Compugen Ltd (CGEN) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Compugen Ltd. third-quarter 2011 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 November 8, 2011.

With us online today are Mr. Martin Gerstel, Chairman of the Board; Dr. Anat Cohen-Dayag, President and CEO; and Ms. Dikla Czaczkes Axselbrad, 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 Dikla Czaczkes Axselbrad at 972-3-765-8595. Mr. Gerstel, would you like to begin?

Yes, thank you very much and I want to thank all of the participants with respect to myself, my associates and all the employees of Compugen. In our Q1 conference call earlier this year, we said that we would update our pipeline program progress in today's call. This will be done by Anat and will be the major focus of our prepared remarks. After this introduction, Dikla will briefly comment on our financial results for the quarter, which were as expected and then Anat will follow with her presentation. Anat will then open the call for any questions that you might have.

Before turning the call over to Dikla, I would like to make a few brief comments regarding our commercialization efforts. Stated simply, our business objective is to place as many of our product candidates' discoveries as possible in the pipelines of pharmaceutical and biotech companies for final development and commercialization under various foreign forms of arrangements and collaborations, but all of which would include fees, milestone payments and the sharing of future revenues from all successful products for Compugen.

As was discussed on last quarter's call, our commercialization efforts can be grouped into three general areas -- first, efforts related to our pipeline program; second, efforts related to discovery on demand-type arrangements in our focus areas of therapeutics for oncology and immunology; and third, our efforts with respect to past discoveries in non-focus areas.

In recent months, a significant portion of our business development efforts has involved potential arrangements in this third area, covering a number of promising therapeutic and diagnostic discoveries, as well as certain opportunities for the use of our platforms outside our areas of focus.

These discoveries were made in the past in large part during validation activities for our various discovery platforms and our intent is to have them further developed and to have our validated platforms perhaps possibly utilized in certain non-focus areas without the requirement for additional Compugen resources, but with Compugen sharing in any future revenues.

During the past quarter, one such agreement was announced -- the arrangement with the Pulmonary Fibrosis Foundation. We are currently in advanced discussions with respect to others. As we move forward, in view of the increasing level of interest and number of discussions now underway with potential licensees and collaborators in our areas of focus, we will be shifting these business development efforts in large part through certain pipeline program candidates and discovery on demand-type collaborations. And with this, I will turn the call over to Dikla.

Thank you, Martin. As Martin mentioned, our financial results for the quarter were in line with our expectations. However, there are a few items that deserve some explanation. First, the reported net loss of $3.6 million for the third quarter of 2011, which rose in comparison with the net loss of $1.6 million for the third quarter of 2010. Includes almost $1 million in increased R&D expenses, plus a financial loss due to exchange rate changes between the new Israeli shekel and the US dollar compared with the financial gain for the corresponding quarter of 2010. Third-quarter 2011 results also include increases in certain non-cash expense items, all as more fully explained in our press release.

Second, the reported increase of nearly $1 million in R&D expenses net includes actual increase due largely to external expenses related to our pipeline program, primarily with payments to independent investors and manufacturing companies related to evaluation studies of our product candidates, but also reflects the impact of lower governmental grants compared with the third quarter of 2011. Such grants are presented as a deduction from research and development expenses. Therefore, as stated in the release, the increase in R&D expenses net to $4.9 million for the first nine months of 2011 compared with $3.7 million for the same period in 2010 is more indicative of the year-to-year increase than are the third-quarter amounts.

With respect to our cash balances, we ended the third quarter of 2011 with approximately $21.7 million in cash and cash-related accounts. This amount does not include the averaging shares we still own. Including the market value of these shares, we ended the quarter with approximately $25.8 million of available resources to fund future operations.

In our release today, we also stated that we expect net cash usage for calendar year 2011 to be less than our previous guidance of approximately $10 million. Compugen continued to have no actual long-term debt. The $3.2 million showing on our balance sheet under long-term liabilities is required by the accounting treatment of the basic arrangement as described in prior conference calls. And with this, I will turn the call over to Anat.

