Compugen Ltd.
Q4 2016 Earnings Call Transcript

Published: 15 Feb 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Compugen's Fourth Quarter and Year End 2016 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 cgen.com. As a reminder, today's call is being recorded. I would now like to introduce Susanna Chau, Compugen’s Director of Investor Relations and Corporate Communications. Please go ahead.

[Susanna Chau:]

Thank you for joining us today. With me from Compugen are, Martin Gerstel, Chairman of the Board; Dr. Anat Cohen-Dayag, President and Chief Executive Officer; 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, 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. Please go ahead.

[Martin Gerstel:]

Thank you, Susanna. The largest portion of my long-term Chairmanship at Compugen has been committed to the establishment of a first of it’s kind broadly applicable predictive discovery infrastructure. And then based on the initial use of this capability the development of an extremely promising early stage immuno-oncology pipeline. I believe that based on our past achievements, and in particular progress made last year with respect to four program areas which will be the main focus of Anat’s remarks today. We have now clearly accomplished these very impressive goals. Further more in my opinion following the entrance of a potential first in class product candidate from our pipeline program in to human clinical testing and the signing of an additional high-value collaboration agreement, these past achievements will be much more broadly recognized in the financial community. And I have no doubt that we will then be seen as, and in fact be, a very different Company with both new opportunities and new challenges. Accordingly, I believe it would be appropriate for Compugen to have a new chairperson on board at that time, guiding the next chapter of our corporate growth as we leverage our unique capabilities to expand and enhance our medical and commercial value. Therefore, as stated in our press release this morning, I have requested our Board to initiate a process to identify and recruit an appropriate person with the required capabilities and experience to replace me as chairperson and aggressively address these new opportunities. A recruitment process for a chairperson of a publicly owned company typically takes six months or more from initiation until the new chairperson is in place. We are announcing this now so that we can begin a careful and open search without undo time pressure. Based on current estimates, a new chairperson may be selected before we have achieved both an IND filing on a Pipeline Product candidate and the signing of an additional industry collaboration. However it is my intention to both continue with the Company, but of course in a different capacity in the event of a new chairperson, and also to maintain in total my equity ownership position until at least both of these two key objectives are achieved. Before turning the call over to Ari I’d like to comment briefly on future collaborations for our Company. As we have stated many times in the past in order to monetize for our shareholders the value of our extensive discovery capabilities and broad and immuno-oncology pipeline, industry collaborations will be essential. However for obvious reasons there is no way to accurately predict when collaborations will be signed. On the other hand there should be no doubt whatsoever about our confidence that we will enter into such collaborations and of course when agreements are signed they will be disclosed. With respect to this confidence it is critical to note two very important differences between our situation now compared with two to three years ago. First of course are the excellent additional experimental results that we have obtained with our target and product candidate programs. Certain of which have recently been presented at leading conferences obtaining significant industry interest. And second is that our leading programs although still early in development either have reached the stage where it is more common for big pharma and big biotech to enter collaborations or are addressing areas of special industry interest due to recent market trends. In her prepared remarks today Anat who will follow Ari will further elaborate on this as she focuses on four product areas which are the current focus of both our R&D and business development activities. And with that I am turning the call over to Ari.

[Ari Krashin:]

Thank you Martin. We released our financial results for the fourth quarter and year-end 2016, today which are in-line with our expectations. In general they continue to reflect the increased R&D activities primarily related to our preclinical activities surrounding COM701 antibody, CGEN-15137/TIGIT antibody program and the additional program in our pipeline. As a result the Company invested resources and added expertise mostly to our sales after physical site. Other revenues during 2016 and 2015 were derived from milestone and non-cash amortization of the upfront payment from our cancer immunotherapy collaboration with Bayer Healthcare announced in August 2016. Revenue for the fourth quarter of 2016 were approximately $0.1 million of non-cash amortization of the upfront payment compared with $8.3 million in the comparable quarter of 2016, reflecting primarily the achievement of the third preclinical milestone in the amount of $7.8 million for CGEN-15001T Revenues for the year ended 2015 and 2016 were $0.7 million and $9.3 million respectively. The decrease in revenues is attributed to lower amount of milestone payments received in 2016 in reduction of the non-cash amortization relating to the $10 million upfront payment received in 2013 at the time the collaboration was signed. R&D expenses during 2016 increased by 16% and totaled $24.5 million, compared with $21.2 million in 2015. For the fourth quarter of 2016 R&D expenses were $6.3 million compared with $5.8 in 2015. The increase in both cases as mentioned earlier reflects a substantial increase in our preclinical activities involving our Pipeline Program candidates, primarily COM701 antibody and CGEN-15137. These include the hiring of additional professional employees and advisors and the manufacturing activities to generate clinical material. General and administrative expenses during 2016 increased by 22% and total $7.3 million compared with $6 million in 2015. For the fourth quarter of 2016 general and administrative expenses were $2 million compared with $1.6 million in 2015. The increase in both cases is attributed mainly to headcount and other corporate related expenses. Net loss for 2016 was $31.5 million or $0.62 per diluted share compared with a net loss of $20.2 million or $0.40 per diluted share for 2016. Net loss for the fourth quarter of 2016 was $8.5 million or $0.17 per diluted share compared with a net loss of $0.5 million or $0.01 per diluted share for the comparable quarter of 2016. As previously forecasted our total growth cash expenditures during 2016 amounted to approximately $30 million, while the actual net cash usage for 2016 was approximately $19.9 million, reflecting also cash received during the year, by the Company primarily from Bayer milestone payments in the amount of $7.5 million. For 2017 as we continue to develop and enhance our pipeline we expect that total growth cash expenditure will be in the range of $33 million to $35 not taking into consideration potential cash inflows from existing or new collaborations. As of December 31, 2016 we had approximately $61.5 million in cash and cash related accounts including short term and long-term cash deposits compared with $81.4 million at the beginning of the year. The Company has no debt and with that I would turn the call over to Anat. Anat?

