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Compugen Ltd. (NASDAQ: CGEN) Third Quarter 2023 Earnings Call Transcript, November 7, 2023
Compugen Ltd. ne met earnings expectations. Reported EPS is -$0. 11 consistent with the stock, expectations were -$0. 09.
Operator: Ladies and gentlemen, thank you for joining us today. Welcome to Compugen’s third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. As a reminder, today’s call is being recorded. An audio webcast of this call will be held on the investor segment of Compugen’s website, www. cgen. com. [Operator’s Instructions] Now I’d like to introduce you to Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, pass on.
Yvonne Naughton: Thank you, Yoni, and thank you all for signing up today. I signed up through Compugen to receive prepared feedback through Dr. Anat Cohen-Dayag, President and CEO; and Alberto Sessa, Chief Financial Officer. Dr. Henry Adewoye, Chief Medical Officer, will sign up for us for the Q&A session. Before we begin, we would like to remind you that on this call, the Company may make forward-looking projections or statements relating to long-term events and business prospects. , studies and progression efforts and their forward-looking effects, progress and expected plans, effects and schedules of its programs, monetary and accounting matters, aggregating projected monetary information, as well as statements relating to the Company’s long-term monetary position and other effects, as well as long-term initiatives of the Company.
A laboratory scientist surrounded by apparatus and resources for drug discovery.
We caution you that those statements reflect only the Company’s existing beliefs, expectations and assumptions, and that the Company’s actual effects, functionalities or achievements could possibly differ materially. These statements are subject to known and unknown dangers and uncertainties, which may also cause the Company to make known and unknown dangers and uncertainties. And we refer you to the documents filed with the SEC for further important points on those risks, adding the Company’s most recent Annual Report on Form 20-F, filed with the SEC on February 28, 2023, as amended. The Company assumes no legal responsibility to update its forward-looking projections and statements forward-looking statements. And now I’ll pass the call on to Anat.
Anat Cohen-Dayag: Thank you, Yvonne. Good morning and good afternoon everyone and welcome to our Q3 2023 update. Let me begin by saying a few words about the heartbreaking scenario in Israel, a humanitarian catastrophe. We have been traumatized and devastated by the inhumane massacres and kidnappings of civilians perpetrated through the Hamas terrorist organization. This brutal attack shook us to our core. I am deeply grateful for all the kind words I have earned from so many friends, colleagues, partners, investors, analysts, and medical associations around the world. Your solidarity means so much to me and comforts me in the midst of all the anguish and unbearable pain. We are aware of the emotional burden this places on our employees in Israel and we take care to manage the wishes of our employees with wonderful sensitivity and care.
Despite what our team members are going through, this is a time when we see the best paintings on the team. Everyone supports each other and steps in to make sure there are no gaps. Groups paint hard in combination to make sure we continue to execute and achieve our goals. Some give 150% while others don’t. I see it one day and it makes me proud. The infrastructure for remote work was put in place during the COVID pandemic, and while we allow some groups to paint remotely, we encourage our painters to come to the office. As a global company headquartered in Israel with a presence in the U. S. We are working in the U. S. , Europe and Singapore, safe control and teams responsible for some of our key functions, adding clinical progression and preclinical progression. and IT systems, are founded outside of Israel.
Our clinical trials are conducted in the United States and are conducted as part of our overall line of business, adding CMC and drug supply. In addition, most of our COM503-like preclinical activities take place outside of Israel. We continue to make curtain painting a part of our operations, and if this changes, we will communicate that to the market. At Compugen, we aim to reshape the treatment of cancer patients who do not have effective treatment functions by using our pioneering informatics platform to identify new drug targets and expand potential first-in-class drugs. On this front, we applied our differentiated clinical technique to evaluate the blockade of the 3 pathways PVRIG, TIGIT and PD1. We are also advancing studies that enable IND with our first-in-class anti-IL-18 BP COM503 antibody with preclinical prospective, offering a new technique to leverage cytokine biology to combat cancer resistance to immunotherapy.
And we’re advancing our past-stage portfolio with additional new first-class prospective programs. At the recent Citi [ph] conference, we presented additional knowledge that bolsters COM701-mediated antitumor activity in tumors that do not respond to immunotherapy. As a percentage of our previous signal-searching studies, we went up to the diversity of tumor types, which commonly do not respond to anti-PD1, but respond to the COM701 combination. In addition, biopsies performed on patients treated in those studies allow us to advance our knowledge of biomarkers and further verify the mechanism of action mediated by COM701. And at the same time, we are conducting our ongoing studies on MSS CRC and platinum-resistant ovarian cancer.
Building on the knowledge we presented at ESMO IO last year at SITC, we report durable and clinically significant partial reactions in patients with platinum-resistant ovarian cancer treated with the triple COM701 mixture with no new protective signals. Three patients continue to examine the remedy for more than 16 months. Although the numbers are low, the typical average duration of reaction for this population is 3 to 4 months with popular chemotherapy, compared to 6. 9 months in patients treated with a newly approved antibody-drug conjugate. In addition to those long-lasting reactions, our triple combination has the added advantage of gaining advantages from a favorable profile of protection and tolerability which, as previously reported, is vital to patients’ quality of life.