Thank you, Dikla. These are indeed exciting times for Compugen. We are aggressively advancing our pipeline program and we are particularly pleased with the ongoing progress of our pipeline program candidates in our fields of focus, oncology and immunology. We are also enhancing and expanding our cutting-edge science and predictive models and as Martin indicated, we are engaged in active discussions with an increasing number of potential licensees and partners.

During our Q1 call, we provided an introduction and update concerning our pipeline program and also, as mentioned by Martin, said that we would provide another update in our Q3 call, which I will now do. Compugen's pipeline program, which was initiated in late 2010, consists of more than 30 therapeutic product candidates at various stages of validation and early preclinical studies.

In general, the program consists of in vitro and in vivo experimental validation with selective molecules advanced towards pre-IND activities. The experimental validation studies are either conducted at Compugen or at leading expert laboratories selected specifically for each relevant field.

Following successful in vitro validation, the molecules are further advanced to either in vitro proof-of-concept studies in diseased animal models or in the case of drug targets, additional target validation studies confirming the target expression profile. These are then followed by monoclonal antibody generation and in vivo proof-of-concept studies in diseased animal models.

Molecules selected to be advanced to pre-IND activities enter the stage of lead candidate optimization and selection. For proteins, this means the selection of the final therapeutic form of the molecule to be used at later development stages. For antibody targets, this requires the generation of a therapeutic monoclonal antibody, either humanized or fully human. In both cases, we expect that these efforts, if successful, will result in higher value partnership for our product candidate.

I wish to emphasize the dynamic nature of our pipeline program. Needless to say, not all of our pipeline candidates are successfully validated and even among those that are validated, not all will succeed in the future. In addition, we continuously review the strength of our candidates relative to one another and relative to new candidates being generated by our existing and newly developed discovery platform and determine which candidates should remain in our pipeline and which candidates should be sidelined.

Also, we anticipate that certain existing peptide candidates now outside our field of focus will form the basis of collaborations with other parties and not require additional cash resources from Compugen. This ability to both constantly improve the overall quality of our pipeline, while at the same time advancing lead molecules, reflects the enormous depth and strength of Compugen's discovery capabilities.

Compugen's pipeline program is focused on the fields of oncology and immunology and consists of drug target candidates for monoclonal antibody therapy and protein therapeutics. Oncology and immunology are both areas of complex and challenging diseases with significant unmet medical need. Therefore, these are areas of high industry interest with numerous efforts to identify novel therapeutic solutions. These complex and challenging fields are well-suited for the application of Compugen's capabilities to identify novel therapeutic candidates.

I will discuss our two fields of focus, oncology and immunology, separately. First, our current efforts in the field of oncology are largely related to our very broad and powerful ability to predict promising drug targets. This enables us to identify targets for monoclonal antibodies, one of the fastest growing segments in oncology therapeutics. Monoclonal antibodies can directly attack the tumor cells or modulate the tumor microenvironment in order to inhibit growth of the malignant cells.

One class of oncology drug targets discovered by Compugen and created in our pipeline consists of proteins that serve as specific molecules, that is targets to identify the cancer cells. These types of drug targets are proteins that are present on membranes of certain types of cancer cells, but in large are not present or present to a lower amount on the membranes of healthy cells, a phenomenon known as differential expression.

The monoclonal antibodies using this therapeutic approach are either designed as naked antibodies or as antibodies carrying a drug payload. Naked antibodies use their natural ability to stimulate the patient's immune system to attack and destroy those malignant tumor cells that the antibody recognizes. Alternatively, the antibody may carry as a payload a toxic molecule thereby delivering the lethal dose specifically to the tumor while sparing healthy tissue.

This second approach is used by a recently FDA-approved antibody targeting CD13 protein for the treatment of Hodgkin's lymphoma. Compugen discovered -- CGEN-928 is an example of a protein specifically expressed on cancer cells. This target was shown by Compugen to be specifically expressed on multiple myeloma cells, mainly in the late stage of the disease and in the drug-resistant and aggressive form of it, representing a clear unmet medical need.

