Compugen Ltd.
Q1 2016 Earnings Call Transcript

Published: 11 May 2016

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Compugen's First Quarter 2016 Financial Earnings Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investor section of Compugen's website at cgen.com/investors. As a reminder, today's call is being recorded. I would now like to introduce Hannah Deresiewicz of Stern Investor Relations. Please go ahead.

[Hannah Deresiewicz -:]

Good morning and thank you for joining us today. With us today from Compugen are, Mr. Martin Gerstel, Chairman of the Board; Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Mr. Ari Krashin, Chief Financial Officer. 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 or other forward-looking statements regarding future events or future business outlook, including anticipated progress on Compugen's pipeline program as well as commercialization efforts. 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 Securities and Exchange Commission, including the Company's annual report on Form 20-F, filed March 7, 2016. The Company undertakes no obligation to update any projections or forward-looking statements in the future. I will now turn the call over to Martin Gerstel, Chairman of the Board of Compugen.

[Martin Gerstel:]

Thank you. On behalf of all of us at Compugen, welcome to our first quarter 2016 conference call and we appreciate you joining us today. As I assume most of you know Compugen's mission is to be the leading source of novel therapeutics in multiple important areas of medicine through the pioneering of predictive discovery methodologies. Fortunately, we have been very successful in this difficult undertaking where numerous companies have previously failed in establishing through more than a decade of state of the art multi-disciplinary life science research, the required discovery infrastructure to pursue this mission. Furthermore, this unique predictive discovery infrastructure continues to be expanded and enhaced on an ongoing basis by our exceptionally talented and experienced scientific team. From a business perspective, our expectation was to utilize this broadly applicable capabilities to systematically provide discoveries such as targets or bio markers which would allow the development of novel therapeutic products and/or to provide such product candidates themselves for further development and commercialization in an increasing number of medical fields, and by so doing to create significant shareholder value. Consistent with this business, with this mission and business model, our financial strategy was to maximize the number of collaborations as we continue to focus our discovery capabilities towards an increasing number of unmet needs in additional medical areas. This meant partnering our discoveries out as early as possible, subject of course to receiving appropriate compensation particularly downstream participation. Up until relatively recently, our lack of downstream development capabilities provided another reason for focusing on early collaborations, such as our milestone and royalty-bearing agreement with Bayer covering two Compugen-discovered checkpoint targets for immuno-oncology from our first internal focus discovery effort. However, in recent years, the accelerating demonstration of the potential for multiple targets resulting from our initial focus discovery efforts in immuno-oncology combined with the spectacular results being disclosed by others in immuno-oncology clinical activities, and of course the often orders of magnitude premiums being paid by the industry for pre-clinical and clinical assets in the IO field compared to early stage collaborations have led to our current substantial focus on the field of immuno-oncology and the establishment of a pre-clinical and clinical stage infrastructure. These activities are of course intended to allow us to enter into IO collaborations at more advanced stages in addition to early stage potentially capturing more of the value of selected product candidates for our company and its shareholders from an expanded IO pipeline. Accordingly, for the foreseeable future, a substantial portion of our corporate efforts will be to expand, advance and commercialize a growing pipeline of potential, first in class, immuno-oncology product candidates, combining later stage collaborations with early stage collaborations as our pipeline advances. In order to provide you with additional insight into this most important current area of activity for our company, following remarks by Ari with respect to our first quarter financial results, Anat in her prepared remarks today will focus on providing more program and product candidate information with respect to two important segments of our immuno-oncology program pipeline. It is however very important to note that behind this and our other pipeline segments and candidates is a predictive discovery capability that is unique in our industry. The wide applicability of this capability has been demonstrated by discoveries in a number of very different therapeutic and diagnostic areas and its reliability by the impressive results from our first two focused uses of this capability for target discovery. First in the discovery of multiple immune checkpoint candidates for immuno-oncology, and second in the discovery of multiple target candidates for ADC therapy. Bottom-line, we are confident that the combination of our very promising early stage pipeline with potential for a multiple first in cost drugs with our underlying broadly applicable discovery capability provides Compugen with exceptional opportunities for substantial medical contributions and commercial success. Ari?

