Compugen Ltd.
Q2 2018 Earnings Call Transcript

Published: 1 Aug 2018

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Compugen's Second Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available in the Investor section of Compugen's website at www.cgen.com. As a reminder, today’s call is being recorded. I would now like to introduce Elana Holzman, Compugen's Director of Investor Relations and Corporate Communications. Please go ahead.

[Elana Holzman:]

Thank you operator. Thank you for joining us today. With me from Compugen are Dr. Anat Cohen-Dayag, President and CEO; Dr. Henry Adewoye, Chief Medical Officer; and Ari Krashin, CFO and COO. Before we begin, I would like to read the following regarding forward-looking statements. During the course of this conference call, the company may make projections and other forward-looking statements regarding future events, future business outlook, anticipated progress of Compugen's pipeline program, and financing related matters. We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ materially. You are kindly referred to the risk factors and cautionary language contained in the documents that the company filed with the Securities and Exchange Commission including the company's most recent Annual Report on Form 20-F, filed March 27, 2018. The company undertakes no obligation to update any projections or forward-looking statements in the future. Also please note that in his prepared comments Henry will refer to a slide describing the clinical protocol of COM701 Phase 1 study. This slide can be found in a link in today's press release or in slide 24 in our corporate presentation which can be found in the Investor Relations section of our website. I will now turn the call over to Anat.

[Anat Cohen-Dayag:]

