Compugen Ltd

NASDAQ:CGEN

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's First Quarter 2024 Results Conference Call. [Operator Instructions] 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, executive]

Thank you, operator, and thank you all for joining us on the call today. Joining me from Compugen with prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Michelle Mahler, Chief Medical Officer; and Dr. Eran Ophir, Chief Scientific Officer, 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 of forward-looking statements regarding future events, business outlook, development efforts under potential outcome, the company's discovery platform, anticipated progress and planned results and time lines for our programs, financial and accounting-related matters as well as statements regarding our 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. The company undertakes no obligation to update projections and forward-looking statements in the future.

With that, I now turn the call over to Anat.

[Anat Cohen-Dayag, executive]

Thank you, Yvonne, and thank you, everyone, for joining us on our first quarter 2024 call. Today, I will cover the significant progress we have made across our pipeline in the first quarter of this year, and I will then move to our planned catalysts through the rest of 2024. But before I go there, I thought I would start with a question which we frequently get asked in Compugen, an AI company. And the answer is yes, Compugen is a pioneer in computation and discovery of novel drug targets and not just in theory, but in practice, which is a significant differentiator.

We successfully moved our newly discovered drug target from computer prediction to drug discovery to preclinical and clinical trials continuously feeding our own pipeline with potential significant opportunities to address cancer immunotherapy resistance. The Gilead bill on COM503, highlights the most recent assets discovered through our computational discovery capabilities. Our discovery platform is a validated AI ML power platform. This platform is the engine fueling our competitive advantage and pipeline and has already delivered multiple fully owned clinical programs multiple validating strategic partnerships and multiple early-stage undisclosed assets, which are expected to fit our future pipeline and the opportunity to deliver long-term value creation. We plan to speak more on our discovery platform at future events.

So now I'll move to the focus of today's call. In the first quarter of the year, we again executed on our promises. Firstly, in the annual ASCO conference in June, we will present preliminary antitumor activity of COM701 in combination with [ COM902 ] and pembrolizumab in patients with [indiscernible] and liver metastasis from our ongoing proof-of-concept study. Secondly, we completed enrollment of more than 20 patients in our platinum reticent ovarian cancer study, and we're on track to report initial findings in the fourth quarter of this year. Thirdly, the progress we have made, unlocking novel biology of new drug targets and in diversifying our approach to address anti-immunotherapy resistance was reflected by our presentations at the [indiscernible] and the American Association of Cancer Research Conference in March and April this year, along with the publication of our COM503 and PRG paper in cancer immunology research.

At both conferences, we presented data supporting the unique biology of PVRIG suggesting its role in sensitizing tumors to the other immune checkpoints [indiscernible] and PD-1. And additionally, data supporting the [ rapid ] potential of our high affinity potential first-in-class [ anti-IL-1 ] binding protein antibody COM503 showing its activities localized to the tumor macro environment with the potential advantage of a wider therapeutic window than systemically delivered cytokine.

Finally, in the first quarter of 2024, our partner AstraZeneca continue to rapidly advance the development of [indiscernible]. We're delighted that they are initiating a second Phase III trial, [indiscernible] in non-squamous [ cell ] in cancer. The study will assess [indiscernible] as monotherapy and in combination with [indiscernible], a p[ Trop-2 ] directed ADC being developed in collaboration with [indiscernible], compared to pembrolizumab as first-line treatment for patients with advanced or metastatic [ noncemoclane ] cancer with high PD-L1 expression.

As a reminder, we recently received a $10 million smartphone payment upon dosing of the first patient in the Phase III study of the first indication, biliary tract cancer. Under this agreement, we're eligible to retain development milestone payments for the first and second indication. The progress into a second Phase III trial addressing a major indication such as non-squamous, not [indiscernible] cancer, reinforces our partnering strategy to growth and opportunity for our pipeline and brings us closer to realizing the additional future milestone payments and royalties.

