Compugen Ltd (CGEN) 2017 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Compugen's Second Quarter 2017 Results Conference Call. (Operator Instructions) As a reminder, today's call is being recorded. I would now like to introduce Elana Holzman, Compugen's Director of Investor Relations and Corporate Communications, please go ahead.

Thank you for joining us today. Before we begin, I would like to read the following regarding forward-looking statements. During the course of this conference call, the company may make projections and other forward-looking statements regarding future events or future business outlook, anticipated progress on Compugen's pipeline program, as well as commercialization efforts. We wish to caution you that such statements reflect only the company's current expectations, and that actual events or results may differ materially. You are kindly referred to the risk factors and cautionary language contained in the documents that the company filed with the SEC, including the company's most recent annual report on Form 20-F, filed February 16, 2017. The company undertakes no obligation to update any projections or forward-looking statements in the future. I will now turn the call over to Anat.

Thank you, Elana, and welcome to Compugen. I would also like to welcome all the participants on today's call. Joining me from Compugen today are John Hunter, our Vice President, Antibody R&D and head of our San Francisco site; and Ari Krashin, our CFO and COO. Unfortunately, Martin Gerstel, our Chairman, who usually participates in these quarterly calls, is currently on vacation and therefore will not be joining us today.

Before moving to a corporate update, I would like to say a few words about Paul Sekhri's appointment as our new Chairman. As most of you are probably aware, in a separate press release issued today, we announced that Paul will be replacing Martin Gerstel effective October 2. Martin has been with the company for two decades, and has made invaluable contributions as we vault from a discovery-only company to having a promising cancer immunotherapy pipeline of first-in-class drug opportunities. As Martin stated in February, while Compugen is advancing towards its first human critical trials, and is facing new opportunities and challenges, it would be appropriate for Compugen to have a new chairperson on board to guide the next chapter of our corporate growth.

Paul brings to Compugen over 30 years of extensive and diverse experience in life sciences industry, in drug development, business development and commercial strategy, having been part of both big pharma and biotech company and with vast experience boards of both public and private companies. I'm thrilled that he has accepted our offer, and I look forward to working with him along with the rest of our Board.

I am confident that Compugen will greatly benefit from his leadership and guidance. In addition, I wish to thank Martin for his invaluable contributions to Compugen's development for two decades, and we all look forward for his continued support.

In my prepared remarks today, I will provide an overview of our recent activities and progress made over the last quarter. I will discuss our collaboration with Bayer, followed by an update on the progress made within our product pipeline, specifically on COM701, the company's leading new oncology checkpoint candidate targeting PVRIG.

I will discuss the plan for IND filing, the clinical advisory meeting with key clinicians in the immuno-oncology field, our development tests, and the patent we were recently granted by the United States Patent and Trademark Office. I will also update on our second pre-clinical program, COM902, our TIGIT inhibitor.

Following my remarks, John will be sharing some data we presented at ASCO, the American Society for Clinical Oncology meeting. Please look into the WebEx link on our website to see the slides. John will also present our clinical development strategy for COM701, which includes opportunities for monotherapy as well as dual- and triple-combination treatment options.

Ari will conclude the company's prepared comments by reviewing key aspects of our financial results that were published earlier today.

Last week, we issued a press release updating the status of our activities with Bayer. Our agreement with Bayer involves the recent development and commercialization of antibody-based therapeutics against two novel, Compugen-discovered immune checkpoints [regulatory], CGEN-15001T and CGEN-15022. However, a recently-completed joint assessment by Compugen and Bayer of potential drug candidates against the CGEN-15022 target has suggested that its potential to serve as a key immune checkpoint for the treatment of cancer immunotherapy may be limited and does not justify further investment. Therefore, it has been determined that the current collaboration will focus solely on CGEN-15001T, and all rights to CGEN-15022 will be returned to Compugen.

As previously announced, Bayer continues to advance the CGEN-15001T program towards first-in-man clinical trials. To date, we have received $25 million in up-front and milestone payments from Bayer, primarily due to the progress of CGEN-15001T, and we see significant upside potential for this program with over $250 million in total milestone and royalties and product sales.

