Compugen Ltd Q3 FY2023 Earnings Call

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen’s Third Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today’s call is being recorded. An audio webcast of this call will be available on the Investors section of Compugen’s website, www.cgen.com. I would now like to introduce Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Thank you, Yoni, and thank you all for joining us on the call today. Joining me for Compugen for the prepared remarks are Dr. Anat Cohen-Dayag, President and Chief Executive Officer; and Alberto Sessa, Chief Financial Officer. Dr. Henry Adewoye, Chief Medical Officer will join us for the Q&A session. Before we begin, we would like to remind you that during this call, the company may make projections or forward-looking statements regarding future events, business outlook, research and development efforts and their potential outcome, anticipated progress and plans, results and timelines for its programs, financial and accounting-related matters, including projected financial information, as well as statements regarding the company’s future cash position and other results, and the company’s future initiatives. We wish to caution you that such statements reflect only the company’s current beliefs, expectations and assumptions, and that actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, which could cause the company’s actual results to differ materially from those projected in such forward-looking statements. And we refer you to the SEC filings for more details on these risks, including the company’s most recent annual report on Form 20-F, filed with the SEC on February 28, 2023, as later amended. The company undertakes no obligation to update projections and forward-looking statements in the future. And now, I’ll turn the call over to Anat.

Thank you, Yvonne. Good morning and good afternoon, everyone, and welcome to our third quarter 2023 update. I want to begin by expressing my deep sadness regarding the tragic situation in Israel, which has resulted in a humanitarian crisis. The horrific attacks and acts of violence against civilians by Hamas have caused immense grief and trauma. I am incredibly grateful for the outpouring of support from friends, colleagues, partners, investors, analysts, and medical organizations worldwide. Your solidarity brings me comfort during this painful time. We acknowledge the emotional impact this situation has on our employees in Israel, and we are prioritizing their needs with sensitivity and care. Despite the challenges faced by our team, we are witnessing exceptional teamwork, with everyone stepping up to support one another and ensuring continuity in our operations. Some team members are going above and beyond, and I am incredibly proud of their efforts. Our remote work infrastructure, established during the COVID pandemic, is still in place, but we encourage our employees to come into the office. As a global organization with headquarters in Israel and presence in the U.S., Europe, and Singapore, many key functions, including clinical and preclinical development and IT systems, are managed by teams located outside of Israel. Our clinical trials in the U.S. and our operations are continuing normally, including with respect to CMC and drug supplies. Furthermore, most of our preclinical activities pertaining to COM503 are executed outside Israel. We are operating without any significant disruptions, and should that change, we will keep the market informed. At Compugen, our aim is to revolutionize cancer treatment for patients with no effective options by leveraging our groundbreaking computational platform to identify new drug targets and develop potential first-in-class therapies. We are actively pursuing a differentiated clinical strategy to assess the blockade of the pathways PVRIG, TIGIT, and PD1. In addition, we are progressing IND-enabling studies with our leading preclinical candidate, the anti-IL-18 BP antibody COM503, which presents a unique method to leverage cytokine biology against resistance to cancer immunotherapy. We are also advancing our early-stage pipeline with new potential first-in-class programs. At the recent Citi Conference, we reported data highlighting the antitumor efficacy of COM701 in tumor types that typically do not respond to immunotherapy. This data, derived from previous signal-seeking studies, expands the range of tumor types responding to the COM701 combination. Biopsies from treated patients are enhancing our biomarker insights and affirming the mechanism of action for COM701. Concurrently, we are continuing our studies focused on MSS CRC and platinum-resistant ovarian cancer. Building on last year's ESMO IO presentation, we presented at SITC clinically meaningful durable responses in patients with platinum-resistant ovarian cancer who received a triple combination with COM701, with no new safety concerns. Three patients have been on treatment for over 16 months. Although the sample size is small, the typical median duration of response for this group is three to four months with standard chemotherapy, while a recent antibody-drug conjugate showed a median of 6.9 months. We also noted that clinical benefit, defined as a partial response or stable disease lasting at least 180 days, was not influenced by baseline inflammatory status, but was linked to increased CD8+ T