Compugen - Earnings Call - Q1 2025

Transcript

Operator (participant)

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's first quarter 2025 results conference call. At this time, all participants are in 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, Vice President, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Yvonne Naughton (VP, Head of Investor Relations and Corporate Communications)

Thank you, Operator, and thank you all for joining us on the call today. Joining me from Compugen for the prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer, and David Silberman, Chief Financial Officer. Dr. Michelle Mahler, Chief Medical Officer, and Dr. Eran Ophir, Chief Scientific Officer, will join us for the Q&A. Before we begin, we would like to remind you that during this call, the company may make projections or forward-looking statements regarding future events, business outlook, development efforts, and the 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 and cash runway. 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 our SEC filings for more details on these risks, including the company's most recent annual report on Form 20F. The company undertakes no obligation to update projections and forward-looking statements in the future. I'll turn the call over to Anat.

Anat Cohen-Dayag (President and CEO)

Thank you, Yvonne, and a warm welcome to everyone joining our call today. To start, I would like to refer to the announcement we shared a few days ago regarding key leadership transitions at Compugen. After 15 years as President and CEO of the company, I'm very happy to be assuming the newly created position of Executive Chair and to be handing the reins over to the very capable hands of Eran Ophir. Over the past year, we have accomplished a lot, including advancing our innovative clinical immunotherapy pipeline, establishing strategic collaborations, building a robust foundation with a talented management team, and ensuring a cash runway into 2027. This is the right moment to pass the leadership to Eran, who has been my trusted partner and Compugen's scientific leader for the past five years.

We believe this combination of leadership ensures a solid foundation for the company's next phase of growth. I would also like to thank Paul Sekhri, who, after eight years, will step down as Chair of the board. Paul has been a great mentor to me and contributed significantly to the success we have achieved at Compugen. On the call today, I will provide an update on progress we have made this quarter in our mission to transform the lives of cancer patients. In the first quarter of 2025, we continue to advance our early-stage and clinical immuno-oncology pipeline. Starting with our potential first-in-class Anti-PVRIG antibody, COM701, we initiated the first sub-trial of our adaptive platform trial comparing COM701 maintenance therapy to placebo in 60 patients with relapsed platinum-sensitive ovarian cancer.

The patients progressing post-PARP inhibitors and/or bevacizumab, or who are not candidates for such treatment, represent an area of unmet medical need with no treatment option. Our study focuses on helping these women. With the support of our investigators, we are engaged with the site activation and are working diligently to proceed dosing the first patients. We intend to share interim analysis from these sub-trials in the second half of 2026. The clinical trial landscape is evolving following the success of ADCs in platinum-resistant ovarian cancer. ADCs are also being evaluated now, earlier in the disease course, in patients with platinum-sensitive ovarian cancer, as replacements to chemotherapy and added to chemotherapy. We believe that advancing COM701 in the maintenance setting of platinum-sensitive ovarian cancer is where COM701 may present its potential advantages in terms of tolerability and durability.

As previously communicated, we believe that showing a three-month improvement over the median progression-free survival of the placebo would be clinically meaningful. Positive data has the potential to serve as a key catalyst in advancing a broader clinical development program to address significant unmet medical needs. Moving next to the TIGIT landscape. Despite failures in the TIGIT space, it is notable that companies with FCE inactive anti-TIGIT, like AstraZeneca and Arcus Gilead, are advancing their programs. We have consistently advocated that FCE inactive antibodies may serve as the better antibody format for targeting TGIT. In line with this, current clinical trials suggest that FCE inactive anti-TiGIT may have a safety advantage in certain patient populations, which could support a potential efficacy advantage due to patient durability on study treatment.

With the multiple phase III failures in TIGIT studies, despite positive phase II randomized studies, we believe that only a success in one of the upcoming phase III trials could validate the TIGIT antibodies as a drug class, change the market sentiment, and open new opportunities for us as one of the few companies that have an FCE inactive clinical stage TIGIT antibody. Clinically, we continue to believe that TIGIT PD-1 blockade may need to be combined with a PVRIG inhibitor to expand their use to less inflamed PD-L1 low tumors. Positive TIGIT PD-1 data by others may present additional opportunities for us. In addition, our partner AstraZeneca has the largest ongoing phase III program in the TIGIT space. They have most recently initiated their 10th phase III clinical trial with rizagostamine, their PD-1 TIGIT bispecific, the TIGIT component of which is derived from our COM902.