The Bayer collaboration has been, and still is, highly productive and we look forward to continuing to work together with their excellent team. We're very proud with the success rate of our predicted discovery capabilities, advancing one out of two of our novel immuno-oncology Bayer programs from computer prediction to pre-clinical studies, and into IND-track development under this collaboration. We remain very confident in our discovery capabilities and intend to continue to enhance them to maintain our strong competency in the field of novel target discovery. With this effective collaboration and our excellent relationship with Bayer, the companies are discussing potential additional collaborative projects in the area of immuno-oncology.

On the business development front, we are encouraged by the various discussions and evaluation processes we are currently holding with potential industry partners with respect to our four program areas. To remind you, these are COM701, our anti-PVRIG drug candidate; COM902, our anti-TIGIT drug candidate, our myeloid target for immuno-oncology, and CGEN-15001, our Fc fusion protein drug candidate for auto-immune diseases. It is important to note that these type of industry partnerships entail a lengthy evaluation period, particularly when it relates to completely novel targets such as ours.

While we are confident that we can achieve multiple pipeline collaborations, and believe that a new industry partnership may occur before the end of the year, the exact timing for completing any such collaborative arrangement cannot be precisely predicted and may take longer.

Moving now to an update on our pipeline program, I will focus today on COM701 and COM902.

As we previously announced, our contract development manufacturing organization faced a contamination event while manufacturing the lot intended for our planned COM701 GLP toxicity study. This event resulted in our need to reschedule the filing of our IND, which was originally planned for Q4 of this year. Today, I am pleased to announce that following a thorough investigation with the CDMO, production of the drug for clinical testing is currently in progress and the GLP studies will be pursued with newly-produced materials. Given this progress, we are now targeting the IND filing towards the end of Q1 2018, with the expectation of initiating our Phase I clinical trial a few months later, pending of course on clearance by the regulatory authority.

In parallel to preparing for clinical trials, we are also assessing potential biomarkers that can be used to enable the selection of patients likely to respond to our COM701 treatment.

I would also like to relate today to some recent developments in the immuno-oncology landscape. While PD-1 blockade has demonstrated efficacy across a wide range of tumors, and has quickly been established as a revolutionary treatment to cancer patients and the standard of care for cancer treatment, the outcome of most of the recent trials bring forth the fact that still, the majority of patients do not respond to PD-1 blockade. It is also clear that the need for new, important immune checkpoint pathways such as PD-1 or other approaches to increase the response rate, remains a key unmet need.

Therefore, the focus of the industry has turned towards the search of new checkpoint pathways and various combination therapies to increase patients' response rate. But still, although its first competition in the field, the initial clinical data from other targets or checkpoints is in most of the cases, not very compelling. Also, the large amount of ongoing clinical trials of drug combination treatments with checkpoints performed usually in an opportunistic fashion, mostly did not demonstrate the substantial increased response rate among patients, again highlighting the high remaining unmet need for new targets and biological pathways.

This presents Compugen with a unique opportunity to generate value by developing differentiated and novel assets. For example, the TIGIT-PVRIG genome axis represents an alternative immune checkpoint pathway with the potential to be key for multiple combinations. This is due to two main reasons. First, TIGIT is believed to be a key immune checkpoint which is in clinical testing by several companies. The novel target we discovered, PVRIG, is a second distinct checkpoint in this axis. We believe, and our experimental data to date supports, that the blockade of these two checkpoints offers the potential to fully maximize the efficacy of these two important related pathways in this axis.

Second, the ligand of PVRIG is expressed in both patients who are PD-L1 positive and PD-L1 negative, highlighting the potential for combination with PD-1 blockade, and as a potential mechanism to overcome resistance to PD-1 treatment.

Our approach for drug combination is based on the scientific and biological rationale of the pathway we're targeting, and presents a differentiated approach which offers an increased potential for monotherapy and combination treatment. In addition, having a deep understanding of the expression patterns of the ligands and receptors of this pathway presents Compugen with the opportunity to develop biomarker and patient enrichment strategies in select patients likely to respond to treatment.

