Compugen Ltd.

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's second quarter 2024 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 Notten, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Thank you, Yanni, and thank you all for joining us on the call today. Joining me from Compogen for the prepared remarks are Dr. Anat Cohen-Dyack, President and Chief Executive Officer, and Alberto Sessa, Chief Financial Officer. Dr. Michelle Malera, Chief Medical Officer, and Dr. Iran Ofeira, 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 programmes, 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 20F. The company undertakes no obligation to update projections and forward-looking statements in the future. And with that, I now turn the call over to Anat.

Thank you, Yvonne, and thank you, everyone, for joining us on our second quarter 2024 call. I'm delighted to start this call by congratulating our team for the excellent execution on the high-quality COM543 INV submission, resulting in FDA clearance for initiation of a Phase I trial. COM543 is our differentiated approach to harness cytokine biology to treat cancer, and I'll come back to this later in the call. There have been many developments in the ticket landscape in the last few months, and more are expected by the end of this year. Therefore, I thought it is appropriate to begin by sharing with you how we think about the field. We believe that CompGen is uniquely positioned and differentiated in the pursuit of the DLM1 axis as part of our COM71-COM902 triple combination. I will then cover the progress we have made in the second quarter of this year and move to our planned milestones through the rest of 2024. Starting with the TG competitive landscape, what have we learned so far? First, the benefit of adding TG blockade to PD-1 compared to PD-1 demonstrated in several Phase II randomized clinical trials And TG blockade added a six-month survival benefit in a phase three interim analysis. Second, the benefit of TG blockade was observed mostly in PD-L1 high patient populations. Third, the nature of the TG antibody matters. The use of an FC-enabled antibody may not be tolerable in patients with early stage of disease due to potential immune-mediated safety concerns. And finally, a third component may be needed to be added to TGT and PD-1 blockade to maximize the effect. Some companies are adding chemo or ADC, which may be an option for patients who can tolerate these combinations. Confidence data consistently suggest that PGR-IG co-blockade provides added benefit. We believe an advantage of this choice is the favorable safety profile of IO combinations and the prolonged immune benefit that one might expect to achieve. We therefore believe that the success of the next antitigic studies will be determined by several factors. Firstly, the clinical strategy employed, which includes choice of patient population and combinations used. And secondly, the choice of an anti-tigit, EPSI inactive versus active. Now, elaborating more on why the clinical strategy matters. Based by our innovative research of the PVRIG pathway as part of the genome access, Confidence hypothesis has always been that blocking TG-plus PD-1 alone may not be sufficient and that a third component, PVRIG, may be needed to optimize the potential of TG-10 PD-1 blockade in certain tumor types and patient populations. Confidence data suggests that unlike anti-TG, anti-PVRIG may function across PD-L1 expression levels, and may also extend the response to the PD-1-TGIT non-responsive tumor types and patient populations. We're therefore currently pursuing a triple combination strategy, blocking PVRIG, TGIT, and PD-1, and we pursue this drug combination in tumor types and patient populations that are not responsive to PD-1. This strategy helps us to directly prove a COM71-PVRG-driven effect of a triple combo, even though we employ small single-arm studies. By assessing the non-responsive tumor types, our data will not be attributed to a PD-1 effect, but we also recognize that the signals that we may see in these very hard-to-treat tumor types will not be very high. Of course, this triple combination is also expected to add benefit in inflamed PD-1 responsive settings. In addition, our partner AstraZeneca is advancing development of Rizogastamig, their PD-1-tigid bite-specific, providing a peak revenue target of greater than $5 billion, reflecting the potential of this asset. As the TGIT component of resagastomy is derived from Configent's COM902, this is a potentially significant revenue-generating opportunity for Configent. Elaborating more on the choice of anti-TGITs, not all anti-TGITs are the same. Our CoV-2 anti-FIGIT antibody is an IDG4 antibody, and so it is naturally FC-reduced, chosen with efficacy and safety in mind. We have always said that the FC activity of the antibody should be disabled. The reason for this is simple. FIGIT is highly expressed on CD8 plus T cells and NK cells. cells that are key for antitumor activity, and you therefore want to avoid depleting them. In addition, FC-silent antitigit avoids peripheral T-rate depletion that can lead to immune-related adverse effects. Notably, recent data may suggest that an FC-active antitigit antibody may not be tolerable in patients with early stage of disease due to immune-mediated safety concerns. Moving now to the progress we have made in the second quarter of the year, continuing our track record in delivering our plans, we again executed on our promises. Firstly, we're delighted that the FDA has cleared the IMD application to initiate a Phase I trial for COM503, our potential first-in-class high-affinity anti-ALA team-binding protein antibody licensed to Gilead. ID clearance, which triggered a right to a $30 million milestone payment from Gilead, further transcends our balance sheet with an expected cash runway into 2027. We're well advanced in our planning and currently on track to initiate the phase one trials for COM503 in solid tumors in the fourth quarter of 2024. Advancing COM503 to phase one adds to the multiple clinical programs discovered through our predictive computational discovery platform, where we unlock the science and advance the clinical trials. Secondly, We are on track to report data from our COM701, COM902, and pembrolizumab triple combination proof-of-concept study in patients with platinum-resistant ovarian cancer in the fourth quarter of this year, and I will come back to this shortly. Finally, in the second quarter of 2024, we were excited to see that our partner AstraZeneca announced the further advancement of the development of rilvogastamide, the PD-1-tigit bispecific, where the tigit component is derived from compaginus com902, into its third phase retrial, Destiny BTC, which will assess rilvogastamide and the ADC and HER2 versus standard-of-care chemotherapy and the anti-PD-L1 durvalumab for first-line locally advanced or metastatic HER2-expressing biliary tract cancer. As a reminder, the other phase III trials initiated by AstraZeneca are in lung cancer as part of an IO-ADC regimen and in adjuvant biliary tract cancer. We believe these advancements reinforce our partnering strategy designed to expand the opportunity for our pipeline programs, including Common O2. This brings us closer to potential additional milestone payments in an aggregate amount of up to $200 million and future mid-single-digit tiered royalties presenting together a significant potential revenue source for our company. To date, we have received around $40 million in upfront payment and milestone payments. Moving on now to what is planned for the rest of the year, I'm coming back to the presentation of our data in platinum-resistant ovarian cancer, which is on track for the fourth quarter of 2024, and our plan to present this data at a medical conference. We believe that the totality of the data we have reported to date in platinum-resistant ovarian cancer patients is encouraging. In the prior cohort of patients, our investigators were excited to report durable shrinking or stabilization of tumors in some of the patients who had previously progressed on all available treatment options. we presented a 20% overall response rate, with some patients responding for over 16 months, which is favorable considering the median duration of response for 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. To remind you, ovarian cancer was pre-identified using our computational capabilities even before we treated patients as high priority target indication for PVRIG blockade. Of note, we also previously presented data showing COM7-1 immunotherapy activity in a patient with ovarian cancer whose tumor microenvironment was immune desert. This patient had a partial response of more than 18 months. In the fourth quarter, we plan to present the baseline characteristics, safety, overall response rate, disease control rate, initial biomarker data, if any, and preliminary data on duration of responses for COM701, COM902, and pembrolizumab combination. In relation to baseline characteristics, these platinum-resistant ovarian cancer patients were heavily pretreated, exhausting all other treatment options, and the number of patients were ADC-experienced, reflecting the changing treatment landscape and the hard-to-treat patient populations. Given that the only other treatment option for these patients would have been chemotherapy, we believe that it is the most relevant benchmark. As we have previously communicated, our goal is to assess whether we can demonstrate a similar clinical benefit to what we observed in the prior cohort. We believe, repeating it in a larger total number of patients, would confirm COM71 combinations are active. There is a significant unmet medical need for women with ovarian cancer who could benefit from alternative potentially safe, efficacious, and durable treatment options. We intend to share our plans or next steps for our COM71 combinations at the time of data presentation. Finally, In the second half of this year, our partner AstraZeneca anticipates data from Phase 1-2 Artemide 01 trial and the poster presentation from Phase 2 Gemini gastric trial, which was accepted at ESMO 2024. With that, I will hand over to Alberto for the financial update.