Since our last report in March 2025, AstraZeneca has initiated three additional phase III trials in lung, gastric, and now also in endometrial. These new trials are evaluating rizagostamine as monotherapy and combination therapy. The potential commercial opportunity for rizagostamine is substantial, with AstraZeneca estimating non-risk-adjusted peak year revenue targets of more than $5 billion. In lung cancer alone, the eligible lung cancer patient population across G7, based on 2025 epidata, is estimated by AstraZeneca to be over 500,000 patients. AstraZeneca's broad development strategy for rizagostamine to replace existing PD-1, PD-L1 inhibitors represents a significant potential revenue source for us, as we're eligible for both future milestone payments and mid single-digit tiered royalties on future sales.

Coming up at ASCO 2025, AstraZeneca plans to present, as a poster, the first rilvegostomig ADC combination data from the phase II TROPION-Lung04 trial, evaluating frontline rilvegostomig in combination with Dato-DXd in non-small cell lung cancer. AstraZeneca also plans to present a poster with the first data from the phase II Gemini hepatobiliary trial, evaluating frontline rilvegostomig in combination with chemotherapy in treatment-naive biliary tract cancer. Moving next to GS0321, formerly known as COM503, our potential first-in-class anti-IL-18 binding protein antibody licensed to Gilead. GS0321 represents a novel way to harness IL-18 pathway biology for the treatment of cancer, potentially avoiding the challenges presented by administration of therapeutic cytokines. The phase I trial is progressing as planned.

Finally, beyond our clinical stage program, our teams are committed to progressing our extensive, innovative, and differentiated early-stage pipeline focused on potential first-in-class drugs and novel mechanisms of action, aiming to address various mechanisms to enhance anti-cancer immunity. With a diverse pipeline and strong focus on execution in 2025, we believe Compugen is well-positioned for growth. Cash runway, assuming no further cash inflow, is expected to fund our operating plans into 2027, and we anticipate using this runway to advance our COM701 platinum-sensitive ovarian cancer trial and to support the progression of GS0321 in the clinic, together with continuing investment in our early-stage research pipeline. Of course, none of this would be possible without our highly committed, talented team here at Compugen, who continuously perform at the highest levels of excellence.

I'm excited for 2025 to be another year of advancing our efforts to make a meaningful impact on cancer patients' lives. With that, I will hand over to David for the financial update before we open the floor for Q&A.

David Silberman (CFO)

Thank you, Anat. I am delighted to say that we are advancing in 2025 with a solid balance sheet, with no debt, and with a cash runway to support our operating plans into 2027. Our cash runway takes into account the planned development of our clinical assets and continued investment in our early innovative pipeline and does not include any additional potential cash inflows. Going into the details, I will start with our cash balance. As of March 31st, 2025, we had approximately $103.7 million in cash, cash equivalents, short-term bank deposits, and investment in marketable securities. Revenues for the first quarter of 2025 were approximately $2.3 million compared to approximately $2.6 million of revenue for the comparable period in 2024.

The revenues in the first quarter of 2025 reflect the recognition of portions of both the upfront payment and the milestone payment from the license agreement with Gilead, while in the first quarter of 2024, they reflect portions of the upfront payment from the license agreement with Gilead. Expenses for the first quarter of 2025 were in line with our plans. R&D expenses for the first quarter of 2025 were approximately $5.8 million compared to approximately $6.4 million in the first quarter of 2024. Our G&A expenses for both the first quarter of 2025 and 2024 were approximately $2.4 million. For the first quarter of 2025, our net loss was approximately $7.2 million, or $0.08 per basic and diluted share, compared to a net loss of approximately $7.3 million, or $0.08 per basic and diluted share, in the first quarter of 2024.

With that, I will hand over to the operator to open the call for questions.

Operator (participant)

Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you have a question, please press star one. If you wish to decline from the polling process, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Please stand by while we poll for your questions.

The first question is from Dana Graybosch from Leerink Partners.