cell infiltration in the tumors, aligning with our previously reported mechanism of action. At SITC, we identified for the first time in tumor biopsies a link between the PVRIG ligand PVRL2 expression and clinical benefit, suggesting that patients' baseline PVRL2 levels could serve as a biomarker to better select candidates likely to benefit from the COM701 combination. This aligns with the computational-driven hypotheses we have shared about this pathway. Our SITC presentations also included findings from heavily pretreated metastatic breast cancer patients, where the combination of COM701 and nivolumab showed initial antitumor effects, including a complete response lasting over 21 months and partial responses in other cases. We reported a disease control rate of 29% among patients with stable disease, particularly those with low PDL1 expression and low tumor mutation burden, indicating a COM701-mediated mechanism. Additionally, we confirmed that the safety and tolerability of these dual combinations continue to be favorable. This serves as further evidence that patients can achieve durable benefits from COM701 combinations in settings where they typically would not respond to immunotherapy. As with the biomarker insights in platinum-resistant ovarian cancer, we observed that baseline PVRL2 levels were elevated in patients experiencing clinical benefits, further supporting our hypothesis. Lastly, our presentations included new data on our preclinical anti-IL-18 binding protein antibody COM503, emphasizing our innovative strategy to tackle resistance in cancer therapy. There’s significant excitement around cytokines, given their therapeutic potential, though challenges in delivering them effectively at the required levels persist. Our approach with COM503 aims to address these challenges by blocking the IL-18 binding protein, allowing natural IL-18 to exert its effects against tumor growth in the tumor microenvironment. The data discussed at SITC examined two key questions: whether IL-18 levels in the tumor can elicit antitumor responses following blockade, and if the IL-18BP antibody is safer than a systemically administered engineered IL-18 cytokine. We demonstrated that the blockade effectively frees natural IL-18 and stimulates an immune response, which is highly relevant. In addition to our successful SITC, I'm pleased to report that we have finished enrollment in the proof-of-concept study for MSS CRC. This reflects the critical unmet medical needs in this patient group, and we plan to provide updates after further follow-up later in the first half of 2024, likely at a medical conference. For our platinum-resistant ovarian cancer study, enrollment is progressing well since we last reported, with two additional sites activated. However, we expect to complete enrollment of up to 20 patients into 2024 due to the evolving and competitive landscape. While mirvetuximab may not significantly affect our enrollment given its labeling, we believe the growing confidence in its use is impacting our recruitment efforts. We remain optimistic about addressing any enrollment challenges, as our investigators express enthusiasm based on the durability noted with our triple combination and its safety profile. I am also excited about the progress made by our partner AstraZeneca with rilvegostomig, their PD-1/TIGIT bispecific derived from COM902, which is now in Phase 3 trials as adjuvant therapy for biliary tract cancer post-resection, alongside chemotherapy. AstraZeneca's continued advancement of rilvegostomig in multiple indications demonstrates our joint commitment to exploring the potential of TIGIT and differentiating our anti-TIGIT, COM902. Like COM902, which has reduced Fc effector function, rilvegostomig was designed to enhance antitumor efficacy by minimizing Fc effector interactions. Looking ahead, we expect to report data from our ongoing MSS CRC proof-of-concept study in the first half of 2024 and plan to enroll up to 20 patients in our platinum-resistant ovarian cancer study with data anticipated in 2024. Specific details will be provided during our year-end conference call. Identifying a predictive biomarker to select likely responders for our COM701 combinations remains critical. We are excited about the initial biomarker data we’ve generated, confirming the association between PVRL2 expression and clinical benefits, as we continue our study in platinum-resistant ovarian cancer, where biopsies are required. We are also working on optimizing our PVRL2 assay for potential patient selection studies. Achieving the ability to enrich responders among platinum-resistant ovarian cancer patients, together with the durability of response and favorable safety profile of our triplet combination, may allow us to develop a distinct path for this regimen. We will share our strategies based on this data early next year. Finally, we are on target for an IND filing for COM503 in 2024. Before handing over to Alberto, I'll briefly touch on our finances. We anticipate enough cash to sustain operations through at least the end of 2024, excluding any potential cash inflows from milestone payments associated with our partnership with AstraZeneca. We have prioritized securing non-dilutive funding through partnerships and will keep our focus on these opportunities. Now, I will turn the call over to Alberto for the financial update.

