Compugen Ltd.

Ladies and gentlemen, thank you for joining us today. Welcome to CompuGen's first quarter 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. Yvonne, please go ahead.

Thank you, Operator, and thank you all for joining us on the call today. Joining me for compagin for the prepared remarks are Dr. Anak Cohen-Diag, President and Chief Executive Officer, and Alberto Sessa, Chief Financial Officer. Dr. Henry Attaway, Chief Medical Officer, and Dr. Iran Ofeir, Senior Vice President, Research and Drug Discovery, 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 their potential outcome, the company's discovery platform, anticipated progress and plans, results and timelines for its programs, financial and accounting-related matters, as well as statements regarding the company's future 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 filing for more details on these risks, including the company's most recent annual report on Form 20-F filed with the SEC on February 28, 2023. The company undertakes no obligation to update projections and forward-looking statements in the future. And now, I turn the call over to Anat.

Thank you, Yvonne. Good morning and good afternoon, everyone. and welcome to our first quarter 2023 update. At Compugen, we're advancing a differentiated clinical strategy, evaluating a drug combination that was never tested before in a space where there is a significant unmet need and potential opportunity to transform the lives of cancer patients with the right immunotherapy combination. Compugen has always believed that in certain patients and in certain tumor types, blocking the three pathways of the denim axis, PVRIG, TGIT, and PD-1, may be needed to enhance anti-tumor immunity. We have always said that blocking TGIT in addition to PD-1 may not be enough, a concept that is now increasingly reflected in the consistent move of larger pharma players to add an additional drug to the TG-PD-1 drug combinations in various indications. Given the potential of PVRIG inhibition to sensitize tumors to PD-1 and TG blockade, we believe the biological and mechanistic rationale support the addition of an anti-PVRIG to the anti-PD-1-TG mix, and we have the initial clinical and translational data to support our hypothesis. We are the leaders in the unique chemotherapy-free triple combination approach of blocking the three adenine axis immune checkpoints, PVRIG, TGIT, and PD-1, and we are focused on maintaining this leadership. We have initiated two follow-on proof-of-concept studies in indications not typically responding to immunotherapy. microsatellite-stable colorectal cancer, and platinum-resistant ovarian cancer. The former is enrolled in patients, and the latter is open for screening of eligible patients. In these difficult-to-treat indications, refractory to standard of care, we have previously demonstrated encouraging clinical benefit, including in patients refractory to anti-PD-1s and in patients whose tumors were immune-deserved. These data are supported by immune activation that aligns with the COM701 mechanism of action. The goal of the following clinical studies is to strengthen the evidence, help us better understand the contribution of components, and build on the extensive biomarker work to identify the patients most likely to respond. We believe that this strategy provides the fastest route in building a path to registration and de-risk our lead assets, COM701 and COM902, in these two indications. In the first quarter of the year, we executed on our promises. Firstly, we initiated enrollment in our microsatellite colorectal cancer study and were excited to be on track to report initial findings by the end of the year with final data in 2024. Secondly, at the annual ASCO conference in June, we will present encouraging data showing the preliminary anti-tumor activity of COM701 in combination with BMS anti-tigit and Evolumab in patients with recurrent metastatic microsatellite stable endometrial cancer. This will include data on antitumor activity and safety in nine patients. Patients with advanced microsatellite stable endometrial cancer have limited treatment options. In a similar population of patients, Dostalimab showed an overall response rate of approximately 15%. The data we will present for our triple combination at ASCO serves as an additional support for a COM701-mediated antitumor activity in another tumor type in patients refractory to standard of care. For now, we remain focused on our proof-of-concept studies in MSS-CRC and platinum-resistant ovarian cancer using our own TGIT COM902 in combination with our own anti-PVRIG COM701 and pembrolizumab with the goal to strengthen the evidence in these indications by enlarging the number of patients. However, our data suggests that the treatment potential for COM71 combinations goes beyond these two indications. And thirdly, we continue to feed our own pipeline, leveraging our pioneering computational discovery platform. Earlier this month, we gave an oral presentation at CIMT Europe's cancer immunotherapy meeting on our lead potential first-in-class preclinical assets, COM543, which utilizes a novel approach to harness cytokine biology to potentially treat cancer. We presented preclinical data showing that COM543 binds with high affinity to IL-18 binding protein, freeing endogenous IL-18 and restoring natural killer and T-cell activity. We also showed that blocking IL-18 binding protein prevents tumor growth and release IL-18 to activate immunity in the tumor microenvironment without affecting peripheral immunity in urine tumor models. Our approach is unique and different from recombinant cytokines targeting this pathway or from other pathways that were already tested in the clinic. These are given systemically to patients and are associated with safety challenges. The potential advantage of our approach is that our drug, COM503, is an antibody and not a cytokine. And this antibody works by freeing the body's own interleukin-18, where it is mostly upregulated in the tumor microenvironment to stimulate the immune system to fight cancer. Consequently, we believe that it has the potential advantage of avoiding the typical pharmacokinetic and systemic tolerance limitations associated with cytokine administration. Regarding our finances, we have an expected cash runway at least through the end of 2024 to support operations, reach milestones, and de-risk our lead assets, COM701 and COM902. In terms of future funding, non-dilutive funding of our pipeline assets is our priority. We see this as a big opportunity, having three potential first or best-in-class unrestricted assets with the possibility to address a significant unmet need in immuno-oncology. With that, I will hand over to Alberto for the financial update.