Daina Graybosch (Senior Managing Director and Biotechnology Analyst)

Daina, two questions for me more on the competitive landscape. Merck recently announced that KEYNOTE-B96, which is a phase III trial studying pembrolizumab in platinum-resistant ovarian cancer, was successful and hit on overall survival in patients that had tumors that expressed PD-L1. I wonder if you could talk about that success and how that could impact if Pembro, we have not seen the results, if they ultimately launch Pembro in that setting, your strategy in ovarian cancer. I have a follow-up.

Anat Cohen-Dayag (President and CEO)

Michelle, would you like to refer to this?

Michelle Mahler (CMO)

Sure. I'd be happy to refer to it. Thanks for the question, Daina. Yes, this study is in platinum-resistant ovarian cancer. It's in third line. It is in an earlier stage setting of patients in the disease process, whereas our study is in platinum-sensitive, but we're also looking at second and third line patients. I'm quite encouraged by their announcement because it means that there is benefit being seen by adding an immune checkpoint inhibitor to standard of care agents. In the event that our study demonstrates activity, it opens up additional opportunities to be able to combine our COM701 in these settings and also help drive taking it further to a broader population.

Daina Graybosch (Senior Managing Director and Biotechnology Analyst)

Great. I wonder, we talked about TIGIT and FCE competent or incompetent. I wonder if you could talk about your interpretation of Roche's Skyscraper-01 data. What about the data specifically gives you confidence that the failure of that TIGIT was due to its FCE competency and not simply that TIGIT antagonism adds incremental clinical benefit?

Eran Ophir (Chief Scientific Officer)

Yes.

Michelle Mahler (CMO)

Okay. I'm going to make—oh, you're going to take it, Eran. Okay. Go ahead. No, I'll go after you.

Eran Ophir (Chief Scientific Officer)

Sure. What we see is, I think what we tend to see from this TIGIT trial with the FCE active. We see that even in this trial, even with all the complications of the FCE active and high discontinuation rates, we still see activity. We definitely see numerical activity. Overall, in this study, in the patient population that they chose, also they had higher rates of brain metastasis in these patients compared to previous trials and CT scape, for example. The statistical plan maybe was a bit challenging, maybe also the number of patients. I think we know that TIGIT, in contrast to mice, TIGIT blockade is not causing complete melting of all tumors. We know it is active. This does matter. If you have an active FCE and you have high discontinuation rate, it matters.

As a reminder, ourselves, AstraZeneca, Arcus have a non-active FCE. If the right patient population is critically important, the statistical design. I think what you are encouraged to see, again, definitely an activity of TIGIT that when it's added to PD-1, we see numerically that there is longer overall survival, longer PFS, higher ORR. It was not sufficient in this study, in this size, in this patient population, and with the high discontinuation rates typical to FCE active TIGIT to lead to approval. We definitely are eager to see how the coming trials with active FCE non-active TIGIT will turn out. Michelle?

Michelle Mahler (CMO)

Yeah. Yeah. I agree with also—yeah. I was going to agree with what Eran said. I think that there are definite nuggets in terms of the type of patients between the CT scape study and the Skyscraper study. I think the populations were not different—sorry, were not the same. The activity seen in the one study did not translate into the second study. I think there is still more to be learned. Again, I think that the discontinuation rate in Skyscraper-01, as well as the number of patients with metastases to the brain and liver, probably also impacted their data and outcomes.

I'll add just one more thing that I think the safety or the tolerability of the FCE inactive may also turn these assets—it may not only affect the discontinuation and then the efficacy, but it may also turn them to be more combinable. I think that with the next studies that are being done, testing also combinations with chemo, combinations with ADCs, that may be very relevant. On this front, I think that only phase III data will make a difference in this field. I think that we have a lot of phase II data that are showing in randomized studies that are showing that the TIGIT addition to PD-1 adds value. I think that the only thing that will matter is to see very good phase III data, hopefully with the FCE inactive, either from Arcus first and then from AstraZeneca beyond 2026.

Only positive data will change the sentiment, I believe.

Daina Graybosch (Senior Managing Director and Biotechnology Analyst)

Great. Thank you, guys.

Michelle Mahler (CMO)

The next question is from Rohan Mathur of Oppenheimer. Please go ahead.

