Compugen Ltd (CGEN) 2006 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Compugen Ltd. fourth quarter 2006 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, February 6, 2007. With us online today are Martin Gerstel, Chairman; Alex Kotzer, 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 content 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 on telephone number 9723-765-8525. Mr. Kotzer, would you like to begin?

Greetings and thank you all for joining our 2006 fourth quarter conference call today. Compugen's mission is to be the world leader in the discovery and licensing of product candidates to the drug and diagnostics industry. This quote from our mission statement presents a very ambitious goal, particularly in an industry where leadership for a company typically means leadership which is based on expertise with either very specific area, such as certain type of diagnostics or a specific operating area.

However, as we begin 2007, Compugen has already demonstrated the capability for systematic and predictable discovery of candidates; for biomarkers and diagnostic products, for amino acid nucleic acid testing, proteins and peptides as therapeutic candidates, large-scale genetic variations as markers for disease predisposition and drug response, biomarkers for the early identification of drug toxicity, end targets for antibody therapeutics.

Although just the beginning, these accomplishments already position Compugen as a very different type of company in the drug and diagnostic world. For those not familiar with our history, our recent announcements regarding activities in such diverse fields probably is very surprising. However, our long-term shareholders fully understand that this is now possible only because of our successful, decade-long focus on certain truly unique science-based drug and diagnostic product discovery capabilities.

This is the real value of Compugen, and therefore in my brief remarks today, I would like to focus on how our increasing portfolio of collaboration is beginning to demonstrate the wide scope of commercial opportunities that we now have ahead of us.

After my remarks, I will turn the call over to Nurit Benjamini, our CFO, who will follow with an overview of our financial results and (indiscernible). Martin Gerstel, our Chairman, will then provide closing remarks, after which we will all be available to answer any questions you may have.

Compugen's first three amino acid diagnostic agreement with [DPC] of Siemens, [OCV] of Johnson & Johnson, and with [Biosides] are based both on specific molecules that we discovered and initially validated, and on additional molecules to be discovered during the collaboration.

With respect to our initial round of therapeutic product discovery, based on our alternative splicing discovery engine, we undertook both in-vitro and in-vivo validation studies in order to select the first three candidates for which we would seek potential partners for licensing or co-development.

The two most recent agreements with Medarex and Teva will present a further and very important validation of our unique capabilities and our continuing progress. These agreements are not based on molecules that we have already discovered but rather on our capability to carry out such discoveries. Therefore, they are clear demonstrations that not only we, but also a growing number of potential partners are beginning to recognize and appreciate the potential of our predictive discovery approach and growing inventory of discovery platforms and engines.

No less important is the fact that these two agreements are entirely new fields that we have not discussed before, thereby continuing to demonstrate the broad scope of unmet needs in our industry that our underlying capabilities can address. The Medarex arrangement brings us into the rapidly growing field of therapeutic antibodies with a partner recognized as a worldwide leader in this field. A few examples of antibody-based drugs are (indiscernible) metastatic breast cancer, (indiscernible) in colorectal cancer and Remicade and Humira in rheumatoid arthritis.

The Teva agreement brings us into a whole new category of unmet needs of our industry. They relate to a problem all pharma companies and drug developers are facing. That is not only is it difficult to find important new product candidates to develop, most product candidates will fail, very often due to toxicity issues discovered late in the development process. Working with Teva, one of the fastest-growing pharma companies in the world, we will utilize our capacity in nucleic acid testing technologies initially in the area of early prediction of kidney toxicity with the expectation of then expanding to liver and heart toxicity.

Martin will be further discussing the growing recognition of what we call our discovery on-demand capabilities, which is a key aspect of our go-forward strategy. We are now ready to add a new category of collaboration in which we expect to receive not only future milestones and royalties on specific products arising out of the collaboration, but also substantial fees for access to our technologies.

In closing, I would like to state that this is a very exciting time for Compugen as we begin to demonstrate the commercial potential of our substantial past investment in creating fully unparalleled and broadly applicable discovery capabilities. We look enthusiastically forward to the remainder of 2007 and the next few years with the expectation of broadening and deepening these capabilities and their commercial potential with the availability of new discovery engines, addressing additional important unmet needs, new and expanded collaborations, and an increasing number of therapeutic and diagnostic product candidates moving forward under revenue-sharing arrangements.

Before I turn the call over to Nurit, I would like to thank Erez Chimovits and Norm [Chame] for their significant contribution to the Company's success. Erez and Norm will be leaving during the next few months and we wish them continued success.

