Compugen - Earnings Call - Q2 2025

Transcript

Speaker 5

Ladies and gentlemen, thank you for joining us today. Welcome to the Compugen Ltd. second quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available in the investor section of Compugen's website, www.cgen.com. As a reminder, today's call is being recorded. I would now like to introduce Yvonne Naughton, Vice President, Head of Investor Relations and Corporate Communications.

Speaker 2

Thank you, operator, and thank you all for joining us on the call today. Joining us on Compugen Ltd. for the prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer, and David Silberman, Chief Financial Officer. Dr. Michelle Mahler, Chief Analytical 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 will make projections of 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 past petition and past summary. 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 20-F. The company undertakes no obligation to update projections and forward-looking statements in the future. With that, I'll turn the call over to Anat.

Speaker 4

Thank you, Yvonne, and a warm welcome to everyone joining our call today. Today marks my last quarterly call as President and CEO of Compugen Ltd., and I could not be prouder or more confident as I pass the leadership reins into the exceptional hands of Eran. I'm excited at the opportunity to take on the newly created position of Executive Chair, where my focus will be on Compugen Ltd.'s corporate strategy and strategic collaboration. We believe this leadership combination provides a strong foundation for the company's next phase of growth. Before I provide an update on our progress in this quarter, I'd like to first share some high-level reflections on the current landscape and why we believe Compugen Ltd. is well-positioned for future growth. Immunotherapy has been tremendously successful and is extending the lives of many cancer patients, with Keytruda standing out as the top-selling drug.

However, significant unmet medical needs persist, with many patients still lacking effective treatment options. As a result, we're seeing a shift in how immunotherapy is being approached, driven by a focus on novel mechanisms of action, innovative combinations, and new modalities aimed at enhancing the efficacy and safety across multiple cancer types. This is precisely where Compugen Ltd.'s differentiated approach aims to create significant value. We're leveraging Unigen™, a validated AI/ML-powered computational target discovery platform, to identify novel mechanisms to activate the immune system against cancer. In addition, we're advancing our pipeline of differentiated immuno-oncology therapies, with the goal to transform patient outcomes and deliver meaningful clinical and commercial impact.

In the clinic, we have our potential first-in-class immune checkpoint inhibitor, CAL-701, in addition to validating partnerships with a potential for a total of over $1 billion in milestone payments and tiered royalties on future sales, with both AstraZeneca on rilvegostomig and Gilead on GS0321. We have a solid balance sheet with $93.9 million in cash at the end of June 2025 and expected cash runway into 2027. With our leadership expansion, a strategically differentiated pipeline, and operational focus, we believe that Compugen Ltd. is well-positioned to capitalize on potential growth opportunities ahead. Now, turning to the progress we have made this quarter, we continue to advance our immuno-oncology clinical and early-stage pipeline programs, starting with our potential first-in-class anti-TDIP antibody CAL-701. The first patient was dosed in our ovarian, our maintenance immunotherapy trial in platinum-sensitive ovarian cancer. We continue to make progress, opening sites across the U.S.

and Israel, and we aim to share interim analysis from this subtrial in the second half of 2026. As a reminder, this is the first subtrial of our adaptive platform trial, comparing CAL-701 maintenance therapy to placebo in 60 patients with relapsed platinum-sensitive ovarian cancer. There is an unmet medical need with no standard of care treatment options for this patient population, progressing post-top inhibitors and/or bevacizumab, or who are not candidates for such treatments. We have observed increased competition in this space, primarily from drug candidates evaluated in the platinum-resistant ovarian cancer setting. This reflects the recognized and significant need to improve treatment options for these patients. In this earlier stage population, platinum-sensitive ovarian cancer, safety becomes an even more critical consideration along with efficacy, which in the maintenance setting aims specifically on delaying time to disease progression.

We believe that advancing CAL-701 in the maintenance setting of platinum-sensitive ovarian cancer represents a compelling opportunity to demonstrate its potential advantage in terms of durability of response and tolerability. As previously communicated, we view a three-month improvement over the median progression-free survival of the placebo as clinically meaningful. Positive data from this trial could support a broader clinical development program aimed at addressing the significant unmet medical needs. At ESMO this year, we plan to present a preliminary analysis of our three previously reported phase 1 trials, reflecting clinical benefits of CAL-701 as monotherapy and in combination in patients with heavily pretreated platinum-resistant ovarian cancer. This data forms part of our rationale to advance CAL-701 in our ongoing platinum-sensitive ovarian cancer adaptive platform trial. Moving next to the TDIP landscape. Despite failures in the TDIP space, it is noted that some companies are advancing differentiated TDIP programs.