Thank you, Anat. I’m happy to summarize our financial results. I will start with our cash balance. As of September 30, 2023, cash, cash equivalents, and cash investments were approximately $57.5 million compared with approximately $83.7 million as of September 30, 2022, affirming our focus on cash management while continuing our execution on our DNAM-1 axis hypothesis and progressing our lead preclinical drug candidate COM503. As Anat mentioned, we have an expected cash runway through at least the end of 2024, which we believe is sufficient to support all our planned operations. The company has no debt. Now, regarding expenses, expenses for the third quarter of 2023 were in line with our plans. R&D expenses for the third quarter of 2023 were $8.3 million, down from $9.3 million in the third quarter of 2022. The decrease is mainly due to lower expenses associated with our CMC activities, offset by an increase in clinical trial expenses and by the end of the amortization of the deferred participation in R&D expenses following the termination of the agreement with BMS in the third quarter of 2022. G&A expenses for the third quarter of 2023 were $2.3 million compared to $2.6 million in the third quarter of 2022. The net loss for the third quarter of 2023 was $9.9 million, or $0.11 per basic and diluted share, compared to a net loss of $11.7 million, or $0.14 per basic and diluted share in the third quarter of 2022. With that, I will hand back to Anat to summarize.

Thank you, Alberto. To summarize, we continue to execute, with our most recent data presented at SITC, we continue to provide evidence supporting a potential COM701 mediated clinical benefit in hard-to-treat patients who are not responding to standard of care and have failed prior IO therapy. This strengthens our path as we continue to pursue our ongoing proof-of-concept studies designed to reinforce the data in our two selected indications and continue to inform our complementary biomarker strategy. We’re looking forward to presenting data from these studies in 2024 and providing more details on our biomarker strategy informing future direction and related studies. We’ve always said that blocking TIGIT may not be enough and that PVRIG may be needed. This belief is consistently being reinforced as we roll out our clinical data across multiple indications and most evidently in hard to treat patients who are not responding to standard of care and have failed IO therapy. With COM701 and COM902, our two wholly-owned PVRIG and TIGIT programs, we are the leaders in the unique chemotherapy-free, triple combination approach of blocking three DNAM axis immune checkpoints, PVRIG, TIGIT, and PD-1 with initial clinical data to support our hypothesis. We’re also paving the way in harnessing cytokine biology to address cancer immunotherapy resistance, which is a field of high interest to the industry. With COM503 targeting the IL-18 pathway, we’re on track for IND filing in 2024. I would like to thank all our employees for their dedication, teamwork, and resilience. Despite the challenges we have been enduring in Israel. With that, I will turn the call back to the operator to initiate the Q&A session.

Actually, before we go to the operator, I see Pierre Ferre, our Vice President of Preclinical Development, just joined us fresh off the plane from SITC in San Diego. Pierre will be glad to answer any questions on COM503, which sparked a lot of interest after his oral presentation at SITC. Welcome, Pierre. Yoni, you can now initiate the Q&A session.

Thank you. The first question is from Asthika Goonewardene of Truist. Please go ahead.

