Compugen Ltd (CGEN) 2008 Q1 法說會逐字稿

Welcome to the Compugen Limited first quarter 2008 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. (OPERATOR INSTRUCTIONS).

As a reminder, this conference is being recorded May 14, 2008. With us on the line today are Mr. Martin Gerstel, Chairman of the Board, Dikla Czaczkes Axselbard, acting CFO, and and Dr. Yossi Cohen, Vice President Research and Development. 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 Dikla Czaczkes Axselbard at telephone number 972-3-765-8595. Mr. Gerstel would you like to begin?

Yes. Thank you very much. Welcome to all of you to today's conference call, which is for the first quarter of 2008.

Our CEO, Alex Kotzer, is currently on vacation. Therefore, I've asked Yossi Cohen, who is our Vice President of Research and Development, to join Dikla and me in order to be available to respond to any R&D related questions during the Q&A session.

In my remarks, which will be the only formal presentation today prior to the Q&A, I would like to focus solely on the Company's financial status and plans including our interactions with the financial community and investor relations activities.

I will begin by discussing our efforts and interactions with the investment community, which most of you are fully aware to date has been very modest to say the least.

In part, this was due to my belief, as expressed by me in a number of our quarterly calls, that since Compugen is so unique and is based on an entirely different strategy and business model, it was just too difficult for the financial community to understand and appreciate us.

However, during the past year or so, I have spoken with a number of potential investors and leading biopharma and drug analysts and have come to the conclusion, or perhaps more accurately, woken up to the fact that I was entirely wrong.

In general, they all understood us and continue to do so. At least to the degree necessary to make an investment decision. The problem was that for a long period of time, we could not provide them with any real proof that we could in fact accomplish our objectives.

A key reason for this is that starting about 15 years ago, and up until about five years ago, there were a number of companies saying essentially the same thing that we were saying.

That is, by using the new knowledge of human genomics, we are going to change the way drugs were discovered, moving to a reliance on systemic -- systematic hypothesis-driven, and therefore, continuously improving discovery, instead of the traditional reliance on extremely inefficient throughput enhanced serendipity.

A process in which -- if you find something great but if not, which is for the vast majority of cases you have learned almost nothing and your next attempt at discovery will need to begin, once again, at square one.

All of these other companies with essentially the same core story as Compugen's and some with market values of $5 or $10 billion or more totally failed in these efforts, and either disappeared or converted themselves to traditional pharmaceutical companies, usually by licensing one or more drugs from others. So in this environment it seems quite clear to me, and not surprising, at least now, that the reason we have not been seen as a great investment opportunity and in my judgment, we are not 10 or 15 or even 50% under valued, but I believe, we are under valued by over a magnitude. We should be closer to 600 million than 60 million. But this is not because we were not understood, nor because there were doubts about the value of what we were doing.

It was simply that we could not provide any real proof that we would not fail like all of the others before us. But in fact, there is a critical difference between Compugen and these other companies and this difference is the reason why we have been successful where they failed.

But unfortunately, this is also the reason why today there have only been a very minor interest in our company in the financial world.

This reason is that we invested a decade of efforts gaining deeper understanding of life at the molecular level creating world-leading computation algorithms and other tools and systems and along the way establishing an exceptional experience multi-disciplinary R&D team. But from an external standpoint, the only tangible results from these efforts with the numerous peer reviewed scientific articles our scientists offered covering key aspects of life at the molecular level. And as we quickly found out from a financial standpoint, these articles plus $5 would get us a cup of coffee at Starbucks.

But the situation has now changed, since as you know, we are now beginning to see the results from focusing this unique discovery capability on important unmet medical needs. During the past year or so, we have been pleased to report on a rapidly accelerating basis, a growing list of exciting discovery platforms, multiple product candidates and agreements with leading companies. From the emails we have received, it seems like our current shareholders are happy and probably relieved to finally be seeing these results.

However, it is also clear from the very significant decrease in volume in our trading on NASDAQ that although current shareholders are not rushing to sell, neither are new shareholders rushing to buy.

We intend to address this issue directly by now taking steps to increase substantially the probability that as we continue to demonstrate our unique powerful and broadly applicable drug and diagnostic discovery capabilities, these announcements will begin to receive the attention they deserve.

