Compugen Q4 2023 Earnings Call Transcript

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March 5, 2024

There are 9 speakers on the call.

Operator

Welcome to Compugen's 4th Quarter and Full Year 2023 Results Conference Call. At this time, all participants are in a listen only mode. An audio webcast of this call is available in the Investors section of Compugen's website, www.cgen.com. As a reminder, today's call is being recorded. I would now like to introduce Yvonne Naughton, Head of Investor Relations and Corporate Communications.

Operator

Yvonne, please go ahead.

Speaker 1

Thank you, operator, and thank you all for joining us on the call today. Joining me from Compugen for the prepared remarks are Doctor. Anat Cohen Diag, President and Chief Executive Officer and Adversus Sefa, Chief Financial Officer Doctor. Michel Malher, Chief Medical Officer and Doctor. Eran Ophir, Chief Scientific Officer, will join us for the Q and A.

Speaker 1

Before we begin, we would like to remind you that during this call, the company will make projections or forward looking statements regarding future events, business outlook, development efforts and their potential outcome, the company's discovery platform, anticipated progress and plans, results and timelines for our programs, financial and accounting related matters as well as statements regarding our cash position. We wish to caution you that such statements reflect only the company's current beliefs, expectations and assumptions, but actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, and we refer you to the SEC filings for more details on these risks, including the company's most recent Annual Report on Form 20 F. The company undertakes no obligation to update projections and forward looking statements in the future. And with that, I'll turn the call over to Annette.

Speaker 2

Thank you, Yvonne, and thanks to everyone for joining our call today. Before we discuss the full year and 4th quarter highlights, I want to start by welcoming the new addition to our management team, Michelle Mahler, who took over the role of Chief Medical Officer on March 1, 2024. I'm really excited to welcome Michel, an oncologist by training with extensive experience in leading clinical development in both biotech and pharma companies in and outside of the U. S. Michel is an excellent fit for Compugen and will be a great partner to me and a collaborator to the whole team as we work together on executing our programs to accelerate value creation.

Speaker 2

I would like to take this opportunity to thank Henry for his major contributions and commitment to Compugen and his leadership. Henry has been instrumental for the successful transition of Compugen from a preclinical to clinical stage company and creating the growth opportunities in front of us. Moving now to the highlights of 2023. Our successes in 2023 and in the last quarter in particular position us well as we advance into 2024 and are expected to play an important role in the exciting future I envision for Compugen. Firstly, at the end of the year, we executed a preclinical licensing deal with Gilead for a total deal value of up to $848,000,000 including a $60,000,000 upfront payment and $30,000,000 near term milestone payment and with additional single digit to low double digit royalties on future net sales.

Speaker 2

The likeness by Gilead of COM-five forty three for which we are expected to lead Phase 1 development further validates our computational discovery, research and development capabilities. It is also a testament to the differentiation of our antibody program targeting the IL-eighteen binding protein. The deal process was competitive, which reflects the significant interest in the IL-eighteen space and highlights the potential of our COM-five forty three differentiated antibody approach. As a reminder, COM-five forty three, a potential 1st in class anti IL-eighteen binding protein antibody represents a novel way to harness IL-eighteen pathway biology for the treatment of cancer by using an antibody against IL-eighteen binding protein and therefore potentially avoiding the challenges presented by Secondly, focusing on execution and advancing the development of our clinical stage assets, we initiated 2 proof of concept clinical studies with our differentiated COM701 combination in platinum resistant ovarian cancer and metastatic microsatellite stable colorectal cancer. We completed enrollment in the ongoing MSS CRC study and we significantly ramped up the enrollment of our ongoing PROC study with enrollment of at least 20 patients expected by the end of the Q1 of 2020 4.

Speaker 2

In addition, we presented new data at scientific conferences throughout 2023, including preliminary evidence supporting the association between the biomarker PVR L2 and clinical benefit intended to guide the next step in our development path for COM701 combination. Thirdly, in the Q4 of 2023, our partner AstraZeneca advanced with regostomy their PD-one TIGIT bispecific, the TIGIT component of which is derived from COMPGENSCOM-nine zero two into Phase 3 development in biliary tract cancer. Dosing of the first patient in this Phase III trial entitled us to a milestone payment and brings Compugen 1 step closer to a potentially marketed drug. AstraZeneca's broad clinical investigation of this asset across multiple indications and across various lines of treatment and combination increases our probability of realizing future milestone payments and royalties. Finally, the cash received from our licensing deal with Gilead and milestone met by AstraZeneca in 2023 allow us to move into 2024 with a solid balance sheet.

