction. 2.2Compliance with HIPAA and CMIA. The Parties shall comply with all Applicable Laws governing patient privacy and confidentiality of healthinformation, including without limitation the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementingregulations, and the State of California Confidentiality of Medical Information Act (“CMIA”). The Parties shall take all actions necessary to complywith such laws and regulations, including agreeing to amend this Agreement as necessary for compliance. Adverse Event Reporting. Institution is solely responsible for reporting adverse events in the course of a Study in accordance with Applicable Lawand the Protocol to the FDA or other regulatory authorities. Institution shall provide Company with a copy of any adverse event reports as they aresubmitted to the FDA or other authority. In the event of a Serious Adverse Event, Institution and the Study Staff will immediately take all measures attheir disposal to evaluate the risk to the other Study subjects and will agree on which measures to take in order to mitigate that risk. 2.3Debarment. Institution certifies that it will not knowingly use the services of any Study Staff to perform services in connection with the Study who is(i) debarred, disqualified or banned from conducting clinical studies under the Generic Drug Enforcement Act of 1992, as amended, or (ii) excluded,debarred or suspended from participation in, or is otherwise ineligible to participate in, any federal health care program or federal procurement ornon-procurement program. Institution further certifies that neither it, or the Principal Investigator nor any person or entity it utilizes to performservices pursuant to this Agreement, has been convicted of a criminal offense that falls within the ambit of 42 U.S.C. § 1320a-7(a) or is otherwiserelated to the provision of healthcare items or services. Institution agrees to inform Company as soon as practicable in writing of any change to thiscertification. 4Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.4Information and Regulatory Authority Audits. Each of Institution and Company shall notify and provide the other with copies of any inquiries,correspondence or communications to or from any governmental or regulatory authority related to the Study at Institution as soon as practicable aftertheir receipt. In addition, if any governmental or regulatory authority: (i) contacts Institution or the Principal Investigator with respect to the Study;(ii) conducts, or gives notice of its intent to conduct, an inspection at Institution; or (iii) takes, or gives notice of its intent to take, any otherregulatory action with respect to any activity of Institution or Principal Investigator which could reasonably be expected to impact any data orclinical activity under the Study; the Principal Investigator must promptly notify the Company of the contact or notice. The Principal Investigatorshall provide the Company with copies of all information and documentation applicable to the Study issued by any governmental or regulatoryauthority and any proposed response. The Company will have the right to review and comment in advance on any responses, which pertain to theStudy Drug. Furthermore, Institution and Principal Investigator shall provide the Company within two weeks following the inspection a writtenreport of the inspection, noting with specificity each Study-related record or document provided to or reviewed by the regulatory authority. TheParties shall use reasonable efforts to properly address and will cure any and all non-compliance issues. Institution and the Principal Investigator willconsult with and inform the Company of the actions taken and the responses provided to any report or correspondence issued by any governmentalauthority which could reasonably be expected to impact the Study Drug. 3.Compensation Company shall make payments to Institution in accordance with the payment schedule attached hereto as Exhibit B (“the Payment Schedule”) and thebudget attached hereto as Exhibit C (“Budget”). All payments shall be provided to Institution within 30 days of the end of the calendar month duringwhich Institution’s invoice is received by Company. Company shall also make payments to Institution in accordance with Section 7 of this Agreement.The Parties agree that all such payments made by Company to Institution reflect fair market value for the research performed hereunder. 4.Ownership of Data and Intellectual Property 4.1Study Data. All rights, title and interest in Study data shall be the sole and exclusive property of the Institution. Company shall have the right to usein its sole discretion, for any legal purpose consistent with the informed consents, including publication and regulatory filings, any Study dataprovided to Company, at Company’s request. Company shall own the completed Case Report Forms (CRFs) and the data therein that is provided toCompany by Institution, Institutions shall maintain the original CRFs for regulatory compliance and any other Institution required purposeconsistent with Institution policies. 4.2Final Report. Within 60 days following completion of the Study, Institution shall provide Company with a final report of the research results of theStudy. Company shall have the unlimited right to use, copy and disseminate the final report for any legal purpose. The Principal Investigator shallprepare and maintain, both during and following the performance of the Study, current, complete and accurate written records, accounts, notes, reportsand data of the Study, including CRFs, in accordance with the Protocol. Such materials and data shall be maintained in accordance with Section 5below. 5Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4.3Study Inventions. Institution shall own all patentable inventions and discoveries conceived and reduced to practice in the direct performance of theStudy (“Study Inventions”). Institution shall promptly disclose such Study Inventions to Company. 4.4Grant of License and Option to License. To the extent legally able, Institution agrees to grant to Company a non-exclusive, worldwide, royalty-free,fully paid up, transferrable and sublicensable (including through multiple chains) license to use, import, export, have made, make, commercialize orsell Institution’s interest in all Study Inventions and Institution’s Confidential Information as required to exploit the Study Inventions. Also, to theextent legally able, Institution shall grant Company a time-limited first right to negotiate an exclusive, worldwide license to Institution’s rights inany Study Invention on commercially reasonable terms and conditions agreed between the Parties in advance and in good faith. Company will adviseInstitution in writing within ninety (90) days of Institution’s written notification to the Company of a disclosure of Study Invention whether or not itwishes to secure an exclusive commercial license (“Election Period”). Company shall have one hundred and eighty (180) days from the date ofelection to enter into a license agreement with Institution (“Negotiation Period”). In the event it is necessary in the opinion of the Institution to file apatent application to protect a Study Invention during the Negotiation Period in geographies agreed between the parties, Company will reimburseInstitution for reasonable incurred patent costs during such period. 4.5No Rights to Other Proprietary Interests. Nothing contained in this Agreement shall be deemed to grant either directly or by implication, estoppel, orotherwise, any rights under any patents, patent applications or other proprietary interests, whether dominant or subordinate, or any other invention,discovery or improvement of either party, other than the specific rights covering Study Inventions under this Agreement. 5.Confidentiality 5.1Institution Confidential Information. Institution shall only disclose confidential information necessary for Company’s support of the Study.“Institution Confidential Information” shall mean and include all data and other information which are disclosed by the Institution to Company, forthe purposes of conducting Study which is marked as “Confidential” at the time of disclosure, or (i) in the case of oral disclosures, identified at thetime of such oral disclosure as confidential and reduced to writing and marked as “Confidential” within thirty (30) days of oral disclosure; (ii) if notmarked, regarded as confidential if a reasonable person in the relevant field would consider such information to be the Institution’s confidentialinformation given its content and the circumstances of the disclosure. Institution Confidential Information shall not include information to the extentthat it: (i) is, or later becomes publicly known other than through a breach of this Agreement by the Company, its employees, or its agents; (ii) islawfully made available to the Company, its employees or its agents, by a third party that Company reasonably believes owes no obligation ofconfidentiality to the Institution; or (iii) was already known to or is independently developed by the Company, its employees, or its agents. Duringthe term of this Agreement and for a period of five (5) years after its expiration or earlier termination, the Company shall maintain the confidentialityof the institution Confidential Information and may not transfer or disclose Institution Confidential Information to any third party without theInstitution’s prior written consent other than as required by Applicable Law or as permitted pursuant to the terms of this Agreement. 6Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 5.2Company Confidential Information. Company shall only disclose confidential information necessary for Institution’s performance of the Study.“Company Confidential Information” shall mean and include all data and other information which are disclosed by the Company to Institution forthe purposes of conducting Study or related to the Study Drug which is marked as “Confidential” at the time of disclosure, or (i) in the case of oraldisclosures, identified at the time of such oral disclosure as confidential and reduced to writing and marked as “Confidential” within thirty (30) daysof oral disclosure; (ii) if not marked, regarded as confidential if a reasonable person in the relevant field would consider such information to be theCompany’s confidential information given its content and the circumstances of the disclosure. Company Confidential Information shall not includeinformation to the extent that it: (i) is, or later becomes publicly known other than through a breach of this Agreement by the Institution, itsemployees, or its agents, including the Principal Investigator; (ii) is lawfully made available to the Institution, its employees or its agents, includingPrincipal Investigator, by a third party that Institution reasonably believes owes no obligation of confidentiality to the Company; or (iii) was alreadyknown to or is independently developed by the Institution, its employees, or its agents, including Principal Investigator without reference to or use ofthe Company Confidential Information. During the term of this Agreement and for a period of five (5) years after its expiration or earlier termination,the Institution shall maintain the confidentiality of the Company Confidential Information and may not transfer or disclose Company ConfidentialInformation to any third party without the Company’s prior written consent other than as required by Applicable Law or as permitted pursuant to theterms of this Agreement. 5.3Permitted Uses and Disclosures of a Disclosing Party’s Confidential Information. “Disclosing Party” as used herein means, with respect to InstitutionConfidential Information or Company Confidential Information, the Party who owns or otherwise controls such confidential information, and hasdisclosed such confidential information under this Agreement. A Disclosing Party’s confidential information may be used by the Party receiving suchconfidential information (“Receiving Party”) to the extent that it: (i) is disclosed for the purpose of performing the Study or exercising such Party’srights under this Agreement, provided that the Receiving Party has obligated its employees and agents to hold such Institution ConfidentialInformation or Company Confidential Information in confidence at least to the same degree of care as the Receiving Party uses to protect its ownconfidential information hereunder; or (ii) is disclosed to medical professionals in order to provide reasonable and necessary medical care to a Studysubject, provided that the Receiving Party advises such medical care provider(s) of the need to maintain the confidentiality of such InstitutionConfidential Information or Company Confidential Information. 7Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 5.4Required Disclosures of Institution Confidential Information and Company Confidential Information. Notwithstanding any provisions of thisAgreement, the Receiving Party may disclose Institution Confidential Information or Company Confidential Information which it is required bygovernmental order, subpoena or Applicable Law to disclose. The Receiving Party agrees to cooperate with any reasonable effort of the DisclosingParty to challenge a court-ordered, open records, or similar required disclosure; provided, however, that, with respect to an open records disclosure,the Receiving Party independently has determined that the information the Disclosing Party seeks to protect is exempted from disclosure underApplicable Law. 5.5Return of Confidential Information. At any time and upon the Disclosing Party’s advance written request, the Receiving Party shall return to theDisclosing Party promptly, or destroy, any and all Institution Confidential Information or Company Confidential Information and all copies thereof,furnished to the Receiving Party under this Agreement; provided, however, that the Receiving Party may retain one copy in a secure location forpurposes of compliance with this Agreement and Applicable Law, subject to continuing confidentiality obligations. The Receiving Party shall not berequired to delete or destroy any electronic back-up tapes or other electronic back-up files that have been created solely by the automatic or routinearchiving and back-up procedures of the Receiving Party, to the extent created and retained in a manner consistent with its or their standard archivingand back-up procedures. 5.6Accessibility of Institution Records. Institution, as an instrumentality of the State of California, is subject to certain state regulations and resolutionsregarding access to Institution’s records, including the requirement that Institution make available the terms and conditions of contracts. The actualcontract agreement must be released upon request, although portions of the document may be withheld when redaction meets one of the legalexemptions under the California Public Records Act. As such, the general terms and conditions of this Agreement will be released to the public uponrequest. To the extent disclosure of other records, including the Protocol, terms of compensation and related documents, is requested, Institution willnotify Company and work with Company to redact material which can be withheld from disclosure, to the extent permitted by law and at Company’srequest and expense. Furthermore, for the avoidance of doubt, Institution maintains a publicly accessible listing of all proposals and awards. Thelisting includes the name of the campus, sponsor, award amount, begin and end dates, principal investigator and co-investigator’s name, project type,award instrument, indirect cost rate, account and fund number, department and academic discipline. 5.7Use of Name. Neither party shall use the name, logo, mark or image of the other party in any publicity or advertising without the other party’s writtenapproval. California Education Code Section 92000 prohibits use of Institution’s names to suggest that Institution endorses a product or service. 8Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6.Publication 6.1Right of Publication. Institution may freely publish and disseminate the results of the Study, or otherwise publish or submit for publication an article,manuscript, abstract, report, poster, presentation, or other material containing or dealing with results of the Study (“Publication”), only aftercoordinating the Publication in advance with the Company in writing, and provided that to the extent appropriate Institution shall include a credit tothe Company, its research and investors. 6.2Review Period of Publications. Institution shall send Company a copy of any proposed Publication sixty (60) days prior to submission forPublication (“Review Period”). Company may comment upon, but may not make any editorial changes to the proposed Publication, and any suchcomments shall be considered in good faith by the Institution. Upon Company’s timely written request prior to submission to Publication, Institutionshall delete any Company Confidential Information in the proposed Publication. At the Company’s request, Institution shall delay Publication for anadditional sixty (60) days in order to protect the potential patentability of an invention described therein. 6.3Company’s Right of Publication. For avoidance of doubt, it is clarified that Company may freely publish and disseminate the data generated in theperformance of, and results of, the Study, or otherwise publish or submit for publication an article, manuscript, abstract, report, poster, presentation, orother material containing or dealing with results of the Study and will, as appropriate, seek Institution review of any publication or disseminationunder this paragraph if Institution generated the data or results being published. Additionally, Institution will be provided credit, consistent withscientific custom, for its contributions. 6.4Registration of Study. Institution shall register and report the results of the Study in accordance with the International Committee of Medical JournalEditors (ICMJE) clinical trial requirements for publication and as required under Applicable Law. 7.Indemnification, Subject Injury and Insurance 7.1Institution Indemnification. To the extent permitted by law, Institution shall defend, indemnify and hold harmless Company, its directors, officers,agents and employees (“Company Indemnitees”) from and against any and all claims, liabilities, expenses (including reasonable attorneys’ fees),actions or demands that may be made or instituted against any of them by reason of injury (including death) to any person, or damage to property,arising out of or in connection with the Study (“Claims”) except to the extent caused solely by the gross negligence or willful misconduct ofCompany. Company shall promptly notify Institution in writing after receipt by Company of any Claim subject to this Section. 7.2Management of Indemnification. Institution shall have the right to manage the defense and settlement of any Claim, provided however, that theInstitution shall not admit any liability or wrongdoing on the part of the Company or indemnitees, or settle any Claim which would involve such anadmission, without the prior written consent of the Company, which consent will not be unreasonably withheld. The Company shall reasonablycooperate with the Institution regarding any such Claims, at the Institution’s expense. Subject to the foregoing, Company may participate in any suchClaims at its/his/her own cost and expense. 9Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7.3Subject Injury and Reimbursement for Subject Injury. Institution shall provide medical treatment to subjects injured as a result of their participationin the Study. Subjects will be advised in the informed consent that if they are injured as a direct result of participation in the Study, the University ofCalifornia will provide any medical care they need to treat those injuries. The Company shall not be required to make any reimbursement in anyevent. 7.4Insurance. The Institution shall have sufficient liability, professional indemnity and clinical trial insurance and other adequate forms of protection tosatisfy all the obligations set forth in this Agreement, including without limitation with respect to Study subjects and any injury thereto. Institutionshall secure and maintain in full force and effect through the performance of the Study (and following termination of the Study to cover any claimsarising from the Study) self - insurance coverage for: (i) medical professional and/or medical malpractice liability; (ii) general liability; and (iii)workmen’s compensation, each such insurance coverage in amounts appropriate to the conduct of Institution’s and Principal Investigator’s businessactivities and the services contemplated by the Study. The amount of such insurance coverage shall not be construed as creating a limit on anyobligations assumed herein. The insurance policy shall include the Company as additional named insured. The insurance will be regarded as primaryinsurance and not contributory. Institution shall present the Company with appropriate insurance confirmation prior to the commencement of theStudy. 7.5No party hereto shall be responsible or liable with respect to any subject matter of this Agreement under any contract, negligence, strict liability orother theory for any indirect, incidental, special or consequential damages including but not limited to loss of revenues and loss of profits. 8.Term and Termination 8.1Term. This Agreement shall take effect on the Effective Date and shall continue until the earlier of: (i) completion of the Study and submission to theCompany of a final report summarizing the results of the Study pursuant to this Agreement; or (ii) until Study is sooner terminated or suspended asprovided for in this Agreement and pursuant to the Protocol. 8.2Termination. Either Party may terminate this Agreement: (i) upon thirty (30) days prior written notice to the other Party, in its sole discretion; or (ii)upon written notice to the other Party, if the terminating Party determines that termination of the Study is necessary for the safety of the Studysubjects. 10Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8.3Termination for Material Breach. Either Party may terminate this Agreement upon written notice to the other Party if the other Party materiallybreaches this Agreement and the breaching Party fails to cure the breach within thirty (30) days after receipt of written notice of the breach from theother Party. 8.4Early Termination Procedures. If this Agreement is terminated before completion of the Study, the Parties shall negotiate in good faith on the phase-out for Study subjects and subsequent treatment of Study subjects. In the event such early termination occurs, which is not due to a breach of thisAgreement by Institution and/or Principal Investigator or their bankruptcy/insolvency, and/or is not terminated by Institution for convenience,Company shall reimburse the Institution for (i) obligations incurred in accordance with the Study budget that cannot be cancelled or mitigated byInstitution using reasonable efforts; (ii) reasonable costs incurred in connection with the safe withdrawal of Study subjects; and (iii) any other post-termination expenses mutually agreed to by the Parties. 8.5Return of Property. Within thirty (30) days following the expiration or earlier termination of this Agreement: (a) the Institution shall return to theCompany, at Company’s sole and reasonable expense (i) any remaining Study Supplies (except as required by Applicable Law); (ii) any equipmenton loan or lease from the Company; and (iii) subject to the terms of Section 5 of this Agreement, any copies of Company Confidential Informationprovided by the Company that are in the possession of or are under the control of the Institution; (b) the Company shall return to the Institution, atInstitution’s sole and reasonable expense, subject to the terms of Section 5 of this Agreement, any copies of Institution Confidential Informationprovided by Institution that are in the possession of or are under the control of the Company. 8.6Survival. The following provisions shall survive expiration or termination of this Agreement: Sections 1.2,1.3,1.4, 2.1, 3, 4, 5, 6, 7, 8.4, 8.5, 8.6 and 9. 8A. Warranties It is understood that the Study Drug and any other materials provided are investigational in nature. COMPANY MAKES NO WARRANTIES,EXPRESS OR IMPLIED, INCLUDING AND WITHOUT LIMITATION ANY OF THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR APARTICULAR PURPOSE AND NON-INFRINGEMENT, REGARDING THE STUDY DRUG. ADDITIONALLY, COMPANY MAKES NO REPRESENTATIONOF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE SAFETY OR EFFICACY OF THE STUDY DRUG. 9.Miscellaneous 9.1Independent Contractor. All research performed by Institution, Principal Investigator and any Study Staff pursuant to this Agreement shall beperformed as an independent contractor. The relationship between the Parties does not constitute a partnership, joint venture, or agency. Neither Partyshall have the authority to bind the other Party without that other Party’s express and written consent. 11Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 9.2Remedies and Waiver. The remedies provided in this Agreement are not exclusive and the Party suffering from breach or default of this Agreementmay pursue all other remedies, both legal and equitable. No express or implied waiver by a Party of any breach or default will be construed as a waiverof a future or subsequent breach or default. The failure or delay of any Party in exercising any of its rights under this Agreement will not constitute awaiver of any such right, and any single or partial exercise of any particular right by any Party will not exhaust the same or constitute a waiver of anyother right provided in this Agreement. 9.3Assignment. Neither Party may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the otherParty, except that Company may assign this Agreement to a third party in connection with a merger or sale of all or substantially all of its assetsrelating to the Study Drug, and Company may delegate its obligations or assign its rights under this Agreement to a contractor, provided thatCompany remains liable for the performance of all delegated obligations and written notice is provided to Institution. Any unauthorized attemptedassignment shall be null and void and of no force or effect. 9.4Governing Law. This Agreement is governed by the laws of the State of California without regard to its conflict of law provisions. 