Now I would like to turn the call over to Nurit.

Thank you, Alex. As previously projected, revenues for the fourth quarter and for the year 2006 were not significant. We have stated a number of times in the past that this is a result of the fact that our anticipated primary sources of future revenues are milestone and revenue-sharing payments from licensing and other arrangements covering the development and marketing of the agnostic and therapeutic project based on our discoveries.

Total operating expenses for the year were $14.2 million, including a non-cash expense of $2.1 million related to stock-based compensation compared with $15.5 million for 2005 including a non-cash expense of $391,000 related to stock-based compensation.

Research and development expenses of $3.3 million for the most recent quarter compared to $3.2 million for the fourth quarter of 2005 remained the Company's largest expense. Research and development expenses for the year were $11.6 million compared to $12.7 million for 2005, representing approximately 65% of total operating expenses for both years. These amounts are before the deduction of government and other grants, which totaled $409,000 for the fourth quarter and the December 31, 2006, compared with $800,000 for the corresponding quarter in 2005, and $1.8 million for 2006, compared to $2.3 million for 2005.

Our most important financial consideration is to ensure the availability of the financial resources necessary for us to continue to develop until we attain positive cash flow from operations.

We ended the fourth quarter with more than $26 million in cash and cash-related accounts, representing a decrease of $10.4 million for the year and lower than our guidance for 2006. The lower than expected cash burn was primarily due to lower than budgeted expenses. Our reported balance sheet as of December 31, 2006 reflects a change in the accounting treatment for investment in Evogene, an affiliate, as compared to that used in the balance sheet reported for the first three quarters of 2006.

This change reinstates the treatment utilized at December 31, 2005, and shows in assets of losses of reinvestments amounting to $466,000 rather than showing, as was the case for the first three quarters of 2006, an investment asset of $812,000. This revised accounting treatment had no effect on our reported cash flow or results of operation for any period, and resulted in a reduction in total shareholders equity of $1.3 million.

And with this, I will turn the call over to Martin.

Thanks, Nurit. In my remarks today, I would like to focus primarily on our business model and objectives, which I am sure some of you will find surprising based on what a few of you have referred to as my rather philosophical musings on prior calls.

As Nurit mentioned in her remarks and as we have said many times in the past, our anticipated primary sources of future revenues are milestone and revenue-sharing payments from licensing and other arrangements based on our discoveries. In today's call, I would like to make this more specific and discuss our overall financial strategy moving forward.

To date we have described two general formats for Compugen agreements -- first, our licensing and our co-development arrangements covering one or a few specific discoveries. This is a traditional type of agreement that [is] common in the diagnostic and pharma industries and is the type of agreement, for example, that we would likely be interested in with respect to our therapeutic protein candidates.

The second type of arrangement that we have discussed in the past is what we call the pipeline agreements. Under a pipeline agreement, we provide a whole series of product candidates, usually some already discovered and some to be discovered during the collaboration to our partner. In general, this allows the licensing out to take place at a very early stage, which of course, leverages our competitive advantage in discovery. Pipeline-type agreements are not typical in our industry and the underlying reason that we have been able to do them, such as our first three immunoassay diagnostic agreements, is our ability to create discovery engines that can predictably and systematically provide multiple product candidates for many different fields and purposes.

Alex mentioned a third type of collaboration that we will now begin to pursue that I would like to introduce to you today. It represents a very important and integral part of our strategy and business model. The reason why it is now appropriate to begin to talk about this third format for collaboration relates to our recent announcements demonstrating Compugen's discovery capabilities in a growing number of fields. As Alex stated, although this is just the beginning, these announcements have already clearly positioned Compugen as having created, over the past decade, an unparalleled core competency for discovery, and furthermore that this capability now provides us with a wide and increasing scope of commercial opportunities.

Perhaps even more important, because of the successive building nature of our R&D efforts, our capabilities get better every day. This leads directly to this third format for Compugen collaborations that we call access agreements. It is intended that access agreements will be the broadest type of collaboration that we will enter into.

These agreements will serve a number of different purposes. Under the terms of an access agreement, in return for a yearly access fee, our partner would have a specified level of access to most, if not all, of our discovery engines and capabilities. The access fee would be a small fraction of what it would take our potential partner to attempt to create this capability internally without even taking into consideration the long timeframe involved and the many difficulties in attempting to do so. In addition, as with our other agreements, Compugen would receive milestones and royalties on all products arising through these efforts.