[Anat Cohen-Dayag:]

Thank you Ari. As Martin mentioned in my prepared remarks today. I will specifically focus on four program areas. The first is our immuno-oncology checkpoint inhibitor program COM701 targeting the CGEN-15029/PVRIG receptor which is currently into clinical development. The second is our CGEN-15137/TIGIT program, focusing on our anti-TIGIT antibodies for use both as monotherapy and in combination with COM701. The third is our CGEN-15001 program for autoimmune diseases. The fourth is our myeloid target portfolio for immuno-oncology, a portfolio that is addition to our multiple T-cell based checkpoint. Before discussing the four program areas I will briefly comment on other key assets of the Company. First are the two assets being developed under our collaboration with Bayer. This partnership includes a lead preclinical stage program for which pivotal GLP toxicity studies are ongoing and the second immuno-oncology program, which is at an earlier stage. Next are our multiple additional non-myeloid immuno-oncology program including undisclosed T-cell immune checkpoints in the target validation stage, which are huge for incorporation to our therapeutic development pipeline. Third is our inventory of additional computationally predicted candidates, which have not yet entered the validation queue all of which are in the phase on immuno-oncology. Lastly in the core technological basis of all of our product opportunities is our broadly applicable predictive discovery infrastructure, which we firmly believe to be powerful and unique in the industry. Now returning to the main focus of today’s remarks I would like to make some important comments that are true for all four program areas. First following our recent data disclosure all four of these program areas are the subject of our business development efforts. Second each of these four areas address unmet medical need with potential billion dollar markets where new drug targets providing new treatment solutions are required. And lastly it is our belief that these program areas are at a stage where collaborations are in alignment with current market trends. I will now summarize the status of each of the four program areas. COM701 is our most advanced internal anti-body program in immuno-oncology. The COM701 clinical lead candidate antibody targets the CGEN-15029/PVRIG receptor, which we identified through our predictive discovery effort. PVRIG is a novel immune checkpoint that operates as an inhibitory T-cell target in the well known TIGIT axis. We’ve demonstrated that PVRIG pathway is differentiated from and yet complementary to TIGIT. Therefore targeting PVRIG with COM701 could potentially give rise to both monotherapy and combination therapy opportunity. COM701 is currently undergoing IND enabling studies and is on track for an anticipated IND filing in Q4 of this year. As we transition with COM701 towards becoming a clinical stage company, we are working with consultants and advisors to develop a clinical trial design and to choose the appropriate oncological indication, clinical study end-point and clinical trial size. All of which will be led by experienced immuno-oncologists. The second is our CGEN-15137/TIGIT program involving development of an anti-TIGIT antibody for use both as a monotherapy and in clinical combination with COM701. Our COM701 program generated an opportunity for unique clinical differentiation of our TIGIT program as a potential combination therapy. The decision to develop our own TIGIT antibody was made with an eye towards extracting the full medical and business potential of our COM701 program. TIGIT is a T-cell immune checkpoint discovered and published by us and by other groups in 2009. While the TIGIT pathway is targeted, by others in the industry our data suggests that inhibition of TIGIT alone may not be sufficient in some cases and that additional blockades of PVRIG is necessary to a maximum T-cell response. Therefore in addition to COM701 and anti-TIGIT having potential as individual therapies there is evidence that the combination may have additional and important advantages. Furthermore both PVRIG and TIGIT blockades can be combined with PDL-1 pathway inhibitor for enhanced anti-tumor effect, which presents an additional opportunity for unique clinical differentiation. Our activities was expected that TIGIT program are on track and we plan to select a lead TIGIT antibody candidate at the end of Q1 2017. Before commenting on our third program area, I would remind you that in 2014 we made a strategic decision as a Company to focus on immuno-oncology and to make autoimmune diseases a secondary focus. This decision was driven by the large number of immune checkpoint candidates we predicted and by the market's clear focus at that time on checkpoints for immuno-oncology. However in view of the very promising early data we were seeing and the belief that checkpoints for autoimmune diseases will be off interest in the future. We decided to continue to advance one program. Our lead autoimmune program CGEN-15001 a protein fusion based on the CGEN-15001T immune checkpoint that is part of our bio collaboration. Given our commitment to focus primarily on immuno-oncology, we have advanced this program primarily through our academic collaboration. As we indicated at our R&D day and as witnessed in the recent deal activity over the last two months, tolerance induction in autoimmune diseases has since gathered pharma recognition and vindicated our decision to advance CGEN-15001 addressing the specific medical need. This provides Compugen with the opportunity for first-in-class therapeutic agent with a differentiated modification. That has the