Compugen Ltd (CGEN) 2012 Q2 法說會逐字稿

Yes, thank you very much and on behalf of all of us with Compugen, welcome to our Q2 2012 Conference Call.

I am now in California at our recently established monoclonal antibody facility, with Dr. Mary Haak-Frendscho, Chairperson of Compugen, Inc. while Anat our CEO and Dikla, our CFO are at our offices in Israel. Hopefully, this geographical difference will not create any problems with our call but if it does I apologize in advance.

After my introductory remarks, Mary will report on the progress to date and expectations we have with respect to our monoclonal antibody operations, followed by Anat who will provide the status update with respect to the two product candidate arms of our pipeline program. The call will then be open for any questions you might have.

In the interest of time and since there is nothing unexpected in our financial results for the quarter, other than the effect of both non-cash income and non-cash expenses. We will not address these results in our prepared remarks, but please feel free to raise any questions you may have regarding them in the q-and-a session.

This is a very exciting time for us here at Compugen. After committing more than a decade to the creation of a truly unique predictive biology discovery capability and then the last two years focusing this capability on therapeutic monoclonal antibodies and therapeutic proteins for use in oncology and immunology. We are now clearly demonstrating, in a number of ways the potential value of the capability we have created.

First, our B7/CD28 like molecule program. Which was our initial focused discovery effort was extremely successful with the identification of a significant percentage of new B7/CD28 family members compared to the total number previously reported worldwide. Results, which far exceeded even our own expectations.

This is a truly a remarkable achievement when you consider the high level of interest, and likely, orders of magnitude greater efforts undertaken during the past decade by others in both academia and industry utilizing various discovery methodologies in order to identify the previously known members.

Secondly, largely based on the success of our B7/CD28 like discovery efforts, we have today a therapeutic pipeline program consisting of approximately 30 product candidates at various stages of validation and for preclinical development in our areas of focus.

Thirdly, in addition to our accomplishments in our areas of focus we have unparalleled identified opportunities to further develop and commercialized certain of our discoveries in diagnostic and/or therapeutic areas outside of these areas, whereby, our shareholders will obtain the right to share in any future success from commercializing these discoveries but without the need to commit any further Compugen financial resources.

In recent months we have announced a number of agreements, including the announcement during the last quarter of the joint establishment with Merck Serono of a new biomarker company and we expect to announce additional such arrangements in the future. Thus, significantly extending our strong base for future growth and shareholder value beyond our initial areas of focus.

As a discovery company, our underlying strategy is to maximize the returns to our shareholders from our multiple candidates through licensing and other arrangements with the industry and to do so at preselected key value enhancement points. Relative to the cost, of course, of getting to these points. This business model offers exceptional potential shareholder value through the matching of our unique discovery capabilities with the enormous discovery capabilities existing in the biopharma industry but without any broadly applicable systematic source for attractive product candidates such as we have established.

The most recent decisions we have made in implementing the strategy and business model were first to provide further differentiation for our multiple product candidates. And second, to license out monoclonal antibodies themselves rather than just the targets that we discover and validate.

Anat in our remarks will provide additional information about our ongoing differentiation efforts. With respect to monoclonal antibodies, although the quality of the target is the most critical variable determining the value of any monoclonal antibody therapy, it is clear that under most circumstances we would achieve much greater value and leverage our discoveries more fully by licensing out the monoclonal antibody therapeutic candidates rather than the target.

In both cases, we are confident that the additional efforts, which we are undertaking, will be more than compensated for by the terms we should be able to achieve upon licensing the candidates. Assuming, of course, continuing development success.

Therefore, like the final piece of infrastructure required with regard to implementing our strategy for our current areas of focus, we were extremely pleased that Mary, a world recognized expert in the monoclonal antibody field agreed to take the field in establishing a monoclone antibody development capability for us, here at Compugen, Inc., in south San Francisco.

