Compugen Ltd. (NASDAQ:CGEN) Q3 2023 Earnings Call Transcript

Compugen Ltd. (NASDAQ:CGEN) Q3 2023 Earnings Call Transcript November 7, 2023

Compugen Ltd. misses on earnings expectations. Reported EPS is $-0.11 EPS, expectations were $-0.09.

Operator: Ladies and gentlemen, thank you for joining us today. Welcome to Compugen’s Third Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today’s call is being recorded. An audio webcast of this call will be made available on the Investors section of Compugen’s website, www.cgen.com. [Operator Instructions] I would now like to introduce, Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Yvonne Naughton: Thank you, Yoni, and thank you all for joining us on the call today. Joining me for Compugen for the prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Henry Adewoye, Chief Medical Officer will join us for the Q&A session. 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, research and development efforts and their potential outcome, anticipated progress and plans, results and timelines for its programs, financial and accounting related matters, including projected financial information, as well as statements regarding the company’s future cash position and other results, and the company’s future initiatives.

A laboratory scientist surrounded by drug-discovery equipment and resources.

We wish to caution you that such statements reflect only the company’s current beliefs, expectations and assumptions, and that actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, which could cause the company’s actual results to differ materially from those projected in such forward-looking statements. 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, filed with the SEC on February 28, 2023 as later amended. The company undertakes no obligation to update projections and forward-looking statements in the future. And now, I’ll turn the call over to Anat.

Anat Cohen-Dayag: Thank you, Yvonne. Good morning and good afternoon, everyone, and welcome to our third quarter 2023 update. I will start by saying a few words on the heartbreaking situation in Israel, a humanitarian disaster. We were traumatized and devastated by the inhuman slaughtering and kidnapping of civilians by the terrorist group Hamas. This brutal attack shook us to our core. I’m deeply thankful for all the kind words of support I’ve received from so many friends, colleagues, partners, investors, analysts, and the medical associations from across the world. Your solidarity means so much to me and provides comfort amidst all the anguish and unbearable pain. Thank you. We recognize the emotional toll this is taking on our employees in Israel, and we are taking care to manage the employee needs with a lot of sensitivity and care.

Despite what our team members are going through, this is a time when we see teamwork at its best. Everyone supporting each other and stepping in to ensure we have no gap. The teams are working hard together to ensure we continue to execute and meet our goals. Some are giving 150% when others are not able to. I’m seeing it every day and it makes me proud. The infrastructure for remote working was established during the COVID pandemic, and although we allow certain teams to work remotely, we are encouraging our employees to come to the office. As a global company with headquarters in Israel and presence in the U.S., Europe and Singapore, some management members and teams responsible for some of our key functions, including clinical development, preclinical development and IT systems are based outside of Israel.

Our clinical trials are run in the U.S. and operating in the ordinary course of business, including with respect to CMC and drug supply. Also, most of our preclinical activities related to COM503 are performed outside of Israel. We continue to work with no material impact on our operations, and if this changes, we will communicate it to the market. At Compugen, our goal is to transform the treatment of cancer patients who have no effective treatment options by using our pioneering computational platform to discover novel drug targets and develop potential first-in-class drugs. On this front, we’re executing on our differentiated clinical approach to evaluate the blockade of the three pathways PVRIG, TIGIT and PD1. We’re also advancing IND enabling studies with our lead preclinical potential first-in-class anti-IL-18 BP antibody COM503, offering a novel approach to harness cytokine biology to address resistance to cancer immunotherapy.

And we’re advancing our earlier stage pipeline with additional new potential first-in-class programs. At Citi [ph] Conference, which just took place, we presented additional data reinforcing a COM701 mediated antitumor activity in tumors typically not responding to immunotherapy. This data, which we continue to collect and share from our prior signal seeking studies, adds to the breadth of tumor type, typically not responding to anti-PD1, but responding to COM701 combination. Also, the biopsies taken from patients treated in these studies allows us to advance our biomarker insights as well as further confirm the COM701 mediated mechanism of action. And in parallel, we’re conducting our ongoing studies focusing on MSS CRC and platinum resistant ovarian cancer.

Building on data we presented at ESMO IO last year, at SITC, we reported clinically meaningful durable partial responses in platinum resistant ovarian cancer patients treated with COM701 triple combination with no new safety signals. Three patients are continuing study treatment for more than 16 months. While the numbers are small, typical median duration of response for this population is three months to four months with standard chemotherapy, where 6.9 months reported in patients treated with a recently approved antibody drug conjugate. In addition to these durable responses, our triple combination has the potential added benefit of a favorable safety and tolerability profile which as we reported previously, investigators believe is important for patient’s quality of life.

