Compugen Ltd.
Q3 2017 Earnings Call Transcript

Published: 7 Nov 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Compugen's Third Quarter 2017 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, 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 for joining us today. With me from Compugen are Dr. Anat Cohen-Dayag, President and CEO; and Ari Krashin, CFO and COO who will provide quarterly updates. Dr. John Hunter, Vice President, Antibody R&D and Head of our USA is also joining us from San Francisco and is available to answer questions. 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 or future business outlook, anticipated progress on Compugen's pipeline program as well as business development efforts 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 February 16, 2017. The company takes no obligation to update any projections or forward-looking statements in the future. I will now turn the call over to Anat.

[Anat Cohen-Dayag:]

Thank you, Elana. I would like to welcome everyone to our quarterly earnings update. I will focus in my prepared comments today on the progress we have made during the last quarter with respect to our pipeline program, the development path and potential impact both on the company and the cancer immunotherapy field. Ari will follow with a review of key aspects of the financial results released earlier to date. As Elana mentioned, Dr. John Hunter, our Vice-President antibody R&D and Site Head of Compugen USA is also on the line and will be available for the Q&A session. I’d like to begin by saying how please we are that Paul Sekhri has joined Compugen competition as our new Chairman of the Board of Directors. Paul has spent over 30 years in the life sciences industry with both big pharma and smaller biotech’s and brings exceptional experience both in the US and aboard. We're confident that his leadership and experience would be invaluable for Compugen as we transition to a clinical stage company and Paul's prospective and guidance will help us enhance and extract the commercial value of our pipeline program and unique discovery capabilities. Regarding our lead R&D program, we are continuing to make key advancements including for first-in-class immune oncology anti-PVRIG candidate COM701. We remain on track for filing an IND for COM701 towards the end of Q1, 2018. For this program as well as for our earlier stage immune oncology program and CGEN-1501 for autoimmune diseases we continue to hold discussions with the potential industry partners and we remain confident this will really achieve multiple collaboration. Nonetheless, we cannot predict the exact timing of completing any such collaboration as most of our programs are novel and early stage entailing a lengthy evaluation period by prospective partners and are, therefore, taking longer than we originally anticipated to complete. Going forward, we do not plan to provide updates of this nature on our quarterly calls as they are currently not serving the best interests of the company or its shareholder. In this respect, our communication policy from now on is to announce only when a material event such as the signing of an agreement has occurred. Returning to COM701 IND enabling activities are ongoing including pivotal toxicology studies, regulatory activities and finalization of the clinical protocol for our planned Phase I trial. Before describing our Phase I trial I would like to share a high level overview about our pipeline and our overall clinical trial strategy and positioning. Our therapeutic pipeline including COM701 is designed to address the immense clinical gap in cancer immune therapy in which up to 70% to 80% of patients do not respond to approved caner immunotherapy drug and the large number of dose who do respond develop resistance over time. To meet this need, we’re advancing a pipeline designed to address diverse mechanism perfection that may be beneficial for the refractory or relapse patient population in various cancer indications. In line with this in our clinical strategy for COM701, we combined the clinical goal of addressing the non-responder the reclassification with a biological rationale underlying the problem. We plan to start the Phase I trial with the objective of testing COM701 as monotherapy-based on our in vitro in-vivo knockout model data that supports durational for single agent activity. In parallel to the monotherapy dose escalation, we will initiate a second study this combines COM701 with PD-1 blockade. Our per clinical results suggest that these drug combination is beneficial in reducing tumor growth and known interaction between PD-1 and TIGIT, PVRIG pathway further support the biological rationale combining these two drugs. This design supports our belief, there's a potential data from both the monotherapy and the combination trial of COM701 are key to the company and are expected to serve as value driver. In addition, and as we already mentioned, COM701 target the PVRIG pathway which is different from but also synergistic with the TIGIT pathway. Such potential synergy between the two pathways supports the second drug combination approach, the combination of PVRIG antibody and TIGIT antibody. This combination is not only design to relieve the break from two parallel inhibitory pathways but also to enable activation of DNAM, this stimulatory component of this signaling AXIS. Our data suggests that dual blockade of PVRIG and TIGIT inhibits tumor growth and we believe these drug combination may maximize the stimulation of the immune system against the cancer. In patients with tumors were PVRIG and TIGIT are dominant. We planned to sell this combination of COM701 together with COM902 our anti-TIGIT antibody in the clinic following the initial Phase I study. A third drug combination approach to be tested by us in the clinic involves the known intersection between PD-1 and the TIGIT PVRIG.DNAM AXIS. Attributable drug combination blocking PVRIG TIGIT and PD-1 which is already orally supported by our pre-clinical data will also be tested in subsequent studies this will allow us to explore [indiscernible] and the commercial potential of the COM701 program. So overall clinical strategy for COM701 will involve the exploration of its multiple opportunities as monotherapy in combination with PD-1 blocker, also a dual combo with COM902 and attributable combo with COM902 and a three-way combo with COM902 and PD-1 blocker. We