In summary, based on our long term and consistent efforts to create a predictive discovery capability and implement our business model, Compugen currently represents a truly unique company in the industry. A company that not only has a substantial current pipeline of molecules targeting areas of high industry interest, which although early stage continue to advance successful under our direction. But also a proven discovery capability for the further systematic discovery of product candidates in our current and future areas of focus.

Lastly, with respect to a related question that we are often asked that is when can shareholders expect to see the first substantial agreement on a product from Compugen's pipeline program, I can state the following.

First, our goals with respect to our most advanced Fc fusion therapeutic proteins continue to be successfully met. With several of them already at the preclinical stage of development. Therefore, it is reasonable to expect that our first pipeline product agreement will be based on these Fc fusion proteins.

Second, the number of attractive product candidates in our pipeline program, combined with the experimental results that we have achieved and continue to achieve support our strong expectations that our pipeline program will be the source for multiple industry corroborations.

And lastly, in our ongoing discussions with an increasing numbers of collaborators and licensees we continue to see a growing interest in both our product candidates and our unique discovery capabilities.

As I hope you can appreciate, it is not possible to be more specific regarding timing, since no matter what the stage of any discussions might be, one can never predict with certainty when or even if a specific agreement with a third party will be finalized.

However, it is very important to remember that unlike most other companies in our industry, Compugen's future is not dependent on one or two product candidates, instead after many years of high risk investment in establishing our unique capabilities, during which we had very little solid evidence to demonstrate its potential value to either pharmaceutical or the financial world, Compugen is now successfully validating its initial wave of product candidates from a substantial and very attractive therapeutic pipeline. Which in turn was created through only the initial use of a systematic broadly applicable predictive discovery capability.

Thus, my opening comments that is a very exciting time at Compugen. And with that I am pleased to turn the call over to Mary.

Thank you Martin. As you know I decided to join the company after seeing the truly remarkable preclinical evidence of the predictive power of Compugen's target discovery capabilities and meeting with the exceptional scientists in Israel. It has been a terrific opportunity for me to establish Compugen, In. as the world-class antibody discovery and development operation with the mission to select the most promising, novel and preclinically validated targets discovered by the parent company and translate them into compelling human therapeutic drug candidates.

Today, it is my pleasure to participate in this call and tell our shareholders and other listeners about Compugen, Inc. It's novel antibody initiative and to summarize our achievements to date.

In less than four months we have established our south San Francisco operation including the required modifications to our purpose built facility, the recruitment of top personnel and the installment of enabling equipment and technology.

Moreover, with Compugen's collective scientific expertise we have prioritized and initiated several antibody programs based on Compugen's exciting catalog of targets. Most importantly, we successfully recruited Dr. John Hunter, who has extensive scientific and managerial experience in this area, to take the responsibility of site-head.

As industry veterans, John and I were able to leverage our broad network of experts in antibody drug discovery and development to rapidly assemble an enviable team with an average of over a decade of industry experience in antibody drug discovery and clinical product development. Of course, we had the advantage of being located in South San Francisco, the birthplace of biotech and a world-leading center for antibody research and development.

Since the antibody drug discovery and development engine here in San Francisco was built as a Greenfield operation we have been integrated with a complementary predictive target discovery and validation research function in Israel right from the start.

With tight collaboration between the two sites, we selected and prioritized antibody targets to further enhance Compugen's expanding biologics pipeline. Indeed in biopharma where targets are scarce it is a rare abundance of riches to have the luxury of target selection.

To begin filling the antibody pipeline we chose heavy from Compugen's novel B7/CD28 like family of molecules. The B7/CD28 protein family of co stimulatory molecules also known as immune checkpoint regulators are a very high pharmaceutical industry interest for addressing unmet medical needs for the treatment of both oncologic and autoimmune diseases.

Historically, this family of molecules has proven to be very difficult to find by traditional discovery methods. However, notable contrast, Compugen's predictive discovery methods have revealed nine new members. Markedly increasing the number of B7/CD28 like proteins from the universally known set. This bodes very well for our ability to discover and advance first in class antibody drug candidates, not only in this field but in future areas of interest.