Towards that end, we are now interviewing leading life science investor relations firms and expect to make our selection shortly. It is comforting to hear the reactions of these firms as we tell them about Compugen. That is, as we tell them what you, our current shareholders, already know. For example, a quote from one of these firms is quote, we would love to work with you.

This has to be one of the greatest unknown stories in life science today.

And of course, it is not only our shareholders that have observed our progress but as stated in in our press release of today, this accelerating proof of our unique discovery capabilities has also provided us with some interesting strategic alternatives that we have now begun to explore.

Before moving to the second topic of my talk, our financial status, I would like to point out a very important ongoing validation of our capabilities that you may not have fully appreciated. This is the continuing growth and development Evogene, the company that we established in 2002 and licensed to use our predicted biology capabilities in the [AG vile2] Evogene now has collaboration agreements with 5 of the top 6 Ag-bio companies in the world and clearly, these agreements are only the beginning.

It is important to note that both Evogene and Compugen use these predictive capabilities to identify in each specific area of interest a few tens or perhaps hundreds of interesting potential product candidates.

For Compugen, the next step is to prioritize and begin invitro and invivo validation on a one-at-a-time basis. On the other hand, the next step for Evogene is to take these tens or even hundreds of interested potential product candidates and immediately test them in plants. Thus, essentially going directly from in silico discovery to what would be considered Phase III testing in the human area.

I would now like to move to the other topic, our financial status.

Although all the points I will be making were previously disclosed individually at various times or I'll refer to in today release. It is obvious from some of the comments that we continue to receive that with at least some of our shareholders, there seems to be this continuing understanding.

First, the facts. In our October 23, 2007 press release, we stated, and I quote, we currently estimate that approximately $10 million in addition to the $19 million we now have would be sufficient to continue our progress through at least mid 2010 by which time we anticipate that the Company will be in a very different strategic and financial position.

In addition, we stated that any equity offering based on our current share price would be limited to that amount. As you will note, our reported results today are entirely consistent with this projection, showing $15 million in cash at 3/31/08 and approximately $10 million per year burn rate.

In analyzing the financial strength of a company, often people use a shorthand guide of how many quarters or years of cash does the company currently have, and in general, having a year or less is considered a warning signal.

Assuming that no significant milestones or other revenues are received and assuming that Compugen has not chosen to increase its available cash by some means, we would reach the one year of cash point sometime in the third quarter of this year.

However, this one year rule of thumb is of course a gross simplification. The key issue is the comparison between the company market value and burn rate.

For example, the only question for a company with a 100 million market cap and one year of cash, but with a $10 million burn rate is when and how to raise additional funds.

Whereas, for another company with exactly the same $100 million market value and exactly the same one year of cash but burning $100 million per year. For this company there is a real risk that this company may be able to - may not be able to raise capital and clearly, this one year is a warning signal.

For Compugen, our market value is more than 6 times our annual burn rate, which is amongst the very best for public like science companies that are not yet profitable. If you have any doubt about this, I encourage you can do this for other companies that you are following.

Taking all the proceeding into consideration and stated in today's release, our expectation that during the coming months the values and potential of our approach will be more fully demonstrated to the disclosure of additional discovery platforms and further evidence of the broad applicability and continuous improvement with time and usage over existing 9 state-of-the-art biology-based platforms. Our focus during the next few months will be as previously stated to increase substantially the probability that these announcements will begin to receive the attention they deserve.

In addition, significant activity is now ongoing with respect to exploring the strategic alternatives referred in today's release. That might or might not include Compugen equity at its current market value.

I hope that this has helped clarify how we view our financial situation, and we'll be pleased to respond to any remaining questions to the degree that security laws would permit us doing so during the Q&A session, which we can now begin. Thank you.

Thank you. (OPERATOR INSTRUCTIONS). The first question is from Jeffrey Grossman of Berenberg Company Limited. Please go ahead.

Good afternoon Martin.

A quick question. We are looking at only $10 million. Why not a simple line of credit?

Did I say we wouldn't do a simple line of credit?

No, you did not.

But certainly I think it's something that deserves to be explored, and I think it would calm a lot of nerves of shareholders.

I agree with you. As I've said, we have not -- we haven't talked specifically about the alternatives that we were looking at.

