Compugen Ltd

NASDAQ:CGEN

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's Second 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, Joni, and thank you all for joining us on the call today. Joining me from Compugen for the 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 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 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.

And with that, I'll now turn the call over to Anat.

[Anat Cohen-Dayag, executive]

Thank you, Yvonne. And thank you, everyone, for joining us on our second quarter 2024 call. I'm delighted to start this call by congratulating our team for the excellent execution on the high-quality COM503 IND submission resulting in FDA clearance for initiation of a Phase I trial. COM503 is our differentiated approach to harness cytokine biology to treat cancer. And I'll come back to this later in the call. There have been many developments in the TIGIT landscape in the last few months, and more are expected by the end of this year.

Therefore, I thought it is appropriate to begin by sharing with you how we think about the field. We believe that Compugen is uniquely positioned and differentiated in the pursuit of the DNAM-1 axis as part of our COM701, COM902 triple combination. I will then cover the progress we have made in the second quarter of this year and move to our planned milestones through the rest of 2024. Starting with the TIGIT competitive landscape, what have we learned so far?

First, the benefit of any TIGIT blockade to PD-1 compared to PD-1 demonstrated in several Phase II randomized clinical trials, and TIGIT blockade added a 6-month survival benefit in a Phase III interim analysis.

Second, the benefit of TIGIT blockade was observed mostly in PD-L1 high patient population.

Third, the nature of the TIGIT antibody matters. The use of an Fc-enabled antibody may not be tolerable in patients with early-stage of disease due to potential immune-modulated safety concerns.

And finally, a third component may be needed to be added to TIGIT and PD-1 blockade to maximize the effect. Some companies are adding chemo or ADC, which may be an option for patients who can tolerate this combination. Compugen's data consistently suggests that PVRIG co-blockade provides added benefit. We believe an advantage of this choice is the favorable safety profile of IO combination and the prolonged immune benefits that one must expect to achieve.

We therefore believe that the success of the next anti-TIGIT studies will be determined by several factors. Thirdly, the clinical strategy employed, which includes choice of the patient population and combination use; and secondly, the choice of an anti-TIGIT, Fc inactive versus active.

Now elaborating more on why the clinical strategy matters. [indiscernible] our innovative research of the PVRIG pathway as part of the DNAM axis. Compugen's hypothesis has always been the blocking TIGIT plus PD-1 alone may not be sufficient. And then the third component, PVRIG may be needed to optimize the potential of TIGIT and PD-1 blockade in certain tumor types and patient population.

Compugen's data suggests that unlike anti-TIGIT, anti-PVRIG may function across PD-L1 expression levels and may also extend the response to the PD-1 TIGIT to nonresponsive tumor types and patient populations. We're, therefore, currently pursuing a triple combination strategy, blocking PVRIG, TIGIT and PD-1 and we pursue this drug combination in tumor types and patient populations that are not responsive to PD-1.

This strategy helped us to directly prove a COM701 PVRIG-driven effect of a triple combo even though we employ small single-arm studies. By assessing the non-responsive tumor type, our data will not be attributed to a PD-1 effect, but we also recognize that the signals that we may see in these very hard to treat tumor types will not be very high. Of course, this triple combination is also expected to advance in inflamed PD-1 responsive settings.

In addition, our partner, AstraZeneca, is advancing development of rilvegostomig, their PD-1 TIGIT bispecific, providing a peak revenue target of greater than $5 billion, reflecting the potential of these assets. As the TIGIT component of rilvegostomig is derived from Compugen's COM902, this is a potential significant revenue-generating opportunity for Compugen.

Elaborating more on the choice of anti-TIGIT, not all anti-TIGITs are the same. Our COM902 anti-TIGIT antibody is an IgG4 antibody, and so it is naturally attribute, chosen with efficacy and safety in mind. We have always said that the effectivity of the antibody should be disabled. The reason for this is simple. TIGIT is highly expressed on CD8 + T cell and [ anti-T cells, ] cells that are key for anti-tumor activity. And you, therefore, want to avoid depleting them. In addition, Fc-silent anti-TIGIT avoids peripheral Treg depletion that can lead to immune-related adverse effects. Notably, recent data may suggest that Fc anti-TIGIT antibody may not be tolerable in patients with early stage of disease due to immune-mediated safety concerns.

Moving now to the progress we have made in the second quarter of the year, continuing our track record in delivering our plans, we again executed on our promises.