It is important to note that in the scientific literature there continues to be very positive clinical validation for the B7/CD28 like protein family. For example, therapeutic antibodies directed against several known families members recently have been reported to have remarkable efficacy in cancer patients with certain late stage diseases.

In addition to these proprietary antibody target initiatives to add depth to our pipeline Compugen intends to include several targets for kinase inhibition and antibody blood conjugate therapy. Although, some of these targets may be been previously known through the use of Compugen's predictive discovery capabilities. We are obtaining insights for clinical leaning pro-product differentiations.

Kinases are well known as key regulators of cell function that constitute one of the largest and most functionally diverse gene families. They direct the activity, localization and overall function of many proteins and are therefore considered a key target for cancer therapy.

Antibody drug conjugates where a cancer specific antibody is linked to an extremely potent chemotherapeutic agent or payload are a transformational and clinically validated new drug class. With an antibody drug conjugate the antibody specifically targets the cancer cells where upon the payload is released and selectively kills tumor cells. Thus these drug candidates possess the best drug attributes of both antibodies and chemotherapeutics, giving rise to a more efficacious multi-mechanism cancer drug with improved safety profiles.

In summary, I am very pleased to report how quickly and efficiently we have extended Compugen's core competencies and value chain in the antibodies discovery and preclinical development area.

Our short-term goals are to continue to aggressively prosecute antibody targets selected from the constellation of targets coming from Compugen's industry leading discovery and validation platform. With the initial prioritized antibody program specifically addressing solid tumors where there is a high unmet medical need and with a heavy emphasis on the cancer immunotherapy area.

Our development efforts will include generating the first wave of therapeutic antibody drug candidates to demonstrate that proof of concept is relevant to these models, selecting lead candidate antibodies for the preclinical development, and if required for certain monoclonal antibodies, also selecting an appropriate antibody drug conjugate technology.

On a more personal note, for the past half-year I have been largely devoted to establishing the site, recruiting key personnel, setting strategy, and overseeing early operations. Today, I am delighted to report that day-to-day operations are now squarely in Dr. John Hunter's proven and very capable hands. Going forward in my role as Chairperson of the Board for Compugen, Inc., I will focus on supporting key business and strategic initiative and on interactions with the industry with respect to antibodies. And with that I turn the call over to Anat.

Thank you Mary. As mentioned by Martin, today I would like to update you on the progress we have achieved with respect to the two distinct product candidate streams in our pipeline program, heading for commercialization through licensing and other forms of collaboration.

Monoclonal antibodies therapeutics primarily for oncology and Fc fusion therapeutic primarily for autoimmune disease.

With respect to monoclonal antibody therapeutics we are delighted by the speed with which we have established and initiated activities at our south San Francisco operation. But even more important are the outstanding quality of the team that has been assembled and the level of communication that has arisen between them and the teams in Israel, thereby facilitating the selection of compelling targets from Compugen's inventory of candidates. Some of which have yet to be disclosed along with the established of aggressive work plants and timetables.

As indicated by Mary, to begin filling our mAb development pipeline we chose leading targets predicted by us to belong to the B7/CD28 family. A key reason for us to first focus on this protein family is there predicted function as immune checkpoint regulator, proteins that are now emerging as gain changes for cancer immunotherapy.

CGEN-15001T and CGEN-15022 are two drug targets predicted by us to belong to the B7/CD28 family of immune checkpoints regulators and both have been discussed by us in the past with respect to their discovery and initial validations.

Today, I would like to use the exciting results that we have obtained for these two drug targets to exemplify the important value-enhancing role of early stage product differentiation for Compugen. In view of our unique ability to identify multiple potential product candidates with each discovery effort. I will also relate to this product differentiation aspect when I later discuss our Fc fusion candidates.

CGEN-15001T and CGEN-15022 were the first of nine in silico predicted novel B7/CD28 like proteins to undergo validation. We are very excited that recent test results indicate the CGEN-15022 is expressed in numerous types of epithelial cancers with significant unmet clinical need such as liver, colorectal, lung, and ovarian cancer.

