Compugen Ltd Q1 FY2021 Earnings Call

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen's First Quarter 2021 Results Conference Call. As a reminder, today's call is being recorded. With us from Compugen are Dr. Anat Cohen-Dayag; Ari Krashin, CFO and COO; and Dr. Henry Adewoye, Chief Medical Officer, who will be available for questions at the end of the call. 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 or other forward-looking statements regarding future events or future business outlook. Our development efforts and their outcome, our discovery platform, anticipated progress and timeline for our programs, financial and accounting-related matters as well as statements regarding our cash position. 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 the company filed with the Securities and Exchange Commission, including the company's most recent annual report on Form 20-F filed on February 25, 2021. The company undertakes no obligation to update projections or forward-looking statements in the future. I would now turn over the call to Anat. Anat?

Thank you, operator. Good morning and good afternoon, everyone, and welcome to our first quarter 2021 corporate and financial update. We have started 2021 from a strong position, building on our timely execution for our 2020 guidance and plans. We believe 2021 is poised to be an important year for Compugen as we continue our efforts to build a robust clinical pipeline with multiple clinical studies while further deepening the scientific foundation for our differentiated programs. We have developed a comprehensive clinical development program designed to systematically elucidate the role of our internally discovered and wholly owned anti-PVRIG and TIGIT assets across settings and combination regimens. With steady execution, we have made great progress both clinically and research-wise in understanding the role of the DNAM axis members, PVRIG and TIGIT as potentially foundational immunotherapy checkpoint targets. Our work has identified PVRIG and TIGIT as key parallel and complementary inhibitory pathways in the DNAM axis, which also intersect with a well-established PD-1 pathway. Together, our data suggests that the D3 inhibitory pathways have different dominance in different tumor types and patients which means that in order to induce effective antitumor responses certain patient populations may require the blockade of different combinations of these three pathways. With this in mind, we have established a science-driven and data-informed clinical program, which evaluates different combinations of these axis members across indications that we believe will be most relevant in the clinic. On our last call, we shared data from the combination arm of the Phase I dose escalation study of COM701 in combination with Bristol-Myers Squibb nivolumab, as well as follow-up data from our monotherapy dose escalation and cohort expansion study. For the combination arm dose escalation, we provided complete data from all five dose levels in the study. Our encouraging results showed a disease control rate of approximately 67%, which is a significant accomplishment given the highly refractory heavily pretreated and advanced disease patient population. Equally important, are the observed durable responses in multiple patients and across indications, which include complete and partial responses with patients on study treatment for almost a year or in some cases, for more than a year. An additional meaningful highlight from these updated data relates to the patient with a complete response who prior to being enrolled in our study had disease progression on a checkpoint inhibitor. This data suggests that the dual blockade of PVRIG and PD-1 may be key to driving antitumor immune responses in certain patient populations. These readouts are particularly significant given our latest announcement of our expanded clinical collaboration with Bristol-Myers Squibb to initiate a Phase Ib dual combination expansive study of COM701 in combination with nivolumab, which is expected to begin in the second quarter of 2021. This study will enroll patients with ovarian, breast, endometrial, and microsatellite stable colorectal cancer and is an important addition to our clinical strategy, expanding the potential reach of this combination regimen while also providing insight towards the contribution of the different components of the DNAM axis across our ongoing and future COM701 studies and specifically, our ongoing triplet study of COM701 with nivolumab and Bristol-Myers Squibb's TIGIT inhibitor. We also shared initial data from our COM701 monotherapy cohort expansion, a safety and tolerability study with a biomarker-informed strategy to select tumor types most likely to respond to treatment based on preclinical expression data and clinical results from the dose escalation arm. These indications are endometrial, breast, ovarian, colorectal, and non-small cell lung cancer. Enrollment of 20 patients in the study was completed in the fourth quarter of 2022. As of the data cutoff date we presented last quarter, six out of 20 patients had the best response of stable disease across endometrial, non-small cell lung, and ovarian cancer and two patients with durable antitumor activity continuing on treatment. This data, combined with our COM701 dose escalation data, provides signals of antitumor activity in a monotherapy setting in tumor types typically unresponsive to immune checkpoint inhibitors. In addition, some of these single-agent signals are durable, including a patient with a confirmed partial response from the dose escalation study on treatment for over a year as of the data cutoff date presented last quarter. It should be noted that these were highly refractory patients who exhausted all treatment options with tumor types that are typically nonresponsive to checkpoint inhibitors, including patients with prior progression on these treatments, which together suggests the PVRIG blockade may be an important untapped checkpoint that has the potential of driving antitumor immune responses. The clinical data across the combination and monotherapy arms leaves us increasingly confident in our prediction that there are certain patient populations likely to respond to PVRIG blockers and/or PVRIG and PD-1 dual blockade, including those that have progressed on immune checkpoint blockers. Another angle to evaluate the activity of COM701 is the data analysis in progress from the COM701 monotherapy cohort expansion study that will include correlative assessments based on data from patient samples, including cytokines, immunophenotyping, and immunohistochemistry analysis. This data, that will also be gathered from our dual and triple combination studies, will enable us to gain insights relating to COM701 and PVRIG/PVRL2 pathway biology, particularly in indications that are typically not responsive to PD-1 blockade. Our initial assessment of patients’ peripheral blood centers suggest that COM701 may enhance immune activation in cancer patients alone or in combination with nivolumab. These results provide for the first time an indication for the potential effect of PVRIG blockade in peripheral blood of cancer patients treated with COM701. We are excited to be providing updated data from the COM701 monotherapy in combination with nivolumab studies in our upcoming oral presentation at ASCO on June 7, 2021, and look forward to sharing the data following our oral presentation. We continue to