In view of the very wide applicability of our discovery capabilities, we will be seeking access agreements with leading companies in a number of different medical industry segments, such as diagnostic companies, pharma and biotech companies, CRO's, et cetera. Within each segment, we will seek one, perhaps two companies at the most, and in total we would like to have such arrangements with a maximum of five to six companies. Please note that this is not going to be achieved this year and probably not within the next few years.

Our financial goal with respect to access agreements would be to obtain sufficient access fees to allow us to both approximately double our direct research activities and still break even on a cash basis without the need for any milestone payments or royalties. In this way, in addition to limiting our need for additional capital even if there are unexpected delays in Compugen discovery-based products reaching the marketplace, when such milestone payments and royalties do begin to be received, they will flow directly to our bottom line as profits.

The doubling of our current direct research activities would allow us to allocate about half of this increased R&D capacity to strengthening -- to supporting our access partners; and the other half, equal to approximately the capacity we have today, to essentially continue what we are now doing in terms of new discovery engines, applications, and actual discovery runs for ourselves and in support of our other agreements.

Our preliminary analysis leads us to believe that approximately $18 to $22 million per year or an average of $3 million to $4 million per partner per year, if we had five or six access partners, would be sufficient to achieve these objectives. It is important to remember that we are only interested in a limited number of access partners, to some degree, the fewer the better, and are neither attempting to maximize our fee income nor looking at these fees as a source of profit. As stated, our profits will come from milestone payments and royalties.

There are, of course, other major advantages of working closely with one or two leading companies in a field, but in view of our time limitations for this call, I will not attempt to describe them today.

Before closing, in view of the greatly increased trading volume for our stock during the past few weeks, I assume we have a few new shareholders on this call and I want to warmly welcome them. Also, for all of our relatively new shareholders, I urge you to review our last three or four annual reports. In my view, they provide an excellent overview of the building of Compugen and will give you some idea of the past investments and achievements that have positioned us to now move forward aggressively and pursuing our corporate mission of being the world leader in the discovery and licensing of product candidates to the drug and diagnostic industry.

And with that, we look forward to any questions you might have.

(OPERATOR INSTRUCTIONS). Vivian Lewis, Global Investing.

I am one of the new investors. Thank you for welcoming me. One of the things that was missing from the announcements of the deals with Teva and Medarex was any indication of what kind of revenues were anticipated. I wonder if there is someone who could address this question, which obviously leaves old and new shareholders a little puzzled.

Well, neither of these arrangements will give rise to any revenues to our Company in the foreseeable future. The Medarex arrangement is for co-development of products where our discovery capabilities are being used to identify the targets for these future products to be developed out of. Medarex is one of the leading companies in this particular field of product development.

And Teva is -- it's creating an understanding and a platform for identifying toxicity of drugs during the development process. Now, the arrangements with Teva are that they will have use of these markers -- the intellectual property that comes out of this arrangement and then we would have the right to use it for ourselves and to license to other companies.

So, there could potentially be some short-term. By short-term I mean still a few years, but some short-term revenue from this. But we're not probably talking about gigantic numbers, at least not in the short-term.

I'd like to be sure that for both -- particularly for our new shareholders who may be investors and many other -- or some other pharmaceutical companies, that we are a very different type of company in that the value of our Company is in early stage discovery, and that we believe that we are rapidly becoming the best in the world in this. This discovery is based on -- so it was discussed a few times in this phone call -- based on a very substantial, long-term and unique research effort in establishing a capability of understanding life at the molecular level and creating a team that is truly unique in doing this.

But what we intend to do is to, rather than betting on one or two products as most, at least smaller companies and to some degree larger companies do in our industry -- our goal is to put in the pipelines of many different companies, therapeutic companies, diagnostic companies, other types of companies -- a series of products in the tens, hopefully soon in the hundreds, literally, that when they get to the marketplace they will be developed first at their expense and then when they get to the marketplace we will share through revenue-sharing arrangements.

Keep in mind that most products in our industry, unfortunately, fail. We are very hopeful that because of the way we do our research on a predictive basis, that with time we will prove that we have a higher success rate or our early stage products have a higher success rate than do others which are found in the more traditional experimental through high throughput experiments, et cetera. But we have no evidence, really, to support that at this point in time.