A treatment with an antibody directed against CGEN-928 is expected to be beneficial either by stimulating the immune system to attack these cancer cells or by delivering a little toxic compound to these cells. CGEN-928 is currently at the stage of target functional validation and also in the process of antibody generation.

A second class of drug targets for monoclonal antibody therapy, which includes a number of the B cell and CD28 family of molecules in both protein drug targets that not only are expressed on the surface of cells, but also have a critical function in the biology of the tumor, which helps it evade its destruction by the immune system.

These targets are either expressed by the tumor cells, by the immune cells infiltrating the tumor or by both. Therefore, blocking such targets with an antibody will allow the immune system to destroy the tumor cells and prevent uncontrolled tumor growth.

Although such targets are of high industry interest, they are very difficult to identify. Compugen's involvement in the field started with our prediction of the B cell (inaudible) CD28-like proteins. These membrane proteins are predicted to serve as protein targets involved in tumor biology as immune (inaudible) [inhibitory] molecules. Such targets already demonstrate a great potential and importance to the development of novel treatments involving the modulation of the immune system in cancer and autoimmune diseases.

Similar to a recently approved antibody targeting CTLA4 to treat advanced melanoma and similar to antibodies targeting PD-1/PD-L1 pathway currently in clinical development by several pharmaceutical companies, it is expected that blocking these novel protein targets of Compugen by a monoclonal antibody will result in the aspiration of the cancer's ability to inhibit immune response allowing the immune system to fight the cancer.

CGEN-15001T is an example of one of the novel B cell and CD28-like proteins discovered by Compugen. It is a membrane protein predicted to serve as a target for antibody therapy in oncology. CGEN-15001T is currently at the stage of validation in various epithelial cancers and also in the process of monoclonal antibody generation. Functionality of this protein as an immune modulator was demonstrated using CGEN-15001 protein that will be later discussed, which shares the extracellular domain of CGEN-15001T target protein.

This approach of harnessing the immune system to fight cancer is called cancer immunotherapy. The initial successful result and the high industry interest in Compugen's discoveries of new B cell and CD28-like proteins have led Compugen to recently expand its focus in this area through the identification of additional sets of immunomodulatory proteins. Therefore, in the last year, a focus of our research activities has been the development of two as yet undisclosed discovery platforms based on new approaches and algorithms to predict novel immunomodulatory proteins.

These platforms recently completed their (inaudible) validation stage and have already predicted several novel immunomodulatory proteins that are expected to enter initial validation studies as drug targets in the field of oncology and/or as protein therapeutics in immunology.

As already mentioned, this second class of protein drug targets is bound to the cell membrane and a portion of the protein that is outside the cell, which is called the extracellular domain, is a part of the protein that is impacting the immune system. Therefore, this extracellular domain has the potential to be used as a basis to create a new molecule to serve as a soluble therapeutic protein in our second field of (inaudible) immunology. This approach has been an important aspect of our current efforts in discovering new therapeutic candidates for immunology.

Moving now to the secondary (inaudible), immunology, a significant portion of our efforts has been directed at advancing immunomodulatory proteins that are based on extracellular domain of our novel B cell and CD28-like drug targets. In addition, it is anticipated that similar to the B cell and CD28-like proteins, the newly discovered immunomodulatory proteins predicted to serve as drug targets will give rise to therapeutic proteins using their extracellular domain.

This concept has been already demonstrated with CTLA4, which I already mentioned serve as antibody targets in oncology while its extracellular domain is used for the treatment of autoimmune diseases such as rheumatoid arthritis. We have initiated the production of these soluble proteins, which are expected to enter initial validation studies in early 2012.

With respect to CGEN-15001, in the past quarter, we have continued to move forward with research and development activities for the use of this molecule in the treatment of autoimmune diseases and are very pleased with the results to date. Our research activities exploring the biological mechanism of action of CGEN-15001 and its therapeutic effect in multiple sclerosis carried out by the laboratory of Professor Stephen Miller at Northwestern University were presented for the first time to the scientific community at the International Conference on Immune Tolerance and were of high interest.