aim to target specific combination in different patient populations in which the complex PVRIG, TIGIT AXIS plays a key role in cancer immune suppression including those that are partially responsive or non-responsive to PD-1 blockade. As well as those patients we initially respond and then we left on PD-1 inhibitor. Our goal is to establish the optimal combination for the right patient population. Well our Phase 1 study will generally be in all comers trial our preclinical expression study currently points to COM701 potential in specific indication such as lung, ovary, breast and endometrial, kidney and head and neck cancer. Our preclinical data indicating important of the PVRIG, TIGIT AXIS in immune-oncology together with the intersection of this AXIS with the PD-1 pathway. And we are committed to establishing its relevance in the clinic. In addition we believe that generating a clinical proof of concept for COM701 and the PVRIG, TIGIT AXIS in immune oncology will open the door not only for additional product opportunities in cancer immunotherapy but also for products based on this AXIS ultra immune, inflammatory, environment diseases. The discovery of novel drug target generate real opportunity in developing first in class product but also opens the door for validating new biological pathways this can generate opportunities for additional product within end or outside of immune oncology. The data we are presenting this weekend at the annual meeting of the society for immunotherapy of cancer provides scientific and biological support based on regulated pathway depression pattern to our clinical approach and the potential of COM701 to address PD-1 refractory patient and define the patient population to anticipate to later target in the clinic. We’re now completing CMC and IND enabling activities necessary for the anticipated filing of our IND towards the end of Q1, 2018. Our Phase I study is expected to start in 2018 following potential FDA clearance of our IND application. The trial will be an open label study design to test the safety of COM701 both alone and in combination with PD-1 inhibitor. During the trial, we will of course look for efficacy signals as we proceed through dose escalation and into the expansion cohort. For more information about the design of our COM701 Phase I study and the high level presentation of our clinical strategy, see our new corporate presentation on our website. As we prepare for the COM701 trial, we're also concurrently advancing COM902 our anti-TIGIT monoclonal antibody candidate with the goal of filing an IND for a combination trial with COM701 in 2019. During the last two quarters, a high expression cell line for COM902 has been generated for establishment of a research cell bank. This cell line has already been transferred to our CMC service provider for the initiation of upstream process development. As we announced yesterday, we have engaged Bayer to provide process development in manufacturing services for COM902. As I stated, Bayer collaborates with a few select partners to develop and manufacture their own pipeline program and we are delighted to enter this service agreement with them and benefit from Bayer’s longstanding advanced biologics manufacturing experience for the manufacturer concept COM902. Furthermore, we are presenting new data this week at the Annual Meeting of the Society of Immunotherapy of Cancer with respect to the functional and bio-clinical characteristics of COM902 together with data demonstrating the PVRIG and TIGIT are the dominant inhibitor molecules in this complex avenue. We will continue to update on this program as it is advanced through product clinical development. Our third major internal pipeline effort focuses on our Myeloid target program that we launched in 2016. This is a newly rising skill in cancer immunotherapy that is receiving growing interest and investment from both established pharma and biotech companies. This Myeloid target program affect T-cell immunities for various immunosuppressive mechanisms and, therefore, have the potential to serve as the basis for the next wave of cancer immunotherapy. These targets may offer a complementary strategy to that of checkpoint inhibitors and may provide treatment solution for non-responsive or relapsing patients. A limited number of known Myeloid targets are currently pursued in clinical targets with only initial efficacy results presented to-date. Following our decision to enter this field over a year ago, we already have a portfolio of novel Myeloid target at different stages of validation and therapeutic antibody discovery. We recently disclosed new data with respect to certain of our Myeloid program presenting their potential as drug targets for cancer immunotherapy; you can find data on certain of our Myeloid targets on our website and in our new corporate presentation which is also available on our website. In addition, we enhanced our capabilities in this area with the recent establishment of a new research collaboration agreement signed with Mount Sinai Hospital in New York under the direction of Dr. Miriam Merad, a world leader in Myeloid biology and the most recent addition to our scientific advisory board. Similar to our long-term collaboration with the John Hopkins University School of Medicine under the direction of Professor Drew Pardoll focused on new checkpoints, our collaboration with Dr. Merad was focused on research and validation activities for selected Myeloid target candidates discovered by Compugen for their potential to serve as the basis for cancer immunotherapy treatments. These two research collaboration with world leading experts in immune-oncology provide us with an interesting growth and integrated infrastructure for testing the potential of our diverse set of target programs and advancing them serve as a basis for the development of cancer immunotherapy treatment. In regard to our collaboration with Johns Hopkins University initiated in 2014, we recently extended these research collaboration to include additional targets. To-date, the collaboration has been instrumental in expanding our knowledge around our lead check point program particularly COM701 where data generated at Johns Hopkins University has been a major component of the preclinical package presented to clinicians in preparation for our planned clinical trial for COM701. Thank you, and I will now turn the call over to Ari. Ari?