invest in our clinical programs and have expanded our clinical strategy to include multiple clinical studies in order to maintain our leadership position in the evaluation of the DNAM axis pathway. Moving forward, in 2021, we expect to continue to execute across our broad clinical strategy, which includes the ongoing triplet study of COM701 with nivolumab and Bristol-Myers Squibb’s TIGIT inhibitor, the initiation of the doublet expansion study of COM701 with nivolumab in the second quarter of 2021, the ongoing dose escalation of COM902, our wholly owned TIGIT inhibitor, and following the completion of the COM902 dose escalation, the initiation of the doublet study of COM701 and COM902 in the second half of this year. With these studies in place, we are positioned to rapidly generate multiple data readouts that will be key for our development of DNAM axis-based new cancer immunotherapies. Our Phase I/II triple combination study evaluating the safety, tolerability, and preliminary antitumor activity of COM701 in combination with Bristol-Myers Squibb’s TIGIT antibody and nivolumab is currently enrolling patients, and we expect to share initial data from the dose escalation portion of the study in the fourth quarter of this year. The purpose of this study is to allow the testing of our triple blockade hypothesis that blocking the three intersecting PVRIG, TIGIT, and PD-1 pathways has the potential to synergistically enhance antitumor immune responses in selected patient populations not responsive or refractory to PD-1 blockers. Another ongoing trial, the COM902 monotherapy dose escalation study is an important component of Compugen's overall strategy. We have seen the growing interest in TIGIT inhibitors, which now include multiple clinical-stage programs, and we're closely following the development in this space. We firmly believe it is important to pursue the development of our own candidate to maintain our control of what we believe are two key arms of the DNAM axis and our ability to independently evaluate multiple combination approaches, which includes TIGIT in the clinic. Advancing COM902 through dose escalation and future combination studies is important for our position in the PVRIG TIGIT space. We expect to provide initial data from the COM902 dose escalation study in the fourth quarter of this year, and are on track to begin studies evaluating COM701 in combination with COM902 in the second half of this year. The preclinical data we published in cancer immunology immunotherapy strengthened our confidence in our clinical approach, providing important information on the underlying biology of TIGIT and its potential synergies with other immune checkpoints, which we can leverage in our clinical strategy. This data, together with our internal PVRIG research, allows us to focus and refine the indications we will pursue in the clinic to potentially maximize the probability of success of our combination strategy of COM701 and COM902. In addition, our research further demonstrates the absence of T cell depletion activity in vitro and in vivo with COM902, and therefore, reinforces our COM902 approach, which was designed to have reduced Fc receptor engagement to avoid potential depletion of TIGIT expressing effector T cells. As you can see from our various scientific publications, we continue to invest in high-quality in-house research that feeds our clinical pipeline strategy in order to keep it differentiated and competitive. Our progress from target discovery, validation, and preclinical development now through to a comprehensive clinical program has been remarkable. Our discovery of the previously unknown PVRIG pathway uncovered this immuno-oncology pathway and our research and clinical work have supported our position as leaders in the DNAM axis space, which has been highlighted by our status as the only company with wholly owned clinical-stage assets targeting both PVRIG and TIGIT. And thus, the only company currently capable of evaluating in the clinic PVRIG monotherapy, dual blockade of PVRIG with PD-1 or TIGIT, and triple blockade of PVRIG with PD-1 and TIGIT. We're highly enthusiastic about what's to come later in the year. Most importantly, initial data from our dose escalation triple combination study. Our Phase I/II triple combination study designed as a study in ovarian and endometrial cancer and additional tumor types with high PVRL2 expression is the ultimate test of our hypothesis and a true differentiator in the crowded immuno-oncology space. Beyond these exciting clinical progress, we're also continually driving forward our science, which has been the foundation that underlies our clinical progress. Our recent publications in cancer immunology immunotherapy and cancer discovery are a testament to our scientific rigor and broader contributions to the fundamental biology of the DNAM axis. We will continue our efforts to drive the science forward, building upon our deep scientific heritage that we believe plays an integral role in our potential success. A key factor in driving our science forward involves the advancement of our early-stage pipeline with multiple programs targeting the immunosuppressive tumor microenvironment, including targeting the myeloid population, which we believe will fuel long-term growth and opportunity for Compugen. The expansion of our fruitful research collaboration with Johns Hopkins University to include focused research on Compugen discovered novel myeloid target reinforces our ability to further discover completely new drug targets and our continued focused research and development on early-stage programs, along our clinical development execution. We are proud to continue this long-standing collaboration, addressing our multiple drug candidates with Dr. Drew Pardoll who played an important role in the preclinical development of COM701 and look forward to collaborating with his incredible team to advance a novel immuno-oncology agent that has the potential to target tumor-associated macrophages in the tumor microenvironment. We are excited by this novel myeloid target, and although this is very early days, we hope that through rigorous and deep research, we will build a strong foundation that can ultimately translate this very early-stage program into a first-in-class clinical candidate. And while our progress in the clinic has been a major focus, we have been in parallel advancing programs like this one along with additional later-stage programs to continue our science-driven approach to discover and develop novel immuno-oncology targets. We will continue to push the science forward and look forward to maturing these programs to a stage where we will be able to disclose more information in terms of target and our future strategic path. Investing in our early-stage programs and pipeline growth engine remains a high priority for Compugen, and we believe in the potential of our platform to uncover additional untapped novel immuno-oncology targets just as we did with the DNAM axis. Finally, before turning the call over to Ari, I would like to thank the team at Compugen, our partners, investigators, shareholders, and patients. The dedication and contributions across these groups are what have enabled us to continue our on-track execution and progress despite the ongoing COVID-19 pandemic. We are proud to have our prior guidance for enrollment and data across our studies unchanged. And with that, I will turn the call over to Ari to review our financials.

