Compugen Ltd (CGEN) 2018 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Compugen's Second Quarter 2018 Results Conference Call. (Operator Instructions) An audio webcast of this call is available in the Investors section of Compugen's website, www.cgen.com. 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, operator. Thank you for joining us today. With me from Compugen are Dr. Anat Cohen-Dayag, President and CEO; Dr. Henry Adewoye, Chief Medical Officer, and Ari Krashin, CFO and COO. 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, future business outlook, anticipated progress of Compugen's pipeline program and financing related matters. 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 Securities and Exchange Commission, including the company's most recent annual report Form 20-F filed on March 27, 2018. The company undertakes no obligation to update any projections or forward-looking statements in the future. Also, please note, that in his prepared comments, Henry will refer to a slide describing the clinical protocol of the COM701 Phase I study. The slide can be found in the link in today's press release or to Slide 24 in our corporate presentation, which can be found in the Investor Relations section of our website.

I will now turn the call over to Anat.

Thank you, Elana. Good morning, and good afternoon, everyone. I would like to welcome you to our second quarter 2018 corporate and financial updates. I would also like to welcome Dr. Henry Adewoye, to today's call. Henry joined Compugen's in late March as our Chief Medical Officer, a newly created position at Compugen and assumed overall responsibility of our clinical stage pipeline programs. Henry joined us from Gilead Sciences and brings to Compugen over 20 years of clinical experience, having led multiple oncology and hematology clinical trials at global pharmaceutical and biotech companies, including several drug approvals. Since arriving at Compugen, Henry has been instrumental in leading our efforts with the FDA, bringing to a quick resolution, the clinical hold that followed our IND submission, finalizing the trial protocol and clearing the path for the initiation of our Phase I trial for COM701 with first patient dosing expected in early fall. In parallel, Henry has been working to create the required infrastructure to run the Phase I trial.

We're engaging prominent clinical investigators from leading U.S. medical centers in the field of cancer immunotherapy, who will most effectively execute our clinical strategy and explore the full potential of COM701.

On the call today, Henry will provide an overview of our Phase I trial protocol and clinical strategy, and will review the operational aspects of our clinical trial preparations. Following Henry's comments, Ari will provide a financial update after which we will open the call for the Q&A session.

The first half of 2018 marks a transformational period for Compugen. Several weeks ago, the FDA cleared both our IND application for COM701 as well as Bayer's IND application for BAY 1905254. Initiating trials for these 2 programs in 2018 is a significant milestone for our company. Also, the fact that these programs are the first clinical candidates addressing novel drug targets, identified through our computational predictive technology, represents substantial proof of concept for our capabilities in computational discovery efforts. We're excited and looking forward to beginning our first-in-human clinical trials for COM701, targeting the PVRIG immune checkpoint. The mechanistic rationale for this new checkpoint pathway, which ties into both, that TIGIT and PD-1 pathways suggest that COM701 has the potential to improve response rate in patients with refractory or relapse disease following treatment with existing cancer immunotherapies across multiple solid tumor indications. Our data suggest that COM701 may work as monotherapy, but even more so, is necessary to induce a sufficient antitumor immune response in cancer patient [population], where both the 2 pathways, TIGIT and PVRIG are operative. We believe our COM701 program is the only clinical stage product candidate targeting the PVRIG pathway, which is part of the larger TIGIT, PVRIG and PD-1 axis. With this, Compugen clearly has a first mover advantage in a competitive immunotherapy landscape. We plan to advance this program through clinical proof of concept. However, our business model remains to partner our assets and at any stage, we will carefully consider partnering opportunities for these assets that might help us advance the program, establish a sustainable clinical stage pipeline and ensure continued growth and long-term value for Compugen.

As our planned Phase I trial consists of competition treatments with COM701 and PD-1 blocker, we are currently evaluating different avenues to access at PD-1 blocker for the trial. There are multiple possible sources in the industry for PD-1 drug supply, and various types of access arrangements ranging from buying the products on the open market, to entering into an access arrangement with one of the several companies developing and/or marketing a PD-1 blocker. The various access options, each have their own relative merit and value, and we are currently evaluating all alternatives. We will of course share with you more information as we secure such access. As we advance COM701, Bayer also plans to start Phase 1 clinical trials this year for their program targeting as we are too. BAY 1905254, which was jointly developed by the teams at Compugen and Bayer has exhibited antitumor activity as a monotherapy and in combination with other cancer therapy approaches in various mouse models indicating the potential for multiple combination uses in cancer immunotherapy. Bayer is now solely responsible for the further clinical development of BAY 1905254, and we're very excited to see their continued investment and commitment to this promising program. As we already disclosed, we're eligible to receive a milestone payment when the first patient is dosed in 2018. We will of course update you when that happens. The 2 clinical stage programs COM701 and BAY 1905254 along with our anti-TIGIT antibody COM902 address new immune checkpoints that were identified purely through computational discovery. Discovering a new drug target is a remarkable accomplishment. Discovering a new drug target with computer prediction is a breakthrough. We have successfully done that now 3 times. As of today, these have resulted in 2 clinical drug candidates addressing computationally discovered novel targets, which is extraordinary in the life sciences industries. And more important, we have the system, tools and know-how to do it again. We are pioneers in the field of computational discovery. A field now receiving, increasing attention in our industry. It is a core competency and competitive advantage for Compugen. We have extensive experience in developing proprietary computational discovery approaches, and we continue to invest to generate novel drug targets and our predict programs for our internal development and for collaboration purposes. Our proven know-how in computational drug target discovery uniquely coupled with our in-house target validation and drug discovery and development capabilities, distinctively position us in this field.