As you pointed out, the immediate need -- the need -- it isn't even immediate, at this point in time -- but, as you said, $10 million would get us into late 2010 given what is going on in the company and everything else. We should be in a very different situation by then.

$10 million relative to even our low-market capital at the present time is -- it should not be an issue as to how to raise it. I assume anyone familiar with the pharmaceutical -- with the financial world realizes that we can raise $10 million tomorrow morning. My view -- given what I know about what is going on in the company today, that would not be in the best interest of our current shareholders.

I think shareholders agree with that, and more than that, all shareholders believe that selling additional shares at the current market price would be something of an obscenity. What I understand between the lines, is that you certainly feel no pressure at the current moment.

Well, as you know from my history, I'm a very conservative financial person. When I say that to people they look at me like I'm crazy because I've done things like with (inaudible) and now with Compugen, and Evogene, whatever, that appear to be high-risk companies. Believe me.

These companies have almost zero risk compared to pharmaceutical company that is betting a couple hundred million dollars on a new chemical entity, that no matter how good they are the rats may die in phase 3 or whatever. I'm only pointing this out in saying I'm very conservative. I will take no risk with respect to this Company's ongoing operations. Zero risk.

Understood. When we speak about interesting strategical alternatives, might that include the sale of a minority interest to a leading pharma company?

I'm not in a position to say anything more about what these alternatives are. So I really can't comment at all.

We just seem that you dropped a hint in the statement that was released today. Never mind.

I didn't mean it as a hint. I meant it as just a statement of fact.

I would assume that people -- the few people who are familiar with our company shouldn't be surprised that given what we've been announcing and the number of platforms, particularly the platforms, much more than the products. The most important thing about the products is that they prove that the platforms work.

And so it isn't surprising -- I don't think there's another company probably in the industry that has the breadth of discovery that we've already created here. So it's not surprising, I think, that we have some interesting strategic alternatives that we would like to consider. I want to make it very clear though that this is -- that these are at very, very, early stages. Very interesting, but at very early stages.

Another question.

In this quarter's announcement it was $281,000 in income. Can you tell us where that income came from?

[Jea Lau] will handle that.

Jeffrey, Hi. How are you? Most of it as we said, we didn't mention it, but most of it is from our continuing licensing for Evogene.

Okay. Were there up fronts or milestones from a diagnostics?

We can't be specific with respect to, from, where, or wherever, but there were some minor milestones payments included in it.

As you noted, we didn't make a point about it because -- in my view, it's really not -- it's nice to see these things happening but again, they are not really substantial or meaningful to us yet. Hopefully before the end of the year, we will see substantial milestones.

Okay. Last question.

A little background or a progress report involving the Company's relationships with Medarex, Teva, Merck, Roche?

You know, as well as anyone, that we really are not in a position either legally or contractually with our partner companies to be saying very much about the status or What's happening and most are very sensitive from a competitive situation.

So we really can't give you any specifics. I don't know. Do you want to say a few comments just in general whatever about research activities or some general statement?

An indication of satisfaction with the progress that has been made.

Let me just say that all the companies you mentioned are moving forward as planned. It's awkward to give into -- would that be a correct statement?

All these programs are active and viable and pleased with the progress that we are making so far.

And should we expect additional agreements in the coming months with other leading companies?

Let's first, let's take the incoming months out of your question, and the answer is yes. The issue of timing is one of -- when you are working with a large organization, there is no way of predicting when the agreement is going to be signed.

Some of them have to wait for their quarterly board meeting, if it's a substantial agreement. Others have all kinds of different reviews that come up.

That's why I've said a few times that there's no such thing as an agreement almost done. It's either done or not done.

And as our history shows, I think, it is true that every agreement that we've announced, we've never mentioned it in any way prior to the date we announced that it was signed. I think that is a correct statement and never even hinted at those particular agreements.

If I'm not mistaken I think in this report you indicated that there's been a substantial increase in the interest in the Company's candidates and also platforms. I would be satisfied that the shareholders need to know that there is an increase probability of agreements being signed.

I believe there is, but of course takes two to dance. But the first part is absolutely true.

We are seeing a tremendous increase in the interest in the industry. When our people show up at conferences or whatever, whereas in the past, we had to schedule -- try to schedule long in advance to get to see some of these companies. Now our dance cards get filled up very, very quickly.