In June, at ASCO, we held our first clinical investigators meeting to solicit input on designing a Phase I clinical trial for COM701. At the meeting, we presented our COM701 immune checkpoint program to a select group of leading clinicians, each of whom are renowned experts in the clinical immuno-oncology field. The meeting was led by Professor Tony Rivas from UCLA, Professor Drew Pardoll from Johns Hopkins University, and Professor Charles Drake from Columbia University, all key opinion leaders who play a major role in the cancer immunotherapy revolution.

The purpose of the meeting was to hear the clinicians' views on the COM701 Phase I clinical development plan, and to discuss their possible involvement as investigators in a future trial. The information we provided regarding our novel PVRIG target and the pre-clinical package of its antibody drug, COM701, was very well-received, and we believe the result is desire by investigators to take part in our upcoming clinical trial.

Based on that successful meeting, we are now finalizing our Phase I clinical trial design. John will provide more details on our clinical development strategy intended to extract the full clinical and business potential of our lead program.

Last week, we also announced the allowance of our first patent covering COM701 relating to methods of using COM701 for activating T-cells in cancer patients. The patent was issued under the USPTO's pilot program, providing early review for patent applications pertaining to cancer immunotherapy in support of the National Cancer Moonshot program. This was a one-year pilot program launched by the USPTO in June 2016, and which was extended until December 2018. In view of the approximately 900 cancer immunotherapy patent applications being received annually by the USPTO, the program was intended to move innovative new treatments from conception through regulatory approval swiftly, to ultimately reach patients faster.

We are very excited that we were able to achieve this patent issuance for our lead internal immuno-oncology program, particularly since our patent is one of less than a dozen patents granted under this program to date. This patent, along with other pending applications in the U.S. and other jurisdictions, are part of our global strategy to protect our assets.

COM902, our anti-TIGIT monoclonal antibody candidate, is the second pre-clinical asset in our pipeline. It is an exceptionally high-affinity antagonist antibody which we selected for its ability to enhance T-cell activation, both alone and synergistically in combination with COM701. We are internally developing this antibody and intend to combine it with COM701 in clinical trials for various oncology indications. Currently, generation of a production cell line from manufacturing is in progress, and we look forward to providing further updates on the program as it advances through non-clinical development.

Thank you, and I will now turn the call over to John.

Thank you, Anat. As Anat noted, I will be directing my remarks today towards the early clinical development and positioning of COM701. Before I begin, I would like to quickly summarize the pre-clinical data that we recently presented at ASCO, as it guided our thinking on the design of the Phase I clinical trial.

So, on slide 1, you can see an overview of the COM701 program. And, as a reminder, it's a high-affinity antibody that targets PVRIG, a novel immune checkpoint discovered by Compugen, with its computational predictive discovery platform. We have now shown in a number of different pre-clinical studies, that COM701 is synergistic with both TIGIT and PD-1 pathway blockades, and we see this as a benefit as a potential cancer treatment in different solid tumor indications. And, we are seeing COM701 as having first-in-class opportunities both as a monotherapy and in combination with both TIGIT and PD-1 pathway inhibitors. We are currently on track for filing an IND in Q1 of 2018.

Moving to the next slide, in in vitro studies, we've shown that while COM701 has monotherapy activity in terms of enhancing T-cell activation, we get synergistic effects when we combine COM701 with a TIGIT inhibitor antibody. We've also seen this effect with PD-1 combinations as well, both in vitro and in vivo, and I'll show you the in vivo data shortly. But, as you can see, we get similar effects with COM701 as we see with PD-1, and this is further enhanced when we combine the two for a dual blockade of both pathways.

Additionally, in some [pathway] systems we've seen benefit of triple combination when we combine COM701 with TIGIT blockade plus PD-1 blockade, suggesting that clinically there may be opportunities for triple combination.

Mechanistically there is a rationale for seeing the combination both of PVRIG with TIGIT as well as with PD-1 inhibition, as you can see shown in this slide. PD-1 does in fact tie in to the [DNAM] axis in that it dephosphorylates and inactivates DNAM, when it's bound to its ligand PD-L1. And so, we believe that if we combine inhibition of PD-1 with PVRIG, TIGIT, or the two of them together, we should see enhanced effects on T-cell activation similar to what we've seen in pre-clinical studies.