Thank you Elana. Good morning and good afternoon everyone. I would like to welcome you to our second quarter 2018 corporate and financial update. I would also like to welcome Dr. Henry Adewoye to today's call. Henry joined Compugen in late March as our Chief Medical Officer, a newly created position at Compugen and assumed overall responsibility of our clinical stage pipeline programs. Henry joined us from Gilead Sciences and brings to Compugen over 20 years of clinical experience having led multiple oncology and hematology clinical trials at global pharmaceutical and biotech companies including several drug approvals Since arriving at Compugen Henry has been instrumental in leading our efforts with the FDA bringing to a quick resolution the clinical hold that followed our IND submission, finalizing the trial protocol, and clearing the path for the initiation of our Phase 1 trial for COM701 with first patient dosing expected in early fall. In parallel Henry has been working to create the required infrastructure to run the phase 1 trials. We are engaging prominent clinical investigators from leading U.S. medical centers in the field of cancer immunotherapy who will most effectively execute our clinical strategy and explore the full potential of COM701. On the call today Henry will provide an overview of our phase 1 trial protocol and clinical strategy and we will review the operational aspects of our clinical trial preparations. Following Henry's comments Ari will provide the financial update after which we will open the call for the Q&A session. The first half of 2018 marked the transformational period for Compugen. Several weeks ago the FDA cleared both our IND application for COM701 as well as Bayers IND application for BAY 1905254. Initiating trials for these two programs in 2018 is a significant milestone for our company. Also the [indiscernible] programs are the first clinical candidates addressing novel drug targets identified through our computational predictive technology represents substantial proof of concept for our capabilities and computational discovery efforts. We're excited and looking forward to beginning our first in human clinical trials for COM701 targeting the PVRIG immune checkpoint. The mechanistic questionnaires for these new checkpoint pathway which ties into both the strategic and PD-1 pathways suggest this COM701 has the potential to improve response rate in patients with refractory or relapse disease following treatment with existing cancer immunotherapies across multiple solid tumor indications. Our data suggests that COM701 may work as monotherapy but even more so is necessary to induce a sufficient anti-tumor immune response in cancer patient subpopulations where both the two pathways TIGIT and PVRIG are operating. We believe our COM701 program is the only clinical stage product candidate targeting the PVRIG pathway which is part of the larger PVRIG and PD-1 axis. With this Compugen clearly has a first mover advantage in a competitive immunotherapy landscape. We plan to advance this program through clinical proof of concept. However, our business model remains to partner our assets and at any state we will carefully consider partnering opportunities for this asset that might help us advance the program, establish a sustainable clinical stage pipeline, and ensure continued growth and long-term value for Compugen. As our planned Phase 1 trial consists of combination treatment with COM701 and PD-1 blocker, we are currently evaluating different avenues to axis a PD-1 blocker for the trial. There are multiple possible sources in the industry for PD-1 drug supply and various types of axis arrangements ranging from buying the products on the open market to entering into an axis arrangement with one of the several companies developing and/or marketing a PD-1 blocker. The various axis options each have their own relative merit and value and we are currently evaluating all alternatives. We will of course share with you more information as we secure such axis. As we advance COM701 Bayer also plans to start Phase 1 clinical trials this year for their program targeting ILDR2.BAY 1905254 which was jointly developed by the teams at Compugen and Bayer has exhibited anti-tumor activity as in monotherapy and in combination with other cancer therapy approaches in various mouse models indicating the potential for multiple combination uses intensive immunotherapy. Bayer is now solely responsible for the further clinical development of BAY 1905254 and we're very excited to see their continued investment and commitment to these programs -- to these promising programs. As we already disclosed we are eligible to receive a milestone payment when the first patient is dosed in 2018. We will of course update you when that happens. The two clinical stage programs COM701 and BAY 1905254 along with our anti-TIGIT antibody COM902 addressed new immune checkpoints that were identified purely through computational discovery. Discovering a new drug target is a remarkable accomplishment. Discovering a new drug target through computer prediction is a breakthrough. We have successfully done that now three times. As of today these have resulted in two clinical drug candidates addressing computationally discovered novel targets which is extraordinary in the life sciences industry. And more important, we have the systems, tools, and know hows to do it again. We are pioneers in the field of computational discovery as it is now receiving increasing attention in our industry. It is a core competency and competitive advantage for Compugen. We have extensive experience in developing proprietary computational discovery approaches and we continue to invest to generate novel drug targets and our TIGIT [ph] programs for our internal development and for collaboration purposes. Our proven know how in computational drug target discovery uniquely catered with our in-house target validation and drug discovery and development capabilities distinctively position in this sphere. The third most advanced therapeutic program is COM902. Our anti-TIGIT program which is progressing towards expected IND filing and initiation of Phase 1 studies in 2019. To remind you, we are developing COM902 as a complimentary program to COM701 which leverages our growing and unique understanding of the synergistic biological activity between the PVRIG and TIGIT pathways. Based on this data we believe that co-blockade of PVRIG is necessary to maximize the immunoset of strategic inhibition in certain cancer indications. The combination of COM701 and COM902 will provide Compugen with a distinct competitive advantage. In addition to these programs we have a broad early stage pipeline and are working on the next candidate to advance into therapeutic development. These programs as you know are largely focused on myeloid target addressing a range of mechanisms of action. We will provide further details on these programs as they mature. Before the turning the call over to Henry I would like to say a few words about the changes that were recently announced regarding our Board of Directors. To support our transition to a clinical stage company and the advancement in our pipeline and business we recently added three new members to our Board of Directors. We're delighted to welcome Gilead Halevy, Dr. Kinneret Livnat Savitzky, and Sandy Zweifach to our Board, each of whom brings to Compugen extensive managerial, business, and financial experience in the pharma and/or biotech as well as other industries. These newly appointed board members together with the existing members have the breadth of experience and expertise and the commitment to support and guide the company's future growth. And with that I will turn the call over to Henry.

[Henry Adewoye:]