potential to restore immune homeostasis and be applicable for various autoimmune diseases such as multiple sclerosis, rheumatoid arthritis and type 1 diabetes. We do not intend to advance this program towards the clinic on our own and therefore identification of a partner for CGEN-15001 in autoimmunity is of high priority. Our first program area relates to the field of myeloid target. Under these effort, we're pursuing multiple drug targets all with aggressive validation activities. The first of these targets has recently entered the therapeutic antibody discovery stage and its progress is on track. By adding novel myeloid target to our efforts, we have significantly expanded the scope and breadth of our immuno-oncology pipeline. We’re of course pursuing multiple immune checkpoint programs targeting direct T-cell inhibition in our therapeutic and validation pipeline, some of which were not yet disclosed. Lead immune checkpoint programs, our designed to address cancers in which there is T-cell infiltrate within the tumor. Those are called inflamed tumors. However some myeloid cells are believed to generate an immuno suppressive tumor microenvironment preventing pieces from entering the tumor and they listing an immune response against it, therefore there may be a need to inhibit this myeloid-mediated immunosuppressive effect which should allow T-cells to then infiltrate the tumor. This may compliment therapeutics that in novel activation of T-cells that are already at the tumor site. This notion supports myeloid targeting approaches as both monotherapy and combination therapy with other immune checkpoint. Pursuing a myeloid target program was a business decision based on industry needs and market trends and one that aligns with our expertise in predictive discovery in the immuno-oncology. We believe it allows us to build on our success in T-cell based immune checkpoint to establish the next wave of our immuno-oncology program and to complement the advances made with our T-cell candidates as possible combinations with them. These further focus of our IO expertise and the complementarity of our IO pipeline was part of our decision to deprioritize our efforts on antibody drug conjugates target. Although these myeloid program are at an early stage, there is a growing interest in the industry for such programs due to the recent understanding of the importance of the myeloid targets in the tumor microenvironment, there possible using combination with T-cell modulating agents and the lack of target candidates. I would also like to mention in this call the status of Neviah Genomic, a joint venture of Merck Serono and Compugen. This joint venture successfully developed PropheTox Bioassay for the early detection of drug induced hepatoxicity. This assay was developed through the analysis of the experiments performed at Merck Ventures bioincubator utilizing Compugen’s predictive discovery capabilities. Following the biomarker discovery phase and the completion of the validation and development of the PropheTox Bioassay Merck Ventures decided to not enter into commercialization of the product. As a result Neviah Genomic will cease to exist. Merck will have the right to utilize the assay internally but not to provide it to third-party and all commercialization rights and intellectual property generated by Neviah Genomic will become property of Compugen. At present Compugen has no plans to commercialize the product. Looking back on 2016, our Company has made tremendous progress for the first time in the history of the Company. We have created a pre-clinical development stage internal pipeline with three products program that are close to or have successfully achieved lead selections and with multiple additional programs in the target validation stage. We have generated a diversified and differentiated pipeline with our first wave of potential products targeting T-cell immune checkpoint and the second wave addressing myeloid express immunosuppressive targets candidates. We believe we are currently positioned to take a transformational step forward towards becoming a clinical stage company that will establish Compugen’s position in the market as a leading product discovery and development Company with a unique discovery capability and novel pipeline. That is why although Compugen exists today because of Martin and his many contributions and he will be missed – I fully understand his decision that we should seek a new Chairman to guide these efforts in coming years. I would like to conclude my prepared remarks today by reiterating the important comments I made earlier. First following our recent data disclosures all four program areas I discussed today are the subject of our business development efforts. As already indicated identifying a partner for CGEN-15001 in auto-immunity is our high priority as we are internally focused on developing immuno-oncology product. Potential collaboration for our immuno-oncology assets are also a possibility and could include one or more of our existing programs, including assets in the target validation stage. This will be achieved with the stipulation that we advance COM701 to the clinic in order to retain higher value from future proceeds and use it as a stepping stone to build our own internal clinical capabilities. Second each of these four areas address unmet medical needs with potential billion, dollar market where new drug target providing new treatment solutions are required. And lastly it is our belief that these programs areas specifically those where we already have a drug candidate are now at this stage that in line with current market trends. Thank you. And we will now open the call for questions.