[Ari Krashin:]

Thank you, Anat. While you may find the full details of our financial results in the press release issued this morning, I will now provide a summary of the highlights. Net loss for the third quarter of 2017 was $9.9 million or $0.19 per diluted share compared to a net loss of $7.8 million or $0.15 per diluted share for the third quarter of 2016. As we have developed our pipeline and moved forward our first anticipated IND filing, research and development expenses continues to be our single largest category of expenses totaling $7.6 million for the third quarter of 2017 compared to $6 million in the third quarter of 2016. These expenses continue to reflect an increase in preclinical development activities including manufacturing an IND enabling costs related to the COM701 program as well as increased activities related to COM902. Total cash expenditure for the full year of 2017 are expected to be approximately $34 million assuming approximately $9 million of cash expenditures for the fourth quarter of 2017 excluding potential cash impact. In the September 30, 2017, we had approximately $38.5 million in cash and cash related accounts with no debt. As a policy, management and the board periodically evaluate the company’s cash status in light of these development plans, business activities, financing opportunities and market condition. This is considered together with the long-term best interest of our shareholders. Strengthening our balance sheet continues to be a top priority for management and the board. Entering into new collaborative arrangements as well as milestone payments under existing or new collaboration would clearly impact our cash balance in path forward. Any future decisions regarding possible financing will take into consideration all of these factors as they exist at such time as well as the resources needed to ensure a clear path to becoming a development stage company. Thank you. And with that, I will now open the call for questions.

[Operator:]

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question is from Mike King of JMP Securities. Please go ahead.