Thirdly, we're delighted that the FDA has cleared the R&D application to initiate a Phase I trial for COM503, our potential first-in-class high-affinity anti-IL -18 binding protein antibody licensed to Gilead. IND clearance, which triggered a right to a $30 million milestone payment from Gilead further strengthens our balance sheet with an expected cash runway into 2027. We are well advanced in our planning and are currently on track to initiate the Phase I trial for COM503 in solid tumors in the fourth quarter of 2024. Advancing COM503 to Phase I adds to the multiple clinical programs discovered through our predictive computational discovery platform where we unlock the science and advance to clinical trials.

Secondly, we are on track to report data from our COM701 and COM902, pembrolizumab, triple combination proof-of-concept study in patients with platinum resistant ovarian cancer in the fourth quarter of this year, and will come back to this shortly.

Finally, in the second quarter of 2024, we were excited to see that our partner, AstraZeneca, announced the further advancement of the development of rilvegostomig, their PD-1 TIGIT bispecific, where the TIGIT component is derived from Compugen's COM902 into its third Phase III trial, [indiscernible] BTC, which will assess rilvegostomig and the ADC in HER2 for the standard of care chemotherapy and the anti-PDL1 durvalumab for first-line locally advanced or metastatic HER2 expressing biliary tract cancer.

As a reminder, the other Phase III trials initiated by AstraZeneca are in lung cancer as part of an IO ADC regimen in adjuvant biliary tract cancer. We believe these advancements reinforce our partnering strategy designed to expand the opportunity for our pipeline programs, including COM902. This brings us closer to potential additional milestone payments in an aggregate amount of up to $200 million and future mid-single digit tiered royalties presenting together a significant potential revenue source for our company.

To date, we have received around $40 million in upfront payments and milestone payments. Moving on now to our plan for the rest of the year. And coming back to the presentation of our data in platinum-resistant ovarian cancer, which is on track for the fourth quarter of 2024, and our plan to present the data at a medical conference. We believe that the totality of the data we have reported to date in platinum-resistant ovarian cancer patients is encouraging.

In the product cohort of patients, our investigators were excited to report durable shrinking or stabilization of tumors in some of the patients who had previously progressed on all available treatment options. We presented a 20% overall response rate with some patients responding for over 16 months, which is favorable, considering the median duration of response for chemotherapy is around 3 to 4 months and ADC is around 6.9 months. Responses were also achieved in the hard to treat high-grade serous adenocarcinoma patients, along with a favorable safety profile.

To remind you, ovarian cancer was pre-identified using our computational capabilities even before we treated patients as high-priority target indications for PVRIG blockade. Of note, we also previously presented data showing COM701 monotherapy activity in a patient with ovarian cancer whose tumor marker environment was immune desert. This patient had a partial response of more than 18 months.

In the fourth quarter, we plan to present the data and characteristics, safety, overall response rate, disease control rate, initial biomarker data if any and preliminary data on duration of responses for our COM701, COM902 and pembrolizumab combination. In relation to baseline characteristics, these platinum-resistant ovarian cancer patients were heavily pretreated, exhausting all other treatment options and the number of patients where ADC experience, reflecting the changing treatment landscape and the hard-to-treat patient population.

Given that the only other treatment option for this patient who had been chemotherapy, we believe that is the most relevant benchmark. As we have previously communicated, our goal is to assess whether we can demonstrate a similar clinical benefit to what we observed in the prior cohort. We believe repeating it in a larger total number of patients will confirm COM701 combinations are active. There is a significant unmet medical need for women with ovarian cancer, who could benefit from alternative potentially safe, efficacious and durable treatment options. We intend to share our plans or next steps for our COM701 combination at the time of data presentation.

Finally, in the second half of this year, our partner, AstraZeneca anticipates data from Phase I/II ARTEMIDE-01 trial and the poster presentation from Phase II GEMINI-gastric trial, which was accepted at ESMO 2024.

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 June 30, 2024, we had approximately $92.3 million in cash and cash related compared with approximately $51.1 million as of December 31, 2023. We recognize the importance of cash efficiency, and we are disciplined in how we deploy our cash resources while making sure we focus on reaching key milestones.

With a cash runway expected to fund our operations into 2027, taking into account the expected milestone payment of $30 million from Gilead which we are now eligible to receive following the successful IND clearance for COM503 last month. The company has no debt.

Revenue for Q2 2024 were approximately $6.7 million compared with no revenue for the comparable period in 2023. The revenues reflect recognition of a portion of the upfront payments from the license agreement with Gilead and the milestone payment from AstraZeneca on the dosing of the first patient in their second Phase III trial with rilvegostomig in non-small cell lung cancer. Expenses for the second quarter of 2024 were in line with our plans. R&D expenses for the second quarter of 2024 were $6.2 million compared to $7.8 million in the second quarter of 2023. Our G&A expenses for the second quarter of 2024 were $2.2 million compared to $2.4 million in the second quarter of 2023. For the second quarter of 2024, net loss was $2.1 million or $0.02 per basic and diluted share compared to a net loss of $9.3 million or $0.11 per basic and diluted share in the second quarter of 2023.