CGEN-15001's remarkable beneficial effects demonstrated in animal models with both multiple sclerosis and rheumatoid arthritis indicate that CGEN-15001 may serve as a powerful modulator of the immune system. In addition to multiple sclerosis and rheumatoid arthritis, CGEN-15001 has great promise as a drug for a variety of traditional autoimmune diseases such as systemic lupus erythematosus, inflammatory bowel disease and diabetes type 1.

We are happy with the continuing progress in the preclinical development of these promising drug candidates, which includes defining and optimizing the specific form of the drug candidate in order to maximize its potential for clinical success. This is an important part of our ongoing activities with respect to this molecule, which may impact the efficacy and safety of this molecule.

Although this work is primarily technical and time-consuming, due to a pretty fine set of activities that are done sequentially, it is of critical importance for future clinical success and may save us unnecessary complications in later development work.

As disclosed previously, following the successful result of CGEN-15001, we are validating additional B cell and CD28-like proteins discovered by us. In the past quarter, we announced the validation of two additional novel therapeutic candidates belonging to this family, CGEN-15021 and CGEN-15091. These two new immunomodulatory proteins have demonstrated significant therapeutic potential for autoimmune diseases. Both molecules have been shown to have therapeutic potential in an animal diseased model of multiple sclerosis. CGEN-15021, tested also in an animal diseased model of rheumatoid arthritis, demonstrated positive results in this model as well.

In each of these diseased models, the Compugen fusion protein demonstrated dramatic therapeutic effect in ameliorating disease symptoms. Furthermore, in earlier in vitro experiments, CGEN-15021 and CGEN-15091 exhibited inhibition of T cell activation confirming their predictive role in the modulation of the immune system. The in vitro validation experiment and the in vivo studies involving CGEN-15021 and CGEN-15091 in multiple sclerosis animal model were part of our long-term research agreement with Professor Stephen Miller's laboratory at Northwestern University. The in vitro validation of CGEN-15021 in rheumatoid arthritis model was conducted at Dr. Richard Williams' laboratory at the Kennedy Institute of Rheumatology at Oxford University.

In recent months, we have also entered new research agreements with additional experts in the field to support the molecule's preclinical research activity. And now Martin, Dikla and I will be pleased to address any questions that you might have.

(Operator Instructions). Keay Nakae, Chardan Capital Markets.

Yes, thank you. With respect to your pipeline, I know you have consistently talked about greater than 30 compounds in the pipeline and I know that some of them fail and are replaced by others. So can you give us a sense for, since the beginning of the year, how many of those compounds have failed and what number of new compounds have entered the pipeline?

Yes, with respect to our pipeline, as we said in my remarks, we do not expect that all the molecules that we are predicting would pass the initial validation experiment or even the in vitro experiment. So of course, as with all the industry, there is attrition rate. I am happy to say that with respect to the results that we have from the current quarter and also from the last quarter, few molecules have failed in our experiments. But as I said in my remarks, we always have a new prediction that we can come up with in order to fill the pipeline.

Sometimes even if molecules were not failed in the experimental analysis, but we feel that we predict with new versions of our discovery platform that we predict molecules that should better fit a specific unmet clinical need than previous molecules that were entered the pipeline should have answered, we consider if we are adding them to the pipeline or we are replacing and we are prioritizing the pipeline all the time.

Now, of course, if a molecule -- if we decide to advance a molecule beyond an in vitro experimental stage, we usually are confident enough in the molecule in order not to replace it with additional predictions that we have. But again, also in this stage of in vivo experimental analysis, we can (inaudible).

So in short, in order to answer your question, few of the molecules have failed and we had to replace them. But luckily enough, Compugen is not built on one molecule and we can allow ourselves to have failure and in predictions and to be able to support it immediately with other predictions that we have answering the same unmet need that we have aimed to answer.

