Compugen Ltd (CGEN) 2004 Q2 法說會逐字稿

Ladies and gentlemen thank you for standing by. Welcome to the Compugen second quarter 2004 financial results conference call. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded July 21st, 2004. With us on line today are Martin Gerstel, Chairman; Dr. Mor Amitai, President and CEO; and Nurit Benjamini, CFO.

I would like to remind everyone that the Safe Harbor language contained in today's press release also pertains to all contents of this conference call. If you have not received a copy of today's release and would like to do so, please contact Nurit Benjamini at telephone number 9-723-765-8525. Mr. Gerstel, you may begin.

Thank you very much. This is Martin Gerstel. I just want to mention that I happen to be in the United States, the other participants on the phone call this morning are in Israel, so if we have a little bit of a problem with the phone issue, you will understand why. I want to thank all of you for participating in the call today. As with the last few quarterly calls, in Compugen's formal presentation today, we will not be reviewing the detailed financial results for Q2. However, Nurit in her talk will provide some general comments regarding our results looking in particular at them from a strategic standpoint, and you are encouraged to raise any specific issues about them during the Q&A session, following our presentation.

In my talk today, I would like to do something quite different than I have done in the past. Some of you are aware that I have personally bought very significant amounts of Compugen stock in the open market. Since most of my investment was at prices very close to the current stock price, I decided that this was probably a very appropriate time to discuss my personal views of Compugen as a potential investment. In view of the fact that I often get questions that essentially relate to that issue.

I joined Compugen as Chairman in 1997, and the Company became public in August of 2000. This was at the very end of the so-called window for biotech IPOs and so Compugen did not participate in the ride up, but we surely participated in the ride down. At the time, investing in Compugen was largely a matter of hope, belief and expectation. We greatly appreciate the shareholders who joined us at that early time. It is true that at that time, Compugen had brought together a very unique mix of scientists from biology, physics, mathematics and computer science to focus on the emerging field of life science at the molecular level. This is largely what led to my interest in joining in a Company that already demonstrated that this team could create unique tools (ph) and platform for the analysis by others of biological data.

Compugen's Bioccelerators, our LabOnWeb activities and software offerings, all of which were addressing evolving but still very small markets were clearly recognized as the state-of-the-art and were relied upon by many of the leaders in this emerging field. However, from a commercial and business model standpoint, it was extremely difficult for investors at the time of our ITO (ph), to see how these activities could lead to a $1 billion plus company, particularly since the key strategic focus of the Company, the deeper understanding of life processes through predictive modeling which at that time was best demonstrated by our early -- and by early I mean not months but years earlier than the rest of the scientific world -- recognition of the prevalence and importance of alternative splicing in the human genome. This discovery was totally ignored by potential investors.

From a Company standpoint, from a Company active standpoint, however, it is important to note that this insight and the resulting prediction and validation of numerous novel proteins allowed us to begin to establish an IP position in many cases based on discoveries that most likely could not be made without our unique capability. We are very proud of the accomplishment that Compugen has made since our IPO 4 years ago. Although just as with alternative splicing at that time, I believe that the scope and significance of our activities are not well appreciated in the financial world. However, those who have followed our progress know that today because of our accomplishments, the basis for making an investment in Compugen is very different than that existing in 2000.

Building on our earlier understanding of alternative splicing, our discovery of the abundance of natural antisense followed by our press release earlier this week regarding the identification of thousands of post transcription RNA editing sites now provide very strong evidence that the team we have assembled can continue to lead the world in important aspects of understanding life at the molecular level. In that regard, it is interesting to note that the recognition of the abundance and important of 3 of the most fundamental aspects of how genes expressed protein, which of course is the core of all life. First at many genes expressed multiple proteins; second that expression often occurs from the two complementary strands of DNA at the same location on the chromosome; and third, the identification of thousands of RNA post expression editing sites were all discoveries of one small Company, Compugen.

From a commercial standpoint, these deeper understandings of important biological phenomenon are extremely valuable to us since they can lead directly to specific discoveries of possible therapeutic and diagnostic importance. Unfortunately, most investors do not yet appreciate that unlike in the physical sciences, where before a scientific discovery can have commercial value, a technology must be created based on that discovery and then products can be developed. In the life science world, in many cases, the scientific discovery is built (ph) by the provide or directly leads to product opportunities with recognized market needs I believe that our CSA (ph) and soluble CD 40 and other protein discoveries provide very clear evidence of this being the case. Regardless of whether or not these particular molecules result in successful product and as we have said in the past, perhaps the most valuable aspect of our research is that unlike the more common high throughput experimental research efforts, each discovery that we make whether relating to a biological phenomenon or a specific protein, in general increases the probability of Compugen making additional discoveries in the future.