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

[Anat Cohen-Dayag, executive]

Thank you, Alberto. To summarize, Compugen is a clinical-stage immuno-oncology drug discovery pioneer. We're differentiated by our validated discovery platform which is powered by the mix of human expertise with AI and machine learning to fuel our first-in-class pipeline. There has been many developments in the TIGIT landscape with more data readouts expected this year. And we believe we stand out as differentiated, both in terms of our clinical strategy and our differentiated programs, including our potential best-in-class anti-TIGIT COM902 and first-in-class anti-PVRIG COM701.

Also, our partner AstraZeneca is advancing the development of rilvegostomig the TIGIT PD-1 bispecific, the TIGIT component of TIGIT derived from COM902. AstraZeneca has set a target for more than $5 billion in nonrisk-adjusted peak revenue reflecting the potential of these assets and the potential significant revenue-generating opportunity for Compugen.

Our achievements successfully gaining FDA IND clearance for COM503 is a clear reflection for our continuous ability to execute. We're on track to deliver data from our COM701, COM902, pembro triple combination study in patients with platinum-resistant ovarian cancer at the end of the year, a disease where there is a significant unmet medical need to alternative treatment options.

With the pipeline that is being advanced internally and by our partners, this is an exciting time for Compugen, and we believe that we have the fundamentals in place to bring value to our shareholders and cancer patients. I would like to thank all competent colleagues for their collaborating experience and daily dedication resulting in a well-executed second quarter of the year and setting us up for future success.

Finally, I would like to say a special word of thanks to Alberto as this is his last conference call with Compugen, and welcome David who has already joined us and will take over from Alberto on August 15 after a transition period.

With that, I will turn the call over to the operator for questions.

[Operator]

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

[Stephen Willey, analyst]

Anat, is there anything that you can say about your confidence in the totality of clinical evidence that you have in hand when you make a decision on the triplet regimen in ovarian? You have data from one heavily pretreated dose expansion cohort that was generated with a different TIGIT antibody, soon you have data from a slightly less pretreated expansion cohort generated with COM902. Just curious about your thoughts here in the totality of evidence that you'll have in hand. And then I just have a follow-up.

[Anat Cohen-Dayag, executive]

Sure. Thank you, Steve. And I'm happy to elaborate on this. First, I'll just say the totality of the data that we have is pointing to COM701-driven effect and monotherapy effect over response rate that is added to -- the combined durability, safety profiles and purely from our perspective, as I was saying in the prepared remarks, the need is there for safe efficacious and durable treatment. And we believe that if we can repeat the clinical benefit that we have seen up until now, there is a need.

Now, with respect to the differences in the studies, I can say the following. I believe that since we use the TIGIT antibody, that is actually disabled, even though it was not COM902, we believe this will be comparable. We do think that we have a best-in-class potential, best-in-class TIGIT antibody, we believe that the data may be comparable. We use [ nivo ] as compared to pembro. So we believe that this triplet that we use now may have the chance to at least repeat the advantage that we saw. And with respect to the differences in the treatment, I want to say that at the end of the day, the patient characteristics are more or less the same, and we believe that we would be able to compare between the 2 different cohorts.

[Stephen Willey, analyst]

Okay. That's helpful. And then I might have missed this, but did I interpret your commentary, I guess, regarding the update at the end of the year to suggest that you may not have biomarker data to present in conjunction with the safety and efficacy data?

[Anat Cohen-Dayag, executive]

We did not say whether we really have or not, but we said that we present data -- if we have the data. I think it's fair to say, and we're saying that we have the initial data. It looks supportive of -- patient with clinical benefits. We also stated few times that we recognized the challenges in generating biomarkers in IO and mainly with a small number of patients. We are assessing the biomarkers, the expression level and we share what we have at the time that we have it.

[Stephen Willey, analyst]

Okay. And so in terms of being able to articulate a potential path forward here before the end of the year in conjunction with data, should we then expect that you will be communicating either the use of or the absence of a patient selection and enrichment strategy in terms of…

[Anat Cohen-Dayag, executive]

So in general, we were preparing ourselves to 2 scenarios from the get-go. Obviously, we had initial biomarker data and enrichment strategy on the table, but we also recognize the fact, as I said, that this is very challenging, and we may not have enough supporting data, and we have to prepare ourselves to a situation where there is no enrichment strategy, but I will say that we will always be data-driven. As we've been up until today and will continue to do so, we will focus pending the data, we will focus where we believe we have the competitive edge where we can give our triplet combo the best chance to impact the appropriate patient population, and we'll take everything into consideration.

