Compugen Ltd. (CGEN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's First Quarter 2024 Results Conference Call. [Operator Instructions] 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 from Compugen with prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Michelle Mahler, Chief Medical Officer; and Dr. Eran Ophir, Chief Scientific Officer, will join us for the Q&A. Before we begin, we would like to remind you that during this call, the company may make projections of forward-looking statements regarding future events, business outlook, development efforts under potential outcome, the company's discovery platform, anticipated progress and plans, results and timelines for our programs, financial and accounting-related matters, as well as statements regarding our cash position. 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 20-F. The company undertakes no obligation to update projections and forward-looking statements in the future. With that, I now turn the call over to Anat.

Thank you, Yvonne, and thank you, everyone, for joining us on our first quarter 2024 call. Today, I will cover the significant progress we have made across our pipeline in the first quarter of this year, and I will then move to our planned catalysts through the rest of 2024. But before I go there, I thought I would start with a question, which we frequently get asked, is Compugen an AI company? And the answer is yes, Compugen is a pioneer in computation and discovery of novel drug targets and not just in theory, but in practice, which is a significant differentiator. We successfully moved our newly discovered drug target from computer prediction to drug discovery to preclinical and clinical trials, continuously feeding our own pipeline with potential significant opportunities to address cancer immunotherapy resistance. The Gilead bill on COM503 highlights the most recent assets discovered through our computational discovery capabilities. Our discovery platform is a validated AI ML power platform. This platform is the engine fueling our competitive advantage and pipeline, and has already delivered multiple fully owned clinical programs, multiple validating strategic partnerships and multiple early-stage undisclosed assets, which are expected to feed our future pipeline and the opportunity to deliver long-term value creation. We plan to speak more on our discovery platform at future events. So now I'll move to the focus of today's call. In the first quarter of the year, we again executed on our promises. Firstly, at the annual ASCO conference in June, we will present preliminary antitumor activity of COM701 in combination with COM902 and pembrolizumab in patients with MSS-CRC and liver metastasis from our ongoing proof-of-concept study. Secondly, we completed enrollment of more than 20 patients in our platinum resistant ovarian cancer study, and we're on track to report initial findings in the fourth quarter of this year. Thirdly, the progress we have made, unlocking novel biology of new drug targets, and in diversifying our approach to address cancer immunotherapy resistance was reflected by our presentations at the Keystone Symposium and the American Association of Cancer Research Conference in March and April this year, along with the publication of our COM503 and PVRIG paper in cancer immunology research. At both conferences, we presented data supporting the unique biology of PVRIG, suggesting its role in sensitizing tumors to the other immune checkpoints PD and PD-1. And additionally, data supporting the diabetic potential of our high affinity potential first-in-class anti-IL-18 binding protein antibody COM503 showing its activities localized to the tumor macro environment, with the potential advantage of a wider therapeutic window, than systemically delivered cytokine. Finally, in the first quarter of 2024, our partner AstraZeneca continue to rapidly advance the development of rilvegostomig. We're delighted that they are initiating a second Phase III trial, TROPION-Lung10 in non-squamous non-small cell lung cancer. The study will assess rilvegostomig as monotherapy, and in combination with Dato-DXd, a Trop2 directed ADC being developed in collaboration with Daiichi Sankyo, compared to pembrolizumab as first-line treatment for patients with advanced or metastatic non-squamous lung cancer with high PD-L1 expression. As a reminder, we recently received a $10 million milestone payment on dosing of the first patient in the Phase III study of the first indication, biliary tract cancer. Under this agreement, we're eligible to retain development milestone payments for the first and second indication. The progress into a second Phase III trial addressing a major indication such as non-squamous non-small cell lung cancer reinforces our partnering strategy to growth and opportunity for our pipeline, and brings us closer to realizing the additional future milestone payments and royalties. As a reminder, the TIGIT component of rilvegostomig is derived from our potential best-in-class anti-TIGIT COM902, and both with rilvegostomig and COM902, fall in the Fc reduced inactive function camp. Moving on now towards plan for the rest of the year. 2024 is planned to be a catalyst-rich year for us, with multiple data readouts and updates expected from our diversified portfolio. At ASCO in June, we plan to present data from our ongoing proof-of-concept study in MSS-CRC patients including those with liver metastasis, who have been treated with the triple-IO combination of COM701, COM902 and pembrolizumab. NSCLC and in particular, such patients with liver metastasis represents significant unmet medical need in the hard-to-treat patient population. Exited in 2022, we presented data from our first cohort of 22 patients, treated with the dual combination of COM701 and pembrolizumab, and we were the first and only company to report responses to IO in this population of patients with liver metastasis, reporting a 12% overall response rate and stable disease, in addition to new activation supporting PVRIG biology and COM701 mechanism of action. Although this indication was not initially selected based on dominant PVRIG pathway expression level. Following this encouraging clinical data, and with an aim to assess the strength from findings in liver metastasis patients in a larger cohort, we initiated our ongoing study in 20 patients with NSCLC, and added our anti-TIGIT COM902 to the