Our in vitro data has been supported by in vivo effects as we see with either PVRIG blockade or ablation in knockout mice. As you can see on slide 4, when tumors are grown in mice that lack PVRIG expression, they grow more slowly than what we see when they're grown in wild-type mice that have the PVRIG gene present. And this suggests to us that there will be monotherapy opportunities for using COM701 in the clinic.

Additionally, when we treat these mice with a PD-L1 blocking antibody, we now see a combination effect in the knockout mice, in that there is a further decrease in tumor growth in the PVRIG knockout mice when you compare it to either wild-type mice treated with anti-PD-L1 or the PVRIG knockout, which again supports the combination rationale that we saw in the in vitro studies.

We have also managed to replicate this combination effect with dual antibody blockades of PVRIG and the PD-1 pathway, where we've seen effects not only on tumor growth but on survival in the combination treatment animals.

As we also have looked for combination benefit with TIGIT blockade in vitro, we've run some in vivo models where we've looked to see whether in mice that have the TIGIT gene ablated, and therefore lack TIGIT expression, whether PVRIG blockade can get some benefit in terms of reducing tumor growth. And as you see on slide 7, we do in fact see reduced tumor growth in TIGIT knockout mice when they are treated with a PVRIG-blocking antibody.

All of this pre-clinical data was taken into account when we designed the Phase I clinical trial. We have been working closely with our clinical advisors, who have extensive experience in IO clinical trials, to design an aggressive Phase I study that will quickly establish safe dosing levels of COM701 while at the same time offering opportunities to observe any initial efficacy signals in targeted patient populations. While the clinical plan is still under review with our advisors, we have mapped out the overall structure that we'll be implementing for the Phase I trial. The Phase I trial will be performed in three distinct stages: Stages Ia, Ib, and Ic.

The first part of the study, Stage Ia, will entail monotherapy dose escalation of COM701 in what is known as an all-comers solid tumor trial. This is an open label trial, in which patients are not pre-selected based on cancer indication or prior therapies. These patients generally possess advanced disease and have exhausted all available treatment options. This phase of the study will allow us to establish the maximum tolerated dose known as the MTD for COM701. In addition to establishing the MTD, another goal for the study will include assessing possible adverse events associated with COM701 treatment.

As this will be the first time an anti-PVRIG drug has been employed in patients, these results will inform and guide the development strategy for the product candidate overall. Additional information that we look to gain at this stage is the understanding of how our drug works in humans. This information will include the pharmacokinetics of COM701 in humans, evaluation of possible surrogate readouts of response that can be used to confirm efficacious dose levels, and possibly some indication of which specific patient populations will best respond to monotherapy administration of COM701.

Because our pre-clinical data points to synergistic activity of COM701 with PD-1 pathway inhibitors on T-cell activation, as demonstrated in our recent data at ASCO, the second part of the study, Stage Ib, will evaluate the combination of COM701 with a commercially-approved PD-1 pathway inhibitor. In order to increase the likelihood of generating early efficacy data, the Stage Ib combination arm will run in a parallel, staggered-delay design with the monotherapy arm of the study, and will involve dose escalation of COM701 in combination with an approved, fixed dose of the PD-1 pathway inhibitor. As with the Stage Ia portion of the trial, the key goal is to establish a safe dose of COM701, although in this case it will be a safe dose when used in combination with a second checkpoint inhibitor. During Stage Ib, we will continue to monitor all of the same parameters outlined for Stage Ia with an increasing focus on possible efficacy signals in any responsive patient populations. Information from this stage of the trial will be used to determine which specific cancer indications and/or patient populations to focus on in the next stage of the study.

The third part of the study, Stage Ic, will consist of expansion cohorts in which the combination of COM701 and PD-1 pathway inhibitor will be tested in patient populations deemed likely to respond based on data from Stages Ia and Ib, and where we will further explore efficacy signals for combination treatment in the selected patient population. As PD-1 inhibitors are already established as the backbone of cancer immunotherapy, our near-term clinical combination focus will be on PD-1 pathway inhibitors. However, since our data also strongly supports COM701 combination with TIGIT inhibition, our follow-up approach will be to combine COM701 with COM902, our internally-developed anti-TIGIT antibody. This approach will allow us to extract the full clinical potential with COM701, which will be tested both in dual combination with COM902 and possibly in triple combination with COM902 and a PD-1 pathway inhibitor.