[Operator:]

Thank you. [Operator Instructions] In order to provide as many participants as possible with the opportunity to ask their questions, we kindly request that you ask only one question at a time with a maximum of one short follow-up question. Please standby while we poll for your questions. The first question is from Thomas Yip of FBR and Co. Please go ahead.

[Thomas Yip:]

Hello everyone, thank you very much for taking my question. We think it is sad to hear Martin is stepping down, but we also think it’s a very logical move as composition moves closer to following express IND. So regarding your next – your ideal candidate for the next chairman or chairperson of the board, what specific experiences or characters do you – should be able to share – to have and what role will Martin play in the future?

[Anat Cohen-Dayag:]

Actually, we're not going and Martin will relate it in a moment, but we're not to going to specify the exact requirements for the Company. Of course the Company is moving forward to turn to a clinical stage company and we are seeking to enter collaborations. But as we stated the appropriate person with the required capabilities and experience in order to help us address the next chapter.

[Martin Gerstel:]

Yes, I think it's important to note that there's really a very clear kind of dividing line between what our objectives as a corporation were essentially up until now, and what they will be moving forward. I'm very proud of what we have accomplished to-date from the standpoint of now creating the type of predictive discovery capability that truly doesn't exist anywhere else in the world. We've proven without – you really cannot argue with the fact that we've proven that we can, in fact, make important discoveries in areas of high interest in the industry that we're not possible with other methodologies. And we have shown that this capability can, in fact, create a very, very attractive product pipeline. Now with those two assets in place we move to a very, very different type of a company where the objectives now are to leverage these assets to obtain the maximum type – the maximum returns possible for our shareholders. As I said, this is a very different objects – set of objectives for the Company. And in fact, it will make us a very, very unique company. I'm not sure there's – I can't think of any Company that has – pharma company that's ever had these two capabilities, systematic, science-based discovery capability and very interesting pipeline. Speaking about the discovery, I mean, predictive discovery capability. Moving forward from here with these two, I think the first thing that's going to have to happen will be to – will be the set of a whole new type corporate strategy et cetera. And so we would be looking for an individual who has experience and capabilities with respect to the two fundamental aspects of our Company moving forward which are clearly the clinical and commercialization aspects and business development. We realize that that this may take a little bit of time, but given what we have accomplished to-date and the potential that we see for these assets that have been created, we want to have the time to define the right person.

[Thomas Yip:]

Okay. Yes, thank you very much for the explanation. This is very good. So I guess one follow-up regarding our business development as you mentioned in the prepared remarks that you were pursuing potential partnerships from 2007. We understand that the timing are obviously not certain at this point, can you just remind us, are there specific structure or types of partnership that you prefer to sign on to your assets?

[Anat Cohen-Dayag:]

Yes, it will relate to this. We're not limiting ourselves to specific structures like things that we did, with the multiple candidates that we have, the different stages, the different opportunities that are at our hands with respect to immuno-oncology and also in our immunity. We're not limiting ourself to specific structures. It has to make sense for the Company to make two objectives, one, to make sure that we allow to – maybe even three, to allow to generate cash inflows to the Company, and deals that will allow us to get the recognition, and growing in value. But also to allow us to make sure that we’re turning to a clinical stage company. So while combining all these three different aspects, we're very flexible in how we look at it.

[Thomas Yip:]

Okay, that makes sense. Thank you again for taking my questions and I’m looking forward to you cross 2017.

[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. A couple, firstly, just returning to the Chairman role. Just wondering if are you looking for someone who will be an active chairman, shall we say, and similar to the role of Martin has held or is the desire to be make it less of an executive role in the future, more of a – sort of a shareholder and board role? And secondly then just on the financials, really it’s a point of clarification, the cash burn of $33 million to $35 million, I think you said excluding any new collaborations, but does it also exclude any potential money from buyer under existing collaboration rather or not? Thank you.

[Anat Cohen-Dayag:]

So just in terms of the chairman, Martin you may want to relate it?

[Martin Gerstel:]

Yes, I can see how given the needs for the company in these two – as I mentioned, with respect to the future, I can actually see based on the qualities and the information – the qualifications and interest of the person, I can say either that clearly somebody – we would want somebody with the experience and the understanding of both areas and also somebody who to say it bluntly can open doors in the industry for us beyond what we already have done. And so it's really – it is a subject of discussion at the board now. But we really didn't come to any conclusion other than we want a highly-qualified person, and we understand what the needs of the company are, and I believe that they can be fulfilled either with an act of chairman or with a more traditional chairman, but traditional chairman who is prepared to guide and provide the oversight for the company.

[Anat Cohen-Dayag:]

And Peter, with respect to your second question, of course, we are anticipating to obtain additional maintenance from buyer, specifically we are looking as I stated, we are looking for getting cash inflows from collaborations and it would include the current Bayer collaboration and future collaboration.

[Ari Krashin:]

I want to make it clear though with respect to specifically your question, no anticipated revenues are included in the $35 million that’s not a cash burn. It is a gross expenditure number.