As a reminder, the [ digit ] component of [indiscernible] is derived from our potential best-in-class anti-TIGIT [indiscernible] and both with the [indiscernible] in the review in active function can. Moving on now to what plan for the rest of the year. 2024 is planned to be a catalyst year for us with multiple data readouts and updates expected from our diversified portfolio. As June, we plan to present data from our ongoing [ cop-concept ] study in [indiscernible] patients including those with liver [indiscernible], who have been treated with the [indiscernible] combination of COM701 [indiscernible]. [ NSCLC ] and in particular, such patients with liver metastasis represents significant unmet medical need in the hard-to-treat patient population.

[indiscernible] 2022, we presented data from our first cohort of 22 patients treated in the dual combination of COM701 and [indiscernible] and we were the first and only company to report responses to IO in this correlation of patients with liver metastasis, reporting a 12% overall response rate and stable disease in addition to new activation supporting [indiscernible] biology and COM701 mechanism of action. Although this indication was not initially selected based on dominant PVRIG pathway expression level. Following this encouraging clinical data, and with an aim to assess the strength from findings in liver and [indiscernible] patient in a larger cohort, we initiated our ongoing study in [indiscernible] patients with NSCLC and added our anti ticket [ COM902 ] to the [indiscernible] to see if we could improve on the [ response as seen ] with the dual combination.

[ Recurrent ] was rapid, reflecting the significant unmet need and we enrolled the last patient in September '23. The data will be presented at the upcoming ASCO on June 1 with a data cut update of April 5, '24 and remains supportive of COM701 mediated activity and safety with some patients continuing treatment at the data cutoff date. However, with the totality of the data we have in hand, we believe that an IO approach is not the way forward in this notoriously ion resistant patient population of NSCLC with liver metastasis. Yet the total clinical activity observed to date in the 2 evaluated cohorts suggest the effects are COM701 mediated and due to the unique biology of PVRIG may warrant further valuation of COM701 with other agents in MSS-CRC.

Therefore, the [indiscernible] open for other COM701 combinations in this patient population. However, this will not be the focus of our internal resources at this time. It is important to note that observations made in tumors which are biologically distinct from each other, such as MSS-CRC and platinum-resistant ovarian cancer are not considered indicative of each other. With this, I will remind you that we have reported more dominant PVRIG [ paper ] expression levels in ovarian cancer.

This brings us to our next catalyst. The next catalyst for our triple combination will be the presentation of our data in platinum-resistant ovarian cancer, for which we have completed enrollment. Data presentation is on track for the fourth quarter of 2024, and our plan is to present this data at a medical conference. We believe the totality of the data we have reported to date in platinum resistant ovarian cancer patients is encouraging compared to the current standard of care. Based on the data we reported at [ FYO ] in December 2022, from the first cohort of 20 platinum replacement for ovarian cancer patients treated with triple combination, investigators were excited to report durable shrinking or stabilization of tumors in some of their patients, who had previously progressed on all available treatment options. We presented a 20% overall response rate with some patients responding for over 15 months, which is favorable, considering median duration of response for single-agent chemotherapy is around 3 to 4 months. And in ABC is around 6.9 months.

Responses were achieved in the hard-to-treat high-grade serous [ adenocarcinoma ] patients and [indiscernible] with a favorable safety profile. We also presented preliminary biomarker data showing an association between PVRL2 expression and clinical benefit. Of note, we also previously presented data showing COM701 monotherapy activity in a patient with ovarian cancer whose tumor microenvironment was [indiscernible]. These patients had a partial response of more than 18 months. For the ongoing study, we plan present data in the fourth quarter of the year, including the data and characteristics safety, overall response rate, disease control rate, preliminary data on duration of responses and potentially biomarker data. The showing clinical benefit in platinum-resistant ovarian cancer is expected to allow us to pursue the next study towards a path to registration, which depending on data [ employ ] a predictive biomarker enrichment strategy.

In addition, we are also on track to submit the IND for COM503 in the second half of this year and expect this IND clearance for which were eligible for a $30 million milestone payment from Gilead will be achieved in 2024. With that expectation, we are in advanced stages of planning the Phase I study. Finally, in the second half of this year, AstraZeneca expects data from their Phase I/II ARTEMIDE-01 trial in non-small cell in cancer in the frontline setting.