In contrast test results for CGEN-15001T show that it is expressed in complimentary set of solid cancers and in a set of hematological malignancies such as prostate cancer, melanoma, Hodgkin's lymphoma and non-Hodgkin's lymphoma such as T-cell and B-cell lymphomas.

These expression profiles in different in different cancers presenting significant unmet clinical needs provide important distinctions and product differentiation between these two novel targets although the markets themselves were discovered by the same predictive methodology. Together with our previously disclosed results pointing to the negative co stimulatory activity of each of them, these results strongly support the potential of CGEN-15001T and CGEN-15022 as compelling drug targets for the treatment of different test indications through monoclonal antibody immunotherapy.

As suggested by Mary 's reference to the abundance of riches from which our California subsidiary can make target selections, we have a number of additional targets both in the B7/CD28 like family and otherwise, that have not yet been disclosed.

We intend to diversify our South San Francisco antibody pipeline with these targets and with additional targets to be identified by our team in Israel through the application of new discovery prioritization and selection criteria. These include targets intended for antibody drug conjugate therapy and protein kinase inhibition

Therefore, as we move forward we expect to be able to systematically supply our California subsidiary with prioritized ways of compelling novel pre-clinically validated target candidates.

As most of you are aware, last year we entered into an investment with Baize Investments for the financial support of the start up of our mAb operations in California. One result of our mAb target is a lesson in prioritization activities has been the recognition that some of the specific targets included in that arrangement no longer fully reflect our near-term mAb development program.

Therefore, during the past quarter we announced that Baize agreement had been amended to modify the list of targets included and to reduce the total number of targets from twelve to eight. Consistent with this reduction the payment schedule was modified such that the remaining $6 million due under the agreement would be received by Compugen by year-end 2012.

As reported in today's press release subsequent to June 30, 2012, the first payment of $1 million under the revised schedule was received by Compugen.

I would like to move now to the second arm of our pipeline program Protein Therapeutics.

As previously mentioned in addition to serving as targets from monoclonal antibody treatment in oncology our B7/CD28 molecules also provide us with the potential to develop Fc fusion proteins for the treatment of various autoimmune diseases. These activities including predictive discoveries, validation, and development are managed by the team in Israel.

As previously mentioned and quite remarkably, five out of the first six Fc fusion product candidates tested have been shown to be efficacious in relevant autoimmune disease models. These represent an extraordinary rate of early stage success in comparison with industry experience. A number of these candidates have entered early product development stages with our most advanced candidate programs now focused on defining the lead molecule for IND enabling studies and extending the relevant therapeutic utilities we're testing in animal models of additional autoimmune diseases and studies relating to their mode of action.

As we continue our development activates for these Fc fusion protein therapeutics, we're in active discussions with a number of leading pharma companies regarding various forms of collaborations for products to development and commercialization. We're very pleased by the interest now being shown in these candidates and optimistic about our ability to enter into partnership with the industry based on them (inaudible). However, predicting an exact timetable for such partnership with we understand the front interest to our shareholder is never possible with any certainty, but please, do not interpret our inability to provide a timetable as an indication of lack of optimism on our part.

In addition to our continued success with our early stage development activities, another reason for our increasing optimism regarding the commercial value of our pipeline our recent industry collaborations for pre-clinical stage biologics. Terms for reported agreements vary greatly with up on payments and research funding raging from a few million to tens of millions of dollars and total deal value not including royalties from tens to hundreds of millions depending on manufacturers such as product indication, technology, mechanism of action, superiority profile, et cetera.

In addition, in view of the importance of early stage product differentiation in catering the value of Compugen's unique ability to identify multiple potential for the candidate, with its discovery effort, I would like to provide some more detailed information regarding our ongoing activities in this regard for our Fc fusion B7/CD28 like proteins. Included in the differentiation activities for these candidates are multiple studies by our collaborators in academia and by ourself with initial indications of differences between some of our B7/CD28 like molecules among themselves and from standards of care therapy,

In our studies, each of our therapeutic Fc fusion proteins based on our B7/CD28 like molecules has demonstrated the ability to attenuate inflammatory T-cells. Attenuation of T-cells is upstream in the autoimmune case affecting multiple downstream inflammatory pathways. Therefore our diabetic candidates has the potential for improved efficacy and to address a larger patient population compared with most current standards of care drug such as the most successive biologics drug class of painless inhibitors which influence a specific downstream inflammatory pathway.