Thank you, Annette. I'm happy to summarize our financial results. I will start with our cash balance. As of June 30, 2024, we had approximately $92.3 million in cash and cash-related, compared with approximately $51.1 million as of December 31, 2023. We recognize the importance of cash efficiency, and we are disciplined in how we deploy our cash resource. while making sure we focus on reaching K milestones. We have a cash runway expected to fund our operation into 2027, taking into account the expected milestones payment of $30 million from Gilead, which we are now eligible to receive following the successful IMD clearance for COM 503 last month. The company has no debts. Revenue for Q2 2024 were approximately $6.7 million compared with no revenue for the comparable period in 2023. The revenues reflect recognition of a portion of the upfront payment from the license agreement with Gilead and the milestone payment from AstraZeneca on the dosing of the first patient in their second phase three trial with in non-small cell lung cancer. Expenses for the second quarter of 2024 were in line with our plans. R&D expenses for the second quarter of 2024 were $6.2 million compared to $7.8 million in the second quarter of 2023. Our G&A expenses for the second quarter of 2024 where $2.2 million compared to $2.4 million in the second quarter of 2023. For the second quarter of 2024, net loss was $2.1 million, or two cents per basic and diluted share, compared to a net loss of $9.3 million, or 11 cents per basic and diluted share, in the second quarter of 2023. With that, I will hand back to Anna to summarize.

