Compugen Ltd. (CGEN) Q3 2023 Earnings Report, Transcript and Summary

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.

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. 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.

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.

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.

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.

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.

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

Hi, thanks for taking my questions. I’m Jean, and I’m on the line for Asthika. So, I have a question regarding about the first question is about what’s expected – your expected milestones or timelines in 2024 and beyond for the program you co-develop with your partner AstraZeneca? And then could you tell more details about how you both parties will handle this program? How will you monitor and evaluate the progress and then performance of this program? That’s my first question. Second question is regarding, of course, the COM503. So, I would like to ask, how are you going to determine the optimal dose and schedule for this COM503 and then in the animal or human studies, preclinical and clinical? And then how will you count for the variability and also stability of this IL-18 and IL-18 BP levels in the different individuals or conditions? Okay, that’s my two questions. Thank you.

Thank you, Jean. So, I’ll start with the first question that relates to AstraZeneca. And then Pierre will take the second question that relates to COM503. So first I’ll say that with AstraZeneca, the partnership that we have is actually a license agreement where we license to AstraZeneca the rights to develop bispecific antibodies based on our COM902. And from the get go, this agreement is actually granting the rights for AstraZeneca for the full development and the later commercialization of the program. We’re getting updates on this program, but this program is really progressed by AstraZeneca. And obviously any information about this program will be disclosed only by AstraZeneca. Specifically, for contractual reasons, I cannot provide any insight about the specific milestones and the breakdown and the timing and the eligibility. The only insight that I can give on this front is that on the clinical milestones that we were already obtaining, we were eligible for milestones for the initiation of patient dosing in Phase 1. And in Phase 2, it was $6 million for Phase 1 and $7 million for Phase 2. Other than that, at this point in time, I cannot say more. And as I stated, this is really AstraZeneca strategy in how to advance these programs to which indications and at what timing. Pierre, will you take the COM503 question?

Yes, my pleasure. So you were asking how we would conduct the Phase 1 study to go to the active dose. So to do that, we will of course run a Phase 1 cancer patients with standard dose escalation with some accelerated, maybe dose iterations. About the dose itself, we have built large experience at Compugen on the tools and the methods needed to measure all the components required for the pathway. We have built a comprehensive translational package with all our experience in vivo with vivo models ovarian cancers, and also lots of experience on in vitro testing on human samples. So we have made and this will be ongoing for the rest of the time that goes to the clinical trial. We have built comprehensive PK/PD modeling that we will aim to follow during the course of the study. With the tool that we have, we can monitor the suppression of IL-18 BP in the periphery of the patients, and that will be, the main basis of reaching the actual dose. A very interesting thing with that program is the safety so far that we’ve seen in all the animal models and also the human in vitro models that we have tested. And so with that safety in hand, if that transfer into the expected high tolerance in patients, we really think that we will be able to reach active dose level that saturates IL-18 BP target easily in the tumor.

Thank you again for taking my question.

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

Hi, good morning. This is Jeff on Daina. I just have a few questions related to the biomarker data reported at SITC, Anat [ph] can you just recap where you are in the process of developing companion diagnostics for PVRL2 patients, respectively? And how would this path differ for IHC versus genomic amplification companion diagnostic? And is any one more practical than the other to implement? Second, do you think the data you shared on PVRL2 expression ovarian cancer and that genomic application data more broadly is something you can leverage to facilitate enrollment indications? And next year, when you report ovarian in MSS CRC, do you plan to show this retrospective PVRL2 expression data in these patients? Thank you.

So thank you, Jeff. I’ll start with answering the first portion of the question of what we are and how we move forward, and then Pierre can relate to the IHC and genomic alteration. So I’ll just say that at this point in time, first, we’re very excited with the data that we got. It’s still initial, but it’s pointing in the exact right direction that we were thinking of at the stage that we build the hypothesis based on computational data, and we are continuing to collect data. And this is from the ongoing study. It is important for us to add more patients and generate more robust data as we go with the ovarian cancer study. For the meantime, we’re also developing an assay, but I want to make sure maybe Pierre will want to relate as well when he answers. It is not the final companion diagnostic assay. We’re now, in parallel of collecting more data, we’re optimizing the assay that will be used eventually for screening patients in a study. It’s not going to be the ultimate companion diagnostic assay, but we’re trying to work aggressively on both forms, on collecting the data and optimizing an assay. So we are ready to be able to take it forward based pending the data will continue to look good. Pierre, do you want to relate to the additional questions or to add?