The third most advanced therapeutic program is COM902, our anti-TIGIT program, which is progressing towards expected IND filing and initiation of Phase I study in 2019. To remind you, we are developing COM902 as a complimentary program to COM701, which leverages our growing and unique understanding of the synergistic biological activity, between the PVRIG and TIGIT pathways. Based on this data, we believe that, [co-blockade] of PVRIG is necessary to maximize the [immunoset] of TIGIT inhibition in certain cancer indications. The combination of COM701 and COM902 will provide Compugen with a distinct competitive advantage. In addition to these programs, we have a broad early-stage pipeline and are working on the next candidate to advance into therapeutic development. These programs, as you know, are largely focused on myeloid targets addressing a range of mechanisms of action. We will provide further details on these programs as they mature.

Before turning the call over to Henry, I would like to say a few words about the changes we recently announced, regarding our Board of Directors. To support our transition to a clinical stage company, and the advancement in our pipeline and business, we recently added 3 new members to our Board of Directors. We are delighted to welcome Gilead Halevy, Dr. Kinneret Livnat Savitzky, and Sandy Zweifach, to our board. Each of whom bring to Compugen, extensive managerial, business and financial experience in the Pharma and/or biotech as well as other industries. These newly appointed board members together with the existing members have the breadth of experience and expertise and the commitment to support and guide the company's future growth.

And with that, I'll turn the call over to Henry.

Thank you, Anat for the warm welcome and thank you, everyone, for joining us today. I'm excited to be part of Compugen's management team, and joined today's call to provide you with an update on the clinical protocols for COM701 and operational aspects of our preparations for the clinical study. Compugen has made significant strides, transitioning from a predictive target discovery company to a clinical stage company and Anat has assembled an experienced, high-achieving and goal-oriented team to lead these efforts, which has put personnel, systems and processes in place to better position us for the clinical development of novel immuno-oncology drugs. As part of the team, I will lead the clinical strategy of the organization and the clinical development of molecules in our pipeline.

Phase I study will be conducted in the United States. Details of the participating [sites] and the overall study design will be accessible on clinicaltrials.gov. The participating clinicians all expressed high interest in COM701, and in our preclinical data and have relevant experience running oncology clinical trials in general and in particular, in the field of immuno-oncology. As we recently disclosed, we expect our first patient to be dosed in early fall.

As Anat mentioned, Phase I protocol is designed to address the scientific and clinical rationale of the COM701 program. Also, the biomarker strategy implemented in the protocol is based on a understanding of the biological pathway of PVRIG and our supported clinical data.

What is particularly newsworthy about our program is that our preclinical expression data support its potential efficacy in tumor types that are PD-L1 negative, which tends to be more resistant or refractory to PD-1 inhibitors. This is even more important, given the change in landscape of cancer treatment, reflected in the increasing number of approvals for the PD-1 checkpoint inhibitors and recent failures of other agents. Our expectations are that the targeted inhibitor, the PVRIG, TIGIT axis will lead to meaningful improvements in clinical outcomes for patients as we met the needs of this underserved patient population.