Thank you, Anat. Good morning, and good afternoon to everyone. Our financial results for the first quarter of 2021 released this morning continue to reflect a solid financial position with, as expected, increased research and development expenses due to a growing number of clinical trials. Research and development expenses for the first quarter of 2021 were $7.3 million compared with $4.7 million for the same period in 2020. This increase is attributed mostly to CMC-related activities specifically manufacturing costs for additional drug supply of COM701 to support the planned expansion of our various clinical trials as well as an expanded clinical team located in the US, which brings additional expertise to the company to ensure the successful management and execution of our ongoing and soon-to-be-initiated clinical trials. As a reminder, our clinical expenses reflect costs associated with our expanded clinical programs, which we now include COM701 in monotherapy, dual and triple combination studies, as well as dose escalation study for COM902. Net loss for the first quarter of 2021 was $9.9 million or $0.12 per basic and diluted share compared with a net loss of $7.1 million or $0.10 per basic and diluted share for the same period in 2020. As of March 31, 2021, we had approximately $190 million in cash and cash-related accounts compared with approximately $124 million as of December 31, 2020. The company has no debt. The decrease in our cash balances of approximately $5 million net during the first quarter represents approximately $9 million of gross cash expenditures, offset by collection of $2 million from AstraZeneca related to the revenues recognized in the fourth quarter of last year and $2 million of working capital. As a reminder, we expect our gross cash expenditures for 2021 to be in the range between $40 million to $42 million without taking into consideration any potential cash inflows for the company from existing old and new collaborations. Thank you. And with that, we will now open the call for questions.