Thank you, Anat. I'm happy to summarize our financial results. I will start with our cash balance. As of March 31st, 2023, we had approximately $74.3 million in cash compared with approximately $83.7 million as of December 31st, 2022. affirming our focus on capital efficiency while continuing our bold execution on our DIN M1 axis hypothesis. The company has no debt. We recognize the importance of cash efficiency and we are disciplined in how we deploy our cash resources, making sure we will focus on reaching key milestones with our available cash runway at least through the end of 2024. It is important to emphasize that this does not include any potential cash inflows, including potential milestones payment from our collaborator, AstraZeneca. The timing of milestones payment will depend on the progress of studies run by AstraZeneca. For contractual reasons, we cannot provide the breakdown of the milestones payments. To remind you, to date, Compugen received development milestones payments of $2, $6, and $7.5 million for achieving preclinical milestones and for dosing the first patient in Phase I and Phase II studies, respectively. Compugen is entitled to receive an aggregate of up to $200 million in development, regulatory, and commercial milestones for the first product. Expenses for the first quarter of 2023 were in line with our plans. R&D expenses for the first quarter of 2023 were $7.4 million compared to $7.2 million in the first quarter of 2022. Our G&A expenses for the first quarter of 2023 were $2.6 million compared to $2.6 million in the first quarter of 2022. For the first quarter of 2023, net loss was $9.3 million or 11 cents per basic and diluted share compared to a net loss of $9.7 million or 11 cents per basic and diluted share in the first quarter of 2022. With that, I will end back to Anna to summarize.

Thank you, Alberto. To summarize, we are on track to present initial findings from two studies evaluating our leading triple combination blockade of PVRIG, TGIT, and PD-1 by the end of this year. These studies are building on prior data suggesting that blocking PVRIG may sensitize tumors to respond to PD-1 and TG blockade, and could turn cold tumors hot, potentially offering a chemotherapy-free option for tumors most competitors are not targeting, metastatic MSS CRC and platinum-resistant ovarian cancer. This is a real potential opportunity to transform the lives of patients with the right immunotherapy combinations. With that, I will turn the call over for questions. Operator?

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to decline from the polling process, please press star 2. 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 Mark Breidenbach of Oppenheimer. Please go ahead.

Hey, thanks for taking the questions and congrats on the quarter. Just a couple quick ones from me. I was wondering if you could comment on any potential read-through between observations you'll be presenting at ASCO in endometrial cancer to the two focus areas that you're pursuing development in colorectal and ovarian. And then the second question is just on COM503, if you could give us like a rough timeline until this product candidate enters the clinic, that would be appreciated. Thank you.

Okay, thank you, Mark. I think that I understand what you meant with your question, and I'll answer. It's not just to quickly answer me again. Send me the question again. So first on the endometrial cancer, as we said, we'll publish the data at ASCO, and we gave some insights. This is a small cohort, and we'll be able to show antitumor activity and also safety data. From our perspective, as I said in the prepared remarks, this is a way for us to show again the potential of COM701 in a different indication, and by the way, an indication that we were predicting through our computational discovery capabilities to begin with with the program. And then later in the year, we will be able to share preliminary findings from the two studies that were that we're pursuing now. As I said, the CRC is already enrolling. The platinum-resistant ovarian cancer study is screening patients for enrolling. And we will share data towards the end of the year. We aim to complete enrollment of up to 20 patients of the CRC study. So that's on one front. We may have data from I don't believe that it would be the full cohort, but we'll aim to complete enrollment. And on the ovarian, we aim to complete enrollment of 20 patients out of the 40 in the triplet study, and we'll share data of whatever we'll have at that point in time, and then the rest in 2024. And with respect to your question about COM543, IED is scheduled for next year.