drug combination, to see if we could improve on the response we have seen with a dual combination. [indiscernible] rapid, reflecting the significant unmet need and we enrolled the last patient in September '23. The data will be presented at the upcoming ASCO on June 1 with a data cut update of April 5, '24 and remains supportive of COM701 mediated activity and safety with some patients continuing treatment at the data cutoff date. However, with the totality of the data we have in hand, we believe that an IO-IO approach is not the way forward in this notoriously IO-resistant patient population of NSCLC with liver metastasis. Yet the total clinical activity observed to date in the 2 evaluated cohorts, suggest the effects are COM701 mediated and due to the unique biology of PVRIG may warrant further evaluation of COM701 with other agents in MSS-CRC. Therefore, the door remains open for other COM701 combinations in this patient population. However, this will not be the focus of our internal resources at this time. It is important to note that observations made in tumors, which are biologically distinct from each other, such as MSS-CRC and platinum resistant ovarian cancer are not considered indicative of each other. With this, I will remind you that we have reported more dominant PVRIG pathway expression levels in ovarian cancer. This brings us to our next catalyst. The next catalyst for our triple combination will be the presentation of our data in platinum resistant ovarian cancer, for which we have completed enrollment. Data presentation is on track for the fourth quarter of 2024, and our plan is to present this data at a medical conference. We believe the totality of the data we have reported to date in platinum resistant ovarian cancer patients is encouraging compared to the current standard of care. Based on the data we reported at ESMO-IO in December 2022, from the first cohort of 20 platinum resistant ovarian cancer patients treated with triple combination. Investigators were excited to report durable shrinking or stabilization of tumors in some of their 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 median duration of response for single-agent chemotherapy is around 3 to 4 months, and in ADC is around 6.9 months. Responses were achieved in the hard-to-treat high-grade serous adenocarcinoma patients along with a favorable safety profile. We also presented preliminary biomarker data showing an association between PVRL2 expression and clinical benefit. Of note, we also previously presented data showing COM701 monotherapy activity in a patient with ovarian cancer, whose tumor microenvironment was immune desert. This patients had a partial response of more than 18 months. For the ongoing study, we plan to present data in the fourth quarter of the year, including the data and characteristics, safety, overall response rate, disease control rate, preliminary data on duration of responses and potentially biomarker data. They're showing clinical benefit in platinum-resistant ovarian cancer is expected to allow us to pursue the next study towards a path to registration, which depending on data may employ a predictive biomarker enrichment strategy. In addition, we are also on track to submit the IND for COM503 in the second half of this year, and expect this IND clearance for which we're eligible for a $30 million milestone payment from Gilead, will be achieved in 2024. With that expectation, we are in advanced stages of planning the Phase I study finally, in the second half of this year, AstraZeneca expects data from their Phase I/II ARTEMIDE-01 trial in non-small cell lung cancer in the frontline setting. Before passing over to Alberto to go through the financials, I would like to take this opportunity to warmly thank him for his commitment and leadership since he joined us in 2022. Alberto has been a great partner to me and the rest of the team here at Compugen. David Silberman will take over the reign from Alberto as Chief Financial Officer effective August 15. David has experience in the healthcare industry as chief financial officer of a biotech company traded on the NASDAQ, and I'm looking forward to introducing you to David when he joins. I also want to emphasize that while benefiting from our side cash position, to enhance and advance confidence to additional milestones, we're also financially disciplined. We have 2 potential first or best-in-class unrestricted assets along with multiple undisclosed early-stage assets, with the possibility to address a significant unmet need in immuno-oncology. In addition, we have 2 strong validating strategic pharma partners, Gilead and AstraZeneca on rilvegostomig and COM503, respectively, and from rilve, we're eligible to receive future milestone and royalty payments. 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 31, 2024, we had approximately $101.3 million in cash compared with approximately $51.1 million as of December 31, 2023. This cash balance includes $60 million upfront payment from Gilead related to the licensing of COM503 and $10 million milestone payment from AstraZeneca on dosing the first patient in the Phase III trial in biliary tract cancer. We recognize the importance of cash efficiency, and we are disciplined in how we deploy our cash reserves, while making sure we focus on reaching key milestones. With a cash runway into 2027, taking into account the expected milestone payment of $30 million from Gilead for COM503 IND clearance expected in the second half of 2024. It is important to emphasize that this does not include any additional potential cash inflow from our partners. I remind you that the company has no debt. Revenues for Q1 '24 were approximately $2.6 million compared to no revenue for the comparable period in 2023. The revenue reflects recognition of a portion of the upfront payment from the license agreement with Gilead. Expenses for the first quarter of 2024 were in line with our plans. R&D expenses for the first quarter of 2024 were $6.4 million, reduced from $7.4 million in the first quarter of 2023. Our G&A expenses for the first quarter of 2024 were $2.4 million compared to $2.6 million in the first quarter of 2023. For the first quarter of 2024, net loss was $7.3 million or $0.08 per basic and diluted share compared to a net loss of $9.3 million or $0.11 per basic and diluted share in the first quarter of 2023. With that, I will hand back to Anat to summarize.