Thank you, Alberto. To summarize, Compogen is a clinical stage immune oncology-type discovery pioneer. We are differentiated by our validated discovery platform, which is powered by the mix of human expertise with AI and machine learning to fuel our first-in-class pipelines. There have been many developments in the TIGIT landscape with more data readouts expected this year, and we believe we stand out as differentiated both in terms of our clinical strategy and our differentiated programs, including our potential best-in-class anti-TIGIT COM-902 and first-in-class anti-PBRG COM-701. Also, our partner at Susanica is advancing the development of resagostomy, the TDP-D1 bank-specific, the ticket component of which is derived from COM902. AstraZeneca has set a target for more than $5 billion in non-risk-adjusted peak revenues, reflecting the potential of these assets and the potential significant revenue-generating opportunity for Compugen. Our achievement in successfully gaining FDA IND clearance for COM503 is a clear reflection for our continuous ability to execute. We're on track to deliver data from our COM701, COM902, PEMBRO triple combination study in patients with platinum-resistant ovarian cancer at the end of the year, a disease where there is a significant unmet medical need to alternative treatment options. With a pipeline that is being advanced internally and by our partners, this is an exciting time for Compugen and we believe that we have the fundamentals in place to bring value to our shareholders and cancer patients. I would like to thank all competent colleagues for their collaborative spirit and daily dedication, resulting in a well-executed second quarter of the year and setting us up for future success. Finally, I would like to say a special word of thanks to Alberto as this is his last conference call with ComfyGen and welcome David who has already joined us and will take over from Alberto on August 15th after a transition period. With that, I will turn the call over to the operator for questions.

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're 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 Steven Wiley of Stifel. Please go ahead.

Yeah, good morning. Thanks for taking the questions. Anat, is there anything that you can say about your confidence in the totality of clinical evidence that you'll have in hand when you make a decision on the triplet regimen and ovarian? You know, you have data from one heavily pretreated dose expansion cohort that was generated with a different TIGIT antibody. You'll soon have data from a slightly less pre-treated expansion cohort generated with COM902. Just curious about your thoughts here in the totality of evidence that you'll have at hand. And then I just have a follow-up.

Sure. Thank you, Steve. And I'm happy to elaborate on this. First, I'll just say that the totality of the data that we have is pointing to COM7-1 driven effects and monotherapy effects, overall response rate that is added to, that is combined with durability, safety profile, and clearly from our perspective, as I was saying in the prepared remarks, that the need is there for safe, efficacious, durable treatments. And we believe that if we can repeat the clinical benefits that we have seen up until now, there is a need. Now, with respect to the differences in the studies, I can say the following. I believe that since we use the TIGIT antibody that is actually disabled, even though it was not COM902, we believe this would be comparable. We do think that we have a best-in-class TIGIT potential, best-in-class TIGIT antibody, but we believe that the data may be comparable. We use NEVO as compared to PEMBRO. So, you know, we believe that this triplex that we use now may have the chance to at least repeat the benefits that we saw. And with respect to the differences in the treatment, I want to say that at the end of the day, the patient characteristics are more or less the same, and we believe that we'll be able to compare between the two different cohorts.

Okay, that's helpful. And then, I might have missed this, but did I interpret your commentary, I guess, regarding the update at the end of the year to suggest that you may not have biomarker data to present in conjunction with the safety and efficacy data?

We did not say whether we will have or not. What we said is that we'll present data if we have the data. I think that it's fair to say we're saying that. We had the initial data. It looked supportive, of course, of association with clinical benefit. We also stated a few times that we recognize the challenges in generating biomarkers in IO and mainly with small number of patients. We are affecting the biomarkers, the expression level, and we share what we have at the time that we have it.

Okay. And so in terms of being able to articulate a potential path forward here before the end of the year in conjunction with data, should we then expect that you will be communicating either the use of or the absence of a patient selection and enrichment strategy in terms of next steps.