As already demonstrated for some of our Fc fusion candidates including CGEN-15001 and CGEN-15021, the in vivo therapeutic effect is long term and the disease does not rebound with treatment withdrawal. This suggests the treatment with these Fc fusion proteins has to this progression and has the potential to induce long term remission and tolerance that are highly desirable for long-term management of chronic autoimmune diseases.

Furthermore, targeted intervention toward T cell as opposed to global inhibition of T cell activation by other agents should lead to therapeutic effect while leaving general immune responses active to fight infections and malignancies.

This was demonstrated for CGEN-15001 in a viral infection model where treatment for CGEN-15001 did not result in an exacerbation of the viral infection so the general immune system was capable of fighting the infection.

This is in contrast to reported exacerbation in the same model of the viral infection by [CTL lympho ig] a mouth version of the rheumatoid arthritis drug Orencia, currently one of the leading treatments for rheumatoid arthritis.

This demonstrated absence of global immunosupression by CGEN-15001 should lead to a safer therapy with reduced risk of infection as opposed to the significant risk posed by approved biologics for autoimmune diseases.

CGEN-15001 will be the subject of a presentation by [Professor Joseph Podogial] from Professor Miller of Northwestern University Lab at the European Congress of Immunology this September in Glasgow. This Congress is held once every three years with over 5,000 participants. It is the largest of gathering of European immunologists and a prime event to present new novelty research and therefore we are very pleased to participate through Professor Podogial's presentation.

The new advances that we have made in the field of B7/CD28 like immune checkpoints for both our Fc fusion proteins and the drugs targets for mAb therapy continue to raise the interest of key opinion leaders in this therapeutic field.

Consequently, our efforts will now progress with an extended network with new and existing expert collaborators to further demonstrate the potential advantages and superiority of our product candidates and their differential profile.

And with that we will begin the q-and-a portion of this conference call.

Please note that we would appreciate if each time you are recognized by the moderator you will limit your questions to one, plus a short follow up if necessary.

(Operators Instructions)

Our first question is from Klaus von Stutterheim from Deutsche Bank, please go ahead.

Hello, this is a question on cash position and cash brand so the question, it is a multi-faceted question. Current cash position, cash brand this year and next, expected cash balance at the end of next year and possible need for financing?

This is Martin, as is shown in our report that was issued today. As of the end of June 2012, we had almost $22 million in dollars of available cash. And this is what I am considering the value of our average shares where the $6 million at that time was remaining to be paid during this year by Baize under the revised schedule of which we recently received the first $1 million. Also as shown we have no long term debt of any type. So therefore, we now have sufficient cash resources in hand to take us well into 2014 at our current and expected earn rate, with out additional cash from new agreements or any other source.

As well look at this situation we don't see any short-term issue and we see many upside opportunities for the receipt of cash beyond the issue of new equity. In any case I think we have shown that we have managed the company's finances both conservatively and in the best interest of the shareholders. And I can assure you that we will continue to attempt to do so in the future.

Okay, terrific thanks.

The next question is from Brian Coleman of Hawk Hill Investments, please go ahead.

Great, thanks. First, the initial mAb targets at South San Francisco, is there the resources in place to develop those eight simultaneously or is there some kind of a prioritization that happens? And also what is the timing, I guess it is about usually ballpark about 18 months to develop a mAb target that is ready to go to clinical trials. Is there an opportunity to monetize those mAb therapeutics before we get to that point?

Okay this is Mary, so to answer your first question, which is the loading of the pipeline. We prioritize the programs and we are loading them up sequentially, so there is a little bit of staggering and then to accelerate we are also working with CRO's in order to see the pace at which we load up those programs.