Rohan Mathur (Equity Research Associate)

Hi. Thanks for taking the question. This is Rohan [audio distortion]. Just a couple from me. One was, do you plan to collect data on the tumor microenvironment features from the 701 study, like PVRIG expression or IFN signatures? The other would be, as you think about the maintenance setting for platinum-resistant patients, what would you like to see from a clinically meaningful perspective on PFS benefit? Thank you.

Michelle Mahler (CMO)

To answer your first question, we will definitely be collecting data to be able to evaluate the tumor microenvironment. We do have a biomarker plan, but I'm not going to comment further on the details since it's not in the public domain. Regarding the maintenance setting, in platinum-sensitive, which is where our maintenance study is taking place, we do know from multiple phase III benchmark studies, both for bevacizumab as well as for the PARP inhibitors, the progression-free survival in patients on all of those placebo arms, whether they were in second-line treatment or third-line treatment, tended to range between 5.4 months-5.8 months. There was one outlier of 3.8 months, which had to do with the baseline genetic makeup of the patient population. We feel that an improvement that exceeds around three months would be clinically meaningful.

Rohan Mathur (Equity Research Associate)

Great. Thank you.

Operator (participant)

The next question is from Asthika Goonewardene of Truist. Please go ahead.

Asthika Goonewardene (Analyst)

Hey, guys. Good morning. Thanks for taking my questions. Just want to tag on to Daina's question about B96. Can you remind us, does 701 work with that? Have you seen specifically activity in PD-L1 positive patients?

Just wondering if I know the B96 is in the platinum-resistant setting, but I'm just wondering if you had seen that and maybe we could make some read-throughs into what the combinability would look like in the event that Merck gets the PD-1 approved in the late-line setting too. Secondly, PD-1 VEGF, Vice specifics, a lot of interest these days. I have a multi-part question for you on that, if I may. One, have you looked at what adding VEGF does to TIGIT plus PD-1? And can you talk about any synergy that you've observed? Does the FCE inactive strategy make sense here too? And have you discussed any of this data with your partners at AZ? Thank you.

Michelle Mahler (CMO)

I will take some of your questions and then defer to Eran for further input. To start with the question about activity in patients that are PD-L1, whether they are positive or negative. In our platinum-resistant data, we have presented in the past that we see activity both in PD-L1 positive and negative patients. It is one of the reasons why we believe that when we use COM701, it tends to be a PVRIG-mediated activity because traditionally, single-agent PD-1 inhibition in platinum-resistant patients has not been very effective. As far as the PD-1 VEGF, I am going to have Eran comment.

Eran Ophir (Chief Scientific Officer)

Yeah. Thank you, Michelle, and thank you, Asthika, for the question. Just to add a bit about the PD-L1, what is really interesting and what we have shown quite extensively is that PVRIG biology is very different from PD-1, from TIGIT, and other checkpoints. That is the reason why we think that we see this unique activity in places where checkpoints are typically not working, including in PD-L1 negative patients. We even have a monotherapy activity of COM701 alone in a patient with a PD-L1 negative tumor microenvironment. Definitely, we think that this will explain why PVRIG could be active.

Now, when we have some signal of activity of PD-1 blockade in the last line in combination with chemo, we definitely think that it could be that when COM701 would be added potentially also to PD-1, we can now treat also patients which are PD-L1 negative that would not respond probably too good to PD-1 alone. About the PD-1 VEGF, VEGF in general has a mechanism in addition to the anti-angiogenic effect to increase TC infiltration. Mechanistically, point of view, this could definitely go along with the biology of PVRIG blockade that increased TC infiltration with other mechanisms. We did not publish any data on this regard, but it definitely could be a mechanism that would complement specifically PVRIG biology in addition to the other activities it is doing with any other checkpoints.

I don't think specifically the FCE active or non-active will matter mechanistically, but since the FCE active have, again, some safety challenges. Since it's yet to be seen if the PD-1 VEGF bispecific indeed really solves the BEV side effects, the combination of what could be still some toxic agent like PD-1 VEGF with another bit toxic agent like FCE active TIGIT could be challenging. We think that here as well, it will be preferable to combine any kind of these agents, including PD-1 VEGF, with an FCE non-active TIGIT.

Operator (participant)

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