Congrats on all the progress, and I hope everyone is staying safe on your end. Just a couple for me. First of all, should we be expecting any additional patients from either the monotherapy or nivolumab combination cohorts to be included in the analysis presented at ASCO versus what we saw in February, or will it really just be the same set with more follow-up time? And you mentioned that there might be some correlative data presented at ASCO as well. I'm wondering if you were able to track any specific markers of DNAM 1 activation or will these correlative data really be more generalized indicators of immune activation and response?

So I will take the correlative assessments and let Henry relate to the clinical. On the correlative assessment, as we stated in our last quarterly call, we were able to track with very initial data, obviously, immune activation seen by COM701 treatment as monotherapy and also in combination with nivolumab. So this data will be presented. With respect to DRAM access, this is really analysis in progress and if we'll show some data, it would be very, very initial. We will present the data as we will have it ready probably in additional later conference. Henry?

So Mark, what we previously disclosed in February was a snapshot of the data. At ASCO, we’ll present updated data, including all the patients who have been enrolled on the dose escalation arms of the study, so monotherapy dose escalation, the combination dose escalation, including follow-up. We'll also disclose data on the patients who have been enrolled on the monotherapy expansion cohorts, including follow-up on those patients also. And particularly, we will disclose data on long-term patients who have been on the study, especially the ones that we've highlighted in the prior disclosure we had in February. So it will be a summary of all the data that's been previously disclosed and new data, specifically new data in the last dose cohort of COM701 in combination with nivolumab both at the doses of 20 milligrams per kilogram body weight dose and 480 milligrams IV Q 4 weeks. So there will be a lot more safety data in those cohorts.

And just also wondering if you were able to collect any postmortem biopsies from patients in the Phase I study, who were on drug at the time of death, just to be able to look for any evidence of target engagement and also do a little bit of PVRL2 expression profile in any of the Phase I patients?

As Anat mentioned in her script, there will be correlative data presented. And I'm giving the opportunity to Anat to further elaborate on your question.

We were collecting on the monotherapy expansion. We're collecting pre and on treatment. I am not sure with respect to postmortem. I guess you'll need to wait for it. I'm not sure that we have postmortem for specific patients.

Maybe just to follow up on the last question. Can you maybe just kind of ballpark with respect to, I guess, how much pre and on-treatment tumor biopsy data from patients we might see at ASCO? And I know you talked about some of the peripheral blood markers of immune activation, but I think there's been some increased interest in the changes in CD8 TIL fraction that are in the tumor, both pre and post-treatment. So just wondering if that's an assessment that we might see at ASCO.

We did discuss the blood markers, and with regard to liquid biopsies, we have more data from the dose escalation and expansion. The number is a bit higher here. For tumor biopsies, as you recall, we had 20 patients in the monotherapy expansion, but we couldn't obtain paired pre and on-treatment biopsies from all of them. Therefore, the data we have will only represent a portion of this group, especially since some did not show a response. Consequently, the data will be limited and preliminary. What we currently have indicates some initial activation following COM701 treatment. We may not present all the immunohistochemistry data since it is still in progress, but we will show some of what we have. To answer your question, the data will be limited at this stage, but we will ensure all data is presented when it is available, likely at a future conference.