So, in general, we were preparing ourselves to two scenarios from the get-go. Obviously, we had initial biomarker data and enrichment strategy on the table, but we also recognize the fact, as I said, that this is very challenging, and we may not have enough supporting data, and we had to prepare ourselves to a situation where there is no enrichment strategy. But I will say that we will always be data-driven, as we've been up until today, and we continue to do so. We will focus pending the data. We will focus where we believe we have the competitive edge, where we can give our triplet combo the best chance to impact the appropriate patient population. And we'll take everything into consideration. So we're not saying no, we're not saying yes. We're assessing and we see what we have and we take the steps accordingly.

Okay. Thanks for taking the questions.

Thank you.

The next question is from Ashtika Gunwardhan of SunTrust. Please go ahead.

Hi. Good morning, guys. Thanks for taking my question. It's all clarified from Truist, no longer SunTrust. I just want to dig into this on the platinum resistant ovarian cancer that's coming up. I think you mentioned in your prepared comments that you have patients who have seen prior ADC. And I wanted to maybe contrast between the previous data set. What proportion of patients are you expecting to have prior ADCs? Is it going to be considerably more than the previous data set? And how do you expect exposure to the ADC, particularly the serapsin scene payload, to alter the patient's T-cells? Is there any opportunity for this patient to be conditioned in a way that they might actually respond better or worse to immunotherapy, such as PBRG and TGET, et cetera? And then I have a follow-up.

Sure. Thank you, Aspika. Michelle, do you want to take this one? Sure.

Yeah, sure. So I can't comment on the exact amount of patients who received ADCs at this point since we're not ready to disclose the data. However, what I can say is when you look at the different timing of when the studies were enrolled, the one study enrolled before, a good amount of patients were enrolled before the ADCs really came forward and before they recently got approved, whereas the current study is ongoing. So we naturally have captured a certain amount of patients that have previously seen ADCs. I can hypothesize with you on what we think may occur once patients are exposed to ADC and that there is potential for cell death with increased antigen presentation. However, at this point in time, I can't share any data with you. And I think the other thing to be aware of, you know, It's all the totality of data and coming back to the ADCs in terms of, you know, the prior lines of treatment also matter in terms of how patients are in terms of their overall condition and the immunogenicity of their response to them.

Yeah, I'm just add, sorry, I'll just add that mechanistically, while it makes sense, I want to emphasize that, you know, that we enrolled somewhat more than 20 patients, and with small numbers, it is going to be hard to get any specifics with respect to ADCs plus IO in our studies. But I believe that the potential is there.

Ana, do you think you'll actually report the two data points? I mean, would that be sort of a breakout, like the subgroup analysis of patients who came prior to ADT versus not? Do you have enough numbers to really do that?

I think that in 20 patients cohort doing any subgroup analysis, that was my point of the remark. I don't think that, you know, that the numbers we support specific conclusions based on this.

Got it. Okay, that's helpful. And then quickly for Alberto, I want to wish you all the best in your next endeavors. I just want to ask, can you maybe give us a little bit more color on the cash flow guidance? I'm curious to know, does it anticipate starting off any follow-on studies with COM 701, 902, potential registration enabling studies, et cetera? Thanks.

Yes. Thank you for the wishes. As we said, we have cash into 2027. This takes into consideration a certain amount of cash that should be used for the next trial. We don't have plans and we will have plans only once the data will be out. But yes, we have some reserve for additional trials that we may or may not start going forward.

Great. Thanks for taking my questions, guys. Thank you. The next question is from Dana Graybush of Learing Partners. Please go ahead.

Hi, thanks guys. Another question for me on the platinum resistant ovarian cancer data. You mentioned that this is a very difficult to treat patient population based on their prior lines and prior therapies and that because PD-1 has little activity alone, it's a very good place for signal seeking. To me, when I hear that, It feels like you're guiding to pretty modest overall response rates and duration of response. But I wonder if you could put actual quantification on that. So what kind of range in a 20-patient cohort specifically are you looking for that you think the activity is not only giving you a signal of PVRG and contingent contribution, but also is attractive enough to move forward?

So I'll start, and then, Michelle, if you want to, please go ahead. It's a very good question. And as I explained, we were seeking to go into areas where we could show in single-arm studies, small single-arm studies, that this is a COM701 PGRID-driven effect. And we believe that what we show, the cross-indications with the different studies that we've done, that this is the COM71-driven effect. And right now, in terms of looking at the guidance, what we did say today, that we are looking to repeat the clinical benefits that we have shown in the prior cohort in order to make a decision, okay, with this amount of patients that accumulate the data of the two cohorts, we believe that COM71 is active. Then the question is, Where do we have the competitive edge in which we should use this combination where the data that it showed up until now that we had deep, durable, in the prep cohorts, deep, durable, and safe profile, and where do we give it the best chance to impact the appropriate patient population? But basically, it will be, from our perspective, repeating the same clinical benefits.