Thank you, Alberto. To summarize, Compugen stands out as the clinical stage of immuno-oncology target discovery pioneer. We're differentiated by our validated discovery platform, which is powered by the mix of human expertise with AI and machine learning to fill our first-in-class pipeline. We're on track to deliver a catalyst rich 2024 across our diversified pipeline, and planning to present data for our COM701, COM902 triple combination at ASCO in MSS-CRC, as well as data from our platinum-resistant ovarian cancer at the end of the year. We are planning to submit COM503 for IND in the second half of this year and are advancing our planning for the initiation of Phase I for this program. With the 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 am proud of what we are achieving here at Compugen. I would like to thank all our Compugen colleagues for their collaborative spirit and daily dedication, resulting in a well-executed first quarter of the year and setting us up for future success. With that, I will turn the call over for questions. Operator?

[Operator Instructions] The first question is from Stephen Willey of Stifel.

This is Tuuli on for Steve. Congrats on the progress. We just have 2 questions on our end. The first one is related to colorectal trial. So I know that ASCO abstracts will be available this week. But when it comes to the actual presentation, how much additional incremental detail should we expect in the actual presentation versus abstracts? And following this presentation, what would be path forward for this study? And the second question would be related to COM503. Do you think you will disclose any clinical data following the IND submission for this asset?