Therefore, in summary, since discovery is recognized by the financial community and others as the major problem facing the entire pharmaceutical industry, and as just discussed, we already have very solid evidence of our unique capabilities in this area. A reasonable question is why isn't Compugen stock $100 per share or more now? In my judgment, there are 3 nonindependent reasons for this. First, not enough potential investors, particularly in institutional investors know us well enough in order to appreciate our capabilities and potential and without any research coverage on the street, this remains an obstacle for us.

Second, we currently have too small a market cap for many institutions or analysts to be willing to take the time to learn about us. The third factor and probably in large part a cause for the first 2 is that although we have accomplished much since 2000, there is still 1 remaining requirement where we in fact do not have evidence supporting our position. Or at least don't have enough evidence. Today, for those of you that do understand our Company, we no longer have to convince them that Compugen's research capability is unique, nor that we can make both important breakthroughs in science and technology and discover putative therapeutic proteins and diagnostic that others cannot. Nor that our discovery efforts should continue to improve as we further our efforts.

However, it is also fair to say that as of now, we have very little proof that specific discoveries that our capabilities allow us to take have significant medical and commercial value. Here is where some level of belief is still required. And, once we begin to see additional valuation of this last issue, which can be achieved in many different forms, I'm confident that the change in perception of Compugen as an investment opportunity will be rapid and substantial as is often the case with unique case Companies such as ours.

In view of the above, I have asked Mor to date to provide you with some insight into why we in the Company have confidence that we will be as successful with this last issue; demonstrating clearly the medical and commercial value of our discovery as we have been with our challenges to date.

Now, I will turn the call over to Mor.

Thank you, Martin. In my presentation today I would like to provide you with some insight as to why we believe that we will be successful in accomplishing the commercial successes that Martin mentioned. I am pleased that Martin asked me to do this since I believe that we will provide our investors with additional and thoughtful (ph) insights into our Company, and also because in addressing this matter, I do not have to nor would I be able to validate this release. However, I would like to extend to you why this is important and why we believe that we will provide proof. For those there are 2 broad sides of mutually supportive activities within Compugen. The sales for different understandings of important biological functions and the development of the pipeline of therapeutic proteins; the ultimate validation of the value of our efforts will be in the successful development and commercialization of therapeutic products.

Therefore, our strategy with respect to our initial pipeline is critical. This strategy is based on a number of beliefs or assumptions that I would like to briefly discuss.

The first assumption is that Compugen has and will continue to have an advantage in many novel proteins with relevant medical and functional annotation. Second, within these proteins, Compugen has the ability to select a number of proteins that have a relatively high probability of becoming successful drugs. Third, Compugen will have the ability to accomplish the needed bioclinical and clinical work alone and through alliances. And finally, Compugen will have the financial strength and management capabilities to identify appropriate commercial pathways for its products. This will provide Compugen with a meaningful share of the (indiscernible) value of the discoveries.

For the reasons discussed by Martin, I believe that the first point, Compugen advantages in discovery is accepted by most people who are familiar with our Company is that the growing value of evidence supporting this assertion is already sufficient to convince others who are willing to take the time to listen. Therefore, I will not address this point any further today.

The third and fourth points at least for corporate clinical development and commercialization, I would like to having or acquiring essentially genetic capabilities that exist in today's world in many places. I do not want to underestimate the development (indiscernible) and substantial efforts that will be required to accomplish these points or the potential for failure if not done correctly. But, this is a question of proper execution and not a question of belief as to whether or not something is doable or possible. Therefore, I will devote the rest of my presentation to the second point. Having the ability to select the appropriate discoveries on which to focus our efforts in terms of development and licensing.

This is a key area remaining where we have invested in our Company, must still rely on a certain level of belief rather than proof or execution skills. With respect to the selection process for initial pipeline, our strategy is to choose proteins that our novel but in addition are (indiscernible) of well-studied proteins. This strategy is based on 2 key police that are not universally accepted by the pharmaceutical community, but are accepted by many. More importantly, based on our analysis of an introduction from the available information, we strongly believe in them.

The first belief concerns the general case of 2 splice variants of the same gene. Where one has been well studied by others and one is discovered by us. We believe that the analysis of the common and different domains present in the 2 proteins, we can deduce a great deal of valuable information about the functions and medical impact of our novel protein.