Speaker 2

The additional cash we receive and the cash we expect to receive upon IND clearance of COM-five forty three is expected to extend our cash runway from the end of 2024 into 2027 and potentially accelerate value creation by enabling us to invest in enhancing our discovery capabilities and advancing our diversified portfolio, including our differentiated COM701, COM902 IO combination strategy, the Phase 1 development of COM503 and our early stage innovative pipeline. This is an exciting time for Compugen. This is a good segue for me to move to what to expect from us in 2024. 2024 is planned to be a catalyst rich year for us with multiple data readouts and update expected from our diversified portfolio. In 2024, we plan to share data from our ongoing proof of concept studies, NSSCRC and platinum resistant ovarian cancer.

Speaker 2

These are particularly challenging indications to treat and have historically failed to respond to a neuro therapy. While we believe that these indications represent a very high bar, we have previously presented encouraging clinical data supported by immune activation, suggesting that the unique biology of PVRIG enables anti PD-one activity in this challenging indication. The goal of these studies is to further substantiate our clinical findings, including our initial biomarker results to potentially enable us to move forward with the biomarker ENRICH development strategy. Regarding ANAST SRC, in the first cohort of 22 patients treated with COM701 in combination with nivolumab, we showed an encouraging overall response rate of 12% and stable disease in patients with liver metastases, a patient population which historically has not responded to other drugs. For the ongoing proof of concept study, our objective is to understand if there could be an additional benefit of adding an anti TIGIT to the dual combination and further evaluate the combination in the liver metastases patient population, which represents approximately 70% of the patient population in the evaluated line of treatment.

Speaker 2

The ongoing study fully recruited in 2023 at a speed which we believe reflects the significant unmet need. Data presentation from this ongoing study is planned for the first half of twenty twenty four with the aim to be presented at a medical conference. You can expect to see baseline characteristics including safety, overall response rate, disease control rate, duration of response and translational data. In patients with platinum resistant ovarian cancer, based on the data from the first cohort of 20 patients treated with triple combination, there was a lot of excitement from investigators reporting durable shrinking or stabilization of tumors in some of their patients who has previously progressed on all available treatment options. We believe the totality of the data reported in these patients is encouraging compared to the current standard of care.

Speaker 2

We presented a 20% overall response rate with patients responding for over 16 months, which is favorable considering median duration of response for single agent chemotherapy is around 3 to 4 months and in ADC is around 6.9 months. Responses were also achieved in the hard to treat high grade serous adenocarcinoma patients along with a favorable safety profile. For the ongoing study in platinum resistant ovarian cancer, we're delighted to report that our investigators are active on recruitment and we expect to complete recruitment of at least 20 patients this quarter and plan to present in the Q4 of 2024. Again, our preference will be to present at a medical conference. For this ongoing study, you can expect to see baseline characteristics and data for at least 20 patients, including safety, overall response rate, disease control rate, duration of responses and preliminary biomarker data.

Speaker 2

Moving now to COM-five zero three. Rapid execution on both COM-five zero three IND clearance and Phase 1 development is a priority for us. And we're incentivized by Gilead on this priority. We greatly value the partnership with Gilead and together we're well advanced on the Phase I trial design and feel confident that we can initiate Phase I shortly after we gain IND clearance. We're on track for IND submission in the second half of twenty twenty four with subsequent initiation of the Phase 1 study following IND clearance.

Speaker 2

Finally, in the second half of twenty twenty four, AstraZeneca expects data from their Phase III ARTEMISE I trial in non small cell lung cancer in frontline setting and the Phase 2 GEMINI trial in hepatobiliary cancer. Before handing over to Alberto to go through our financials, I want to emphasize that we will continue to be financially disciplined while benefiting from our solid cash position to enhance and advance our company. We're strategic with how we deploy our resources and this will include 2 main priorities. 1, advancing our clinical stage programs COM701 and COM-two combination and COM-five forty three upon initiation of its clinical study and 2, investing in COMPETEEN's core competitive advantage, the integration of our computational discovery platform with innovative research and drug development capabilities. In terms of COM701 combination, advancing our ongoing studies will be data and biology driven.