Overall, our goal for the COM701 development program is to expand the number and diversity of cancer patients who are responsive to immune checkpoint inhibition, and to increase the depth and duration of benefit in those patients who have no or only partial responses to current checkpoint inhibitors. We hope to achieve this with monotherapy use of COM701 in cases where PVRIG is the dominant immune checkpoint in the tumor microenvironment, or in combination use when there are multiple checkpoints limiting immune response against the tumor.

As I noted previously, our early focus on PD-1 pathway inhibitor combinations is due to the prevalence of their use in cancer treatment together with our pre-clinical data indicating that COM701 can substantially enhance the effects of PD-1 pathway inhibition. Our hypothesis is that the overall efficacy of anti-PD-1 therapies may be limited by PVRIG expression in certain tumors, and that combination with COM701 will release multiple breaks on the immune system and enable a more complete anti-tumor immune response.

In situations where the PD-1 pathway is not the dominant immunosuppressive mechanism, such as in tumors that express no PD-L1, we believe that other checkpoints such as PVRIG and TIGIT may be responsible for inhibition of immune response, offering the opportunity for use of COM701 as monotherapy treatment or in combination with our TIGIT inhibitor, COM902. Having seen the potent effects of COM701 and COM902 on T-cell activation in pre-clinical studies, we are excited to move these programs into the clinic to test their effectiveness in stimulating anti-tumor immune responses in patients.

Thank you, and I will now turn the call to Ari.

Thank you, John. The full details of our financial results can be found in the press release issued this morning.

Net loss for the second quarter of 2017 was $9.2 million, or $0.18 per diluted share compared to a net loss of $6.6 million, or $0.13 per diluted share, for the second quarter of 2016. Our single largest category of expenses remains research and development expenses, which total $7.1 million for the second quarter of 2017 compared to $5.5 million in the second quarter of 2016. The increase in R&D expenses primarily at our South San Francisco site continues to reflect the increased pre-clinical activities including manufacturing costs [affording] the COM701 program as we move forward towards the IND filing which is now planned for Q1 2018, as well as increased pre-clinical activities related to COM902.

I would like to note that the contamination issue reported in June did not financially impact our R&D budget.

As of June 30, 2017, we had approximately $46.1 million in cash and cash-related accounts with no debt. Entering the second half of 2017, and consistent with our prior estimate, total cash expenditures for the second half of 2017 are expected to be in the range of $16 million to $17 million, bringing full-year 2017 total gross cash expenditures to be in the range of $33 million to $34 million, excluding potential cash inflows.

Thank you, and we will now open the call for questions.

(Operator Instructions) The first question is from Mike King of JMP Securities.

I wanted to drill down a little bit more on John's comments. First of all, before I do that, let me just also congratulate you on naming Paul Sekrhi as Chair. He's a highly-regarded biotech executive, and I think it's a great move for you guys. So, coming back to the question for John, with regard to patient selection, I'm just wondering when you begin trials in combination -- well, I guess it doesn't matter, single agent 701 or combo with PD-1, if you'll be looking for PD-L1 expression at all, and its correlates with response? Or, if you'll just be taking all comers, and perhaps stratifying for presence or absence of PD-L1?

We are planning on starting with all comers, just in part so we can get through the dose escalation study more quickly, because it broadens the patient population and helps with enrollment. Where we can, we do plan to get biopsies from patients. That may not be possible in every situation. And when we have those biopsies, we are going to look at the expression of all of the relevant checkpoint players that we've been focusing on. And, that will include looking at PD-L1 levels.

Sorry, so you're saying you'll be looking for biomarkers beyond just PD-L1?

Yes, yes. Sorry. We of course, will be looking at PVRIG, PVRLT, TIGIT, PVR, so we're going to try to get a really broad view of the checkpoint landscape and the tumors, and hopefully we'll be able to tie that back in to patient response.

Got it, okay. And also, just as far as patient selection, can you talk about whether you would expect -- I assume that all these patients would be somewhat PD-1 or PD-L1 experienced, but maybe I'm jumping to an illogical conclusion. But perhaps talk about that aspect of it, and whether you're trying to amplify response, a known response to first line PD-1 inhibition, or are you trying to revive a response to PD-1 inhibition?