If this belief is correct, it will provide us with a significant advantage in our priority determination of the probability of successful development for our proteins and therefore, in the selection process. The second belief is that natural proteins, especially those that are naturally secreted are in general less likely to create severe side effects when used as drugs, compared with synthesized (ph) molecules for the (indiscernible).

With respect to the first assumption, underlying our selection process, we have only very preliminarily validation through initial in vitro studies. But based on these studies, I feel optimistic. On the other hand, with respect to the second assumption regarding our beliefs in the inherent safety advantages of naturally secreted proteins, as of now, we have no experiment of validation, but many sciences would agree that this is a very reasonable assumption to make.

In growing our selection process, is to identify novel proteins that will provide and serve to important unmet medical needs. Therefore, our belief is that we have the ability to predict medical impact through the comparative analysis of splice variants together with a (indiscernible) evidence that we continue to have a leadership position in discovering novel proteins with relevant connotation in large part provides a basis for the confidence in our ability to achieve what Martin spoke about, significant commercial success through discoveries of therapeutic proteins meeting important medical needs.

I would like to take this opportunity to join Martin in thanking you for sharing our beliefs with us and for your ongoing support. Now, I will turn the call over to Nurit Benjamini, our CFO.

Thank you, Mor. As in previous calls, other than with respect to a few general comments and an update on our (ph) status, I will not review the financial results for the past quarter. If you have any questions about these statements, we will be glad to address them during the Q&A session following my remarks.

Our repurchased financial results reflect our ongoing effort to build a discovery company focusing on 2 mutually supporting activities. The first relates to bringing together biology and exact sciences, to obtain deeper understanding of the important biological phenomenon and incorporating these understandings in our proprietary product discovery engine.

The second major activity relates to the development by us and our partners of the growing pipeline of potential therapeutic proteins and diagnostic markers selected from the large number discovered for use of these engines. The systems of this focus will be closing our New Jersey offices has provided assistance to the Company's Israeli-based R&D operations; the development of software and ragent (ph) product and provided customer support services to clients using these software products and moving our use headquarters and business development activity to California.

On the other hand, during the first half of 2004, we continued to increase our effort in advancing our putative therapeutic protein pipeline including the addition of 2 molecules during the past quarter. CGEN M-3, a soluble kinase receptor with potential therapeutic applications in various types of cancer; and CGEN P-4, a peptide with potential therapeutic applications in obesity and eating disorders.

In the coming months, these new candidates will undergo further validation studies either in our molecular biology laboratory or in collaboration with research institutions.

As we have stated in the past, we manage our Company financially on a cash-flow basis. We began to 2Q '04 with approximately $58 million in cash and cash related accounts and ended it with approximately $55 million. This marked a number of Martin's remarks with (indiscernible) IPO in 2000. I would like to point out an interesting and probably quite unusual fact. Although Compugen has not done any final thing since or IPO in 2000, as of the beginning of Q3 '04, the $55 million that we have in the bank is slightly more than the net proceeds of $53 million we obtained from our IPO.

Looking forward, as previously projected, we anticipate the beginning of 2005 with approximately $45 million in cash and cash related accounts.

With this, we conclude our formal presentation and open the call to any questions you might have about the presentation today, the financial statements, and press release for Q2 '04 or any other aspects of our Company.

Ladies and gentlemen, at this time we will begin the question-and-answer session. (OPERATOR INSTRUCTIONS) Jeffrey Grussman, a private investor.

Hi Martin, Mor and Nurit. How are you doing? I hope all is well on the West Coast, Martin. First question concerning the Company's biomarker engine. We've seen a lot of diagrams but we have not seen any evidence of results. Is there anything on the way? Perhaps you can give us a little feedback?

Mor, will you respond to that?

Yes. The PSA-LM and the K-LM are the first potential biomarker that resulted from our discovery engine for diagnostic markers about two years ago, and we have continued developing this engine since then. And you are right, since then we did not announced any different discoveries.

But perhaps you can tell us -- is there anything on the way or do you prefer not to respond to that?

I will interrupt. Because (inaudible) but I don't think we can relate to this question, Jeffrey. I'm sorry.

I think we can say that we are pleased with the continuing progress. It is a very active program and we are pleased with the continuing progress, but as Nurit said, we're not in the position to comment on potential future announcements.

Is this a matter that there is no patent protection if you can say that? Or things are in negotiation, or something altogether else?