So the key advantage that we have, the thing that is unique about us is this early stage discovery capability and putting many products into the pipelines at early stages in many different companies. I think for anyone analyzing an investment in our Company, to go to any particular agreement and attempt to analyze the revenues and future profits from that particular agreement would be very misleading. As I said, most -- you just have to understand that most of these products are going to fail. But we're going to have enough of them out there that we believe we are going to be a very successful and actually, a very low-risk pharmaceutical company because of the numbers involved.

[Brett Rice], Janney Montgomery Scott.

The access agreement format that's new -- why is the revenue stream from something like that a few years off? And then when you enter into these arrangements, how do you protect the intellectual property that you are showing the other partner?

Let me answer the second one first. The intellectual property aspect is not a problem in general. On specific inventions, we always file our patents before we disclose things -- the inventions or the discoveries to other companies. In general, when we work with other companies, we never share with them how we do things. We share with them the results of what we do. The core of our Company is the scientific understanding, the people and this growing inventory of discovery engines in various fields. The initial discovery engines are largely in cancer and diagnostic products -- I'm sorry, cancer and cardiovascular products and some immunology. We also have -- and the science behind a number of these also is the work that we've done in alternative splicing. But we don't share this knowledge, we don't share the working actually of the discovery engine with the partner. We share only the results from it.

With respect to your first question -- what was it? What was the first question?

On the access fees, why did the cash flow from that a few years down the road?

I'm sorry, yes. Again, first, if I suggested -- I mean the cash flows from the access fees will start as soon as we sign these. This is something which we are now really just beginning to do and actually at this point in time, we're talking with a couple of sort of consulting/investment banking type companies that are familiar in this field and we may actually work with one of them to interface with us with the industry. We haven't made a decision on that yet. And the only reason I point that out is -- it's early in the process but when these access fees will begin to come in basically as soon as we sign these agreements.

But we are not looking at these access fees as a way to create profits for the Company. At least initially, the access fees will then allow us to begin to increase actually the R&D capability and the capacity of the Company so that we can both support our partners on these access arrangements and also continue to do everything that we're doing for our own account at the present time.

So I mentioned that the financial goal here is to reach a point where the Company will be breakeven on a cash flow basis with approximately double the R&D activity that is going on today and without the need for any milestones or royalties. So I'm not saying that we won't have milestones and royalties, I'm saying that we would not need them to break even.

In the press release you've warned that if a lot of these things don't happen you'll need more capital by mid-2009. Do you hope to have this access fee program up and running before mid-2009?

It will be in process, but I think it's highly unlikely from what I know now that we would actually get through 2009 without some new source of cash. I don't want to say necessarily capital; but as we've said, we have cash now based on our -- without any new sources of cash based on our current operations for a little over two years through mid-2009.

I think it is unlikely that by 2009, whatever we have done in the access agreement area would be sufficient to have us break even by that point in time. I think that is highly unlikely. We have mentioned in the past that if -- we expect that we probably will need to bring in additional cash and that it could come from either equity basis, or strategic or other kinds of activities. And that when you do the number pushing you're probably talking about something in the range of around $20 million to be safe, to get through that period.

George Karutz, Karutz Capital.

George Karutz in San Antonio. Based upon your current knowledge, when do you anticipate your first milestones?

We said that we expect to start seeing a low milestone this year.

This year.

Yes, as you know, we've signed about -- how many agreements do we have now that we have milestones in? Four or five? Three? Three. Okay. And the initial milestones on most of them are relatively modest, as we have mentioned in the past, that the name of the game for what we're doing is to get the maximum royalty rate out of the products that ultimately are going to be winners. So we are really focusing on our product arrangements -- we're focusing on our product licensing on long-term royalties and milestones rather than upfront fees and really rather than large milestones.

When we discussed this in the past, we weren't in a position at that time to really discuss the access agreement concept. We weren't in a position to discuss it because I didn't think that we really would have the credibility to be saying that companies would want to do that with us. I think with the recent agreements covering so many different areas of very exciting areas in our industry, I think people looking at it would say it's probably likely that we are going to be able to get some interesting partners for these kinds of arrangements.

When you factor that in, then you understand why we are comfortable in not focusing on upfront fees and, because upfront fees and large milestones definitely reduce your ability to get big royalties on individual products. However, access fees do not. They are an entirely different concept. They are what the other party is paying for is basically to have you on standby or whatever and to have access to a capability, multiple capabilities, that they don't have and that have cost you a significant amount of money and a long period of time to create.