Thank you Anat for the warm welcome and thank you everyone for joining us today. I am excited to be part of Compugen's management team and join today's call to provide you with an update on the clinical protocol for COM701 and operational aspects of our preparations for the clinical study. Compugen has made significant strides transitioning a predictive target discovery company to a clinical stage company and Anat has assembled an experienced, high achieving, and goal oriented team to lead these efforts which has put personnel, systems, and processes in place to better position us for the clinical development of novel immuno-oncology drugs. As part of the team I will lead the clinical strategy of the organization and the clinical development of molecules in our pipeline. Our Phase 1 study will be conducted in the United States. Details of the participating sites and the overall study design will be accessible on clinicaltrials.gov. The participating clinicians all expressed high interest in COM701 and in our pre-clinical data and have relevant experience running oncology clinical trials in general and in particular in the field of immuno-oncology. As recently disclosed we expect our first patient to be dosed in early fall. As an affirmation our Phase 1 protocol is designed to address the scientific and clinical rationale of the COM701 program. Also the biomarker strategy implemented in the protocol is based on our understanding of the biological pathway of PVRIG and our supportive clinical data. What is particularly noteworthy about our program is that our pre-clinical expression data supports its potential efficacy into tumor types that are PDL-1 negative which tend to be more resistant or refractory to PD-1 inhibitors. This is even more important, given the changing landscape of cancer treatment reflected in the increasing number of approvals for the PD-1 checkpoint inhibitors and research failures of other agents. Our expectations as are targeted on inhibitors in the PVRIG TIGIT assets will lead to meaningful improvements in clinical outcomes for patients and as we meet the needs of this underserved patient population. Turning to the slide described as the protocol. The primary and secondary endpoints of this study are extended end points for similar Phase 1 clinical trials. The primary endpoint is safety, evaluated by dose limiting toxicities and the determination of a maximum tolerated dose or MTD. This also includes pharmacokinetics. The secondary end-point is a evaluation of preliminary anti-tumor activity of COM701 in combination with a PD-1 inhibitor in patients with selected tumor types. Phase 1A of the study will evaluate the safety and tolerability of COM701 immunotherapy through sequential dose escalations. To minimize the number of patients treated at subtherapeutic doses of COM701 we have incorporated into the clinical trial an accelerated titration design. What this means is that one patient would be enrolled into the low dose cohorts and observed during the dose limiting toxicity window prior to enrolling additional subjects into the next higher dose cohorts. As dose escalations continue we anticipate also utilizing a three plus three study design. At the completion of the monotherapy dose escalation study we will have a recommended Phase 2 dose of COM701. The patient population enrolled will be all commerce and will include patients who have failed prior therapies including all the checkpoint inhibitors and have no other available approved therapies. To evaluate the long-term safety and efficacy of COM701 monotherapy at the completion of the COM701 monotherapy dose escalation, cohort dose expansion will be performed with the enrolment of patients with relapsed or refractory TIGIT [ph] and the following tumor types. Non-small cell lung cancer, ovarian cancer, breast cancer including triple negative breast cancer and endometrial cancer. This tumor types have been selected based on the pre-clinical data demonstrated in the high expression of PVRIG and PVRL2. With the exception of non-small cell lung cancer the other tumor types typically have low PDL-1 expression relative to PVRL2 based on our pre-clinical data and are not usually responsive to PD-1 inhibitors. Clinically relevant end points will include objective response rate, disease control rate, progression free survival, duration of response, and overall survival. In addition our body marker strategy will evaluate this clinically relevant end points, clinical activity and safety with immunity -- PVRIG pathway expression and target covered by COM701. Our biomarker analysis will be a retrospective analysis which if confirmed will serve for patient selection at later stages of the trial. Phase 1A and 1B of the study will evaluate the safety and tolerability of COM701 in combination with the PD-1 inhibitor using a three plus three study design. For this amount of study all subjects will be on the standard of care dose of a PD-1 inhibitor while escalating doses of COM701 will be tested. The study will start with a COM701 dose that has already been demonstrated safe and tolerable from MA [ph]. Sequential dose escalation will then be performed until the recommended dose of COM701 from MA [ph] can be combined with a standard of care dose of a checkpoint inhibitor. A similar patient population has enrolled for the cohort expansion in MA in other words breast cancer, ovarian cancer, endometrial cancer, non-small cell lung cancer will be preferred for enrolment for this part of the study. To gain more information on the safety and tolerability of the XX COM701 in combination with a PD-1 checkpoint inhibitor additional patients will be enrolled at the projected dose of the combination prior to cohort expansion in the Phase 1B of this study. Phase 1B part of the study will enroll patients with this specific tumor types where the pre-clinical data has demonstrated that expression of PVRL2 and PVRIG. These are non-small cell lung cancer, ovarian cancer, breast cancer, and endometrial cancer. All the tumor indications maybe explored based on the earlier clinical data. All subjects in this part of the study will have measurable disease so we are able to potentially evaluate the clinical activity of the doblex [ph]. As we earlier mentioned proof testing for PVRIG and PVRL2 will not be an eligibility criterion on this study. Long term we would perform introspective analysis for correlation with clinical activity. Results of this analysis may inform a biomarker driven study, in other words the study in which patient eligibility in part is based on the presence of a biomarker. The overall study will allow us to evaluate the safety, tolerability, and clinical activity of COM701 as monotherapy and in combination with a PD-1 inhibitor. Our team, the investigators and chief thought leaders participating in this study are confident that we have identified a biologically relevant and clinically meaningful target. As you are all aware the company also develops COM902, a TIGIT antibody that is currently underscoring IND enabling studies that will allow us to leave test with dual and triple combinations of COM701 and COM902 with and without a PD-1 inhibitor. Compugen's management adopted a vision a few years ago of transforming patient lives by developing first in class therapeutics based on Compugen's foundational, predictive, habit discovery and functional validation platforms. By being a clinical stage company we are closer to realizing this mission. In conclusion, as we open a new front in the treatment of cancer with COM701, a novel first in class inhibitor of PVRIG we are optimistic and looking forward to seeing the clinical data and hopefully provide validation to computed and predictive drug discovery and development model from drug targets to therapy or in other words from cohort to cure. Thank you.