[Ari Krashin:]

Thank you, Martin. Our financial results for the first quarter of 2016, we list today, are in line with our expectations. In general, they continue to reflect increased activities in R&D primarily, at our South San Francisco site where we continue to add substantial resources and expertise to our leading program, as well as preclinical capabilities. Revenues in the amount of $0.1 million for the first quarter of 2016, as well as revenues of $500,000 for the first quarter of 2015, were both substantially attributable to the non-cash amortization of the $10 million upfront payment for our cancer immuno therapy collaboration with bio healthcare. To date, we have recognized approximately $9.8 million of this upfront payment. R&D expenses for the first quarter of 2016 totaled $6.8 million compared with $4.8 million in the first quarter of 2015. This increased reflect the previously projected substantial growth in our research and development activities, in large part of our U.S. subsidiary. This includes significantly increased expenses related to our lead IO program, CGEN-15029. As we continue to advance this program towards lead selection and IND enabling studies. Our net loss for the quarter of 2016 was $8.6 million or $0.17 per diluted share, compared with a net loss of $6.1 million or $0.12 per diluted share in the comparable period of 2015. As of March 31, 2016, we had approximately $81.3 million in cash and cash-related account with no debt compared with approximately $81.4 million as of December 31, 2015. The cash balance at March 31, 2016 reflect the receipt during the quarter of $7.8 million relating to the third milestone from bio healthcare in connection with CGEN-1501 C offset by an approximately equal amount of expenditures during the first quarter of 2016. However, this milestone was achieved in the last quarter of 2015 and therefore recognized as revenue at that time. Consistent with our prior estimate, total cash expenditures for the final nine months of 2016 are expected to be in the range of $23 million to $25 million without taking into consideration any additional cash receipt from existing or new collaboration during the year. And with that, I will turn the call over to Anat. Anat?

[Anat Cohen-Dayag:]