We also report that clinical advantages, explained as a partial reaction or solid disease of at least 180 days, were independent of baseline inflammatory prestige and were related to increased infiltration of CD8 T cells into the tumor, which is recommended and consistent with what we had. in the past reported, a mechanism of action mediated through COM701. Interestingly, at SITC, we have demonstrated for the first time in tumor biopsies a disposition between the expression of the PVRIG ligand, PVRL2 and clinical advantages, which would possibly recommend the prospective of patients’ baseline PVRL2 levels as a biomarker to help enrich patients who would possibly derive advantages from it. The clinical benefits of COM701. This is consistent with the fundamental computational assumption we have shared for this pathway in the past.
This first localization of disposition suggests a mechanism of action mediated through COM701 and may potentially reveal our studies, and I’ll come back to this later. At SITC, we have also reported insights into patients with highly pretreated metastatic breast cancer. COM701, when combined with nivolumab, resulted in initial antitumor activity with an overall reaction rate of 12%, adding a complete reaction for more than 21 months in a patient with HER2-negative metastatic breast cancer, a tumor believed to be an immune cause, and a partial reaction for ten months in a triple-negative breast cancer patient, which is the fastest developing and most competitive type of breast cancer. The disease rate was 29%, and all 3 patients with solid disease had low PDL1 grades and low tumor mutation loads. at the start of the study, suggesting a COM701-mediated mechanism of action.
And again, we’ve reported intelligent protection and tolerability with those dual combinations. These findings are vital because it is another indication where patients derive lasting benefits from COM701 combinations, even if they do not respond to immunotherapy. , similar to initial paints on biomarkers in platinum-resistant ovarian cancer in those patients with metastatic breast cancer, we demonstrate that the baseline of PVRL2 expression is higher in patients with clinical benefits that support our biomarker hypothesis. And finally, at SITC, in an oral presentation and posters, we shared new insights into our preclinical potential, the binding of the first anti-IL-18 antibody to the COM503 protein, further supporting our exciting new technique to harness cytokine biology to initiate resistance, cancer, and immunotherapy.
As a reminder, there is great excitement in this area, as cytokines have the potential to be potent healing agents, but they have faced the challenge of delivering them systemically at levels high enough to succeed and modulate the tumor microenvironment without causing systemic side effects. . We figured out a way to solve this challenge for the IL-18 track. COM503 blocks the interaction between the IL-18 binding protein and IL-18, thereby releasing herbal IL-18 to inhibit cancer expansion in the tumor microenvironment. The knowledge we have presented to TCIS answers two pertinent questions. First, are the levels of IL-18 in the tumor sufficient to cause an antitumor reaction after IL-18BP is blocked by antibodies?And secondly, is an antibody against IL-18BP safer than a systemic antibody?Was a modified IL-18 cytokine administered?
Regarding the first question about IL-18 levels in the tumor, we demonstrated that inhibition of the IL-18BP antibody that releases plant IL-18 prevents tumor expansion in a mouse tumor model; and secondly, COM503 has the potential to release local production of IL-18 in human tumors beyond the minimum diversity needed to stimulate the immune system. We also showed that inhibition of IL-18BP antibodies induced significant accumulation in functional immune cells, such as effector T cells and induced an extension of T cells [ph] in the tumor, as well as an immune-reminiscent response.
In addition to the good luck of TCIS, I’d like to mention the additional progress we made during the quarter. We are pleased to announce that we have finalized registration for the MSS CRC proof-of-concept exam, which is a testament to the significant unmet medical need in those patients and the lack of choice options. We continue to monitor patients on study treatment and it will be more prudent to provide an update when we have longer follow-up of those cohorts in the first part of 2024. , and our preference is to do it at a medical conference. In the platinum-resistant ovarian cancer study, recruitment has been higher since our last report with the activation of two more sites. However, recruitment of up to 20 patients will be completed through 2024.
The platinum-resistant ovarian cancer landscape is continually evolving and becoming increasingly competitive. Although we do not expect an effect of mirvetuximab on our recruitment, which according to the label is limited to approximately 40% of patients with High Alpha Folate. Cancer researchers report that as the clinical network gains confidence in the use of mirvetuximab, this has an effect on our recruitment. After extensive discussions with our researchers, we are positive about our ability to address those gaps and are working intensively with our researchers on patient recruitment. Our investigators remain excited to enroll more in our study based on the harshness of responses with our reported triple combination to SITC, as well as a favorable protection profile.