[Michael King:]

Hey guys, good afternoon, good morning. Thanks for taking the question. I wanted to just ask you more of a high level question about sort of the IO landscape as it is evolving right now and how that may impact your thinking about how you develop your clinical candidates, and it just it seems like the combination world things that are going on top of checkpoints are getting a lot more complicated, the readthroughs from animal studies are less reliable, the impact that combination therapies are having on the activity of checkpoints namely PD-1 inhibitors is not as clear cut as some may have assumed. So I’m just wondering how this new evolving data has caused you to perhaps rethink or adjust your development strategies for things like 701, 902 et cetera?

[Anat Cohen-Dayag:]

Sure. Thank you, Mike. And in general, if you were relating to few of the trends now that are occurring in the IO field but I will take it as a high level person and related. I can say that but going on currently in the IO field is serving both as challenges but also opportunities for Compugen. And we follow up on this periodically and make sure that we are aligning the path forward. And so just with respective checkpoint and so, yes, the checkpoints that were tested in the clinic and most of them did not show competent with initial data, did not show compelling data; there is a data for last three is opening the door to maybe add on the PD-1 response rate and it’s posing challenges there. We need to show that the PVRIG checkpoints and the pathway of PVRIG TIGIT, as I explained, is going to make a difference and we’re committed to test it in the clinic. But on the other and the fact is there is one there it showing a path forward, as I stated last week, is encouraging. So that's with respect to the checkpoint. Translating the data and by the way with respect to other trends in the industry [indiscernible] becomes more -- get more recognition I think that it is clearly also affected our decision to get into the myeloid biology field and to make sure that we diversify the pipeline with respect to different mechanism of action to address the resistant patient population -- the drug resistant patient population. With respect to animal studies actually this is something that we're taking into consideration when in designing the clinical trial. We have certain data that are actually pointing to specific type of indication as I commented in my remarks today. But it is not clear that these will be the indications they're going forward that will be validated clinically. And it could well be that other indications that are not popping up now at the preclinical stage will be seen as relevant. And just one way to incorporate this gap between preclinical data and clinical data was actually for us pointing in fact that we should go ahead within all-comer trial and nothing what we see in the preclinical package and yet to slight focus on specific indication but actually go ahead with an all-comer trial. So we can see clearly the different type of indication as they are, as the data is going to come out of the trial. That’s all. Since John is located in the different site, I'm now in New York and John is in San Francisco. I'll just ask John whether he has anything to add on this. John?

[John Hunter:]

Yes, and the one thing I would add on top of that is that we are trying to do as much bio marker work is possible to really better understand which patients we want to target both with COM701 and COM902 because we think there's going to be a critical component of the development strategy.

[Michael King:]

Okay, fair enough. And then perhaps related to that I just wonder not if the you guys are, I guess, less convinced that corporate collaboration deal can get done this year. And I just wonder if you feel that is reflective of sort of this I don't want to call it turmoil but just sort of we're in a bit of a graze on right at the moment in the world of IO define that potential corporate collaborators are more conservative at the moment, maybe there is some deal fatigue or is it perhaps something to do with sort of the state of development, are they looking for assets that have more maturity perhaps proof of concept in humans rather than as you point out in your former remarks of the pre-clinical evidence of activity? Thank you.

[Anat Cohen-Dayag:]

It's a very good question. I wouldn't say that there is a fatigue out there. Of course people are looking in the IO field and now on different methods that they would probably look at four years ago. And because we know more and we also know that we -- as much as we know we don't know enough generally in this field, but I think -- but, you know, for Compugen we have different aspects that are in discussion with different stages and of development. So we thought really about the specific stage, everything that we have in the pipeline is still early not till it gets to the clinic and we have clinical data completely considered as early. And -- but in general, it consists of a lengthy evaluation period, these are early stage asset, these are novel asset. And evaluation periods are taking again more time than we anticipated and that is more less summarized situation.

[Michael King:]

Thank you.

[Operator:]

The next question is from Ted Tenthoff of Piper Jaffray. Please go ahead.