[Peter Welford:]

That’s great, thank you. Sorry, just going to the Chairman, again are you looking for someone to – to let the company continue on its current path so we say and as you mentioned open doors to make that path easier or facilitate that path or are you looking for someone who also potentially can review the company’s current strategy and priorities if necessary. Thank you.

[Anat Cohen-Dayag:]

Peter, I relate it – the company has a very clear vision and mission, we are very committed to this – we built for many years the discovery capabilities by the way with the conviction of Martin throughout two decades that it can be done. We built it for years, we just started to crank the discovery capabilities in order to be able to discover novel targets and to show that we can develop potentially first-in-class products. We are now – we just now reach the stage of showing that it works for clinically by the way, there are few examples not only one the internal programs and also the program as much as you know with respect to 15001 at the Bayer collaboration and we are very committed to the path. A new Chairman that we would welcome for the company, would be a Chairman then would buy into the vision and the mission of the company and I would say that would be the one thing that is important.

[Peter Welford:]

It’s great. Thank you very much.

[Operator:]

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

[Edward Tenthoff:]

Great. Thank you. Not a question just a comment. Martin, wishing you all the best, I remember back to during the IPO at Robertson Stephens all that time ago, and look to see where the company has grown and I think a lot to be proud of. So just I wanted to leave you with that thought. Martin, all the very best.

[Martin Gerstel:]

I’d greatly appreciate it. Thank you very much.

[Operator:]

The next question is from Brian Coleman of Hawk Hill Asset Management. Please go ahead.

[Brian Coleman:]

Thanks. Anat, could you provide a little bit more context for your strategy in autoimmune, a year ago that was called a non-core de-prioritized area. Now it’s on your corporate presentation it’s a second major therapeutic opportunity. And what you described with respect to 15001 is pretty clear but what about the other checkpoints. What’s the strategy going forward on developing that portfolio and specifically with something like PVRIG, is there a thought that that checkpoint could be valuable and autoimmune?

[Anat Cohen-Dayag:]

Yes. So it’s a very good question and I would say, you are referring to a year ago. I would say that I was standing on the stage at the R&D Day and I was just saying that this field of immune-tolerizing agent is starting together recognition. I would say that we are here today after we sell from December to January just two months, six deals in this area with respect to autoimmunity. And that was the reason for the statements of saying we have the right candidate at the right time. We work on this candidate when we sell to that in a way it was premature in terms of the industry interest. We clearly knew that when we are identifying novel immune checkpoints that could be two drug opportunities, we were not that clever, you could see it by a CTLA4-Ig having two opportunities Bristol, [indiscernible] arrange the product to the market CTLA4-Ig in 2005 I believe. And the CTLA4 antibody was approved for immuno-oncology in 2011 I believe or 2010. So when we discovered our own checkpoints, it was clear that if the data looks good. We should de-prioritize because immuno-oncology was higher on the radar screen of the industry and is still on the radar screen of the industry and specifically for checkpoints but we had to keep one program. We are glad that we are doing a three – we believe that the phase will come up and yes even, a year ago I couldn’t sit here and say exactly within a year it will be out there but we knew that it is going to rise. The strategy moving forward is, as I said before it’s – we know what we want but we are flexible and I will explain. On one hand, 15001 for autoimmunity is not in the core area of focus of the company. We are focusing our resources on immuno-oncology and as you heard, we are also expanding into myeloid so this is something that we believe very much in it. And it’s an asset that we believe should get into further development and later get into clinical trials and we would like this is the first priority for us to get into a business arrangements with respect to 15001. And this strategy is to make sure that we are putting it in good hands, in order to move forward, we may take some portions of involvement not sure and we are not limiting ourselves in this respect but it will serve in order to get some more cash inflow to the company, in order to support the core focus of the company in immuno-oncology. Having said that, we have additional immune checkpoints in the pipeline of course, the additional immune checkpoints and there are additional opportunities with this immune checkpoints in the Fc fusion for autoimmune diseases, it does not mean that all of them will be relevant for addressing autoimmunity, its not that every checkpoint would fix. So the work that we were doing for all these years in order to prove that it worked and that it has a unique mechanism-of-action even by the way as compared to the current assets that were the subjects of the deal activity in the last two months. And there are opportunities also for the other immune checkpoints. We are currently not thinking of investing additional resources of the company. On this immune checkpoints for autoimmunity but of course there is – this opportunity exist and if we can we would not leave it on the shelf.

[Brian Coleman:]

Okay. Thanks. Then a second question with COM701 IND filing in the fourth quarter of this year and I – bolt-on a little kind of industry normal timeline on TIGIT you could expect that to be an IND filed some time in mid-2018 and you’ve also commented that your therapeutic pipeline in South San Francisco is got the breadth and you’ve invested in, I assume now have the throughput capability there. Are we getting to the point where we could start to see a one IND filing per year from the company? And specifically have you already indentified perhaps the third program that you are looking to advance into the clinic on your own?