Okay. Just touching back on the first question, I guess what I was asking is if we should reasonably expect the lessons or observations from endometrial cancer to directly apply to either colorectal or ovarian cancer.

I think that we look at it, and Henry, please chime in. I think that we look at it as, on one hand, as indication by indication, so that Data in one indication is not predictive of success in a different indication, but I think that the totality of the data definitely points to strengthening the view that we have on Councilman 1, the clinical responses. but also the mechanism of action behind this antibody that we see. That's very important for us, so that's my view. Henry, would you like to share anything else on this front?

No, thank you, Anat. You've answered it in general. The thing to remember, Mark, is that, like Anat said, it will be based on indication by indication. One of the things to consider is that for all these indications, the paratherapies are also different. The number of paratherapies are different also. So it's probably best to look at each indication. So, for example, microsatellite colorectal cancer separates us from endometrial cancer. I think maybe the only thing that's common to both of these tumor types are that they're microsatellite stable. And that's one of the commonalities for those two indications. But in general, we'll have to look at the results separately in order to make a full determination of potential read-throughs for the indications that you've asked about.

Okay, got it. Thanks, guys.

The next question is from Steven Wiley of Stifle. Please go ahead.

Yeah, good morning. Thanks for taking the questions. I guess just with respect to endometrial cancer and ASCO, should we assume that these nine patients will mostly be IO experience? And then in terms of supporting the mechanism of action, can you speak to any biomarker data that you might be able to present and I guess whether or not that's on treatment biopsies and or peripheral markers?

I think that on the translational, I'll take it and then, Henry, you'll answer about the patient population. I think that on the translational data in general, we're doing a lot of work that not only covers the endometrial, which is at the end of the day, it's nine patients, but on prior studies and also on the current studies that are planned to have extensive biomarker work. We're harnessing all our capabilities, computational, experimental, working with biopsies, pretreatment, on-treatment, blood samples drawn from patients, pretreatment and on-treatment a few times in order to be able to assess the Dynamax potential biomarkers and also biomarker discoveries that we could do. So we aim to present at a certain point in time this data probably per indication. We present translational, very preliminary translational data for endometrial, but I think that biomarker work is still probably towards the end of the year, ending 2024. Henry, would you like to discuss the patient population?

Yes, so I think it's only the titles of the abstracts that are currently available now. And so we'll have to wait to see the details of the presentation for endometrial. And of course, one of the things that, the question you've asked will be one of the things that we will be interested in assessing and seeing if it contributes to the assessment of anti-tumor activity. So not just that, but also what will be important is the kinds of therapies that patients have received also, what the performance status of all these patients are, and also what the prior response to some of the therapies that these patients have received, in particular for endometrial cancer. So all these parameters, including the one that you've asked specifically about, the things that we will look at and we'll be able to discuss further once the full abstracts are disclosed and at the time of the presentation also.

Okay. And then can you just remind us what the scan frequency is in the two triple cohorts? I guess I'm just trying to think about the amount of response of valuable patient data that you might be able to show us before the end of this year. Thanks.

Right. So you're referring to the triplets of COM701, Nivolum and BMS986207. The scan frequency is every two cycles. So, a cycle is four weeks, so every eight weeks for the first six months.

Henry, I think that relates to the MSS-CRC and the platinum resistance around cancer studies, but it's the same, basically. Right, Henry? It's the same frequency. For the MSS-CRC, yes.

Yes, for the MSS-CRC.

Okay, great.

Thanks for taking the time. Right, but do remember that for the endometrial cancer cohort that we are going to disclose, it's also the same scanning frequency because the NEVO dose, the schedule is every four weeks. So at the end of every two cycles. Does that make sense?

Is it clear? The next question is from Astika Gunwarden of Truist Securities. Please go ahead.