So may -- thank you. And maybe I'll start with the second question for COM503. This decision of disclosing clinical data from a Phase I study will be taken in collaboration with the Gilead, this is an asset that was licensed to Gilead, and I cannot commit on their behalf, and we'll give some guidance when we will know. But obviously, before that will need to file the IND and initiate the study, which filing is expected in the second half of this year. And for the CRC data, yes, the abstract is going to be out this week. And the presentation of data will be June 1. For Compugen, it will be a data worth of 20 patients enrolled and we share the antitumor activity, durability, translational data, safety, et cetera, and obviously, patient baseline characteristics. And as we've already stated, the data is supporting of antitumor activity of COM701, supportive of COM701 mechanism infection, PVRIG biology that we believe based on the data and this is the guidance that we shared today, it was important for us to share the guidance at the time that we know when the decision that we've already took, is that we believe that IO-IO only combinations would not be the right way to target MSS-CRC with liver mets population, which, as you know, in this time consists of 70% of the patient population. We believe that that's not the right path, and we decide that while there could be a path forward for COM701 in MSS-CRC, we deliver next maybe in other combinations. So maybe even in earlier line, we're not taking this path forward at this point in time.

The next question is from Asthika Goonewardene of Truist Securities.

So maybe I want to just dig in a little bit more here on colorectal. And I'd like for maybe you and Eran to comment on what do you think is missing here, it sounds like you're resilient that 701 biology is active but maybe you can help us understand what -- did you need more immune activation and less -- maybe less checkpoint blockade, but maybe more debulking, what exactly was the missing link here given the encouraging activity we saw earlier for this approach? And then beyond ovarian for 701 or 902, how should we think about the other avenues that you're going to pursue this combination? Is there next priority to maybe revive efforts in CRC but with a different combination to maybe address what's missing? Or have you identified another tumor site that you would like to take this into?

Okay. Thanks, Asthika. And I'll start by saying that we can get really to the specifics of the data and maybe this discussion will be worth to be taken following the presentation in June 1. Maybe Eran wants to add. But I'll just say that with IO-only, we believe that what we see is not enough in order to pursue. But maybe Eran, do you want to say anything about it more than that?

Yes. So with the unique biology of PVRIG and what you have seen previously, definitely, we see activity in places where normally check points are not working in MSS-CRC, with liver metastasis, immunomodulation, increasing T cells, but we've seen it in part of the patients, right? And eventually to move forward, you need to have sufficient activity in sufficient amount of the patients to really consider to go towards approval. And as you understand what we see in the pure IO combination of the triplet, in this very difficult and not immunogenic indication, what you have seen is not enough to convince ourself to move forward as is. And yes, as discussed maybe not at this point in time, but there are other rational based combination that could be employed to increase IO activity in this kind of difficult indication. It is something to consider for the future, but again, not at the point in time.

And then actually takes me to your second question about additional tumor types. I think that with the data that we have in hand on COM701 activity in non-inflamed tumor types across indications where PD-1 is really not -- the populations are not responsive to PD-1 inhibition or very -- or responses to a very low accent, we have data across indications and COM701 is active and other than putting the resources and focusing now on platinum-resistant ovarian cancer, which we really have a package of data and additional 20 or more than 20 patients worth of data will really help us to make decision about how to move forward there. I think that the future is open for us for different type of path in the non-inflamed indications. Also in the inflamed indications, obviously, we've never tested inflamed indications and we had the reason why we didn't do it, PVRIG biology gave us an edge in this non-inflamed indications, and we could prove COM701 activity in combination, in single arm studies without asking the question, is it PD-1 inhibition that is generating this activity. And we could do all the work and show in [indiscernible] that this is comfortable mechanical of action, and also another path is to combine with the non-IO combinations. But really we are now at the stage that we're focusing in platinum-resistant ovarian cancer. And we will make the decisions during the year, how we move forward in this indication.

And maybe I would add -- so may I would just add that in addition to what we're focusing on at the moment, you pre-identify a few indications with dominant PVRIG pathway. Ovarian is one of those but there are other indications, for example, like non-small cell lung cancer, and as mentioned more inflamed settings. So definitely, there are multiple opportunities. And combining this with the safety profile of COM701 that really will enable us safe combination, maybe in other indications, maybe in early lines. So again, opportunities are there and there are quite a few but we are focusing now on the ovarian cancer, which we have seen until now quite promising data.

The next question is from Daina Graybosch of Leerink.