It's a number of factors. Clearly the patent issue is one, but I don't would to totally rely on that. The other is that we want to have some fairly good degree of confidence about the things that we do announce. As we have mentioned many times, our problem is not discovery, it is the selection process. If we do have so many putative markers and other things that we're discovering using these engines. So, I would not -- I guess in general I would just like say it would be a mistake to interpret the lack of public announcement as a statement that this program is not moving forward very successfully.

Maybe I will explain the difference between our diagnostic program and the therapeutic protein one. In the therapeutic protein, we take them and we discover them, and we do a certain amount of (indiscernible) internally and also we intend to develop some of them ourselves to a certain stage and then alliances or license them out. This is our key program. The diagnostic markers, we do only the discovery and very, very initial validation and we would like to tell take on partners to develop (indiscernible). Therefore, it makes sense to us to make announcements with special therapeutic protein when there is certain forms of validation or development, and with respect to the diagnostic marker, the only announcement that we are likely to make with respect to agreements on resale (ph) parties and actually we cannot relate information, particularly where the signed on agreements like (inaudible).

That is understood. Perhaps a related question. You announced that your U.S. headquarters are moving over to San Jose. What exactly are they doing there? What is being marketed? Have there been any successes?

This is very simple. We had a big office in Chelsea (ph) and a very small office in California. We decided to close the bigger office and just leave the small office and we are not currently planning to relocate people from 1 office to another which is reducing substantially the operations. The general operation into the U.S. and the people in the U.S. are responsible for all our commercial operation, and which means collaborations and alliances with other companies such as the one we have with Novartis and Abbott and also in licensing of certain technologies and (indiscernible) that we need. And in both cases, the key market, our key so far in licensing is in (indiscernible) therefore (indiscernible) and they seem to compare to other companies, it is a very small thing.

Okay. Concerning the Company's previously announced therapeutic proteins, perhaps you can give us some indication concerning progress being made towards phase 1? I think on a prior conference call you indicated it might be another 2 years. If you could give us any milestones that you hope to achieve? Maybe you can tell us when you expect animal testing to begin?

We will announce milestones on the way. We are not going to wait until entering clinical trial before making announcements, and certain animal studies can certainly be an appropriate milestones, but currently we cannot disclose when we plan to do it.

Okay. Last question. Congratulations are certainly in order concerning the Company's discovery involving RNA editing sites. Perhaps you can tell us how long ago was this discovery made? I know with respect to prior discoveries that you have made, they were published, the discovery occurred a couple of years prior to the publication. Is this the case here? Perhaps you can tell us if there are additional discoveries of this magnitude in the pipeline?

Initial discovery was made between 1 to 2 years ago -- maybe closer to 2 years, and the validation that is mentioned in the press release would have been done a few months -- a few months ago. And so, this is with respect to the first part of your question. And with respect to a certain -- our strategy is to continue, as Martin mentioned today, is to always continue investing in deeper understanding of protein phenomenon. This is a key aspect of strength and a critical component in our ability to discover protein in potential drugs and maybe better than in some cases than others. So, yes, we are continuing working on similar projects, and -- but before they are finalized, sometimes we cannot disclose the magnitude and sometimes even do not know the magnitude before the end of the project.

Okay. Thank you very much.

Ronald Oveter (ph) of Capital Partners.

Thank you and first I want to thank everybody for being more open and elucidating more of what goes into the science development of the company. I think it's very helpful. I have really 2 questions. One, in terms of the corporate partnering strategy, you indicated that you keep narrowing the speculative part of what the company is developing here down to the splicer as existing drugs and novel proteins. In the former case, can you discuss a little bit whether you intend to go to companies who have the same drug for which you've already discovered a splice variant or in fact go to competitors to compete against the Company that has that existing drug?

And as a further part of that question, given the good but not great balance sheet of the Company, it would seem to me that it is difficult for you to get too far along on the internal development phase, getting into Phase 1 studies of these drugs. So what I'm really asking is what kinds of corporate partnering arrangements do hope to develop where it would seem to be primarily royalty bearing licenses as opposed to co-development deals given your balance sheet. I have another question but I will stop there for a moment.

With respect to the first question, the decision will be made on a case-by-case basis. In general, when we have the 2 possibilities, I assume that we will choose to work with a Company that is interested in developing or completing drugs, and there are several reasons for this. One of them is the risk cost. With such a company, with the smaller risk of them deciding not to continue developing our product due to competition. I assume that in some cases we may not really have the choice and that the best candidate will be the Company with an existing drug that has much higher level of (indiscernible) in the area -- the critical area in a certain part of the drug, and in some cases it will be better to work with them.