[Anat Cohen-Dayag:]

So it’s a very good question, of course with our strategy moving forward, building a sustainable pipeline, there are two things. First we are not intending to take everything that we have on the table on our own to the clinic, we are not. We have more than we can handle. On the other hand, we do want to make sure that we build into a clinical stage company and build a sustainable pipeline that will allow us to combine between this, early stage opportunities that we have that could be the subjects of early stage collaborations. But also the late stage that we give right to higher value, higher recognition and higher potential for growth for the company. So thinking about this second part of what I was saying, a clinical stage company, yes, we do intend to have a pipeline that will generate consecutive IND. And we did not give guidance exactly, whether what would be the intervals but of course is a company we need to take care that it will be intervals that will allow us to grow. We will do it in a very – in a way that will allow us to manage well, the cash, the collaborations and the ability to build a sustainable pipeline. And this is always in our mind to make sure that we take into consideration that all this three parameters will play with one another well in order to be able to execute on our mission and goals for the company. So the short answer is yes, but not – I wouldn't commit now to every year.

[Brian Coleman:]

Okay. And I just have one quick follow-up. I know you've changed the way you're presenting your programs to investors and you stop disclosing a lot of the things going to target validation and you are starting to disclose programs that are more advanced through South San Francisco. And I think that's a great idea. My question is at what point in development at South San Francisco, will you be comfortable disclosing these additional undisclosed programs to investors?

[Anat Cohen-Dayag:]

So it's a very good follow-up question, because I forgot to answer one more thing that you said and its kind of continuation for this answer – this question that you are asking. So first we did disclose additional, the third program that internal program in South San Francisco, we did call it CGEN [indiscernible] yes, we did not say that we're going to take it on our own to the clinic but just to complete this. At what stage we disclose more information, it is – it’s not a fixed stage in terms of development stage but its more relates to a three different parameters. One would be the amount of data that we have for the program to allow us to feel comfortable that is a sustainable program. The second would be the IP landscape that we see for this program, and the third would be which is build on the combination of the two, is the competition that we think that we will have with respect to these program. Now bear in mind, even if you work on a novel program. At the time that we disclose it even if no one knows about it, some of the programs, maybe we don’t know and others are working on but at the time, that we are disclosing it, we are taking into considerations that there are some entities out there pharma, biotech that initiate a program around it. Yes, we hope that the IP strategy that we are employing will necessitate them to approach us at a certain point of time but from the assumption that we have as a business assumption is that some of them will not approach us and we start a program. And we need to make sure that at the time that we disclose a program to investors, which we know we’d like to know a lot about what we're doing here because this will allow them to make decisions about our investments. We know that at the time there we do it we will face – we will increase the competition and that's the three, the data, IP and competition.

[Brian Coleman:]

Okay, perfect. Thank you.

[Operator:]

The next question is from Denis O'Hara of Wells Fargo Advisors. Please go ahead.

[Denis O'Hara:]

Thank you. Anat, this question is for you and it sort of touches on your last comment. It's been about a year or so since the University of Colorado paper was published. And I presume that a lot of investigation was commenced by others and pharma to try and replicate and understand the conclusions in that paper around the PVRIG. Many of those investigations are ongoing at pharma, I presume. Since you’ve already done much of the work to understand the function of these pathways, you've screened for antibodies against PVRIG, selected the lead in COM701 with – which you are going to file an IND in the fourth quarter. Can you comment on what kind of lead you think you have timelines before you expect to see a competitor in the clinic. And I’ve got a follow-up.

[Anat Cohen-Dayag:]

It’s a tough question because your assumption or a case it would be very reasonable to assume just following the paper, other pharma would start, first it’s an assumption maybe they would know about it before us and no one was publishing it. And I don’t know to say about the lead time that we have it remains to be same I guess that usually pharma, biotech had publish their clinical plans when they need to file, so I guess that we will see when it is filed with the FDA as much as – as we will need to file. But its one thing to be first to market, which is very important and we're not saying that it's not completely important. But it's the other thing is the strength of the IP and of course at the day when it will need to be tested, that’s the day that will know exactly what we have in hand. But we were trying to address it the filing strategy in a comprehensive manner. So it’s the time to market and it’s the breadth of IP that would play in this method. And it remains to be seen, one more thing that I want to mention and of course we should assume competition on this as well is the combination that we are pursuing with TIGIT. When we became aware that this program is generating a business opportunity for us to combine with TIGIT, for us this was a lead as well. So we know it for quite some time and this is why we pushed the TIGIT program, yes, we disclosed the TIGIT program only recently, only two months ago but of course we are not working on it only for two months. And as you know, we are scheduled to hit lead selection this quarter.