So there's no question that -- again, though, if you look at the kinds of platforms that we've talked about, these are critically important commercial-research segments of the industry. So it's not surprising that the companies want to know what we are doing in this area. I believe, that as they get to know what we are doing in this area, we are going to see more and more deals done, because I'm very confident that we have an excellent leadership position and discovery with the various platforms we've developed.

Thank you very much. Looks good to me.

I'll pass it on to the next question.

The next question is from Jim Smith of [Benzar] Capital. Please go ahead.

I'm just wondering about the 9 platforms that we currently have, the apparent potential for many other platforms, and whether the limited financial resources is constraining either your scientific progress or your development of new platforms that appear to be on the horizon.

Let me sort of address the second part and then ask Yossi to sort of give you more color on the first part about our platforms, et cetera.

There is no question in my mind that if we had more capital available to us now, we would increase our progress, moving forward much more rapidly.

There are a lot of things on the shelf here that we are not pursuing at the present time because of lack of resources.

That being said, I think the unbelievable efficiency with which we can create these things now because of our -- the core background that we've created in terms of tools and systems and scientific knowledge and people and platforms, whatever, algorithms, that to some degree, it is kind of like what we've created is a Lego set of pieces that form platforms and when we go after a new platform, maybe 80 or 90% of what we need for the new platform is already now in our Lego set and we have to create another 10 or 20 or 30%. And once we create these new Lego pieces for that platform, they go into the pool and they are now available for the next platform.

So my answer is I wish we had more money to commit to R&D, and I'm hopeful that we will find a way to do that in the near future without significantly -- in a way that is positive for our current shareholders position in the company and not dilute of it in any way.

But if you, again, looking at what we can achieve with what we have, it's really quite astonishing. I will turn it to Yossi to deal with the more specific aspects of saying -- I guess your question is more information about the platforms?

That would be nice. But I'm also -- I get the feeling there's got to be some level and you are addressing it to a certain extent, a trade off with this -- between the explosion of scientific discovery and the limited resources, which, as you said, you can deal with it tomorrow if you wanted to and what's -- I just wanted a little bit more color on the metrics of that trade off.

It is a trade off and hopefully, we are choosing properly in the interest of the shareholders, but it is a trade off.

Maybe what I can add to that is -- there is no doubt that having more resources, we would have done more, no doubt about it. But in terms of developing new platforms and also structuring value from existing platforms. No doubt about it.

On the same token, we are pleased with the progress that we are doing with the platform that we have with the resources available to us.

I think that looking at the size of our company and our expenses compared to the results that we are able to achieve, the ratio is quite nice, and we are quite -- I can say that I am proud of it.

I think that this relatively would say good ratio of investment and the return, at least as demonstrated by the results that we see and the results that you are aware that were published.

It's a good ratio because of two main reasons. One, as Martin said, the history. We've been dealing with that field of discovery for the past ten years, maybe more. We've learned lots of things. We've developed lots of tools. We've also learned where it's more likely to fail and where it's more likely to success. We are less naive. We understand the difficulties and the challenges and it allows us to better choose how to proceed and where to proceed.

We are more mature in what we are doing.

And also the second thing, second ingredient, not just the history, but the team that work here. Many of the people that were developing these platforms and taking the results forward are people that are with us for many years. Their expertise of them is crucial for the interest of the company and it's proving itself overall.

I think in terms of where is the right balance, where I think a judgment. We are choosing -- we've chosen a particular or specific ratio of how much to invest platform, how many resources and how many platforms we can work on at the same time.

I think the major parameter that is affecting or influencing this balance out given a new idea or a new direction. How much do we already have implemented. How much we need to start from scratch. We want to make most of the use of things already on the shelf on one hand.

On the other hand, we must be able to produce new components which are going to be the basis for our future discovery platforms. Those that we'll publish from two years, three years because this is our company. That's what we are doing.

So generally speaking, all I can say is that it's a measurement of judgment and I believe -- I honestly believe that we are in a reasonable -- in a reasonable balance. I hope that the future will show that this is right.

Fair enough. So you are not wasting too much time ringing your hands over your lack of flexibility?