For example, Gilead is advancing an FC-inactive anti-TDIP program. In addition, AstraZeneca is advancing rilvegostomig, which is an FC-reduced anti-PD-1 TDIP bispecific, the TDIP component of which is derived from Compugen's CAL-902. AstraZeneca has specifically designed and engineered rilvegostomig with a unique mechanism of action to harness cooperative binding of both PD-1 and TDIP to drive enhanced immune responses. We've consistently advocated that FC inactive antibodies may serve as the better antibody format for targeting TDIP by providing a potential safety advantage in certain patient populations, which could support a potential efficacy advantage due to patient durability on study treatment. We believe that successful phase 3 data would validate TDIP antibodies as a drug class, change the market sentiment, and open new opportunities for Compugen as one of the few companies that have an FC inactive clinical-stage TDIP antibody, CAL-902.

Three, we continue to believe that TD-PD-1 blockade in combination with the PVRIG inhibitor may expand the use of TD-PD-1 to less inflamed PD-L1 low tumors, and positive TD-PD-1 data may present additional opportunities for us. In addition, earlier this year, our partner AstraZeneca initiated their 10th phase 3 clinical trial with rilvegostomig. At ESMO this year, AstraZeneca presented encouraging early data from trials evaluating rilvegostomig in combination with the anti-CTLA-4 agent in non-small cell lung cancer and in combination with chemotherapy in hepatobiliary cancer. This data, along with the data presented at the World Conference on Lung Cancer and ESMO last year, highlights rilvegostomig as a potential IO backbone to future drug combinations.

Coming up at ESMO this October, AstraZeneca plans to present longer-term follow-up data evaluating rilvegostomig monotherapy in non-small cell lung cancer as a poster presentation and first data in bladder cancer in combination with anti-CTLA-4 agent as a mini oral session. The potential commercial opportunity for rilvegostomig is substantial, with AstraZeneca estimating non-risk-adjusted peak revenues target of more than $5 billion. AstraZeneca's broad development strategy for rilvegostomig to replace the 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. To date, we have received milestone payments of $30.5 million and remain eligible to receive up to $170 million in regulatory and commercial milestone payments. Moving next to GS0321, formerly known as CAL-503, our potential first-in-class anti-RA kin-binding protein antibody licensed to Gilead.

GS0321 represents a novel approach to harness RA kin pathway biology for the treatment of cancer, potentially overcoming the mutations presented by administration of therapeutic cytokines. The phase one trial is progressing as planned. Finally, beyond our clinical stage program, we remain committed to advancing our extensive and differentiated early-stage pipeline, focused on potential first-in-class drugs and novel mechanisms of action designed to activate the immune system against cancer. With a diverse pipeline and strong focus on execution in 2025, we believe Compugen is well-positioned for growth. Of course, none of this would be possible without our highly committed, talented team here at Compugen, who continuously performs at the highest levels of excellence. With that, I will hand over to David for the financial update before we open the floor for Q&A.

Speaker 3

Thank you, Anat. I am pleased to say that we are advancing in 2025 with a solid balance sheet. Path runway, assuming no further cash inflows, is expected to fund our operating plan into 2027, and we're anticipating using this runway to advance our CAL-701 platinum-sensitive ovarian cancer trial and to support the progression of GS0321 in the clinic, together with continued investment in our early-stage pipeline. Going into the details, I will start with our cash balance. As of June 30, 2025, we had approximately $93.9 million in cash, cash equivalents, short-term bank deposits, and investment in marketable securities. Revenues for the second quarter of 2025 were approximately $1.3 million, compared to approximately $6.7 million of revenue for the comparable period in 2024.

The revenues for the second quarter of 2025 reflect the recognition of portions of both the upfront payments and the IMD milestone payment from the license agreement with Gilead, while in the second quarter of 2024, they reflect portions of the upfront payment from the license agreement with Gilead and the clinical milestone from the license agreement with AstraZeneca. Expenses for the second quarter of 2025 were in line with our plans. R&D expenses for the second quarter of 2025 were approximately $5.6 million, compared to approximately $6.2 million in the second quarter of 2024. Our DME expenses for both the second quarters of 2025 and 2024 were approximately $2.2 million.

For the second quarter of 2025, our net loss was approximately $7.3 million or $0.08 per basic and diluted share, compared to a net loss of approximately $2.1 million or $0.02 per basic and diluted share in the second quarter of 2024. With that, I will hand over to the operator to open the call for questions.

Speaker 5

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 will be from Steven Wiley from Stifel. Please go ahead.

Speaker 6

Good morning. This is Julian from Stifel. Thank you for taking our question. We just have two formats. The first one is related to the platinum-sensitive ovarian cancer trial. Can you please just briefly, like more of an overall, general comment on the ongoing dynamics of patient involvement? I don't remember if you guys have actually communicated how many sites you guys are planning to activate. I guess what I'm trying to ask you is, what maybe like a what portion of those sites are currently active so far? The second question is related to the ECHO presentation. I understand that you guys are planning on presenting a full data analysis. What do you think investors should focus on at that presentation? Would this presentation actually include any biomarker data analysis? Thank you.

Speaker 4

Thank you. Michelle, would you like to ask these questions?