Yes, it's actually going to be a mix of patients. As I had mentioned, we're not pre-selecting based on prior treatment, because I think the likelihood of patients having seen PD-1 pathway inhibitors is going to depend on indications. However, ultimately our goal is to see if we can with COM701 get responses in patients that didn't respond to PD-1 inhibitors, or in combination with PD-1 kind of extend responses that may have been seen with PD-1 alone. So, we're really quite open at this point, and we're trying to cover as many different scenarios as possible.

Okay, and then finally on PVRIG, do we have any understanding about correlation with tumor mutation burden, or MSI status?

Yes, we haven't publicly released information on that, but we are looking into that.

Okay, so we'll look forward to some future publication on that front, I suppose?

Yes.

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

One of the things that has given my clients confidence to stay with Compugen all these years, has been the impressive resumes of the people on the Scientific Board, and the three resumes of the Strategic Advisors who have hitched their star to Compugen. We reason that these folks with their backgrounds are better equipped than we are to understand the science and potential of Compugen. Since this is one of the pillars of our continued confidence in Compugen, could you talk a little bit about what the skin in the game of these folks are, going forward, in Compugen? And I'd really like to hear it on the strategic advisors, Sigal, Holtzman and [Hader].

Yes, sure. I'll just say that in general, these advisors and the key leaders that are engaged with the company, of course the reason that they are engaged with the company is their ability to assess the potential of what Compugen was generating along the years, the discovery capabilities and the pipeline of the company, and now, of course that we announced today also the Chairman. In general the advisors, and if you relate specifically to the advisors that are more on the business front, Elliot Sigal and Steve Holtzman, first I must say that we're fortunate that these advisors are engaged with the company. They're very helpful for the company. They are engaged on all fronts, the strategy, the pipeline, the business, and they're working very closely with us.

Right, but is it -- these folks, is it just their reputational risk that they're putting on the line? Is it the opportunity, cost of their time? Because these are very accomplished people, they could be doing other things. Do they have a material economic risk or incentive to stay with Compugen? And then, the strategic advisors, how much time of their working day do they spend advancing the interests of Compugen?

I think that saying just reputation is some kind of under-estimation. These are people that are industry veterans, they're working with big pharma and biotech companies. I think that the reputation is a very important one. In terms of time, these advisors are accessible to us when we need them. Incentive, I guess that I cannot comment, it won't be appropriate for me to comment about material incentive for them. And in general I would say, as I stated, these are strategic advisors to the company. They are involved in all three fronts, the strategy, the pipeline, the business, and as I stated, they are accessible to us and we're fortunate to have these advisors engaged with a company like Compugen. Which I think, and I think that this is the reason that they are engaged with the company, has a great potential.

Right, right, and just last one, and this is kind of back-of-the-envelope question from lay investors. With respect to the Bayer collaboration, I do hear this kind of rumbling, with the resources of Bayer plus your compelling science, it took basically 3.5 years to determine that one of the two molecules just wasn't cutting it. Because you're better at what you do going forward, is it going to be less of a time frame in our determination of whether the other molecule bears any commercial fruit?

I think that just in order to put things in perspective, maybe it took 3.5 years to make a decision on the second one, but it took 3.5 years to make a decision on the first one too because you take it to the clinic. And it is progressing. So, let's just put things in perspective. In general, every target is a new opportunity, brings its own challenges, it's a completely different story between different targets and it's not related to whether our discovery capabilities can predict something that is both faster in the assessment and the development stage, or slower. In general, I would say -- and this is important for our investors to understand -- while novel targets bring huge potential as first-in-class and a better shot at growth intellectual property position, but in these cases, in most of the cases, these are molecules that the research stage is done by Compugen or by the external collaborators that are working with us. So, that also needs to be taken in place. But nevertheless, as I stated, for one program it took 3.5 years to make a decision not continuing for the other program. In only 3.5 years, it moved forward to advancing to clinical trials.

The next question is from John Lazarus. Please go ahead.

