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Iterum Therapeutics plcMorningstar® Document Research℠ FORM 20-FGalmed Pharmaceuticals Ltd. - GLMDFiled: March 22, 2016 (period: December 31, 2015)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 1934OrxxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015Or¨¨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) 16 Ze’ev Tiomkin Street, Tel Aviv, Israel 6578317(Address of principal executive offices) Allen BaharaffPresident and Chief Executive Officer16 Ze’ev Tiomkin StreetTel Aviv, Israel 6578317Tel: +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 class Name of each exchange on which registeredOrdinary shares, par value NIS 0.01per 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 x 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 x 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 x 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 x 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 x Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP xInternational Financial Reporting StandardsOther ¨as issued by the International Accounting Standards Board ¨ 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 ¨ Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 x (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) 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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 Company44ITEM 4A. Unresolved Staff Comments80ITEM 5. Operating and Financial Review and Prospects80ITEM 6. Directors, Senior Management and Employees89ITEM 7. Major Shareholders and Related Party Transactions112ITEM 8. Financial Information113ITEM 9. The Offer and Listing114ITEM 10. Additional Information115ITEM 11. Quantitative and Qualitative Disclosures About Market Risk133ITEM 12. Description of Securities Other Than Equity Securities134 PART II135ITEM 13. Defaults, Dividend Arrearages and Delinquencies135ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds135ITEM 15. Controls and Procedures136ITEM 16. [RESERVED]136ITEM 16A. Audit Committee Financial Expert136ITEM 16B. Code of Ethics136ITEM 16C. Principal Accountant Fees and Services137ITEM 16D. Exemptions from the Listing Standards for Audit Committees138ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers138ITEM 16F. Change in Registrant’s Certifying Accountant138ITEM 16G. Corporate Governance138ITEM 16H. Mine Safety Disclosure139 PART III140ITEM 17. Financial Statements140ITEM 18. Financial Statements140ITEM 19. Exhibits141 2Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 U.S. 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: ·the timing and cost of our ongoing Phase IIB ARREST Study and planned Phase III trials, for our product candidate, AramcholTM(hereinafter referred to as “Aramchol”) for the treatment of patients with overweight or obesity and who are pre diabetic or type II diabetic(hereinafter OD patients) with Non-Alcoholic Steato-Hepatitis, or NASH, or whether such trials will be conducted at all; ·completion and receiving favorable results of these Phase IIB and Phase III trials for Aramchol; ·regulatory action with respect to Aramchol by the U.S. Food and Drug Administration, or FDA, or the European Medicines Authority, orEMA, including but not limited to acceptance of an application for marketing authorization, review and approval of such application, and,if approved, the scope of the approved indication and labeling; ·the commercial launch and future sales of Aramchol or any other future products or product candidates; ·our ability to comply with all applicable post-market regulatory requirements for Aramchol in the countries in which we seek to market theproduct; ·our ability to achieve favorable pricing for Aramchol; ·our expectations regarding the commercial market for NASH in OD patients; 3Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·third-party payor reimbursement for Aramchol; ·our estimates regarding anticipated capital requirements and our needs for additional financing; ·market adoption of Aramchol by physicians and patients; ·the timing, cost or other aspects of the commercial launch of Aramchol; ·the development and approval of the use of Aramchol for additional indications or in combination therapy; and ·our expectations regarding licensing, acquisitions and strategic operations. We believe these forward-looking statements are reasonable; however, these statements are only current predictions and are subject to known 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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015, 2014, 2013, 2012 and 2011, asapplicable, from our audited consolidated financial statements included elsewhere in this Annual Report on Form 20-F. Year ended December 31, 2011 2012 2013 2014 2015 (in thousands) Research and development expenses $1,326 $2,443 $7,207 $6,664 $7,629 General and administrative expenses 151 694 7,355 2,478 3,246 Capital Loss — — 10 — — Operating loss 1,477 3,137 14,572 9,142 10,875 Financial expenses 3 6 2,912 10 180 Financial Income — — — (50) (433)Taxes on income 2 6 1 1 — Net loss $1,482 $3,149 $17,485 $9,103 $10,622 Comprehensive loss 1,482 3,149 17,485 9,099 10,832 Net loss per ordinary share (*)$0.30 (*)$0.63 (*)$3.45 (*)$0.88 $0.96 Number of ordinary shares used in computing loss perordinary share (*)4,995,837 (*)4,995,837 (*)5,096,466 (*)10,323,686 11,101,453 (*) 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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 2015 (In thousands) Cash and cash equivalents $718 $137 $23,736 $4,156 Short-term deposits and marketable securities — — 8,250 18,845 Other receivables 14 16 165 379 Fixed assets 30 13 774 883 Total assets 762 166 32,925 24,263 Total liabilities 2,741 2,117 1,518 2,718 Total shareholders’ equity (1,979) (1,951) 31,407 21,545 Number of ordinary shares issued and outstanding 4,995,837(*) 7,099,731(*) 11,100,453 11,100,453 (*) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization (as defined below). Exchange Rate Galmed reports its financial results and balance sheet position in U.S. dollars. On March 10, 2016, the latest practicable date for inclusion in thisreport, the exchange rate between New Israeli Sheckels and U.S. dollars as published by the Bank of Israel was 3.90 NIS. The average exchange rates for each of the five most recent fiscal years, calculated by using the average of the exchange rates on the last day of eachmonth during the period, are set forth below: 2015 2014 2013 2012 2011 Average 1 US $ = NIS 3.88 3.58 3.61 3.71 3.67 The high and low exchange rates for each month during the previous six months are set forth below: September 2015 October 2015 November 2015 December 2015 January 2016 February 2016 High 1 US $ = NIS 3.95 3.92 3.92 3.91 3.98 3.96 Low 1 US $ = NIS 3.86 3.82 3.87 3.86 3.91 3.87 B. Capitalization and Indebtedness. Not applicable. C. Reasons for the Offer and Use of Proceeds. Not applicable. 6Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 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 significant additional losses in the future andmay never be profitable. 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, 2014 and 2015 wasapproximately $9.1 million and $10.6 million, respectively. As of December 31, 2015, we had an accumulated deficit of $47.4 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 productcandidate. We do not know when, or if, we will generate any revenue. We do not expect to generate revenue unless and until we, or an ultimate third-partylicensor or acquirer, obtain regulatory and marketing approval of, and commercialize, Aramchol, or any other product candidate. We will continue to incurresearch and development and general and administrative expenses related to our operations. We expect to continue to incur losses for the foreseeable future,which may be significant, 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; ·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; 7Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·contract for the manufacture of commercial quantities of Aramchol by a cGMP compliant manufacturing facility at acceptable cost levels ifmarketing 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 in OD patients, or for any other indications, it may not gain marketacceptance or achieve commercial success. In addition, we anticipate incurring significant costs associated with seeking regulatory approval andcommercialization. We may not achieve profitability soon after generating product revenue, if ever. If we are unable to generate product revenue, we will notbecome profitable and would be unable 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 and opt to commercialize it ourselves, we will likely initially incursignificant expenses associated with outsourcing sales, marketing and manufacturing functions to third parties, as well as continued research anddevelopment expenses. Furthermore, we expect to incur additional costs associated with operating as a public company. As a result, we expect to continue toincur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developingpharmaceutical products, we are unable to predict the extent of any future losses 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 for these products will depend on a number of factors, including: ·the timing and scope of regulatory approvals in the countries we intend to pursue with respect to the commercialization of our productcandidates, including the indications for which they are approved; ·the competitive environment; ·the ability for our products to be manufactured, whether by us or third parties, in compliance with applicable regulatory requirements,including cGMP; ·our ability to effectively promote our products, whether directly or using third parties, consistent with the approved indications andlabeling in the countries in which we intend to pursue approval; ·the acceptance by the medical community of the safety and clinical efficacy of our products and their potential advantages over othertherapeutic products; 8Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 development of a non-invasive method for diagnosing NASH as an alternative to the current gold standard of liver biopsy, which weview as a rate-limiting factor to complete market uptake because of its expense and its risks and discomfort to patients; ·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. We will likely need to raise substantialadditional capital to fund our operations and to develop Aramchol for, and beyond its current development stage for the NASH indication, as well asadditional indications, and ultimately commercialize it, if we choose to do so, for NASH or any other indication. In addition, we may choose to expand ourcurrent research and development focus, or other clinical operations, which may also require additional capital. As of December 31, 2015, we had a networking capital of $20.8 million, cash and cash equivalents of $4.2 million and marketable securities of $18.8 million. Our future capital requirements maybe substantial and will depend on many factors including: ·adhering to patient recruitment in the our ongoing ARREST Study, based on our current estimation; ·our clinical trial results; ·exploration of the possibility to develop Aramchol for the treatment of other conditions or indications beyond those being explored in theARREST Study and the ARamchol for the Reversal of HIV-AssociatEd lipodystrophy and NAFLD (ARRIVE) Study, or possible labelexpansion of Aramchol 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, and choose to commercialize Aramchol ourselves,including the cost and timing of establishing external, and potentially in the future, internal, sales and marketing capabilities to market andsell Aramchol; ·subject to receipt of marketing approval, revenue received from sales of approved products, if any, in the future; ·the costs associated with any product liability or other lawsuits related to our future product candidates or products, if any; ·the costs associated with post-market compliance with regulatory requirements, and of addressing any allegations of non-compliance byregulatory authorities in countries where we plan to market and sell Aramchol; 9Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. We believe these funds will enable us to complete any preparatory clinical and non-clinical work, as well as our ARREST Study, assuming that we adhere to patient recruitment based on our current estimation. We will require significantadditional funds to initiate and complete additional clinical trials, including but not limited to a possible Phase III pivotal trial for the treatment of ODpatients with NASH, and the FDA and EMA approval processes. However, changing circumstances may cause us to consume capital significantly faster thanwe currently anticipate, such as losing our Small and Medium Enterprise status at the EMA, which entitles us to significant fee reductions. Because there arenumerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amount ofincreased capital outlays and operating expenditures associated with our anticipated clinical trials. 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 are favorable to us and additional financing may causesignificant dilution to our existing shareholders. If adequate funds are not available to us on a timely basis, or at all, we may be required to terminate or delayplanned 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 or desire may not be available on terms favorable to us, or at all. If we obtain funding through astrategic collaboration or licensing arrangement, we may be required to relinquish our rights to certain of our technologies, products or marketing territories.If we are unable 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 tocontinue operating 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 existing and future clinical trials; 10Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 trials, 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 candidates; ·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; ·the costs associated with contracting with third parties to manufacture the product and to perform other necessary services; ·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. 11Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, costlyand uncertain as to its outcome. The research, testing, clinical trials, manufacturing, labeling, approval, sale, marketing and distribution of drugs are subject to extensive regulationby the FDA and other regulatory agencies in other countries. These regulations differ from jurisdiction to jurisdiction. We have not received marketingapproval for Aramchol in any jurisdiction. We are not permitted to market Aramchol, or any other product candidate, in the United States until we receiveapproval of a New Drug Application, or NDA, from the FDA, or in any foreign countries until we receive the requisite approval from the respective regulatoryagencies in such countries. We are currently in the midst of conducting the Phase IIB ARREST Study and have not yet begun any pivotal study of Aramchol,We have not received regulatory authorization to conduct the clinical trials that are necessary to file an NDA with the FDA or comparable applications toother regulatory authorities in other countries. The results of clinical trials may be unsatisfactory, and even if we believe those clinical trials to be successful,the FDA, or other regulatory authorities, may not grant marketing authorization should we be in a position to request it. The requirements and length of time for approval vary in different jurisdictions and could involve additional studies of Aramchol beyond those wecurrently anticipate. The time required to obtain approval in other countries might differ from that required to obtain FDA approval in the United States. Themarketing approval process in other countries may include all of the risks detailed above regarding FDA approval as well as other risks. In particular, in manycountries outside the United States, it is required that a product receive pricing and reimbursement approval before the product can be commercialized. Thiscan result in substantial delays in such countries. In other countries, product approval depends on showing superiority to an approved therapy. This can resultin significant expense to conduct 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 generateproduct revenues. Upon the completion of any clinical trial, the results might not support the desired indications for use. Further, success in earlier clinical trials doesnot ensure that later clinical trials will be successful, and the results of later clinical trials may not replicate the results of prior clinical trials or preclinicaltesting. The clinical trial process may fail to demonstrate that Aramchol is safe and effective for the indications we seek. 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 desired indications, the completion of development of such product candidate may be significantly delayedor abandoned, which will significantly impair our ability to generate revenues and will materially adversely affect our results of operations. 12Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 or 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 that any product candidate that we develop based on acquired or in-licensedtechnology 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 complete or commence 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 authorities 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 trials will be successful. On the contrary, most candidate drugs thatbegin clinical trials do not prove to be successful and do not result in the filing of an NDA, MAA or similar filing. Drug candidates that successfully completeone phase of clinical trials may prove unsuccessful at a subsequent phase. Human clinical trials are very expensive and difficult to design and implement, inpart because 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 permitted toproceed. Additionally, the clinical trial process is time-consuming, and failure can occur at any stage of the trials. We may encounter problems that cause usto abandon or repeat clinical trials. The commencement and completion of clinical trials may be delayed by several factors, including: ·difficulties obtaining regulatory authorization to commence a clinical trial or complying with regulatory requirements for clinical trials orwith the conditions imposed by a regulatory authority 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 designate Aramchol as a Breakthrough Therapy, a designation that could, among otherbenefits, expedite the conduct of clinical trials; 13Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·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. The ARREST Study may also be delayed or terminated as a result of, but not limited to, inadequate recruitment rate or speed thereof or safetysignals. In addition, the ARREST Study or other clinical trials may be suspended or terminated by us, the FDA or other regulatory authorities, the principalinvestigator at a site, the IRBs at the sites where such boards are overseeing a trial or the data safety monitoring board, or DSMB, that is overseeing theclinical 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, in particular good clinical practice requirements, or GCP, or the FDA-authorized clinical protocols; ·negative findings upon 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. To date, we have already experienced material delays in the ARREST Study largely related to slower than expected recruitment and the length oftime required to obtain regulatory authorizations to proceed with clinical trials, as well as the termination of a Phase IIA trial of Aramchol for the treatmentand dissolution of cholesterol gallstones. We may experience further delays, and there can be no assurance that we will not experience such risks in the futureas we progress with our planned clinical trials. Furthermore, positive results in previous clinical studies of Aramchol may not be predictive of similar results in future clinical trials. Also, interimresults, if at all, during a clinical trial do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industrieshave suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results fromthe completed preclinical studies and clinical trials for Aramchol may not be predictive of the results we may obtain in later stage trials. Our clinical trialsmay produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials. Moreover, clinical dataare often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily inpreclinical and clinical studies 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. The 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,if ever commercialized. Liver biopsy is the standard approach for the diagnosis of inflammation and fibrosis associated with NASH. However, the procedure-relatedmorbidity, sample errors, costs, patient discomfort and thus lack of patient interest in undergoing the procedure limit its use. As such, only patients with ahigh risk of NASH, which includes patients with metabolic syndrome and an indication of Non-Alcoholic Fatty Liver Disease, or NAFLD, are generally sentfor liver biopsy. Because NASH tends to be asymptomatic until the disease progresses, many individuals with NASH go undiagnosed until the disease hasreached its late stages. The lack of a reliable non-invasive method for the diagnosis of NASH is likely to present a major challenge to Aramchol’s marketpenetration, as many practitioners and patients may not be aware that a patient suffers from NASH and requires treatment. As such, use of Aramchol might notbe as wide-spread as our actual target market and this may limit the commercial potential of Aramchol. 14Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. While we, and other companies in the industry, are currently working on advancing non-invasive diagnostic approaches, none of these has beenclinically validated, and the timetable for commercial validation, if at all, is uncertain. Moreover, such diagnostics may also be subject to regulation by FDAor other regulatory authorities as medical devices and may require premarket clearance or approval. 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 treatmentof NASH in OD patients or for any other indication; ·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 thatAramchol’s clinical 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, or REMS, as a condition ofapproval; ·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; 15Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. Before we can submit an NDA to the FDA or a similar approval application to other regulatory authorities, as applicable, we must complete theongoing ARREST Study and conduct one or more Phase III clinical trials that will be substantially broader than our Phase IIB trial. We will also need to agreeon a protocol with the FDA for any Phase III clinical trial before commencing that trial in the United States. Clinical trials frequently produce unsatisfactoryresults even though prior clinical trials were successful. Therefore, the results of the Phase IIB or Phase III clinical trials that we conduct may or may not besuccessful. 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 the NDA or similar regulatoryapplication. Depending on the extent of these, or any other studies, approval of any applications that we submit may be delayed by several years, or mayrequire us to expend more resources than we have available. It is also possible that additional studies, if performed and completed, may not be consideredsufficient by the applicable regulatory agencies to provide regulatory approval. If any of these outcomes occur, we would not receive approval for Aramcholand may be forced to cease operations. Even if we obtain regulatory approval for Aramchol, the approval might contain significant limitations related to the indications for use for whichthe drug 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. In that event,regulatory authorities may: ·suspend or withdraw their approval of the product; ·require the addition of labeling statements, such as warnings, so-called “black box warnings,” contraindications or restrictions on theproduct’s intended use; ·require us to issue specific communications to healthcare professionals, such as “Dear Doctor” letters; ·issue negative publicity regarding the affected product, including safety communications; ·impose a risk evaluation and mitigation strategy (REMS), in the case of FDA, or similar risk management strategies in the case of foreignregulators; In addition to these potentially significant negative consequences, we could be required to change the way the product is administered, conductadditional preclinical studies or clinical trials or restrict or cease the distribution or use of the product, and/or be sued and held liable for harm caused topatients. The foregoing or other events could prevent us from achieving or maintaining market acceptance of the affected product candidate and couldsubstantially increase commercialization costs or even force us to cease operations. 16Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patientpopulation, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, patient willingness to undergo a liverbiopsy in our NASH trials, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and disadvantages of the productcandidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.Potential patients for Aramchol may not be adequately diagnosed or identified with the diseases which we are targeting or may not meet the entry criteria forour studies. We will be required to identify and enroll a sufficient number of patients in the U.S. with NASH for each of our ongoing and planned clinical trials ofAramchol in this indication. We also may encounter difficulties in identifying and enrolling U.S. NASH patients who meet the eligibility criteria for ourplanned clinical trials. We may not be able to initiate or continue clinical trials if we are unable to locate a sufficient number of eligible patients toparticipate in the clinical trials required by the FDA or other foreign regulatory agencies. In addition, the process of finding and diagnosing patients mayprove costly. Our inability to enroll a sufficient number of patients for any of our clinical trials would result in significant delays or may require us toabandon one or more clinical trials. 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 or guidance or unanticipated events during our clinical trials may result in the need for us to amend clinical trialprotocols. Amendments may require review and approval by regulators and/or IRBs, and re-consent subjects, which may adversely affect the cost, timing orsuccessful completion of a clinical trial. If we experience delays in the completion of, or if we terminate, any of our clinical trials, the commercial prospectsfor 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 definitive regulatory approval ofAramchol for the treatment of NASH in OD patients. Further, specific to us, a number of issues still remain unclear with regard to the potential Phase III protocol, including, among other issues, the (i)duration of study, (ii) number of subjects required, (iii) dosages, and (iv) approvable endpoints. These factors, among others, would play a material role indetermining the cost of such study(ies) and ultimate probability of success. 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 studies. Any adverse effects observed after the approval and marketing of a product candidate could result in limitations on the use of theapproved product, withdrawal of FDA approval of the previously approved product, or voluntary withdrawal from the marketplace 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 the regulatory requirements of the FDA,and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers ormanufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks, including the following: 17Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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; ·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; ·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; 18Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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, warnings or contraindications 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 voluntaryREMS; ·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. 19Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. Maintaining our reputation and brand image is essential to our business success. Our success in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing media environment,including our increasing reliance on social media, such as the Company’s website, Twitter, Facebook and LinkedIn, and online dissemination of advertisingcampaigns. We are subject to a variety of legal and regulatory restrictions on how and to whom we market our product candidate, Aramchol. Theserestrictions may limit our ability to maintain, extend and expand our brand image as the media and communications environment continues to evolve.Negative posts or comments about us on social networking web sites could seriously damage our reputation and brand image. If we do not maintain, extendand expand our brand image, then our product sales, financial condition and results of operations could be materially and adversely affected. 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 inconsistent with the FDA-approved indications and other conditions or restrictions contained in the approvedlabeling, including the prescribing information, for the product. In particular, any labeling approved by FDA or other foreign regulatory agencies forAramchol necessarily limits its use for certain conditions in certain patient populations. Also, regulatory agencies may impose further requirements orrestrictions on the distribution or use of Aramchol as part of a mandatory plan, such as limiting prescribing to certain physicians or medical centers that haveundergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. If wereceive marketing approval for Aramchol, physicians may nevertheless prescribe Aramchol to their patients in a manner that is inconsistent with the approvedlabeling, which is commonly known as “off label” use. If we are found to have promoted our products for such “off label” uses, we may become subject tosignificant liability under a variety of statutory theories typically alleged by U.S. regulatory authorities. In particular, the U.S. federal government has leviedlarge civil and criminal fines against companies for alleged improper promotion, has enjoined several companies from engaging in off-label promotion, andhas requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. 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. 20Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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. 21Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 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. 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 that may affect reimbursement, the 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 theproduct is 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, of 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. 22Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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 register with FDA or foreignregulators undergo regulatory inspection of their manufacturing facilities, processes and quality systems. In addition, pharmaceutical manufacturing facilitiesare subject to periodic inspection by the FDA and foreign regulatory authorities after product approval. Due to the complexity of the processes used tomanufacture pharmaceutical products and product candidates, any potential third-party manufacturer may be unable to meet local, federal, or internationalregulatory requirements either at the outset or on an ongoing basis, in a cost effective manner, if at all. 23Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 do not intend to engage in the manufacture of our products other than for preclinical and clinical studies, but we or our materials suppliers mayface manufacturing or quality control problems causing product production and shipment delays or a situation where we or the supplier may not be able tomaintain compliance with the FDA’s or foreign regulators’ requirements necessary to continue manufacturing our product candidate. Drug manufacturers aresubject to ongoing periodic unannounced inspections by the FDA and corresponding foreign regulators to ensure continuing compliance with applicablerequirements. Any failure to comply with FDA or foreign regulatory requirements could adversely affect our clinical research activities and our ability todevelop 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 requirements, 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 OD patients, many of which are being developed by pharmaceutical companies that arefar larger than us, with significantly greater resources and more experience than us. Further, our industry is highly competitive and subject to rapid andsignificant technological change. Our potential competitors include large, fully-integrated pharmaceutical and biotechnology companies, specialtypharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. All of these competitors currently engagein, have engaged in or may engage in the future in the development, manufacturing, marketing and commercialization of new pharmaceuticals, some ofwhich may compete with Aramchol or other product candidates. Smaller or early stage companies may also prove to be significant competitors, particularlythrough collaborative arrangements with large, established companies. These companies may have products in development that are superior to Aramchol.Key competitive factors affecting the commercial success of Aramchol and any other product candidates that we develop are likely to be efficacy, time ofonset, safety and tolerability profile, reliability, convenience of dosing, price and reimbursement. 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 developingand commercializing the product. We anticipate that we will face intense and increasing competition as new drugs enter the market and advancedtechnologies become available. Finally, the development of new treatment methods for the diseases we are targeting could render Aramchol, or any otherproduct candidate that we develop, non-competitive or obsolete. If we cannot successfully compete with new or existing products, our marketing and saleswill suffer and we may 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., Gilead Sciences, Inc. and Tobira Therapeutics, Inc.,among others. See also “Item 4. Information on the Company—Competition.” Moreover, several companies have reported the commencement of researchprojects and proof-of-concept trials related to NASH, including those mentioned in the preceding sentence. However, we are not aware if such projects areongoing or have been completed and, to the best of our knowledge, there is no approved drug currently on the market which is similar to Aramchol, nor arewe aware of any product candidate targeting NASH using a compound similar to Aramchol with respect to chemical profile and mechanism of action. 24Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 or other regulatory actions; ·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 ·the inability to successfully commercialize Aramchol or any other product candidate for which we obtain marketing approval. To date, no serious adverse events related to the study drug have been reported in any of our clinical studies, in which subjects have beenadministered doses up to 900 mg, at doses up to 600 mg administered once-daily for up to ten days and at doses up to 300 mg administered once-daily for upto three months. Several non-serious adverse events were reported in four completed and fully analyzed clinical trials. Those four studies enrolled a combinedtotal of 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 reportedby 80% of the subjects. A higher proportion of patients reported drug-related adverse events in the placebo group (88.9%) compared to the 30 mg activegroup (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 adverseevents, 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 determined to be unrelated to Aramchol and all of the adverse events were transient and gave noindication of target organ toxicity. No serious adverse events or deaths occurred during the study. No clinically significant abnormalities related to anyAramchol dose were noted in electrocardiograms, or ECGs, laboratory results, vital signs or physical examinations. 25Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 our Phase IIA placebo-controlled trial with 60 subjects 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 un-blinding 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 with respect to our clinical trials against and from any losses or claims from third parties, our financialcondition could be adversely affected in the event of uninsured or inadequately insured loss or damage. We may not be able to obtain insurance policies onterms affordable to us that would adequately cover loss or claims by third parties. To the extent our business suffers any losses or claims by third parties,which are not covered, or adequately covered, by insurance, our financial condition 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. 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 corporate officers, including President and Chief Executive Officer, Chief Medical Officer, Chief Financial Officer, Vice President of Clinical Operations,and Vice President of Drug Development, or the inability to hire or retain experienced management personnel, could adversely affect our ability to executeour 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. 26Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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 clinical development of our products, we willneed to substantially increase our operations, including expanding our employee base of managerial, operational and financial personnel. We currentlyintend to establish additional infrastructure in the United States and Europe, 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. 27Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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, global supply and demand of various commodities, such as gasand oil and pricing of thereof, as well as geopolitical risks, including that related to China. 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 will 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-diagnosedOD patients with NASH. The primary endpoint of the study is a significant reduction of liver fat, as measured by magnetic resonance spectroscopy, or MRS,which is a noninvasive and sensitive method for quantification of the amount of fat in the liver. The main secondary endpoint of the ARREST Study isresolution of NASH on biopsies, which can be assessed only at the completion of the study and by repeated liver biopsies. We are conducting a portion of ourARREST Study in Israel. While, the Israeli Ministry of Health has granted us approval to conduct our ARREST Study including patients that underwent aliver biopsy independently and previously to the study (as warranted by their medical condition), it has taken exception to the necessity of conducting asecond biopsy at the end of the trial period, as specified by the trial protocol. As this position is inconsistent with the already established guidance by theFDA and the EMA, it was unexpected. We are not expecting that the Israeli Ministry of Health will reverse its preliminary position, and as such, wereconfigured our recruitment targets in Israel to include patients who have undergone liver biopsies no more than six months prior to enrolling in theARREST Study. After conducting a close dialogue with the Israeli Ministry of Health, we did not succeed in changing their position concerning the secondbiopsy, and patients who will not undergo a second biopsy as part of the ARREST Study will be considered treatment failure. However we can perform astatistical analysis for the sub group that underwent the second biopsy and based on the results of such group (even trends of improvement) continue to apivotal phase III study. 28Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 expanding ourclinical activities into the United States will improve the ARREST Study’s breadth and relevance, including potentially allowing us to immediatelycommence Phase III clinical trials in NASH in OD patients in the United States without any additional clinical requirements. Additional clinical trials may divert a significant amount of Company resources and may ultimately be unsuccessful. During 2016, we intend to expand our clinical operations for Aramchol to multiple other indications in order to expand our pipeline, commercialpotential and ultimately de-risk the Company for the success of any one given trial. However, such activities will require significant time, funds andCompany resources. There can be no assurance that these studies will be successful. 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. A failure by our contract manufacturer to achieve and maintain high manufacturing standards, in accordance with applicable good manufacturingpractices (GMPs) and other applicable regulatory requirements could result in patient injury or death, product shortages, product recalls or withdrawals,delays or failures in product testing or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers oftenencounter difficulties involving production 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,we may 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. 29Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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: 30Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·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 in the U.S.; ·we may be subject to opposition proceedings in certain 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 that will affect our freedom to operate forAramchol; ·other companies may challenge and invalidate patents licensed or issued to us or our customers; ·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. 31Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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. 32Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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. 33Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 34Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 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.Decisions by the Compensation and Rewards Committee and Israeli courts have created some uncertainty in this area, as some decision have held thatemployees may be entitled to remuneration for their service inventions despite having specifically waived any such rights. As a consequence of such claims,we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which couldnegatively affect 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. 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. 35Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 oftentimes 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: ·delays in existing clinical trials due to an inability to enroll patients at the expected pace, among other factors; ·inability to obtain the approvals necessary to commence further clinical trials; ·unsatisfactory or inconclusive results of clinical trials; ·termination of clinical trials; ·adverse events in our ongoing clinical trials; ·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; 36Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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, cashflow guidance, or recommendations by securities 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 our Company and that of smallcompanies. Broad market and industry factors may negatively affect the market price of our ordinary shares, regardless of our actual operating performance.Further, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly.Price volatility of our ordinary shares might be worse if the trading volume of our ordinary shares is low. Following periods of market volatility, shareholdersmay institute securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and attentionof management from our business, even if we are successful. Future sales of our ordinary shares could also reduce the market price of such stock. Any adversedetermination in litigation could also subject us to significant liabilities. 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 42% and 40% of our outstanding ordinaryshares on a diluted basis and non-diluted basis, respectively. They will therefore be able to exert significant control over matters submitted to ourshareholders for approval. Our President and Chief Executive Officer, directors and shareholders that own more than 5% of our outstanding ordinary shares own approximately412 and 40% of our ordinary shares on a fully diluted basis and non-diluted basis, respectively. As a result, these shareholders, if they acted together, couldsignificantly influence or even unilaterally approve matters requiring approval by our shareholders, including the election of directors and the approval ofmergers or other business combination transactions. The interests of these shareholders may not always coincide with our interests or the interests of othershareholders. This significant concentration of share ownership may adversely affect the trading price for our ordinary shares because investors often perceivedisadvantages in owning stock in companies with controlling shareholders. 37Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 approximately seven million ordinary shares and options agreed not tosell or dispose of our ordinary shares for a period of two years following the consummation of the Reorganization, subject to certain exceptions. To date, thelock-up period has expired and all of our outstanding shares are eligible for unrestricted sale. In addition, shares issued or issuable upon exercise of optionsand warrants vested as of the expiration of the lock-up period are eligible for sale as of February 4, 2016. Sales of shares by these shareholders would likelyresult in the supply of our ordinary shares far exceeding the demand for our ordinary shares and could have a material adverse effect on the trading price ofour 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, equity-linked and structuredtransactions, debt (straight, convertible, or otherwise) financings, collaborations and licensing arrangements. To the extent that we raise additional capitalthrough the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferencesthat adversely affect your rights as a shareholder. Debt financing, if available, would result in increased fixed payment obligations and may involveagreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaringdividends. If we raise additional funds through collaboration, strategic alliance and licensing arrangements with third parties, we may have to relinquishvaluable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us. In anticipation of the same, we registered $150 million of our ordinary shares on July 2, 2015, pursuant to a registration statement on Form F-3,which was declared effective by the SEC. Depending upon market liquidity at the time, a sale of shares registered pursuant to such registration statement atany given time could cause the trading price of our common stock to decline. 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.” 38Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 the securities analysts that current cover our stock, or will do so in the future, or industry analysts do not publish or cease publishing research or reportsabout us, our business or our market, or if they adversely change their 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 do cover, or may cover us in the future, adversely change their recommendation regarding our shares,or provide more favorable relative recommendations about our competitors, our share price would likely decline. If any analyst who cover us to ceasecoverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could negatively impactour share price or trading volume. 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. 39Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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.” 40Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 41Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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, an Islamist terrorist organization operating in the Gaza Strip and parts of the West Bank.The last conflict, as well as the previous round of escalation, involved missile strikes against civilian targets in various parts of Israel, including areas inwhich our employees, service providers and some of our consultants are located. During the summer of 2006, Israel was also engaged in armed conflicts withHezbollah, a Lebanese Islamist terrorist organization, which also involved missile strikes against civilian targets in the northern part of Israel. Thecontinuation of such strikes may negatively affect business conditions in Israel. 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, 2015 was $1.00 = Euro 0.82 and $1.00 = NIS 3.88. 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 2013, 2014 or 2015. 42Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. The Companies Law regulates, among others, mergers, requires tender offers for acquisitions of shares above specified thresholds, requires specialapprovals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types oftransactions. See “Item 10. Additional Information—B. —“Mergers and Acquisitions under Israeli Law” for additional information 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 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. Anti-takeover provisions in our Articles could make it difficult for our shareholders to replace or remove our current Board and could have the effect ofdiscouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our ordinary shares. 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. 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. 43Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 to effect service of process on these persons in the United States or to assert U.S. securitieslaw claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action withrespect 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, our shareholders 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 our 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, when voting at the general meeting of shareholders on certain matters. Israeli law provides thatthese duties are applicable to shareholder votes on, among other things, amendments to a company’s articles of association, increases in a company’sauthorized share capital, mergers and interested party transactions requiring shareholder approval. In addition, a controlling shareholder, a shareholder whoknows that it possesses the power to determine the outcome of a shareholders’ vote or a shareholder who has the power to appoint or prevent the appointmentof a director or executive officer in the company, has a duty of fairness towards the company. However, Israeli law does not define the substance of this dutyof fairness. Because Israeli corporate law has undergone extensive revisions in recent years, there is little case law available to assist in understanding theimplications of these provisions that govern shareholder behavior. These provisions may be interpreted to impose additional obligations and liabilities onholders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations. See Item 10.—B Memorandum and Articles of Association—Shareholder Duties” for additional information Any of the risk factors referred to above could significantly and negatively affect our business, results of operations or financial condition, which mayreduce 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 0.1% of the share capital held byGHI). GIL held all of the equity rights in and to GMR. Our intellectual property was held by GIL. The research and development was conducted by GMR as aservice to GIL on a cost plus basis. GIL was responsible for all product development. 44Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 2, 2014, we underwent the Reorganization, pursuant to which all of our intangible assets (including our intellectual property) are beingtransferred from GIL to GRD. The Reorganization was effectuated by share transfers and asset transfers, resulting in the Company as the parent company and100% equity-owner of the following companies: (1) GRD, which holds all the Group’s intellectual property, including the Company’s patent portfolio; (2)GIL, which may provide research and development services to GRD on a cost plus basis; and (3) GTTI, which is an inactive company that we expect toliquidate during 2016. GIL holds GMR, which became an inactive company in 2015. 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. The following is a diagram of our corporate structure (assuming GTTI liquidation): 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. Net of underwriting discounts, commissions and other estimated offering expenses, the offeringraised approximately $39.7 million. 45Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 principal executive offices and registered office in Israel are located at 16 Tiomkin Street, Tel Aviv, Israel, 6578317 (during 2015, we relocatedfrom our previous address of 8 Shaul Hamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel, 6473307) and our telephone number is +972-3-693-8448. Ourwebsite address is http://www.galmedpharma.com. The information contained on, or that can be accessed through, our website is neither a part of norincorporated into this report. We have included our website address in this annual report solely as an inactive textual reference. Puglisi & Associates serves asour authorized representative in the United States for matters concerning our IPO and our registration statement filing on Form S-8 only. Its address is 850Library Avenue, Newark, Delaware 19711. 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, 2015. Business Overview We are a clinical-stage biopharmaceutical company focused on the development of a novel, once-daily, oral therapy for the treatment of liverdiseases utilizing its proprietary first-in-class family of synthetic fatty-acid/bile-acid conjugates, or FABACs. We believe that our product candidate,Aramchol, has the potential to be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic disease that we believeconstitutes a large unmet medical need. Aramchol is a synthetic conjugate of cholic acid, or a type of bile acid, and arachidic acid, or a type of saturated fatty acid, both of which, in theirnon-synthetic forms, are naturally occurring. The conjugated molecule acts upon important metabolic pathways, reducing fat accumulation in the liver andregulating the transport of cholesterol, which is essential for maintaining cholesterol balance in the body. The ability of Aramchol to decrease liver fatcontent may also reduce the risk of cardiovascular complications associated with NASH. Independent third-party epidemiologic studies suggest that certainlevels of fat reduction may reduce, and ultimately eliminate, liver inflammation in patients who have undergone bariatric surgery or other weight lossprograms. We believe that Aramchol’s ability to reduce liver fat without observable adverse side effects in our studies to date will enable it to be a safe andeffective treatment for NASH in OD patients and prevent the hepatic and cardiovascular complications associated therewith. 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 OD patients who have been biopsy-diagnosed as having NASH. We have initiated this study in Israel,Europe, Latin America and in the United States (pursuant to an IND authorized by FDA). Our ARREST Study for Aramchol in OD NASH patients is inaccordance with the study design recommended by the Medicines and Healthcare Products Regulatory Agency, or MHRA, and has been deemed acceptableby Bundesinstitut für Arzneimittel und Medizinprodukte, a German medical agency, or BfArM, and deemed satisfactory by Agence nationale de sécurité dumédicament, a French medical agency, or ANSM. The BfArM and ANSM also confirmed, in minutes of each of their respective scientific advisory meetings,that if successful, the ARREST Study may serve as a basis for Phase III pivotal trials of Aramchol. The FDA and MHRA invited us to discuss the next steps inthe development of Aramchol after we analyze the results of the ARREST Study. If the Phase III trial(s) are successful, we intend to submit an NDA to the FDAand an MAA to the EMA for the approval of Aramchol for the treatment of NASH in OD patients in the United States and Europe. More information about theARREST Study may be found on ClinicalTrials.gov identifier: NCT02279524. Originally, we intended to perform a ‘futility analysis’ as part of the ‘interim analysis.’ The futility analysis would have reviewed the data both forsafety signals and determined whether subjects receiving Aramchol showed an observable reduction in liver fat concentration, as measured by MRS. Theindependent Drug and Safety Monitoring Board (DSMB) would have then made a “go/no go” decision based on the MRS data at six months. The absence ofsignificant MRS-related results at the six month point could have resulted in the termination of the study based on the absence of clinical benefit in theinterim review and was therefore considered a futility analysis. However, in light of the FDA and AASLD clinical guidance for the development of diagnostic and therapeutic modalities for the treatment of NASHpublished in early 2015, it has become increasingly clear that histological data (liver biopsy) will be absolutely required to seek regulatory approval forNASH drugs, not merely MRS data. This conclusion was further supported by two recent Phase III protocols (the REGENERATE Study, NCT02548351, andRESOLVE-IT study- NCT 02704403), which also require resolution of NASH as measured by histological data. As such, the entire twelve month dataset willbe necessary to judge the viability of Aramchol, and potential further development thereof. 46Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Thus, the scope of the interim analysis we are currently planning on conducting once 120 patients in our ARREST Study complete six months oftreatment, will be limited to analysis of safety related signals only, conducted by the DSMB. The interim analysis will not include review of the data withrespect to any efficacy endpoints. The DSMB will decide whether to continue studying both doses or move all patients to one dose, if one is found to be safer than the other. We donot anticipate the interim results to lead to the stoppage of our ARREST Study, but no assurance can be given. We currently expect results from the interimanalysis to be completed by December 2016, or early first-quarter 2017 and top-line data for the ARREST Study to be completed in the first quarter of 2018,inclusive of the three-month follow-up period. Non-Alcoholic Fatty Liver Disease (NAFLD) / Non-Alcoholic Steato-Hepatitis (NASH) It is currently estimated that Non-Alcoholic Fatty Liver Disease (NAFLD), the precursor condition to NASH, could affect up to 30% of the adultpopulation in developed countries. This disease is also now recognized as one of the most common liver disorders, and a significant and growing publichealth problem. In the US alone, more than 100 million people are said to be affected by NAFLD, and its prevalence is rapidly growing in parallel withmetabolic syndromes, particularly obesity and diabetes. NAFLD is characterized by the accumulation of fat of 6% or greater in the liver of people who drink alcohol only in moderation, or not at all. Theremay be numerous causes of NAFLD, however, the disease is mostly associated with a high fat, fructose-rich diet. Although NAFLD is generally asymptomatic,it is a major risk factor for liver inflammation (NASH) and scarring (fibrosis and cirrhosis). In addition, NAFLD is also associated with metabolic syndromeand cardiovascular disease. Currently, NAFLD can only be managed through lifestyle improvements, such as weight reduction and physical activity. NASH is currently estimated to affect between 4%-6% of the adult population in developed countries, and is associated with increased risk of livercirrhosis, liver failure, hepatocellular cancer, as well as metabolic and cardiovascular diseases. The major characteristics of NASH are elevated liver fat alongwith inflammation and fibrosis. However, despite the growing need, there are currently no approved therapeutic treatments for NASH. Modification of risk factors, such as obesityand hyperlipidemia, and proper diabetic control is generally recommended for the treatment of NASH, and the standard of care includes lifestyle changes topromote weight loss, including low-calorie, low-fat diets and physical activity. Although weight loss can be potentially significant in delaying theprogression of NASH, studies have shown that, for most individuals, it is generally very difficult to maintain over the long-term, even following bariatricsurgery. 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 adequate and well-controlled clinical studies. Such prescription or use of unapproved drugs is typically known as “off-label” prescription or use. Inparticular, the anti-diabetic drug, Metformin®, is used for patients who have type 2 diabetes (T2DM) as well as NASH. Other drugs such as Orlistat (Xenical®,Roche) and Glitazones are sometimes used for non-diabetic NASH patients, however their long term safety and efficacy in NASH patients has not beenestablished. Bariatric surgery can be performed in obese patients with NASH, but is not an established procedure to treat NASH. Lastly, vitamin E was foundto be beneficial for non-diabetic patients with biopsy-proven NASH, but not for diabetics with NASH, NAFLD or liver cirrhosis. As such, the use of vitamin Eis fairly limited. 47Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Currently, it is impossible to predict which of the NAFLD patients will deteriorate to NASH as it is unclear what causes NASH to develop.Researchers are now focusing on several factors that may contribute to the development of NASH. Therefore lifestyle changes are recommended for allpatients with NAFLD. In 2015, the FDA and AASLD issued clinical guidance for the development of diagnostic and therapeutic modalities for the treatment of NASHbased on the joint workshop held on September 5-6, 2013. The guidance serves as a broad framework for discussions with different companies and therequirements for pivotal studies for receiving regulatory approval are decided case-by-case depending on the products profile and previous studies results. There is an exceptionally wide range of estimates regarding the size of the commercial market for NASH. This uncertainty stems from (i) the overallsize of the patient population, (ii) the percentage of the addressable market that will be diagnosed and, subsequently, seek treatment, and (iii) the ultimatecost of the therapies. None of these factors can be known definitively until NASH drugs begin to hit the market, which based on analysts’ estimates, willlikely be 2019 at the earliest. Independent estimates generally estimate a commercial market in excess of $10 billion in developed countries, though we donot endorse any estimates, which are based on a number of different underlying assumptions. 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 inOD patients. 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. In contrast, fatty liver was observed in control micefed a high fat diet but not treated with Aramchol. In such early studies, we also observed that the mechanism of this effect was not a result of malabsorption offat in the intestines because the FABAC-treated mice gained weight throughout the test periods to a similar degree to the control mice. This led us toconclude that FABAC therapy triggers a beneficial modulation of intra-hepatic lipid metabolism and thus reduces liver fat content. The images below showthe reduction of liver fat content in rodents after treatment with Aramchol. 48Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 in-vitro studies, Aramchol partially inhibited the Stearoyl-Coenzyme A Desaturase-1, or SCD1, enzyme, an enzyme recognized as playing an importantrole in the metabolism of fatty acids. The SCD1 enzyme is essentially the gateway that regulates the use and storage of fat in the body by convertingsaturated fatty acids to monounsaturated fatty acids. Experimental animal studies showed that complete inhibition of the SCD1 enzyme protects against diet-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 such complete SCD1 enzyme inhibition has serious side effects, such as inflammation, atherosclerosis and pancreatic betacell dysfunction. As observed by us in our pre-clinical and clinical studies performed to date, and subsequently published in the European Journal ofGastroenterology and Hepatology and Archives of Medical Research in 2008 and 2010 respectively, one of Aramchol’s unique characteristics is that ittriggers a partial SCD1 enzyme inhibition and, to date, we have not observed any significant adverse events in our clinical studies. Aramchol also has the ability to up-regulate ABCA1 and thereby induce “reverse cholesterol transport” in animal models. ABCA1 is an ATP-binding cassettetransporter, also known as the cholesterol efflux regulatory protein (CERP), which is a regulator of cellular cholesterol and phospholipid homeostasis. Inevery cell of the body, the LDL receptor enables entry of cholesterol into the cell and the ABCA1 transporter pumps cholesterol out of the cell, where it iscarried by high-density lipoprotein, or HDL, to the liver to be excreted into the intestine. This pathway of cholesterol from the cell to the liver is calledreverse cholesterol transport and is essential for maintaining cholesterol balance in the body. Excess LDL, or “bad,” cholesterol is deposited mainly invascular walls, causing atherosclerosis, a vascular disease in which an artery wall thickens as a result of the accumulation of calcium and fatty materials, suchas cholesterol. Activation of 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. 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 as well as to evaluate the effect of a high-fat, high-calorie meal on the PK of Aramchol following a single dosein healthy volunteers. The results showed dose-related, but less than dose-proportional, increases in the mean Aramchol plasma concentrations, or Cmax, area under thecurve, or AUC (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 andrepeated dose administration. Cmax and AUC are metrics used to indicate the significance of a drug’s exposure. Steady-state was achieved by 144 hours (dayseven). 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. No serious adverse events or deaths occurred during the study and only one patient withdrew due to an adverse event, which was categorized asunrelated to Aramchol. Of the 27 adverse events reported in the study, 24 were considered to be unrelated to Aramchol and three, all of which were mild, wereconsidered to be possibly related. No clinically significant abnormalities related to any Aramchol dose were noted in ECGs, laboratory results, vital signs orphysical examinations. To date, we have successfully completed four clinical trials of Aramchol: ·A Phase 1 Single and Multiple-Dose Study of Aramchol in Healthy Male Volunteers (NCT00776841): This study was performed in twoparts: (a) a single dose, double-blind, placebo-controlled, Phase IA study with ascending doses of Aramchol in healthy volunteers in onecenter in Israel, in which no serious adverse side effects were observed; (b) a Phase IB repeated-dose trial in healthy volunteers in one centerin Israel, in which no adverse side effects were observed and which confirmed the suitability of a once-daily dose of Aramchol. 49Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Study of Aramchol in Patients With Fatty Liver Disease or Nonalcoholic Steatohepatitis (NCT01094158): Thereafter, we commenced amulti-center, randomized, double-blind, placebo-controlled Phase IIA trial of Aramchol in 60 NAFLD and NASH patients in 12 centers inIsrael. This study, whose design was deemed acceptable by the FDA in 2007 at a pre-IND meeting suggested that Aramchol reduced liver fatin a dose-dependent manner, as evidenced by a statistically significant reduction of liver fat over a three month treatment period of once-daily 300 mg doses of Aramchol, and induced positive trends of changes in several metabolic parameters. Based on these Phase IIA proof-of-concept results, we established a development plan that we believe may confirm that Aramchol (i) is safe, (ii) can be administered as aonce-daily oral therapy, (iii) targets NASH, (iv) can effectively treat inflammation and thus prevent the progression of NASH and (v) cantreat metabolic syndrome, the underlying condition of NASH, by improving parameters of metabolic syndrome including insulin resistanceand homeostatic model assessment, or HOMA, levels, which are used to quantify the metabolic syndrome biological marker insulinresistance and beta-cell function, and adiponectin levels. ·Pharmacokinetics of Single and Multiple Escalating Doses of Aramchol and Food Effect in Healthy Volunteers (NCT02374437): OnApril 28, 2014, we commenced PK and food effect studies of Aramchol. In written correspondence from December 2013 regarding arequested pre- IND meeting, the FDA recommended that we conduct such studies prior to commencing our Phase IIB ARREST Study. Weconducted the PK study at the Sourasky Medical Center in Tel Aviv, Israel. We enrolled 66 healthy male volunteers who received threedoses of Aramchol: 200 mg, 400 mg and 600 mg. The two higher doses are being used in our ARREST Study. In December 2014, wecompleted the statistical analysis of the PK study of the three doses of Aramchol and observed no serious adverse events. The PK studyprovides additional safety data to further support existing safety data from our pre-clinical studies and our Phase I and Phase IIA clinicaltrials of Aramchol. 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 Aramchol doses ranging from 30 mgto 900 mg. The subsequent Phase I clinical trial was a repeated-dose trial conducted over four days in 25 subjects testing repeated daily doses of Aramchol of30 mg and 300 mg. The profiles for the groups were similar and the maximal plasma concentration of Aramchol increased with the higher doses. The PKprofile demonstrated that Aramchol is suitable at each dose for once-daily administration and there were neither significant adverse events observed in eitherPhase I trial nor any notable changes in biochemical, hematologic, cardiovascular or other safety parameters. 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 Clinical Gastroenterology and Hepatology Journal. In accordance with the AASLD’s guidelines for Phase IIA studies in NAFLD or NASH, the trialwas performed in patients with either NAFLD or NASH, rather than only in NASH patients. The trial’s primary efficacy endpoint was a reduction in liver fatcontent, and did not consider inflammation or fibrosis, which can be diagnosed only by liver biopsy. We believe that the short study duration of three monthsof treatment followed by a one-month follow-up period did not warrant repeated biopsies. The trial evaluated the effects on liver fat content of 100 mg and300 mg once-daily doses of Aramchol compared to a placebo. At the end of the three month treatment period, statistically significant reductions in liver fatconcentration as measured by MRS were observed in the 300 mg patient group. Specifically, a 12.57% mean liver fat content reduction was observed in the300 mg group, as compared to a mean reduction of 2.89% in the 100 mg group and a mean increase of 6.39% in the placebo-treated patients. These resultsindicate that the effects of Aramchol are dose-dependent, as demonstrated in the graph below, which presents the results with respect to the 57 patients whosuccessfully completed the entire treatment period. 50Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 successfully completed the entiretreatment period (three patients were excluded from data analysis because of protocol violations). Relative Change in Liver Fat Concentrations in the NASH and NAFLD Groups Liver MRS Aramchol 300 mg/dMean ± SD Aramchol 100 mg/dMean ± SD PlaceboMean ± SD NASH -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. A non-statistically significant change of approximately 1 Kg in body weight was observed between the 300 mg dose group and the placebo group,suggesting that weight-loss did not influence the observed reduction in liver fat content experienced in the Aramchol treated groups. 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. The Aramchol treated groups’ ALT values relapsed 30 days post-treatment, indicating that after thecessation of Aramchol treatment, the patients experienced recurring liver inflammation. The placebo group did not demonstrate a relapse in ALT levels. Thissupports the supposition that Aramchol has a real biological effect. 51Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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, a non-statisticallysignificant increase in serum adiponectin levels were observed in the Aramchol treated patient groups, indicating that Aramchol increases serum adiponectinlevels in a dose dependent manner, suggesting that Aramchol may act as a protective factor for the prevention of metabolic syndrome, as increased serumadiponectin is itself such an independent protective factor. 52Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, a non-statistically significantimprovement in endothelial function was observed in the 300 mg Aramchol treated patient group. The table and graph below present the change inendothelial function, as measured by flow mediated dilation observed between baseline and the end-of-treatment for the 48 patients who performed two flowmediated dilation examinations. Change in Endothelial Function between Baseline and the End-of-Treatment FMD (mm Hg) Aramchol 300 mg/d Mean ± SD N=20 Aramchol 100 mg/d Mean ± SD N=18 Placebo Mean ± SD N=19 Pre-treatment 4.6 ± 2.5 5.4 ±2.8* 6.4 ±2.9 Post-treatment 5.9±2.1 5.7±3.9 6.6±2.3 Change 1.28±2.92 0.27±3.42 0.23±2.42 P 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. 53Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, there were no notable changes in biochemical, hematological, cardiovascular or other safety parameters, and there were no serious drugrelated adverse events in the Aramchol treated group during the three month treatment period or the subsequent recovery period. Aramchol’s adverse eventprofile 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 Conjugate Aramchol Reduced Liver Fat Content in Patients with NonalcoholicFatty Liver Disease,” provides the full report of the Phase IA 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. 54Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 ongoing ARREST Study and planned Phase III clinical studies. These studies were performed in compliance with theEMA’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 thecommencement of human clinical trials and marketing authorization for pharmaceuticals in Europe and the United States. The toxicity program for Aramcholincluded repeat dose studies of up to six months in rats and up to nine months in dogs by oral administration, the intended clinical dose route. These studiesdemonstrated that Aramchol was well-tolerated at the dose levels investigated with no-observed-adverse-effect-level, or NOAEL, values of 1000 mg/kg/dayin rats and 1500 mg/kg/day in dogs, the maximum feasible dose in both species. There were no observations noted in the rat study. The findings in the dogstudy were limited to changes in plasma lipids, including decreases in total blood cholesterol levels, LDL, HDL and phospholipids, and a slight increase inthe 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 fromweek 13 onwards in all Aramchol-treated groups, with a dose-related incidence. The decrease in total blood cholesterol levels in the dog study furthersupports our understanding of the positive effect of Aramchol on lipids as we previously observed in our preclinical studies in other animals. After six monthsthis was not accompanied by any microscopic alteration of the skin and therefore considered not toxicologically relevant. Results from the study show thatafter nine months the presence of scales in all Aramchol-treated groups was accompanied by minor test item-related microscopic findings in the skin:Hyperkeratosis of the epidermis, correlating to the scales, and keratin plugs in the hair follicles (in males at 750/500 and 1500 mg/kg). After a 12-weektreatment-free recovery period, fewer scales were noted and microscopically there was partial recovery. As these findings were minor and no clinicalsymptoms like scratching were noted, these findings were considered not adverse. 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, in bone marrow micronucleus test in male rats at a 2000 mg/kg oral dose (themaximum recommended dose in accordance with ICH S2 (R1)), Aramchol was not clastogenic, meaning it did not give rise to or induce disruption orbreakages of chromosomes, nor was it aneugenic, meaning it did not cause the number of chromosomes in the nucleus of a cell to not be an exact multiple ofthe monoploid number of a particular species. 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. 55Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Summary of Aramchol Clinical Trials Our Phase IIB ARREST Study for Aramchol The Company believes that Aramchol will reduce and eventually eliminate liver inflammation by the mechanism of action described above, whilealso mitigating cardiovascular comorbidities. We submitted an IND application to FDA to initiate the ARREST Study, and hope to expand the scope of the IND in the future to conduct pivotalPhase III clinical trials for NASH and other clinical trials in the United States. The FDA cleared our IND application, allowing us to conduct the Phase IIBARREST Study in the United States. In September 2014, the FDA granted Fast Track designation status to Aramchol for the treatment of NASH. Fast Trackdesignation may accelerate the development process and may expedite the review of drugs that show promise in treating serious, life-threatening medicalconditions for which no other drug either exists or is as effective. We are currently conducting our Phase IIB ARREST Study to evaluate the safety and effectiveness of two different doses of Aramchol for thetreatment NASH in OD patients. In order to be eligible to participate in our ARREST Study, patients must be affected by NASH, as diagnosed by a biopsy, beoverweight as measured by a Body Mass Index between 26 and 29 or obese as measured by a Body Mass Index of 30 or greater, and who are pre diabetic ortype II diabetic. We target this specific population as it is at the greatest risk of developing the complications that are associated with NASH. Although basedon the identified mechanism of action of Aramchol we do not expect an effect on liver fibrosis, we included patients with and without liver fibrosis in thetrial, as such an effect may occur mediated by the reduction in inflammation or resulting from another, yet unidentified mechanism of action. 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 70 clinical sites in the United States, Europe, Latin America and Israel. 56Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 primary endpoint of the 12-month double-blind portion of the trial is a statistically significant reduction in liver fat concentration as measuredby MRS, which is a surrogate endpoint that is generally accepted by the FDA with respect to Phase I and Phase II NASH studies. Secondary endpoints of the trial include a resolution of NASH (currently defined as disappearance of ballooning), as measured by liver biopsy, withno worsening of fibrosis. Other secondary endpoints are improved liver and metabolic biomarker levels and exploratory endpoints, such as blood liverenzymes and metabolomics. The Company believes that finding a non-invasive test that 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 subject the patient to risk and discomfort, are notgenerally used to diagnose NASH. In communications received in response to our submission of an update to our IND in 2014, FDA recommended that future clinical studies should bediscussed at an end-of-Phase II meeting, which could take place within three months from the date we complete the analysis of the results of our ARRESTStudy, and at which time the trial results could be considered. The FDA communication further noted that we must discuss with the FDA a methodology forour drug development processes as our development of Aramchol progresses in order to determine which surrogate endpoints, if any, the agency will acceptto demonstrate the efficacy of Aramchol for the purposes of NDA approval. In light of the publication of the FDA and AASLD joint workshop guidance, andbased on the Phase III trial designs published to date by other companies drugs for NASH, we currently believe that we will likely be approved if the endpoints of the pivotal study are met, but FDA may require as a condition of approval that we complete a Phase IV, post-approval, study assessing effectivenessbased on morbidity and mortality endpoints (e.g., reduction in deaths and other significant clinical events), as well as evaluating safety. The failure tosuccessfully complete any required post-market study could result in FDA withdrawing approval for Aramchol. 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 theMHRA, BfArM and ANSM, in addition to FDA as noted above. Our ARREST Study design is in accordance with the study design recommended by theMHRA, deemed acceptable by BfArM and deemed satisfactory by ANSM. BfArM and ANSM also confirmed, in minutes of each of their respective scientificadvisory meetings, that, if our ARREST Study is successful in reaching its primary endpoint, we may proceed to pivotal randomized, double-blind, placebo-controlled, Phase III trials. We expect the primary endpoints of such trials to be the resolution of NASH as evidenced by disappearance of ballooning andsome reduction in inflammation. Like FDA, as noted above, the MHRA invited us to discuss the next steps in the development of Aramchol after we completethe analysis of the results of our ARREST Study, at which time the data from the study will be considered. Aramchol for the Treatment of Other Indications In addition to the ARREST Study, we are exploring other indications for the use of Aramchol. On December 1, 2015 we announced that our Investigational New Drug (IND) for the ARRIVE Study, a proof-of-concept clinical trial that willevaluate the safety and efficacy of Aramchol in up to 50 patients with HIV-associated lipodystrophy and NAFLD, was allowed by FDA to proceed. TheARRIVE Study is an investigator-initiated study sponsored by the University of California San Diego, where it will be conducted, and led by Professor RohitLoomba. The Study is designed as a randomized, double-blinded, allocation-concealed, placebo-controlled, proof-of-concept Phase IIA clinical trial, and willevaluate either Aramchol at 600 mg or placebo for 16 weeks in up to 50 patients with HIV-associated lipodystrophy and NAFLD. Pre- and post-treatmentMRI-measured liver fat content and total body fat via dual energy x-ray absorptiometry (DEXA) will be compared. The primary end point of successfultherapy will be an improvement in hepatic steatosis as measured by MRI. Secondary endpoints will be an improvement in total body fat, metabolic profile,and liver biochemistry. On March 1, 2016, we announced that we have randomized the first patient in the ARRIVE study. We believe that top line results willbe available by the end of 2017. 57Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. HIV is a major global health issue, with 35.3 million people living with the disease worldwide, 2-3 million of whom are in the United States andWestern and Central Europe. While effective combination antiretroviral therapy (cART) has resulted in a major reduction in acquired immunodeficiencysyndrome (AIDS)-related mortality overall, liver disease is now the second leading cause of death in patients with HIV, accounting for nearly 7-14% of alldeaths in this population. The prevalence of NAFLD is higher in individuals with HIV infection than in the general population. A recently conducted clinicaltrial at the University of California San Diego by Professor Rohit Loomba, the largest such study to-date, compared age- and sex-matched patients withprimary NAFLD, with patients with HIV-associated NAFLD, and found that patients with HIV-associated NAFLD had significantly higher rates of definitesteatohepatitis (63% vs. 37%, P = 0.04), and more features of liver injury. On November 13, 2014, we announced the first administration of Aramchol in a proof-of-concept Phase IIA clinical trial for the treatment of newlyformed cholesterol gallstones following bariatric surgery. However, due to poor patient recruitment and higher-priority clinical programs, we decided toterminate the study on October 1, 2015. At the moment, we believe that it is unlikely that we will revive another study in cholesterol gallstones. We are also investigating the possibility of developing combination therapy to address NASH-associated fibrosis. Such product could potentiallycombine Aramchol with either a new compound that would be developed in house, with an existing compound that has undergone pre-clinical testing andwhich we would license from a separate entity or with an existing compound we will reposition. We plan to announce developments in combination therapyfor advanced (fibrotic) NASH in the second quarter 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 Aramchol is strategicallypositioned to address the unmet medical needs of OD patients with NASH. Our competitive strengths include: ·A once-daily oral drug without observable adverse side effects to date in development for the chronic treatment of OD patients withNASH. We believe that the characteristics of Aramchol, including its ability to reduce liver fat content without observable adverse sideeffects in our studies to date, which we believe may result in an anti-inflammatory effect, its ability to modulate the transport of cholesterolin the body and simple and convenient delivery through once-daily oral administration, position it well against the competition in thetreatment of NASH. We believe that such characteristics may also lead to Aramchol’s acceptance and adoption by the medical communityand patients as an alternative to the medical treatments used today, which are not approved by applicable regulatory authorities fortreatment of NASH as their efficacy has not been proven in adequate and well-controlled clinical studies. We believe Aramchol is well-positioned against drugs in development for NASH, some of which may require intravenous delivery or may cause adverse events, such asitching or an increase in LDL, which can be highly inconvenient for patients with chronic diseases, such as NASH, and may result in lowpatient compliance. ·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, developing FABACs, such as Aramchol, for the treatment of liver diseases and working with lipid molecules, which due to theirspecial physiochemical characteristics, are difficult to synthesize, develop and work with. We believe that such knowledge and expertisemakes us competitive in the metabolic and liver diseases. ·Ability to target Pre Fibrotic NASH and observed metabolic effect. On September 29, 2014, we purchased 60 EndoPAT™ devices andaccessories from, and entered into a collaboration with, Itamar Medical LTD., or Itamar, to include an assessment of endothelial, or arterial,function in our Phase IIB ARREST Study. In the completed Phase IIA study we observed a trend of improvement in endothelial function inpatients treated with 300 mg of Aramchol. The EndoPAT™ device will allow for a validated, consistent measurement of endothelialfunction in patients participating in the study. As mentioned, NASH patients develop cardiovascular complications and present withendothelial dysfunction as a marker of their propensity for atherosclerosis, or hardening of the arteries. A significant improvement inendothelial function, if found, will provide an additional advantage for patients treated with Aramchol and will be a differentiating factorfor Aramchol among other NASH drugs in development. 58Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Non-invasive diagnostic tools for NAFLD/NASH and the assessment of Aramchol’s therapeutic responses. On July 8, 2015, weannounced that we entered into a Research, Option and License Agreement and a Share Purchase Agreement with One Way Liver GenomicsS.L., or OWL, which developed the proprietary OWL LIVERTest®, a test seeking to stratify NAFLD and NASH patients according to theirmetabolic profile. Under the License Agreement, we and OWL will work together during our ARREST Study to develop a non-invasiveblood test including metabolic markers that could potentially predict therapeutic responses to Aramchol. The development of thisproprietary non-invasive complementary diagnostic for Aramchol could replace liver biopsy in testing the ongoing efficacy of treatment,which may enhance Aramchol market penetration. We hope that our efforts will lead to the identification of specific biomarkers, which will differentiate NASH from NAFLD patients withoutthe need for liver biopsy, and serve as a tool for the prediction and assessment of Aramchol’s efficacy. The identification of such specificbiomarkers may greatly improve Aramchol’s chances of qualifying for reimbursement from third-party payors, by providing an indicationof the patients who are most likely to benefit from treatment with Aramchol. Our Strategy Our strategy is to build a specialized biopharmaceutical company that discovers and develops novel FABAC drugs and potentially other moleculesfor the treatment of liver diseases, beginning with the treatment of fatty liver disorders, primarily NASH, and potentially other metabolic disorders. We focuson drugs and drug conjugates for liver diseases with global market potential and we seek to create global partnerships with academic institutions andbiotechnology or pharmaceutical companies to effectively assist us in developing our portfolio and ultimately commercializing our products. Through thisapproach, we have successfully advanced Aramchol into various stages of clinical development. Key elements of our strategy include: ·Continuing to advance the development of Aramchol for the treatment of NASH. Our development of Aramchol for treatment of NASHcurrently includes our ongoing Phase IIB ARREST Study. If this study is successful, the results will serve as a basis for potential Phase IIIpivotal trial(s) in the United States, Latin America, Europe and Israel for the same indication. Assuming successful completion of Phase IIItrial(s), which could be carried out by us in conjunction with a strategic partner under a licensing agreement, we intend to seek regulatoryapproval of Aramchol in the United States and Europe for the treatment of NASH in OD patients. ·Exploring other indications for the use of Aramchol, which includes the ARRIVE Study, a proof-of-concept Phase IIA clinical trial thatwill evaluate the safety and efficacy of Aramchol in up to 50 patients with HIV-associated lipodystrophy and NAFLD. We expect toannounce additional clinical trials during the course of 2016. ·Establishing a development and commercialization partnerships for Aramchol before the completion of the ARREST Study ingeographies outside of our main territorial focus. Forging development and commercialization partnership(s) outside our main territorialfocus of the United States, Europe and Israel, through out-licensing agreements with pharmaceuticals or biotechnology companies thatpossess experience, resources and infrastructure to execute a successful market launch and provide sales support for Aramchol in thelicensed territories. Such potential partnerships could be sought before the completion of the ARREST Study. ·Establishing a global development and commercialization partnership for Aramchol upon completion of the ARREST Study or afterthe successful completion of the first of the potential Phase III trials of Aramchol for the treatment of NASH. Following the successfulcompletion of the ARREST Study, which we provide no assurance we will achieve, we intend to out-license Aramchol to a multinationalpharmaceutical company that possesses experience, resources and infrastructure to execute pivotal trial(s), regulatory approval and marketlaunch. 59Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Advancing existing collaborations, and seeking additional partnerships, for the discovery and validation of diagnostic tools andbiomarkers for the diagnosis of liver disease. We intend to advance our existing collaborations and strategic arrangements for thediscovery and validation of non-invasive diagnostic tools and biomarkers for the diagnosis of liver disease, including NASH. We arecurrently collaborating with OWL, on the development of a non-invasive biomarker, which, if successful, may help to predict individualresponses to Aramchol for the treatment of liver diseases. OWL also granted us a right of first refusal, exercisable upon completion of ourARREST Study, to enter into a business transaction with OWL regarding the commercial exploitation of the data generated during thecollaboration. In the future, we may seek additional collaborations of this nature. ·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. Our intent is to explore opportunities to in-license, develop or acquireother 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 inmultiple indications, as well as increase awareness of liver disease and metabolic syndrome, our brand and our potential market share. In addition, throughactivating our pipeline expansion strategy we believe we could extrapolate additional commercial potential, as well as de-risk our company throughreducing our reliance on the success of any one given trial or indication. Unmet Need Based on the limited treatment options, and the lack of approved therapy, for the treatment of NASH, we believe that there is a significant unmetneed for a NASH-specific therapy. We believe that Aramchol has the potential to provide significant benefits in the treatment of this liver disease due to itsability to reduce liver fat in a dose dependent manner, lack of observable adverse side effects in our studies to date and ease of use through once-daily oraladministration. Moreover, based in part on the Journal of Gastroenterology and Hepatology, we believe the increasing rates of diabetes and obesityworldwide likely means that a significant number of patients will be eligible for, and will be interested in, receiving a new therapy for the treatment of NASHif it becomes available on the market. We believe that Aramchol’s observed positive metabolic effects, if confirmed in future studies, will position it as avaluable tool in the treatment of NASH in OD patients at an early stage of the disease, which can help to prevent both hepatic and cardiovascularcomplications. 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 strengthshave been developed to enable the convenient administration of 400 mg and 600 mg doses (for a 600 mg dose, patients will administer one 400 mg tabletand one 200 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, theremay be an additional 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 study,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. 60Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 generate 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 gold standard approachfor the 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 present 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. There is a growing position in the scientific andmedical community to replace assessment of liver histology with MR-based imaging tests, as set forth in an article published in Gastroenterology in 2016(150:7–10). This school of thought is one of foundations to maintain our strategy of utilizing MRS technology as an endpoint in our ARREST Study ofAramchol. If we are successful in our clinical trials in correlating fat reduction in the liver as measured by MRS with Aramchol’s effect on inflammation in theliver, MRS may become a non-invasive biomarker with the ability to measure the effect 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. 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 facilitate the marketadoption of Aramchol. On July 8, 2015, we entered into a Research, Option and License Agreement and a Share Purchase Agreement with respect to theforegoing. OWL. See “Item 4.B. Information on the Company—Business Overview—Strategic Collaborations, Research Arrangements and other MaterialAgreements—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. 61Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Strategic Collaborations, Research Arrangements and other Material Agreements OWL On July 8, 2015, we entered into a Research, Option and License Agreement, or the OWL License Agreement with OWL, for the development of anon-invasive, blood-based complimentary diagnostic tool, which we believe could increase the likelihood of success of our Phase III trials and facilitate themarket adoption of Aramchol. Pursuant to the terms of the OWL License Agreement, we will partially fund the research and development of the diagnostictool in the amount of up to Euro 437,000 based on reaching development milestones. Subject to development under the OWL License Agreement, we havean option to exclusively license from OWL a complimentary diagnostic tool for NASH using Aramchol, or the OWL License Agreement Option, inconsideration for the payment of a 10% royalty to OWL on an annual net sales of the complimentary diagnostic product. In addition, if OWL develops anyother complimentary diagnostic tool for NASH not using Aramchol, it will pay us a royalty from revenues. Concurrently with the OWL License Agreement,we have entered into a Share Purchase Agreement, or the OWL SPA, pursuant to which we undertook to invest Euro 175,000 in OWL, subject to certainspecified milestones. In addition, under the OWL SPA, OWL has granted us an option which will allow us to purchase additional shares up to 19.9% of OWLat the higher of the valuation as a then current round of financing or at a 15% premium on OWL's valuation in the most recent equity investments. Upon exercise of the OWL License Agreement Option, we will own all rights, title and interest in and to (i) the complimentary diagnostic tool forNASH using Aramchol, excluding the OWL Markers (as defined in the OWL License Agreement) and any Licensed Technology (as defined in the OWLLicense Agreement) which are owned by OWL; (ii) the complimentary diagnostic tool for NASH using Aramchol intellectual property; and (iii) allDevelopment Results (as defined in the OWL License Agreement). University of California, San Diego In February 2015, we entered into an Investigator Initiated Trial Agreement with the University of California, San Diego to conduct a Phase IIAStudy for the treatment of HIV associated with Lipodystrophy and NAFLD, or the ARRIVE Study. The ARRIVE Study principal investigator is Dr. RohitLoomba, a member of our scientific advisory board. The ARRIVE Study is a randomized, double-blinded, allocation-concealed, placebo-controlled, proof-of-concept Phase IIA clinical trial. The study will evaluate up to 50 patients with HIV-associated lipodystrophy and NAFLD, with either Aramchol at 600 mg orplacebo for 16 weeks. Pre- and post-treatment MRI-measured liver fat content and total body fat via DEXA will be compared. The primary end point ofsuccessful therapy will be an improvement in hepatic steatosis as measured by MRI. Secondary endpoints will be an improvement in total body fat, metabolicprofile, and liver biochemistry. On December 1, 2015 we announced that the FDA has cleared our IND application for the ARRIVE Study and on March 1,2016, we announced that we have randomized the first patient in the ARRIVE study. 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 API and the scale-up and manufacturing processoptimization for large-scale production of the Aramchol API. To date, we have completed the process of transferring the development and scale-up process ofthe manufacturing process from Cambridge Major Laboratories to Perrigo. Pursuant to the Perrigo Agreement, Perrigo will provide manufacturing process,optimization services for large-scale production of the Aramchol API, manufacture the Aramchol API pursuant to current good manufacturing practices, orcGMP, and perform additional development services regarding scale-up and manufacturing optimization for the Aramchol API. In consideration for theservices to be provided by Perrigo, the Company agreed to pay in accordance with the Perrigo Agreement a maximum aggregate amount of approximately$3.6 million U.S. dollars to Perrigo. The Perrigo Agreement also provides Perrigo, under certain circumstances, with the option to manufacture commercialsupplies of the Aramchol API in the future. To date, Perrigo has manufactured 3 pilot batches of Aramchol. The material obtained is of appropriate qualityand was produced under GMP. Additional development work pertaining to the scale-up and optimization of the process is currently being done by Perrigo.Based on the results of the optimization studies the parties to the Perrigo Agreement will decide whether they wish to complete all its stages. 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 who are obese and also suffer from insulin resistance. Thepurchase price for the EndoPAT™ devices and accessories was approximately $750,000. 62Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. Additionally, afterexperiencing poor patient recruitment and due to higher-priority clinical programs, at this point in time we have decided not to pursue the indications ofcholesterol gallstones and we believe that it is unlikely that we will revive another study in cholesterol gallstones. Unipharm On October 7, 2000, in connection with a certain share subscription agreement, we sent a letter to Unipharm Ltd., or Unipharm, pursuant to which weagreed to negotiate the grant of an exclusive license to Unipharm with respect to the use of patents within our first patent family covering the composition ofmatter of Aramchol within Israel on to-be-agreed upon terms and conditions. The letter stated that, if granted, such license would at all times be subject to ourbest interests, as determined in our sole discretion, and all approvals and proceedings required by agreement or by law. As of the date hereof, no suchdefinitive agreement has been executed with regard to this matter and at this stage we have no intention to pursue such an agreement. The letter is silent as toterm, termination and whether or not it is binding. 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. 63Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. and Genfit S.A., have molecules currently in Phase III clinical development, and GileadSciences, Inc., Tobira Therapeutics Inc., Conatus pharmaceuticals Inc., Novo Nordisk and Immuron have molecules and/or antibodies in Phase IIB clinicaldevelopment for the treatment of NASH and the fibrosis associated therewith. Antibodies cannot be delivered orally. There are a host of other potentialcompetitors in earlier stages of development relative to us for the treatment of NASH including, but not limited to Galectin therapeutics Inc., Arisaphpharmaceuticals Inc, AstraZeneca, Bristol-Myers Squibb, Medicinova and Nimbus. Some of these companies are focusing their trials on NASH patients withadvanced fibrosis, whereas our studies relate to NASH, or the onset of fat accumulation in and inflammation of the liver, in which we expect that Aramcholwill 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. 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 for new indications, processes and know-how areimportant to our business. We own patent rights to Aramchol in various jurisdictions worldwide, including within and outside of Israel. We have soughtpatent protection in the United States and internationally for Aramchol and our discovery programs, and any other inventions to which we have rights, whereavailable and when appropriate. We expect that patent protection covering the use of Aramchol for the treatment of fatty liver will not expire until 2022(2021 in Israel), subject to any applicable extensions then-available. Within Israel, we agreed to negotiate the grant of an exclusive license to Unipharm Ltd. ,or Unipharm, with respect to the use of patents within our first patent family covering the composition of matter of Aramchol on to-be-agreed upon terms andconditions. We are not in negotiations with Unipharm and no definitive agreement has been executed as of the date hereof. 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 March 10, 2016, we own six U.S. patents, and corresponding foreign patents and pending patent applications, as detailed below. Wehave also recently filed a PCT patent application for second generation FABAC compounds. 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. 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. 64Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 a U.S. patent directed to reduction of serumcholesterol by administering additional forms of FABACs, and a U.S. patent (Continuation-in-Part) directed to the treatment of hyperglycemia and diabetes.This patent family also includes two European patents, one patent which was validated in Austria, Belgium, Cyprus, Denmark, Finland, France, GermanyIreland, Italy, Luxembourg, Monaco, Netherlands, Portugal, Spain, Sweden, Switzerland, Turkey and the United Kingdom, and the second patent which wasvalidated in Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Spain, Sweden, Switzerland, Turkey and the United Kingdom.The family also includes patents in Australia, Canada, China, Czech Republic, Eurasia, Indonesia, Japan, Korea, Israel, Mexico, New Zealand, Norway,Poland and the Ukraine. Foreign patent applications are pending in Hungary and the Czech Republic. If the appropriate maintenance, renewal, annuity orother governmental fees are paid, the non-extended patent term for this patent family is due to expire on April 15, 2022, with the exception of the Israelipatent, 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 term adjustments of 567 daysfor 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 to reduction of serumcholesterol, and 356 days for U.S. Patent 8,975,246, which is directed to disorders associated with altered glucose metabolism or insulin action. 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 an issued European patent that was validated in France, Germany, Switzerland and the United Kingdom. A fourth patent family, including one PCT patent application, discloses and claims second generation FABAC compounds. A fifth patent family, including one PCT patent application, covers the use of Aramchol for the treatment of lipodystrophy. A sixth patent family, including one provisional patent application, discloses and claims compositions comprising second generation FABACcompounds. The seventh and an eighth patent families, each including one Israeli patent application, cover additional therapeutic uses of Aramchol. 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. 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.” 65Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. We anticipate that theprice levels of cholic acid will revert back to prior levels and will not experience continued volatility as a result of the entrance of additional manufacturersinto 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 herein) 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. 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. 66Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 currently engage the services of Cambridge Major Laboratories, a leading provider of chemistry services to the global pharmaceutical industry,to develop and manufacture Aramchol clinical API. However, on January 28, 2015, we entered into the Perrigo Agreement with Perrigo, a subsidiary ofPerrigo Company plc, for, among other things, the large-scale production of Aramchol’s API and the scale-up and manufacturing process optimization forlarge-scale production of the Aramchol API. As such, the Company is currently in the process of transferring the development and scale-up of themanufacturing process from Cambridge Major Laboratories to Perrigo. See “Item 4.B. Information on the Company—Business Overview—StrategicCollaborations, Research Arrangements 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. Government Regulation and Product Approval Governmental authorities in the United States 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 of products such as those we aredeveloping. Our product candidates must be approved by the FDA through the NDA process before they may be legally marketed in the United States and bythe Committee on Human Medicinal Products, or CHMP, via the EMA and European Commission through the MAA process before they may be legallymarketed in Europe. Our product candidate and future product candidates will be subject to similar requirements in other countries prior to marketing inthose countries. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes andregulations require the expenditure of substantial time and financial resources. 67Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 are conducting a global development program for Aramchol for the treatment of NASH in patients who are obese and also suffer from 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 andguidance documents. Failure to comply with the applicable U.S. requirements at any time during the product development process or approval process, orafter approval, may subject an applicant to administrative or judicial sanctions, any of which could have a material adverse effect on us. These sanctionscould include refusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, warning letters, product seizures, total orpartial suspension of production or distribution, 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 cGMPs to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality andpurity; ·satisfactory completion of FDA inspections of clinical sites and GLP toxicology studies; and ·FDA review and approval of the NDA. 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. 68Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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, including the informed consent document, before it commences at any institution. An IRB considers, among other things, whether therisks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informationregarding the trial and the consent form that must be provided to each trial subject or his or her legal representative and must monitor the study untilcompleted. All clinical trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, research subject inclusion andexclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND, and progressreports detailing the status of the clinical trials must be submitted to the FDA annually. Sponsors must also report within set timeframes to FDA serious andunexpected adverse reactions, any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol orinvestigation 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. During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points are typically prior tothe submission of an IND, at the end of Phase II and before an NDA is submitted. Meetings at other times may also be requested. These meetings can providean opportunity 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. 69Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. The FDA may refuse to approve an NDA if the applicable regulatorycriteria are not satisfied or may require additional clinical or other data. Even if such data are submitted, the FDA may ultimately decide that the NDA doesnot satisfy the criteria for approval. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended useand whether its manufacturing is cGMP-compliant. The FDA may refer the NDA to an advisory committee for review and recommendation as to whether theapplication should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it generally followssuch recommendations. Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured and tested. TheFDA will also inspect selected clinical sites that participated in the clinical studies and may inspect the testing facilities that performed the GLP toxicologystudies cited in the NDA. 70Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 expedited review. A drug representing a significant improvement in treatment, prevention or diagnosis of diseasemay receive expedited review. The FDA has various specific programs, including Fast Track, Breakthrough Therapy, Priority Review, and AcceleratedApproval, which, in different ways, are each intended to expedite the process for reviewing and approving drugs. Even if a drug qualifies for one or more ofthese programs, the FDA may later decide that the drug no longer meets the conditions for qualification or that the time period for FDA review or approvalwill be shortened. Generally, drugs that are eligible for these programs are those for serious or life-threatening conditions, those with the potential to addressunmet medical needs and those that offer meaningful benefits over existing treatments. For example, Fast Track is a process designed to facilitate thedevelopment and expedite the review of drugs to treat serious or life-threatening diseases or conditions and fill unmet medical needs, and BreakthroughTherapy designation is designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinicalevidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s). Priority review isdesigned to give drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists an initial review within six months ascompared to a standard review time of ten months. Although Fast Track, Breakthrough Therapy designation and priority review do not affect the standards forapproval, the FDA will attempt to facilitate early and frequent meetings with a sponsor of a Fast Track or Breakthrough Therapy designated drug andexpedite review of the application for a drug designated for priority review. The FDA will also provide Breakthrough Therapy designated drugs intensiveguidance on an efficient drug development program and provide these drug developers with an organizational commitment from the FDA involving seniormanagers. Since sponsors can design clinical trials in a number of ways, in providing its guidance for drugs designated as breakthrough therapies, the FDAwill seek to ensure that the sponsor of the product designated as a breakthrough therapy receives timely advice and interactive communications in order tohelp the sponsor design and conduct a development program as efficiently as possible. During these interactions, the FDA may suggest, or a sponsor canpropose, alternative clinical trial designs (e.g., adaptive designs, an enrichment strategy, use of historical controls) that may result in smaller trials or moreefficient trials that require less time to complete. Such trial designs could also help minimize the number of patients exposed to a potentially less efficacioustreatment (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 approval of a new drug that is intended to treat a serious or life-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. To be used in accelerated approval, a surrogateendpoint must be “reasonably likely, based on epidemiologic, therapeutic, pathophysiologic, or other evidence to predict benefit” on irreversible morbidityor mortality.” The term “reasonable likely” implies that some uncertainty remains about the relationship of the surrogate to the clinical benefit to the patient.Therefore, accelerated approval is typically contingent on a sponsor’s agreement to conduct additional post-approval studies to verify and describe thedrug’s clinical benefit. Accelerated Approval does not change the standards for approval, but by allowing a demonstration of efficacy based on a surrogateendpoint may expedite the approval process. 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 IIB and III 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 OD patients with 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. 71Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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; good manufacturing practices; reporting of adverse experiences with the drug; providing the FDA with updatedsafety and efficacy information; drug sampling and distribution requirements; notifying the FDA and gaining its approval of specified manufacturing orlabeling changes; and complying with 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. 72Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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.” 73Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 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. 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. 74Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 75Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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. 76Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 77Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 78Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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, or in certain cases, the general manager of the Ministry of Health, as requiredunder the Guidelines for Clinical Trials in Human Subjects implemented pursuant to the Israeli Public Health Regulations (Clinical Trials in HumanSubjects), as amended from time to time, and other applicable legislation. In addition, these regulations also require authorization from the Israeli Ministry ofHealth, in the case of genetic trials, certain fertility trials and in such other matters as set forth by the Ministry of Health, which also include our ARRESTStudy for Aramchol. The institutional ethics committee must, among other things, evaluate the anticipated benefits that are likely to be derived from theproject to determine if it justifies the risks and inconvenience to be inflicted on the human subjects, and the committee must ensure that adequate protectionexists for the rights and safety of the participants as well as the accuracy of the information gathered in the course of the clinical testing. Because we intend toperform a portion of the clinical studies on certain of our therapeutic candidates in Israel, we obtained authorization from the ethics committee and generalmanager of each institution in which we intend to conduct our 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. 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. 79Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 16 Ze’ev Tiomkin Street, Tel Aviv, Israel, 6578317, where we lease and occupy approximately 356 squaremeters of space. We entered into the lease agreement On March 22, 2015 with Mintz K. Construction Compd., after our previous lease agreement at 8 ShaulHamelech Blvd., Amot Mishpat Bldg., Tel Aviv, Israel, 6473307 was terminated. The term of the Lease is for 4 years with an option for two additional years.The aggregate monthly rental payment for 4 years, together with adjustments and the maintenance fees, is approximately $8,194. In addition, in May 2015, our sublease agreement with Radix Organization Inc., for one office in New York, New York was expired. 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 of a novel, once-daily, oral therapy for the treatment of liverdiseases utilizing its proprietary first-in-class family of synthetic fatty-acid/bile-acid conjugates, or FABACs. We believes that our product candidate,Aramchol, has the potential to be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic disease that we believeconstitutes a large unmet medical need, and HIV-associated lipodystrophy and NAFLD. 80Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 in 240 OD patients who have been biopsy-diagnosed as having NASH. Our ARREST Study is in accordance with the study designrecommended by the MHRA and has been deemed acceptable by the BfArM and deemed satisfactory by the ANSM. The study design has been confirmed bythe FDA in a written pre-IND advice as acceptable for a Phase IIB study. The BfArM and ANSM also confirmed, in minutes of each of their respectivescientific advisory meetings, that if successful, this ARREST Study may serve as a basis for Phase III pivotal trials of Aramchol. The FDA and MHRA invitedus to discuss the next steps in the development of Aramchol after we analyze the results of the ARREST Study. If the Phase III trials are successful, we intendto submit an NDA to the FDA and an MAA to the EMA for the approval of Aramchol for the treatment of NASH in OD patients in the United States, Europeand Latin America. We currently expect top-line data from the ARREST Study to be completed by the first quarter 2018, inclusive of the three-month follow-up period. Once 120 patients in the ARREST Study complete six months of treatment, we intend to conduct an interim analysis regarding the safety ofAramchol. The interim analysis will provide safety data according to which an independent safety board will decide whether to continue studying both dosesor move all patients to one dose, if one is found to be safer than the other. We do not anticipate the interim results to lead to the stoppage of our ARRESTStudy, but no assurance can be given. This reflects the importance of the main secondary endpoint of the resolution of NASH in biopsies, which can beassessed only at the completion of the study and by repeated liver biopsies. We currently expect results from the interim analysis to be available by December2016, or early first-quarter 2017. We are also exploring other indications for the use of Aramchol, including patients with HIV-associated lipodystrophy and NAFLD. On December 1,2015 we announced that the FDA had allowed our IND application to proceed for the ARRIVE Study. The ARRIVE Study is an investigator-initiated studysponsored by the University of California San Diego, where it will be conducted, and led by Professor Rohit Loomba. The Study is designed as a randomized,double-blinded, allocation-concealed, placebo-controlled, proof-of-concept Phase IIA clinical trial, and will evaluate either Aramchol at 600 mg or placebofor 16 weeks in up to 50 patients with HIV-associated lipodystrophy and NAFLD. Pre- and post-treatment MRI-measured liver fat content and total body fatvia DEXA will be compared. The primary end point of successful therapy will be an improvement in hepatic steatosis as measured by MRI. Secondaryendpoints will be an improvement in total body fat, metabolic profile, and liver biochemistry. 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 are used in our ARREST Study. In December 2014, we completed the statistical analysis of thePK 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. 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 in our studies to date. An additional Phase Ib repeated dose trial completed on healthy volunteers in one center in Israel also showed thatAramchol has no observable adverse side effects and confirmed the suitability of a once-daily dose of 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 theFDA in 2007 at a pre-IND scientific advisory meeting, suggested that Aramchol reduced liver fat in a dose dependent manner, as evidenced by a statisticallysignificant reduction of liver fat over a three month treatment period of once-daily 300 mg doses of Aramchol, and induces positive trends of changes inseveral metabolic parameters. The fourth was a single-site, randomized, partially double-blind, placebo-controlled PK and food effect study conducted inthree parts. The first part of the study assessed the PK, safety and tolerability of Aramchol tablets at single doses of either 200 mg or 400 mg under fastingconditions. The second part of the study evaluated the effect of a high-calorie, high-fat meal on the bioavailability of a single 600 mg dose of Aramchol andassessed the safety and tolerability. The third part of the study assessed the PK and comparative bioavailability, safety and tolerability of Aramchol tabletsafter repeated administrations of three different doses (200 mg, 400 mg and 600 mg) for ten consecutive days, with dosing occurring following theconsumption of a light meal. No serious adverse events have been observed in any study. All observed adverse events were generally minimal to mild andtransient. Furthermore, no clinically significant abnormalities related to Aramchol were noted in the ECG or 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, or license the product to a third party. As of December 31, 2015, the Company had an accumulated deficit of approximately $47.4million. 81Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 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 (which has subsequently been converted in whole to common equity; no debt remains on our balance sheet), shareholders and third-partyinvestors, and as of March 18, 2014, through the sale of our ordinary shares in our initial public offering. At December 31, 2015, we had current assets of$23.4 million, which is mainly comprised of cash and cash equivalents of $4.2 million and short-term investment securities of $18.8 million. This compareswith current assets of $32.2 million at December 31, 2014, which is mainly comprised of cash and cash equivalents of $23.7 million and short-terminvestment securities of $8.2 million.. We believe that such existing funds and the proceeds from our initial public offering will be sufficient to continue ourbusiness and operations as currently conducted into 2017. However, we will continue to incur operating losses, which may be substantial over the nextseveral years, and we may need to obtain additional funds to further develop our research and development programs. Costs and Operating Expenses Our current costs and operating expenses consist of two components: (i) research and development expenses; and (ii) general and 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 and drug and laboratory supplies. We charge allresearch and development expenses to operations as they are incurred. We expect our research and development expense to remain our primary expense inthe near future as we continue to develop our products. Increases or decreases in research and development expenditures are attributable to the number and/orduration 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. 82Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 Income, Net Our financial income consists of interest income from marketable securities and short-term bank deposits. Our financial expense consists of bankfees. Critical Accounting Policies and Estimate We prepare our financial statements in accordance with U.S. GAAP. In doing so, we must make estimates and assumptions that affect our reportedamounts of assets, liabilities and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have useddifferent accounting policies and estimates. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actualresults could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financialcondition or results of operations will be affected. For further significant accounting policies please see Note 2 to our audited consolidated financialstatements of this annual report. We believe that our accounting policies contained therein are critical in fully understanding and evaluating our financialcondition 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. 83Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. Information regarding each such issuance, on a post-Reorganization(1) basis, is included in the following table: Year of issuanceof equity Instrument issued Number of shares derived from the instrument issued Number of options/warrants/RSUs Consideration ($) Exercise price ($) 2000 Ordinary shares 3,754,350 — 650,000 — 2002 Options — 38,637 — 1.47 2005 – 2008 Ordinary shares upon conversion ofconvertible notes 1,241,487 — 3,596,778 — 2012 Warrants (2) — 241,299 — 3.57 2012 Options — 241,299 — 3.57 2013 Ordinary shares upon conversion of theConvertible Loan Agreement (3) 1,043,928 — 3,724,462 — 2013 Ordinary shares upon conversion of theBridge Loans 511,029 — 1,824,300 — 2013 Ordinary shares upon conversion of theConvertible Security Notes (4) 515,403 — 4,717,641 — 2013 Options — 1,219,617 — 0.01 – 3.57 2013 Ordinary Shares 33,534 120,000 2014 Ordinary shares 560,224 — 2,000,000 — 2014 Option — 25,749 — 3.57 2014 Ordinary shares upon initial publicoffering (5) 3,263,010 — 39,856 — 2014 Cashless exercise of options 177,488 (241,299) — - 2014 Warrants — 65,260 — 16.87 2014 Options — 233,750 — 5.49 2015 Options — 160,000 — 5.49 2015 Options — 11,000 — 9.73 2015 Options — 45,000 — 9.13 2016 Options — 242,500 — 7.61 2016 RSUs — 41,250 — — 2016 Options (6) — 470,000 — 5.94 2016 RSUs (6) — 37,500 — — (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 financial statementscontained elsewhere herein.(5)Net of offering expenses in the amount of $ 4,204.(6)This equity grant is subject to shareholder approval. Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.84Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 intrinsic value of the Company’s vested and unvested options outstanding as of March 10, 2016 and 2015, based on the market price per share,was $5.3 million and $12.2 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, 2015 as compared to the years endedDecember 31, 2013, 2012 and 2011. Year Ended December 31, 2013 2014 2015 (thousands) Research and development expenses $7,207 $6,664 $7,629 General and administrative expenses 7,355 2,478 3,246 Capital Loss 10 — — Operating loss 14,572 9,142 10,875 Financial (income) expenses, net 2,912 (40) (253)Operating loss post-finance expense & other income, net 17,484 9,102 10,622 Taxes on income 1 1 - Net loss $17,485 $9,103 $10,622 Comprehensive loss $17,485 $9,099 $10,832 Loss per share $3.45(*) $0.88(*) $0.96 (*) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization. Research and Development Expenses Our research and development expenses amounted to $7.6 million during the year ended December 31, 2015, representing an increase of $965thousand, or 14%, compared to $6.7 million for the year ended December 31, 2014. The increase primarily resulted from an increase in research anddevelopment subcontractor expenses in connection with the ARREST Study of $2.5 million; partially offset by a decrease in drug development relatedexpenses of $2.0 million, as compared to such expenses for the comparable prior year. Our research and development expenses amounted to $6.7 million during the year ended December 31, 2014, representing a decrease of $543thousand, or 8%, compared to $7.2 million for the year ended December 31, 2013. The decrease primarily resulted from a decrease in non-cash-stock-basedcompensation of $4.3 million, partially offset by an increase in research and development subcontractor expenses in connection with The manufacturing ofAramchol drug product of $3.2 million and an increase of $573 thousand in salaries and benefits paid to new employees hired since the comparable prior yearperiod. General and Administrative Expenses Our general and administrative expenses amounted to $3.2 million for the year ended December 31, 2015, representing an increase of $768 thousands,or 31%, compared to $2.5 million for the year ended December 31, 2014. The increase primarily resulted from an increase in salaries and benefits to newemployees hired since the comparable prior year period, consisting of non-cash stock-based compensation of $257 thousand and salaries paid to employeesin the amount of $164 thousand. The increase in the general and administrative expenses is also as a result of an increase in professional services of $290thousand, which includes primary legal, accounting and investor relations and business development expenses. 85Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 general and administrative expenses amounted to $2.5 million for the year ended December 31, 2014, representing a decrease of $4.9 million, or66%, compared to $7.4 million for the year ended December 31, 2013. This decrease primarily resulted from a decrease in non-cash stock-basedcompensation of $6.0 million, partially offset by an increase in salaries and benefits paid to employees of $443 thousand and an increase in professionalservices expenses of $516 thousand, which primarily includes legal, accounting and consulting services. 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 operating loss for the year ended December 31, 2015 was $10.9 million, representing an increase in our operating loss of $1.7 million, or 19%,compared to $9.1 million for the year ended December 31, 2014. 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%,compared to $14.6 million for the year ended December 31, 2013. Financial Income (Expense), Net Our financial income, net, for the year ended December 31, 2015 was $253 thousand, representing an increase of $213 thousand, or 533%, compared to$40 thousand for the comparable prior year period. The increase primarily resulted from an increase in interest income from marketable securities and short-term deposit resulting from our implementation of a cash management strategy during the year in an effort to generate revenues with excess liquidity. Our financial income, net, for the year ended December 31, 2014 was $40 thousand, representing a decrease of $2.9 million, compared to $2.9million financial expenses for the comparable prior year period. This decrease resulted from recording the difference between the fair value of newconvertible notes and the net carrying amount of the extinguished notes, in the amount of approximately $2.9 million, in the statement of operations reportfor the year ended 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, our net loss forthe year ended December 31, 2015 was $10.6 million, representing an increase of $1.5 million, or 17%, compared to $9.1 million for the year endedDecember 31, 2014. Our net loss for the year ended December 31, 2014 was $9.1 million, representing a decrease of $8.4 million, or 48%, compared to $17.5 million forthe year ended December 31, 2013. Liquidity and Capital Resources Overview To date, we have funded our operations primarily through the sale of equity and debt securities in private equity offerings and debt financings inIsrael to our affiliates (which has subsequently been converted in whole to common equity; no debt or debt-related securities remains on our balance sheet),shareholders and third-party investors, and as of March 18, 2014, through the sale of our ordinary shares in our initial public offering. We have incurred substantial losses since our inception. As of December 31, 2015, we had an accumulated deficit of approximately $47.4 millionand working capital (current assets less current liabilities) of $20.8 million. Do to our expectation that we will continue to not generate any revenues for theforeseeable future, we expect that losses will continue for the foreseeable future. As of December 31, 2015, we had cash and cash equivalents of $4.2 million and marketable securities of $18.8 million invested in accordance withour investment policy, totaling $23.0 million in highly-liquid assets, primarily with a view towards liquidity and capital preservation with an averagematurity of 0.71 years, as compared to $23.7 million and $8.2 million as of December 31, 2014, totaling $32.0 million in highly-liquid assets, respectively.The decrease is mainly attributable to our net loss of $10.6 million 86Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2014, we had cash and cash equivalents of $23.7 million and short-term deposits and marketable securities of $8.2 million,totaling $32.0 million in highly-liquid assets, as compared to $137 thousand and $0 as of December 31, 2013, respectively. This increase was primarily dueto net proceeds from our initial public offering of approximately $39.9 million. Cash Flow from Operating Activities We had negative cash flow from operating activities of $8.5 million for the year ended December 31, 2015 as compared to a negative cash flow fromoperating activities of $9.2 million for the year ended December 31, 2014. The negative cash flow from operating activities for the year ended December 31,2015 was mainly attributable to our net loss of $10.6 million, offset by a stock based compensation expense of $970 thousand and an increase of tradepayables of $1.4 million. 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. Cash Flow from Investing Activities We had negative cash flow from investing activities of $11.1 million for the year ended December 31, 2015 as compared to a negative cash flowfrom investing activities of $9.0 million for the year ended December 31, 2014. The negative cash flow from investing activities for the year ended December31, 2015 was mainly due to an investment in marketable securities in the amount of $26.5 million, offset by maturity of marketable securities and short termdeposits in the amount of $15.5 million. 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 $3.0 thousand for the year ended December 31, 2013. The negative cash flow from investing activities for the year ended December 31,2014 was due to an investment in short-term deposits and marketable securities in the amount of $8.2 million and the purchase of medical equipment in theamount of $750 thousand. Cash Flow from Financing Activities We did not have any cash flow from financing activity for the year ended December 31, 2015 as compared to a positive cash flow from financingactivities of $41.9 million for the year ended December 31, 2014. 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 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. Nevertheless, we will require significant additional financing in the future to fund our operations if and when weprogress into Phase III trials of Aramchol and clinical trials for other indications and other research and development related activities 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. 87Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. Nevertheless, we will require significant additional financing in the future tofund our operations, including if and when we progress into Phase III trials of Aramchol for the treatment of NASH in patients who are obesity and also sufferfrom insulin resistance and clinical trials for other indications, obtain regulatory approval for Aramchol and commercialize the drug. We currently anticipatethat we will utilize approximately $18.0 million for clinical trial activities over the course of the next 12 months. Our future capital requirements will dependon 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; ·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. 88Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Contractual Obligations The following table summarizes our significant contractual obligations at December 31, 2015. Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years (in thousands) Facility leases (1) $164 $51 $102 $11 $- Purchase Obligations 874 327 519 28 Termination payment (2) 180 - - - 180 Total $1,218 $378 $621 $39 $180 (1)For a more detailed description of the facility leases, see “Description of Property and Facilities” above. (2)Consists of remuneration for our Chief Executive Officer’s non-competition undertakings, in the event of termination of his employment, other thanfor cause 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. We have included as purchase obligations our commitmentsunder agreements to the extent they are quantifiable and are not cancelable. 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, 2015. 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.” 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 10, 2016. Thebusiness address for each of our directors, senior management and corporate officers is c/o Galmed Pharmaceuticals Ltd., 16 Tiomkin St., Tel Aviv 6578317,Israel. 89Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Name Age Position Chaim Hurvitz(1)(6) 55 Chairman of the Board, Class III Director; Chairman of the R&DCommittee, Chairman of our Nomination Committee Allen Baharaff 51 President and Chief Executive Officer, Class II Director Dr. Maya Halpern(7) 63 Chief Medical Officer, Class I Director Josh Blacher 43 Chief Financial Officer George Tonelli 56 Vice President, Clinical Operations Dr. Antony Appleyard 41 Vice President, Drug Development William Marth(1)(2)(6) 61 Class III Director Shmuel Nir(2)(3)(4) 54 Class II Director Tali Yaron-Eldar(2)(3)(4)(5)(6) 52 Director; External Director; Chairman of our Audit Committee, Chairmanof our Remuneration Committee David Sidransky, M.D. (1)(2)(3)(4)(5)(6) 55 Director; External Director (1)A member of our research & development committee, or our R&D Committee.(2)Independent director under applicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board.(3)A member of our audit committee, or our Audit Committee.(4)A member of our remuneration committee, or our Remuneration Committee.(5)An external director under the Companies Law, approved by our shareholders.(6)A member of our Nomination Committee.(7)On February 11, 2016, we announced that Dr. Maya Halpern will retire from the Company as our Chief Medical Officer and as a director effective asof April 9, 2016 (the “Resignation Date”), due to her reaching retirement age. Chaim Hurvitz, our chairman of the Board and the Chairman of our R&D Committee and Nomination Committee, joined our Board in 2011. Mr.Hurvitz currently serves as the Chief Executive Officer of CH Health, a private venture capital firm, a position he has held since May 2011. Mr. Hurvitzserved as a member of the board of directors of Teva Pharmaceuticals Industries Ltd. from 2010 to 2014. Previously, he was a member of the seniormanagement of Teva Pharmaceuticals Industries Ltd., serving as the President of Teva International Group from 2002 until 2010, as President and ChiefExecutive Officer of Teva Pharmaceuticals Europe from 1992 to 1999 and as Vice President - Israeli Pharmaceutical Sales from 1999 until 2002. Mr. Hurvitzpresently serves as a member of the management of the Manufacturers Association of Israel and head of its pharmaceutical branch. Mr. Hurvitz holds aBachelor 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, co-founded the Group in 2000,served as the Chief Financial Officer of GHI from 2000 until January 2015, and has served as our Chief Executive Officer since January 2012 and as ourPresident since March 2015. Previously, he held a number of senior executive positions, including a Senior Vice President position at Isramex Projects Ltd.,an energy project financing company, and Managing Director of T+M Trusteeship & Management Services (Israel) Ltd., a subsidiary of a Swiss companyproviding trust and similar services. Since 2001, Mr. Baharaff also serves as a member of the board of directors of the Tel-Aviv Museum of Arts, 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, served as a Medical Advisor at CH Health, an Israeli privateventure capital company controlled by our Chairman from 2011 to 2015, prior to which, from 2000 to 2010, Dr. Halpern worked in the pharmaceuticalindustry as a medical director of Teva Pharmaceutical Industries Ltd. in Israel and in Teva’s international group of subsidiaries. Dr. Halpern’s experiencecovers managing clinical trials, 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. On February 11, 2016, we announced that Dr. Maya Halpern willretire from the Company as our Chief Medical Officer and as a director effective as of the Resignation Date, due to her reaching retirement age. 90Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Josh Blacher, our Chief Financial Officer, has served in such capacity since January 2015. Mr. Blacher joined the Company in October 2014 asSenior Director, Corporate Development. Mr. Blacher has seven years of experience in biotech-related business development, operations and investing, aswell as 14 years of experience in capital markets. Prior to joining the Company, among other things, Mr. Blacher served as Director of Business Developmentat Teva Innovative Ventures, Teva Pharmaceuticals’ early- and mid-stage investment and in-licensing arm from 2008 to 2011. In that capacity, Mr. Blacherhelped build and manage Teva’s portfolio of approximately 20 equity investments in biotech companies, spanning a wide range of development stagecompanies from pre-clinical through Phase III projects, as well as various therapeutic areas. Previously, from 1995 to 2005. Mr. Blacher also held positions inportfolio investment management at Deutsche Asset Management and 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 25 years of progressiveexperience in clinical development operations and regulatory affairs. Prior to joining the Company, Mr. Tonelli planned and managed diabetes trials atMannKind Corporation from 2005 to 2014, culminating in FDA approval of Afrezza® Inhalable Insulin. Prior to joining Mankind Corporation, Mr. Tonelliheld leadership positions in clinical development and project management at Innapharma. He began his career in regulatory affairs in the Medical ResearchDivision of American Cyanamid (Lederle Labs). He holds a Bachelor of Science degree from Rutgers University. 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 and as a director at the University ofIllinois at Chicago College of Pharmacy (UIC). Previously, Mr. Marth has served as chairman of the board of directors of Albany Molecular Research Inc.from May 2012 to December 2013, prior to which he served as President and Chief Executive Officer of Teva Pharmaceutical Industries Ltd. in the Americasfrom June 2010 to November 2012. From January 2008 to June 2010, he served as President and Chief Executive Officer of Teva North America and asPresident and Chief Executive Officer of Teva USA from January 2005 to January 2008. In addition, Mr. Marth worked with several large equity firmsproviding guidance on their healthcare investments. He was a member of Teva’s global executive management team and Teva Americas’ board of directorsfrom 2007 to 2012. From July 1999 to January 2002, he was the Executive Vice President and Vice President of Sales and Marketing for Teva USA. Prior tojoining Teva USA, he held various positions with the Apothecon division of Bristol-Myers Squibb. In February 2008, Mr. Marth was elected Chairman of theGeneric Pharmaceutical Association where he is also a member of the executive committee. He is a licensed pharmacist and previously served as theChairman of the board of directors of the Generic Pharmaceutical Association (GPhA) in 2008 and 2009 and the American Society for Health-SystemPharmacists (ASHP) in 2010, and on various boards and committees, including The University of the Sciences in Philadelphia, the American Society forHealth-System Pharmacists and the Board of Ambassadors for John Hopkins’ Project RESTORE. Mr. Marth earned his B.Sc. in pharmacy from the Universityof Illinois in 1977 and his M.B.A. in 1989 from the Keller Graduate School of Management, DeVry University. 91Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Shmuel Nir, a director of the Company since 2007, serves as President and Chief Executive Officer of Tushia Consulting Engineers Ltd., aninvestment and management services company, and Chairman of the board of directors of Matan Digital Printers Ltd. From March 1998 to January 2008, heserved as President 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. David Sidransky, M.D., has been a director and external director of the Company since June 2014. Dr. Sidransky is a renowned oncologist andresearch scientist named and profiled by TIME magazine in 2001 as one of the top physicians and scientists in America, recognized for his work with earlydetection of cancer. He serves as the Director of the Head and Neck Cancer Research Program at the Sidney Kimmel Comprehensive Cancer Center at JohnsHopkins University. He is a Professor of Oncology, Otolaryngology, Cellular & Molecular Medicine, Urology, Genetics, and Pathology at John HopkinsUniversity and Hospital. Dr. Sidransky has written over 500 peer-reviewed publications, and has contributed to more than 60 cancer reviews and chapters.Dr. Sidransky is a founder of a number of biotechnology companies and holds numerous biotechnology patents. He has been the recipient of many awardsand honors, including the 1997 Sarstedt International prize from the German Society of Clinical Chemistry, 1998 Alton Ochsner Award Relating Smokingand Health by the American College of Chest Physicians and the 2004 Hinda Rosenthal Award presented by the American Association of Cancer Research.Dr. Sidransky has served as Vice Chairman of the Board of Directors of ImClone. He is Chairman of the Board of Champions Oncology and TamirBiotechnology and is on the board of directors of Rosetta Genomics Ltd., Orgenesis Inc., and Advaxis, Inc. He is serving and has served on scientific advisoryboards of corporations and 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 BrandeisUniversity and his M.D. from the Baylor College of Medicine. There are no family relationships between any director or executive officer. There are noarrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any director or executive officer was selected as adirector or member of senior management, as the case may be. Scientific Advisory Board We seek advice from our Scientific Advisory Board generally on scientific and medical matters. Our Scientific Advisory Board includes: Prof. VladRatziu, from the University Pierre et Marie Curie in Paris, France and coordinator of the EU FP7 FLIP consortium; Prof. Scott Friedman from the Icahn Schoolof Medicine at Mount Sinai in New York, United States; Prof. Arun Sanyal, from the Virginia Commonwealth University in Richmond, Virginia; Prof. RohitLoomba, from the University of California San Diego School of Medicine in San Diego, California; Prof. Jose Mato, from CIC bioGUNE and CICbiomaGUNE, Spain; Prof. Eric Gershwin, Chief, Division of Rheumatology Allergy and Clinical Immunology of University of California at Davis, in Davis,California; and Prof. Ran Oren from Hadassah University Hospital in Ein Kerem, Jerusalem, Israel. 92Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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), which includes exemption and release of the Office Holders from liability for breach of his or her duty ofcare to the Company, an undertaking to indemnify the Office Holder, post factum indemnification or insurance; any grant, payment, remuneration,compensation, or other benefit provided in connection with termination of service; and any benefit, other payment or undertaking to provide any payment asaforesaid, or the Terms of Office and Employment. The Company’s compensation policy with respect to the Terms of Office and Employment of theCompany’s Office Holders, or the Compensation Policy, was approved by the Board in November 2014 after considering the recommendations of theRemuneration Committee and was adopted by the Company’s shareholders in December 2014. The term ‘Office Holder’ as defined in the Companies Law includes a general manager, chief business manager, deputy general manager, vicegeneral manager, any other person fulfilling or assuming the responsibilities of any of the foregoing positions without regard to such person’s title, as well asa director, or a manager directly subordinate to the general manager or the chief executive officer. As of March 2016, in addition to the seven members of theBoard, the Company considers five other individuals, including its Chief Financial Officer, its Vice President of Clinical Operations, and its Vice President –Drug Development 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 in addition to the approval of the Compensation Committee and the Board, in that order; with respect to achief executive officer or an officer who is a controlling shareholder, the approval of the shareholders 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 anon-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 Office Holders(who are not directors or controlling shareholders) requires the approval of the Remuneration Committee only, if the Remuneration Committee determinesthat 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, 2015, was approximately $2.1 million. This amount includes approximately $112 thousand 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 five other individuals, namely its Chief Financial Officer, its VP of Clinical Operations, its former VP Research and Development, itsVP Drug Development and its VP Regulatory Affairs & Project Management, to have been Office Holders in 2015. 93Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015, options to purchase 1,397,799 of our ordinary shares granted to our Office Holders as a group were outstanding, of whichoptions to purchase 869,524 of our ordinary shares were vested, with a weighted average exercise price of $2.0 per ordinary share of which 241,299 optionswere exercised to 177,489 ordinary shares in a cashless exercise. For outstanding equity-based awards granted to our Office Holders, see below under “Item 6.Directors, Senior Management and Employees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” Individual Compensation of Covered Executives The following table sets forth the compensation granted to the five most highly compensated Office Holders during or with respect to the year endedDecember 31, 2015. All amounts reported in the table reflect the cost to the Company, as recognized in its financial statements for the year ended December31, 2015. The five individuals for whom disclosure is provided are referred to herein as “Covered Executives.” Information Regarding the Covered Executives Compensation for Services(1) Name and Principal Position(1) Base Salary/consulting fee ($) Benefits and Perquisites ($)(2) Cash Bonus ($)(3) Equity-Based Compensation ($)(4) Other ($)(5) Total ($) Allen Baharaff (President and Chief ExecutiveOfficer and Director) 240,000 56,196 88,000 414,430 30,000 828,626 Josh Blacher (Chief Financial Officer) 123,586 26,868 30,897 93,232 - 274,584 Maya Halpern (Chief Medical Officer and Director) 61,793 13,489 22,657 125,337 30,000 253,277 George Tonelli (Vice President of ClinicalOperations) 145,000 - 34,800 41,029 - 220,829 Antony Appleyard (Vice President Drug Development) 149,212 - - 10,445 - 159,657 (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 3.88 = $1.00, which reflects the average conversion rate for fiscal year ended December 31, 2015. (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. 94Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (3)Amounts reported in this column refer to the cash bonuses provided by the Company with respect to 2015, which have been provided for inthe Company’s financial statements for the year ended December 31, 2015 (including if such bonuses were paid during 2016). Theyexclude bonuses paid during 2015 which were provided for in the Company’s financial statements for previous years. The amounts reportedin this column include ad-hoc cash bonuses of $10,285 and $40,000 to Mr. Baharaff and Dr. Halpern, respectively, which were approved bythe Company's shareholders on May 11, 2015 with respect to the year 2014. (4)Amounts reported in this column represent the expense recorded in the Company’s financial statements for the year ended December 31,2015 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 with respect to the year 2015 and recorded in the financial statements for the yearended December 31, 2015 relating to directors’ fees. Compensation of Directors As approved by our shareholders at our 2015 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.” 95Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 $200,000 in recognition of his efforts and contribution with respect to theconsummation of our initial public offering. Mr. Baharaff will also receive other benefits required under Israeli law or that are customary for senior executivesin Israel such as reimbursement for cellular telephone expenses, automobile maintenance expenses, and Company contributions equivalent to 5%, 8.33%,2.5% and 7.5% of his gross monthly base salary towards certain pension, or a manager’s insurance policy, severance, disability and tax-advantaged savingsfunds, or a study fund, respectively. Mr. Baharaff will also contribute 5% and 2.5% of his gross monthly salary towards the manager’s insurance policy andstudy fund, respectively. Mr. Baharaff’s employment agreement is terminable by either party upon 90 days’ prior written notice, and contains customaryprovisions regarding noncompetition, confidentiality of information and assignment of inventions. For cash bonuses granted to Mr. Baharaff see “Item 6. Directors, Senior Management and Employees— B. Compensation—Individual Compensationof Covered Executives.” For outstanding equity-based awards granted to Mr. Baharaff see below under “Item 6. Directors, Senior Management andEmployees—E. Share Ownership—Certain Information Concerning Equity Awards to Office Holders.” Employment Agreement with Our Chief Medical Officer We entered into an employment agreement with Dr. Maya Halpern, our Chief Medical Officer and a member of our Board, dated December 23, 2013,on a part-time basis. Under her employment agreement, which became effective as of February 2014, Dr. Halpern is entitled to a gross monthly salary of NIS20,000 (which is equivalent to US$ 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. Halpern 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. On February 11, 2016, we announced that Dr. Maya Halpern will retire from the Company as our Chief Medical Officer and asa director effective as of the Resignation Date, due to her reaching retirement age. 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 10, 2016, a total of 3,090,492shares were reserved for issuance under our 2013 Plan, of which (1) Options to purchase 1,988,753 ordinary shares and 41,250 restricted stock units, or RSUswere issued and outstanding thereunder (i.e., were granted but not canceled, expired or exercised); (2) Options to purchase 214,299 ordinary shares wereexercised and (3) 304,190 shares remain unallocated for future equity awards pursuant to our 2013 Plan. In addition, on February 4, 2016, our Boardapproved grants of 470,000 options and 37,500 RSUs to certain of our Office Holders, which are subject to shareholders meeting approval, and thus notreflected in the issued and outstanding options and RSUs amounts set forth above. Our 2013 Plan, which was adopted by our Board on September 2, 2013,and approved by our shareholders in December 30, 2013 (as was amended by the Board and our shareholders on March 30, 2015 and May 11, 2015,respectively), provides for the grant of options to purchase our ordinary shares and the issuance of restricted share units, to our and our affiliates’ respectivedirectors, employees, Office Holders, service providers and consultants. Our 2013 Plan provides for such equity-based compensation under various anddifferent tax regimes, including those detailed below. 96Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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 and RSUs granted under the 2013 Plan will vest in accordance with the vesting dates as determined by the Board following therecommendation of the Remuneration Committee or any other similar committee of the Board with respect to each grant. Generally, options and RSUs thatare not exercised within ten years from the grant date expire, unless otherwise determined by the Board and the Remuneration Committee, as applicable,provided however, that, pursuant to our Compensation Policy, any equity-based awards to Office Holders must include both a minimum vesting period of notless than one year from the date of grant, and an exercise period of no more than ten years from the date of grant. Upon such date or dates designated in the applicable award agreement, unless earlier forfeited, subject to the receipt of any approvals required fromany relevant tax authority, we shall settle each RSU by delivering one Share. 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. 97Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 the event of grantee’s termination prior to a vesting date by reason of such grantee's death or disability, all of such grantee’s RSUs shallimmediately become vested as of the date of such termination. In the event of a grantee’s termination for cause prior to settlement, all of such grantee’s RSUsshall immediately be forfeited for no consideration as of the date of such termination. If a grantee’s employment or service is terminated for any other reason,(1) all vesting with respect to such grantee's RSUs shall cease, (2) all of such grantee’s unvested RSUs shall immediately be forfeited for no consideration asof the date of such termination, and (3) to the extent not already settled, all of such grantee’s vested RSUs shall be settled in accordance with the settlementschedule set forth in the applicable award agreement. 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. 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 expired at theannual general meeting of shareholders held in May 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. Halpernserves as our Class I Director; Mr. Shmuel Nir and Mr. Allen Baharaff serve as our Class II Directors; and Mr. William Marth and Mr. Chaim Hurvitz serve asour 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). In our shareholders meeting held on May 11, 2015, it wasresolved to re-elect Dr. Halpern as a Class I director for a term of approximately three years expiring at the end of the annual general meeting of shareholdersto be held in 2018 and when her successor has been duly elected. 98Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. The minimum and maximum number of directors may be changed, at any time and from time to time, by amajority vote of our Directors then in office, provided that no decrease in the number of Directors shall shorten the term of any incumbent Director. Any amendment of our Articles regarding the election of directors, as described above, require the affirmative vote of at least 75% of the votingrights in the Company. See “—External directors” for a description of the procedure for the election of 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. Alternate directors Our Articles provide, as allowed by the Companies Law, that any director may, subject to the conditions set thereto, appoint a person as an alternateto act in his place, to remove the alternate and appoint another in his place and to appoint an alternate in place of an alternate whose office is vacated for anyreason whatsoever. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or aperson who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who isalready serving as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not alreadyserving as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external director and tohave either “financial and accounting expertise” or “professional expertise,” depending on the qualifications of the external director he or she is replacing. Aperson who does not have the requisite “financial and accounting experience” or the “professional expertise,” depending on the qualifications of the externaldirector he or she is replacing, may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as anindependent director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under theCompanies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointingdirector ceases to be a director or terminates the appointment. 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.” No person may be appointed as an external director if such person is a relative of a controlling shareholder or if such person, a relative, partner oremployer of such person, or anyone to whom such person is directly or indirectly subordinate, or any entity under such person’s control, has or had, on orwithin the two years preceding the date of such person’s appointment to serve as an external director, any affiliation with the company to whose board ofdirectors the external director is proposed to be appointed, with any controlling shareholder of the company, with a relative of such controlling shareholder,or with any entity controlled, on the date of such appointment or within the preceding two years, by the company or by a controlling shareholder of thecompany. If the company has no controlling shareholder or a shareholder holding 25% or more of the company’s voting rights, a person may not serve as anexternal director if the person has any affiliation, at the time of the appointment, to the chairman of the board of directors, the chief executive officer or themost senior financial officer of the company, or to a shareholder holding 5% or more of the outstanding shares or voting rights of the company. 99Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 “controlling shareholder” means a shareholder with the ability to direct the activities of the company, other than by virtue of being anoffice holder. A shareholder is presumed to have “control” of the company and thus to be a controlling shareholder of the company if the shareholder holds50% or more of the “means of control” of the company. “Means of control” is defined as (1) the right to vote at a general meeting of a company or acorresponding body of another corporation; or (2) the right to appoint directors of the corporation or its general manager. The term “affiliation” includes: ·an employment relationship; ·a business or professional relationship maintained on a regular basis; ·or control; and ·service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if suchdirector was appointed as a director of the private company in order to serve as an external director following the initial public offering. The term “relative” is defined as a spouse, sibling, parent, grandparent, descendant, spouse’s descendant, sibling and parent and the spouse of eachof the foregoing. 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. However, if at least one of our other directors (1) meets the independence requirements of the Exchange Act, (2) meets the Nasdaqrequirements for membership on the audit committee and (3) has financial and accounting expertise as defined in the Companies Law and applicableregulations, then neither of our external directors is required to possess financial and accounting expertise as long as both possess other requisite professionalqualifications as required under the Companies Law and regulations promulgated thereunder. The regulations promulgated under the Companies Law define an external director with requisite professional qualifications as a director whosatisfies one of the following requirements: (1) the director holds an academic degree in either economics, business administration, accounting, law or publicadministration, (2) the director either holds an academic degree in any other field or has completed another form of higher education in the company’sprimary field of business or in an area which is relevant to his or her office as an external director in the company, or (3) the director has at least five years ofexperience serving in any one of the following capacities, or at least five years of cumulative experience serving in two or more of the following capacities:(a) a senior business management position in a company with a substantial scope of business, (b) a senior position in the company’s primary field of businessor (c) a senior position in public administration. 100Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 board of directors must make the determination as to the financial and accounting expertise, and as to the professional qualifications, of adirector taking into consideration those criteria and matters set forth in the regulations. A director with financial and accounting expertise is a director whoby virtue of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters andfinancial statements so that he or she is able to fully understand our financial statements and initiate debate regarding the manner in which the financialinformation is presented. In addition, the boards of directors of public companies are required to make a determination as to the minimum number of directorswho must have such financial and accounting expertise based on, among other things, the type of company, its size, the volume and complexity of thecompany’s activities and the number of directors. The Board has determined that the minimum number of directors with financial and accounting expertise,in addition to the external director or directors who have such expertise, will be one, and that Mr. Marth qualifies as such. The external director who qualifiesto have such expertise is Ms. Yaron-Eldar. In addition, our Board has determined that each of Ms. Yaron-Eldar and Mr. Marth qualifies as an audit committeefinancial expert pursuant to the applicable SEC rules, and accordingly as having the necessary financial sophistication as required by the Nasdaq CapitalMarket rules. Election and dismissal of external directors External directors are elected for a term of three years at the general meeting of shareholders by a simple majority, provided that the majorityincludes either: ·a majority of the shares that are voted at the meeting in favor of the election of the external director, excluding abstentions, include at least amajority of the votes of shareholders who are not controlling shareholders and who do not have a personal interest in the appointment (excluding apersonal interest that did not result from the shareholder’s relationship with the controlling shareholder), or ·the total number of shares held by the shareholders mentioned in the paragraph above that are voted against the election of the external director doesnot exceed two percent of the aggregate voting rights in 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: ·his/her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rights and isapproved at a shareholders’ meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholdersvoting for such reelection exceeds 2% of the aggregate voting rights in the company, subject to additional restrictions set forth in the CompaniesLaw with respect to the affiliation of the external director nominee; ·the external director proposed his or her own nomination, and such nomination was approved in accordance with the requirements described in theparagraph above; or ·the reappointment of the external director has been proposed by the board of directors and the appointment was approved by the majority ofshareholders required for the initial appointment of an external director. 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, in that order, must determine that, in light of the external director’s expertise and special contribution to the board ofdirectors and its committees, the re-election for an additional term is to the company’s best interest; (ii) the external director must be re-elected by therequired majority of shareholders as described above; and (iii) the term during which the nominee has served as an external director and the reasons given bythe audit committee and board of directors for extending his or her term of office must be presented to the shareholders prior to their approval. 101Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 the board of directors has learned there is a concern that: theexternal director no longer meets the statutory requirements for his appointment as an external director; or the external director is in breach of his or her dutyof loyalty to the company. The board of directors shall discuss the matter no later than in the first board of directors meeting convened after the board hadbecome aware of such circumstances. In the event the board of directors has determined that an external director had ceased to comply with the requirementsset forth under the Companies Law or that he or she breached his or her duty of loyalty to the company, than the board of directors shall convene a generalmeeting of the shareholders and will include on the agenda a resolution for the removal from office of such external director. The shareholders vote requiredto removal of an external director from office is the same majority required for the appointment; provided, however, that the external director has been giventhe opportunity to present his or her position. In addition, a court of law may determine, upon a request of a director or a shareholder, to dismiss the externaldirector after finding that such external director no longer meets the statutory requirements of an external director set under the Companies Law or that theexternal director is in breach of his or her duty of loyalty to the company. 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,employment and provision of professional services as are applicable to external directors. 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 each of the audit committee and the board of directors determine, in that order, that in light of the independentdirector’s expertise and special contribution to the board of directors and its committees, the reappointment for an additional term is in the company’s bestinterest. 102Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 livelihoodmainly depends 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 is 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. 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. 103Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 quarter, at which time, among other things, it reviews,and either approves or disapproves, the financial results of the Company for the immediately preceding calendar quarter and conveys its conclusions in thisregard to the Board. Our Audit Committee also monitors generally the services provided by the Company’s external auditors to ensure their independence,and reviews all audit and non-audit services provided by them. On March 30, 2015, our Board approved the adoption of a preapproval policy, such that the Chairman of the Audit Committee is authorized to pre-approve any engagement of our external auditors during a period of twelve months from the date of such approval, for the provision of non-auditing services,for fees not to exceed $20,000, and any such engagement which exceeds $20,000 shall require a pre-approval by the entire Audit Committee. Once serviceshave been pre-approved, our management must then report to the Audit Committee on a periodic basis regarding the extent of services actually provided inaccordance with the pre-approval policy, and regarding the fees for the services performed. Such fees for 2015 were pre-approved by the Audit Committee inaccordance with the pre-approval policy. 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 ofour Audit Committee members are “independent directors” in accordance with the Nasdaq Capital Market corporate governance requirements, asaffirmatively determined by our Board, and Ms. Yaron-Eldar and Dr. Sidransky also meet the qualifications for service as “external directors” under theCompanies Law and the regulations promulgated thereunder, also as affirmatively determined by our Board and our shareholders. In addition, our Board hasaffirmatively determined that Ms. Yaron-Eldar also qualifies as an audit committee financial expert pursuant to the applicable SEC rules, and accordingly hasthe necessary financial sophistication as required by the Nasdaq Capital Market rules, and as a financial and accounting expert under the Companies Law. 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. 104Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 The Nasdaq Capital Market corporate governance requires each company adopting a nominating committee to certify that it has adopted a formalwritten charter or board resolution, as applicable, addressing the nominations process and such related matters as may be required under U.S. federal securitieslaws. Although not required as a foreign private issuer to adopt a nominating committee, we have decided to follow such requirement, as resolved in theBoard's meeting held on December 15, 2015. Our Board has adopted a nominating committee charter setting forth the responsibilities of the Nominating Committee consistent with the ListingRules of the Nasdaq Capital Market. The Nominating Committee is responsible for identifying individuals qualified to be appointed as board members, and recommending to the Boardof appropriate director nominees for election at the general meeting of shareholders. Independent director oversight of nominations enhances investor confidence in the selection of well-qualified director nominees, as well asindependent nominees as required by the rules. The Nasdaq Capital Market listing rule is also intended to provide flexibility for a company to choose anappropriate board structure and reduce resource burdens, while ensuring that independent directors approve all nominations. Mr. Hurvitz, Ms. Yaron-Eldar, Mr. Marth and Dr. Sidransky are the current members of our Nominating Committee, with Dr. Sidransky serving aschairperson. Nasdaq Capital Market Listing Rule 5605(e) requires that our Nominating Committee be comprised solely of independent directors unless theNominating Committee is comprised of at least three members and the Board determines that such non-independent director’s membership, which shall notbe longer than two years, is required by the best interests of the Company and our shareholders. 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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 theduty of care but only if a provision authorizing such exculpation is included in its articles of association. Our Articles include such a provision. TheCompany may 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: ·a monetary liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement orarbitrator’s award approved by a court. However, if an undertaking to indemnify an Office Holder with respect to such liability is provided inadvance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on thecompany’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directorsas reasonable under the 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; ·a monetary liability imposed on him or her in favor of an injured party at an Administrative Procedure (as defined below) pursuant to Section52(54)(a)(1)(a) of the Securities Law; ·expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigationexpenses and reasonable attorneys’ fees; and 106Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. ·An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4(Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures orInterruption of procedures subject to conditions) to the Securities Law. 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; ·a monetary liability imposed on the Office Holder in favor of a third-party;. ·a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a)of the Securities Law; and ·expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonableattorneys’ fees. 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 ourOffice Holders, other than our VP Drug Development and VP Regulatory Affairs & Project Management, have entered into an indemnification agreement withus, exculpating them, to the fullest extent permitted by Israeli law, from liability to us for damages caused to us as a result of a breach of the duty of care andundertaking to indemnify them to the fullest extent permitted by Israeli law, including with respect to liabilities resulting from certain acts performed by suchOffice Holders in their capacity as an Office Holder of the Company, our subsidiaries or our affiliates. In accordance with the indemnification agreement, weagree to indemnify our Office Holders for certain liabilities resulting from our initial public offering. The indemnification is limited both in terms of amountand 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. 107Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. D. Employees. As of December 31, 2015, we had 17 employees and executive officers, of which 11 were full-time employees, four were part-time employees andtwo were independent consultants. Nine of such employees and executive officers were involved in our clinical and product development operations and sixserved in general and administrative capacities. Fifteen of our employees are located in Israel, our VP of drug development is located in the United Kingdomand our VP of Clinical Operations is located in the United States. The three employee increase from 2014 was the result of our growing activity in connectionwith our clinical studies (including the expansion of our phase IIB clinical trial to the United States.), and research and development 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 favorable. E. Share Ownership. As of March 10, 2016, there were 37 record holders of our ordinary shares holding an aggregate of 47.58% of our ordinary shares on a diluted basis. 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 10, 2016 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 10,2016 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 10, 2016, which does not include an aggregate of 3,155,752 ordinary shares that were either subject tooutstanding equity awards granted or available for grant, of which: (i) 2,610,263 were subject to outstanding options, RSUs and warrants (of which: (a)1,425,584 were vested or will be vested within 60 days as of the date hereof; and (b) 507,500 were allocated by the Board to certain Office Holders and aresubject to shareholder approval); (ii) 241,299 were exercised into 177,488 in a cashless exercise and (iii) 304,190 remained available for future equity awardspursuant to our 2013 Plan. 108Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 10, 2016 Number of ordinaryshares beneficiallyowned(1) Percentage of ordinaryshares beneficiallyowned Chaim Hurvitz(2) 1,003,874 9.0%Allen Baharaff(3) 4,162,945 35.2%Dr. Maya Halpern(4) 124,152 1.1%Shmuel Nir(5) 50,021 * William Marth 11,440 * Tali Yaron-Eldar - * Dr. David Sidransky - * Josh Blacher 32,125 * George Tonelli 2,500 * Dr. Antony Appleyard 12,602 * All directors and executive officers as a group (10 persons) 5,399,659 46.29% __________________ *Less than 1%. (1)All options included are either currently exercisable or will be exercisable within 60 days from the date hereof. (2)Ordinary shares beneficially owned consist of 1,003,874 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)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 of directorsand (ii) options to purchase 742,122 ordinary shares that are currently exercisable within 60 days from March 10, 2016, of which 567,162 have anexercise price per share of NIS 0.01 and will expire in September 2023, 174,960 have an exercise price of $0.53 and will expire in September 2023. Allsuch options were granted on December 30, 2013. Of the 4,162,945 ordinary shares, Mr. Baharaff exercises sole voting and dispositive power over746,122 shares beneficially owned and shared voting and dispositive power with G. Yaron Medical Research Ltd. over 3,416,823 shares. (4)Ordinary shares beneficially owned consist of (i) options to purchase 64,152 shares that are currently exercisable or will be exercisable within 60 daysfrom March 10, 2016, all of which have an exercise price per share of $3.57 and which will expire on July 8, 2016; and (ii) options to purchase 60,000ordinary shares that are currently exercisable or will be exercisable within 60 days from March 10, 2016, all of which have an exercise price per share of$5.49 and which will expire in April 2021. (5)Ordinary shares beneficially owned consist of (i) options to purchase 8,583 shares that are currently exercisable or will be exercisable within 60 daysfrom March 10, 2016, all of which have an exercise price per share of $3.57, will expire in February 2024 and were granted on February 21, 2014, and (ii)41,438 ordinary shares held through Tushia Consulting Engineers Ltd., of which Shmuel Nir is its controlling shareholder. 109Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. This table is based upon information supplied by officers and directors and is believed to be accurate. Except as indicated in footnotes to this table,we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned bythem, based on information provided to us by such shareholders. Unless otherwise noted below, each shareholder’s address is: c/o Galmed PharmaceuticalsLtd., 16 Tiomkin St., Tel Aviv, Israel 6578317. Certain Information Concerning Equity Awards to Office Holders The following tables set forth information, as of March 10, 2016, concerning all outstanding equity awards to Office Holders. Name ofOfficeHolder Date of grant Exerciseprice pershare ($) Shares subjectto the option Sharesvested andunexercised Sharesunvested Scheduledate ofexpirationChaim Hurvitz February 4, 2016 $5.49 10,000(1)(2) 0 10,000 Feb-04-2026 February 4, 2016 $5.95 30,000(1) 0 30,000 Feb-04-2026 Allen Baharaff December 22, 2013 NIS0.01 266,085 266,085 0 Sep-2-2023 December 22, 2013 $0.53 174,960 174,960 0 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 February 4, 2016 $5.49 140,000(1)(2) 0 140,000 Feb-04-2026 February 4, 2016 $5.95 170,000(1)(2) 0 170,000 Feb-04-2026 Maya Halpern December 22, 2013 $3.57 64,152 64,152 0 Sep-2-2023(3) May 11, 2015 $5.49 120,000(3) 0 120,000 May-11-2025 February 4, 2016 $5.95 75,000(1)(3) 0 75,000 Feb-04-2026 William Marth March 18, 2014 $3.57 17,166 10,010 7,150 Sep-02-2023 May 11, 2015 $5.49 10,000 0 10,000 May-11-2025 February 4, 2016 $5.95 30,000(1) 0 30,000 Feb-04-2026 Shmuel Nir February 21, 2014 $3.57 8,583 8,583 0 Sep-02-2023 May 11, 2015 $5.49 10,000 0 10,000 May-11-2025 February 4, 2016 $5.95 30,000(1) 0 30,000 Feb-04-2026 110Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Tali Yaron-Eldar May 11, 2015 $5.49 10,000 0 10,000 May-11-2025 February 4, 2016 $5.95 30,000(1) 0 30,000 Feb-04-2026 David Sidransky May 11, 2015 $5.49 10,000 0 10,000 May-11-2025 February 4, 2016 $5.95 30,000(1) 0 30,000 Feb-04-2026 Josh Blacher December 30, 2014 $5.49 90,000 22,500 67,500 Dec-30-2024 January 3, 2016 $7.61 55,000 0 55,000 Jan-03-2026 George Tonelli March 30, 2015 $9.73 10,000 0 10,000 March-30-2025 April 6, 2015 $9.13 45,000 0 45,000 April-6-2025 January 3, 2016 $7.61 30,000 0 30,000 Jan-03-2026 Antony Appleyard December 22, 2013 $3.57 9,477 9,477 0 Sep-2-2023 December 30, 2014 $5.49 10,000 0 10,000 Dec-30-2024 January 3, 2016 $7.61 7,500 0 7,500 Jan-03-2026 Name ofOfficeHolder Date of grant Sharessubject tothe RSUs Sharesvested Sharesunvested Chaim Hurvitz Feb-04-2016 7,500(1) 0 7,500 Maya Halpern Feb-04-2016 16,250(1)(3) 0 16,250 William Marth Feb-04-2016 7,500(1) 0 7,500 Shmuel Nir Feb-04-2016 7,500(1) 0 7,500 Tali Yaron-Eldar Feb-04-2016 7,500(1) 0 7,500 David Sidransky Feb-04-2016 7,500(1) 0 7,500 Josh Blacher Jan-03-2016 13,750 0 13,750 George Tonelli Jan-03-2016 7,500 0 7,500 (1)This equity grant is subject to shareholder approval, following the approval and recommendation of our Remuneration Committee and our Boardprovided on February 2, 2016 and February 4, 2016, respectively. (2)This option grant was approved by our shareholders in May 2015, following the approval and recommendation of the Board and the RemunerationCommittee. However, the options were never granted as they were also subject to obtaining a tax pre-ruling from the Israeli Tax Authority, which was notreceived at the time of the approval. The allocation was re-approved by our Remuneration Committee and our Board and it is subject to shareholders’ re-approval. 111Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (3)On February 11, 2016, we announced that Dr. Maya Halpern will retire from the Company as our Chief Medical Officer and as a director effective asof the Resignation Date, due to her reaching retirement age. Due to such notification: (i) the option to purchase 64,152 ordinary shares of the Companymay be exercised within a period of ninety (90) days after the Resignation Date and thereafter will immediately expire and terminate; (ii) on March 2016,our Board has resolved to accelerate half of the options to purchase 120,000 ordinary shares of the Company, granted to Dr. Halpern in May 2015, for herservices as Chief Medical Officer and as a director of the Company and to extend the exercise period to five years from the Resignation Date; and (iii)following the Resignation Date the grant of options to purchase 75,000 ordinary shares of the Company and 16,250 RSUs, which on the ResignationDate will still be subject to shareholder approval, shall return to the Company's option pool. 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 10, 2016. 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. 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. 112Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. RSUs. We have granted RSUs to certain of our Office Holders. Such award agreements may contain 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 is terminated, RSUs that are vested shall be settled in accordance withthe settlement schedule set forth in the applicable award agreement. C. Interests of Experts and Counsel. Not applicable. 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. 113Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 $4.68 $15.24 2015 $5.83 $13.25 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 First Quarter 2015 $5.83 $13.25 Second Quarter 2015 $8.25 $11.85 Third Quarter 2015 $7.35 $10.57 Fourth Quarter 2015 $7.44 $10.01 Monthly Information: September 2015 $7.41 $9.02 October 2015 $7.40 $10.01 November 2015 $8.22 $9.93 December 2015 $4.58 $6.85 January 2016 $5.30 $7.65 February 2016 $4.45 $6.42 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 March 18, 2014 under the symbol “GLMD.” We are considering applying for adual listing of our shares on the Tel Aviv Stock Exchange and will have a separate announcement in the event we decide to proceed with such listing andreceive all necessary approvals. 9.D. Selling shareholders Not applicable. 9.E. Dilution Not applicable. 9.F. Expenses of the issue Not applicable. 114Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 our 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. 115Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Borrowing Powers Our Board may from time to time, and at its reasonable discretion, borrow or secure the payment of any sum or sums of money for reasonableCompany purposes. The directors may raise or secure the repayment of such sum or sums in such manner, at such times and upon such terms and conditions inall respects as they see fit and, in particular, by issuing bonds, perpetual or redeemable debentures, debenture stock or any mortgages, charges or othersecurities on the undertaking of the whole or any part of the property of the Company, both present and future, including current uncalled capital and calledbut unpaid capital. 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”. 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. Under the Companies Law, a "personal interest" includes an interest of any person in an action or transaction of a company, including a personalinterest of one’s relative or of a corporate body in which such person or a relative of such person is a 5% or greater shareholder, director or general manager orin which he or she has the right to appoint at least one director or the general manager, but excluding a personal interest stemming from one’s ownership ofshares in a company. A personal interest furthermore includes the personal interest of a person for whom the Office Holder holds a voting proxy or the interestof the Office Holder with respect to his or her vote on behalf of the shareholder for whom he or she holds a proxy, even if such shareholder itself has nopersonal interest in the approval of the matter. An Office Holder is not, however, obliged to disclose a personal interest if it derives solely from the personalinterest of a relative of such Office Holder in a transaction that is not considered an extraordinary transaction. 116Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Under the Companies Law, an extraordinary transaction is defined as any of the following: ·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.” 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 the board of directors (as applicable) has a personalinterest in the approval of a transaction, then all directors may participate in discussions of the audit committee and/or the board of directors on suchtransaction and the voting 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. 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, regarding the company’s receipt of services from the controlling shareholder, and if such controlling shareholder is also an office holder or anemployee of the company, regarding his or her terms of service or employment, require the approval of the audit committee or remuneration committee, theboard of directors and the shareholders of a company by a Special Majority, in that order. 117Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. Under theCompanies Law, the distribution amount is further limited to the greater of retained earnings or earnings generated over the two most recent years legallyavailable for distribution. In the event that we do not have retained earnings or earnings generated over the two most recent years legally available fordistribution, we may seek the approval of the court in order to distribute a dividend. The court may approve our request if it is convinced that there is noreasonable concern that the payment of a dividend will prevent us from satisfying our existing and foreseeable obligations as 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 ofdirectors. The Articles provide that the Board may from time to time declare, and cause the Company to pay, such dividends as may appear to it to be justifiedby the profits of the Company and that the Board has the authority to determine the time for payment of such dividends and the record date for determiningthe shareholders entitled to receive such dividends, provided the date is not before the date of the resolution to distribute the dividend. Declaration ofdividends does not require 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. 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 then inoffice or 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 holderor holders of 5% of its voting rights. All demands for shareholder meetings must set forth the items to be considered at that meeting. Pursuant to theCompanies Law, 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 shareholdermeeting, provided the item is appropriate for discussion at a shareholder meeting. 118Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. According to regulations promulgatedpursuant to the Companies Law and governing the terms of notice and publication of shareholder meetings of public companies, or the General MeetingRegulations, holder(s) of one percent or more of the Company’s voting rights may propose any matter appropriate for deliberation at a shareholder meeting tobe included on the agenda of a shareholder meeting, generally by submitting a proposal within seven days of publicizing the convening of a shareholdermeeting, or, if the Company publishes a preliminary notice at least 21 days prior to publicizing the convening of a meeting (stating its intention to convenesuch meeting and the agenda thereof), within 14 days of such preliminary notice. Any such proposal must further comply with the information requirementsunder 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. Our Articles determine that the quorum required for either an annual (regular) or an extraordinary (special) general meeting of shareholders consistsof at least two shareholders present in person or by proxy holding shares comprising in the aggregate more than 33.33% of the voting rights of the Company.If a meeting is convened by the Board upon the demand of shareholders or upon the demand of less than 50% of the directors then in office or directly bysuch shareholders or directors and no quorum is present within half an hour from the time appointed, it shall be cancelled. If a meeting is otherwise called andno quorum is present within such 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 asthe Board may determine and specify in the notice of the general meeting and it shall not be necessary to give notice of such adjournment. If a quorum is notpresent within half an hour from the time stated for such adjourned meeting, any two shareholders present in person or by proxy at such meeting shallconstitute a quorum even if, between them, they represent shares conferring 33.33% or less of the voting rights of the Company. Generally, under the Companies Law and the Articles, shareholder resolutions are deemed adopted if approved by the holders of a simple majority ofthe voting rights represented at a meeting and voting unless a different majority is required by law or pursuant to the Articles. The Companies Law providesthat resolutions on certain matters, such as amending a company’s articles of association, assuming the authority of the board of directors in certaincircumstances, appointing auditors, appointing external directors, approving certain transactions, increasing or decreasing the registered share capital andapproving most mergers must be made by the shareholders at a general meeting. A company may determine in its articles of association certain additionalmatters in respect of which resolutions by the shareholders in a general meeting will be required. Access to corporate records Under the Companies Law, all shareholders generally have the right to review minutes of our general meetings, our shareholder register and registerof significant shareholders (as defined in the Companies Law), our articles of association, our financial statements, other documents as provided in theCompanies Law, and any document we are required by law to file publicly with the Israeli Companies Registrar. Any shareholder who specifies the purposeof its request may request to review any document in our possession that relates to: (i) any action or transaction with a related party which requiresshareholder approval under the Companies Law; or (ii) the approval, by the board of directors, of an action in which an office holder has a personal interest.We may deny a request to review a document if we determine that the request was not made in good faith, or if such denial is necessary to protect our interestor protect a trade secret or patent. 119Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, taking the shareholder’s position in the company into account. Mergers and Acquisitions under Israeli Law (i) Merger The Companies Law permits merger transactions if approved by each party’s board of directors, and, unless certain requirements described under theCompanies Law are met, a majority of each party’s shareholders, by a majority of each party’s shares that are voted on the proposed merger at a shareholders’meeting. The board of directors of a merging company is required pursuant to the Companies Law to discuss and determine whether in its opinion there existsa reasonable concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, taking intoaccount the financial condition of the merging companies. If the board of directors has determined that such a concern exists, it may not approve a proposedmerger. Following the approval of the board of directors of each of the merging companies, the boards of directors must jointly prepare a merger proposal forsubmission to the Israeli Registrar of Companies. For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares voting at theshareholders meeting (excluding abstentions) that are held by parties other than the other party to the merger, any person who holds 25% or more of themeans of control of the other party to the merger or any one on their behalf including their relatives or corporations controlled by any of them, vote againstthe merger. In addition, if the non-surviving entity of the merger has more than one class of shares, the merger must be approved by each class of shareholders. If the transaction would have been approved but for the separate approval of each class of shares or the exclusion of the votes of certain shareholdersas provided above, a court may still rule that the company has approved the merger upon the request of holders of at least 25% of the voting rights of acompany, if the court holds that the merger is fair and reasonable, taking into account the appraisal of the merging companies’ value and the considerationoffered to the shareholders. Under the Companies Law, each merging company must send a copy of the proposed merger plan to its secured creditors. Unsecured creditors areentitled to receive notice of the merger, as provided by the regulations promulgated under the Companies Law. Upon the request of a creditor of either partyto the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result of the merger, thesurviving company will be unable to satisfy the obligations of the target company. The court may also give instructions in order to secure the rights ofcreditors. 120Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, a merger may not be completed unless at least 50 days have passed from the date that a proposal for approval of the merger was filedwith the Israeli Registrar of Companies and 30 days from the date that shareholder approval of both merging companies was obtained. (ii) Special Tender Offer The Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as a resultof the acquisition the purchaser would become a holder of at least 25% of the voting rights in the company. This rule does not apply if there is alreadyanother holder of at least 25% of the voting rights in the company. Similarly, the Companies Law provides that an acquisition of shares in a public companymust be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights inthe company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company. These requirements do not apply if the acquisition (i) occurs in the context of a private offering, on the condition that the shareholders’ meetingapproved the acquisition as a private offering whose purpose is to give the acquirer at least 25% of the voting rights in the company if there is no person whoholds at least 25% of the voting rights in the company, or as a private offering whose purpose is to give the acquirer 45% of the voting rights in the company,if there is no person who holds 45% of the voting rights in the company; (ii) was from a shareholder holding at least 25% of the voting rights in the companyand resulted in the acquirer becoming a holder of at least 25% of the voting rights in the company; or (iii) was from a holder of more than 45% of the votingrights in the company and resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company. The special tender offer may be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will beacquired by the offeror and (ii) the special tender offer is accepted by a majority of the votes of those offerees who gave notice of their position in respect ofthe offer; in counting the votes of offerees, the votes of a holder of control in the offeror, a person who has personal interest in acceptance of the special tenderoffer, a holder of at least 25% of the voting rights in the company, or any person acting on their or on the offeror’s behalf, including their relatives orcompanies under their control, are not taken into account. In the event that a special tender offer is made, a company’s board of directors is required to express its opinion on the advisability of the offer orshall abstain from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention. In addition, the board of directors mustdisclose any personal interest each of member of the board of directors have in the offer or stems therefrom. An office holder in a target company who, in his or her capacity as an office holder, performs an action the purpose of which is to cause the failure ofan existing or foreseeable special tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser and shareholders for damagesresulting from his acts, unless such office holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit of thecompany. However, office holders of the target company may negotiate with the potential purchaser in order to improve the terms of the special tender offer,and may further negotiate with third parties in order to obtain a competing offer. If a special tender offer was accepted by a majority of the shareholders who announced their stand on such offer, then shareholders who did notrespond to the special offer or had objected to the special tender offer may accept the offer within four days of the last day set for the acceptance of the offer.In the event that a special tender offer is accepted, then the purchaser or any person or entity controlling it and any corporation controlled by them shallrefrain from making a subsequent tender offer for the purchase of shares of the target company and may not execute a merger with the target company for aperiod of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial specialtender offer. 121Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, that as long as a shareholder in a public company holds more than 90% of the company’s sharesor of a class of shares, that shareholder shall be precluded from purchasing any additional shares unless tendering an offer to purchase all of the outstandingshares of the company or the applicable class of the shares. If the shareholders who do not respond to or accept the offer hold less than 5% of the issued andoutstanding share capital of the company or of the applicable class of the shares, and more than half of the shareholders who do not have a personal interest inthe offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offerwill be accepted if the shareholders who do not accept it hold less than 2% of the issued and outstanding share capital of the company or of the applicableclass of the shares. Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder acceptedthe tender offer or not, has the right, within six months from the date of acceptance of the tender offer, to petition the court to determine that the tender offerwas for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the purchaser may provide inits offer that an offeree who accepted 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. 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 affirmative vote of at least 75% of the voting rights of the Company represented personally or by proxy and voting thereon at a generalmeeting at which a quorum is present. The convening of the general meeting, the shareholders entitled to participate and the majority vote required to beobtained at such a meeting will be subject to the requirements set forth in the Articles and the Companies Law as described above in “— ShareholderMeetings.” 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. 122Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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 consequences thatmay 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 25% of their taxable income,as of January 1, 2016 (and 26.5% in 2014-2015). 123Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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 reduce 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 lower tax rate is provided under an applicable tax treaty. However, if such dividends are paid to an Israeli company, no tax is required to be withheld. 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. 124Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. Payers of dividends on our ordinary shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through whichthe securities are held, are generally required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder regardinghis, her or its foreign residency, to withhold tax upon the distribution of dividend at the rate of 25%, so long as the shares are registered with a nomineecompany. 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%. 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). At the sale of securities traded on a stock exchange a detailed return, including a computation of the tax due, must be filed and an advancedpayment must be paid on January 31 and June 30 of every tax year in respect of sales of securities made within the previous six months. However, if all taxdue was withheld at source according to applicable provisions of the Ordinance and regulations promulgated thereunder the aforementioned return need notbe filed and no advance payment must be paid. Capital gain is also reportable on the annual income tax return. 125Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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),unless a different rate is provided under an applicable tax treaty between Israel and the shareholder’s country of residence. 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 an Approved 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. Payers of dividends on our ordinary shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through whichthe securities are held, are generally required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder regardinghis, her or its foreign residency, to withhold tax upon the distribution of dividend at the rate of 25%, so long as the shares are registered with a nomineecompany. 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. 126Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Excess Tax Individuals who are subject to tax in Israel are also subject to an additional tax at a rate of 2% on annual income exceeding a certain threshold(approximately NIS 811,000 for 2015, which amount is linked to the annual change in the Israeli consumer price index), including, but not limited to,dividends, interest and capital gains. 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 were applied to the Company and its subsidiaries, as well as to those shareholders and option holders and other holdersof rights in the share capital of the Company (on a 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 diluted basis)” includesshares, options to purchase shares and any other “right” in “a body of persons” as such term is defined in the Israeli Tax Ordinance. These restrictionsgenerally restrict these entities and Rights Holders from making any disposition of their Rights in the transferred assets and shares for a two year periodfollowing the consummation of the Reorganization, which ended in February 2016, or the Restriction Period. During the Restriction Period, these restrictionsincluded the following: ·Sale or otherwise disposition of our intellectual property, other than out-licensing in the ordinary course of business, was not permitted; ·the Rights Holders immediately following the Reorganization must not have changed. Notwithstanding this restriction, so long as theaggregate holdings of the Rights Holders, collectively, was 51% or more of the total share capital of the Company at any time during theRestriction Period, certain changes in the holding percentages of the Rights Holders might have been permitted during the RestrictionPeriod under the Israeli Tax Ordinance and guidelines issued by the Israeli Tax Authorities; ·the Rights Holders may not have sold or otherwise transfer or dispose of more than 10% of their respective Rights, subject to theexemptions and relief detailed below; ·Sale or otherwise transfer or disposition of any of our shares in GTTI, GHI or GIL, was not permitted; and ·during the two tax years following the end of the year in which the Reorganization was completed we may not have 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. In addition, no deduction for tax purposes is allowed in relation to the Reorganization. If during the Restriction Period, we or the Rights Holders committed 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 Restriction Period ended onFebruary 2016, and to our knowledge, neither we nor any of the Right Holders has committed a violation during the Restriction Period pursuant to the termsand conditions of the Tax Pre Ruling. 127Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 128Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. Certain distributions treated as dividends that are received by an individual U.S. Holder from a “qualified foreign corporation” generally qualify fora 20% reduced maximum tax rate so long as certain holding period and other requirements are met. A non-U.S. corporation (other than a corporation that istreated 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 foreigncorporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United Statesdetermines is satisfactory for purposes of this provision and which includes an exchange of information program, or (ii) with respect to any dividend it payson stock which is readily tradable on an established securities market in the United States. Dividends paid by us in a taxable year in which we are not a PFICand with respect to which we were not a PFIC in the preceding taxable year are expected to be eligible for the 20% reduced maximum tax rate, although wecan offer no assurances in this regard. However, any dividend paid by us in a taxable year in which we are a PFIC or were a PFIC in the preceding taxable yearwill be subject to tax at regular ordinary income rates (along with any applicable additional PFIC tax liability, as discussed below). As discussed below under“Passive Foreign Investment Company,” we have determined that we are a PFIC and likely will continue to be a PFIC, at least until we develop a source ofsignificant 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% will apply to individual U.S. Holders. The deductibility ofcapital losses is subject to limitations. The gain or loss will generally be income or loss from sources within the United States for U.S. foreign tax creditpurposes, subject to certain possible exceptions under the U.S.-Israel Tax Treaty. The additional 3.8% “net investment income tax” (described below) mayapply to gains recognized upon the sale, exchange, or other taxable disposition of our ordinary shares by certain U.S. Holders who meet certain modifiedadjusted gross income thresholds. 129Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 130Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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). 131Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 132Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 133Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, subcontractors 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 15% 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 0.75% and 1.5%, respectively. Approximately 25% 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 1.3% and 2.6%, 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 Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. Wecurrently do not hedge interest rate exposure. Because of the short-term maturities of our cash equivalents and investment securities, we do not believe thatan increase in market rates would have any significant impact on the realized value of our investment securities. If a 10% change in interest rates were to haveoccurred on December 31, 2015, this change would not have had a material effect on the fair value of our investment portfolio as of that date. Liquidity We do not believe that our cash and cash equivalents and available for sale investments have significant risk of default or illiquidity. While webelieve our cash, cash equivalents and available for sale investments do not contain excessive risk, we cannot provide absolute assurance that in the futureour investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one ormore financial institutions that are in excess of federally insured limits. 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. 134Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, or Maxim, acted as sole book-running manager of the offering, and MLV &Co. and Feltl and Company acted as co-managers of the offering. We also issued to Maxim, at the closing of the offering, warrants to purchase that number ofour ordinary shares equal to up to 2% of the aggregate number of shares sold in the offering. The warrants provide for cashless exercise, “piggyback”registration rights for three years from the effective date of the registration statement and customary anti-dilution provisions (for share dividends, splits andrecapitalizations and the like) consistent with FINRA Rule 5110. The offer and sale of all of the shares in the offering were registered under the Securities Actpursuant to a registration statement on Form F-1, which was declared effective on March 12, 2014 (File No. 333-193792), and a registration statement onForm F-1 filed 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, 2015, the net proceeds from our initial public offering were held in cash and cash equivalents, short-term deposits andmarketable securities. We have deployed the net proceeds of our initial public offering into a variety of additional capital preservation investments,including short-term, investment grade, interest-bearing instruments, such as corporate debt securities, and certain short-term money market investments. As of December 31, 2015, we used the net proceeds from the initial public offering for the following purposes and amounts: •Research and development costs of $14.2 million, including chemistry and formulation studies, preclinical, regulatory, clinical operations expensesand personnel and benefit costs; •General and administrative costs of $4.3 million, which include personnel and benefit costs as well as costs of operations and professional services;and •Property and equipment costs of $929 thousands, including medical equipment and other fixed assets. We have no current understandings, commitments or agreements with respect to any material acquisition of or investment in any technologies,products or companies. 135Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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 controls over financial reporting There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2015 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. 136Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 November 5, 2015 the Board has approved an amendment to our Code of Business Conduct and Ethics to include sufficient language regardingthe Foreign Corrupt Practices Act of 1977, as amended (FCPA) and other anti-bribery matters. The full text of the Code of Business Conduct and Ethics is posted on our website at www.galmedpharma.com. Information contained on, or that canbe 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, 2014 and 2015, 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 2014 and 2015. 2015 2014 (US$ in thousands) (US$ in thousands) Audit Fees (1) 60 60 Audit-Related fees (2) 12 141(2)Tax Fees (3) 8 — All Other Fees (4) — 13(3)Total 80 214 (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 professional services rendered in connection with our registration statement on form F-3 in 2015 and initial public offering in the UnitedStates in 2014. (3) Includes fees for professional services rendered in connection with a tax ruling from the Israeli Tax Authority regarding the Reorganization. (4) Includes fees for professional fees related to an EU governmental incentive plan in 2014. 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 a pre-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. Since its establishment in May 2014, the Audit Committee has approved all of the audit-related fees, tax feesand all other fees. 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 byour Audit Committee. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functionsdefined in applicable SEC rules. 137Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 made by the Nominating Committee itself, in accordance with the provisions of Nasdaq Capital Market Listing Rule 5605(e), our Articlesand the Companies Law. One or more shareholders of a company holding at least 1% of the voting power of the company may nominate a currentlyserving external director for an additional three year term. ·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, remuneration of Office Holders is determined andapproved by our Remuneration Committee, and in general, by our Board as well, and in certain circumstances, by our shareholders, as detailedabove. The requirements for shareholder approval of any Office Holder compensation, and the relevant majority or Special Majority for suchapproval, are all as set forth in the Companies Law. Thus, we seek shareholder approval for all corporate actions with respect to Office Holdercompensation requiring such approval under the requirements of the Companies Law, including for our Compensation Policy and for certain OfficeHolder Compensation, rather than seeking approval for such corporate actions in accordance with Listing Rules of the Nasdaq Capital Market. Allmembers of our Remuneration Committee are independent directors under applicable Nasdaq Capital Market and SEC rules, as affirmativelydetermined by our Board. See “Item 6. Directors, Senior Management and Employees—B. Compensation.” 138Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 “independent directors” as defined in the Companies Law. Our independent directors will conduct regularlyscheduled meetings at which only such independent directors are present, as required by the Nasdaq Capital Market Listing Rules. Our Board hasaffirmatively determined that each of Mr. Nir, Ms. Yaron-Eldar, Mr. Marth and Dr. Sidransky qualifies as “independent” under the Nasdaq CapitalMarket 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. 139Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. PageReport of Independent Registered Public Accounting FirmF-2Consolidated Balance SheetsF-3Consolidated Statements of OperationsF-4Consolidated Statements of Comprehensive LossF-5Consolidated Statements of Changes in Shareholders’ EquityF-6Consolidated Statements of Cash FlowsF-7Notes to Consolidated Financial StatementsF-8 140Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 Financial Statements As of December 31, 2015 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 31,2015 and 2014, and the related consolidated statements of operations and changes in shareholders' equity and cash flows for each of the three years in theperiod ended December 31, 2015. These consolidated financial statements are the responsibility of the Company's Board of Directors and management. Ourresponsibility 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, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, inconformity with accounting principles generally accepted in the United States of America. /s/ Brightman Almagor Zohar & Co.Certified Public AccountantsMember of Deloitte Touche Tohmatsu Limited Tel Aviv, IsraelMarch 22, 2016 F-2 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 2014 Assets Current assets Cash and cash equivalents 3 $4,156 $23,736 Short-term deposit 3 - 6,000 Marketable securities 3 18,845 2,250 Other accounts receivable 4 379 165 Total current assets 23,380 32,151 Property and equipment, net 5 883 774 Total assets $24,263 $32,925 Liabilities and stockholders’ equity Current liabilities Trade payables 2,259 875 Other accounts payable 6 282 243 Total current liabilities 2,541 1,118 Long-term liabilities Related parties 7 177 400 Total long-term liabilities 177 400 Stockholders’ equity Ordinary shares, par value NIS 0.01 per share; Authorized 50,000,000 shares; Issued and outstanding: 11,100,453 shares as of December 31, 2015 9 32 32 Additional paid-in capital 69,086 68,116 Accumulated other comprehensive income (loss) (206) 4 Accumulated deficit (47,367) (36,745)Total stockholders’ equity 21,545 31,407 Total liabilities and stockholders’ equity $24,263 $32,925 The accompanying notes are an integral part of the consolidated financial statements. F-3 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 2014 2013 Research and development, expenses 10 $7,629 $6,664 $7,207 General and administrative expenses 11 3,246 2,478 7,355 Capital loss – – 10 Total operating expenses 10,875 9,142 14,572 Financial expenses (income), net (253) (40) 2,912 Loss before income taxes 10,622 9,102 17,484 Income taxes 12 - 1 1 Net loss $10,622 $9,103 $17,485 Basic and diluted net loss per share from continuing operations $0.96 $0.88 $3.45 Weighted-average number of shares outstanding used in computing basicand diluted net loss per share 11,100,453 *)10,323,686 *)5,069,466 *) 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-4 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 2014 2013 Net loss $10,622 $9,103 $17,485 Other comprehensive loss (income): Net unrealized loss (gain) on available for sale securities 210 (4) – Comprehensive loss $10,832 $9,099 $17,485 The accompanying notes are an integral part of the condensed interim consolidated financial statements. F-5 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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.Statements of Changes in Stockholders’ Equity U.S. Dollars in thousands, except share data and per share data Ordinary shares Shares Amount Additionalpaid-incapital Accumulatedothercomprehensiveincome (loss) Accumulateddeficit Total Balance - January 1, 2014 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 Stock based compensation – – 970 – – 970 Unrealized loss from marketable securities – – (210) – (210)Net loss – – – (10,622) (10,622)Balance - December 31, 2015 11,100,453 $32 $69,086 $(206) $(47,367) $21,545 *) 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 statement F-6 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 2014 2013 Cash flow from operating activities Net loss for the year $(10,622) $(9,103) $(17,485)Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation and amortization 50 9 4 Capital loss – – 10 Non-cash financial expenses due to convertible notes modification – – 2,878 Amortization of discount/premium on marketable securities 92 – – Loss from realization of marketable securities 50 – – Stock-based compensation expense 970 601 10,851 Changes in operating assets and liabilities: Increase in other accounts receivable (214) (149) (2)Increase (decrease) in trade payables 1,384 (480) 954 Increase (decrease) in other accounts payable 39 (91) 228 Increase (decrease) in related party (223) (28) 38 Net cash used in operating activities (8,474) (9,241) (2,524) Cash flow from investing activities Purchase of property and equipment (159) (770) (13)Proceeds from sale of property and equipment – – 16 Investment in securities, available for sale (26,541) (2,246) – Proceeds from securities, available for sale 9,594 – – Disposal of (Investment in) short-term deposit 6,000 (6,000) – Net cash provided by (used in) investing activities (11,106) (9,016) 3 Cash flow from financing activities Repayments of short-term loan from bank – – (20)Receipt of convertible notes – – 1,840 Issuance of ordinary shares – 2,000 120 Issuance of ordinary shares upon IPO, net *) – 39,856 – Net cash provided by financing activities – 41,856 1,940 Increase (decrease) in cash and cash equivalents (19,580) 23,599 (581)Cash and cash equivalents at the beginning of the year 23,736 137 718 Cash and cash equivalents at the end of the year $4,156 $23,736 $137 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: Cash received from interest $473 $– – *) Net of offering costs in the amount of $4,204. The accompanying notes are an integral part of the consolidated financial statements. F-7 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 of therapeutics for thetreatment of liver diseases. The Company, in its current legal structure, was incorporated in Israel on July 31, 2013 and commenced operations on February 2, 2014. On February 2,2014, upon a pre-ruling from the Israeli Tax Authorities, the Company underwent a reorganization (the “Reorganization”), pursuant to which all of GalmedHoldings Inc.’s business, including shares in its fully owned subsidiary, Galmed 2000, which was incorporated in the British Virgin Island) and net assets,was transferred to the Company. Contemporaneously, Galmed Pharmaceuticals Ltd. effectuated a stock split of 729:1. This Reorganization was deemed to bea restructuring under common control, in which the Company is the Successor (the “Successor”) and Galmed Holdings Inc. (which, as of the date of theReorganization, was owned exactly proportionately by the same shareholders that owned the Company) is the predecessor (the “Predecessor”). Accordingly, the Company succeeded the Predecessor's activities and the comparative figures which is presented on these financial statements. All the data in the accompanying notes regarding the number 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-8 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 denominated transactions and balanceshave been re-measured to dollars in accordance with the provisions of ASC 830-10, “Foreign Currency Translation.” All transaction gains andlosses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations asfinancial income 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 transactionshave been eliminated upon consolidation. E.Cash and cash equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible into 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. Marketable securities 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-9 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 Leasehold improvements 10 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 2015 and 2014, 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 monthlydeposits at 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. Theaforementioned deposits are not recorded as an asset in the Company’s balance sheet. F-10 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 amountsthe Company 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-11 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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.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 requisiteservice periods 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 2015 and 2014 grants: dividend yield of 0.00% for both periods; risk-free interest ratebetween 1.56% and 1.90%; an expected life between five and six years; and a volatility rate ranging between 70% to 82.5%. M.Research and development expenses Research and development expenses are charged to the statement of operations as incurred. F-12 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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.) N.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. O.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 31,2015 and 2014 because all such securities have an anti-dilutive effect. F-13 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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.) P.Recently issued accounting pronouncements On November 20, 2015, the FASB issued ASU 2015-17 as part of its simplification initiative (i.e., the Board’s effort to reduce the cost andcomplexity of certain aspects of U.S. GAAP). The ASU requires entities to present deferred tax assets (“DTAs”) and deferred tax liabilities(“DTLs”) as non-current in a classified balance sheet. It thus simplifies the current guidance, which requires entities to separately present DTAsand DTLs as current or non-current in a classified balance sheet. Netting of DTAs and DTLs by tax jurisdiction is still required under the newguidance. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning afterDecember 15, 2016, and interim periods within those annual periods. For all other entities, the amendments in this Update are effective forfinancial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning afterDecember 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We do not expect the adoption ofASU 2015-17 to have a material effect on our consolidated financial statements and disclosures. F-14 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 and 2014 As of December 31, 2015 Cost Basis GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair Value (in thousands) Cash and cash equivalents $4,156 $– $– $4,156 Marketable securities 19,059 – (214) 18,845 Total cash, cash equivalents and investments $23,215 $- $(214) $23,001 As of December 31, 2014 Cost Basis GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair 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 F-15 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015 2014 (in thousands) Government institutions $109 $51 Interest receivable - 13 Prepaid expenses 270 101 $379 $165 As at December 31, 2015 2014 (in thousands) Medical equipment $750 $750 Office furniture and equipment 30 5 Computer software and electronic equipment 55 45 Leasehold improvements 123 - 958 800 Less - Accumulated depreciation 75 26 Net book value $883 $774 As of December 31, 2015 2014 (in thousands) Accrued expenses $113 $81 Employees and related institutions 137 84 Accrued vacation *) 32 78 $282 $243 GALMED PHARMACEUTICALS LTD.Notes to Consolidated Financial Statements Note 4 – Other Accounts Receivable Note 5 – Property and equipment, net Note 6 – Other Accounts Payable *)Including inter alia due to a related party in the amount of $22 thousand and $68 thousand, as of December 31, 2015 and 2014,respectively. F-16 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 – Related Parties A.Balances 1.As of December 31, 2015 and 2014, the Company had an accrual in the amount of $236 thousand and $255 thousand, respectively, pursuant toan employment agreement with its CEO. 2.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%. During the year 2015, the balance was fully paid. B.Transactions 1.During 2015, 2014 and 2013, the Company recorded salary expenses in the amount of $434 thousand, $512 thousand and $34 respectively,pursuant to an employment agreement with its President and CEO. 2.During 2015 and 2014, the Company recorded salary expenses in the amount of $98 thousand $91 respectively, pursuant to an employmentagreement with its CMO, who also serves a director. 3.During 2015 and 2014 the company recorded directors fee expenses in the amount of $210 thousand and $165 thousand, pursuant to a serviceagreement with its directors. 4.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 2015, 2014 and 2013, the stock-based compensation expenses with respect to the options amounted to $0 thousand, $43 thousand and$101 thousand, respectively. See also Note 10.A.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, 2015, all the above mentioned options were vested. The aggregate grant date fair value of suchoptions is $7.8 million. During the year 2015 and 2014, with respect to the above-mentioned options, the Company recorded stock-basedcompensation expenses in the amount of $415 thousand and $413 thousand, respectively, See also Note 10. F-17 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 – Related Parties (Cont.) B.Transactions (Cont.) 6.In March 2014, the Company granted 25,749 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 three years and will expire in September 2023. The exercise price is $3.67 per share. Asof December 31, 2015, the amount of vested Options is 18,593. The aggregate grant date fair value of such options is $285 thousand. During theyear 2015 and 2014, with respect to the above-mentioned options, the Company recorded stock-based compensation expenses in the amount of$63 thousand and $145 thousand, respectively, See also Note 9. 7.In May 2015, the Company granted 160,000 options to purchase ordinary shares of the Company with a NIS 0.01 par value to certain directors.The options will vest over four years and will expire in September 2024. The exercise price is $5.49 per share. As of December 31, 2015, none ofthe above mentioned options were vested. The aggregate grant date fair value of such options is $1.0 million. During the year 2015, with respectto the above-mentioned options, the Company recorded stock-based compensation expenses in the amount of $167 thousand. See also Note 10. 8.Subsequent to the balance sheet date, In February 2016, the Company granted 470,000 options to purchase ordinary shares of the Companywith a NIS 0.01 par value to certain directors, and as well 37,500 restricted shares. The options and restricted shares will vest over a period offour years. The options will expire 10 years from the grant date. The exercise price of the options is $5.94 per share. The aggregate grant date fairvalue of such options is $3.05 million. The Grant is subject to the approval of the general shareholders meeting. Note 8 – 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. Note 9 – Shareholders’ Equity 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. F-18 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 9 – Shareholders' Equity (Cont.) A.Ordinary shares (Cont.) 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-19 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 9 – Shareholders' Equity (Cont.) B.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, 2015, 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, 2015, 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, 2015, the amount of vested options is $4,290. 5.In December 2014, the Company granted 335,000 options to purchase ordinary shares of the Company to certain employees andconsultants. The options will vest over four years and will expire in December 2024. The exercise price is $5.49 per share. As of December31, 2015, the amount of vested options is $61,250. 6.In May 2015, the Company granted 160,000 options to purchase ordinary shares of the Company to certain directors. The options will vestover four years and will expire in September 2024. The exercise price is $5.49 per share. As of December 31, 2015, none of the abovementioned options were vested. 7.In March 2015, the Company granted 11,000 options to purchase ordinary shares of the Company to certain consultants. The options willvest over various periods not exceeding three years and will expire in March 2025. The exercise price is $9.73 per share. As of December31, 2015, none of the above mentioned options were vested. F-20 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 9 – Shareholders' Equity (Cont.) B.Stock-based compensation (Cont.) 8.In August 2015, the Company granted 100,000 options to purchase ordinary shares of the Company to certain employees and consultants.The options will vest over four years and will expire in August 2025. The exercise price is ranges between $9.13 and $10.14 per share. As ofDecember 31, 2015, none of the above mentioned options were vested. 9.Subsequent to the balance sheet date, In January 2016, the Company granted 242,500 options to purchase ordinary shares of the Companywith a NIS 0.01 par value to certain employees and consultants, and as well 41,250 restricted stock units (the "RSU's"). The options andRSU's will vest over a period of four years and will expire 10 years from the grant date. The exercise price of the options is $7.61 per share. 10.Subsequent to the balance sheet date, In February 2016, the Company granted 470,000 options to purchase ordinary shares of the Companywith a NIS 0.01 par value to certain directors, and as well 37,500 restricted shares. The options and restricted shares will vest over a periodof four years. The options will expire 10 years from the grant date. The exercise price of the options is $5.94 per share. The Grant is subjectto the approval of the general shareholders meeting. 11.A summary of the status of the Company’s option plans as of December 31, 2015 and 2014 and changes during the years then ended arepresented below: December 31, 2015 2014*) Number ofshare options Weightedaverageexerciseprice Number ofshareoptions Weightedaverageexerciseprice Options outstanding at beginning of year 1,619,003 $1.71 1,499,553 $1.17 Granted 271,000 $7.21 360,749 $5.35 forfeited (136,250) $7.37 - - Exercised - - (241,299) $3.57 Outstanding at end of year 1,753,753 $2.12 1,619,003 $1.71 Options exercisable at year end 1,338,097 $0.92 1,227,387 $1.41 F-21 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 9 – Shareholders' Equity (Deficiency) (Cont.) B.Stock-based compensation (Cont.) *) Retroactively adjusted to reflect the 729:1 share split, which occurred upon the consummation of the Reorganization. As of December 31, 2015 and 2014, 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 9.45 and 8.81 years, respectively. As of December 31, 2015 and 2014, all of the outstanding and exercisable options are “in the money” with aggregate intrinsic value of $10.3million and $6.7 million, respectively. The unrecognized compensation expense calculated under the fair-value method for stock options expected to vest as of December 31, 2015and 2014 is approximately $3.2 million and $2.4 million and is expected to be recognized over a weighted-average period of three years. Note 10 – Research and Development Expenses Year ended December 31, 2015 2014 2013 (in thousands) Chemistry and formulation studies $1,902 $3,923 $2,081 Salaries and benefits 808 573 – Stock-based compensation 111 – 4,285 Research and preclinical studies 637 865 711 Clinical studies 3,671 1,148 128 Regulatory and other expenses 500 155 2 $7,629 $6,664 $7,207 F-22 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 11 – General and Administrative Expenses Year ended December 31, 2015 2014 2013 (in thousands) Stock-based compensation $858 $601 $6,566 Professional fees 741 625 496 Salaries and benefits 747 588 145 Traveling and conference costs 65 30 46 Rent and office-maintenance fees 359 284 46 Investor relations and business development 457 337 – Other 19 13 56 $3,246 $2,478 $7,355 Note 12 – 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: The Company's subsidiaries in Israel are subject to income tax at regular corporate rate of 26.5% in 2015. Maltese subsidiary: Taxable income of Maltese companies is subject to tax at the rate of 35% in 2014 and 2015 (“Regular Tax Rate”). C.Net Operating Loss Carry forward As of December 31, 2015, the Company had approximately $24.2 million net-operating-loss carry forwards, consisting of approximately $11.9million of Maltese net-operating-loss carry forwards and approximately 12.3 million Israeli net-operating-loss carry forward. The Maltese andthe Israeli loss carry forwards have no expiration date. 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. F-23 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 – Income Taxes (Cont.) D.Deferred income taxes (Cont.) Significant components of the Company’s and its subsidiaries’ assets are as follows As of December 31, 2015 2014 (in thousands) Deferred tax assets Maltese subsidiary net-operating-loss carry forward $4,608 $4,212 Israeli subsidiary net-operating-loss carry forward 3,251 1,184 Other reserves and allowances 56 115 Total deferred-tax assets 7,915 5,396 Valuation allowance (7,915) (5,396)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. E.Tax assessments The Israeli subsidiary has received final tax assessments through the year ended December 31, 2011. A reconciliation of the Company’seffective tax expense to the Company’s theoretical statutory tax benefit is as follows. Year ended December 31, 2015 2014 2013 (in thousands) Loss before taxes on income, as reported in the consolidated statements ofoperations $10,622 $9,102 $17,484 Statutory tax rate 26.5% 26.5% 25% Theoretical tax benefit 2,815 2,412 4,371 Losses and other items for which a valuation allowance was provided or benefit fromloss carry forwards (2,815) (2,412) (4,371)Other - 1 1 Actual tax expense $- $1 $1 F-24 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 HaChaimLtd., 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) 141Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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 andAllen Baharaff to Galmed Medical Research Ltd. (2) 4.8 Equipment Purchase Agreement, dated September 24, 2014, between Itamar Medical Ltd. and Galmed Research and DevelopmentLtd.* (3) 4.9 Development and Manufacturing Services Agreement, dated January 27, 2015, between Galmed Research and Development Ltd. andPerrigo API Ltd.* (3) 4.10 Investigator Initiated Clinical Trial Agreement, dated February 8, 2015, between Galmed Research and Development Ltd. and theUniversity of California, San Diego* (3) 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 302of the Sarbanes-Oxley Act of 2002 12.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302of the Sarbanes-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. (3)Incorporated herein by reference to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014, filed with the SEC onMarch 31, 2015. * 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. 142Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 22, 2016 143 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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,the U.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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 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. 2 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 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. 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. 3 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 4 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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. 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. 5 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Bribes, Kickbacks and Other Improper Payments The Company does not permit or condone bribes, kickbacks or other improper payments, transfers or receipts in any form, for any reason. NoCovered Person, and no distributor, service provider, or other agent of the Company, should offer, give, solicit or receive any money or other item of value forthe purpose of obtaining, retaining or directing business or bestowing or receiving any kind of favored treatment. In particular, the U.S. Foreign CorruptPractices Act of 1977 (the “FCPA”) and Sections 290-295 of the Israeli Penal Code (the "Israeli Anti-bribery Provisions") together prohibit any individual orbusiness from authorizing, offering or paying money or anything of value, directly or indirectly, to (i) a government official or employee, (ii) a political partyor official thereof, (iii) a candidate for public office, or (iv) an officer or employee of (a) a public institution or entity controlled directly or indirectly by thegovernment (as is the case with health care service providers and institutions in many countries), (b) certain private companies which provide services to thepublic (examples may include banks, utility companies, and certain collective bargaining organizations), or (c) an international organization (collectivelyreferred to as "Government Officials") for the purpose of obtaining or maintaining business, promoting business activity, influencing the recipient's businessjudgment or inducing such person to act or make any decision in an official capacity, or to obtain any other business advantage. The Company strictlyprohibits making illegal payments to Government Officials. This policy applies to gifts, meals, travel, and entertainment, which may only be provide to orreceived from Government Officials with the prior approval of the Compliance Officer. Violation of applicable law, including without limitation the FCPAand Israeli Anti-bribery Provisions, could subject the Company, Covered Persons and other third parties 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. 6 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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. 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. 7 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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., 16 Tiomkin St., Tel Aviv, 6578317, Israel. 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. 8 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, and as amended by the board of directors on November 6, 2015. 9 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 (asdefined in 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)) for the 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 conclusions aboutthe 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 which arereasonably 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 22, 2016 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 (asdefined in 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)) for the 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 conclusions aboutthe 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 which arereasonably 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 22, 2016 Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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, 2015, 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 22, 2016 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, 2015, or as a separate disclosure document of the Company or the certifyingofficers. Source: Galmed Pharmaceuticals Ltd., 20-F, March 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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 22, 2016Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except 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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