Thank you, Ari. Immuno-oncology is now in the early stages of transforming the treatment of cancer. In this respect, the novel nature of our immuno-oncology pipeline program and the data we are generating for you position us with the potential to generate multiple first in class transformational antibody drug for this key cancer immuno-therapy field. This in turn has resulted in a high and increasing level of recognition and commitment of key opinion leaders in the field. As Martin mention, in my prepared remarks today, I will focus only on two segments of our novel immuno-oncology pipeline program. Programs based on immune checkpoints expressed on T-cell and programs based on targets expressed on myeloid cells identified within the tumor micro environment. For each of this segment, I will provide more detailed data than in past calls, and will be referring to a short slide presentation that you can access via the Investors Section of our corporate website. I encourage you to have this presentation in front of you so it will be easier to follow my remark. The date we'll be presenting with respect to our T-cell based immune checkpoint will focus on early results of only one product candidate, CGEN-15029 which is our leading general candidate for IO therapy. For the second segment which is based on targets expressed on myeloid cells due to certain competitive issues, I will provide examples of results from a few candidates but without disclosing the specific pipeline program. The purpose in providing this more in depth look at this two segment of our pipeline is to hopefully give you more of an understanding as to the basis for the enthusiasm of the company and its expert advisors in the unique potential for Compugen's early stage IO pipeline. Before addressing the two segments, I would like to make a few comments to put my remarks today in perspective. First, I would like to emphasize again that focusing on novel drug targets is an enormous undertaking and a new challenge. The additional required in depth research, including the generation of the necessary tools and reagent, establishment of unique assay system and exploration of the novel biology behind our targets and their role in cancer generates a very challenging path to success. In this regard, access to the knowledge and expertise of highly distinguished leaders in the academic medicine and the pharma industry provide us with critical support and guidance along the challenging path of translating our novel drug targets to therapy. The guidance from SAB, the enhanced involvement of Prof. Dhrupad [ph] now as a board member of our U.S. subsidiary. The recently announced involvement of Dr. Elliot Sigal and as announced today the involvement of Steve Holtzman, all these along with the drug development infrastructure we've established at our South San Francisco facility are directed toward the goal of translating our novel drug targets to new therapy. Of course, the potential upside of success from our efforts is enormous on all fronts, scientific, clinical and commercial. This is the reason we selected this space and our predictive target discovery capabilities clearly allow us to do so in a unique manner. And now, I would like to refer to the slides on our webcast. Starting with Slide 3. As you know in contrast to the disease based or gene of protein library-based discovery approaches, our predictive biology approach for target discovery is built bottom up and is not limited to any disease indication, mechanism affection or cell type. Consequently, we were able to identify a large number of proteins predicted to serve as novel negative immune checkpoint candidate and therefore have the potential to inhibit the immune response from attacking the cancer. Furthermore, this discovery may represent very different mechanisms of action compared with one another and compared with the currently know checkpoint. The potentially diverse mechanism by which the immune system is regulated within tumors are increasingly being recognized and exploited with the hope to more effectively treat all cancer patients. As you can see on Slide 3, these predicted checkpoint proteins are present or expressed on various types of cells involved in the interaction between the tumor and cells of the immune system. They are present on cancer cells indicated here as epithelial and/or on various types of immune cells, such as T-cells or antigen presenting cells referred to as APC. Each representing either receptor or target. Such diversity of target candidate for negative co-stimulation of the immune response may offer multiple potential options for the development of first in class cancer immunotherapy treatment for patients who are not responsive to current immune checkpoint inhibitors or other therapeutic modalities, either through monotherapy or combination therapy. The first segment of our IO pipeline I will address today consist of programs based on immune checkpoint expressed on T-cells. In this regard, our leading general program is CGEN-15029. As you know, for competitive reasons, we keep most of the data with respect to our programs in confidence. Therefore today I will focus on data that we can currently share. However, in the coming months, we expect to share much more data on this program including the nature of the target and express to which is anticipated next year. CGEN-15029 is predicted by us to be a receptor-like immune checkpoint protein expressed on immune cells and specifically with receptive expression in T and NK immune cells similar to PD-1. Moving now to Slide 4. We also observed that this target is expressed in multiple cancer types, hematological [ph] but with limited expression in normal tissue as shown in the example of expression of CGEN-15029 in a normal kidney tissue and it's up regulation in kidney cancer. However on the next Slide 5, you can see that this presence of this target protein within tumor is not because it is present on cancer cells themselves, but rather in line with our prediction, its expression pattern is associated with immune cells that are infiltrating the tumor. In this case, T-cells that are present within the tumor microenvironment. This are called tumor infiltrating lymphocytes or TIL. We have confirmed this by demonstrating protein expression on TILs taken from melanoma patient. So in short, the reason it demonstrates over expression in multiple tumors is because it's present on the T-cells infiltrating the tumor. In line with this, you can see that it is highly correlated with the presence of PD-1 and the presence of CD8 T-cells within the tumor microenvironment which are the immune cells one would take to activate in order to achieve an immune response against the cancer. The data in Slide 6 further support it and subject a high correlation between the presence of CGEN-15029 in tumors, multiple tumor types, both solid and hematological and other known checkpoint, such as PD-1, this protein serve as marker of exhausted T-cells which are the target population of T-cells one would seek to activate with immune checkpoint inhibition. In addition to being in the right location and have the required expression profile, the target has to inhibit the activity of the immune system against the cancer. On Slide 7 you can see that functional assessment of the target is also consistent with our prediction. When CGEN-15029 is over expressed on T-cells in the presence of melanoma cell lines, it causes a decrease in T-cell activation in a system widely used by others to measure immune checkpoints effect. Slide 8. We have also identified the binding partner or ligand to the receptor-like CGEN-15029. This is important on two levels. First, the identification of the ligand shed light on the target pathway and how it might be functioning in the tumor microenvironment. Second, as we already stated, it created for us a smoother path to generate blocking therapeutic antibodies. Slide 9. So far, I have been describing the characteristics of our novel drug target. Of course, the therapeutic effect is achieved by modulating this target. In this case, through blocking ligand binding by a monoclonal antibody specific to the target. As our new subsidiary in South San Francisco, we've complete antibody discovery for the program and generated a number of therapeutic antibodies for CGEn-15029 meeting both our affinity and blocking criteria. We are now at the stage of functional testing to select the clinical therapeutic antibody candidate to advance to IND-enabling study which will include manufacturing, tox testing and additional for a clinical study. As our antibodies are not cross-reacting with the mouse meaning they do not recognize the mouse version of CGEN-15029. We also performed the discovery program for the identification of surrogate antibodies and now have mouse antibodies with affinity and blocking capabilities similar to the human antibodies we've identified. I would also note that we were able to confirm the same ligand to the mouse CGEN-15029 which allowed us to implore the same antibody discovery strategy for the mouse antibody. The availability of such surrogate antibodies enables us to perform tumor studies in well-established animal cancer model in order to assess the function of the target and its respective blocking antibodies mainly because such studies in mice could not be done with a human antibody. Before moving to the second segment of our IO pipeline, I want to mention again that we intend to disclose more data for this very promising therapeutic opportunity in the coming month. Moving now to our myeloid target candidate program. These target are present on myeloid cells referred to on the slide as antigen presenting cells. As previously mentioned, this segment is somewhat earlier in its validation stage and therefore I will describe it only as a high level. Myeloid cells are important component of the tumor microenvironment, the key myeloid cell populations within the tumor microenvironment are tumor-associated macrophages and myeloid derived suppressor cells, both of which are highly immunosuppressive inhibit effector T and NK responses against the tumor. Myeloid biology involvement in cancer immunotherapy represents a promising, new and emerging area of tumor biology with very few known therapeutic targets. This is exactly the type of emerging biomedical field which can best benefit from our predictive discovery infrastructure. We therefore included in our high priority program, novel myeloid target candidates which we identified within the tumor microenvironment of multiple cancers. This may provide new mono and combination therapy treatment options for patients with diseases refractory to existing immune checkpoint inhibitor. We are now verifying the target candidate role in T-cell inhibition and we are further assessing additional potential mechanism of actions by which they may suppress immune response. On Slide 12, as an example for this group of candidate you can see the characteristics of one of our myeloid candidates. It shows low expression in normal solid tissues which you would expect as it should be present on immune cells and generally not in other solid tissues in the body. In this regard, it is present in blood and spleen, again as you would expect since these two tissues contain a large amount of immune cells. You can also see that its expression is increased in multiple cancer type. In Slide 13, you can see that the increased expression of these candidates in multiple cancers is not due to its expression on cancer cells. The strong correlation with a myeloid-specific marker suggest that it is expressed primarily on myeloid cells present within the environment of this cancer. Our myeloid target appear to be differentiated from one another based on the myeloid cell population they are expressed on and other functional characteristics. Therefore again possibly offering the potential for multiple treatment solution. On Slide 14 for example, one type is expressed exclusively on monocytes and on M2 type immunosuppressive myeloid cells within the tumor microenvironment. While on Slide 15, in other types is expressed on M2 type myeloid cells present within the tumor microenvironment. Before opening the call to Q&A, I want to point out that our two PAR programs with Bayer, highlighted on Slide 16, are also presenting distinct differentiation profiles compared with other immune checkpoints. In summary, we believe that the early results were seeing for only these two segments of our current pipeline justify our high level of enthusiasm for our company and its potential for medical and commercial success. In addition and perhaps even more importantly, the continuing advancement of this and other programs based on novel targets discovered by us provide a clear validation of our broadly applicable in-silico predictive discovery capabilities which we believe are unique in the industry and represent the most important long term assets of our company. We will now open the call for Q&A.