[Denis O'Hara:]

Okay. But I guess, let me just ask in a different way. If the University of Colorado paper last year was the first time that pharma understood, the interaction of PVRIG in the TIGIT access. You were already working on it, if they just started working on it last year. And this is an assumption but I'd ask you to indulge me. If they just started working on it last year trying to understand it, trying to replicate the results of University of Colorado and you're own what kind of lead would you have is it a two years, three years, I know what…

[Anat Cohen-Dayag:]

It's hard for me to say I would say that as much as you know we disclose it on June 2015 its not the time that we started to work on it, the publication was I think that we’ve already stated in June 2015 that we are working on it, for almost a year, I would say that it would be between months and years its really, really hard for me to say we will get to know it when others will file their data, their request for IND with the FDA.

[Denis O'Hara:]

Okay, okay. I understand. One more question then. Could you provide your thoughts on Bristol-Myers’ recent decision not to seek an accelerated approval lung cancer for their Opdivo, YERVOY combo therapy, as this dampened any of the enthusiasm amongst the key opinion leaders broadly and more specifically your Scientific Advisory Board for the promise of multiple checkpoint blockade and what advancements being made to understand potential side effects arising from a multiple checkpoint blockade approach? Thanks.

[Anat Cohen-Dayag:]

It’s a very tricky question since we are – of course we have our own views about Bristol’s actions but I think that it’s a quartile – because for Compugen I’d refrain from giving any statements with respect to what I think about Bristol action. So I’m sorry.

[Denis O'Hara:]

Has it dampened enthusiasm amongst people that you speak to in the industry key opinion leaders et cetera is there some concern that this sort of immune checkpoint blockade combination is maybe a little bit trickier than people thought originally?

[Anat Cohen-Dayag:]

First, it is more tricky than people felt in the past, we learn a lot, I mean we – the field learns a lot about checkpoint stuff that we didn’t know. Having said that, everyone understand that there is a huge promise with checkpoints and still a lot of unmet needs and checkpoints are probably here to stay. So its – there is enthusiasm outside with respect to checkpoints and what they could contribute and also checkpoint combination. It’s not, the last word has not been said but as all of us know in every field you may also adjust challenge while you're pursuing opportunities. So that's my take home message.

[Denis O'Hara:]

Thank you.

[Operator:]

The next question is from Stephen Bauer. Please go ahead.

[Unidentified Analyst:]

Hi, I apologize if you cover this, the phone system wasn't working. And I missed the first 15 minutes of the call. Can you just maybe get some insight into the status of some of the checkpoint candidates that you rule from the website and you de-prioritized are they – was there negative data that went into that decision or with the other opportunities – seem so much greater and are those still candidates were – collaborations or they no longer part of the pipeline?

[Anat Cohen-Dayag:]

Yes. So as a company – a discovery company and have multiple targets that we discover and we must prioritize what we are working on. Now there could be different reasons for the prioritization. First, I would say what would put program up on our radar screen and then I would say, we put it down, the potential as a drug target is the first criteria. The second would be the ease in order to take it forward and the impact that it may generate. But while we are pursuing this, some times we get initial – and this is in the target validation stage, okay. Sometimes we get encouraging data but then we see that its either more complicated than we thought that – complex interaction between the immune system and the cancer is not very clear to us or may be not that promising in order to serve at the therapeutics. And in some of the cases what we do is we keep this program at a low-brainer in some cases we disclose them but in some cases, we push them into collaborations with academia in order to do more research, it may take additional one year, two years it may take even longer than that in research and maybe they will come better, maybe not. We don’t know but as a company that is dealing with many programs we have to do it. I will mention just one more thing and this is why we initiated and we did publish it recently, the knock-out mice effort. And you won’t find such a breadth of a knock-out mice activity generation in many, many other companies that are not big pharma, I would say. We have many opportunities on the table, knock-out mice allow the screening fast while we were – while we had to do it earlier without the knock-out mice because it takes a long time this process of generating knock-out mice, only the preparation is one year and then after you get – until you get the data is additional one year. We are now at the stage that the knock-out mice data starts to flow into the company and allow us to make decisions faster and not only on the in vitro and in vivo data that we get but also through the knock-out data. So just to give you more clarity about the decision-making, everything that I explained relates to the validation pipeline. When we decide that we launch the therapeutic and then it goes back to the question that I was being asked this time, that we know with our policy now disclose the programs, it’s just a later stage where we feel more comfortable than it has high potential.

[Unidentified Analyst:]

Okay. Thank you. I really appreciate that.

[Operator:]

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

[Douglas Altabef:]

Thanks a lot. At the outset, I just want to say is a fairly substantial long-term shareholder, we’ve had the pleasure of meeting with Martin on numerous occasions. I want to express my appreciation and I speak for a great many shareholders. When I express my appreciation for all that has been on behalf of the company. I think Martin is really been something of an anomaly in the Israeli business world because he's a man of a long-term in a proven track record of success with building, staying with businesses and building them and Martin, we all owe you a debt of gratitude. My question really is to focus on the activities that are not that you were referencing and which is intriguing to hear that there are four areas that are subject to profitable business development. But I'd like to get a little bit more granular it's hard not to notice that the cash position of the company is such that you really are going to be dependent on reaching some – getting some cash infusions this year. Of course, you don't control that, the only real control you have is with the candidates that are in-house. And so I'd like to just explore with you a little bit on what your priorities are. You've talked a fair amount about 15001 which is sort of was once a fair haired boy then went into something of a penumbra and now seems to be back. Is that your highest priority, would you say that that is your highest priority for this year and is it realizable for this year.