We also reported that clinical benefit, defined as partial response or stable disease of at least 180 days, was independent of baseline inflammatory status and was associated with an increase in CD8+ T cells infiltration into the tumor, suggesting again and consistent with what we previously reported, a COM701 mediated mechanism of action. Excitingly, at SITC, we showed for the first time in tumor biopsies an association between the expression of the PVRIG ligand, PVRL2 and clinical benefit, which may suggest the potential of patients baseline PVRL2 levels as a biomarker to help enrich for patients who may gain clinical benefit from COM701 combination. This is consistent with the basic computational driven hypothesis we shared for this pathway in the past.

This initial association finding suggest a COM701 mediated mechanism of action and has a potential for informing our studies, and I will come back to it later. At SITC, we also reported data in heavily pretreated metastatic breast cancer patient. COM701 when combined with nivolumab resulted in preliminary antitumor activity with an overall response rate of 12%, including one complete response for over 21 months in a patient with HER2 negative metastatic breast cancer, a tumor that is considered immune cause and a partial response for a ten months in a patient with a triple negative breast cancer, which is the fastest growing and most aggressive kind of breast cancer. The disease control rate was 29% and the three patients with stable disease were PDL1 low and with low tumor mutation burden at baseline, suggesting a COM701 mediated mechanism of action.

And again, we reported good safety and tolerability with these dual combinations. These findings are important because this is yet another indication in which patients are deriving durable benefits from COM701 combinations despite typically not responding to immunotherapy. Additionally, like the initial biomarker work in platinum resistant ovarian cancer in these metastatic breast cancer patients we showed that baseline PVRL2 expression level are higher in patients with clinical benefits further supporting our biomarker hypothesis. And finally, at SITC, as part of an oral and poster presentations, we shared new data on our preclinical potential first-in-class anti-IL-18 binding protein antibody COM503 further supporting our exciting novel approach to harness cytokine biology to started resistance to cancer and immunotherapy.

As a reminder, there is a huge excitement in this space as cytokines have the potential to be powerful therapeutics but have been plugged with challenges of giving them systemically at levels high enough to reach and modulate the tumor microenvironment without causing systemic side effect. We have found a way to address this for the IL-18 pathway. COM503 block the interaction between IL-18 binding protein and IL-18, thereby freeing natural IL-18 to inhibit cancer growth in the tumor microenvironment. The data we presented at SITC addresses two pertinent questions. One, are IL-18 levels in the tumor sufficient to provoke an antitumor response following antibody blockade of IL-18BP? And two, is an IL-18BP antibody safer than an engineered IL-18 cytokine that is given systemically?

With respect to the first question relating to IL-18 levels in the tumor we showed that one, antibody inhibition of IL-18BP freeing natural IL-18 prevents tumor growth in multiple mouse tumor model; and two, COM503 has the potential to release local production of IL-18 in human tumors above the minimum range needed to stimulate the immune system. We also showed that antibody inhibition of IL-18BP induced a significant increase in functional immune cells, such as the effector T cells and induced a T cell [ph] extension in the tumor as well as immune memory response.

.: Along with a successful SITC, I would like to refer to additional progress we have made in the quarter. We are delighted to report that we have completed enrollment in the MSS CRC proof-of-concept study, which is a testament to the substantial unmet medical need in these patients and lack of alternative options. We continue to monitor patients on study treatment, and we believe it will be more prudent to provide an update when we have longer follow up from these cohorts in the first half of 2024, and our preference is to do this at a medical conference. In the platinum resistant ovarian cancer study, enrollment is increasing since we last reported with the activation of two additional sites. Nevertheless completion of enrollment of up to 20 patients will move into 2024.

The platinum resistant ovarian cancer landscape is continually evolving and becoming more competitive. Although we did not expect an impact of mirvetuximab on our enrollment, which as per label is restricted to about 40% of Folate Alpha High patient. Ovarian cancer investigators are indicating that as the clinical community gained more confidence in the use of mirvetuximab, this is having an impact on our enrollment. Following comprehensive discussions with our investigators, we’re optimistic that we can address these gaps and are working closely with our investigators on patient enrollment. Our investigators remain enthusiastic to further enroll to our study based on the durability of responses with our triple combination reported at SITC, as well as favorable safety profile.

In addition to our progress, I’m delighted to see the progress of our partner AstraZeneca is making rilvegostomig. Their PD-1/TIGIT bispecific derived from COM902, which has progressed into Phase 3 as adjuvant therapy for biliary tract cancer after resection in combination with chemotherapy. In addition, AstraZeneca continues to progress their rilvegostomig Phase 1 and 2 programs in additional indication. I believe that the progress of the rilvegostomig clinical program demonstrates the commitment to explore the potential of TIGIT and our differentiated anti-TIGIT COM902. Like COM902, a reduced Fc effector function anti-TIGIT antibody rilvegostomig was engineered to reduce Fc effector functionality with the potential to enhance antitumor activity.