9.5No Implied Right or License. No implied right or license is granted under this Agreement by either Party except those specifically set forth herein.Nothing contained in this Agreement shall impose an obligation of exclusivity on one Party to the other Party. 9.6Severability. If any provision of this Agreement is held to be unenforceable for any reason, that unenforceability shall not affect the enforceability ofany other provision of this Agreement. The Parties shall negotiate in good faith to substitute an enforceable provision with similar terms. 9.7Entire Agreement. This Agreement, and any Exhibits thereto, constitutes the entire agreement between the Parties and supersedes all prior agreementsand understandings relating to its subject matter. This Agreement, and any Exhibits thereto, may not be altered, modified or waived in whole or partexcept in writing signed by duly authorized representatives of both Parties. In the event of a conflict between the provisions of this Agreement andExhibit A or other Study document, the provisions of this Agreement will govern. 9.8Counterparts. This Agreement may be executed in counterparts, via facsimile or .pdf file and each of which shall be deemed to be an original, but allof which constitute one instrument. 9.9Force Maieure. If either Party’s performance of this Agreement or Study is prevented, restricted or delayed, either totally or in part, for reasons beyondthe affected Party’s reasonable control and is not due to the action or inaction of such Party, the affected Party will, upon giving notice to the otherParty, be excused from such performance to the extent of such prevention, restriction or delay; provided, that the affected Party will use reasonableefforts to avoid or remove such causes of non-performance and will continue its performance whenever such causes are removed. For purposes of thisSection, a lack of funds shall not be considered a cause beyond the reasonable control of the Parties. 12Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 9.10 Order of Precedence. The terms of this Agreement and the Protocol shall take precedence over other documentation, including but not limited to theInformed Consent in the interpretation and resolution of disputes concerning this Study. In the event that there is a conflict between the terms of theProtocol and the terms of this Agreement, the terms of this Agreement will govern with respect to legal contract terms, but the Protocol will governwith respect to the scientific/clinical conduct of the Study. 9.11 Notices. All notices required or permitted hereunder must be in writing, and will be deemed to be effective only when delivered personally ortransmitted by email or facsimile, or sent by certified or registered mail, postage prepaid, return receipt requested, and addressed to the address setout above, with the following additional information: To the Institution: UCSD OCGA Attn: Contract Officer Torrey Pines Center North 9500 Gilman Drive #0934 La Jolla, CA 92093-0934 With a codv to the Principal Investigator: Contact person:Dr. Rohit Loomba Associate Professor of Clinical Medicine Fax number:(858) 534-0280 E-mail:roloomba@ucsd.edu To the Company: Contact person:Allen Baharaff, CEO Fax number:+972-3-693-8447 E-mail:ab@galmedpharma.com or at such other address, facsimile number or e-mail as a Party shall have given a written notice of pursuant hereto. Notices shall be deemed properly andeffectively served two (or five if sent by airmail) working days after posting and on the first business day (at the receiving end) following transmission, iftransmitted by hand, email or facsimile. 13Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In witness whereof, the Parties have caused this Agreement to be executed by their duly authorized representatives. COMPANY By:/s/ Allen Baharaff By: /s/ Maya Halpern Print Name:Allen Baharaff Print Name:Maya Halpern Title:CEO Title:CMO Date:2/8/2015 Date:2/8/2015 THE REGENTS OF THE UNIVERSITY OF CALIFORNIA By:/s/ Rachel sievert Print Name:Rachel Sievert Title:Contract Officer Date:2/5/2015 WHILE NOT A PARTY TO THIS AGREEMENT I HAVE READ THE AGREEMENT AND ACKNOWLEDGE MY RESPONSIBILITIES AS THEPRINCIPAL INVESTIGATOR: /s/ Rohit Loomba Name: Dr. Rohit Loomba Title: Principal Investigator Enclosures:Exhibit A: Protocol Exhibit B: Payment Schedule Exhibit C: Budget 14Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit A [Protocol] 15Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CLINICAL RESEARCH PROTOCOLUNIVERSITY OF CALIFORNIA SAN DIEGODEPARMENT OF MEDICINEDIVISION OF GASTROENTEROLOGY DATE: February 4, 2015CLINICAL PROTOCOL NO: IND NO: TITLE: Aramchol versus placebo in the treatment of HIV-associated nonalcoholic fatty liver disease and lipodystrophy: A randomized, double-blinded,allocation-concealed, placebo-controlled clinical trial ABBREVIATED TITLE: Aramchol for HIV-associated nonalcoholic fatty liver disease and lipodystrophy IDENTIFYING WORDS: Aramchol, HIV, Lipodystrophy, Nonalcoholic fatty liver disease, Obesity, Fatty Liver, Cirrhosis PRINCIPAL INVESTIGATOR:Rohit Loomba, MD, MHSc ASSOCIATE INVESTIGATORS:Ahilan Arulanandan, MDIrine Vodkin, MDLisa Richards, NPClaude Sirlin, MD ESTIMATED DURATION OF STUDY: 16 WEEKS NUMBER AND TYPE OF PATIENTS: Up to 50 patients with HIV, ages above 18 years, both male and female who have NAFLD. SUBJECTS OF STUDY:NumberSexAge Range Patients50Male & FemaleAbove 18 yearsVolunteersNone Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PROJECT USES IONIZING RADIATION: NoPROJECT USES “DURABLE POWER OF ATTORNEY”: NoOFF-SITE PROJECT: NoMULTI-INSTITUTIONAL PROJECT: No Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Abstract One in every three adult Americans is afflicted by nonalcoholic fatty liver disease (NAFLD). NAFLD represents a spectrum of diseases ranging fromsimple steatosis to nonalcoholic steatohepatitis (NASH), the progressive form of liver disease that can lead to cirrhosis and liver-related mortality in personswho drink little or no alcohol. NASH represents the more severe end of this spectrum and is characterized by steatosis, ballooning degeneration and lobularinflammation with or without fibrosis. NASH can progress to hepatocellular carcinoma and liver-related death. The etiology of NASH is not completelyunderstood, but it is often associated with obesity, type 2 diabetes, hyperlipidemia and insulin resistance. Lipotoxicity, insulin resistance and oxidativestress appear to be central to the pathogenesis of NASH. Currently, there is no FDA approved treatment for NAFLD or NASH, although weight loss andexercise have demonstrated some benefit. Among patients with human immunodeficiency virus (HIV) infection, liver disease is among the leading causes of death. Progression of liver diseasein HIV is linked to metabolic derangements associated with hepatic steatosis. Till date there are no therapies for the treatment of HIV-associated NAFLD andthis area remains understudied with paucity of clinical trials. Recent studies have shown that Aramchol, a fatty acid-bile acid conjugate, may improve serumalanine (ALT) and aspartate (AST) aminotransferase levels and liver fat content on magnetic resonance spectroscopy (MRS) in Israeli patients with primaryNAFLD. Aramchol inhibits stearoyl coenzyme A desaturase 1 (SCD1) activity, a key enzyme in fatty acid synthesis. This inhibition may lead to increase infatty acid oxidation and reduce hepatic steatosis. In addition, it activates cholesterol efflux by stimulating adenosine triphosphate-binding cassettetransporter Al, a pan-cellular cholesterol export pump, and thereby, reducing hepatic steatosis and reducing atherosclerosis. Aramchol has not been studied in HIV-associated NAFLD. In this study, we propose to treat 50 patients with HIV and NAFLD with either Aramchol orplacebo for 16 weeks. After an initial evaluation for magnetic resonance imaging (MRI) liver fat distribution and dual energy x-ray absorptiometry (DEXA)whole body fat, patients will receive either 600 mg/day of Aramchol or placebo. Patients will be monitored at regular intervals for symptoms of liver disease,side effects of Aramchol and serum biochemical and metabolic indices. After 16 weeks, patients will have a repeat medical evaluation, liver MRI, and DEXAscan. Pre and post treatment MRI-derived liver fat content and total body fat via DEXA will be compared. The primary end point of successful therapy will beimprovement in hepatic steatosis measured by MRI. Secondary end points will be improvement in total body fat, metabolic profile, and liver biochemistry. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Background Nonalcoholic fatty liver disease is the most common cause of chronic liver disease in the United States and it affects almost 30% of adults in Westerncountries.1-3 With climbing obesity rates and more sedentary patient populations, the prevalence of NAFLD is increasing worldwide and is becoming thepredominant cause of chronic liver disease in parts of the world.4 NAFLD represents a spectrum of diseases ranging from simple steatosis to nonalcoholicsteatohepatitis (NASH), the progressive form of fatty liver disease that can lead to cirrhosis and liver-related mortality in persons who drink little or noalcohol. NASH represents the more severe end of this spectrum and is characterized by steatosis, ballooning degeneration and lobular inflammation with orwithout fibrosis.5 Long-term risks of NASH include cirrhosis, hepatocellular carcinoma and end stage liver disease requiring liver transplantation.6, 7 The majority of patients with NAFLD are asymptomatic. Clinical history, laboratory and radiological investigations are useful in excluding othercauses of liver disease but do not permit an accurate diagnosis of NAFLD8. The diagnosis is usually suspected in a patient with elevated serum alanineaminotransferase (ALT) who drinks no or minimal amounts of alcohol, who has evidence of increased fat in the liver by ultrasound, CT scan or MRI, and whotests negative for the common causes of chronic liver disease. Liver biopsy is the gold standard for the accurate diagnosis of NAFLD, but inherent risks ofbiopsy such as pain, bleeding, and bacteremia make interval biopsies impractical in the management of this disease. Recently, innovative imaging tools have demonstrated potential to change how we study and monitor liver disease.9, 10 An advanced magneticresonance imaging based biomarker, the proton-density fat fraction (MRI-PDFF), has been validated as a precise and accurate method of quantifying liver fatin NAFLD.11-15 This provides a unique opportunity to research the progression and treatment of NAFLD without invasive procedures. A subset of patients with NAFLD that have not been extensively studied are those infected with human immunodeficiency virus (HIV). Amongpatients with HIV infection, liver disease is one of the leading causes of death.16 Progression of liver disease in HIV is linked to metabolic derangementsassociated with hepatic steatosis. Till date there are no therapies for the treatment of HIV-associated NAFLD and this area remains understudied with paucityof clinical trials. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Medical Therapy for NAFLD in HIV patients: Currently, there is no FDA approved treatment for NAFLD or NASH. Additionally, there have been no significant clinical trials for HIV patients withNAFLD and there are no approved treatment options. Current treatments for NAFLD are limited to weight loss and exercise, but this is often difficult toadhere to for many patients. Therapeutic agents are being investigated but the trials thus far including ursodeoxycholic acid, metformin, clofibrate, betaine,N-acetylcystine, atorvastatin, and orlistat have demonstrated very limited benefit. Pioglitazone has been shown to be somewhat beneficial reducing liver fatbut weight gain due to increased adiposity is harmful in the long run. Additionally, none of these trials were for HIV-infected patients. Further therapies forNAFLD and NASH are still under investigation. Aramchol: Aramchol, also known as arachidyl amido cholanoic acid, is a fatty acid bile acid conjugate (FABAC) that was created by conjugating 2 naturalcomponents, cholic acid and arachidic acid, through a stable amide bond. Aramchol inhibits stearoyl coenzyme A desaturase 1 (SCD1), a key enzyme in fattyacid synthesis. SCD1 is an endoplasmic reticulum enzyme that catalyzes the rate-limiting step in the biosynthesis of monounsaturated fatty acids fromsaturated fatty acids. Inhibiting SCD1 decreases synthesis and increases beta-oxidation of fatty acids, causing decreased storage of fatty acids. SCD1 hasbeen demonstrated to be tightly associated with control of lipid homeostasis and body weight regulation. Within in vitro models, Aramchol hasdemonstrated significant (70% to 83%) inhibition of the SCD1 activity.17 Additionally, Aramchol increases cholesterol efflux by stimulating the adenosinetriphosphate-binding cassette transporter A1. This has demonstrated an anti-atherogenic effect in animal models with increased fecal sterol output anddecreased plasma cholesterol levels in mice.18 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Aramchol and the liver: The three proposed mechanisms of Aramchol’s effects on liver fat are 1) reducing de novo fatty acid synthesis, 2) reducing SCD1 