Compugen Ltd. (NASDAQ:CGEN) Q1 2023 Earnings Call Transcript May 15, 2023

Compugen Ltd. beats earnings expectations. Reported EPS is $-0.11, expectations were $-0.12.

Operator: Ladies and gentlemen, thank you for joining us today. Welcome to Compugen’s First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available in the Investors section of Compugen’s website, www.cgen.com. As a reminder, today’s call is being recorded. I would now like to introduce, Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Yvonne Naughton: Thank you, operator, and thank you all for joining us on the call today. Joining me for Compugen for the prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Henry Adewoye, Chief Medical Officer; and Dr. Eran Ophir, Senior Vice President Research and Drug Discovery will join us for the Q&A. Before we begin, we would like to remind you that during this call, the company may make projections or forward-looking statements regarding future events, business outlook, development efforts and their potential outcome, the company’s discovery platform, anticipated progress and plans, results and timelines for its programs, financial and accounting related matters, as well as statements regarding the company’s future cash position.

We wish to caution you that such statements reflect only the company’s current beliefs, expectations and assumptions, but actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties and we refer you to the SEC filings for more details on these risks, including the company’s most recent annual report on Form 20-F, filed with the SEC on February 28, 2022. The company undertakes no obligation to update projections and forward-looking statements in the future. And now, I’ll turn the call over to Anat.

Anat Cohen-Dayag: Thank you, Yvonne. Good morning and good afternoon, everyone, and welcome to our first quarter 2023 update. At Compugen, we are advancing a differentiated clinical strategy evaluating a drug combination that was never tested before in a space, where there is a significant unmet need and potential opportunity to transform the lives of cancer patients with the right immunotherapy combination. Compugen has always believed that in certain patients and in certain tumor types blocking the three pathways of the DNAM axis PVRIG, TIGIT and PD-1 may be needed to enhance antitumor immunity. We have always said that blocking TIGIT in addition to PD-1 may not be enough, a concept that is now increasingly reflected in the consistent move of larger pharma players to add an additional drug to the TIGIT/PD-1 drug combinations in various indications.

Given the potential of PVRIG inhibition to sensitize tumors to PD-1 and TIGIT blockade, we believe the biological and mechanistic rationale support the addition of an anti-PVRIG to the anti-PD-1/TIGIT mix, and we have the initial clinical and translational data to support our hypothesis. We are the leaders in the unique chemotherapy three [ph] triple combination approach of blocking the three genome access immune checkpoint, PVRIG, TIGIT, and PD-1, and we are focused on maintaining this leadership. We have initiated 2 follow on proof-of-concept studies in indications not typically responding to immunotherapy, microsatellite stable colorectal cancer and platinum resistant ovarian cancer. The former is enrolling patients and the latter is open for screening of eligible patients.

In these difficult to treat indications refractory to standard of care, we have previously demonstrated encouraging clinical benefits, including in-patient refractory to anti-PD-1 and in in-patients whose tumors were immune desert. These data are supported by immune activation that aligns with COM701 mechanism of action. The goal of the follow-on clinical studies is to strengthen the evidence, help us better understand the contribution of components, and build on the extensive biomarker work to identify the patients most likely to respond. We believe that this strategy provides the fastest route in building a path to registration and de-risk our lead assets COM701 and COM902 in these two indications. In the first quarter of the year, we executed on our promises.

Firstly, we initiated enrollment in our microsatellite colorectal cancer study and we’re excited to be on track to report initial findings by the end of the year with final data in 2024. Secondly, at the annual ASCO conference in June, we will present encouraging data showing the preliminary anti-tumor activity of COM701 in combination with BMS anti-TIGIT and nivolumab in patients with recurrent metastatic microsatellite stable endometrial cancer. This will include data on antitumor activity and safety in naïve patients. Patients with advanced microsatellite stable endometrial cancer have limited treatment options. In a similar population of patients dostarlimab shows an overall response rate of approximately 15%. The data we will present for our triple combination at ASCO serves as an additional support for COM701 mediated antitumor activity in another tumor type in patients refractory to standard of care.

For now, we remain focused on our proof-of-concept studies in MSS CRC and platinum resistant ovarian cancer using our own TIGIT COM902 in combination with our own anti-PVRIG COM-701 and pembrolizumab with a goal to strengthen the evidence in these indications by enlarging the number of patients. However, our data suggests that the treatment potential for COM701 combinations goes beyond these two indications. And thirdly, we continue to feed our own pipeline leveraging our pioneering computational discovery platform. Earlier this month, we gave an oral presentation at CIMT, Europe Cancer Immunotherapy Meeting on our lead potential first-in-class preclinical asset COM503, which utilizes a novel approach to harness cytokine biology to potentially treat cancer.