Hi, thanks for taking my questions. I’m Jean, and I’m on the line for Asthika. So, I have a question regarding your expected milestones or timelines in 2024 and beyond for the program you co-develop with your partner AstraZeneca? And then could you tell more details about how you both parties will handle this program? How will you monitor and evaluate the progress and performance of this program? That’s my first question. Second question is regarding COM503. So, I would like to ask, how are you going to determine the optimal dose and schedule for this COM503 and then in the animal or human studies, preclinical and clinical? And then how will you account for the variability and also stability of this IL-18 and IL-18 BP levels in the different individuals or conditions? Okay, that’s my two questions. Thank you.

Thank you, Jean. So, I’ll start with the first question that relates to AstraZeneca. And then Pierre will take the second question that relates to COM503. So first I’ll say that with AstraZeneca, the partnership that we have is actually a license agreement where we license to AstraZeneca the rights to develop bispecific antibodies based on our COM902. And from the get-go, this agreement is actually granting the rights for AstraZeneca for the full development and the later commercialization of the program. We’re getting updates on this program, but this program is really progressed by AstraZeneca. And obviously, any information about this program will be disclosed only by AstraZeneca. Specifically, for contractual reasons, I cannot provide any insight about the specific milestones and the breakdown and the timing and the eligibility. The only insight that I can give on this front is that on the clinical milestones that we were already obtaining, we were eligible for milestones for the initiation of patient dosing in Phase 1. In Phase 2, it was $6 million for Phase 1 and $7 million for Phase 2. Other than that, at this point in time, I cannot say more. And as I stated, this is really AstraZeneca's strategy in how to advance these programs to which indications and at what timing. Pierre, will you take the COM503 question?

Yes, my pleasure. So you were asking how we would conduct the Phase 1 study to go to the active dose. To do that, we will of course run a Phase 1 cancer patients with standard dose escalation with some accelerated, maybe dose iterations. About the dose itself, we have built large experience at Compugen on the tools and the methods needed to measure all the components required for the pathway. We have built a comprehensive translational package with all our experience in vivo with vivo models of ovarian cancers, and also lots of experience on in vitro testing on human samples. So we have made and this will be ongoing for the rest of the time that goes to the clinical trial. We have built comprehensive PK/PD modeling that we will aim to follow during the course of the study. With the tool that we have, we can monitor the suppression of IL-18 BP in the periphery of the patients, and that will be, the main basis of reaching the actual dose. A very interesting thing with that program is the safety so far that we’ve seen in all the animal models and also the human in vitro models that we have tested. And so with that safety in hand, if that transfers into the expected high tolerance in patients, we really think that we will be able to reach active dose level that saturates IL-18 BP target easily in the tumor.

Thank you again for taking my question.

The next question is from Daina Graybosch of Leerink Partners. Please go ahead.

Hi, good morning. This is Jeff on Daina. I just have a few questions related to the biomarker data reported at SITC, Anat can you just recap where you are in the process of developing companion diagnostics for PVRL2 patients, respectively? And how would this path differ for IHC versus genomic amplification companion diagnostic? And is any one more practical than the other to implement? Second, do you think the data you shared on PVRL2 expression ovarian cancer and that genomic application data more broadly is something you can leverage to facilitate enrollment indications? And next year, when you report ovarian in MSS CRC, do you plan to show this retrospective PVRL2 expression data in these patients? Thank you.

So thank you, Jeff. I’ll start with answering the first portion of the question of what we are and how we move forward, and then Pierre can relate to the IHC and genomic alteration. So I’ll just say that at this point in time, first, we’re very excited with the data that we got. It’s still initial, but it’s pointing in the exact right direction that we were thinking of at the stage that we build the hypothesis based on computational data, and we are continuing to collect data. And this is from the ongoing study. It is important for us to add more patients and generate more robust data as we go with the ovarian cancer study. For the meantime, we’re also developing an assay, but I want to make sure maybe Pierre will want to relate as well when he answers. It is not the final companion diagnostic assay. We’re now, in parallel with collecting more data, we’re optimizing the assay that will be used eventually for screening patients in a study. It’s not going to be the ultimate companion diagnostic assay, but we’re trying to work aggressively on both forms, on collecting the data and optimizing an assay. So we are ready to take it forward based on the data continuing to look good. Pierre, do you want to relate to the additional questions or to add?