Hi, good morning and good afternoon, and thanks for taking my question. First off, I'd like to get an idea. To report meaningful efficacy data from the CRC and the platinum-resistant ovarian cancer cohort, how much minimum follow-up do you think you will need per patient?

Henry, would you like to address the question?

I think there was a little bit of background, but were you asking specifically for microsatellite stable colorectal cancer?

Yeah, Henry, sorry. That was my little puppy barking in the background there. Yeah, for both CRC as well as that resistant organ cancer, what do you think the minimum follow-up is that you need per patient to have a good view on what the efficacy is?

Oh, I think the minimum follow-up is probably something like secondary. For those two tumor types you mentioned, what would be important would be what the anti-tumor activity is. So the earliest benchmark to look at or endpoint would be responses or durable clinical or disease control rates, right? papal disease, postpartum response, or plus CR, whatever the case may be in these patient populations. That's a good benchmark to look at. Remember, this is a phase one study with very few patient population, so that benchmark is probably the most appropriate to look at. The other benchmark to look at would be the depth of responses that we observe in these patient populations. But because it's a small number, Sometimes it can be a little bit challenging to interpret the median duration of follow-up you'll need in a patient population like this. For example, if you have maybe 20 patients, that's a little bit more challenging as opposed to a much larger patient population where you have a 95% confidence interval that's a little bit more conservative.

Okay, so maybe to put it another way, Henry, when we see the data that you wrote later this year, we won't be able to get a good idea of durability of response. It's really going to be disease control rate and depth of response. That's going to be what's going to be in the key data later this year, right?

Largely, the antitumor activity, partial responses, stable disease, and in the unfortunate instance, patients who haven't responded to these therapies Yes, those are the things I would look at. Because it's a short period of time, it really would be difficult if you haven't been able to follow up on how long those responses are for to be able to disclose the duration of responses. Duration of follow-up also can be challenging because remember the duration of follow-up includes from the time point patients are enrolled onto the study until the time that they reach an endpoint for the study, either progression, or in the unfortunate event, another hard endpoint like that. So that's much longer, so.

I think I'd say that, and thank you, Henry, I think that that's exactly, you know, that's exactly what, how we look at it, but I think that I'll just add that it really depends on the enrollment rate. The more data we will have that we share that we think that is meaningful, we'll try to give as much clarity as possible, but needs to take into consideration that even if we enroll the full cohort, some of the patients may, you know, may not be enough time on study treatment and data will be limited.

Got it. Thanks a lot. Appreciate that. And then just my last question is, how confident are you that you will have enough data in-house, in-hand, to see a potential biomarker for both your pre-break programs and your tissue programs. Thank you.

Maybe I'll put it in perspective, and Iran, if you want to add, please do so. I'll put it just in perspective that biomarker works for programs in the field of cancer and neurotherapy. I think that all of you understand that it's not trivial at all. In all these fields, if this is not a target that is addressing a specific mutation or a specific target that is for ADC, et cetera. This is really, really hard to come up with. In all of the years, we ended with what? With PD-L1 and PMB and MSI high, PMB maybe and MSI high. So that's really hard. I think that the work that we're doing, which is extensive and is addressing all possible venues on this axis that we're working on, I think that we increase the chances of success and we feel comfortable to say that we're doing this work and when we'll have data that we think is relevant to disclose, we will disclose it. But I just want to make sure that everyone understands that this is not trivial. If there is a biomarker there, I think that Configent has a good chance to identify it. But it's not a given that there will be a biomarker there. And I think that we're well equipped to meet the goal if it can be identified around.

I mean, just to add that again, as I not mentioned, most people are using PD-L1 as a biomarker. And this is because PD-L1 reflects on immune microenvironment. This is where most checkpoints are working. Luckily, we see responses in PD-L1 negative patients. And the biology of PVRG shows that probably we could tackle these indications, also patients which are immune-desired, patients which are PD-L1-negative. So until now, and this is what we published, we quite extensively saw responses in patients who were PD-L1-negative. So while we continue to follow PD-L1 for PVRG combination response, probably will not be the one. And then you have all the usual suspects and the non-usual suspects, and we're doing extensive work sequencing and computationally really trying to identify it. And we do it for, and maybe a bit related to the question before, we do it per indication and across indications. And this is work ongoing with all the challenges that Anant mentioned.

Great. Thanks, Anant. Thanks, Henry. And thanks, Aaron.