Before passing over to Alberto to go through the financials I would like to take this opportunity to [indiscernible] for his commitment and leadership since he joined us in 2022. Alberto has been a great partner to me and the rest of the team here at Compugen. [ David Silverman ] will take over the reign from Alberto as Chief Financial Officer effective August 15. David has experience in the health care industry as Chief Financial Officer of a biotech company traded on the NASDAQ, and I'm looking forward to introducing you to Davin [ rejoins ].

I also want to emphasize that while benefiting from our side cash position to enhance and advance confident to additional milestones were also financially disciplined. We have 2 potential first or best-in-class unrestricted assets along with multiple undisclosed early-stage assets with the possibility to address a significant unmet need in immuno-oncology. In addition, we have 2 strong validating strategic pharma partners, Gilead and AstraZeneca on ribagastamide and COM503, respectively, and from [ root ] were eligible to receive future milestone and royalty payments.

With that, I will hand over to Alberto for the financial update.

[Alberto Sessa, executive]

Thank you, Anat. I'm happy to summarize our financial results. I will start with our cash balance. As of March 31, 2024, we had approximately $101.3 million in cash compared with approximately $51.1 million as of December 31, 2023. This cash balance includes $60 million upfront payment from Gilead related to the licensing of COM503 and $10 million milestone payment from AstraZeneca on dosing the first patient in the Phase III trial in biliary tract cancer. .

We recognize the importance of cash efficiency, and we are disciplined in how we deploy our cash reserves while making sure we focus on reaching [ game milestone ]. With a cash our way into 2027, taking into account the expected milestone payment of $30 million from Gilead for COM503 IND clearance expected in the second half of 2024. It is important to emphasize that this does not include any additional potential cash inflow from our partners. I remind you that the company has no debt.

Revenues for Q1 '24 were approximately $2.6 million compared to no revenue for the comparable period in 2023. The revenue reflects recognition of a portion of the upfront payment from the license agreement with Gilead. Expenses for the first quarter of 2024 were in line with our plans. R&D expenses for the first quarter of 2024 were $6.4 million, reduced from $7.4 million in the first quarter of 2023. Our G&A expenses for the first quarter of 2024 were $2.4 million compared to $2.6 million in the first quarter of 2023. For the first quarter of 2024, net loss was $7.3 million or $0.08 per basic and diluted share compared to a net loss of $9.3 million or $0.11 per basic and diluted share in the first quarter of 2023.

With that, I will hand back to Anat to summarize.

[Anat Cohen-Dayag, executive]

Thank you, Alberto. To summarize, [indiscernible] stands out as the clinical stage in an oncology [ car ] discovery pioneer were differentiated by our validated [indiscernible] platform which is powered by the mix of human expertise with AI and machine learning to fill our first-in-class pipeline. We're on track to deliver a catalyst rich 2024 across our diversified pipeline and plan to present data for our [indiscernible] combination at [ coin ] MSS-CRC as well as data from our platinum resistant ovarian cancer at the end of the year. .

We are planning to submit COM503 for IND in the second half of this year and are advancing our planning for the initiation of Phase I for this program. With the pipeline that is being advanced internally and by our partners, this is an exciting time for Compugen, and we believe they will have the fundamentals in place to bring value to our shareholders and cancer patients. I am proud of what we are achieving here at Compugen. I would like to thank all our compliant colleagues for their collaborative spirit and daily dedication, resulting in a well-executed first quarter of the year and setting us up for future success.

With that, I will turn the call over for questions. Operator?

[Operator]

[Operator Instructions] The first question is from Stephen Willey of Stifel.

[Unknown Analyst]

This is [indiscernible] on for Steve. Congrats on the progress. We just have 2 questions on our end. The first one is related to colorectal trial. So I know that ASCO abstracts will be available this week. But when it comes to the actual presentation, how much additional incremental detail should we expect in the actual presentation versus abstracts and following this presentation, what would the path forward for this study? And the second question would be related to [ COM506 ]. Do you think you will disclose any clinical data following the IND submission for this asset?