With respect to 15001, what would you estimate is the additional time required to finalize the route of administration that you would like to take forward?

I will answer you by stages because we are complying with the industry standards with respect to the timelines that these stages that we are dealing now with respect to advanced development or early-stage development stages are. But in general, we are very happy with the process of lead candidate optimization. As I mentioned in the last call, we are optimizing the different parts of the molecule. We tried the [FC], the linker and extracellular domain protein itself. And following this stage, we are expecting to be able to start production in large batches in order to be able to create enough protein in order to perform all the preclinical requirements that we should have before meeting the FDA.

I can say that we already started to work with different service providers that we are testing for different manufacturing activities. We are doing either small [budget] or large budgets of production and following the production phase where we will have enough protein for preclinical trials, we will meet obviously the FDA for pre-IND meetings.

So these are the steps that we have and the industry standards are applying for our molecule as well. We don't expect any delays, but we are moving a step after step and as of now, we are very pleased with the progress.

Let me ask that same question another way then. If there are 10 stages, and I don't know if that is the exact number, what percentage of the way towards completion of the number of stages involved would you say you are at this point?

I am not sure I understood your question. Can you repeat it?

Where would you say you are percentagewise towards completing the predefined number of stages that you need to to get the molecule into the form of administration that you are going to take forward?

We are quite confident with what we are doing now and the results that we have with this molecule. So all based on the work done that we had from the beginning of the year, we are standing behind their work sense and their timeline.

The issue of -- let me see if I understood your question. Are you asking at what point -- of the amount of work that we need to do to have some level of confidence that we have the final molecule that we will want to go forward with, what percentage of that work have we already done? Is that what you are asking?

Yes, that's right.

Oh, okay. I'm sorry. Okay, I didn't get it. It depends to which portion of the molecule -- I will also give you a total explanation -- but it depends on which portion of the molecule. The portions that we've already almost done, 90% of the work. There are portions that we did less. I would assume that in general for the total form of the protein, this is between 50% to 70% of the work.

Okay. Thank you for that answer.

(Operator Instructions). Ross Haberman, Haberman Management Corp.

Good morning, Martin. How are you?

Great, thanks. Good to hear you.

You have been talking about commercializing some of these proteins for a long while and you were trying to figure out the best time basically to do it. Are you any closer today than you were a quarter or two ago? I think you were throwing out the possibility of maybe the beginning of 2012 to possibly joint -- joint venturing or perhaps selling one of these. Could you maybe shed some light on the timeframe you're looking at today versus a quarter or two ago?

Yes, I think we are pretty much on that timeframe. Again, keep in mind, what I am talking about is not the whole pipeline, of course, but the lead molecules that we are focusing on. But we are fairly confident that, let's say during the first half of next year, we will be able to license those out under reasonable terms if we choose to do so or with respect to which ones we choose to do so.

There is always the question as to how far along you take these molecules. When we announced the pipeline program, what we were saying that was our intent was to go like 12 to 18 months past animal disease model and you have done your math correctly. That leads us to sort of the first half of next year and where, based on the interactions that we are having now with major companies in the industry, it is fairly clear that the molecules will be at a stage that they could be licensed at that point.

As with any -- in our business, there is always the question of something looks great, do you perhaps take it maybe another six months or a year further if you think that will substantially increase the returns. Of course, all of this must be put into the context of our overall capital situation and everything else and how many of these molecules are there.

But the short answer is fortunately -- this also kind of relates back to the earlier question about what things have failed. I can say nothing that was added -- quote -- none of our advanced, more advanced molecules have failed. They are all moving forward. So to the degree that we drop some from the program, they are not the ones that were further along in our efforts. And that leads -- I'm sorry, go ahead.

The big consideration, as you said, is the capital structure. You are burning $9 million or $10 million a year and you have got $20 million, you are good for another year or two and then you have got to come back to the till.