Speaker 6

Yes, I will be happy to answer those questions. At this point in time, we have not disclosed the number of sites that we are using for the trial, but we have open sites in both the U.S. and in Israel. We are actively enrolling with a high level of investigator enthusiasm. We do have aggressive timelines and plans that we are working to continue to meet. Regarding the question on what should we focus on with respect to our presentation at ECHO, one of the things that we were trying to focus on was understanding deeper about the patients that had had a response on our prior studies. By polling this, it gives us the opportunity to try and characterize more about the efficacy and the safety, and more on that information will be presented during ECHO.

Speaker 5

Okay. Steven, are you with us?

Speaker 0

Hello?

Speaker 5

Yes, please. The next question is from Leland Derso from Oppenheimer. Go ahead, please.

Speaker 0

Hey, thanks for taking our questions. Congrats on all the progress. Anat, I just want to ask, as we look forward to the upcoming reveal on the troponin 10 tumor O3 in bladder, which will be potentially opening that as another development indication for further advancement, do you know when we expect to see what the complete response data, durability data? What do you envision as the potential for the program to maybe move into further development? I'll have a follow-up. Thank you.

Speaker 4

Thank you, Leland. Actually, AstraZeneca did not dive into what they're going to present at ECHO for this study or for the other studies. Obviously, we cannot comment on their behalf. Just to remind that, you know, at ECHO, they presented data for non-small cell lung cancer and also for hepatobiliary stuff. The data was showing there, you know, it was encouraging to see that the potential for rilvegostomig to serve some IL backbone as part of the combination. The data in bladder is going to be in combination with ABC. We're waiting as well. We're looking forward to see the data. We cannot have guidance instead of AC.

Speaker 0

All right. Okay. We look forward to that. If you could just remind us of what you see as a market opportunity in the platinum-sensitive maintenance setting for second line. Thank you.

Speaker 4

Yeah, Michelle, would you like to take that?

Speaker 6

The initial opportunity is based on patients who are in second line or third line requiring maintenance. The study is requiring patients who have received previously at least two prior lines of platinum chemotherapy. Those patients who are eligible for PARP inhibitors or both must have received those to be able to come onto this medical trial. This brings us to a mix between both patients who would be eligible for maintenance in both second and third line. That's approximately 8,000 to 12,000 patients, based on epidemiology data that's available. I think the other point to highlight is in the event that single agent CAL-701 works in maintenance, it opens an avenue for us to also combine with other combinations and go after a much broader ovarian cancer patient population.

I think the initial opportunity might seem limited, but the steps that we would take that we are taking gives potential for the broader population.

Speaker 0

Perfect. Great. Thank you for taking our questions.

Speaker 5

Next question will be from Dana Greybush from Luring Partners.

Speaker 0

Hey, guys. Thanks for the question. You got Bill on for Dana. Just a couple from me. What expectations do you have from MERT to scrub pool phase 3 in ovarian, and how does that change your current approach? The second question is, your current clinical assets provide pretty good validation of your engine platform's ability to identify targets. Can you give us a sense of what's coming down the pipeline and when we may expect to hear some details? Thank you.

Speaker 4

Yeah, I guess I'm going to take the first one and then I'll be relating the second question.

Speaker 6

Okay. Great. For the MERT study, it's exciting that they were able to demonstrate that with adding a checkpoint inhibitor to patients' regimen, there's both a PFS and overall survival advantage appropriate and seen in the data. What I would like to highlight, though, is the MERT study is focused in platinum-resistant patients. It gives us some hints to potential activity or seeing activity in the earlier lines of treatment. Keep in mind, it is a different patient population to where we are going because the patients that we're evaluating in our study are platinum-sensitive. It doesn't specifically change our approach at this point in time. It's just nice to see that there is still potential for checkpoint inhibitors in the right kind of patient population and the right kind of combination. I hand back to Anat and Leland about the other questions.

Speaker 1

Thank you, Michelle. For the early pipeline, we're using a unit here that validates the traditional platform that deals with PDRG and GS0321, and we want to try to bring more assets for many reasons, including comparative one. We try not to disclose clinical gene texts to keep the assets to ourselves at this point in time. Given the issues we're going on knowing and a traditional platform, which is validated by the epidemiology board, we're working hard to bring more assets in different domains.

Speaker 0

Got it. Thank you.

Speaker 5

Next question will be from Charles Wallace from HCW. Go ahead, Charles.

Speaker 0

Hi. Thanks for taking my question. On CAL-701 in the global maintenance ovarian study, can you provide some more color on the interim analysis that you have planned for the second half of 2026? Do you expect at this time that the study will be fully enrolled? Thank you.

Speaker 6

Okay. Just to explain again, this study is an adaptive trial design. Because we're looking for a three-month improvement, we still believe that the interim analysis would happen as we've already previously guided in terms of the second half of 2026. The study will be fully enrolled, and the interim analysis is to evaluate for feasibility and also allow us to characterize the magnitude of the effect size for CAL-701.

Speaker 0

All right. Thanks for taking my question.