[Ari Krashin:]

Thank you Henry and welcome to Compugen. We are delighted to have you on our team. Our financial results for the second quarter of 2018 and for the six month period ending June 30, 2018 released today continue to reflect a higher level of expenses associated with COM701 and COM902. Research and development expenses represent approximately 80% of our total expenses totaling approximately $8 million for the second quarter of 2018 compared to $7.1 million in the second quarter of 2017. The increase in R&D expenses is attributed mostly to pre-clinical activities mainly manufacturing cost relating to COM902 program as we move forward to IND filing plan for 2019 as well as activities related to COM701 in preparation for the start of our clinical trials. Net loss for the second quarter of 2018 was $10.2 million or $0.19 per diluted share compared to a net loss of $9.2 million or $0.18 per diluted share for the second quarter of 2017. As of June 30, 2018 we had approximately $43.1 million in cash and cash related accounts with no debt. At the current level of cash expenditures, our current cash resources are sufficient to support our activities until the end of the second quarter of 2019 without taking into consideration the anticipated milestones from buyer upon first patient dosing in 2018 person to the bio-collaboration or other potential cash consideration from other business arrangements. Thank you all and we will now open the call for questions. Operator.

[Operator:]

[Operator Instructions]. The first question is from Mark Breidenbach of Oppenheimer. Please go ahead.

[Mark Breidenbach:]

Hey, thanks for taking the question and congrats on the progress towards getting COM701 into the clinic later this fall. With the COM701 protocol now finalized I was hoping maybe Henry or Anat can fill us in on a little bit of information on dosing? Can you maybe just outlined the new starting dose for this trial and also could you tell us what the highest specified dose is in the protocol, to me you don't hit any real piece first?

[Henry Adewoye:]

Thank you very much Mark. So as the dose of the COM701 will be using under studying is proprietary. We will not be able to disclose this during this call. But be assured that what we will be looking for will be DLT defining toxicities within the 21 day DLT toxicity window.

[Mark Breidenbach:]

Okay, so with the accelerated titration design you have mentioned earlier, am I understanding correctly that the early dose cohorts will be single patient only and then you will eventually shift to three plus three design once you get to a therapeutically relevant range?

[Henry Adewoye:]

That's correct Mark.

[Mark Breidenbach:]

Okay, okay and one final question from me with the Bayer ILDR2 antibody, is it safe to assume that Bayer will be controlling all the news flow from Phase 1 trial and is it realistic to expect that we could see any early data from this trial in 2019?