So I can understand the many questions that we got when we were announcing the earlier deals and saying that we didn't really care that much about upfront fees, because we hadn't sort of dropped the other shoe. The other shoe is this concept of the access agreements, which if we are successful, we will be able to continue to sign these individual deals, not worrying about upfront fees, not really even worrying about milestones; really focusing on maximizing long term profits in the form of royalties, because we will be self-sufficient without any milestones, even without royalties, based on the access fees that we will be getting from our partners.

Martin, my question really on milestones is not so much money, but more of an indication of success. If you're getting milestones, that would indicate some success and carrythrough, and that's where my question was really aimed; more at that rather than just -- because we don't know how far along these 10-plus molecules that you have licensed have gone and how many have dropped out and where the process is and where they are. And I guess when we see milestone payments it would indicate to us that there has been some success, because at least they are moving on from some particular point.

Very valid point, yes. Of course, you could just take my word for it -- I am a very honest guy.

And let me ask you, the new format of access fees -- is that going to be in lieu of other type arrangements? Or will you continue to make other arrangements where people want to make those?

No, as I said, the only way we're going to be able to do this is by substantially increasing, over time, our R&D capability. But these will be done in tandem. We're not going to be increasing the R&D before we get the access agreements. These will be done in tandem. The hope is that within our -- it's going to take a few years at least, but we'll get to this position where we can do everything that we are doing now, have the same type of capacity we have now, both for ourselves and for the other types of deals that we're doing, plus we will be able to support enough access type arrangements that would provide the current cash necessary for the Company to break even.

And then those would be in addition to say, the three diagnostic deals that you have now. Let's say someone else came to you, they want to make a deal with you on the basis that you've made those deals, but they don't want an access fee agreement, they just want to go and pick X number of molecules, have that opportunity; you'll still do those kind of deals? I mean access fee deals won't be the only --

Absolutely. Keep in mind -- there will be a very limited number of companies that we do access deals with. And I'm not saying -- I mean I don't know whether we will, in the end, whether we'll have more than we want -- I mean, that we will be able to pick, or whether we will be scraping the bottom of the barrel, I don't know, until we really go and start this process.

I think we're going to, though, as we continue to show the industry the kinds of really unique discovery capabilities that we have in so many different areas, I think that we're going to get their interest in wanting to have this type of an access arrangement.

Because keep in mind, an access arrangement will not be tied to any specific engine or technology. It will have some sort of more broad access to our capabilities; again, though, for the creation of specific products. By an access it does not mean that we're going to transfer to them a discovery engine or a capability or whatever. They remain within our Company.

But for example, if somebody had an access agreement with us today, one day they could come to us and say, you know, we are interested in some biomarkers for lung cancer and two weeks later they could say, you know, we'd like to run some programs to see whether your genetic variations that you guys have identified can help us determine some positioning with respect to some of our products in development. They would sort of have us on call, have a capability available to them. They would have to then pay the royalties and the milestones and whatever else, but it's a very different type of arrangement than like the diagnostic agreements which relate to a specific discovery engine.

One last question and I'll get off. But I know recently that you all signed an investor relations firm. And I just wonder what your plans are in the next few months as far as getting out in the financial community and telling the story. Because it's really a story that not many people know. It's a well kept secret. And just wondered what your plans are.

First, let me tell you, that's one of the few things we've really done well. We've really been able to keep us a secret. Nurit, do you want to comment on what the plans are?

Yes, we plan to travel more to the U.S. and meet with then you and all the investors and to start speaking about Compugen, present Compugen. Things that we haven't done in the last year or year and a half.

When we did our public offering back in 2000, we, for those of you -- it was interesting, we were the last company, basically last life science company to get out before the famous window slammed shut in August of 2000. So our stock never went up. The investment banker that took us out was Robertson Stevens that promptly died on us.

And as you can tell, we have a very, very different story to tell. During the early years, during the first part of this century, 2001, 2002, whenever -- we went public in '01, right? 2001?

No, in 2000.

Okay, 2000. During the early years of being a public company, I attempted to kind of sell the story a little bit to some people that I knew in the investment community. What I found out was that it was a very, very difficult thing to do because it was really a "believe me" type story. You know, that hey, we can really, by putting together the kinds of talent that's never been put together before, by bringing in physicists and mathematicians, computer scientists, biologists, and turning them all into either experimental biologists or theoretical biologists, really focusing on the science -- that we were going to create a situation where we could make discoveries that no one else could do.