I don't want to be picky, but just -- we have got about $25 million in resources and we are burning -- we are burning less than $10 million. Our expenditures probably will go up somewhat next year, but we will -- I mean I will be shocked if we don't have any revenues next year. I mean we should start to see some revenues. Of course, the big revenues will depend on when we sign the major licensing deals with respect to front-end monies. But I mean you are familiar with the industry, so you know that the kind of burn rate we have is wiped out by one or at most two modest deals, the front-end payments.

No, I do understand that. I just don't want you guys to wait too long and cut it too short that you are pressed and you are going to have to cut the market and I know what's going to happen then?

And anyone who has followed me knows I am not going to take any -- after what we have created here in the value of this moving forward, we are not going to take any chances with survival. We are not going to take any chances.

Okay. The best of luck. I look forward to the next couple of quarters.

So are we.

John Stamas, Defender Capital.

Hello, everybody. Nice news announcements over the past quarter. To reference one of them, the animal results that have been I guess released for the first time to the scientific community, if you could comment on what the response has been from the community as it relates to new discussions or new interest.

As we explained in the couple of last calls, this family of proteins, the B cell and CD28 family of proteins, is of high interest in the research community and it is not so easy to identify novel members and specifically members that can serve as therapeutics because not all the members in the family could be translated, even though discovered many years ago could be translated to drugs.

So identifying a set of proteins that we already disclosed the results of three of them. CGEN-15001, 21 and 91, suggested that, first, we really made huge progress also therefore in the research community in identifying novel B cell and CD28-like proteins and also not only identifying that, but also identifying proteins from this family that have the therapeutic potential and as we said, both has the potential to serve as drug targets for oncology and protein, soluble protein therapeutics for immunology.

The scientific community, of course, liked it. These results were presented by the laboratory of Professor Stephen Miller and he was in this conference as well and we are happy with the reaction of the scientific community.

And beyond the looking at the molecules themselves, which -- and they are excellent molecules, the idea that these were predicted -- these were not, quote, discovered through traditional means. The sequences of these molecules were predicted by computer and then were proven to be what we said they were going to be. This is a capability that you still will find a number of leading biologists around the world who don't believe it can be done.

That is my point, Martin, yes.

For those people, they don't know what we have done. I mean, believe me, if they came here and they reviewed our stuff, they would believe it can be done. But I think that the tremendous disappointment from the first wave of companies after the human genome project and trying to do predictive biology has left sort of a sense out there that life is just too complicated. It is not physics. You can't do predictive work in it. We are now absolutely proving that to be false.

Now it has taken us a long time to build the scientific capability to do that, but it is proprietary science we have, which is another thing which is interesting comparing our company with a leading company in high tech. There is no leading company in the high tech that has proprietary science. Does not exist. You can have proprietary technology, but the science is (inaudible) in universities. What we are doing -- the science that we are doing here is not taught in universities. It is proprietary to us and we continue to build the base.

Thank you, Martin.

Keay Nakae, Chardan Capital Markets.

Yes, thank you. Do you guys have plans to present your work at any other conferences or in any other peer-reviewed papers?

That is a very good question. We are conducting most of the work for our molecules with, as we said, with experts in these fields that are working in this in the research community. The goal for each of them is to come up with a peer-reviewed paper and peer-reviewed journals and of course, we are aiming to do that. We are always taking into consideration that we will not do that before we protect our intellectual property well in target applications. And we are taking into consideration that we also have to come up with something that will be with enough results that will be sufficient to show for the scientific community the potential of what we have identified.

So of course, this is in our plans with each of the experts that we are working with, but we will consider the timing based on these parameters that I mentioned.

Also, we are, of course, giving also talks in conferences and if you will look at our website, you will see that I am going to present in Geneva by the end of the month in a conference of antibody therapeutics. I am going to present a program of our antibody therapeutic program.

Okay. And Anat, with respect to the two new discovery platforms, I wonder if you can talk about those a little bit more in detail. What specifically do those platforms do that your current ones don't do?