Speaker 2

In PROC, we believe data showing durable responses and additional biomarker correlations are expected to allow us to move ahead employing a predictive biomarker enrichment strategy. As a result of the evolving platinum resistant ovarian cancer treatment landscape, we see the opportunity for COM701 combination to be used as a treatment option in 2 patient populations, those progressing on ADCs and those ineligible for ADCs. In MSS CRC, the bar is very high due to the many failures and the non responsive nature of delivery metastasis patient population. We believe the data showing an overall survival advantage over standard of care would be encouraging. Our study in NSF CRC is still ongoing as some of the patients enrolled only in September and based on data from the overall and the liver metastasis patient populations, we will determine the next step.

Speaker 2

Based on the encouraging safety and efficacy data generated to date with our COM701 combinations across indications, we believe there is an opportunity to collaborate with potential partners to bring COM701 combinations to patients across a broad range of indications, generating a potentially large opportunity. For the 2nd main priority, we will continue to invest in the engine powering our core competitive advantage. We're skilled and highly experienced in integrating cutting edge computational capabilities with groundbreaking oncology research and drug development expertise to discover novel drug targets. Investing to enhance our computational discovery platform from computer prediction to early stage programs, we believe will enable us to progress the generation of novel drug candidates, the next COM-five forty three. And finally, our focus remains on non dilutive funding for which we have demonstrated in 2023, we can successfully execute on.

Speaker 2

With that, I turn the call over to Alberto.

Speaker 3

Thank you, Ernest. I'm delighted to say that we advanced into 2024 with a solid balance sheet. This is a result of contingent accomplishment on the collaboration front in 2023, securing non diluted funding, which was always our priority. With cash at end to date and the milestone payment we expect to receive upon IND clearance of COM 503, we expect to extend our cash runway to support our operating plans into 20 27. Going into the details, I will start with our cash balance.

Speaker 3

As of December 30 1, 2023, we had approximately $51,100,000 in cash, cash equivalents, restricted cash and cash investments compared with approximately $83,700,000 as of December 31, 2022. The cash balance at the end of 2023 does not include the receipt of $60,000,000 upfront payment from Gilead for our COM503 preclinical license and $10,000,000 milestones payments from AstraZeneca on dosing the first patient in the Phase 3 In addition, in 2024, we expect to receive from Gilead an additional $30,000,000 milestone payment upon COM503 IND clearance. I would like to remind you that all payments from Gilead are subject to a 15% withholding tax. The company has no debt. As Anat mentioned, we understand the importance of our cash balance and we are financially disciplined.

Speaker 3

Based on our current plans, we expect that our current cash together with the milestone payments payable upon COM 503 IND clearance will be sufficient to fund our operating run rate reflects the planned development of our clinical assets and continued investments in our early innovative lifeline. On the revenues front, we reported approximately $33,500,000 in revenues for the Q4 of 2023 and for the year ended December 31, 2023, compared to $7,500,000 in revenues for each of the comparable periods in 2022. The revenues for the year ended December 31, 2023 include the portion of the upfront payment from the license agreement with Gilead allocated to the license and the clinical milestones from the license agreement with AstraZeneca in the amount of $10,000,000 Now moving to expenses. R and D expenses for the Q4 of 2023 and for the year ended December 31, 2023 were $10,900,000 $34,500,000 respectively, compared with $7,300,000 $30,600,000 for the comparable period in 2022. The increase in 2023 is mainly due to lower amortization of the deferred participation in R and D expenses following the termination of the agreement with BMS, offset by decrease in headcountered expenses.