Turning to the slide describing the protocol. The primary and secondary endpoints of this study are standard endpoints for similar Phase I clinical trials. The primary endpoint is [50], evaluated by dose-limiting toxicities and the determination of a maximum tolerated dose or MTD. This also includes pharmacokinetics. The secondary endpoint is the evaluation of preliminary antitumor activity of COM701 in combination with a PD-1 inhibitor in patients with selective tumor types. Phase Ia, and a of the study will evaluate the safety and tolerability of COM701 monotherapy through sequential dose escalations. To minimize the number of patients treated at subtherapeutic doses of COM701, we have incorporated into the clinical trial an accelerated titration design. What this means is that one patient will be enrolled into the low-dose cohorts and observed during the dose-limiting toxicity window prior to enrolling additional subjects into the next higher-dose cohorts. As dose escalations continue, we anticipate also utilizing a 3 plus 3 study design, at the completion of the monotherapy dose-escalation study, we will have a recommended Phase II dose of COM701. The patient population enrolled will be all commerce, and will include patients who have failed prior therapies, including other checkpoint inhibitors and have no other available approved therapies. To evaluate the long-term safety and efficacy of COM701 monotherapy, at the completion of the COM701 monotherapy dose escalation, cohort dose expansion will be performed with the enrollment of patients with relapsed or refractory disease and the following tumor types. non-small cell lung cancer, ovarian cancer, breast cancer, including triple negative breast cancer and endometrial cancer. These tumor types have been selected based on the preclinical data demonstrating a high expression of PVRIG and PVRL2. With the exception of non-small cell lung cancer, the other tumor types typically have low PD-L1 expression relative to PVRL2 based on our preclinical data, and are not usually responsive to PD-1 inhibitors. Clinically relevant endpoints will include objective response rate, disease control rate, progression-free survival, duration of response and overall survival. In addition, our biomarker strategy will evaluate this clinically relevant endpoints, clinical activity and safety with immunophenotyping PVRIG pathway expression and targeted recovery by COM701.

Our biomarker analysis will be retrospective analysis, which if confirmed, will serve for patient selection at later stages of the trial. Phase Ia and b of the study, will evaluate the safety and tolerability of COM701 in combination with a PD-1 inhibitor using a 3 plus 3 study design.

For this [arm of the] study, all subjects will be on the standard of care dose of a PD-1 inhibitor, while escalating doses of COM701 will be tested. The study will start with a COM701 dose that has already been demonstrated safe and tolerable from (inaudible). Sequential dose escalation will then will be performed until the recommended dose of COM701 from (inaudible) can be combined with the standard of care dose of a checkpoint inhibitor. A similar patient population enrolled for the cohort expansion in [Arm A], in other words, breast cancer, ovarian cancer, endometrial cancer, non-small cell lung cancer will be preferred for enrollment for this part of the study. To give more information on the safety and tolerability of the doublet, COM701 in combination with a PD-1 checkpoint inhibitor, additional patients will be enrolled at a projected dose of the combination prior to cohort expansion in the Phase Ib part of the study. Phase Ib part of the study will enroll patients with these specific tumor types, where the preclinical data has demonstrated a high expression of PVRL2 and PVRIG. These are, non-small cell lung cancer, ovarian cancer, breast cancer, and endometrial cancer. All the tumor indications may be explored based on the earlier clinical data.

All subjects in this part of the study will have measurable disease, so we are able to potentially evaluate the clinical activity of the doublets. As we earlier mentioned, pretesting both PVRIG and PVRL2 will not be an eligibility criteria on the study. Long-term, we will perform a retrospective analysis for correlation with clinical activity. Result of this analysis may inform a biomarker-driven study. In other words, a study in which patient eligibility in part is based on the presence of a biomarker. The overall study will allow us to evaluate the safety, tolerability and clinical activity of COM701 as monotherapy and in combination with a PD-1 inhibitor. Our team, the investigators and key front leaders participating in this study are confident that we've identified a biologically relevant and clinically meaningful target. As you all are aware, the company also develops COM902, a TIGIT antibody, that is currently undergoing IND enabling studies that will allow us to do the test, the dual and triple combinations of COM701 and COM902, with and without a PD-1 inhibitor.

Compugen's management adopted a vision a few years ago of transforming patient lives by developing first-in-class therapeutics based on Compugen's foundational, predictive, habit discovery and functional validation platforms. By being a clinical stage company, we are closer to realizing this vision.

In conclusion, as we open a new front in the treatment of cancer with COM701, a novel first-in-class inhibitor of PVRIG, we are optimistic and looking forward to seeing the clinical data and hopefully provide validation to Compugen's computed predictive drug discovery and development model from drug targets to therapy or in other words, from [cohort] to cure. Thank you.

Thank you, Henry. And welcome to Compugen. We are delighted to have you on our team. Our financial results for the second quarter of 2018 and for the 6 months period ending June 30, 2018 released today, continue to reflect a higher level of expenses associated with COM701 and COM902. Research and development expenses represent approximately 80% of our total expenses, totaling approximately $8 million for the second quarter of 2019 compared to $7.1 million in the second quarter of 2017. The increase in R&D expenses is attributed mostly to pre-clinical activities, mainly manufacturing cost relating to COM902 program as we move forward to IND filing plan for 2019 as well as activities related to COM701, in preparation for the start of our clinical trials.

Net loss for the second quarter of 2018 was $10.2 million or $0.19 per diluted share, compared to a net loss of $9.2 million or $0.18 per diluted share for the second quarter of 2017. As of June 30, 2018, we had approximately $43.1 million in cash and cash related accounts with no debt.