[Anat Cohen-Dayag:]

Of course Bayer is solely responsible now for the clinical trial and all the activities with respect to this program. So for sure with all means that they will control any news with respect to this program and we cannot relate to it, we cannot therefore commit to it, and that's from our perspective. The only thing that we can say is that when we will achieve milestones payments this will be disclosed but other than that we are just solely responsible for this.

[Mark Breidenbach:]

Okay, understood. Thank you again for taking the questions and congrats.

[Anat Cohen-Dayag:]

Thank you Mark.

[Operator:]

The next question is from Lucy Codrington of Jefferies. Please go ahead.

[Lucy Codrington:]

Hi there, thank you for taking my questions. I just have a couple. The first relates to the COM701 study, when might we see first data from this trial and also how many patients are you anticipating taking part in the trial? And that my second question just relates to the Bayer milestones, can you give us an indication as to the size of this milestone? Thank you.

[Anat Cohen-Dayag:]

Okay, so I will start with Bayer milestone, with the second question. We cannot disclose the amount, it is confidential and as we didn't disclose that prior time which is usually filing a 6-K and this is what we'll do and we'll get the milestone there the next milestone which is a first patient dosing. With respect to time lines in general it is premature for us to say anything that relates to give any guidance with respect to the trial. We're now focusing in order to make sure that we start first patient dosing in early fall as we disclosed. As you are aware the timelines for a trial are related to or are tied into many parameters. It depends of course on the size of the trial but also on the type of patient population, the inclusion exclusion criteria, the rate of enrolment, the number of sites, and we cannot really at this stage state relate to it. That's on this front. Henry do you have anything to add.

[Henry Adewoye:]

Yes, with regards to your question on the number of patients for the study, typically studies of this nature around between 100 to 150 patients. So that's a range that we're expecting.

[Lucy Codrington:]

Okay, that is very helpful. Thank you.

[Operator:]

[Operator Instructions]. The next question is from Richard McKee [ph] of First Associates. Please go ahead.

[Unidentified Analyst:]

Hi, thank you for taking my call. I had a question Bayer had included some information in one of their presentations earlier this year about your products effect for autoimmune disease. My understanding is they aren’t actually licensed to use it for auto immune disease and I'm wondering if you are looking into either expanding your license with them for that or finding additional partners to treat those?

[Anat Cohen-Dayag:]

Just to make sure that the information is accurate, Bayer did not license to us so the arrangements with Bayer relates to us licensing to them the rights to develop antibody therapeutics against the drug target and we kept the rights internally for Compugen for the development of an [indiscernible] for autoimmune diseases. And of course we cannot relate to any type of discussions with Bayer or anyone else and this relates to a business development activities of the company.

[Unidentified Analyst:]

Okay, but I haven't heard anything from you about trying to develop that lately, is this something you are hoping to license to someone else?

[Anat Cohen-Dayag:]

This is a program that is in our pipeline and it is part of the pipeline slide that is in our corporate presentation. So yes, it is a program in our pipeline. And as I said we're not commenting about a business development activity that we do -- not with this one or any other program in our pipeline.

[Unidentified Analyst:]

Okay, thank you.

[Operator:]

This concludes the question-and-answer session. I will now turn the call back to Compugen's President and CEO, Dr. Cohen-Dayag would you like to make your concluding statements.

[Anat Cohen-Dayag:]

Thank you. The first half of 2018 was transformational for Compugen as we became a clinical stage company. We're excited to have two drug candidates COM701 and BAY 1905254 addressing new immune checkpoints which we identified purely through computational discovery, beginning Phase 1 studies later this year. We hope that it will become life changing for many cancer patients who fail to respond to existing cancer immunotherapy treatments. We would like to thank our shareholders who have supported this company in weakness, Compugen evolved over the years to reach this day of being a clinical stage company. We are excited to embark on this next stage of our corporate development and we look forward to continuing sharing with you our future accomplishments. Thank you.

[Operator:]

Thank you. This concludes the Compugen Ltd Second Quarter 2018 Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.