We presented preclinical data showing that COM503 binds with high affinity to IL-18 binding protein, freeing endogenous IL-18 and restoring natural killer and T-cell activity. We also showed that blocking IL-18 binding protein prevents tumor growth and release IL-18 to activate immunity in the tumor microenvironment without affecting peripheral immunity in neuron tumor marker. Our approach is unique and different from recombinant cytokines targeting this pathway or from other pathways that were already tested in the clinic. These are given systemically to patients and are associated with safety challenges. The potential advantage of our approach is that our drug COM503 is an antibody and not a cytokine, and this antibody works by freeing the body’s own interleukin-18, where it is mostly upregulated in the tumor microenvironment to stimulate the immune system to fight cancer.

Consequently, we believe that it has the potential advantage of avoiding the typical pharmacokinetic and systemic tolerance [ph] limitations associated with cytokine administration. Regarding our finances, we have an expected cash runway at least through the end of 2024 to support operations, reach milestones, and derisk our lead assets COM701 and COM902. In terms of future funding, non-dilutive funding of our pipeline assets is our priority. We see this as a big opportunity having 3 potential first or best-in-class unrestricted assets with a possibility to address a significant unmet need in immuno-oncology. With that, I will hand over to Alberto for the financial update.

Alberto Sessa: Thank you, Anat. I’m happy to summarize our financial results. I will start with our cash balance. As of March 31, 2023, we had approximately $74.3 million in cash, compared with approximately $83.7 million as of December 31, 2022, affirming our focus on capital efficiency while continuing our bold execution on our DNAM-1 axis hypothesis. The company has no debt. We recognize the importance of cash efficiency and we are disciplined in how we deploy our cash resources, making sure we will focus on reaching key milestones with our available cash runway at least through the end of 2024. It is important to emphasize that this does not include any potential cash inflows, including potential milestones payment from our collaborator AstraZeneca.

The timing of milestones payment will depend on the progress of studies run by AstraZeneca. For contractual reasons, we cannot provide the breakdown of the milestones payment. To remind you to date Compugen received development milestones payment of $2 million, $6 million and $7.5 million for achieving preclinical milestones and for dosing the first patient in Phase 1 and Phase 2 studies, respectively. Compugen is entitled to receive an aggregate of up to $200 million in development, regulatory and commercial milestone for the first product. Expenses for the first quarter of 2023 were in line with our plans. R&D expenses for the first quarter of 2023 were $7.4 million, compared to $7.2 million in the first quarter of 2022. Our G&A expenses for the first quarter of 2023 were $2.6 million, compared to $2.6 million in the first quarter of 2022.

For the first quarter of 2023, net loss was $9.3 million, or $0.11 per basic and diluted share, compared to a net loss of $9.7 million, or $0.11 per basic and diluted share in the first quarter of 2022. With that, I will hand back to Anat to summarize.

Anat Cohen-Dayag: Thank you, Alberto. To summarize, we are on track to present initial findings from 2 studies evaluating our leading triple combination blockade of PVRIG, TIGIT and PD-1 by the end of this year. These studies are building on prior data suggesting that blocking PVRIG may sensitize tumors to respond to PD-1 and TIGIT blockade and could turn cold tumors hot, potentially offering a chemotherapy free option for tumors most competitors are not targeting metastatic MSS CRC and platinum resistant ovarian cancer. This is a real potential opportunity to transform the lives of patients with the right immunotherapy combination. With that, I will turn the call over for questions. Operator?

Q&A Session

Operator: Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question is from Mark Breidenbach of Oppenheimer. Please go ahead.

Operator: The next question is from Stephen Willey of Stifel. Please go ahead.

Operator: He passed on. The next question is from Asthika Goonewardene of Truist Securities. Please go ahead.

Operator: The next question is from Daina Graybosch of SVB Securities. Please go ahead.

Operator: This concludes the Q&A session. I will now hand over the call to Anat for a final remark. Anat, please go ahead.

Anat Cohen-Dayag: Thank you, operator. Before we end the call, I will take this opportunity to remind you of an Investor event we are hosting on Tuesday, May 23, with Drew Pardoll, a pioneer in cancer immunotherapy and a Chairman of Compugen’s Scientific Advisory Board. Drew was the first to propose blockade of PD-1 for cancer immunotherapy, and his research led the clinical development of the first anti-PD-1 antibody. Drew is also a world expert in the DNAM axis. And, I think, you will really enjoy his views on why blocking the 3 pathways in the DNAM axis PVRIG, TIGIT and PD-1 has the potential to generate the next immunotherapies for cancer patients. Thank you for participating today. You may go ahead and disconnect.