And for the second part of your question I think the 18 months to 24 months is to pre-clinical proof of concept and looking at then whether that decision point of whether those are worthy to perform the IND enabling activity, so I think your timing is about right there.

I think it is possible to partner certainly at that time and I think depending....well I will let Anat address the partnering aspect.

Yes, thank you Mary. With respect to our antibody program we are seeing interest from several big pharma companies and the targets that we are now focusing on. And this is particularly since the establishment of our California operation. It helps, the fact that we have the ability to take them into development changes, so although I would not rule out the possibility to take them into development and change it.

So although I would not rule out a possibility of an earlier collaboration at the target level, we are moving forward on the assumption that to maximize the shareholder value from this arm of our pipeline program will be licensing out the extra monoclonal antibody candidate instead of the targets and as Mary indicated and gave some insight about this on the timeline.

Martin, would you like to add?

My only comment based on a number of conversations that I have had with our shareholders, there might be some confusion here because, and we hopefully tried to clear it up in our prepared remarks. It is our expectation that the initial product agreements from our pipeline will come from the protein therapeutics and not from the monoclonal antibodies. The Fc fusion proteins are the most advanced ones already in pre-clinical stage and therefore, I think, unless it is a research-oriented collaboration, which of course is possible but we are not counting on them. Unless it is that type of collaboration in the monoclonal antibody field, again the initial commercialization collaborations will almost certainly be based on our Fc fusion proteins.

Okay thank you and my follow up. Anat, if you could provide just a little bit more clarification on why the number of discoveries covered by the Baize agreement went from twelve to eight?

Yes, when we have initiated the activities in the San Francisco operation, the scientists together were sitting and prioritizing from [hours to hours] of targets. Which target should enter first to the operation, it doesn't mean that the others do not enter later. Of course, the least that is under the Baize agreement was not reflecting all the different candidates that we have in our reservoir, and I indicated in my script, there are candidates that we have never even disclosed.

So, during this prioritization and the decision to focus on a couple of these candidates we have decided to make this change.

Okay, thank you.

The next question is from Christopher Hernandez of Gilder Gagnon Howe. Please go ahead.

Hello, thank you for taking my question. I am wondering whether you can give a little more color on exactly how your predictive technology works, scientifically speaking? Let's say you identify an interesting target and it's a protein, do you somehow map that protein in 3D space and then use some sort of super advanced protein folding simulator to determine what type of binding sight you would need?

Could you just elaborate on that a little bit?

Yes, sure, we are using different types of information in order to answer the needs that we are having for a specific platform, I might need. Usually, we are not focusing on three-dimensional structures, but what we are doing is we are mapping protein, protein interaction we are trying to focus on binding areas, we are getting information from pathways analysis and mutation. So information that is based on the level of the DNA, the RNA, and protein and sometimes peptides and we try to relate all these into drug information and the disease information. So, in general this is a comprehensive analysis of information that we can put our hands on.

I must say that what we are doing here at Compugen and is different from what is done outside here, is we are using all the available information that may be can also used by others with very, very strong algorithms which allows us to do two things. First, to combine the data in a way that we think is unique and to be able with strong algorithms to extract information that is now known and therefore when we are saying predictive discovery approach it means that we are predicting stuff that is not known to the industry. And this is why Compugen can allow it self to focus on novel targets that are not known to the industry and generate novel solutions for diseases with unmet needs.

Okay, thank you that's helpful.

The next question is from Mara Goldstein of Cantor Fitzgerald. Please go ahead.

Oh, great, thanks so much. I have two questions and one is just around development spend and how you think about that from prioritization perspective since you are doing forward integration into the drug development as opposed to validation and so how you think about splitting up that money between those two efforts?

And then somewhat dovetailing on that is that you have spoken about the possibility of doing partnerships for targets as well for the candidates that you are developing. But what I am curious about is the opportunity to both partner with the target and the compound. And if I think in my memory bank to companies that have proceeded you and have started as target companies and then developed their own drugs, we have often seen these, what I would say is, combined arrangements. And I am curious as to your thoughts on that?