[Operator:]

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

[Mike King:]

Hey, guys, can you hear me?

[Martin Gerstel:]

Yes.

[Mike King:]

Hi, everybody. Thanks for taking the question. Thank you for the color. This was nicely illuminating. I just wanted to, the pretty quickly. So I just wanted to, I'm maybe asking the question incorrectly just based on minimum of information, but it looked interesting to me that on Slide 4, you showed I thought greater presence of 029 in tumor type set where generally considered to have, that are typically on the lower end of the spectrum of mutations, and is that one of the unique properties of 029 because typically the dogma is that the more mutations there are, obviously the more immune responsive the tumors are. But you guys showed something that's a bit different than that, so I just wanted to ask about that.

[Anat Cohen-Dayag:]

Yes, thank you. So first I'll just relate to your first comment. The slides will be available until May 12 on our website, so just in case.

[Mike King:]

Yes, I'll go through it again.

[Anat Cohen-Dayag:]

And with the audio. With your second question, I'll not get specifically to the mechanism, and as I stated we will share the information in a couple of months, in a few months, but just to relate to this, the 029 is a receptor like. If it's present on the T-cells surface and as we show with the initial data that we presented, if it's present on the tumor infiltrating T-cell. So what you see here is specifically more related to the amount of T-cells that are infiltrating these tumors and 029 present on them, so it's not on the cancer.