activity, and 3)increasing beta-oxidation of fatty acids.19 In a 2003 study by Gilat,20 Aramchol significantly reduced hepatic fat content in animals (rats, hamsters, andmice) with a high-fat diet model. These animals gained total weight although they had less fat deposition in their liver, measured histologically, whichsuggests a redistribution of fat deposition in the body. The authors hypothesized that redistribution of liver fat to adipose tissue was the most likelyexplanation, but the mechanism was unknown. However, additional animal studies demonstrated that FABACs have specific metabolic effects as they increase cholesterol efflux from fibroblasts andmay not affect the import of dietary fat.21 In addition, preliminary data indicate that Aramchol may increase fatty acid catabolism in the liver by acting as aperoxisome proliferator-activated receptor agonist.22, 23 These studies have proposed possible mechanisms of FABACs but further study of fatty acid andtriglyceride synthesis vs. degradation in the liver are needed to identify the in vivo mechanisms of Aramchol. Effect of Aramchol on NAFLD and total body fat: A recent study by Safadi24 demonstrated that Aramchol significantly reduced liver fat content, measured by magnetic resonance sprectroscopy(MRS), in 60 Israeli NAFLD patients after 12 weeks of 300mg Aramchol per day. Their trial gave patients either 100mg or 300mg of Aramchol or placebo (3groups; n = 20/group) once daily for 12 weeks. Their primary finding was that liver fat content decreased by 12.57% (+/- 22.14% standard deviation) in thehigh dose Aramchol group. There were no serious or drug-related adverse events in the study and the authors proposed that Aramchol might be used for thetreatment of fatty liver disease. Aramchol has not yet been studied in HIV-associated NAFLD. Side effects of Aramchol: Patient trials with Aramchol are limited to the Safadi study,24 but the clinical trial demonstrated no significant adverse events in the 12-weektreatment period for 58 patients that underwent the trial. The few adverse events were mild (abdominal pain, back pain, constipation) and did not causeanyone to drop out of the trial. There were no severe adverse effects. The previous studies on Aramchol were done in animal models. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hypothesis It is well known that MRI is superior to CT in qualitative and quantitative assessment of liver fat and may be a more robust measure of changes duringtherapy25. Using MRI to detect changes in liver fat content, we plan to test the following hypotheses via this randomized-controlled trial. Hypothesis 1: Aramchol at 600 mg orally daily for 16 weeks is superior to placebo in improving liver fat content assessed by MRI in patients with HIV-associated NAFLD. Hypothesis 2: Aramchol at 600 mg orally daily for 16 weeks is superior to placebo in improving total body fat content assessed by DEXA in patients withHIV-associated NAFLD. Specific Aims We plan to conduct a randomized, double-blinded, placebo-controlled clinical trial to examine the efficacy of Aramchol at 600 mg orally dailyversus identical placebo given over 16 weeks to improve HIV-associated hepatic steatosis as measured by a validated and accurate magnetic resonanceimaging (MRI)-based technique. In this study, we propose to randomize up to 50 patients with HIV-associated NAFLD to either Aramchol or placebo for 16 weeks. We plan to enroll atotal of 55 patients, expecting some drop outs prior to randomization. After an initial evaluation for insulin sensitivity, liver fat measurement by MRI, andtotal body fat content by DEXA, patients will be randomized to receive either Aramchol 600 mg or placebo orally for 16 weeks. Patients will be monitored atregular intervals for symptoms of liver disease, side effects of medication, and serum biochemical and metabolic indices. At the end of 16 weeks, patients willhave a repeat medical evaluation, liver fat measurement, and total body fat content measurement. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pre and post treatment liver fat by MRI, ALT/AST, HbAlc, CRP, insulin sensitivity, and DEXA for whole body fat will be compared. The primary endpoint of successful therapy will be improvement in liver fat by MRI. Secondary end points will be improvement in insulin sensitivity and liver biochemistry.As this is a pilot study, we would also like to look at changes in liver histology if funds permit, which would guide the design of future studies with Aramcholto examine histologic improvement in patients with NAFLD. Primary objectives: 1.To examine the efficacy of aramchol 600 mg orally daily versus placebo in improving hepatic steatosis assessed by magnetic resonance imaging inpatients with HIV-associated NAFLD Secondary objectives: 1.To examine the efficacy of aramchol 600 mg orally daily versus placebo in improving total body fat content assessed by DEXA in patients withHIV-associated NAFLD 2.To examine the efficacy of aramchol 600 mg orally daily versus placebo in improving serum alanine aminotransferase (ALT) and aspartateaminotransferase (AST) levels in patients with HIV-associated NAFLD Exploratory objectives: 1.To examine the efficacy of aramchol in improving imaging-based biomarkers associated with changes in NAFLD Protocol This is a randomized, double-blinded, placebo-controlled clinical trial to examine the efficacy of Aramchol at 600 mg orally daily versus identical placebogiven over 16 weeks to improve HIV-associated hepatic steatosis as measured by a validated and accurate magnetic resonance imaging (MRI)-basedtechnique. 50 subjects will be randomized, monitored at regular intervals for the 16 weeks, and will be invited to continue participating in the study for anadditional 5 years of annual monitoring. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Inclusion criteria 1.Age at entry at least 18 years. 2.Serum alanine (ALT) or aspartate (AST) aminotransferase activities that are above the upper limits of normal. 19 or more in women and 30 or more inmen. 1.An MRI-determined fat fraction classification threshold (>5%) will be used to confirm subjects. MR examinations will include four researchsequences (three imaging sequences and one single-voxel spectroscopy sequence) that have been developed and refined by Dr. Sirlin, allowing forthe measurement of liver fat fraction and newer candidate MR biomarkers for future NAFLD studies. MR examinations will last 20-30 minutes andwill be performed without contrast agents. Subjects will be scanned at 1.5T. To assess sequence repeatability, two sequences per subject, blockrandomized, will be run three times. For MR elastography, MR imaging will be done which will include placing a vibrating paddle over theabdomen while images are obtained. A comprehensive screening questionnaire will be utilized prior to subjects having an MRI. Experiencedresearch MR technologists will perform MR examinations under the supervision of Dr. Sirlin. 3.History of HIV documented by a previously positive HIV Elisa or PCR. 4.Written informed consent. Exclusion criteria 1.Evidence of another form of liver disease. a.Hepatitis B as defined as presence of hepatitis B surface antigen (HBsAg). b.Hepatitis C as defined by presence of hepatitis C virus (HCV) RNA in serum. c.Autoimmune hepatitis as defined by anti-nuclear antibody (ANA) of 1:160 or greater and liver histology consistent with autoimmune hepatitis orprevious response to immunosuppressive therapy. d.Autoimmune cholestatic liver disorders as defined by elevation of alkaline phosphatase and anti-mitochondrial antibody of greater than 1:80 orliver histology consistent with primary biliary cirrhosis or elevation of alkaline phosphatase and liver histology consistent with sclerosingcholangitis. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. e.Wilson disease as defined by ceruloplasmin below the limits of normal and liver histology consistent with Wilson disease. f.Alpha-1-antitrypsin deficiency as defined by alpha-1-antitrypsin level less than normal and liver histology consistent with alpha-1-antitrypsindeficiency. g.Hemochromatosis as defined by presence of 3+ or 4+ stainable iron on liver biopsy and homozygosity for C282Y or compound heterozygosity forC282Y/H63D. h.Drug-induced liver disease as defined on the basis of typical exposure and history. i.Bile duct obstruction as shown by imaging studies. 2.History of excess alcohol ingestion, averaging more than 30 gm/day (3 drinks per day) in the previous 10 years, or history of alcohol intake averaginggreater than 10 gm/day (1 drink per day or 7 drinks per week) in the previous one year. 3.Contraindications to MRI: a.The subject has any contraindication to MR imaging, such as patients with pacemakers, metallic cardiac valves, magnetic material such as surgicalclips, implanted electronic infusion pumps or other conditions that would preclude proximity to a strong magnetic field. b.The subject has a history of extreme claustrophobia c.The subject cannot fit inside the MR scanner cavity 4.Decompensated liver disease, Child-Pugh score greater than or equal to 7 points 5.History of gastrointestinal bypass surgery or ingestion of drugs known to produce hepatic steatosis including corticosteroids, high-dose estrogens,methotrexate, tetracycline or amiodarone in the previous 6 months. 6.Recent use (within the last 90 days) of medications to treat hepatic steatosis such as pioglotazone (or medications in the same class) or vitamin E. 7.Use of Aramchol or agents in the same class. 8.Recent use (within the last 90 days) of insulin as an outpatient for management of diabetes. 9.HbAlc > 9 or uncontrolled diabetes. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.Significant systemic or major illnesses other than liver disease, including congestive heart failure, coronary artery disease, cerebrovascular disease,pulmonary disease with hypoxia, renal failure, organ transplantation, serious psychiatric disease, malignancy that, in the opinion of the investigatorwould preclude treatment with Aramchol and adequate follow up. 11.Active substance abuse, such as alcohol, inhaled or injection drugs within the previous one year. 12.Pregnancy or inability to practice adequate contraception in women of childbearing potential. 13.Evidence of hepatocellular carcinoma: alpha-fetoprotein levels greater than 200 ng/ml and/or liver mass on imaging study that is suggestive of livercancer. 14.Advanced HIV defined as CD4 count of less than 100, and/or life expectancy of less than 2 years. 15.Any other condition, which, in the opinion of the investigators would impede competence or compliance or possibility hinder completion of the study. Initial Evaluation Patients will be initially screened in the UCSD NAFLD research center clinic with history, physical examination, review of outside medical records(including HIV status) and routine blood tests. Alcohol history will be assessed in the medical interview, and the lifetime alcohol consumption will beestimated by standardized questionnaires. All patients will be asked to stop any medication being used for their liver disease, including herbal medicationsand vitamins. Only those meeting all inclusion criteria and avoiding all exclusion criteria will be invited to participate in the study. After the initial visit,those who meet all eligibility criteria and have no exclusion criteria will undergo more thorough evaluation with liver MRI and DEXA scan for total body fat.Patients with MRI-PDFF > 5% will be invited to participate in the study. Following an information session during which the primary consent document, a genetic sampling consent document and the UCSD HIPPA forms arereviewed, discussed and signed the following tests and procedures will be done shortly before starting therapy at the UCSD Medical Center, Hillcrest. If theyhave already been completed elsewhere as part of the patient’s original diagnostic evaluation at the referring clinic they do not need to be repeated. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following evaluation will be done shortly before starting therapy. 1.History and physical examination. 2.Blood tests. These include complete blood count (CBC with differential and platelet count), prothrombin time, alanine aminotransferase (ALT), aspartateaminotransferase (AST), direct and total serum bilirubin, alkaline phosphatase, albumin, total protein, fasting plasma glucose, hemoglobin Alc, ,creatinine phosphokinase (CPK), sodium, chloride, potassium, bicarbonate, blood urea nitrogen, creatinine, uric acid, calcium, phosphorus, ferritin,antinuclear antibody, thyroid stimulating hormone (TSH), HBsAg, anti HBs, anti HAV, anti HCV, ceruloplasmin, alpha-1-antitrypsin, fasting insulin, C-reactive protein, Elisa HIV test, CD4 count, CK-18 level. 3.Routine urinalysis. 4.Chest x-ray and electrocardiogram will be done if they have not been done in the previous year. 5.Detailed metabolic characterization a.Oral glucose tolerance test (OGTT): after an overnight fast, subjects will be given 75 grams oral glucose solution. Plasma glucose, insulin levels,and free fatty acids will be obtained from blood samples drawn at 0 and 120 minutes after the oral glucose load 26. b.Lipid profiles. Levels of fasting triglyceride, total cholesterol, LDL cholesterol, HDL cholesterol, free fatty acid will be obtained after an overnightfast. 