Yes, I've been a stockholder for 16 years, and during that time period I had friends and people that knew, who I talked about CGen to, and they were about 20 people who were in the stock, and in the last 3 or 4 years they've dropped out consistently on the stock. And then one -- I don't know what to say, there's some lost -- I don't know what to say to them to be encouraging. I listened to the conference call today, it sounds great. But we've heard a lot of great conference calls. But it continually is a struggle to stay to people, why should they stay in CGen. If you had any simple something to say, that I can relate to these people what would that be? That's the number one question. Number two, are you going to talk about the Moonshot program?

Sure. First, we'll start with what to say with Compugen. It's a company, we even take aside the discovery capabilities that we have, the computation and what this could offer in terms of future potential also in other areas on top of immuno-oncology, I'll stay within immuno-oncology. I think that we are a company that has novel targets, and not only novel targets that you can find 10 or 15 years of research around, that are accessible to others. We have novel targets that we identify the [strong] capabilities, true opportunity for first-in-class drugs, which is the key in this market. So, in the last few years, we generated a pipeline based on these novel targets that we discovered. We have pre-clinical programs targeting in our pipeline, we have four programs at the pre-clinical stage moving from computer predictions to pre-clinical stage, and we're moving on to get to the clinic. We've generated the pipelines, that start to be sustainable in this respect, by sustainable I mean getting to the clinic. And we're hopeful that the additional programs that we have in the pipeline, that we did not disclose yet, will also move forward to the stage where we can disclose more information about them. But, the potential is there for first-in-class drugs for this company.

Okay, thank you, and the Moonshot program?

Yes, sorry, yes. So with respect to the Moonshot program, there is not much more that I can say on top of what I was stating in the comments, in the prepared comments. But, I will just say that we're very proud to be selected by this program to get a grant for our patent. Obviously there was a competition, as we understand it, and this is something that states about the innovation that our molecule offers. Going back to the first section of your answer, I think that this is also pointing to the amount of innovation that Compugen generated in its lifetime.

The next question is from Brian Coleman of Hawk Hill Asset Management.

My question is about PVRIG PD-1 combination potential. We know the limits of PD-1 with roughly 70% to 80% of patients being non-responders, and John said that there's been quite a bit of synergy with PD-1 and anti-PVRIG in combination. And I'm wondering if there's a way that you can quantify what that synergistic population has been, in your pre-clinical data?

To date, a lot of the work that we've been doing to try to understand that has been in different cell systems, and we think at least in part it relates to expression of the different ligands in different systems. For example, if you have almost no PD-L1 expression and you add COM701 plus a PD-1 blocker, you really don't see much of an effect, whereas we see more of an effect when we have both ligands, PVR-L2 and PD-L1 expressed at higher levels on the target cells. Because there are a number of other checkpoints that play into this, we're sort of again trying to get a better sense of what other checkpoints and ligands are expressed in those systems. So, it's something that we're working out, but we do think at least in part it relates to what checkpoints are expressed and at what levels they're being expressed.

Okay, and then my second question is kind of on the business development front. Early on, over the past couple years, there's kind of been a tradeoff discussed about novel targets and novel therapies. On the one hand, they're more risky, but on the other hand the economics of moving a novel drug candidate through trials, and into the market, are much greater than being the 6th, 7th, 8th PD-1 drug to hit the market. And yet, this quarter we saw a fairly significant PD-1 deal with Beigene and Celgene. And I'm wondering, given the discussions you're having now, if you could use that as kind of a metric or a comp for the discussions you're having around COM701 and some of the novel targets?

I'll say that I'll avoid using any metrics in order for us not to put ourselves into a box of a specific metric. In general, the economics, as you know, we stated that we're in discussions on all four program areas. It will be hard to put in metrics for all of them together. And in general, the economics of this type of deals are dependent on multiple variables. It reflects the data, it reflects the stage of the development, it reflects the competition, the amount of assets. So, I would avoid stating any specific metrics relating to this. That's it.

This concludes our question and answer session for today. I will now return the call for Anat for concluding remarks.

Thank you. I'd like to thank all our shareholders and all participants of the call, and I am looking forward to sharing with all of you additional progress during the rest of the year. Thank you.

Thank you. This concludes the Compugen Ltd. Second Quarter 2017 Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.