[Anat Cohen-Dayag, executive]

So maybe I'll start with the second question for COM503. This decision of disclosing clinical data from a Phase I study will be taken in cooperation with Gilead as this is an asset that was at Gilead and I cannot commit on their behalf, and we'll give some guidance when we will know. But obviously, before that will need to file the IND and initiate the study which filing is expected in the second half of this year. And for the CRC data, yes, the abstract is going to be out this week. And the presentation of data will be June 1 for Compugen. It will be a data worth of 20 patients enrolled and we share the antitumor activity, durability, translational data, safety, et cetera, and obviously, patient baseline characteristics.

And as we've already stated, the data is supporting antitumor activity of COM701 supportive of COM701 mechanism infection, [ PVRIG ] biology we believe based on the data and the guidance that we shared today, it was important for us to share the guidance at the time that we know when the decision that we've already took is that we believe that IO only combinations would not be the right way to target MSS-CRC with liver [indiscernible], which, as you know, in this time consists 70% of the patient population. We believe that that's not the right path, and we decide that one -- there could be a path forward for COM701 in MSS-CRC, we deliver next maybe in other combinations. So maybe even in earlier [ nights ], we're not taking this path forward at this point in time.

[Operator]

The next question is from Asthika Godwarden of Truist Securities.

[Asthika Goonewardene, analyst]

So maybe I want to just dig in a little bit more here on colorectal. And I'd like for maybe you and Eran to comment on what do you think is missing here it sounds like you're resilient that 701 biology is active, but maybe you can help us understand what lead more immune activation and less -- maybe less checkpoint blockade, but maybe more debulking. What was the missing [indiscernible] given that would be encouraging actually, we saw earlier for this approach. And then beyond ovarian for 701 or 902, how should we think about the other avenues that you're going to pursue this combination? Is there next priority to maybe revive efforts in CRC, but with a different combination to maybe address what's missing? Or have you identified another tumor tire that you would like to take this into?

[Anat Cohen-Dayag, executive]

Okay. I'll start by saying that we can get really to the specifics of the data and maybe this discussion will be worth to be taken following the presentation in June 1. Maybe Eran wants to add. But I'll just say that with IO-only, we believe that what we see is not enough in order to pursue. But maybe Eran, do you want to say anything about it more than that?

[Eran Ophir, executive]

Yes. So with the [indiscernible], what you have seen previously, definitely resectivity in places where normally check points are not working in MSS-CRC, [ wiliametastasis ],[ immemodulation ], increasing T cells, but we've seen it in part of the patients, right? And eventually to move forward, you need to have sufficient activity in sufficient amount of the patients to really consider to go towards approval. And as you understand what we see in the pure IO combination of the triplet in this very difficult and not immunogenic indication, what you have seen is not enough to convince [indiscernible] is. And yes, I've discussed maybe not at this point in time, but there are other rational based combination that could be employed to increase IO activity in this kind of difficult [indiscernible] something to consider for the future, but again, not at the point in time.

[Anat Cohen-Dayag, executive]

And then actually takes me to your second question about additional tumor types. I think that with the data that we have in hand on [indiscernible] activity in noninflamed tumor types across indications where PD-1 is really not the populations and not responsive to PD-1 inhibition or very or responses to a very low accident. We have data cost indications and COM701 is active and other than including the recent [indiscernible] focusing now on platinum-resistant ovarian cancer, which we really have a package of data and additional 20 or more than 20 patients worth of data, we really have a mix decision about how to move forward there.

I think that the [indiscernible] is open for us for different type of path in the noninflamed indications. Also in the inflamed indications, obviously, we've never tested inflamed indications and we had the reason why we didn't do it, PVRIG biology gave us an ad in this nonclaimed indications and we could do COM701 activity in combination, in single studies without asking the question, is it [ C1 ] inhibition that is generating this activity. And we could do all the work and show in [indiscernible] that this is comfortable on mechanical infection and also in other [ paths ] to combine within non-IO combinations. And really we are now at the stage that we're focusing in platinum-resistant ovarian cancer. And we will make the decisions during the year, how we move forward in this indication.

