Compugen Ltd. (CGEN) Q3 FY2025 Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for joining us today. Welcome to the Compugen Third Quarter 2025 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, VP, Head of Investor Relations and Corporate Communication. Yvonne, please go ahead.

Thank you, operator, and thanks, everyone, for joining us today. Here with me from Compugen team are Eran Ophir, our new President and CEO; and David Silberman, our Chief Financial Officer. Michelle Mahler, our Chief Medical 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 time lines for our programs, including disclosures of clinical data, financial and accounting-related matters as well as statements regarding our cash position and cash runway. We wish to caution you that such statements reflect only the company's current beliefs, expectations and assumptions, but actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, and we refer you to our SEC filings for more details on these risks, including the company's most recent annual report on Form 20-F. The company undertakes no obligation to update projections and forward-looking statements in the future. With that, I'll turn the call over to Eran.

Thanks, Yvonne. Good morning and good afternoon, everyone. I'm delighted to speak with you today as Compugen's new President and CEO. I'm really energized stepping into this role at such pivotal time for our company. Having led our scientific strategy in my forward position as CFO, I've seen firsthand how our science has evolved, and I believe we can deliver significant value for patients. So where do we stand today. Our fundamentals are strong and our strategy is clear. We are pioneers in computational drug target discovery. And we believe that our deep expertise in TIGIT biology is now gaining clinical momentum. I think that now is a great time to highlight what makes us different in the TIGIT drug development space and why you should be paying close attention to our differentiated Fc reduced anti-TIGIT programs and their advantages over Fc active anti-TIGIT antibodies. Reflecting on the history of drug development, one can appreciate that indeed choosing the right therapeutic target to cure disease is critically important. But choosing the right drug format, which fits that specific target is just as important. We know that anti-TIGIT antibodies with the Fc active format have not lived up to expectations and most of these programs were discontinued. However, this did not surprise us because Fc active anti-TIGITs can deplete TIGIT positive effect on T cells and T regs. This is not desired because 1 on efficacy. TIGIT is present on effector T cells. So similar to the action of anti-PD-1s you want to reinvigorate these exhausted cells and avoid their depletion. Two, on safety, TIGIT is present on T regs depleting peripheral T regs could result in immune-mediated side effects. Fc reduced anti-TIGITs like our own COM902 in contrast, preserve and reinvigorate effector T cells, avoid depletion of peripheral T regs and therefore, have the potential for improved immune activation and a better safety profile. It is notable that as earlier Phase II trials with Fc active anti-TIGITs, safety was a concern with high rates of discontinuation due to adverse events. This was also even more evident in the Phase III trials. For example, during the recent ESMO meeting, the presenter highlighted that in SKYSCRAPER-07 trial, adding Fc active TIGIT to atezo resulted in these patients only receiving median number of doses of 12 versus 17 in the atezo-only arm. As a result, the patients receiving TIGIT PD-L1 combination received 30% less PD-L1 antibody versus control. So safety really impacted the ability to administrate treatment and, therefore, probably impacted the outcome. We've always advocated for the Fc reduced formats, and we believe that the data starting to support our convention, not all anti-TIGIT antibodies are the same. And we believe the market is missing this. We believe our assets are positioned to capture the upside as new data emerges with readouts anticipated from 2026, provided our conviction proves correct. This moves us to our strategy, which is rooted in science and focused on patients. We have 5 key value drivers, starting on Fc reduced TIGIT programs. COM902 is one of the only 2 clinical stage Fc reduced anti-TIGIT monoclonal antibodies currently in clinical development. And importantly, it's fully owned by Compugen. Positive Phase III data from Arcus/Gilead with the only other known Fc reduced anti-TIGIT monoclonal antibody is expected in 2026 and could be a real catalyst for COM902. Notably, recent overall survival data from their Phase II frontline gastric cancer study, which is the same setting as Arcus/Gilead ongoing Phase III trial was presented at ESMO recently and showed a median overall survival of 27 months versus 15 months or less for benchmarks, a meaningful signal for the Fc reduced class. Next is Rilvegostomig. Our partner, AstraZeneca's Fc reduced anti-PD-1 TIGIT bispecific with the TIGIT component