Yes, I would say that the IHC assay is being optimized for use in the Socal [ph] laboratory that we already used in the recent past generator [ph] data and based on those data, we are optimizing it further to make it easier on practical terms in a day-to-day basis, if and when we will activate prospective patient selection. Then about the genomic, indeed, in the poster that we reported in SITC, we have flagged that one of our patients having the highest score on IHC pivotal IL-2, is also showing a genomic amplification that may be detected perhaps in the future from peripheral blood from the periphery. So it will be a non-invasive way of assessing the biomarker and the possibility that the patient may respond. We view that association between genomic amplification and the high score pivotal IL-2 are the first of confirmation that there is something there of interest. So in public databases on ovarian cancer, it is a low proportion of patients that are having genomic amplification. So we don’t think that immediately it will be achievable to screen patient on that front. But we are intrigued also by the fact that there are gains, not only amplifications, but also gains. And this is something that we will explore, of course, in parallel, but we do think that the IHCs that we have in hand will be proximal for any study if we are going to activate that.

Thanks for taking our questions.

The next question is from Steve Willey of Stifel. Please go ahead.

Yes, good morning. Thanks for taking the questions. Can you just speak to, I guess, how many sites are currently active in the ovarian trial? I guess how many have you brought on just within the past few months? And I guess over the longer term, do you think you need to bring on more sites in order to expedite patient enrollment?

Thank you, Steve. So right now we have nine sites active. We have few more. This is based on the plan that we’ve already rolled when we were thinking about ranking up. We don’t think that we should add additional sites beyond what we’ve planned and what we’re looking to do now. And the reason for this is, what I was just alluding to in the prepared remarks. So first, we believe that the closed monitoring that we’re doing now with investigators and again trying to make sure that the study is on the radar, this is something that is going to achieve the goal. And this is after we added ovarian cancer specific sites, sites that are growing, specifically ovarian cancer patients. So these two things, adding the sites, making sure that we speak with the investigators and we have – I have to say that hearing their comments about how they think about the triplet activity, mainly the durability in conjunction with the safety for these patients that really experience so many lines of treatment, we don’t really need to convince them. So we believe that the ramp up that we’ve started to see will continue and that we don’t need to add additional sites to the study.

Okay. And then I think you said that, I mean, you’re obviously assaying for PVRL2 expression, so I think you said biopsy is a mandatory. Is the ask of a patient both in on-treatment and then I guess a baseline and then multiple on treatment biopsies? Or are you just looking for one specific biopsy and I guess is that second on treatment biopsy requirement? Is that in any way rate limiting in terms of your ability to get patients to solicit consent?

It’s a very good question, so, and maybe Henry will want to add anything about it. But in any case at any study when you ask for biopsies, this is a hurdle; obviously. Because patient needs to go through some invasive approach, but we don’t anticipate at this point in time that this is a big hurdle. We ask for mandatory biopsies at baseline prior to treatment and also on treatment. And this is really serving us in order to make sure that eventually we can go with the platinum resistant ovarian cancer data that we have into what eventually will be biomarker driven study that will allow us to maximize the potential of COM701 treatment for patients that may respond to this treatment. So at this point in time, this is mandatory. With this mandatory request, we do see a ramp up and we believe that this will not be the issue for enrollment.

Okay. And then just lastly on the colorectal trial, I know this is open label. Do you have a sense as to what the distribution of patients looks like with respect to the presence or absence of liver metastases at baseline? Thanks.

And so I’ll start and then Henry maybe wants to add. Yes, it’s open label. We’re familiar with it. While we’re not looking every day on the patient distribution, we’re familiar with it. We are this kind of study that allows for liver mets and that’s unique. And this is because we believe that there could be some edge there based on the prior data. But as I said, we continue to monitor patients. We continue to collect the data. We’re thinking very hardly on what data we should share, while the study is continuing, but we’ve made a decision that it’s better for us not to share portions of data, incomplete picture. It is better for us to have a longer term follow up and share the full picture, as I said, preferably in a medical conference when investors will be able to see the full picture of the data. Henry, anything else you would like to add on the liver mets part of the question?

Thank you, Anat. I think you’ve covered the major part of the question. But just to give some color, looking back at the data we presented previously on the 22 subjects, patients with microsatellite stable colorectal cancer, a little above three quarters of those patients had liver mets that was the initial presentation we had. The number of patients that we anticipate will have liver mets will also probably be around that number, based solely on the fact that most of these patients have exhausted all available standard of care therapies. And in addition to that, the most common site of metastatic’s of colorectal cancer, if you just look at the anatomy of the liver. So between half to about two-thirds to about three quarters of patients will probably have liver mets on analysis? And I’m just making an assumption here and a projection, until we do look at that data next year, like Anat has mentioned before we’ll be able to give you more substantive information on that regard.

Okay, thanks for taking the questions.

And maybe, Steve, maybe I’ll just add just to make sure that it is clear that in a biomarker driven study we will obviously only require for a baseline biopsy pretreatment biopsy, but not an un-treatment biopsy, so it will be less complicated.

This concludes the Q&A session of Compugen’s Investor Relations Conference Call. Thank you for your participation. You may go ahead and disconnect.