I don't want Yossie to answer that. With the team that we have and the capabilities we have, it is ashamed that we can't increase the budgets right now. But I believe our leadership position is such that if a few of the platforms newer platform are delayed a year, it will not be the end of the world for us. We are still light years ahead in this area.

And as Yossie said, as I've said, we have to -- we could raise a lot of money tomorrow, but I'm not sure it would be -- I know it wouldn't be in the best interest of our current shareholders. Obviously, we can raise almost a limitless amount of money depending on what price we are prepared to take it at.

And so you are stuck with this balance. I personally, my feeling is that, we owe it to our current shareholders to now to make up perhaps with the deficit in investor relations of the past. Now, I defend our lack of investor relations in the past on the basis saying, we didn't have a lot of proof that we can talk about. I'm not sure it would have made a big different difference. If we talked about how great we were. Now, we don't talk about how great we are. Now, we talk about how great our platforms and discoveries are. People can make their own judgement. Those are facts on the ground that people can evaluate.

So I think we owe it to our shareholders -- our current shareholders -- and we can foresee that there will be a number of interesting announcements over the foreseeable future. I'm talking in terms of a few months, with respect to products and platforms, enough going on that I'm confident in saying that things will be announced.

I think we owe it to our shareholders to make an attempt to make sure that the circle of people who are aware of this and see these things and learn something about our company is broader than it is now and I think, we also need to take some of the strategic alternatives a little bit further to evaluate the pros and cons of them for the -- with respect to current shareholders value. So that's where we are right now. It's clearly a lot of judgment calls in there.

Again, I'm a conservative person. I won't put this company in any type of financial risk, but I'm hoping that we are moving forward now at least for the next few months in the right path.

One other quick question on revenues. You mentioned that most of the revenues are a good portion of the revenue was licensing related. Is that Compugen's pro rata share of Evogene?

No. I'm sorry.

This is their payment to us for the platform -- for the basic platform that they use, the predictability biology platform.

Is that a fixed payment per quarter or per month?

No. The real payment for this -- for this was the stock that we received in the beginning when we set the company up and which,of course, unfortunately, has been diluted over the years and now I guess, we own about 10% of the company now? Yes.

But that was the real -- the real payment was the initial stock that we got for giving them the license. This payment had to do with a combination of an extension and some new tools I think that we had developed. Is that correct?

Most of it -- actually the extension.

Just the extension. Okay.

Okay. Thank you.

The next question is from Brett Rice of Janney Montgomery Scott. Please go ahead.

Hello.

Hi.

It was a news release on April 29th that you discovered a biomarker for lung cancer.

Can you pretend I'm a six-year-old child and explain to a six-year-old child why that is good for Compugen. What has to happen and who has to do what for this to result in material monetary compensation to Compugen. And pretend you are talking to a six-year-old child.

Okay. Let me have -- Yossie respond to this -- but I also want to caution people when they ask us about any particular product because -- which is the natural thing to do with any type of pharmaceutical -- any other pharmaceutical company, diagnostic company, you want to know -- tell me about your products.

For us, each individual product -- they may or may not make it. Most of our products are going to fail. Just like most of the products in the industry. The difference is that we have this amazing diversified discovery capability and what we are doing is continuing to not only discover things but improve these engines.

So, yes, there's a high risk and a higher cost of development for each one of them, but many, many of them are going to be developed and at other people's cost. It's going to be the Roches and the Merck and the Medarex's and whatever, who are going to take the risk and the financial cost of developing these products and hopefully, they will be successful.

For the majority of them, the large percentage of their returns will go to our partner who has taken all of the risk.

However, on every one of them we will get a very nice return. The reason I go through this is I know that -- if you ask me, if we had not discovered that -- the particular molecule that you are talking about, how much would the value of our company be decreased, I would say by .000001% or something like that.

This is an example of a very, very interesting product that biomarker that could in the end both be commercially very successful and really make a contribution to medicine. So with that long introduction, do you want to say something about the process of how that goes from where it is today to actually giving us revenues in the future?

Okay. First, lung cancer is a very big disease.

People -- the mortality is very high, and the review to difference is early diagnosis or not. So that you know that lung cancer, in particular, lung cancer, early stage is very important.