[Mike King:]

Right.

[Anat Cohen-Dayag:]

So the correlation to the high load mutation is not very clear. Having said that you are correct that this is the data that is shown in this Slide. So we will share more information about the mechanism, I wouldn't necessarily say that it is specifically co-related with mutational, the appearance of CGEN-15029 with the mutational low of tumor.

[Mike King:]

Okay. Can you say if there is any particular bias either to C4 or CDA key cell?

[Anat Cohen-Dayag:]

I prefer to put all the data together because it makes a lot of sense and it generates a nice story so I prefer the two would relate to each other and we share all the information but we have all the data of course.

[Mike King:]

Okay. Thank you very much.

[Operator:]

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

[Edward Tenthoff:]

Okay. Thank you very much for taking my question and thanks for that update. Quick question, there was a more strategic views of these exciting discoveries. I would say there has been a lot of corporate development activity and partnerships by the leading pharmaceutical companies and a lot from the big pharma too. How do you guys think about this phase, is there something you want to kind of advance this programs further yourself to start to generate some clinical data partnering? Is this something you see opportunities beyond existing collaborations where you can partner existing stuff earlier to generate non-dilutive capital and also bring in some of that immuno-oncology expertise from the big guys? What's your overall view of how you intend to develop?

[Anat Cohen-Dayag:]

Yes, thank you for the question Ted. In general I agree with you, there is a large business activity in this field and in general you would see a lot of, if we speak specifically on the phase of negative customer relation or even within oncology, you will see most of the data are assigned about a specific product candidate usually beyond the stage of preclinical and sometimes there are not that many assets in the clinic to get into a guarantee. Compugen itself is a bit different, and most of these data are known targets of course. So it's on the product candidate that are targeting known targets, Compugen is actually discovering Novell targets and with Novell targets as I eluded in my script you have to do first a lot of the research and build the system and generate the re-agents in order to be able to get to the stage that you know exactly how to do the this program. And in the last year, n building this infrastructure, to be able to build on this targets. There are not many companies that are working on truly Novell targets so we had to build different infrastructure so it takes time looking to the future, being able to generate these antibodies with specific campaigns, the data that we just presented for CGEN-15029 and will continue to share more details. This is a more less a stage where you saw business activity. The business model of Compugen is actually to balance these two types of early stage gears similar to the deal that we have entered with a buyer which was [ph]. And this on product candidate as we selected to take forward and we will look to get into partnerships at later stages so if you really balance between the earlier stage and assets that are later stage that we take to clinical proof of concept. In this respect we have started a year ago to incorporate this infrastructure into our organization and to make sure that we are able to programs not only to the pre-clinical stage but also to enabling studies but also to clinical trial. So the business data combined between the two, as a discovery company we have the luxury to have multiple candidates within our pipeline that can support this type of business activity.

[Edward Tenthoff:]

Of course and then maybe as a follow up question. One of the things that struck me was the ability to model this of Silico and really start to understand and explore that biology in generating hypothesis that can then be validated in the West Lab so how much of that factor into not only the prioritization that comes forward but also the ability to partner any other compounds that you are identifying and creating?

[Anat Cohen-Dayag:]

So within the prioritization process, there is a large wait for Compugen for our internal considerations. The systems that we have built in the last 15 years are also tuned for this matter for the target discovery and for the prioritization and by the way also to be able to start together with respect to how they can work together either in between themselves or with the other drugs companies outside. This is for the R&D prioritization, it has a large wait and the more we are continuing to invest in the program the more we develop the additional systems in order to be able to get this insight. With respect to the business perspective, I think it will be sure to say at this stage of the company. It's an advantage that we discover the candidates through computational approaches but it's more about the programs being Novell and it doesn't matter eventually how they are discovered, the fact that they are novel generated value and I think that as going forward we would like to believe that at the time, that it would be clear that the discovery capabilities are able to deliver targets that generate clinical proof of concept. Then it will probably generate value even beyond the fact that this drug target is novel and the product candidate brings the clinical relevance.

[Edward Tenthoff:]

Okay. Cool. Thank you for that update.

[Operator:]

The next question is from George [ph] of Jones Trading. Please go ahead.