[Anat Cohen-Dayag:]

So first, I’ll relate to your first comment. I fully agree with what you were saying about Martin. And I’ll let Martin relate it which I’m sure that he’d like to thank you over the call here. But I’ll address here your other question. 15001 as I was referring in my prepared remarks. In the first priority because this is a non-focus area of the company, we are not going to advance it forward and it deserves to move forward very much as an opportunity, we think the market is there now and it will allow us to generate the cash inflow that is needed for the company and to focus – and to further focus on the IO and achieve – immuno-oncology and achieve our objectives. With respect to the immuno-oncology, with that in mind that we do want to keep a 15001 is a high priority for future collaboration. We are not saying that we will not that IO is off the table for discussions and that will keep it only to ourselves. We recognized that with advanced programs and with the combination of assets that we have, we do have a nice proposition on the table. Now referring to timelines, I must say that is because you are asking whether it will happen this year. I know and we all know that investors are very disappointed with respect to the fact that the company did not enter into collaborations. Of course, we recognize that collaborations are needed for cash inflows for the company and for the recognition and for growing in value. But it is very – we can predict the exact time of when collaboration will happen and therefore we made a decision for quite some time that we are going to give specific timelines with respect to collaboration. With that in mind, I can tell you that we are very committed and focused to get into collaboration. And I did say in my prepared remarks that the business development activities are focused on this currently. And it is clear to us that collaborations are needed. But with that, still we can’t give timing for this.

[Martin Gerstel:]

I will add to it. Thank you for your comment. Douglas, you truly have been and continue to be a great long-term shareholder. We as a company, we have had the benefit of a few shareholders like you and clear that we would not have been able to get to where we are without you and without your support. And so it's – that I have to also express my appreciation to you but to tell you that your words to me are deeply appreciated. You made the comment that I am known as somebody who stays with something until successful. I'm sure that there are some people thought well, wait a minute the stock is whatever and – I can’t really say that we're at this point in time. Our success is recognized. I see this is two very different things, one are we successful in my mind we have accomplished what were my main objectives, which were very difficult. And I believe we're the only company that attempted to. I know we're the only company that attempted to do this, to build this type of a predictive capability and to create a very, very promising pipeline out of it. So yes, we are successful however, we have not been successful for the shareholders to-date. It's seems very clear to me that when I talk with shareholders and the questions on this call. I think just continue to add credence to the statement I'll make, people are waiting primarily for another collaboration. To prove that the Bayer wasn't kind of a one-off and there aren't going to be more and that's it. And secondly, they really want to see us become a clinical stage company. I – based on my conversations that I've had with our shareholders. I believe that as I said in my talk that once those things occur. We will be seen as the company that we really are – today but it will be seen by the financial community as also as that company and our capabilities and our potential will be hope much more recognized in the marketplace. That is why I made what probably is a relatively unusual commitment in my talk and in the press release was that I intend to obviously, I mean I’m going to continue with the company and we are just saying we are starting a search, I don’t know when we are going to complete that search and even after we completed, don’t know when the new Chairman will be able to actually take on these responsibilities. But I want the people who have invested in our company to understand that I have not sold a single share of Compugen stock. And I will not sell a single share of Compugen stock until these two events that everyone is waiting for and I’m very confident that are going to happen or I wouldn’t make this commitment until we have a new collaboration and an IND on one of our products is filed. So again, Douglas, I greatly appreciate your comments to me. I believe that I’m leaving at a time when I can take a lot of pride in what the team here under are not and what I’m not has done then she’s took over as CEO for those of you, who are really a long-term shareholders will I’m sure recognize that we're completely a different company focused on really making a major contribution to medicine and making and becoming a very successful commercial entity under her guidance and leadership. So I'm proud of what we've done, I’m convinced that we've done it and we're successful and I'm going to stay around and hold everything will share until we do the two things that I – seems to me the shareholders are waiting for. So thank you.

[Douglas Altabef:]

Okay. Thank you.

[Operator:]

Thank you, ladies and gentlemen. This concludes the Q&A period. Before I ask Dr. Cohen-Dayag to provide closing remarks, I would like to remind participants that a replay of this call is scheduled to begin in two hours for a period of 72 hours. In the U.S., please call 1-888-326-9310. In Israel, please call 03-925-5904. Internationally, please 972-3925-5904. Dr. Cohen-Dayag, would you like to make your concluding statement?

[Anat Cohen-Dayag:]

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 in 2017.

[Operator:]

Thank you. This concludes the Compugen Limited fourth quarter and year-end 2016 financial results conference call. Thank you for your participation. You may now disconnect.