Yes, so, first, as I said, the idea to come up with additional platforms that can predict novel immunomodulatory proteins was due to the fact that we understood that, based on the B cell and CD28-like proteins that we have discovered, that this is an area of major interest, specifically the field of cancer and immunotherapy. It is of very high interest and also it is quite hard to come up with novel discoveries in these areas. So this is the idea behind the reason why we started developing this platform.

Now these platforms are using totally different predictive approach as compared to what we have used with the B cell and CD28-like proteins. So we could come up with another set of proteins. But I want to mention these platforms and the reason they were not disclosed yet are platforms that are not fully validated yet. We have predicted their candidates and we validated them by different [insilica] approaches like computer-based approaches, but we didn't validate them experimentally. So usually what we are doing -- before we are telling the world that we have a new platform in hand, we are synthesizing the molecules, we are testing at least one of them as we did remember with the B cell and CD28 proteins. We validate one of them and then we are 100% sure about our prediction.

I can tell you that these molecules predicted also known things that all the industry knows about. So we feel more confident that the results are of these platforms should contain there also molecules that should serve as therapeutics. But I can tell you this isn't 100%. So at the point of time that we will have experimental validation and as I said currently, these molecules have entered into production and then will enter experimental validation, at that point of time, we will know for 100% what we have in our hands.

Okay, thanks.

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 two hours for a period of 72 hours. In the US, please call 1-888-295-2634. In Israel, please call 03-9255-921. Internationally, please call 972-3-9255-921. Mr. Gerstel, would you like to make your concluding statement?

Yes, thank you. Also, I want to again thank everyone for joining our call. I am pleased to be able to say that, once again, the number of participants we have today sets a new record. Although we are not getting to the numbers I would like to see, just about every -- I guess every call we have had over the last four to six quarters has had an increasing number of participants. So it is nice to see.

I would like to take a few minutes now with Anat's update of our achievements sort of as supporting evidence to end today's call with some of my kind of high-level comments. Now these are along the lines of an interview that I had yesterday on Bloomberg TV and to me, I find it fascinating and I am shocked that no one has really written a book or even -- I haven't even seen an article about it, but it was not that long ago that the pharma industry was not only the darling of Wall Street, but it was the most profitable and most admired industry in the United States and you have to ask yourself what happened.

Usually when something like this happens in a powerful industry, something like the market goes down -- well, the market for pharmaceutical products has continued to grow dramatically and there is no end in sight. The list of major unmet medical needs remains unending. There has been no new approach to the industry's marketplace that changes the rules like planes, to railroads, or digital photography or to film and even more important what few new products have come to the market, even if they were only very modest improvements over existing therapy, have been quickly accepted even with greatly increased pricing.

In fact, the only major external event that has occurred with respect to our industry should have been, and this is forgotten and at the time that it occurred, it was widely believed and projected to be a gigantic plus for the industry. That is the beginning of the genomic revolution.

So kind of again I ask what happened. Well, the answer is very simple. The lifeblood of the industry is new products, not manufacturing, not marketing, not competitive, not even quality of management. The name of the game in our industry is new products. And for many good reasons, our industry has historically relied on experimentally-based discovery methodologies for new molecules to test those drugs.

Now these are molecules that they either find such as in the soil or in the ocean or in other species or they create pretty much on a random basis and then test them in various experiments to see if there is any hint that any of them can do what you are looking for.

Now as the years went by, fewer and fewer discoveries were achieved and at an ever-increasing cost through the utilization of the most sophisticated technology to do more and more of these experiments faster and faster in the hopes of observing something that will give you, as I said, a hint that you have found what you are looking for.

Now this isn't just in drugs; this is true if you are trying to discover gold or oil or anything else. As one example in the pharma industry, think about -- it wasn't that long ago that sort of the basic aspect of -- one basic aspect of research in the pharma industry to look for new drugs was to essentially throw individual chemicals, which were made one at a time by chemists, at living rats to see what would happen.