So we're saying no. We're not saying yes. We're assessing. And we do what we have and we take the steps accordingly.

[Operator]

The next question is from Asthika Goonewardene of [ SunTrust ].

[Asthika Goonewardene, analyst]

I'll clarify, I'm from Truist, no longer [ SunTrust ]. I just want to dig into this on the platinum-resistant ovarian cancer data that's coming up, I think you mentioned in your prepared comments that you have patients who have seen prior ADC. And I wanted to maybe contrast between the previous days that what proportion of patients are you expecting to have prior ADC? Is going to be considering more than the previous data set? And how do you expect exposure to the ADC, particularly the -- they're actually seeing payload to alter the patient's T cells? Is there any opportunity for this patient to be conditioned the way that they might actually respond better or worse to immunotherapy, such as PVRIG and TIGIT, et cetera? And then I have a follow-up.

[Anat Cohen-Dayag, executive]

Sure. Thank you, Asthika. Michelle, do you want to take this one?

[Michelle Mahler, executive]

Yes, sure. So I can't comment on the exact amount of patients who received ADCs at this point since we're not ready to disclose the data. However, what I can say is when you look at the different timing of when the studies were enrolled, the one study enrolled before -- a good amount of patients enrolled before the ADCs really became forward and before they recently got approved, whereas the current study is ongoing. So we naturally have captured a certain amount of patients that have previously seen ADCs. I can hypothesize with you on what we think may occur once patients are exposed to ADCs and that there is potential for [ cell waste ] with increased antigen presentation. However, at this point in time, we can't share any data with you. And I think the other thing to be aware is it's all the totality of data and coming back to the ADCs in terms of the prior lines of treatment also matter in terms of how patients are, in terms of the overall condition and the immunogenicity of -- the response to them.

[Anat Cohen-Dayag, executive]

Yes. Sorry, Asthika, I'll just add that mechanistically, why it makes sense, I want to emphasize that we enroll somewhat more than in 20 patients and with some more number, it is going to be hard to get any specifics with respect to ABC plus IO in our study, but I believe that the potential is there.

[Asthika Goonewardene, analyst]

Anat, do you think you'll actually report the 2 data points? I mean, would that be starting a breakout like a subgroup analysis of patients who've seen prior ADC versus not? Is that -- do you have enough numbers to really do that?

[Anat Cohen-Dayag, executive]

I think that in 20 patients cohort, doing any subgroup analysis, that was my point of the remark. I don't think that the numbers we support specific conclusions based on this.

[Asthika Goonewardene, analyst]

Got it. Okay. That's helpful. And then a quick for Alberto. Alberto, I wish you all the best in your next endeavors. I just want to ask can you maybe give us a little bit more color on the cash burn guidance. I'm curious to know, does it anticipate starting off any follow-on studies with COM701, 902, potential registration enabling studies, et cetera?

[Alberto Sessa, executive]

Yes. Asthika, thank you for the wishes. So as we said, we had cash into 2027, and this -- take into consideration a certain amount of cash that should be used for the next trial. So even if, I mean, we did not -- we don't have plans and we will have plans only once the data will be out. But yes, we have some reserve for additional trial that we may or may not start going forward.

[Operator]

The next question is from Daina Graybosch of Leerink Partners.

[Daina Graybosch, analyst]

Another question for me on the platinum-resistant ovarian cancer data. You mentioned that this is a very difficult-to-treat patient population based on their prior lines and prior therapies. And that because PD-1 has little activity alone, it's a very good place for signal seeking. To me, when I hear that, it feels like you're guiding to a pretty modest overall response rate and duration of response. But I wonder if you could put actual quantification on that. So what kind of range in a 20-patient cohort specifically are you looking for that you think the activity is not only giving you a signal of PVRIG and TIGIT contribution but also is attractive enough to move forward?

[Anat Cohen-Dayag, executive]

So I'll start, and then Michelle, if you want to add, please go ahead. It's a very good question. And as I explained, we were thinking to go into areas where we could go show in small single-arm studies that this is a COM701 PVRIG-driven effect. And we believe that what we show the cross indication for the different studies that we've done that this is a COM701-driven effect. And right now in terms of looking at the guidance, what we did say today that we are looking to repeat the clinical benefit that we have shown in the prior cohort in order to make a decision, okay, with this amount of patients that cumulated days of the 2 cohorts, we believe this COM701 is active. Then the question is, where do we have the competitive edge in which we should use this combination, where the data that it showed up until now that we have been durable -- in the prior cohorts, these durable and safe profiles, and where do we give it the best chance to impact the appropriate patient population? But basically, it will be, from our perspective, we're picking the same clinical benefit.