Can you remind us the clinical benefit you observed in the first cohort? I don't think you've given the numbers on the call.

Sure. So other than presenting some monotherapy activity, which was in a different study, in the prior triplet study, we were having 20% of our response rate. with deep responses, patients that were responsive, some of them had durability of more than 16 months, and the combination was safe and tolerable. And we have initial biomarker data supporting some association with clinical benefit.

And then in the data set you're going to have this year, How much follow-up will you have? Will you be able to observe a confirmation of that durability, and then how many patients?

Let Michelle address it. We will not have the 16-month durability time to do monitoring for 16 months, but Michelle, do you want to say anything about it?

Yeah, sure. So what I can say is we did decide to cut the date a little bit earlier so that we can present data by the end of the year. So it may not be as mature as the prior data set. However, a number of our patients on the study have already been on the study for a minimum of six months. So, you know, it is starting to get to a point where we will be able to observe durability.

Great, thank you.

The next question is from Tony Butler of Rodman and Renshaw. Please go ahead.

Thank you very much for the opportunity. I just wanted to follow on with the last question, and I guess it intersects with the first as well, and that is the, I'm going to call it hurdle rate that you, would like to see, at least as it, or maybe we would all like to see as it pertains to the Q4 data in ovarian cancer. So if 20% is that hurdle, if that's correct, the question becomes, will patients, there are two parts. One is, will there be some look at if they're only six months in duration, for example, per Michelle's comments, then that seems perfectly fine, I guess. But there is a question as to whether or not there are late responders. So, for example, if a patient's been on triple therapy for X number of months, that they respond later. Is there evidence from the previous trials that that is the case? That's point one. And number two is, if all the response rates were PRs, Does that matter to you? I mean, that's really great for these women, for sure. But are there any PR conversions that you had seen in the previous study which were later than when that particular cutoff occurred? And then I have a follow-up. Thank you.

Michelle? Thank you, Donna. Michelle?

Yeah, so I can speak to it that there are, and it's is also described in the immunotherapy literature in ovarian cancer that, yes, there are some patients who can develop a later response, so they can be sitting at stable disease for a long period of time, and then stable disease over a period of time will become partial response. Again, I can't speak to all the details on the current data set, And in the prior data set, as you're aware, we did have two partial responders that maintained response beyond 16 months. I don't remember offhand what the exact time to response was in those two patients. But we had a number of stable disease patients as well who were on the study for quite some time. So I feel like I'm not completely answering your question, but I think that's as best as I can get to you right now.

Yes, but I guess to some degree, did any stable disease patients in the previous trial convert to PRs? That was sort of part two.

So offhand, I don't recall. I just know that there were two partial responders. Like I said, I'm not 100% sure what their time to response was. I'm not aware of any late conversions from stable disease to partial response. Although, like I said, that has been described in the oncology, immune oncology literature.

But I think, Tony, I'll just add, and if I understand where you're leading to, I'll just add that the guidance that we shared with the, you know, repeating the same clinical benefit would be relevant for the time that we will also share Our plans, based on the data, as I said, will always be data driven. So that maybe gives you some clarity about our guidance.

Thank you, Anant. And maybe the last question, totally different. But in COM 503, you make reference to harnessing cytokine biology. And I guess the question is, in your current research efforts, Are there other targets that might also harness other cytokines that might be worthwhile as antibodies for which you may bring forth in the future? In other words, something beyond 503. Thank you.

Iran, do you want to take it?

Yes, so overall we use our computational AI-driven platform to identify novel targets. We arrived to IL-Tin binding protein as a target, not because we looked for a cytokine target, because we looked for resistant mechanism in the tumor microenvironment computationally. So it's a very different target from PBRG in digits, for example, and this indeed took us to harness an antibody to unleash natural IL-Tin activity in the tumor microenvironment. So we definitely have a variety of other early assets all coming from our computational discovery platform. And they are across different modalities and different MOAs all coming from, it's kind of an MOA agnostic and more patient-centric approach, looking into the tumor environment of patients and unleashing additional resistance mechanism.

Thank you, Aron.

This concludes the Q&A session and Compugnance Investor Conference call. Thank you for your participation. You may go ahead and disconnect.