Well, we have progressed. What do we do now? We throw thousands of molecules, made combinatorially on chips, we throw them not at rats anymore, but at molecular receptors of interest. Now this is technically known as screening, but it is the same -- basically still the same concept, trying to observe something in an experiment that will give you a hint that you have discovered something of interest.

For a while, one could claim that this was paying off, but this initial success was only hiding the underlying basic fact that no one can argue with. Whenever you attempt to discover things experimentally, again whether it is gold or drugs or anything else, you get the easy discoveries first and then it gets harder and harder.

You can put as many pails in as many streams as you want in California today, I don't think you're going to find another gold nugget. However, there is, at least theoretically, a much better alternative. Rather than trying to find a molecule that does what you are looking for through various forms of experimental technologies and testing and testing large numbers of molecules, one can use knowledge of the underlying science to build a model to predict the molecules that, according to your model, should work.

Or in the case of trying to discover gold, to predict the specific geographical areas or geological characteristics where you should go to look to find gold. You then attempt to validate these predictions using experimental methods. That is with drugs testing them in vitro and then in vivo and with gold actually looking in the predictive locations. In this way, once your models begin to show some level of validity and keep in mind, that is the big risk in going down this route because maybe whatever you're trying to do is just too complicated and you will never reach that point where you are beginning to show validity.

But once you do, it is of necessity that the models and your predictive ability can only improve with time because every validation experiment you do provides not only the potential validation as to whether what you discovered was really what you were looking for, but also provides data and that data can be based on success or failure to guide the improvement of the model for future attempts. Thus every discovery you make makes it easier and easier to make future discoveries.

Compugen has now proven that with respect to drug discovery, at least so far in the number of very important areas, this is not just in theory anymore. Today, we are accomplishing predictive discovery of promising drug candidates on a systematic constantly improving basis in areas of high industry and research interest.

I also find it interesting, kind of as a side note, and it is kind of amazing and a very fortunate coincidence that from a time standpoint, just as the experimental-based methodologies are used by the industry, we are beginning to hit a brick wall with respect to new discoveries. Breakthroughs were made allowing for the first time the study of life science and the creation and understanding of biological data at the molecular level that would allow you to begin to try to create predictive understandings of important biological phenomena rather than just descriptive understandings.

This, of course, has been the key to building Compugen's unique capabilities and it was a high-risk business in the beginning. Not high risk from the standpoint of whether the market or the need was there, but high risk from the standpoint of can it really be done. You put most experts based on the failures in the past would say it could not be done. As I said, I think now anyone looking at what we are doing would have to agree that this is possible. But it has not been easy.

One advantage that Compugen had was we did not have an established, extensive and immensely expensive experimental infrastructure as exists in almost the entire industry. We started from scratch, from zero and to some degree, when you are trying to really create a paradigm shift, it is much better to start from a base of nothing and build what is right rather than starting with something that has to be modified.

As our longer-term shareholders know, it took Compugen, even with this advantage, more than a decade of extremely focused multidisciplinary research using two of the great advantages that Israel has. To me, I find it quite amazing that, in three of the last eight years, the Nobel Prize -- an Israeli won the Nobel Prize in life science three of the last eight years. So this is the -- biological life science theory has always been an enormous base within Israel.

The second competitive advantage in this area that Israel has comes from the military with respect to the algorithm research. What Compugen has done is put these two tremendous advantages together to approach the world of life science and we are beginning to see the kinds of results that can come from this type of an effort.

Thus, and in closing, as Anat said, this is the beginning of what should prove to be a very exciting and rewarding time for Compugen as we utilize this very unique predictive discovery capability. As I said, a capability that many if not most experts thought was currently impossible to create.

So again, we thank you for participating in today's call. I thank all of our shareholders for their long-term support, belief in our Company and we very much look forward to reporting what we expect to be some very significant research and commercial achievements based solely on our significant past investments, but to be in a position to report them to you in the coming months. Thanks again and shalom from Israel.

Thank you. This concludes the Compugen Ltd. third-quarter 2011 financial results conference call. Thank you for your participation. You may go ahead and disconnect.