At the current level of cash expenditures, our current cash resources are sufficient to support our activities until the end of the second quarter of 2019 without taking into consideration the anticipated milestone from Bayer upon first patient dosing in 2018, [person] to the Bayer collaboration or other potential cash consideration from other business arrangements. Thank you all.

And we will now open the call for questions. Operator?

(Operator Instructions) The first question is from Mark Breidenbach of Oppenheimer.

Congrats on the progress toward getting COM701 into the clinic later this fall. With the COM701 protocol now finalized. I was hoping maybe Henry or Anat can fill us in on a little bit of information on dosing. Can you maybe just outline the new starting dose for this trial? And also, could you tell us what the highest specified dose is in the protocol. Assuming you don't hit any DLTs first.

Thank you very much Mark. So as the dose of the COM701 we will be using on the study is proprietary, we will not be able to disclose this during this call. But be reassured that what we will be looking for will be the DLT defining toxicities within the 21-Day DLT toxicity window.

Okay. So with the accelerated titration design you mentioned earlier, did I -- am I understanding correctly that the early dose cohorts will be single patient only? And then, you'll eventually shift to 3 plus 3 design, once you get to a therapeutically relevant range?

That's correct, Mark.

Okay, okay. And one final question from me. With the Bayer ILDR2 antibody, is it safe to assume that Bayer will be controlling all the news flow from the Phase I trial? And is it realistic to expect that we could see any early data from this trial in 2019.

Of course, Bayer is solely responsible now for the clinical trials and all the activities with respect to this program. So for sure, it also means that they will control any news with respect to this program and we cannot relate to it, we cannot of course, commit to it, and that from our perspective. The only thing that we can say is that when we will achieve milestones this will be -- milestone payments this will be disclosed, but other than that we -- they are solely responsible for this.

The next question is from Lucy Codrington of Jefferies.

I just have a couple. The first relates to the COM701 study, when might we see first data from this trial? And also, how many questions -- sorry how many patients are you anticipating taking part in the trial? And then my second question just relates to the Bayer milestone. Can give us an indication as to the size of this milestone?

Okay. So I'll start with the Bayer milestone, with the second question. We cannot disclose the amount, it is confidential. And as we didn't disclose it prior times, which is usually 5k and 6k, and this is what we will do when we'll get the milestone -- the next milestone, which is first patient dosing. With respect to timelines, in general, it is premature for us to say anything that relates to give any guidance with respect to the trial. We're now focusing in order to make sure that we start first patient dosing in early fall, as we disclosed. As you are aware, the timelines for a trial are related to or are tied into many parameters, it depends the -- of course, on the size of the trial, but also on the type of patient population, the inclusion exclusion criteria, the rates of enrollment, the number of sites, and we cannot really, at this stage, [relate] to it. That's on the -- that's on this front. Henry, do you have anything to add?

Yes, with regards to your question on the number of patients for the study. Typically studies of this nature run between 100 to 150 patients. So that's the range we are expecting.

(Operator Instructions) The next question is from [Richard McKey] of [First Associates].

I had a question. Bayer had included some information in one of their presentations early this year about your products, effects for autoimmune disease. My understanding is they aren't actually licensed to use it for autoimmune disease, and I'm wondering if you are looking into either expanding your license with them for that or finding additional partners to treat those.

Just to make sure that the information is accurate, Bayer did not licensed to us, so the arrangement with Bayer relates to us licensing to them, the rights to develop antibody therapeutics against the drug target and we kept the rights internally at Compugen for the development of [Fc fusion] protein therapeutics for autoimmune diseases. And of course, we cannot relate to any type of discussions with Bayer or anyone else that relates to business development activities of the company.

Okay. But I haven't heard anything from you about trying to develop that lately, is this something you are hoping to license to someone else?

This is a program that is in our pipeline, and it is a part of the pipeline slide deck that is in our corporate presentation, so yes it is a program in our pipeline. And as I said, we're not commenting about business development activities that we do, not with this one or any other program in our pipeline.

This concludes the question-and-answer session. I will now turn the call back to Compugen's President and CEO, Dr. Cohen-Dayag, would you like to make your concluding statement?

Thank you. The first half of 2018 was transformational for Compugen, as we became a clinical stage company. We're excited to have 2 drug candidates COM701 and BAY 1905254, addressing new immune checkpoints, which we identified purely through computational discovery, beginning Phase I studies later this year. We hope they will become life-changing for many cancer patients who failed to respond to existing cancer immunotherapy treatments. We would like to thank our shareholders who have supported [this] company, and witnessed Compugen evolve over the years to reach this day of being a clinical stage company. We're excited to embark on this next stage of our Corporate Development and we look forward to continue sharing with you our future accomplishments. Thank you.

Thank you. This concludes the Compugen's Ltd. Second Quarter 2018 Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.