[Unidentified Analyst:]

Hi, thank you and thanks for taking my question. I appreciate your being forward and in disclosing the scientific data. My question is more strategic as well regarding two things. First you are obviously focusing on cancer. One point you also mentioned also going into other looking at the auto-immune disease so if you can update me on where that program is going and also the amount of work you are doing in elucidating these pathways and the new checkpoints. For the most part everybody who is in this space is looking at the receptor-ligand interactions but the ligand interactions has to signal internally to change the cellular phenotypes. And those pathways might be more amenable to perhaps more molecule inhibitors, I am wondering if you are also working on elucidating those pathways and perhaps coming up as a whole new set of targets.

[Anat Cohen-Dayag:]

I will start with the first one. Just with respect to the premium, we made a decision two years ago or even a bit more that we cannot because we cannot allocate resources to both sides of the equation, the oncology and that we will focus on what's first the industry major interest is and this is the field of immuno-oncology and we decided to focus our pipe line on this so most of the resources are invested on this made a decision not to shut up completely that part. Moving on, having said that, not with a lot of effort internally most of the efforts are externally with the work of Prof. Stephen Miller and Prof. Ian McKinnen on this program. We are very excited for the data that we have for this auto-immune program. It is a novel pathway and remember that the target itself is the subject of the license to buy for antibody therapeutic but the extra cellular domain HC4 autoimmune is still with Compugen. So this specific -- it's a novel piece of pathway that we have identified the immune balance. And therefore have implications on response of this specific drug candidate so we are very excited and we are pursuing different options to advance this program to clinical trial as this is where it should go obviously. So this is for the orenium [ph] but yes, the other novel drug target that we have identified for immuno-oncology has the potential to serve as additional product opportunity following it. We are just not pursuing at this stage. So this is for the auto-immune. Where we have accepted what you have mentioned about the pathway and the small molecule approaches, there are two levels for this sense. The first for this novel drug target we have identified of course we tried to be as broad as possible with respect to how we try to protect the IP. Having said that it's hard to protect the target for a small molecule drug when you don't have the small molecule in your hands so we have not to remember that and we are not working on the small molecule, this is not the process of the company. With respect to other type of drug targeted, could be targeted with the small molecule that are not the negative similar sort that we are working on and we did not get into this field and of course this is something that will be taken into consideration while we are selecting the next delivery focus internally for the company. We usually select it way ahead of time before we start to show data. So this is for this portion.

[Unidentified Analyst:]

Okay. That's all understandable. We only have so much bandwidth, everybody only have so much bandwidth and final question, I went to Mercier and looked at their wall on which they have everything that is under clinical trial with progress, with keystone trials with something else in combination, I imagine you are probably also looking at potential synergistic combinations with existing either TKIs or other chemotherapy. This is something you are also looking at as you develop your novel compense?

[Anat Cohen-Dayag:]

Of course, while such novel targets may have the potential to serve the therapy our working assumption is that these will work in combinations and of course we are busy with understanding which is the best combination to pursue yes.

[Unidentified Analyst:]

Okay great fantastic. Thank you very much.

[Operator:]

The next question is from Brett Reece of Janney Montgomery Scott. Please go ahead.

[Brett Reece:]

Yes, hi thanks for the opportunity to ask a question of two. Doctor Seagull's announcement a few weeks ago and now Steven Holtzmann and prior to that Felix Karen, we have three incredibly talented individuals obtained by Compugen as strategic business advisors. Is it a fair characterization that these gentlemen are kind of sitting in the bullpen to be tapped when there is something to look at or are they more active?

[Anat Cohen-Dayag:]

In general, your description to them being a strategic, business translational commercial expertise is very accurate. Them being involved with a company has to do with a strategy and with some execution on part and interactions with them is face to face in meetings and phone calls but I think there is one big corporate for me to dive into the exact details of what we are discussing with them and how specifically they are contributing to the day to day life of the company.

[Brett Reece:]

Okay. Is Mr. Felix [ph] still with the company?

[Anat Cohen-Dayag:]

Sorry?

[Brett Reece:]

Felix Karim, I think he was from Amgen, he still with Compugen?

[Anat Cohen-Dayag:]

Yes, of course Felix is the VP of corporate and business development. And I just want to make sure that it is clear as I did not relate specifically to the words that you were using in your question but Steve and Elliott are active strategic advisors in the company.