derived from our Fc reduced high affinity COM902. Interestingly, cooperative bispecific binding might provide even further efficacy into PD-1 and TIGIT blockade, while in addition, potentially supporting an easier regulatory path. The potential commercial opportunity for Rilve is substantial with AstraZeneca estimating nonrisk-adjusted peak year revenue target of more than $5 billion. We understand that AstraZeneca's ambition is for Rilve to replace PD-1, PD-L1 therapies and to service the backbone for future combination treatments. Their broad development program spanning 11 Phase III trials across lung, gastrointestinal and endometrial cancers represent a potential significant value drive for Compugen as we're eligible for regulatory and commercial milestones and mid-single digit tiered royalties payments. Moving to Fc-reduced PVRIG, COM701, fully owned and the only Fc reduced monoclonal anti-PVRIG antibody in the clinic, which again, we believe is the right Fc format. The biology here is truly differentiated from PD-1 and TIGIT checkpoints, providing advantages that we believe could translate into clinical benefit for patients with platinum-sensitive ovarian cancer. Positive data in our ongoing MAIA-ovarian platform trial could support a broader clinical development program aimed at addressing a significant unmet medical need. And finally, to our cool and smart potential first-in-class antibody program, addressing cytokine biology, GS-0321 previously COM503 is a potential first-in-class anti-IL-18 binding protein antibody licensed to Gilead. GS-0321 represents a novel antibody approach to harness IL-18 pass by biology for the treatment of cancer, potentially overcoming the limitations presented by illustration of therapeutic cytokines. It represents another potential value driver for Compugen, as we're eligible to receive $758 million in milestone payments and single-digit to low double-digit tiered royalties. This program is the most recent example of how our AI/ML power discovery engine is delivering new opportunities. And behind this, we have early pipeline of what we believe to be truly innovative research programs. As pioneers in the field, we are committed to delivering real breakthroughs, not just incremental therapies. And real innovation is never easy. It takes time, persistence and willingness to tackle the toughest scientific challenges. But I believe deeply in what we're doing here, and we have the best talent and great tools to do this and are truly excited about the potential of our early stage programs. Next, turning to the progress we have made this quarter. The team at ESMO in Berlin in October where we presented a pooled analysis of our 3 previously reported Phase I trials, reflecting the clinical benefit of COM701 as monotherapy and in combination in patients with heavily pretreated platinum-resistant ovarian cancer. The pooled analysis demonstrated that COM701 was well tolerated, showed consistent durable responses in patients with heavily pretreated platinum-resistant ovarian cancer, particularly in those without liver metastasis, representing patients with lower disease burden and potentially less immunosuppressive tumor macroenvironment. The results of the analysis support the rationale for the ongoing randomized MAIA-ovarian platform trial, evaluating COM701, its maintenance therapy in early lines of treatment. The MAIA-ovarian platform trial is progressing. Sites have been activated across the U.S., Israel and France including major academical centers and multiple sites from the French oncology cooperative group, ARCAGY-GINECO, renowned for several recent platinum-sensitive ovarian cancer trials. We now estimate the interim analysis in Q1 2027. We believe MAIA-ovarian is a significant opportunity to address an unmet need for maintenance therapy in platinum-sensitive ovarian cancer. Next, our partner, AstraZeneca, which presented new Rilve data at ESMO as part of 2 mini-oral sessions. ARTEMIDE-01 follow-up showed that Rilve was well tolerated with promising efficacy, confirming its potential in checkpoint-naive non-small cell lung cancer. Notably, the drug-related discontinuation rate of only 3% further support differentiation of the Fc reduced formats. The TROPION-PanTumor 03 evaluating combination with Rilve with Datroway showed promising efficacy and manageable safety underscoring the potential of next-generation IO bispecific plus ADC. Moving next to GS-0321, our novel antibody approach with Gilead that leverages cytokine biology, the Phase I trial is progressing as planned and we presented last trial design at SITC last week. We have strong conviction in our fully owned programs. We are validating partnerships with AstraZeneca and Gilead providing potential for over $1 billion in milestone plus royalties. Of course, none of this would be possible without our highly committed talented team here at Compugen who continuously performs at the highest level of excellence. With that, I will hand over to David for the financial update before we open up the floor for Q&A.