Now, moving on to what you should expect to see from us next. First, we plan to report data from our ongoing proof-of-concept study in MSS CRC in the first half of 2024. Second, we plan to enroll up to 20 patients in our ongoing proof-of-concept study in platinum resistant ovarian cancer and report data in 2024. More specific guidance will be shared during our end of year conference call. Third, identification of a predictive biomarker to enrich for responders through our COM701 combinations was always important for us. To this extent, we’re excited about the progress we have made on generating initial biomarker data, which I alluded to earlier, showing for the first time an association between the expression of PVRIG ligand, PVRL2 and clinical benefit that is consistent with our computational predictions.

We will continue to build on these preliminary findings as part of our ongoing platinum resistant ovarian cancer study, in which biopsies are mandatory. In parallel, we’re also optimizing our PVRL2 assay to fit a potential patient selection study. Having the potential to enrich for responders in the platinum resistant ovarian cancer patient population, together with the durability of response and the safety profile of our triplet combination may allow us to build a unique development path for our triplet regimen. We will communicate early next year on how we will use this data to inform future direction. And finally, we’re on track for IND filing for COM503 in 2024. Before handing over to Alberto, I will touch briefly on our finances, and then Alberto will go into the details.

We have an expected cash runway through at least the end of 2024, which we believe is sufficient to support all planned operations. This does not include any potential cash inflows, including potential milestone payments, which we may become eligible for through our partnership with AstraZeneca. Also, as we indicated, obtaining non-dilutive cash from partnering is a priority, and we’re focusing our efforts on that front. With that, I will hand over to Alberto for the financial update.

Alberto Sessa: Thank you, Anat. I’m happy to summarize our financial results. I will start with our cash balance. As of September 30, 2023, cash, cash equivalents and cash investments were approximately $57.5 million compared with approximately $83.7 million as of September 31, 2022, affirming our focus on cash management while continuing our execution on our DNAM-1 axis hypothesis and progressing our lead preclinical drug candidate COM503. As Anat mentioned, we have an expected cash runway through at least the end of 2024, which we believe is sufficient to support all our planned operations. The company has no debt. Now, regarding expenses, expenses for the third quarter of 2023 were in line with our plans. R&D expenses for the third quarter of 2023 were $8.3 million, down from $9.3 million in the third quarter of 2022.

The decrease is mainly due to lower expenses associated with our CMC activities, offset by an increase in clinical trial expenses and by the end of the amortization of the deferred participation in R&D expenses following the termination of the agreement with BMS in the third quarter of 2022. G&A expenses for the third quarter of 2023 were $2.3 million compared to $2.6 million in the third quarter of 2022. Net loss for the third quarter of 2023 was $9.9 million, or $0.11 per basic and diluted share, compared to a net loss of $11.7 million, or $0.14 per basic and diluted share in the third quarter of 2022. With that, I will hand back to Anat to summarize.

Anat Cohen-Dayag: Thank you, Alberto. To summarize, we continue to execute, with our most recent data presented at SITC, we continue to provide evidence supporting a potential COM701 mediated clinical benefit in hard to treat patients who are not responding to standard of care and failed prior IO therapy. This strengthens our path as we continue to pursue our ongoing proof-of-concept studies designed to reinforce the data in our two selected indications and continue to inform our complementary biomarker strategy. We’re looking forward to presenting data from these studies in 2024 and providing more details on our biomarker strategy informing future direction and related studies. We’ve always said that blocking TIGIT may not be enough and the PVRIG may be needed.

This belief is consistently being reinforced as we roll out our clinical data across multiple indications and most evidently in hard to treat patients who are not responding to standard of care and failed IO therapy. With COM701 and COM902 our two wholly-owned PVRIG and TIGIT programs, we are the leaders in the unique chemotherapy free, triple combination approach of blocking three DNAM axis immune checkpoint PVRIG, TIGIT and PD-1 with initial clinical data to support our hypothesis. We’re also paving the way in harnessing cytokine biology to address cancer immunotherapy resistance, which is a field of high interest to the industry. With COM503 targeting the IL-18 pathway, we’re on track to IND filing in 2024. I would like to thank all our employees for their dedication, teamwork and resilience.

Despite the challenges we have been enduring in Israel. With that, I will turn the call back to the operator to initiate the Q&A session.

Yvonne Naughton: Actually, before we go to the operator, I see Pierre Ferre, our Vice President of Preclinical Development, just joined us fresh off the plane from SITC in San Diego. Pierre will be glad to answer any questions on COM503, which sparked a lot of interest after his oral presentation at SITC. Welcome, Pierre. Yoni, you can now initiate the Q&A session.

Operator: Thank you. [Operator Instructions] The first question is from Asthika Goonewardene of Truist. Please go ahead.

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