And with respect to your second question, I agree. We assume that most of the agreements will be a working agreement and not codevelopment.

One other question. Coming back to the RNA I area, which is a hot area of course as we know. In listening to the presentations of some of the so-called RNA companies, particularly Alnylan (ph) and Sierner (ph), the make a great point of stressing that fundamental building blocks patents, particularly the Tushal (ph) in Germany. Do you believe your IP position is going to involve cross-licensing these patents or will it remain independent on a parallel basis in competing with these companies?

The discoveries that we published 2 days ago is about the abundance of unediting the piece and is believed to be related to RNAi. However, our belief is that the importance of the discovery is more related to the effect that we have access to many more new transcript (ph) and proteins and we know of small differences in RNAi and/or proteins that are very likely to make very difference in our bodies.

So what you are saying if I understand you correctly that you would not in fact have to cross license these other patents?

Yes, we are currently not pursuing any -- we're not focusing on applications that are related to RNAi.

I see. That's in the service of something else?

Yes, in some of collaborations, our companies, it is correct that we helped them design RNAi related experiments. There is no license that is that we need that is required for that.

Thank you very much.

Let me just comment in general with respect to the point that you're asking about. I think Mor described very adequately or very well the situation with respect to our beliefs on the RNA editing issue. As most of you probably are aware, the whole area of patenting in the life science area is a very complex one with patents at different levels. And it is clearly part of our selection process to decide what were going to work on; what we're going to attempt to license out, a very important part of that is to evaluate the intellectual property situation of the proteins; and obviously, we stay away from situations where it is known that we are going to need to take licenses. But it also it is clear that I would be very surprised if in the end with respect to everything that we're working on that there isn't some type of cross-licensing going on in specific cases.

But again this will have to be done case-by-case. In general, as every biotech company says, it is kind of a minefield out there with respect to patents. It is 1 of the reasons why we believe we have an advantage in essentially identifying potential products out of a scientific understanding that other people have not achieved yet. We think that in general, not in every case, but in general, this will provide us with some very strong intellectual property status.

It sounds like the cross-licensing would be peripheral, but not fundamental to your strategy?

It will be on a case-by-case basis and I think with respect to some of the product it will be essential, for most of them, it will not.

Thank you very much.

(OPERATOR INSTRUCTIONS) (indiscernible), a private investor.

You haven't mentioned anything about your 2 subsidiaries that were established recently and the early one. Can you comment on what the future prospects and commercial results are expected from them?

With respect to the subsidiaries, they are -- they do at least Evogene, currently has a minority -- other, other investors in it and in general our policy moving forward will be for them to talk about their progress. Let me state, though, that I am on the board of Evogene, and we're very pleased by the progress that they have made to date. I think they're taking excellent advantage of combining the unique capabilities that existed at Compugen with the real life issues of the Ag Bio field (ph).

With respect to the recent establishment of Keddem; as of now, the program continues essentially as it was moving forward as a division of the Company. It's a very, very exciting program. If successful, we will clearly revolutionize the significant aspects of the pharmaceutical industry, but it remains a high-risk program. And given the fact that substantial additional resources are going to be required over the next couple of years to bring back to the next stage, and also for -- in the interest of maintaining the focus in our Company on the opportunities that we have, we decided to set it up as a separate company. But as of now, that Company is wholly owned by us, and it is continuing with its research as it did when it was a part of the parent company.

Okay. Thank you.

John Smith (ph) of Federal Capital (ph) .

In your annual report recently, you talked about in the discovery section pursuing efforts along the therapeutic protein area with collaborations initially with other companies and that you would probably be doing those collaborations in the very near future. Do you expect you will be able to talk about those to the extent you do initiate those collaborations?

I think in general upsell initiating collaborations that will be significant enough we talk about.

Do you still expect a timeline that is relatively near-term?

What is your definition for near-term?

I was reading the annual report. I am not sure what your definition might be. I think in the annual report it says in the near future.

We are certainly attempting to create certain alliances in the (indiscernible) future.

And do you expect that those alliances might give a sort of a trail map for investors or for outsiders on how you will not only pursue those initiatives, but bring them -- give them a structure for commercial viability and the commercial effect or potential commercial effect of Compugen over the long-term?