Thanks, Eran. I'm pleased to say that we are advancing in 2025 with a solid balance sheet. Cash runway, assuming no further cash inflows is expected to fund our operating plan into the third quarter of 2017 and we anticipate using this runway to advance our COM701 platinum-sensitive ovarian cancer trial, MAIA-ovarian and to support the progression of GS-0321 in the clinic, together with continued investment in our early-stage pipeline. Going into the details, I will start with our cash balance. As of September 30, 2025, we had approximately $86 million in cash, cash equivalents, short-term bank deposits and investment in marketable securities. In October 2025, subsequent to the financial results for the quarter ended September 30, 2025, a total of approximately 0.8 million shares were sold through the company's ATM facility, contributing to a net proceeds of approximately $1.6 million. Revenues for the third quarter of 2025 were approximately $1.9 million compared to approximately $17.1 million of revenue for the comparable period in 2024. The revenues for the third quarters of 2025 and 2024 reflect the recognition of respective portions of both the upfront payment and the IND milestone payment from the license agreement with Gilead. Expenses for the third quarter of 2025 were in line with our plans. R&D expenses for the third quarter of 2025 were approximately $5.8 million compared to approximately $6.3 million in the third quarter of 2024. Our G&A expenses for the third quarter of 2025 were approximately $2.2 million and approximately $2.6 million for the same period in 2024. For the third quarter of 2025, our net loss was approximately $6.98 million or $0.07 per basic and diluted share compared to a net profit of approximately $1.28 million or $0.01 per basic and diluted share in the third quarter of 2024. With that, I will hand over to the operator to open the call for questions.

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

Just curious, the extension of the MAIA interim analysis from, I guess, the second half of '26 into the first quarter of '27. Is that just predicated on enrollment time lines and kind of what you're seeing just from an accrual perspective. Does that have anything to do with the accumulation of PFS events in the study that may be required to trigger the interim, just curious as to what's kind of happening behind the scenes there?

Sure. Thanks, Steve. So overall, as we know, there are a few factors that determine the initial readouts of clinical trials. This opening the sites is the actual enrollment rates. And finally, the actual accumulation of events along the trial. And we start the trial by given estimation and the more the trial develops, you understand the kinetics and you optimize your prediction, this is exactly what we're doing here. We can say today that we opened most of the sites, including major academical U.S. centers and the French ARCAGY-GINECO Group. It took a bit more time to open mostly the academical centers, but we are glad to have them on board. And now again, most of them are open. And now we expect while opening the sites, and again, and adding the French site also was done because they showed interest and also to support the aggressive enrollment rate that we anticipate. And now this is the time for the start enrollment and see the actual ramp-up. And Michelle, if you want to add something, to add some color?

No. I mean, you've covered everything. So effectively, we had selected a number of sites. We've had additional academic sites wanting to participate. And those do tend to take a little longer to open. In addition to that, we had also been consulting with GINECO in France when they asked to participate as well. So we're trying to reflect our best estimates. I think there's a lot of different factors that impact when one has an interim analysis, and we still believe that we will be able to meet the aggressive time lines that we have.

And finally, we also disclose today that we have cash runway into Q3 '27. So we also have the cash to support taking into account this shift in Q1. So we're in a good position to continue with the MAIA trial and to bring value for patients because we think and we believe in this study.

The next question is from Daina Graybosch of the Leerink Partners. Please go ahead.

I wonder if we could talk about the upcoming Arcus/Gilead readout with their TIGIT and gastric cancer because it could come as early next year. I want to know what you're looking for, of course, if it's successful, then that validates your ingoing hypothesis. But is there anything you would see in the outcomes of that trial that would reduce your confidence in your own TIGIT and more importantly, in the bispecific Rilvego.