[Ted Tenthoff:]

Great. Thank you very much and thanks for the update. We have to elaborate certain questions. I just wanted to follow-up with sort of the primary programs. Again, I think what you're doing with PVRIG and TIGIT is very interesting and novel, but there is more competition there. Myeloid it seems like you're closer to sort of where everybody is. So what should we be expecting from that and are these novel targets or these target that may be known to other players?

[Anat Cohen-Dayag:]

These are novel targets and it could be that some of them are known rather a partners who don't exactly know what is in the pipeline of other before they publishes. But these were discovered through our computational discovery capabilities in novel target very early stage in different stages of the validation and antibody discovery. In general, the data packages as of this point are not -- as I said these are in validation, so they are not in complete data packages. But yes, as we stated this is in early fears in general in the industry and we're more or less up to the stage of the rest of the industry. And one more point just to make, there are several clinical stage programs, Myeloid programs that are moving forward by others and this is what considers the first wave of things, Myeloid programs in the industry.

[Ted Tenthoff:]

Excellent. I look forward to update, Anat, data just so we can find [indiscernible] 0

[Anat Cohen-Dayag:]

Thank you.

[Operator:]

The next question is from Peter Welford of Jefferies. Please go ahead.

[Peter Welford:]

Hi. Thanks for taking my questions. Just turning to COM701, and I wonder if you could just outline whether or not the plan is scheduled in patients you said I think have failed or were we lost tons of cash. Does that include patients who have already received immunotherapy I guess -- I think in PD-1 specifically or is 30 patients who receive price under the category of immune-oncology agent? And to be clear, I don't want to rush now with the anti PDL-1 rather than PD-1 that you outlined in your slide. And then just quick follow-up on [indiscernible]?

[Anat Cohen-Dayag:]

Okay, yes. John, would you like to take the first one with respect to the PD-1 treated patients?

[John Hunter:]

Sure. Yes. So because this is going to be an all-comers trial and different indications, we do expect that some of the patients will have been treated with and have failed on other IO therapies but it's really going to depend on which indications that we're treating and what the standard of care is within those indications. Regarding the choice for PD-1 antibodies versus PDL-1, right now our feeling is that the PD-1 antibodies have a slight edge in the clinics from the data that we've seen, so that's where our focus is for the combination.

[Peter Welford:]

Great. And then if I could just follow-up on the Bayer collaboration. I appreciate it's maybe difficult to comment. But do you have any sort of update on 5000 1P, I guess, as far as how that's progressing with Bayer and then if you could sort of update on that? Thank you.

[Anat Cohen-Dayag:]

Sure. So just in general, under the collaboration we are very much restricted with sharing information. From time-to-time, we conduct the process with Bayer in order to for them to approve specific information than we're going to share with investors. Of course, we're very much into the details of the programs internally as Compugen together with Bayer, but information that we can share in with investors, this is process that we do with Bayer from time-to-time. So as of today, the information that we can share with respect to these programs is that it is moving to the clinic by Bayer and -- but we cannot share more information as to the exact timeline for IND filing or as such, so I'm sorry for being short on this.

[Peter Welford:]

That's great. Understood. 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 operator. Before ending, I would like to summarize the main highlights discussed on today's call. We continue to hold discussions with potential industry partners in connection with our program and we remain confident that we will achieve magical collaboration. Nonetheless, we cannot predict the exact timing of completing any such collaboration. Our pipeline programs continue to advance with COM701 being on track for an IND filing towards the end of Q1 2018 and we are working on finalizing the clinical protocol for our plan Phase I study. We expect to enter the clinic in 2018. COM902 is moving into process development and manufacturing with the goal of filing an IND for combination trial with COM701 in 2019. I would like to thank you all for joining us today and I look forward to sharing with you additional information as we progress. Thank you.

[Operator:]

Thank you. This concludes the Compugen Ltd. third quarter 2017 financial results conference call. Thank you for your participation. You may go ahead and disconnect.