And then maybe just to throw a question at you that we're getting a lot. I know that there’s competitive trial readout, I think coming maybe later this quarter. And one of the backbone agents in that regimen that's being evaluated is an Fc silent TIGIT. So just kind of wondering what you’re maybe expecting to see out of that? And I guess, how you think that data might extrapolate out to what you’re personally with 902 right now?

Yes, it's a fair question that would be the first data that is derived from an Fc inactive TIGIT inhibitor as opposed to the rest of the data that is out there. So obviously, we're looking as well to see what the data will tell us. I guess that you are well familiar and not only you, Stephen, but also the community with our view about the need or actually the no need from our perspective, as we see it based on our data on having an Fc active. We hope this will support this view that we have, which is based on data. We recently published a paper on COM902, which is further strengthening what we're saying for quite some time. We have our own COM902 clinical study. This is now in dose escalation. We promised to show data in Q4. So obviously, our data will be outside as well. And so we're looking to see what the data will tell us from the other company, but also we're looking very carefully at our data as well. And we still didn't find in the public domain a reason to be concerned with our view with respect to Fc inactive performance in clinical studies. So we'll see.

A couple of points regarding the science. More companies are discussing the targeting of tactile or CD96, which is another member of the DNAM axis that we do not currently have a program for. My first question is what are your thoughts on CD96 and its role in DNAM signaling? Do you believe it may be necessary to target it in certain patients or tumors as well?

CD96 actually is binding PVR, but it binds PVR with a lower affinity than TIGIT. So we think that the contribution is not really clear. Definitely PVRIG is addressing a completely different node, which is PVRIG/PVRL2. We believe that the PVRIG, PVRL2, and TIGIT PVR are the two pathways that needed to be blocked in order to generate meaningful antitumor activity. I would say that also whether CD96 is a positive costimulatory or negative costimulatory that's also a question, at least in our hands and in some papers outside. So we'll see, we'll wait and see. But it doesn't change our hypothesis.

And then a follow-up on the question that Stephen just asked on the competitor data. I wonder if you can remind us how similar COM902 with Arcus’ TIGIT that’s going to have the data? Any notable differences in addition to the similarity that we should consider when looking at that data?

So first, our antibody is ITG4. I believe there is ITG1 mutated, but still Fc inactive. And in general, our antibody is an ultra-high affinity antibody that's an antibody that we've developed from day one to be complementary with COM701. And we tested it also benchmark to other TIGIT antibodies. We don't have a reason to believe that epitopes would play a role here, different epitopes like similarly to PD-1. But generally, the difference is the ultra-high affinity with respect to our antibody. So we'll see.

Anat, you mentioned the additional data in the fourth quarter of this year. Can you give us a sense as to how many patients’ worth of data we might be seeing for both studies and would it be enough to make some reasonable conclusions about a path forward?

So the two projected data that will be anticipated will be for the TIGIT antibody, like Anat mentioned, COM902. So for that, as you know, Reni, it's a design that has an accelerated portion to it. So we have single-cell subject patient cohorts. And also, we have a three plus three subject level cohort. I cannot project for you now the total number of patients that we will expect to see. But certainly, it would be at least more than four patients that will enroll because we'll go past the single-subject level cohorts. We'll continue to accumulate data on that study. So maybe at another presentation, we'll be able to hone in more on the absolute number of patients that we're projecting.

And then the triple comment?

So for the triple combination, we also have that ongoing. It's a three plus three study design also. The projection, when we started that dose escalation study, is to go as high as 20 milligrams per kilogram body weight dose with COM701 in combination with the other two agents. So the other two agents, the BMS-986207, the BMS TIGIT antibody, and nivolumab. So far, as we keep on, we're on track. At a later teleconference, we will be able to tell you how many patients we expect. But certainly, the reason we are projecting that we'll get up to 20 milligrams per kilogram body weight dose of COM701 in combination with the other two agents is because, as you remember, the dose that we've recommended for expansion for COM701 is the 20 milligrams per kilogram body weight dose IVQ four weeks. So as we go along, we'll be able to further refine how many patients that we'll present at that time.