6.Estimation of body fat and fat distribution a.Body Mass Index (BMI): For each patient, weight (kg) and height (m) will be recorded with empty bowel and bladder. BMI is calculated by theformula: BMI = weight (kg)/height (m)2. b.A trained investigator will measure waist/hip ratio at the same time as other measures are taken. c.DEXA scan for whole body fat d.Magnetic resonance imaging (MRI) of the liver: MRI is done to evaluate liver size and estimate liver fat content. e.MR Elastography (MRE) of the liver: MRE will be done to evaluate changes in liver stiffness before and after therapy if additional funding isavailable. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Treatment After the initial evaluation, patients who continue to fulfill all inclusion criteria will be randomized to receive either Aramchol 600 mg/day (1 tablet) orplacebo (1 tablet) orally for a total of 16 weeks. Medication diaries and a count of residual tablets will monitor patient compliance at scheduled visits.Patients will be interviewed and examined by an investigator and have blood draw at weeks 0, 4, 8, and 16 of treatment. In addition, an ARFI ultrasoundimaging examination of the abdomen will be performed. At each visit particular attention will be paid to symptoms associated with the possible side effectsof Aramchol and patients will complete a standardized symptom scale. Labs to be checked during the treatment phase include: i.Urinalysis will be done with extended blood tests. ii.Routine blood tests (Fasting specimens): CD4 counts, Complete metabolic panel (CMP) and protime/INR. In addition, research blood will betaken for cytokine levels and changes in lipid biomarkers. iii.Extended blood tests (Fasting specimens): Insulin, plasma glucose, lipid profile (cholesterol, triglyceride, LDL and HDL), free fatty acids (FFA),and creatinephosphokinase (CPK), and glycosylated hemoglobin (HbAlc). In addition, research blood will be taken for cytokine levels andchanges in lipid biomarkers. iv.Stool and urine sample will be collected for analysis of changes related to the study drug. Post-Treatment Phase: At the end of the study, patients will undergo the same evaluation as listed under the initial evaluation as above, following which treatment will be stopped.Repeat MRI of the liver and full body DEXA scan will also be performed at study conclusion. It is not possible to predict the outcome of this study, but ifAramchol appears to have a significant effect on liver fat by MRI and/or total body fat by DEXA, we will likely develop a follow-up protocol to assess long-term therapy with Aramchol in a large multicenter study to examine the efficacy in improving liver histology. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Annual follow up visits: Patients will be offered annual follow up visits if they choose to attend. At the annual follow up visit, subjects will undergo a detailed history and physicalexamination. Standardized questionnaires Skinner Lifetime Drinking History in addition to the Alcohol Use Disorders Identification Tests (AUDIT) will beused. A urine pregnancy test will be performed for all women of childbearing age. Women who have had hysterectomies are excluded from pregnancy testing.If the pregnancy test is positive, the patient will not be enrolled in the study. The patient will undergo full body DEXA scan, magnetic resonanceelastography, and a magnetic resonance imaging for liver stiffness calculation and hepatic fat fraction, respectively. Table I. Study designWeek04816Routine blood testsXXXXSerum/plasmaXXXXExtended blood testsX XXStooI/urine/DNAX XXPhysicalX XXDEXAX XOGTTX XMRI-PDFFX XMRE*X XAramchol VS placebo600mg/d600mg/d600mg/dStop*additional funding permitting Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Assessment of Response and Statistical Analyses The primary outcome of this study will be improvement in hepatic steatosis by liver MRI. Statistical analyses will compare liver fat improvement between thetreatments versus placebo- arms. It is not possible to predict what the spontaneous or therapeutic response rate will be. Thus, we predict that the spontaneousimprovement rate would be zero to less than 1%. The sample size is chosen to avoid exposure of a large number of patients to 16 weeks of therapy andextensive evaluation if the study medication has no effect, but also to avoid missing a reasonably significant beneficial effect. We will require a sample sizeof 22 patients in each arm to have a power 90% (or higher) with a p of 0.05. We expect that Aramchol therapy group would have at least 6% reduction in liverfat compared to baseline as compared to 1% or less improvement in the placebo group. These estimates are also based upon our recent trial using MRJ-PDFFas an accurate and reproducible marker of hepatic steatosis.12 We expect to enroll up to 55 patients in this study and randomize at least 50 of them to eithertreatment or placebo arm for a full 16 weeks with follow up evaluations. Clinical trials of experimental medications have had variable dropout rates. Our pilotstudies of metformin had less than 9% dropouts, and all remaining patients underwent follow up evaluation and liver biopsy. In the randomized-controlledtrial of colesevelam versus placebo, we had a 10% drop rate. Therefore, we expect less than a 10% drop out. Dropouts would be considered non-respondersbased upon intention to treat analysis. A modified intention to treat analysis will be done in which we will exclude the patients who dropped out beforegetting the week 16 exit evaluation. Secondary outcomes will be assessed comparing pre-treatment to 16-weeks outcomes on therapy using parametric or non-parametric tests as indicated. Themajor secondary outcomes to be evaluated are: 1.Total body fat via DEXA scan 2.Serum ALT and AST values. 3.Lipid profiles. We will compare the changes in the mean difference in the MRI-PDFF determined fat fraction between the treatment arm and the placebo arm at the co-localized region of interest. A two-tailed t-test would be utilized to compare the differences between the two groups. A two-tailed p- value of less than 0.05 isconsidered statistically significant. We will also conduct segment-to-segment changes in liver fat before and after treatment. We may perform internalvalidation by comparing MRI-PDFF with magnetic resonance spectroscopy between the two treatment arms in selected cases. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hazards and Discomforts 1. The risks and discomforts of frequent phlebotomy. To document changes in levels of biochemical markers of liver disease and to monitor themetabolic effects and toxicities of Aramchol, frequent blood sampling will be required. Patients will have between 15 to 20 venipunctures during the periodof evaluation, therapy and follow up. Each venipuncture will remove 15 to 70 ml of blood. However, no more than 6 ml/kg will be drawn from any oneperson during a four-week period. Blood collection by venipuncture is associated with mild discomfort, and the possibility of localized bruising, phlebitis, orextravasation. The risk of infection or fainting is extremely small. 2. The risks and discomforts of HIV testing. Patients will sign a standard consent for HIV testing for this study. 3. The risks and discomforts of other tests. a)MRI of abdomen and liver. Patients will undergo two MRI examinations of the liver during this study. Each session will be completed within 30minutes. While serial MRI scanning is thought to be safe, the procedure may cause anxiety in some patients since current equipment used at theClinical Center uses a closed tube. Patients will be offered sedatives such as Valium if they express worry about being in a closed space. b)MRE of abdomen and liver. MRE is a type of MR imaging where the images indicate tissue stiffness. MRE imaging involves placing a vibratingpaddle over the abdomen while images are being obtained. This is an FDA-approved procedure when used clinically, but is considered to beinvestigational in this study. These vibrations are generally well tolerated by patients, but the vibrating paddle could be uncomfortable to somesubjects. If so, subjects will be instructed to tell the MR technologist if the vibrations become uncomfortable and the MRE part of the examinationwill be discontinued. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. c)Oral glucose tolerance test (OGTT). There will be two OGTT’s during this protocol, one at the beginning and one after 16 weeks of treatment withAramchol. The purpose of this test is to assess insulin sensitivity, insulin secretion as well as free fatty acid metabolism. The patients will have anintravenous catheter placed in the arm and be given 75mg of glucose as an oral solution. Subjects occasionally complain of nausea and rarely mayvomit and there is a small risk of rebound hypoglycemia. Repeat blood draw will be done at 2 hours. Total amount of blood that will be drawn forglucose and insulin measurements during this test will be 100 to 120 ml. No more than 6 ml/kg of blood will be drawn from any one person during afour-week period. 5. Risks and hazards of Aramchol: Patient trials with Aramchol are limited to the Safadi study24, but the clinical trial demonstrated no significant adverse events in the 12-weektreatment period for 58 patients that underwent the trial. The few adverse events were mild (abdominal pain, back pain, constipation) and did not causeanyone to drop out of the trial. There were no severe adverse effects. The previous studies were done in animal models. Due to the paucity of clinical trials toevaluate side effects of Aramchol, we will encourage patients to notify staff of any adverse reactions and we will monitor patients via physical exams andlaboratory testing at regular intervals to ensure patient safety. Dosage modification and discontinuation of Aramchol: Patients will be monitored for side effects and the toxicity will be ranked as Grades 1 to 4. We will use the common toxicity criteria (CTC), version4.0, for scoring adverse events during therapy. Specific scoring of toxicity for the major safety parameters to be followed in this study is shown in Table II.The criteria for grading leukocytes, platelets, prothrombin time, partial thromboplastin time, bilirubin, ALT, and AST are modified slightly from the CTCversion 4.0 because these factors are likely to be abnormal before therapy in patients with chronic liver disease. An adverse event is defined as any adversechange from the patient’s baseline (pre-treatment) condition. These include current illness during the course of the study, regardless of the illness beingconsidered unrelated to treatment. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Dose modification of Aramchol: If any grade 2 adverse events (anemia, elevated serum CPK, hypoglycemia, decrease in serum bicarbonate,elevation in liver transaminases, elevation in bilirubin, anorexia, nausea, diarrhea) occur and persist on repeat testing for one week, Aramchol will be reducedfrom 600 mg daily to 300 mg daily and the patient will be closely monitored. If the adverse event resolves and in retrospect is not believed to be due toAramchol, the drug will be restarted at the dose of 600 mg daily. If the adverse event recurs or persists for 2 weeks despite this dose reduction, Aramchol willbe stopped. Discontinuation of Aramchol: In this study, discontinuation of Aramchol will be based upon the scoring of adverse events as shown in the tablebelow. Factors that will lead to discontinuation of Aramchol include pregnancy, any one of the grade 3 or 4 adverse events or any adverse event, which, inthe opinion of the investigator, places the patient at increased risk. Aramchol will not be restarted unless another cause for the abnormality or symptom isfound. Table II. Scoring of toxicity for dose modification Adverse events12345AllergicreactionTransient flushing orrash, drug fever <38degrees C (<100.4degreesF):intervention notindicatedIntervention orinfusioninterruptionindicated:respondspromptly tosymptomatictreatment (e.g.,antihistamines,NSAIDS,narcotics):prophylacticmedicationsindicated for<=24 hrsProlonged (e.g., not rapidlyresponsive to symptomaticmedication and/or briefinterruption of infusion);recurrence of symptomsfollowing initial improvement;hospitalization indicated forclinical sequelae (e.g.. renalimpairment, pulmonaryinfiltrates)Life threateningconsequences:urgentinterventionindicateDeathAnaphylaxis SymptomaticLife-threateningDeath Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. bronchospasm,with or withouturticaria;parenteralinterventionindicated; allergy-relatededema/angioedema;hypotenconsequences;urgentinterventionindicated AnorexiaLoss of appetitewithout alteration ineating habitsOral intake alteredwithout significantweight loss ormalnutrition; oralnutritionalsupplements indicatedAssociated with significantweight loss or malnutrition(e.g., inadequate oral caloricand/or fluid intake); tubefeeding or TPN indicatedLife-threateningconsequences;urgentinterventionindicatedDeathNauseaLoss of appetitewithout alteration ineating habitsOral intakedecreasedwithoutsignificantweight loss,dehydration ormalnutritionInadequate oral caloric or fluidintake; tube feeding, TPN, orhospitalization indicated--DiarrheaIncrease of <4 stoolsper day over baseline;mild increase inostomy outputcompared to baselineIncrease of 4 - 6 stoolsper day over baseline;moderate increase inostomy outputcompared to baselineIncrease of >=7 stools per dayover baseline; incontinence;hospitalization indicated;severe increase in ostomyoutput compared to baseline;limiting self care ADLLife-threateningconsequences;urgentinterventionindicatedDeathFatigueFatigue relieved byrestFatigue not relievedby rest; limitinginstrumental ADLFatigue not relieved by rest,limiting self care ADL--AnemiaHemoglobin (Hgb)18- Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Activatedpartialthromboplastin timeprolonged23.4 to 34.535.6 to 4242 to 50>50-Alkalinephosphatase(U/L)37-116117-250401 - 400401-600>600ALT(U/L)Baseline-<1.5 timesbaseline>200 and > 1.5 Xbaseline300-400 and > 2 x baseline401-800 and > 3xbaseline>800AST(U/L)Baseline-<1.5 timesbaseline>200 and >1.5 Xbaseline300-400 and > 2 x baseline401-800 and > 3xbaseline>800Total Bilirubin(mg/dL)0.1 to 11.1 to 1.5 and directbilirubin >0.51.5 to 5 and direct bilirubin >15.1 to 10>10Albumin(g/dL)ULN - 2.5 x ULN>2.5 x ULN - 5 x ULN>5 x ULN - 10 x ULN>10 x ULN-Glucose(mg/dL)0.3mg/dL;creatinine 1.5 - 2.0 xabove baselineCreatinine 2-3 x abovebaselineCreatinine >3 x baseline or>4.0 mg/dL; hospitalizationindicatedLife-threateningconsequences;dialysisindicateDeath Table II. Scoring of toxicity for dose modification. Scoring of toxicity from the CTC Version 4.0, with modifications for leukocytes, platelets, prothrombintime, partial thromboplastin time, ALT, AST and bilirubin. Normal ranges for values at UCSD center are used. Radiation Safety There are no radiation studies in this protocol. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Data and Safety Monitoring The principal and research coordinator of this protocol will monitor data and safety regularly at weekly meetings. These meetings are separate from regularclinical rounds and consist of review of all study patients including flow sheets of major safety and efficacy measurements. The rationale for not using anoutside data and safety monitoring committee is that this is a small, single center study using a medication that has been associated with few severe sideeffects. All measurements and tests are well established in clinical medicine. Yearly reports are made to the UCSD IRB regarding safety and efficacy. Adverse Event Reporting All serious adverse events will be reported to the UCSD IRB and Galmed Pharmaceuticals within 7 days. Unexpected and related fatal or life-threateningevents will be reported within 48 hours and reports will be sent to the FDA, MEDWATCH program (telephone 1-800-FDA-1088; or via the Internet atwww.fda.gov/medwatch/index.html and Galmed Pharmaceuticals. Informed Consents All consents will be stored in well-marked binders in locked file cabinets located in private offices at UCSD Medical center. Databases with identifyinginformation will be secure as they will be password protected and encrypted. Staff will be trained in HIPPA guidelines and confidentiality issues. Patient Privacy All data and study forms will be in secured locations (locked room or cabinet) and access is limited to study personnel. Subject names are not used; instead aname code is assigned upon enrollment. Release of data to persons or organizations outside study personnel will require written consent of the subject. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. MRI Findings: Liver MRI (Fat fraction) sequence does not provide detailed information regarding other organs within the abdomen cavity and is mainly dedicated to theliver. However, if there are any unexpected findings on the liver MRI, we would utilize following protocol to safeguard patient interest. A trained radiologistwill read all MRI images. All abnormal findings will be communicated to the PI by the radiologist. Dr. Loomba (PI) is a gastroenterologist and a transplanthepatologist at UCSD who routinely provides consultation and management recommendations to other services regarding abnormal imaging findings. Hewould clinically correlate the significance of any unexpected MRI findings. These findings will be discussed with the patient by the study investigator and afollow-up plan will be established and documented. If the patient desires, this information will be released to the referring physician or any provider or entitythat the patient would like us to send the information. The PI would be available to discuss the findings with the patient or their health care providers andassist in providing adequate follow-up. These abnormal findings would be systematically recorded and reported at yearly renewals and in the finalmanuscript. References1.Browning JD, Szczepaniak LS, Dobbins R, et al. Prevalence of hepatic steatosis in an urban population in the United States: impact of ethnicity.Hepatology 2004;40:1387-95.2.Zelber-Sagi S, Nitzan-Kaluski D, Halpern Z, et al. Prevalence of primary non-alcoholic fatty liver disease in a population-based study and itsassociation with biochemical and anthropometric measures. Liver Int 2006;26:856-63.3.Lazo M, Clark JM. The epidemiology of nonalcoholic fatty liver disease: a global perspective. Semin Liver Dis 2008;28:339-50.4.Loomba R, Sanyal AJ. The global NAFLD epidemic. Nat Rev Gastroenterol Hepatol 2013;10:686- 90.5.Loomba R, Abraham M, Unalp A, et al. Association between diabetes, family history of diabetes, and risk of nonalcoholic steatohepatitis and fibrosis.Hepatology 2012;56:943-51.6.Saadeh S, Younossi ZM, Remer EM, et al. The utility of radiological imaging in nonalcoholic fatty liver disease. Gastroenterology 2002;123:745-50.7.Kleiner DE, Brunt EM, Van Natta M, et al. Design and validation of a histological scoring system for nonalcoholic fatty liver disease. Hepatology2005;41:1313-21.8.el-Hassan AY, Ibrahim EM, al-Mulhim FA, et al. Fatty infiltration of the liver: analysis of prevalence, radiological and clinical features and influenceon patient management. Br J Radiol 1992;65:774-8.9.Venkatesh SK, Yin M, Ehman RL. Magnetic resonance elastography of liver: clinical applications. J Comput Assist Tomogr 2013;37:887-96.10.Kim D, Kim WR, Talwalkar JA, et al. Advanced fibrosis in nonalcoholic fatty liver disease: noninvasive assessment with MR elastography. Radiology2013;268:411-9. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 11.Tang A, Tan J, Sun M, et al. Nonalcoholic fatty liver disease: MR imaging of liver proton density fat fraction to assess hepatic steatosis. Radiology2013;267:422-31.12.Noureddin M, Lam J, Peterson MR, et al. Utility of magnetic resonance imaging versus histology for quantifying changes in liver fat in nonalcoholicfatty liver disease trials. Hepatology 2013;58:1930-40.13.Johnson BL, Schroeder ME, Wolfson T, et al. Effect of flip angle on the accuracy and repeatability of hepatic proton density fat fraction estimation bycomplex data-based, Tl-independent, T2*- corrected, spectrum-modeled MRI. J Magn Reson Imaging 2014;39:440-7.14.Hines CD, Frydrychowicz A, Hamilton G, et al. T(l) independent, T(2) (*) corrected chemical shift based fat-water separation with multi-peak fatspectral modeling is an accurate and precise measure of hepatic steatosis. J Magn Reson Imaging 2011;33:873-81.15.Meisamy S, Hines CD, Hamilton G, et al. Quantification of hepatic steatosis with Tl-independent, T2-corrected MR imaging with spectral modeling offat: blinded comparison with MR spectroscopy. Radiology 2011;258:767-75.16.Weber R, Sabin CA, Friis-Møller N, et al. Liver-related deaths in persons infected with the human immunodeficiency virus: the D:A:D study. ArchIntern Med 2006;166:1632-41.17.Dobrzyn A, Ntambi JM. Stearoyl-CoA desaturase as a new drug target for obesity treatment. Obes Rev 2005;6:169-74.18.Leikin-Frenkel A, Gonen A, Shaish A, et al. Fatty acid bile acid conjugate inhibits hepatic stearoyl coenzyme A desaturase and is non-atherogenic.Arch Med Res 2010;41:397-404.19.Gilat T, Somjen GJ, Mazur Y, et al. Fatty acid bile acid conjugates (FABACs)—new molecules for the prevention of cholesterol crystallisation in bile.Gut 2001;48:75-9.20.Konikoff FM, Leikin-Frenkel A, Goldiner I, et al. Biliary and systemic effects of fatty acid bile acid conjugates. Eur J Gastroenterol Hepatol2003;15:649-55.21.Goldiner I, van der Velde AE, Vandenberghe KE, et al. ABCAl-dependent but apoA-l- independent cholesterol efflux mediated by fatty acid-bile acidconjugates (FABACs). Biochem J 2006;396:529-36.22.Leikin-Frenkel A, Parini P, Konikoff FM, et al. Hypocholesterolemic effects of fatty acid bile acid conjugates (FABACs) in mice. Arch BiochemBiophys 2008;471:63-71.23.Gonen A, Shaish A, Leikin-Frenkel A, et al. Fatty acid bile acid conjugates inhibit atherosclerosis in the C57BL/6 mouse model. Pathobiology2002;70:215-8.24.Safadi R, Konikoff FM, Mahamid M, et al. The Fatty Acid-Bile Acid Conjugate Aramchol Reduces Liver Fat Content in Patients With NonalcoholicFatty Liver Disease. Clin Gastroenterol Hepatol 2014.25.Reeder SB, Cruite I, Hamilton G, et al. Quantitative assessment of liver fat with magnetic resonance imaging and spectroscopy. J Magn Reson Imaging2011;34:729-49.26.World Health Organization: Diabetes Mellitus: Report of a WHO study Group, Geneva, World Health Organization, 1985. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit B Payment Schedule The Parties agree that this Payment Schedule includes all Study-related costs, as referenced in the Protocol. Institution’s sole payee for all services under thisAgreement is The Regents of the University of California. Protocol Title:Aramchol Versus Placebo for the Treatment of HIV-associated NAFLDPrincipal Investigator:Dr. Rohit Loomba Payee Information: Checks shall be made payable to “The Regents of the University of California” and sent to the following address: The Regents of the University of CaliforniaUniversity of California-San DiegoCashier’s Office, Mail Code 00099500 Gilman DriveLa Jolla, CA 92093-0009 Payment Terms: •Initial Payment. Company will make a non-refundable start-up fee payment of US $170,343 within seven (7) days from the date of contractexecution. •Milestones. Company will pay Institution in accordance with the following milestones: 20% due when first patient randomized20% due when 50% of patients randomized20% due when all patients randomized10% due when the last patient finishes treatment10% due when the final report is submitted to Galmed If a Study subject discontinues from the Study for any reason, Company will pay for all payment-eligible Study visits completed by Study subject inaccordance with Exhibit C. •Tax. Should Institution be liable to pay value added tax (or any similar tax) with respect to any amount payable to it by Company hereunder, Companyshall pay Institution the sum of the value added tax imposed on the amount together with the payment thereof, provided that Institution suppliesCompany with appropriate documentation supporting such payment obligation. Company shall be entitled to withhold any amount due as tax or othercompulsory payments that applies or that shall apply to any payment due hereunder, if and to the extent required to do so by law, unless Institutionprovides Company with the required tax certificates indicating either exemption from such tax withholding or the percent of tax to be withheld. 16Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. •Final Payment. Final payment will be based on all work completed in accordance with the Protocol, non-cancelable obligations, if any, and any mutuallyagreeable costs associated with the phase-out of Study subjects, if any, including any withheld amounts earned for Study subject visits. In the event thatthe scheduled payments made by Company exceed the amount due hereunder, Institution will promptly refund any such excess to Company. •Payment Upon Termination: In the event this Agreement or Study is terminated prior to Institution’s completion of the Study, which is not due to abreach of this Agreement by Institution and/or Principal Investigator or their bankruptcy/insolvency, and/or is not terminated by Institution forconvenience, Company shall pay Institution for actual costs incurred in the performance of the Study up to the date of termination. •Screen Failures. Company will pay Institution for screening potential Study subjects who are not enrolled in the Study at the rate designated in theBudget, per screened and non-enrolled subject. Institution agrees to use reasonable efforts to select appropriate potential Study subjects to screen. •Unscheduled Visits. In accordance with the Protocol for those Study subjects who require a visit outside of the scheduled visits, Institution will bereimbursed at the rate designated in the Budget. •Full Remuneration. Neither Institution, nor the Principal Investigator, shall be entitled to any additional compensation and/or remuneration other than asexplicitly set forth in this Agreement, including any expenses incurred by any of them in the performance of their tasks pursuant to this Agreement. 17Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit C [Budget] 18Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THISEXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. UCSD PROPOSAL BUDGET FORM University of California - San Diego Cumulative Budget Cumulative Budget Period:From9/1/14Through8/31/19 UCSD#TBD Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Salaries [***] [***] [***] [***] [***] [***] Fringe Benefits 34,418 36,101 26,632 1,361 1,455 99,967 Tuition Remission - - - - - - Consultant(s) - - - - - - Patient Costs 98,000 98,000 49,000 - - 245,000 Supplies and Materials 3,000 3,000 3,000 - - 9,000 Travel 3,000 6,000 6,000 3,000 - 18,000 Subaward(s) - - - - - - Other Expenses 23,007 19,055 19,629 6,512 2,513 70,716 Total Direct Costs $[***] $[***] $[***] $[***] $[***] $[***] Total Indirect Costs $63,061 $63,883 $43,079 $3,748 $1,980 $175,750 Total Costs Requested $[***] $[***] $[***] $[***] $[***] $[***] Office of Contract and Grant Administration – 11/2018 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 11.1 GALMED PHARMACEUTICALS LTD. CODE OF BUSINESS CONDUCT AND ETHICS Introduction Purpose and Scope The Board of Directors (the “Board”) of Galmed Pharmaceuticals Ltd. (together with its subsidiaries, the “Company”) established this Code ofBusiness Conduct and Ethics (this “Code”) to put in place a system to aid the Company’s employees, officers and directors (the “Covered Persons”) inmaking ethical and legal decisions when conducting the Company’s business and performing their day-to-day duties and to ensure that the Companybecomes aware of and takes prompt action against any questionable behavior. Ethical behavior is required and expected of every Covered Person. Amongother things, this Code is designed and intended to: ·Promote honest and ethical conduct, including fair dealing and the ethical handling of actual or apparent conflicts of interest between personal andprofessional relationships; ·Promote full, fair, accurate, timely and understandable disclosure in reports and documents the Company files with, or submits or furnishes to, theU.S. Securities and Exchange Commission and other applicable governmental authorities, and in its other public communications; ·Promote compliance with applicable governmental laws, rules and regulations; ·Ensure the protection of the Company’s assets, including its intellectual property, and legitimate business interests; ·Deter wrongdoing; ·Promote the prompt internal reporting of violations of this Code to the appropriate person at the Company as identified herein; and ·Promote accountability for adherence to this Code. The Board or a committee of the Board is responsible for administering this Code. The Board has delegated day-to-day responsibility foradministering and interpreting this Code to the Company’s General Counsel to act as the Company’s Compliance Officer (the “Compliance Officer”) underthis Code. The Company expects each Covered Person to exercise reasonable judgment when conducting the Company’s business. The Company encourageseach Covered Person to refer to this Code frequently to ensure that he or she is acting within both the letter and the spirit of this Code. The Company alsounderstands that this Code will not contain the answer to every situation you may encounter or every concern you may have about conducting theCompany’s business ethically and legally. In these situations, or if you otherwise have questions or concerns about this Code, the Company encourages eachCovered Person to speak with his or her supervisor (if applicable) or, if you are uncomfortable doing that, with the Compliance Officer under this Code. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If a law conflicts with a policy in this Code, you must comply with the law; however, if you have any questions about any such conflict, you shouldask your supervisor or the Compliance Officer how to handle the situation. Contents of this Code This Code has two sections which follow this Introduction. The first section, “Standards of Conduct”, contains the actual guidelines that eachCovered Person is expected to adhere to in the conduct of the Company’s business. The second section, “Compliance Procedures”, contains specificinformation about how this Code functions, including who administers this Code, who can provide guidance under this Code and how violations may bereported, investigated and punished. This second section also contains a discussion about waivers of and amendments to this Code. A Note About Other Obligations Each Covered Person generally has other legal and contractual obligations to the Company. This Code is not intended to reduce or limit the otherobligations that you may have to the Company. Instead, the standards in this Code should be viewed as the minimum standards that the Company expectsfrom each Covered Person in the conduct of the Company’s business. Standards of Conduct Conflicts of Interest The Company recognizes and respects the right of Covered Persons to engage in outside activities which they may deem proper and desirable,provided that these activities do not impair or interfere with the performance of their duties to the Company or their ability to act in the Company’s bestinterests. In most, if not all, cases this will mean that Covered Persons must avoid situations that present a potential, apparent or actual conflict between theirpersonal interests and the Company’s interests. A “conflict of interest” occurs when a Covered Person’s personal interest interferes with the Company’s interests. Conflicts of interest may arise inmany situations. For example, conflicts of interest can arise when a Covered Person takes an action or has an outside interest, responsibility or obligation thatmay make it difficult for him or her to perform the responsibilities of his or her position objectively and/or effectively in the Company’s best interests.Conflicts of interest may also occur when a Covered Person or his or her immediate family member receives some personal benefit (whether improper or not)as a result of the Covered Person’s position with the Company. Each individual’s situation is different and in evaluating his or her own situation, a CoveredPerson will have to consider many factors. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Loans to, or guarantees of obligations of, Covered Persons or their family members may create conflicts of interest. It is almost always a conflict ofinterest for a Covered Person to work or provide services simultaneously for a competitor, customer or supplier. If you are unsure whether working orproviding services simultaneously for a competitor, customer or supplier creates a conflict of interest, please consult with the Compliance Officer. Any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest should be reported promptly to theCompliance Officer. The Compliance Officer may notify the Board or a committee thereof as he or she deems appropriate. The provisions of this Code in no way derogate from the provisions of any applicable laws. Directors and officers of the Company owe a duty ofloyalty to the Company and they should familiarize themselves with the nature and extent of this duty, as well as with the disclosure requirements underapplicable law which apply to them and with the process of approving transactions between them and the Company or in which they have a personal interest.The requirements and provisions of applicable law, including, without limitation, the Israeli Companies Law, on these matters are separate and are not part ofthis Code. Compliance with Laws, Rules and Regulations The Company seeks to conduct its business in compliance with applicable laws, rules and regulations in the jurisdictions in which the Companyconducts business. No Covered Person shall engage in any unlawful activity in conducting the Company’s business or in performing his or her day-to-daycompany duties, nor shall any Covered Person instruct others to do so. To maintain the Company’s valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics,quality requires that our products and services will be designed and manufactured to meet our obligations to customers in the future. All inspection andtesting documents must be handled in accordance with all applicable regulations. Licensure and Certification Covered Persons and other healthcare professionals and facilities retained by the Company in positions which require professional licenses,certifications or other credentials are responsible for maintaining the current status of their licenses, certifications and credentials and shall comply at alltimes with governmental requirements applicable to them . To ensure compliance, the Company may require evidence of the individual or facility having acurrent license or credential status. The Company does not allow any Covered Person or other healthcare professional or facility to work or provide services without valid, currentlicenses or credentials, or to otherwise provide services unless fully authorized to do so by law. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Protection and Proper Use of the Company’s Assets Loss, theft and misuse of the Company’s assets has a direct impact on the Company’s business and its profitability. Covered Persons are expected toprotect the Company’s tangible and intangible assets, including, without limitation, its owned and licensed intellectual property, that are entrusted to themand to protect the Company’s assets in general. Covered Persons are also expected to take steps to ensure that the Company’s assets are used only forlegitimate business purposes and in compliance with all applicable laws. Corporate Opportunities Covered Persons owe a duty to the Company to advance its legitimate business interests when the opportunity to do so arises. Each Covered Personis prohibited from: ·diverting to himself or herself or to others any opportunities that are discovered through the use of the Company’s assets, property orinformation or as a result of his or her position with the Company, unless such opportunity has first been presented to, and rejected by, theCompany; ·using the Company’s assets, property or information or his or her position for improper personal gain; and ·competing with the Company. Confidentiality Confidential Information generated and gathered in the Company’s business plays a vital role in its business, prospects and ability to compete.“Confidential Information” includes all non-public information that might be of use to competitors or harmful to the Company or its customers if disclosed.Covered Persons may not disclose or distribute the Company’s Confidential Information, except when disclosure is authorized by the Company or requiredby applicable law, rule or regulation or pursuant to an applicable legal proceeding. Covered Persons shall use Confidential Information solely for legitimatecompany purposes. Covered Persons must return all of the Company’s Confidential Information and proprietary information in their possession to theCompany when they cease to be employed or engaged by or to otherwise serve the Company. To the extent more restrictive than the foregoing, theconfidentiality provisions contained herein shall in no way derogate from the provisions and obligations of any Covered Person contained in any restrictivecovenant or confidentiality agreement to which such Covered Person is a party. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Competition and Fair Dealing Competing vigorously, yet lawfully, with competitors and establishing advantageous, but fair, business relationships with customers and suppliers isa part of the foundation for long-term success. However, unlawful and unethical conduct, which may lead to short-term gains, may damage a company’sreputation and long-term business prospects. Accordingly, it is the Company’s policy that Covered Persons must endeavor to deal ethically and lawfully withthe Company’s customers, clinical trial participants, suppliers, competitors and employees in all business dealings on the Company’s behalf. Stealingproprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or presentemployees of other companies is prohibited. No Covered Person should take unfair advantage of another person in business dealings on the Company’sbehalf through the abuse of privileged or confidential information or through improper manipulation, concealment or misrepresentation of material facts orotherwise. Accuracy of Records The integrity, reliability and accuracy in all material respects of the Company’s books, records and financial statements is fundamental to theCompany’s continued and future business success. No Covered Person may cause the Company to enter into a transaction with the intent to document orrecord it in a deceptive or unlawful manner. In addition, no Covered Person may create any false or artificial documentation or book entry for any transactionentered into by the Company. Similarly, Covered Persons who have responsibility for accounting and financial reporting matters have a responsibility toaccurately record all funds, assets and transactions on the Company’s books and records. Covered Persons are prohibited from directly or indirectly taking any action to fraudulently influence, coerce, manipulate or mislead the Company’sindependent auditors for the purpose of rendering the financial statements of the Company misleading. Quality of Public Disclosures The Company is committed to providing its shareholders with complete and accurate information about its financial condition and results ofoperations as required by the securities laws of the United States. It is the Company’s policy that the reports and documents it files with or submits to the U.S.Securities and Exchange Commission, and its earnings releases and similar public communications made by the Company, include fair, timely andunderstandable disclosure. Covered Persons who are responsible for these filings and disclosures, including the Company’s principal executive, financial andaccounting officers, must use reasonable judgment and perform their responsibilities honestly, ethically and objectively to ensure that this disclosure policyis fulfilled. The Company’s senior management are primarily responsible for monitoring the Company’s public disclosure. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Insider Trading In the course of a Covered Person’s service for or employment with the Company, such Covered Person is likely to use or have access to informationabout the Company that is not generally available to the public. Because of such relationship with the Company, Covered Persons have certainresponsibilities under the U.S. federal securities laws with respect to inside information. The Company has set forth in its Policy Statement on InsideInformation and Insider Trading (the “Insider Trading Policy”) its policies regarding the protection of “inside information” and trading and “tipping” (eachas defined in the Insider Trading Policy), as well as the expected standards of conduct of the Company’s directors, “management insiders”, “financialinsiders”, “systems insiders”, or “other insiders” (each as defined in the Insider Trading Policy) with respect to these highly sensitive matters. The Company’sInsider Trading Policy is not a part of this Code. However, any Covered Person who is uncertain about the legal rules involving a purchase or sale of anyCompany securities or any securities in companies with which he or she is familiar by virtue of his or her work for the Company or whether the InsiderTrading Policy applies to him or her, should consult with the Company’s General Counsel and review the same, a copy of which may be obtained from theCompany’s General Counsel. Bribes, Kickbacks and Other Improper Payments The Company does not permit or condone bribes, kickbacks or other improper payments, transfers or receipts. No Covered Person should offer, give,solicit or receive any money or other item of value for the purpose of obtaining, retaining or directing business or bestowing or receiving any kind of favoredtreatment. In particular, the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) prohibits any U.S. individual or business from authorizing, offering orpaying money or anything of value, directly or indirectly, to any foreign official or employee, political party, or candidate for public office for the purpose ofobtaining or maintaining business or for any other business advantage. The Company strictly prohibits making illegal payments to government officials,employees, parties or candidates for office of any country. Violation of applicable law, including, without limitation, the FCPA, could subject the Companyand the Covered Persons to serious fines and criminal penalties. Discrimination and Harassment The diversity of the Company’s employees and consultants is a tremendous asset. We are firmly committed to providing equal opportunity in allaspects of employment and service and will not tolerate any illegal discrimination or harassment or any kind. Health and Safety The Company strives to provide each Covered Person with a safe and healthful work environment. Each Covered Person has responsibility formaintaining a safe and healthy workplace for all Covered Persons by following safety and health rules and practices and reporting accidents, injuries andunsafe equipment, practices or conditions. Violence and threatening behavior are not permitted. Covered Persons should report to work in a condition to perform their duties, free from theinfluence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Compliance Procedures The Compliance Procedures contained herein provide, among other things, an enforcement mechanism that is intended to ensure prompt andconsistent enforcement of this Code, protection for persons reporting questionable behavior, clear and objective standards for compliance and a fair processby which to determine violations. Communication of Code All Covered Persons will be supplied with a copy of this Code upon beginning service at the Company and will be asked to review and sign anacknowledgment regarding this Code on a periodic basis. Updates of this Code will be provided from time to time. A copy of this Code is also available to allCovered Persons by requesting one from the Compliance Officer or by accessing the Company’s website at http://www.galmedpharma.com/ Monitoring Compliance and Disciplinary Action The Company’s management, under the supervision of the Board or a committee thereof or, in the case of accounting, internal accounting controls,auditing or securities law matters, the Audit Committee of the Board (the “Audit Committee”), shall take reasonable steps from time to time to (i) monitorcompliance with this Code and (ii) when appropriate, impose and enforce appropriate disciplinary measures for violations of this Code. Disciplinary measures for violations of this Code will be determined in the Company’s sole discretion and may include, but are not limited to,counseling, oral or written reprimands, warnings, probation or suspension with or without pay, demotions, reductions in salary, termination of employment orservice, and restitution. The Company’s management shall periodically report to the Board or a committee thereof on these compliance efforts including, without limitation,periodic reporting of alleged violations of this Code and the actions taken with respect to any such violation. Reporting Concerns/Receiving Advice Communication Channels Be Proactive. Reporting of questionable behavior is protected and encouraged, and fosters an atmosphere of self-awareness and prudent conduct.Every Covered Person is expected to act proactively by asking questions, seeking guidance and reporting suspected violations of this Code and otherpolicies and procedures of the Company, as well as any violation or suspected violation of applicable law, rule or regulation arising in the conduct of theCompany’s business or occurring on the Company’s property. If any Covered Person believes that actions have taken place, may be taking place, or maybe about to take place that violate or would violate this Code or any law, rule or regulation applicable to the Company, he or she must bring the matterto the attention of the Company. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Seeking Guidance. The best starting point for a Covered Person seeking advice on ethics-related issues or reporting potential violations of this Codewill usually be his or her supervisor, but may be the Compliance Officer. However, if the conduct in question involves his or her supervisor, if the CoveredPerson has reported the conduct in question to his or her supervisor and does not believe that he or she has dealt with it properly, or if the Covered Persondoes not feel that he or she can discuss the matter with his or her supervisor, the Covered Person may raise the matter with the Compliance Officer. Communication Alternatives. Any Covered Person may communicate any concerns or questions, including any potential violations of this Code,any Company policy or procedure or applicable law, rule or regulation, with the Compliance Officer by any of the following methods: •In writing (which may be done anonymously as set forth below under “Reporting; Anonymity; Retaliation”), addressed to theCompliance Officer, by mail to c/o: Galmed Pharmaceuticals Ltd., 8 Shaul Ha'melech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel64733. or •By e-mail to: ethics@galmedpharma.com Reporting Accounting and Similar Concerns. Any concerns or questions regarding any potential violations of this Code, any company policy orprocedure or applicable law, rules or regulations that specifically involves accounting, internal accounting controls, auditing or related or similar mattersshould be directed to both the Compliance Officer and the Audit Committee or a designee of the Audit Committee in the same manners as set forth above. Cooperation. Covered Persons are expected to cooperate with the Company in any investigation of a potential violation of this Code, any otherCompany policy or procedure, or any applicable law, rule or regulation. Misuse of Reporting Channels. Covered Persons must not use these reporting channels in bad faith or in a false or frivolous manner. Furthermore,Covered Persons should not use the off-site voicemail account to report grievances that do not involve this Code or other ethics-related issues. Reporting; Anonymity; Retaliation When reporting suspected violations of this Code, the Company prefers that Covered Persons identify themselves to facilitate the Company’s abilityto take appropriate steps to address the report, including conducting any appropriate investigation. However, the Company also recognizes that some peoplemay feel more comfortable reporting a suspected violation anonymously. If a Covered Person wishes to remain anonymous, he or she may do so, and the Company will use reasonable efforts to protect the confidentiality ofthe reporting person subject to applicable law, rule or regulation or to any applicable legal proceedings. In the event the report is made anonymously,however, the Company may not have sufficient information to look into or otherwise investigate or evaluate the allegations. Accordingly, persons who makereports anonymously should provide as much detail as is reasonably necessary to permit the Company to evaluate the matter(s) set forth in the anonymousreport and, if appropriate, commence and conduct an appropriate investigation. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. No Retaliation The Company expressly forbids any retaliation against any Covered Person who, acting in good faith on the basis of a reasonable belief, reportssuspected misconduct. Specifically, the Company will not discharge, demote, suspend, threaten, harass or in any other manner discriminate against, such aCovered Person in the terms and conditions of his or her employment or service. Any person who participates in any such retaliation will be subject todisciplinary action, including termination. Waivers and Amendments No waiver of any provision of this Code for the benefit of a director or an executive officer (which includes without limitation, for purposes of thisCode, the Company’s principal executive, financial and accounting officers) shall be effective unless (i) approved by the Board and (ii) such waiver and thereason(s) for such waiver are promptly disclosed to the Company’s shareholders in accordance with applicable U.S. securities laws and/or the rules andregulations of the exchange or system on which the Company’s shares are traded or quoted, as the case may be. This disclosure requirement is intended toprovide our shareholders with the comfort that waivers are not granted except where they are truly necessary and warranted, and that they are limited andqualified so as to protect the Company and its shareholders to the greatest extent possible. Any waivers of this Code for other Covered Persons may be made by the Compliance Officer, the Board or, if permitted, a committee thereof. All amendments to this Code must be approved by the Board or a committee thereof and, if applicable, must be promptly disclosed to theCompany’s shareholders in accordance with applicable U.S. securities laws and/or the rules and regulations of the exchange or system on which theCompany’s shares are traded or quoted, as the case may be. ADOPTED BY THE BOARD OF DIRECTORS: March 30, 2015 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 12.1 CERTIFICATION I, Allen Baharaff, certify that: 1. I have reviewed this Annual Report on Form 20-F of Galmed Pharmaceuticals Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting. By: /s/ Allen Baharaff Allen Baharaff President and Chief Executive Officer Date: March 31, 2015 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 12.2 CERTIFICATION I, Josh Blacher, certify that: 1. I have reviewed this Annual Report on Form 20-F of Galmed Pharmaceuticals Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting. By: /s/ Josh Blacher Josh Blacher Chief Financial Officer Date: March 31, 2015 Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 13.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Galmed Pharmaceuticals Ltd. (the “Company”) on Form 20-F for the period ending December 31, 2014, as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. By:/s/ Allen Baharaff Allen Baharaff President and Chief Executive Officer By:/s/ Josh Blacher Josh Blacher Chief Financial Officer Date: March 31, 2015 The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed aspart of the Annual Report on Form 20-F for the period ended December 31, 2014, or as a separate disclosure document of the Company or the certifyingofficers. Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: Galmed Pharmaceuticals Ltd., 20-F, March 31, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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