[Unknown Executive]

And maybe I would add [indiscernible] will just add that [indiscernible] focusing on at the moment, you pre-identify a few indications with [indiscernible] is one of those. But there are other indications, for example, like [indiscernible], and at mentioned more [indiscernible] settings. So definitely, there are multiple opportunities. And combining this with the safety profile of COM701 that really will enable us safe combination, maybe in other indications, maybe in early lines. So again, opportunities are there and there are quite a few, but we are focusing now on the ovarian cancer, which we have [indiscernible] data.

[Operator]

The next question is from Daina Graybosch of Leerink.

[Daina Graybosch, analyst]

I'm going to continue this line of discussion on your strategy for PVRIG going forward. And in ovarian, in particular, I wonder how you're considering combining with other standard of care agents like chemotherapy or VEGF, bevacizumab. And just reflecting on the past in colorectal there's one path that is seeing if you can get a pure IO therapy to work. And there's another path others have taken in these difficult tumors to do combination. And of course, to get that signal that takes a different kind of study. And I wonder how you're considering that and it reminds me that at one point, you had planned a chemo combination, I think, lung cancer. And I'm not sure you ever started enrolling that. So again, remind us why you didn't start rolling that and what a path -- a specific path you would see in lung cancer should we get to that point?

[Anat Cohen-Dayag, executive]

Thank you, Daina. I'll start and Eran, Michelle, feel free to chime in. I'll start with the ovarian. First, I'd say that you've asked us about combinations. And first, I'd say that we're focused on the IO combination that we're approaching now. And with the package of Daina that we have with the emission biomarker correlation, we feel that if data -- we repeat itself, we see clinical benefit, and there is a path forward for us targeting different type of patient population. So [indiscernible] on ADCs and those that are a standard of care. And those that are eligible.

Having said that, it is true that combination with chemo, ABC, may be relevant, and this is really from -- based on the value of action of PVRIG being combined with a cytotoxic agent, and also from the safety profile, as I mentioned to [indiscernible]. So this is on the ovarian front and why we focused on ovarian and get the data from this study, we can decide how we move forward, taking into consideration the competitive landscape, obviously, in ovarian cancer.

Here, and as I said, let's say Eran, Michelle, [indiscernible] the indications. But you see, I think that while we see a possibility of moving forward in this indication in combination with standard of care. Again, here, mechanistically and safety-wise, and or in earlier lines, I think that the risk profile, and this is for this stage of the company, the risk profile in MSS-CRC with liver mets is a profile that we sold [ that ] at this time, we shouldn't focus and put our resources but still, this door is open to being pursued in the future. So that's for CRC.

[Daina Graybosch, analyst]

I didn't ask about CRC. I asked about non-small cell lung cancer. What would be the [indiscernible] there?

[Anat Cohen-Dayag, executive]

Sorry. And if it's correct, then we planned at a certain point in time to move based on the data that we have that Eran mentioned, data in patients that already experienced [ Check Point Brocade ], we had very nice data, 7 patients though, but very nice data. And we sort of pursuing non-small cell in cancer with chemotherapy as a small study. The reason that we decided to focus on the non-infant indications at the end of the day was the fact that we were -- [indiscernible] indications that we had at that time, we decided to focus on indications where we will not need large studies in order to prove the activity of concern combination, singular a small studies that we can [indiscernible] the contribution of [indiscernible] quickly and move forward. .

This is still on the table. And as I said, as a company in general, we're thinking about indications that we can pursue internally by ourselves and indication that new makers to -- as I was saying, all the time, partnering is also a priority for us and larger indications that could be pursued in partnerships. And Eran,Michelle, anything to add in ovarian and non-small cell lung cancer combinations?

[Unknown Executive]

I was just going to emphasize again what you were saying. And that's because when we look across the indications that we've presented data in, we definitely do see a effect driven by COM701. So I think that there are opportunities even within other indications like endometrial breadth, where we've presented data before and we are considering a lot of different options to have a more robust sort of strategy moving forward.