The next question is from Diana Greybach, of SVB Securities. Please go ahead.

Hi. Thanks for answering my question. I wonder if you could help us understand more about the partnering conversations or licensing conversations you have going on. I'm interested in specifically what the potential partners are most interested in. So which programs, which data points do they emphasize and do you spend the most time on? Thank you.

Thank you, Dana. I relate to this one. While we're not discussing specifically any partnering discussions that we have or do not have, I'll try to give some color about the opportunities that we have in the pipeline and how this could be seen. And I think that in general, we're now sitting with a pipeline that is quite rich, that has different partnering opportunities in the form of COM 701, COM 902, COM 503. We also have earlier stage opportunities that are not in the public domain. But we're sitting with unrestricted assets. And they are presenting opportunity in the field of cancer immunotherapy that I believe brings new treatment options, first in class or best in class. I think that for COM71, COM902, and COM71, you're aware of the fact that it is unrestricted since August. I think that for COM71, the real opportunity is, what we're saying for quite a long time, that TGPD-1 will not be enough. And I also related to it in the prepared comments. And companies are now thinking about a third agent to combine. We're thinking for quite some time. PDR-IG needs to be combined with this in order to enable and in order to allow for the PD-L1 low patient populations or tumor types to respond. We need to deal with the fact that people are judging TGPD-1 combination based on only TGPD1 combination without our third asset. And we have only our own data to show that our third asset is adding to it. And hopefully the larger studies will allow us to extend and strengthen this signal. So this is important in terms of how potential external partners may look at it in order to further clarify and extend the hypothesis that we have in general, as we're showing now in endometrial and in additional cancer indication, but also in the specific tumor types that we selected to focus on in the ovarian cancer and colorectal cancer. So that's important for us to pursue, not only in order to speak with the FDA about the path forward, but also in potential partnering discussions. So that's one thing that is key. I guess that also how TDs will perform out there is also important by others, and we're looking at it. On the COMP 503, I'll say that I think that, you know, analysts are probably aware of it and that and pharma are aware of it, there is a renaissance in the field of annihilating pathway. There is a lot of excitement out there. Small biotech companies are being formed. And we're really differentiated on this front, as much as we're differentiated with the pattern that we bring to the table. And we're addressing this cytokine biology and this pathway in a totally different way than others. And we believe that the way that we're addressing it is actually handling the narrow therapeutic window of cytokines. So we bring something new to the table. And with the excitement that is out there, that's the right time with the right assets. So that's what I can say on potential partnering discussions.

Let me ask one more follow-up then, because you bring it up as your focus is non-dilutive financing in your prepared remarks. How can investors and us have confidence on the timing of that kind of event? You talk about maybe certain data points that you think are going to be more important to reach that value. Beyond the attributes of your pipeline, which you well described, what else can we have in terms of the confidence of that happening?

So I think that it's a fair question. And I think that with respect to COM 503, we don't see any pending will decide to enter into partnership. We don't see any data points that are missing. We have a great package to show exactly what we're saying about this asset. So that's one. I think that on the COM-71 and COM-902, I was saying that it's a fair question because I think that it depends on the internal data that we already have, on internal data that we will generate, and it doesn't mean that we need to get to the end of 2024 in order to be able to share data that is relevant from the internal perspective, but it also depends on external drivers. It's not a given, and I don't think that it's our goal as well. Definitely, this is not our goal, to partner everything and stay without a clinical stage pipeline. We're putting our priorities in place, and we deal with the internal and external milestones and with potential discussions. We believe that the assets that we have has the potential to generate additional cash inflows for the company in order to support our financial status.

Okay. Thank you.

Thank you.

This concludes the Q&A session. I will now hand over the call to Anat for a final remark. Anat, please go ahead.

Thank you, operator. Before we end the call, I will take this opportunity to remind you of an investor event we are hosting on Tuesday, May 23rd, with Drew Pardol, a pioneer in cancer immunotherapy and a chairman of Compugen Scientific Advisory Board. Drew was the first to propose blockade of PD-1 for cancer immunotherapy and his research led the clinical development of the first anti-PD-1 antibody. Drew is also a world expert in the denim axis, and I think you will really enjoy his views on why blocking the three pathways in the denim axis, PVRIG, TGIT, and PD-1, has the potential to generate the next immunotherapies for cancer patients. Thank you for participating today. you may go ahead and disconnect.