Most of my question is related to Simon has been raised and answered, so I won't repeat. Maybe just a quick question related to that Johns Hopkins collaboration. So we know the myeloid target is one of the pillars of your competition and discovery platform. Maybe could you just provide some additional color in terms of the nature of the collaboration? I mean, maybe more specifically, what are the steps and the timeline for the candidate nomination and the potential kind of R&D?

As much as we can relate it, we didn't disclose much. But I'll just say that the collaboration with Hopkins is it's very similar to how we conduct the collaboration for a few years now. Hopkins is part of executing the research on the candidate. As I stated, they were also part in some of the preclinical work on COM701. So this is the nature of the collaboration. Specifically for this myeloid target, this is a very early stage on. It still merits research in order to explore the therapeutic potential and we believe it's exciting. And as we disclosed, we've seen some tumor growth inhibition in generic depletion animal models. The mechanism seems interesting but it requires a lot of research, and this is why we thought that it will be good to go hand-in-hand with the laboratory of Drew Pardoll and his excellent team that we used to work with them and do the work together. That's what I can say about this specific drug target.

Yes, I won't leave Ari out of this conversation. Maybe, Ari, I believe you provide some kind of color around the OpEx and cash. Maybe just remind us what is the current guidance around the cash run rate?

So we ended the quarter with about $190 million. As we stated before, the yearly run rate for expenditures would be roughly between $40 million to $42 million. So having said that, assuming we will not increase significantly the cash burn rate, we're talking about at least cash sufficient through the end of 2023. Having said that, again, if we do decide based on our clinical strategy to expand and to increase the clinical trials, obviously, this estimation might change.

A question for Henry about the combination trial involving 701 and 902. You mentioned safety concerns regarding that combination, but actually, you achieve that with the triple. Besides dosing, what would be the optimal amount to use for 701 with the best dose for 902? What additional definitions might you suggest for eliminating both co-inhibitors in the DNAM axis without a PD-1 antibody?

In a dose escalation study, the goal is to assess the safety and tolerability of the combination being tested. When combining three study drugs, it is challenging to determine the individual contributions of each drug to safety. Thus, we can only discuss the safety and tolerability of the combination, particularly during the defined dose-limiting toxicity period and assessing intermediate and long-term toxicity. As a result, we cannot fully evaluate what a TIGIT inhibitor does on its own within a triple combination. It's also important to note that although we gather data from the TIGIT inhibitor's role in the combination of COM701 and nivolumab, it involves a different TIGIT antibody. The one we are using in the triple combination is BMS-986207, which is distinct and cannot be compared directly with others regarding safety and tolerability. While we can gauge relative toxicities, we cannot equate the safety profiles of different antibodies. Therefore, since we are combining two previously unapproved agents with COM701, we need to compile safety information for each separately without any other combination. We know the safety profile of COM701 is well-tolerated from our previous dosing trials, so we do not anticipate unexpected issues when combined with COM902, even though both are unapproved agents. This is why we are conducting the clinical study. While insights from the triplet combination will be helpful, they won't completely satisfy regulatory requirements for combining COM701 and COM902. I hope this clarifies your question.

It does, Henry, and thank you for the clarity and please understand part of the rationale was would you find other information outside of safety. But I think you've made it very, very clear what the goal is, and I appreciate it.

This concludes our Q&A session. I will now turn the call back to Compugen's President and CEO, Dr. Cohen-Dayag. Would you like to make your concluding statements?

Yes. Thank you. Thank you all for joining the call today. 2021 is poised to be an important year for Compugen, with meaningful milestones and multiple data readouts. We will continue to push forward as leaders in the DNAM axis space, advancing our wholly owned PVRIG and TIGIT assets to potentially drive immunotherapy responses in new and expanded patient populations. Thank you for joining us today and your continued support. Stay safe and healthy.

Thank you. This concludes the Compugen's Ltd. first quarter 2021 financial results conference call. Thank you for your participation. You may go ahead and disconnect.