If I can answer, sorry, Mor. We are not in the same room together. But I think with respect to -- there was a number of different aspects with respect to the commercialization of our intellectual property. And clearly we are pursuing a general strategy with respect to the licensing out of the kinds of things of some of our property. And also as a very specific strategy with respect to a certain type of collaboration that we are interested in with other organizations. I think as when we announced the first few or the first one in each of these categories, it will give investors, I think a fairly clear view as to how -- at least now we are pursuing -- how we are pursuing these paths.

With respect to the timing, the problem that all of us have is that there is no such thing as an agreement being 99 percent done. These involve other companies, and we will never compromise our long-term interest in order to get an agreement signed faster so that they can be announced. These agreements, we believe are going to be an important part of our Company for many years to come. And therefore, we want to be assured that they are done properly and thought through very carefully. Since they involve another company, I have been in situations in my prior companies where we were very close to planning something and then it completely fell apart and other situations where we thought we were 3 or 6 months away from reaching agreement and we get a phone call that says that the other party has decided to accept all of our positions and we sign in a week. But, until it is done, it's very, very hard to estimate when the agreement will actually be approved by both parties.

In that context, it sounds like and correct me if I am hearing it wrong, but it sounds like they are agreements that at least pietively (ph) extend through the commercialization process or potentially through the commercialization process and not through just the so to speak, discovery or other initial processes?

That is correct.

To the extent that they do, do you think you'll be able to disclose some sort of nature of the agreements between the two parties so they provide an investment trail map for outsiders?

Again, I think we will have to wait until we actually announce a specific agreement and then answer questions about that agreement.

Thank you.

Ronald Oveter, Capital Partners.

I just wanted to come back to 1 other point. In your remarks Mor, you talked about this component of the Company which still requires validation which is the splice variants and also your novel proteins. I wondered, we just talked about corporate partnering, are there any circumstances under which the Company might choose to keep for itself one of these novel proteins assuming we are further along, assuming there have been some corporate collaborations that have been announced and developed. Whereby you might choose to in fact try and take those compounds a lot further along internally?

We expect that there might be 7 proteins that will be difficult or out license them in an early stage for commercial value we can get by doing it will be not high enough, and that we will be if we decide to take them and develop them further, our current plan are not to go beyond Phase II in any case.

In any case? Okay. Thank you.

Thank you. (indiscernible), a private investor.

My question is directed towards Nurit. Looking at the financial statements, your cash reserves and cash use point out that you have enough cash to keep the Company going for about another 4 years. Assuming that you will not want to wait for the last-minute, are you -- do you have any plans or any thoughts on further financial (indiscernible) in the way?

Currently we don't have any specific plans, but as you said, we won't wait until the last minute to raise money and currently the Company has for approximately 3 or 3 1/2 years and we will have to start looking into our financing position probably in a few months from now because we would like to be the position that when we raise money, we still have enough money in the bank for at least 2 years.

Can you make any comments on the further forecast for the cash usage of the Company?

I can only repeat what we said in February of this year -- that we expect to end this year with approximately $45 million in the bank, and we expect that in the next 2 quarters we will stay more or less in the same level that we had this quarter.

Thank you Nurit.

Thank you. There are no further questions at this time. Before I ask Mr. Gerstel to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin in 2 hours for a period of 48 hours. In Israel, please call 03- 925-5901. Internationally, please call 9-723-925-5901. Mr. Gerstel, would you like to make your concluding statements?

Yes, thank you. Also I would like to just thank the shareholders on the line. I know there are some of our long-term shareholders. I hope you share with us the view that this Company continues to progress to move forward, and that from our perspective; we are now entering a very exciting time for the Company. I mean, we have the team, we have the technology, we have the intellectual property.

As I had mentioned in my opening comments, many of the uncertainties and the assumptions that we started with almost a decade ago that are no longer risks or uncertainties or assumptions. But I think we have very solid evidence that the path that we have chosen is one that will lead to major medical breakthroughs and very substantial commercial success.

As we pointed out in this call, there still is 1 key remaining assumption or belief that people must have in order to invest in the Company today, and that is that our unique discovery capability and the more specifically, the actual discoveries that we make will prove to have significant commercial medical value. Has Mor discussed, we strongly believe that to be the case, and as the internal evidence continues to build up, we become -- we are becoming more and more confident of that.

So again, I thank all of you for participating with us in this challenging and interesting adventure and look forward to further discussions with you. Thank you very much.

Thank you. This concludes the Compugen second quarter 2004 conference call. Thank you for your participation. You may go ahead and disconnect.