Okay with respect to dividing the resources, as you indicated we have both arms and we are at the early stages of development and in these stages we can't allow ourselves with the resources that we have in the company to split the resources between what is required to advance as many possible therapeutic proteins, Fc fusion proteins and the targets themselves. At this stage this is something that we believe we can proceed forward with and this is what we are doing and we think that we can bring these into the stages that we are able to collaborate together to get into partnerships on these candidates and they it will allow us to move forward with the next wave of our discoveries and to put more focus on them and to move ahead with [spending] our resources.

With respect to the commercialization and the what you mentioned, the targets, the Fc fusion, in this respect the Fc fusion proteins are directed into autoimmune disease they have their specific set of indications that are based on the function of these specific proteins while the drug targets are distinct and are drug targets that should be directed for oncology. And therefore the monoclonal antibodies will be directed to cancer disorders. In this respect we don't see the option of getting into partnerships that are different for each and every candidate and each and every type of biologic.

So for the Fc fusion one hand and for the target and the monoclonal antibodies on the other hand. Never the less there is also an option for having a partnership with pharma partners that will have the interest to proceed with the two arms that are stemming from the same target. Namely, the Fc fusion of this specific protein and the monoclonal antibodies that it's targeting. The same target there is also the option to do this, but definitely these are two different product candidates that should answer different unmet clinical needs.

Okay, thank you.

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

Thank you for allowing me to ask the questions. The first one is the differentiation that the drug companies wanted to see in the proteins before they would commit. Could you give us an update how far along you are on that?

Could you repeat the question, we couldn't hear it well?

The differentiation that the large pharma companies wanted to see on the proteins you presented to them, that has been holding up deals. Could you give us a sense of how far along you are on that?

As I stated in the script and I related to it, we have, and I also said it in the last call. We have established the work plans in order, in the last call I related to the fact that we established the work plans in order answer these different questions and that is not directly specifically for the candidates that Compugen is dealing with. Being able to differentiate from drugs that are in development or are in the market is something that is required. We are moving ahead with these work plans and to gain the call I was pleased to remark that we already started to see results in these terms of differentiation both for the drug target, for example these two that I just stated that are showing results in preliminary tests of cancer, non-overlapping cancers and could direct to different type of indications. And also for the other Fc fusions they are pointing to clear differentiation with the drugs that are standards of care.

So we are very pleased with the results and we aim to progress. Still I think that we are in discussions with a number of leading pharma companies concerning our product candidate and this is not holding the discussions but this is something that we are aware of the fact that we need to do it, this is the right thing for the company to move on with and we are and we are pursuing it full steam ahead.

All right, I appreciated that and my second question. What are the expectations of the company in signing a deal with upfront money? Do we have any hopes or thoughts on that?

As I stated in my talk, based on agreements that are out there with this close-term, you could see that there is a range in the terms, the financial terms of agreements that are signed. In this respect you could see deals with upfront payment and research funding ranging from a few million to tens of millions of dollars. So everything is dependent upon the product indication, the technology, the mechanism affection, the superiority profile. We are working on all these fronts in order to be able to maximize the value of our product candidates to our shareholders.

Thank you very much.

There are no further questions at this time.

(Operators Instructions)

Dr. Cohen-Dayag would you like to make your concluding statement?

It has been a prolonged journey to successfully establish a world leading in silico predictive discovery capability. Fortunately, we are now able to begin to demonstrate impressive results achieved through the first focused use of this unique and power capability as our past infrastructure efforts bear fruit in the form of compelling product candidates.

And it is certainly just the beginning. This journey would not have been possible without the support and patience of our long-term shareholders many of whom we see are on the line with us today. We look forward with much excitement to sharing with all of you our achievements during the remainder of this year and in the years to come as our broadly applicable predictive capability only improves and expands with time with the expectation of providing for the first time a much needed systematic source of attractive product candidates for the biopharma industry along with very substantial increases in shareholder values.

On the behalf of all of us at Compugen, thank you for your confidence in us and for joining this call.