[Brett Reece:]

Okay. Great thank you for answering my questions.

[Operator:]

The next question is from Douglas Altbef of RP Advisors. Please go ahead.

[Douglas Altbef:]

Hi, thanks for taking my question. My question is that actually for Ari Krashin capacity instead of your IR effort. Ari back in the first quarter, I think in January, there was an announcement by Nivea, your JV with Merck Serono that seemed to be fairly significant in terms of capacity level that was achieved in certain toxicity markers. But there was nothing that came out from Compugen and Nivea being a private, it was virtually impossible to find whatever they put out as press release. My question is why didn't Compugen put out a press release?

[Ari Krashin:]

Well, Doug I don't think it is going to be appropriate to discuss each of our press release, which one we are issuing and not issuing, sometimes there are some bigger considerations that restrict us to have different considerations which whether or not if we are going to issue a press release or not. The press release issued by Nivea in this specific case was [indiscernible] the same way the owner did not issue press release and in this regard we took basically the same position. To the point mentioned we are not, every country has its own consideration.

[Martin Gerstel:]

I think in general the press really frowns on companies sort of double announcements, if one company is putting out an announcement in this case the JV, the idea that separate companies would also put out press releases generally as frowned on.

[Douglas Altbef:]

Here's the thing Martin and back to you Ari, there is very little that you can often say in terms of the details that you are working on but here are opportunities to actually talk about what you are working on. Other examples include that in your press releases recently about milestones you don't indicate how much you had been paid by the milestone? That's public information but you choose not to say it as it requires people to search around and go onto your SEC Filings to find out how much you are being paid. So I think for many shareholders it's fair to say that these kind of an orientation leaves one to believe that the company is not eager to share good news or information but rather makes it something of a playing of gotcha to find out what's really going on and I would like to get some color as to why that is?

[Ari Krashin:]

Doug again, as I mentioned at the beginning the different consideration about different topics and sometimes the consideration we are not able to share with out investors we shall full blown up press release like we do with our co-founders, advisors. We have certain restrictions to.

[Douglas Altbef:]

But that' not what I am asking about.

[Ari Krashin:]

Again, when you mention specifically buyer again, we have the restrictions and different consideration that he as an investor is not aware of and as much as we can elaborate on this.

[Douglas Altbef:]

I understand that. That's not what I asked about. I asked about publicly available information where the company chooses to make the information readily available to the public and to investors and to analysts. And it seems to indicate a mindset that is one of having to play detective to find out things about the company. Good news about the company. Especially in an environment where there is very little that you can say in terms of the lot of the proprietary thing and again I find it mystifying.

[Martin Gerstel:]

Well, I mean the other; of course you said that one conclusion is that we aren't interested in providing information. I think a more realistic conclusion is that there is a lot going on here that the world doesn't know about and you will hear about it in the future.

[Douglas Altbef:]

Right, so for example in the last press release about the second buyer candidate, you indicated that there was a milestone payment but you didn't indicate how much milestone payment was. There was an allusion to amendment to the agreement that there was no color on that and it required people to go to your SEC filings to find out that there was a payment made. And I guess what I am saying is it's a mindset issue particularly because you have so much that you can't disclose and I respect that and I endorse that but my frustration is you can disclose and you do not disclose ultimately making it very difficult to ascertain what actually is going on. This is not confidential information. It is the opposite of that and yet its information that the company seems to be very loathes to share.

[Anat Cohen-Dayag:]

Doug, I think in general we are encouraging to have only one follow up question and since it is obvious that there are things that you would like to discuss with the company, I encourage you to have a discussion with us offline after the quarterly call. We'll be very happy to pick with you. Thank you.

[Douglas Altbef:]

Very good.

[Operator:]

The next call is from Joseph [ph]. Please go ahead.

[Unidentified Analyst:]

Hi, good morning. Following up a little maybe in general way than the last question. With respect to Bear that the investor day they hold in informal conversation they seemed to suggest that an IND could be filed as early as late 2016 and maybe 2017. I understand you cannot give the details of what is going on with respect to the Bearical observations, but could you comment generally what the normal for the development process to expect that if the lead candidate is going to be a productive drug we could seem some activity within that six to twelve month time frame thus giving Compugen two drugs in the clinic in 2017? My second question is in last April or May, you all talked a commercially validating event, the type Wall Street looks to in the short term and in subsequent calls there a discussion of the difficulty which I completely appreciate of trying to negotiate such a deal but in this call we have got no updates so could you generally update us as shareholders on the progress of the company in reaching commercially validating events and what we can look forward to in the future? Thank you.