The tools currently available to physicians out there are far from being great. There is a need for new market to diagnose lung cancer, in particular smoke lung cancer. A few features of the discovery that we've made.

First, this is a new protein altogether. This is not something similar to something else someone else discovered. This is completely new sequence, if you wish, a new product.

Second, we've been able to show not only that it exists in the human body, in the body of everyone of us, in some levels, but also show that it's highly expressed or highly -- differential expressed in the serum of patients with noncancer. So this was just not an agreement. This is a level validation on the 40 patients.

Third, since we published this press release, companies are calling us regarding this market. We have interest in this marker from all kinds of companies. Diagnostics but not only diagnostics. So they appreciate an important discovery.

So I think this concludes my explanation and obviously, our business model is to out license our candidates to other companies as soon as possible. That is the business model. So what is the next step? Out licensing to other companies as soon as possible. When that would be and to whom? I don't know. You can never know. What I can say is that there is genuine interest in this discovery.

When you say genuine interest, is the telephone ringing off the hook from these companies? Hey, I want to license this biomarker? I'm six years old.

Just a minute. I have a cold. It's difficult for me to answer this question.

First, what we are dealing with of course is in the field of medicine and the people on the other end of the phone who are calling are very sophisticated companies that want at this point what they want to do is they want to see the data. They want to get more information. And whatever.

There's a great deal -- a lot of companies based on what we've disclosed said, we would like to take the next step with you, signing a nondisclosure agreement and receiving from you the data that you've accumulated to date.

And based on where we are now, we believe that this will continue and ultimately we'll have a nice licensing agreement.

Right. Okay. I understand a little bit better. I appreciate it.

Because I have a lot of shareholders and we read a press release like that and to a layperson, it sounds very exciting and then -- but then when you -- okay, concretely, what does it really mean?

I think the most -- I understand what you are saying.

If you ask me what is the most important statement that you can make about what that release means .What I would say is, it proves that Compugen can find new novel proteins, discover new novel proteins, even in areas where you know the experts in the field have been working, spending literally hundreds of times more money than we have for decades and have been unable to discover what we have discovered. Not only discovered but predicted in silico and then proved that it released. That it actually existed. That is the most important thing that I can say about that release.

Right.

Also I'm very impressed that as a six-year-old, you are dealing with the stock market and you have all these investors.

What are you going to do when you grow up?

You are right.

Thank you.

Thank you. (OPERATOR INSTRUCTIONS). The next question is from Bill Chapman of Morgan Stanley. Please go ahead.

Good afternoon, everyone. Martin, are you still backing -- last quarter on your year end, you had that slide 58 that had the feel of focus that was projecting you three-year potential on a different platform you had. And you had about 28 you felt like within three years would be in development of one year and nine would be in clinical. Do you still back that?

With respect to the three-year projections?

Yes.

I guess the last time we looked at it, we still felt comfortable.

I'm -- I heard you say something about year end or one year, so that's why I'm hesitating.

This is on slide 58. The three-year potential you were projecting in development about 28 and then in clinical 9. That is still an accurate --

We are still comfortable, but we did this because people kept asking questions about can you quantify, whatever you are doing. It has to be looked at as a stab in the dark.

One that based on the number of agreements we have now, and the number that we are discussing, and the kinds of discoveries that we are seeing, those are reasonable projections, we believe, for that period of time.

Okay. Good. What three areas are you the most excited about at this moment, have the best potential with no guarantees to it?

I'll answer that. Personally, I'm particularly pleased with the progress and results that we've been able to achieve in the GPCR area because of how important GPCR is our growth target.

The result of the -- that we've been able to show with a few of our discoveries as a result of the agreement that was signed about this discovery with Merck. The other one is the discovery platform that relates to antibody targets.

The field of antibodies is booming. We are addressing in that field the key component which is finding a good target because once you have a good target moving forward -- having the antibody, which is a (inaudible) entity, it's less of a problem compared with other entities.

And, third, which is I think very promising even though young, this is the last discovery platform treatment now, the (inaudible) despite this is very recent, we've been able to tackle in this discovery platform a very difficult biological phenomena, very difficult to model and we've been able to see very nice results with the specific candidates that we've selected to progress with as some published in the platform.

I think this is really promising and very unique discovery platform. And you said three. If you wouldn't mind, I will address the fourth.