Thank you, Daina. It's a very good question. So this will be the first Phase III readout for an Fc reduced TIGIT antibody. The data enabled is promising, but it was a single-arm study, not many patients, but doubling -- almost doubling the overall survival versus stroke control was reassuring. And now is the time to see how it evolves in the Phase III, and this is, of course, could be very meaningful for us. But it is only 1 trial. So obviously, if it's successful, this reflects directly on the Fc reduced and what we're saying about the Fc active the safety issues, potential reduced efficacy issues, and this will show directly that Fc reduced are active in Phase III results. But even if this trial fails, Arcus/Gilead themselves are additional Phase II -- Phase III trials, additional 2 ones. And AstraZeneca has 2 additional advantages over the -- just a single monoclonal Fc reduced. One is they show that they're bispecific, has a potential more activity. And actually, showed that in a very nice ex vivo patient-derived material system, and they have a cooperative binding that allow cooperative blockade of PD-1 and TIGIT on the same cell. And the result was in that relatively translational system that is more active than just PD-1 and TIGIT blockade. And then also in some of the trials, they have a potential regulatory advantage as the way we see it and looking just for the size of all the accumulating Phase III trials, for example, one of the trials in the, I believe the ARTEMIDE-Biliary01 they are comparing Rilve plus chemo to chemo. And because it's a bispecific, nobody can ask for a contribution of components as far as we understand it. And therefore, you don't need to show that TIGIT is active. Yes, we believe TIGIT is active, and they have to reduce. But even if the activity is not sufficient in this case, having both enhanced efficacy due to the bispecific format and just using it as a IO safe backbone to combine with chemo to compare versus chemo, this is definitely an advantage of the bispecific. There are some other trials doing the same. And they also have some trials doing directly head-to-head versus pembro. And we believe and think that they should have a win there as well. But so they have multiple shots on goal with some advantages of the bispecific in this.

The next question is from Leland Gershell of Oppenheimer.

Just wondering if you -- as we look forward to the interim update from MAIA-ovarian, could you remind us of any internal threshold or bar you're looking for from that interim with respect to efficacy.

Thank you, Leland. So I will start and hand over to Michelle. So again, just to remind everyone, we talked about a study which have 40 patients treated with COM701 in maintenance settings compared to 20 patients in placebo. We're relying on solid stroke control and internal control comparing to placebo. This is not a registration trial, but we are looking, and we think this trial is well built to allow us to understand if COM701 has a monotherapy signal in this patient population after seeing a signal in the last-line platinum resistance setting. And then upon success, this adaptive trial design will allow us to build and to continue to move forward either to adding of more arms or to potential accelerated approval. And Michelle, please add some color on that.

Okay. So the clinical trial is an exploratory study to allow us to determine the magnitude of the effect size of COM701. It is very desirable for us to be able to demonstrate single agent activity, an improvement of up to 3 months above the placebo would be very clinically meaningful. But at the same time, we are looking forward to the totality of the data to be able to determine what the next best steps would be.

The next question is from Asthika Goonewardene of Truist Securities.

So with COM902, this would tend to be an unpartnered Fc -reduced reduced TIGIT antibody in the wake of new data coming up from the people who will be watching on Arcus and making read-throughs here. So I know you've licensed to binder to AstraZeneca, but does that still give you flexibility to partner 902 with a separate company. Can you let us know about any restrictions or financial terms we should take into consideration?

Thanks, Asthika. It's a great question. So we licensed AstraZeneca, the rights to use COM902 as part of their bispecific PD-1 and TIGIT and some other bispecifics. But we fully own COM902. We don't have any restrictions. We can either decide to move forward in our own trials, obviously, upon successful results by others to be a meaningful driver, remind all of us in the days that the Fc active TIGIT initial deals were hundreds of millions of dollars of upfront deals. And being the probably only monoclonal Fc reduced TIGIT antibody out there. We believe that readouts in '26 could bring meaningful interest back into TIGIT, especially in COM902 and we have -- again, we fully own it. So it's -- we can be fully opportunistic in whatever direction we would like to take this COM902.

The next question is from Swayampakula Ramakanth of H.C. Wainwright.

Good morning, Eran and David. A couple of quick questions. One is when we look at the tolerability profile of COM701. How does that influence its potential use in combination therapies, especially in some of the less immune inflamed tumors. And the other question is, when you saw the data from the pooled analysis presented at ESMO. There were some grade 3 or higher treatment-related adverse events about 16.7% or so. So how does -- how do you plan to include that safety in combination therapies.

Michelle?

Sure. So firstly, the tolerability of COM701 as a monotherapy is extremely well tolerated. In fact, we didn't have any discontinuations due to adverse events in that pooled analysis when COM701 was used as a single agent. And in the triplet combination groups in the pooled analysis, the adverse events that we're seeing that were grade 3 were in keeping with the same frequency seen in respect of labels for both nivolumab and pembrolizumab. Given the tolerability of COM701 on its own, we believe that it is very well set up for being able to be used as a monotherapy or as a combination with standard of care agents or with other novel agents that are coming through the landscape.

This concludes the Q&A session in Compugen's investors conference call. Thank you for your participation. You may go ahead and disconnect.