Speaker 3

Research and development expenses as a percentage of the total operating expenses were approximately 78% in 2023 compared to 73% in 2022. Our G and A expenses for the Q4 of 2023 and for the year ended December 31, 2020 3 were $2,500,000 $9,700,000 respectively, compared with approximately $2,500,000 and approximately $10,300,000 for the comparable period in 2022. Finally, on net loss. For the Q4 of 2023, we report a net profit of $9,700,000 or $0.11 per basic and diluted share compared to a net loss of $3,100,000 or $0.04 per basic and diluted share in the comparable period of 2022. Net loss for the year ended December 31, 2023 was 18,800,000 dollars or $0.21 per basic and diluted share compared with a net loss of 33,700,000 dollars or $0.39 per basic and diluted share in the comparable period of 2022.

Speaker 3

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

Speaker 2

Thanks, Alberto. To summarize, 2023 was a very successful year for Compugen, both on the execution front and the validation of our computational discovery and development capabilities, including the exciting preclinical license deal with Gilead for our IL-18BP immunology program, the initiation of 2 proof of concept studies and presentation of preliminary predictive biomarker data with our unique and innovative triple IL combination and progress by our partner AstraZeneca rilzagostomy. Our accomplishment in 2023 position us well for a catalyst reach 2024 and with an extended cash runway expected into 2027, which we believe will support the development of our clinical assets and novel early stage pipeline. Partnering remains an important part of our strategy and we'll continue to focus on collaborating to extend the reach of our potentially 1st in class medicines to cancer patients and to accelerate value creation. I would like to thank all our colleagues at Compugen for their passion and commitment to our success in 2023 and their dedication and readiness to drive for success in 2024.

Speaker 2

With that, I will turn the call over to questions. Operator?

Operator

Thank Please go ahead.

Speaker 4

Hey, guys. Good morning and thanks for taking my questions and congrats on all the progress that have been made. Totally agreed looking forward to seeing how the catalyst play out this year. This will be a very interesting year for the company. I just wanted to check-in on the colorectal cancer data, which I'm sure I think everyone on the call is probably assuming that we could see that around ASCO.

Speaker 4

Perhaps I missed this, would you have biomarker data in that presentation? I know you said you have some translational data, but just want to specifically clarify if there'll be biomarker data that you can tie to response?

Speaker 2

So it's a very good question And we did say that we relate to translational. I want to remind you that with the prior cohort of 22 patients where we disclosed the data already in 23, we did not share biomarker correlations, we did not see biomarker correlations in the CRC with the prior cohort. If you will have anything to report with the next cohort, we'll do that. But I think that it's fair to say to mention that up until now we did not see in the prior cohort the biomarker correlations. Eran, is there anything that you want to add on this front?

Speaker 5

No. As always, we're doing a lot of efforts in all fronts to analyze both correlation to response and the pharmacodynamic markets. And then whatever will be relevant by the time of the presentation will be shared.

Speaker 4

Got it. And then with the platinum resistant ovarian cancer data that will be presented later on this year, At the time of the presentation, I know you will have some preliminary biomarker work, but can you please talk about what maybe your plans are, the next steps then in terms of developing a potential companion diagnostic?

Speaker 2

[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] I think that it's fair to say that we're now at the stage that we're looking as we said last time, we're optimizing DSA while we're testing the samples that we have in place, those that we already tested and new ones. The aim is to be able to set a cutoff and to have an assay that we use, it does not necessarily need to be a companion diagnostic level in terms of the assay itself, essay in order to be used in clinical trials. So we will if the data will repeat itself and we'll see correlations, we'll make sure that we have an assay that can be used to select patients in a clinical trial. Not necessarily this will be the assay that will be used eventually if everything goes well as a companion diagnostic in the market, just to make sure that this is clear. But if data looks good, we'll make sure that we have the assay to select patients ready.

Speaker 4

Great. Thanks so much guys. Thanks for taking my questions. I'll hop back in queue.

Speaker 2

Thank you, Chika.

Operator

The next question is from Diana Graybosch of Leerink. Please go ahead.

Speaker 6

Hi. I just kind of have a follow-up to Asthika there. In that to my ear, it sounds like you're emphasizing the biomarker enrollment strategy much more in this earnings call than you have in many quarters. So what changed data or strategy wise that's leading to that change in emphasis?