Sure.

In Geneva, this is the platform in which -- the aim is to find the marker, and I think this is very exciting for a few reasons. One, this is a great medical need, great one. And not only for a drug on the market, but drugs in development.

The second is that the state-of-the-art, if you want to call it that, or the majority of the companies or organizations dealing with (inaudible) and we are dealing with a different kind of genomic variation, which we think are important for drug response. At least, we've been able to convince our people from Roche that is important and we are working together in this domain for the purpose of finding for RA patients. So I think this is very promising as well.

Good. One question further on the toxicity marker. Yossi, are you pleased with the year to date progress on that?

Yes. I'm sorry.

Say again?

I say it's a short answer, but yes, I'm pleased.

If that test out, could that be offered to pharmas before the year is out, the license?

I think we'd better not answer that question. Let me just say --

You are not saying for sure. Is it possible if all goes well?

If everything went well, what would be the earliest, if everything went well? Would that be available for the market?

Did you ask if it -- if everything goes well before the end of the year?

That's too soon.

Was that your question?

The question is, once it's finished the testing process and it validates successfully, as a bio marker, could you be offering this before the year is up?

I think the answer is yes. If everything goes well and you know the (inaudible) are successful -- we can't guarantee of course. We are looking forward to the results.

Okay. And has Teva and you folks discussed going to the next one for the liver or the cardio?

I don't think -- we have disclosed only that the original intent was after this to consider expanding the program, but I don't think anything else has been stated.

What I can say is this is the place of the judgement of how many we do and how much we invest in the discovery platform comes into place, because we need to focus now on this one, and we need to do the best job on this one.

Once we see that we are able to, we'll address more currently. We are focusing on this one.

Okay. And it's possible this all could be concluded by some point by the Fall or Summer, if it goes according to plan?

When you say Fall --

Are the tests going to be complete and you know it works or not to your satisfaction?

Well, (inaudible).

What Yossie, said -- to get more specific, if everything went well it's possible that this actually could be commercialized before the end of the year? That's a possibility.

Again, we are not saying it's going to happen, but yes, if everything goes well, that's a possibly. To try to get any more precise with respect to the specific steps, I think it would pushing a little bit too far.

Okay. One further question.

I had to get off for about 30 seconds and when I came on, and I heard you say, going into Phase III. Were you referring to the -- which area were you looking at on the new indications?

Are you talking about when I was giving my --

Yes. Earlier in the call.

No, no. It had nothing -- actually, it wasn't even Compugen. I was saying that when you look at Evogene, they -- because they are working in the ag world, they essentially have the ability to go from in silico from a predicted computer discovery directly into what would be equivalent to Phase III in humans. It was just a comparison with Evogene.

Okay. Are there new indications you still anticipate knowing which ones will going into Phase II, Phase III by year end?

One I'm not sure that we ever stated that.

I think what we said was that with new indications, it's possible -- if you have a good product opportunity, that you can move very quickly into Phase II and Phase III, and it wouldn't be impossible for that to happen.

I'm not sure we said even more than that. Yossi, any comments? We have a few that we are focusing on that look very good. I don't know what more --

Okay. Well, thank you very much.

Thank you.

There are no further questions at this time.

Before I ask Mr. Gerstel to go ahead with his closing statements, I would like remind participants that a replay of this call is scheduled to begin in two hours for a period of 72 hours. In the U.S., please call 1-877-456-0009. In Israel, please call 03-925-5938. International, call 972-3-925-5938. Mr. Gerstel, would you like to make a concluding statement?

Thank you very much. Thanks to everybody for the very honest - very interesting call. I like the questions, and I'm very pleased that you all have willing to join us today.

I'm hoping that by the time we have our next call, we will have a number of new shareholders and new people associated with our company.

I know we have by listening to the names of the participants today, I know most of you are long-term loyal shareholders, and I know it may be getting a little lonely out there, when you see the same group kind of hanging in there.

But I believe that we will be taking the appropriate steps to bring the story to a broader audience. And I think it's a great story and I look forward to the results and I look forward to speaking to you next quarter. Thank you very much.

Thank you. This concludes the Compugen Limited first quarter 2008 financial results conference call. Thank you for your participation. You may now disconnect