In addition to our progress, I am very happy to see the progress of our partner AstraZeneca, which manufactures rilvegostomig. Its bispecific PD-1/TIGIT derived from COM902, which entered phase 3 as adjuvant therapy for bile duct cancer after resection in combination with chemotherapy. . In addition, AstraZeneca continues to advance its rilvegostomig Phase 1 and 2 systems in more indications. I that the progress of the rilvegostomig clinical program demonstrates a commitment COM902. Al explore the prospects of TIGIT and our differentiated anti-TIGIT as well as COM902, an anti-TIGIT antibody, rilvegostomig, with diminished Fc effector function, has been designed to decrease the Fc effector capacity with the prospect of decorating antitumor activity.
Now let’s move on to what you deserve to expect from us next. First, we expect to report data from our ongoing proof-of-concept study on the MSS CRC in the first part of 2024. Second, we plan to enroll up to 20 patients in our ongoing proof-of-concept study of platinum-resistant ovarian cancer and report insights in 2024. More quick guidance will be shared during our year-end convention call. Third, identifying a predictive biomarker to enrich stakeholders with our COM701 settings has been vital for us. Up to this point, we are excited about the progress we have made in generating initial biomarker knowledge, which I mentioned earlier, with an agreement appearing for the first time between the expression of the PVRIG ligand, PVRL2 and obtaining clinical advantages that are consistent with our calculation. Predictions.
We will continue to build on those initial effects in our ongoing study of platinum-resistant ovarian cancer, in which biopsies are mandatory. At the same time, we are also optimizing our PVRL2 assay to be suitable for a conceivable patient variety study. The prospect of enriching the platinum-resistant ovarian cancer patient population in terms of responders, as well as the durability of the reaction and protection profile of our triple combination, would possibly allow us to construct a unique progression pathway for our triple regimen. I’ll talk early next year about how we’ll use this knowledge to determine the long-term direction. And finally, we are on track to file the IND application for COM503 in 2024. Before I hand it over to Alberto, I’ll talk briefly about our finances. , and then Alberto will go into detail.
We have a projected liquidity buffer until at least the end of 2024, which is sufficient to support all planned operations. This does not include potential inflows of money, but also potential milestone payments, for which we would possibly be eligible through our partnership with AstraZeneca. In addition, as we have indicated, ensuring non-dilutive liquidity through the partnership is a precedent and we are focusing our efforts on this front. That said, I’ll leave the floor to Alberto for the monetary update.
Alberto Sessa: Thank you, Anat. I’m pleased to summarize our monetary results. I’ll start with our money balance. As of September 30, 2023, money, money equivalents, and monetary investments amounted to approximately $57. 5 million, compared to approximately $83. 7 million as of September 31, 2022, confirming our focus on money control as we proceed to execute our DNAM-1 axis assumption. and the advancement of our leading preclinical drug candidate COM503. As Anat mentioned, we have expected a cash flow until at least the end of 2024, which is enough to support all of our planned operations. The company has no debt. Now, in terms of expenses, finishing in the third quarter of 2023 was in line with our plans.
The reduction is primarily due to the minimization of expenses related to our CMC activities, offset by an increase in clinical trial expenses and the completion of the amortization of the deferred participation in R&D expenses.
Anat Cohen-Dayag: Thank you, Alberto. In summary, we continue to execute, with our maximum recent knowledge presented at SITC, we continue to provide evidence supporting a potential gain of clinical advantages mediated through COM701 in difficult-to-treat patients who do not. they do not respond to popular attention and have not responded to previous IO therapy. This strengthens our path as we continue our ongoing proof-of-concept studies designed to strengthen knowledge on our two decided indications and continue to tell our complementary biomarker strategy. “We look forward to presenting knowledge from those studies in 2024 and offering more key takeaways on our biomarker strategy to give long-term guidance and similar studies. “We have said that blocking TIGIT would possibly not be enough and that PVRIG would possibly be necessary.
This confidence is constantly reinforced as we deploy our clinical knowledge across multiple indications and obviously in difficult-to-treat patients who do not respond to popular attention and have failed IO therapy. With COM701 and COM902, our two PVRIGs and TIGIT Programs, we are leaders in the unique triple-combination, chemotherapy-free technique to block the 3-axis immune checkpoints of the DNAM PVRIG, TIGIT, and PD-1 axis with initial clinical knowledge of our hypothesis. We are also paving the way for the exploitation of cytokine biology to combat resistance to cancer immunotherapy, a domain of wonderful interest to the industry. With COM503 targeting the IL-18 pathway, we are on track to file the IND application in 2024. I must thank all of our workers for their dedication, teamwork, and resilience.
Despite the demanding situations we have endured in Israel. With that said, I’ll go back to the operator to start the Q&A session.
Yvonne Naughton: Actually, before we reach out to the operator, I see Pierre Ferré, our VP of Preclinical Development, who just joined us right off the SITC plane in San Diego. Pierre will be happy to answer any questions you may have about COM503. , which generated a lot of interest after its oral presentation at TCIS. Welcome, Pierre. Yoni, now you can start the Q&A session.
Operator: Thank you. [Operator’s Instructions] The first comes from Asthika Goonewardene of Truist. Please go ahead.
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