Speaker 2

So I think first, I don't know that we emphasize more, but at least I'll say how we see our path forward in light of potential data and in light of the the landscape is changing over time with nivirtuximab and also maybe additional ADCs and we understand that with the biomarker we may have an edge and having biomarker ethane place will allow us to go into a study that is well designed, gives us a higher probability of success, maybe a smaller study. We believe that a biomarker will give us an edge. So not implying anything with respect to potential data outcomes and as you know we're still enrolling patients, we're only anticipating to complete enrollment by the end of the quarter. I think that it's natural for us looking at the competitive landscape to try to look for places where we can see an edge to ourselves. I will also add, other than the biomarker, we also understand that there are now 2 populations that we may target.

Speaker 2

This is those that are progressing on ADCs and those that are not eligible for ADCs. And we're also looking to see where we may have an edge also on these two populations. So maybe that would give some more color on the focus of this

Speaker 6

And then maybe one follow-up. I think I heard you say at the end in your wrap up that you're looking to partner COM701 with other companies, potentially in other novel combinations. Are you thinking any specific novel combination? Or can you talk more about that strategy?

Speaker 2

I think look, partnering COM701 and COM902 and or COM902 was always something that we took into consideration and that's because we're not intending to take the program alone to the market. And I think that today with the data that we have in place, which is kind of broad across indications, all of these indications that we show data is really how to treat 2 more types that where we were able to show durable responses at the patient on the patients with the patients that responded, good tolerability that allows for combinations. We're thinking not only on what we're doing internally, but we're also thinking about how to broaden the opportunities for our drugs and we recognize the fact that there is obviously, as a small biotech company, there is a limit to what we can do. And for us, broadening the opportunities through collaborations is a priority. So that's it.

Speaker 2

I will let Eran relate more to the mechanism of fashion, potential combination strategy based on this mechanism of action and the tolerable safety profile. Eran, maybe you want to add few things about it.

Speaker 5

Yes. So we've showed quite extensively that PVRG's unique checkpoint and that blocking PVRG indeed can synthesize tumors to TIGIT and PD-one. So and this is what we're testing, right, the triplet combination, which is an IO pure combination, extremely safe, very good tolerability profile. And we hope to see the signals mature, and we'll share it later this year. But of course, the potential is out there.

Speaker 5

It could be combined with chemotherapy. It could be combined in early lines of therapy. I mean, this mechanism of action of PVRIG could be relevant also in many other aspects, providing a relatively safe approach that could drive T cells into the tumor, and we believe this could be combined also in regardless of the triplet combination we are pursuing.

Speaker 2

Great. Thank you.

Operator

The next question is from Stephen Willey of Stifel. Please go ahead.

Speaker 7

Yes, good morning. Thanks for taking the questions. I think you may have mentioned it on the call, but can you just maybe speak to, I guess, the efficacy metrics? I know there's a lot of talk about the biomarker directed strategy, but can you speak a little bit to the efficacy data that you're going to be kind of using out of the colorectal trial to make a no go decision? And I guess I asked the question because of the historical disconnect here that tends to exist between response rate and Aventura data in this tumor cut?

Speaker 7

And then I guess there's obviously a lot of different IO based regimens that are pursuing the non Liberumet population. Is that something that is of interest to you to look at as a potential development opportunity? Or do you think that that landscape has kind of become a bit too crowded?

Speaker 2

So I think that it's fair to say that when we're looking at what how we will judge our data, it's really with respect to the benchmarks and what would be relevant based on the standard based on standard of care, but also based on other clinical trials. I think that and I'll let Michel relate to it, but I think that it's a fair point that you raised the data that we were seeing in the data that we've disclosed already is really data within the Liberumet population that was intriguing for us because really this is a very hard to treat patient population. Really there are no agents there that are really targeting this patient population. And I think that when we will have our data in front of us, we will look at the overall liver map, where we believe that we have an edge. So I'll let Michel speak about how we may look at our data as

Speaker 8

compared to early stage clinical trials, as you know, So in early stage clinical trials, as you know, we often look at overall response rates as a way to test whether there's a proof of concept and it's often seen as a surrogate for other endpoints that are related to progression free survival and overall survival. But I think also in these hard to treat populations, we cannot ignore the sustained stable disease responders, keeping in mind that once a lot of these drugs go on to Phase 3 registration studies, the primary endpoints are no longer overall response rate. And many times they're reporting out a primary endpoint of overall survival. So when we look at single arm studies, we have to interpret survival endpoints with the limitations that we have, knowing that our data sets are small single arm studies. So we also have to keep in mind the big picture in terms of what are the registration endpoints.