[Eran Ophir, executive]

And I think at this point in time, we're focusing on the pure IO. We have strong data from pre-clinical to clinical. This is really strong immune modulating regime that have an excellent safety profile, it's chemo-free, it's really attractive, and the data of synergy now in ovarian and some of the other indications really pushes us to continue and explore this pure combination. But again, doing other combinations, if we need or maybe some indication in which we will need it, is definitely an approach and there's a rationale for that. I mean with a unique [indiscernible], the ability to prime new T cells is there is a rush to combine with ATC to chemotherapy with the enhanced immunogenicity [indiscernible] rational to combine with Bev with the effects of PC filtration.

So moving forward, we definitely consider the data, the indication and other rationale-based indication that we may consider in the future.

[Operator]

The next question is from Tony Butler of [ Rodman & Renshaw ].

[Charles Butler, analyst]

With respect to the ovarian cancer data set that's forthcoming. Will data also include patients who are actually segmented by positivity with PVRL2. That's part A of that question. Number 2 is -- you mentioned a biomarker strategy, I believe, for moving forward with a larger potentially registrational trial. Have you settled on -- and this may be for Eran, are you settled on an H score, as I recall, those individuals who had clinical benefit had H scores that were, I guess, relatively high 300 or so. And then the third point is while I assume all ovarian cancer patients will have had BEV, is there a reason why you wouldn't -- they would not want to stay on BEV, even if, in fact, it has marginal activity certainly a single agent. And one last point. Is 20% the hurdle rate that for which we should be looking towards or forward toward the fourth quarter for that data set?

[Anat Cohen-Dayag, executive]

Thank you, Tony. So I'll let Michelle answer the best question. I'll start with what you asked about [indiscernible] relate to the H score. First, I'd say that in terms of the data, yes, we present data, it relates to the activity, to the efficacy, the durability translational, the data that we have in hand. And we also anticipate to share PVRL2, biomarker data, obviously, depending on data, the work in progress now and with the data that we'll have in hand will present what we have in hand. And we say before I let around related to the [ 8 ] score, and we say that we will look at the data and different bars of data will allow us to make a decision, do we go with or without the biomarker. We're not limiting ourselves to a biomarker. This is an enrichment strategy that may help -- it will depend on the data that we have in hand, but we are not ruling out a study that will not be biomarker-driven, maybe a study that we still continue to assess the biomarker finding. It really depends on the data that we have in hand. Eran, do you want to take the [indiscernible]

[Eran Ophir, executive]

So yes, Tony, remember it correctly. This a very important observation for our previous study in which we showed that the patients who responded had clinical benefit from the treatment of the combo combination had higher score of PVRL2. And this opened the door for a potential biomarker, yes to enrich for these patients who have long durable responses and then, of course, to move the registration faster and all the benefits of having the biomarker. So this work is ongoing also in this study to define the cutoff, obviously, we need to show also in this study that the phenomenal [indiscernible] we need to really define looking and now we have much more patients combining the studies together, we can really look at the totality of the data, the response rate, the correlation to the ASCO and then to define the actual cutoff if and when we will move forward with the biomarker selected study. So this is ongoing, yes.

[Unknown Executive]

Do you want me to comment on the bid?

[Anat Cohen-Dayag, executive]

Yes, Michelle, go ahead.

[Michelle Mahler, executive]

Yes. So in the initial lines of treatment in these patients, they do get bevacizumab together with platinum. Platinum are basically the [ mainstay ] therapy in the ovarian cancer population. Generally, if the patient does relapse following a full regimen, which includes bevacizumab maintenance, they may get put on to the PARP inhibitors as second line or sometimes I'll do it in the other way around. But generally, I'm not repeated -- they might [ repeat ] bit, but it's really more repeating the platinum agents until the patients become resistant, so that defined by a platinum-free interval of 6 months or less. And the patients that have been enrolled on our study so far, are the platinum-resistant patient population.

[Operator]

This concludes the Q&A session and Compugen's Investor Conference Call. Thank you for your participation. You may go ahead and disconnect. .