[Daina Graybosch, analyst]

Can you remind us that clinical benefit you observed in the first cohort? I don't think you've given the numbers on the call.

[Anat Cohen-Dayag, executive]

Sure. So other than presenting some monotherapy activity, which was in a different study, in the prior triplet study, we were having 20% of our response rate with deep responses. Patients that were responsive, some of them have durability of more than [ 16 ] months, and it was -- the combination was safe and tolerable. And we have initial biomarker data supporting some association with clinical benefit.

[Daina Graybosch, analyst]

And then in the data that you're going to have this year, how much follow-up will you have? Will you be able to observe a confirmation of that durability and then how many patients?

[Anat Cohen-Dayag, executive]

Let me share, address it. We will not have the 16 months durability -- time to do monitoring for 1 month but -- Michelle, do you want to say anything about it?

[Michelle Mahler, executive]

Yes. So what I can say is we did decide to cut the data a little bit earlier so that we can present data by the end of the year. So it may not be as mature as the prior data set. However, a number of our patients on the study have already been on the study for a minimum of 6 months. So it is starting to get to a point where we will be able to observe durability.

[Operator]

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

[Tony Butler, analyst]

I just wanted to follow on with the last question, and I guess it intersects with the first as well, and that is the -- I'm going to call it hurdle rate that you would like to see, at least as it -- or maybe we would all like to see, as it pertains to the Q4 data in ovarian cancer. So if 20% is that hurdle, if that's correct, the question becomes -- there are 2 parts, one is, will there be some look at, if there are only 6 months in duration, for example, per Michelle's comments, then that seems perfectly fine, I guess. But there is a question as to whether or not there are late responders. So for example, if a patient has been on triple therapy for x number of months that they respond later. Is there evidence from the previous trial that, that is the case? That's point one.

And number two is, if all the response rates were PRs. Does that matter to -- I mean that's really great for these women for sure. But is there -- are there any PR conversions that you had seen in the previous study which were later than when that particular cutoff occurred? And then I have a follow-up.

[Anat Cohen-Dayag, executive]

Michelle?

[Michelle Mahler, executive]

Yes. So I can't speak that they are and is also described in the immunotherapy literature and ovarian cancer that yes, there are some patients who can develop a later response, so they can be sitting at stable disease for a long period of time and then stable disease over a period of time will become partial response. Again, I can't speak to all the details on the current data set and in the prior data set as you're aware, we did have 2 partial responders that maintain response beyond 16 months. I don't remember off hand what the exact time to respond was in those 2 patients. But we had a number of stable disease patients as well who were on the study for quite some time. So I feel like, I'm not completely answering your question, but I think that's the best that I can get to you right now.

[Tony Butler, analyst]

Yes. But I guess, to some degree, did any stable disease patients in the previous trial convert the PR? That was sort of part two.

[Michelle Mahler, executive]

So off-hand, I don't recall. I just know that there were 2 partial responders. Like I said, I'm not 100% sure what the time to respond was. I'm not aware of any late conversions from stable disease to partial response. Although, like I said, that has been described in the immuno-oncology literature.

[Anat Cohen-Dayag, executive]

But I think, Tony, if I understand where you're leading to, I'll just add that the guidance that we shared with repeating the same clinical benefit would be relevant for the time that we will also share our plans based on the data, as I said, we'll always be data-driven. So that maybe gives you some clarity about our guidance.

[Tony Butler, analyst]

And maybe the last question, totally different. But in COM503, you make reference to harness and cytokine biology. And I guess the question is, in your current research efforts, are there other targets that might also harness other cytokines that might be worthwhile as antibodies for which you may bring forth in the future? In other words, something beyond 503?

[Anat Cohen-Dayag, executive]

Eran, do you want to take it?

[Eran Ophir, executive]

Yes. So overall we use our computational AI-driven platform to identify novel targets. We have had trials in binding protein as a target, not because we looked for cytokine target, because we looked for resistant mechanisms in the tumor environment computationally.

So it's a very different target from PVRIG. TIGIT, for example, and this indeed took us to harness an antibody to unleash natural activity in the tumor microenvironment. So we definitely have a variety of other early assets, all coming from our computational discovery platform. And they are across different modalities and different MOAs, all coming from -- it's kind of MOA agnostic and more patient-centric approach, looking into the tumor environment of patients and unleashing additional resistant mechanism.

[Operator]

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