Speaker 8

And so I think it's important not to ignore the patients that have sustained responses of stable disease. And that's where the disease control rate becomes relevant in looking at the data. So we will look at the

Speaker 2

totality of the data to be

Speaker 8

able to make these go, no go decisions. And we will also look at it with an eye towards what will be the survival benchmarks as the landscape is evolving. And with that, I think happy to elaborate if you have additional questions.

Speaker 7

And then I just guess any interest specifically in maybe looking at the non Liberumet population in a bit more granular detail. I know you probably only have a handful of these patients represented in the in the proof of that.

Speaker 2

I just want to clarify that you're talking about the patients without liver metastases because our data is actually targeted to the most difficult to treat patient population. So in the data that was previously presented, 75% of the patient population had liver metastases, which is the But

Speaker 7

there's obviously a subgroup of non Liberumet patients that are now being pursued by a variety of companies with a various number of IO based regimens.

Speaker 8

Okay. So given what we're seeing and what we presented in our patients with LIVAMET, it still remains an

Speaker 6

area of focus for us.

Speaker 2

Okay. Yes, I think I'll just Steve, I'll just add that we recognize the fact that there's not a lot of data there for LIVIMAT at all. I think that there is some data maybe by Biogenes that is relating to overall survival million of overall survival of 8.7 months, etcetera. We're taking all of this into consideration. I mean, overall response rate is not there at all for liver mass and we will look at our overall response rate.

Speaker 2

We do expect that in our patient population, we'll have the same representation of the population in terms of the Liberumet. Most of the more than 70% of the patients in this line of treatment that we are enrolling are having liver meth. So we expect it we'll have the same representation in this and we will take a careful look at this patient population because we do think that we may have an edge there.

Speaker 7

Okay. And then I guess just on the partnering optionality front, can you just remind us, are you exclusive with Astra on COM902? Or is that just specific to the use of bispecific antibodies incorporating the digit domain? And I guess I just asked the question because I mean obviously Gilead just made a fairly strong order confidence in the nepsi silent digit. I know that there's probably some scarcity value around that.

Speaker 2

So totally the latter. So AstraZeneca has the right to use the COM902 segment in their bispecifics, so they got the right to develop bispecific based on our COM902. We own COM902. We also kept to ourselves rights for certain bispecifics TIGIT PVRIG or TIGIT PVR L2 with our COM902 is ours. We do we totally relate to COM-nine zero two as an asset.

Speaker 2

It's nice to see that you noted that you mentioned the SP question, which we were always saying always that it's either does not matter or that if it matters then it should be a silent one. And we're happy to see that there is data now supporting it. We own COM701 and COM902. We believe that these are good partnering opportunities. We have our own plans to move ahead with these assets internally, obviously, in a data driven manner, in a biology driven manner, but we do think that these are drug assets that can generate collaboration opportunities for us.

Speaker 2

And we will intend to proceed because we believe that with partners we can broadly test them. And as you know, I answered to Dana, but I think that one of the key things that should be mentioned, we tested COM701, COM902 combinations in the most hard to treat patient population. It gave it gives us an edge, you can test it in single arm studies, but one cannot ignore that these assets have a potential in the inflamed tumor type. And this is a great opportunity based on the data that we have and the data that we have is supporting COM701 driven effect. We believe that it could serve as good partnering opportunities.

Speaker 2

And hopefully, the TIGIT data that is out there and will be out there by the companies that are leading this field will allow us to clear the air for TIGIT at least to understand that there is a benefit by adding TIGIT to PD-one and that there is a third component that is needed. And I think that the world starts to see that there is a third component that is needed and we believe that it's PVRIG. So yes, on partnering front, that's how we think about it.

Speaker 7

Okay. Thanks for taking the questions.

Speaker 2

Thank you.

Operator

This concludes the Q and A session and Compugen's investor conference call. Thank you for your participation. You may go ahead and disconnect.

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