[Anat Cohen-Dayag:]

Yes, thanks Joe on your first question with regards to buyer, we cannot comment at all on this aspect and I move to your second question that relates to your external commercial validation. In general, the business model for us for Compugen is to get into collaboration and to partner discoveries that we are making in various stages of the drug development process. We are committed to this front however, we believe the providing now and estimated beyond what we were stating in the past would not be appropriate. The company will enter into collaborations but with terms and conditions and times that are consistent with making sure that we support and maximize the long term value for the company and as I stated the business model is to combine between early and later stage collaboration. So we take it forward from there on. I hope this answers your question.

[Unidentified Analyst:]

I guess my question is are your negotiations sort of things that are episodic, that there seems to be an episode last year this time and there may be one in the future, is it a continuous process for you as part of your everyday business, speaking the company's about the potential science and progress that you can help them with and help them develop with us.

[Anat Cohen-Dayag:]

In this field everyone in immuno-oncology, everybody speaks with -- everybody so it's something that is always under discussion. But I'd rather not say more than what I was saying. Investors at the point of time, Compugen will sign a collaboration, it would be announced and investors will be able to hear about it. Until then, we prefer not to give any specific guidance on top of what we're taking in the past.

[Unidentified Analyst:]

Okay, thank you.

[Operator:]

The next question is from Vernon Bernardino of FBR. Please go ahead.

[Vernon Bernardino:]

Hi, Anat, Ari, and Michael and thanks for taking my question and sorry to get so late onto the queue. I just wanted to understand completely what you were showing on Slide 13, 14 through 15. So in Slide 13, each one of those is a different marker that you've identified?

[Anat Cohen-Dayag:]

No. On Slide 13, we're showing that for example, this is one Myeloid target candidate that we discovered and we're showing here that on all these cancers, this candidate is present in correlation to another Myeloid by marker. So it means that this target in this slide is possibly expressed on Myeloid cells that are found within the tumor microenvironment of all this amount of cancer. This is what it is stating. Okay?

[Vernon Bernardino:]

Okay. Yes. I asked that question inaccurately. Then in the subsequent slides, 14 and 15, those candidate expression markers are then presented in these two examples of populations?

[Anat Cohen-Dayag:]

Yes. These two slides are saying the following, that first, that the expression profile of this target is specifically on monocytes and within the tumor microenvironment, they are expressed on a immunosuppressive Myeloid cells and that they may have different profiles – either in M1 or M2 – and this is the collection of the data that is presented in Slide 14 and 15.

[Vernon Bernardino:]

Terrific. So then this is therefore why you are concluding that there are many different targets that we may be able to see in the future and at this point you're just perhaps optimizing which ones to go best forward with?

[Anat Cohen-Dayag:]

The reason we're enthusiastic in what we're trying to exemplify here is that the collection of Myeloid targets that we identified on top of the fact that they are residing on Myeloids within the tumor microenvironment is that they are present on different subpopulations of the Myeloid cells. They could have the profile on cells that are M1 or M2 and also to show that they are present on multiple type of cancers and because they're having different profiles, they could support different types of mechanism of action, they would support generating antibodies that are either blocking antibodies, or depleting antibodies and so on and so forth. So this is the breath of the target that we have.

[Vernon Bernardino:]

Okay, terrific. Thanks for explaining that a little better for me.

[Operator:]

There are no further questions at this time. Before I ask Dr. Cohen-Dayag to go ahead with our closing statement, I would like to remind participants that a replay of this call is scheduled to begin within two hours for a period of 72 hours. [Operator Instructions] Dr. Cohen-Dayag, would you like to make a concluding statement?

[Anat Cohen-Dayag:]

Yes, thank you. I wish to thank all of our investors for their continued confidence in and support of Compugen and we look forward to sharing with you our future accomplishments over the course of 2016. Thank you.

[Operator:]

Thank you. This concludes the Compugen Ltd. First Quarter 2016 Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.