But we had very little proof of it. I think the only reason we got some of our shareholders along the way was some of the scientific articles that were coming out of our Company. It's interesting. These scientific articles for some of the people following our Company where a real plus. I mean, they proved that we really were creating a scientific base here that didn't exist anywhere else.

For others, it was a complete turn off. They sort of said, My God, Compugen's a university; it's not a company, so it had kind of mixed results there. But it was almost an impossible story to tell. So we just stopped trying, basically, and we've been very -- we didn't want it to be a secret, but we have been very quiet for a number of years.

I think though now with what's happening with the maturing of the discovery capability and our success now in focusing in a number of different very, very important areas and signing up with leaders in the fields; and in such diverse fields. I don't think there's ever been a company in the life science industry that has done what we have done already from the standpoint of one day it's large scale genetic variations, the next day it's antibodies, the next day it's therapeutic proteins, whatever. Immunoassay diagnostics, nucleic acid diagnostics, I mean this is really unheard of.

And now it's not a "believe me" story any more. Now it's sort of believe me and 10 other major companies in different fields that are betting on us.

Where are you right now on the nucleic acid diagnostics platform? Because you talked about that at the end of last year, to license that platform. Where are you in that area?

Actually, it's interesting, we're using -- that's the platform that we're using in the Teva arrangement. But we have not -- I think, Alex, it was, what? Like two years ago that you gave this two-year roadmap, sort of?

It was given by end up of 2005 -- the commercial roadmap. And if you look at this commercial roadmap you can see that such an agreement that we have just signed with Medarex was forecasted for the first time only for the end of 2007. So in this respect we feel much more comfortable. With the NAT technology we already mentioned, if I remember well, we already mentioned in the last conference call that although we expected it in this commercial roadmap to be signed, agreement to be signed in the last quarter of 2006, we now anticipate it will be delayed a little. But we're still convinced, let's say, that we will be able to sign such agreement, [hoping the] long-term.

But as was already mentioned, the Teva agreement is utilizing these technologies. So we can see these toxicity biomarkers we're getting with Teva is one of the agreements that is utilizing this capacity. And we're still looking for partners to use it for other diagnostic markers.

I think it is fair to say that with respect to the roadmap, as of this point in time, we pretty much have accomplished on schedule pretty much everything that we laid out, other than the NAT, and that's just taking somewhat longer. But we're still very confident we will sign those deals.

Thank you very much and the best of luck. It's an exciting company and I know that we're going to have a great future.

Thank you.

(OPERATOR INSTRUCTIONS). [Jeffrey Gothman], private investor.

I'm wondering if there has been any response from the industry concerning the Company's initial therapeutic candidates?

We said in this commercial roadmap that we have described before that our objective is to try and sign an agreement at the second half of 2007. I don't think you are expecting us to disclose any additional information of discussions that are ongoing or not ongoing. At this moment, the only thing we can say is that we believe we will be on target.

Alex, perhaps you can tell us whether there -- when we should see the next crop of therapeutic candidates.

I guess I know, but I would not say it. So you will have to wait and follow.

If I knew it, you would have to kill me.

Exactly.

There are no further questions at this time. Mr. Gerstel, would you like to make a concluding statement?

Well, again, I just want to thank all of our old-time investors and welcome the new ones. I think it's going to be a very exciting time for our Company over the next couple of years. It was very, very frustrating and difficult for many years as we were creating sort of the infrastructure and the technology that is now allowing us to do what we can do.

Just as an aside, I would say that this is one of the real unfortunate elements of the financial world in the United States, that there just isn't any way to really finance and support important long-term efforts. And at a time like this when life science particularly is blossoming, people expect to set up a company and do something really important in six months, 12 months. It's just not -- the really important stuff just isn't going to happen that way. It's unfortunate that our financial world, even the venture capitalists aren't prepared to do this any longer.

We were very lucky in that we went public, perhaps a little early, but we got our financing in 2000. I'm fairly certain that we're the only science or technology-based company that really had no products and was attempting to develop capabilities that went public in 2000 and never did any more financing and is still operating today, and in a fairly secure financial situation.

So I think we've done a decent job but it has been very difficult and I appreciate the fact that we've had our loyal shareholders hang in there with us. I really look forward now for us to start delivering on some of our promises. So thank you very much.

Thank you. This concludes the Compugen Ltd. fourth quarter 2006 conference call. Thank you for your participation. You may go ahead and disconnect.