Yes, I would say that the IHC assay is being optimized for use in the Socal laboratory that we already used in the recent past to generate data, and based on that data, we are optimizing it further to make it easier on practical terms in a day-to-day basis if and when we will activate prospective patient selection. Then about the genomic, indeed, in the poster that we reported at SITC, we have flagged that one of our patients having the highest score on IHC pivotal IL-2 is also showing a genomic amplification that may be detected perhaps in the future from peripheral blood. So it will be a non-invasive way of assessing the biomarker and the possibility that the patient may respond. We view that association between genomic amplification and the high score pivotal IL-2 are the first confirmation that there is something there of interest. So in public databases on ovarian cancer, there is a low proportion of patients who have genomic amplification. So we don’t think that immediately it will be achievable to screen patients on that front. But we are intrigued also by the fact that there are gains, not only amplifications, but also gains. And this is something that we will explore, of course, in parallel, but we do think that the IHCs that we have in hand will be proximal for any study if we are going to activate that.

Thanks for taking our questions.

The next question is from Steve Willey of Stifel. Please go ahead.

Yes, good morning. Thanks for taking the questions. Can you just speak to, I guess, how many sites are currently active in the ovarian trial? I guess how many have you brought on just within the past few months? And I guess over the longer term, do you think you need to bring on more sites in order to expedite patient enrollment?

Thank you, Steve. So right now we have nine sites active. We have a few more. This is based on the plan that we’ve already rolled when we were thinking about ramping up. We don’t think that we should add additional sites beyond what we’ve planned and what we’re looking to do now. The reason for this is what I was just alluding to in the prepared remarks. So first, we believe that the close monitoring that we’re doing now with investigators, and again trying to make sure that the study is on the radar, this is something that is going to achieve the goal. And this is after we added ovarian cancer-specific sites that are growing, specifically among ovarian cancer patients. So these two things, adding the sites, making sure that we speak with the investigators and we have – I have to say that hearing their comments about how they think about the triplet activity, mainly the durability in conjunction with the safety for these patients that really experience so many lines of treatment, we don’t really need to convince them. So we believe that the ramp-up that we’ve started to see will continue and that we don’t need to add additional sites to the study.

Okay. And then I think you said that, I mean, you’re obviously assaying for PVRL2 expression, so I think you said biopsy is mandatory. Is the ask of a patient both in on-treatment and then I guess a baseline, and then multiple on-treatment biopsies? Or are you just looking for one specific biopsy and I guess is that second on-treatment biopsy requirement? Is that in any way rate limiting in terms of your ability to get patients to solicit consent?

It’s a very good question, and maybe Henry will want to add anything about it. But in any case at any study when you ask for biopsies, this is a hurdle; obviously. Because patients need to go through some invasive approach, but we don’t anticipate at this point in time that this is a big hurdle. We ask for mandatory biopsies at baseline prior to treatment and also on treatment. This is really serving us in order to make sure that eventually we can go with the platinum-resistant ovarian cancer data that we have into what eventually will be a biomarker-driven study that will allow us to maximize the potential of COM701 treatment for patients that may respond to this treatment. So at this point in time, this is mandatory. With this mandatory request, we do see a ramp-up, and we believe that this will not be the issue for enrollment.

Okay. And then just lastly on the colorectal trial, I know this is open label. Do you have a sense as to what the distribution of patients looks like with respect to the presence or absence of liver metastases at baseline? Thanks.

And so I’ll start and then Henry maybe wants to add. Yes, it’s open label. We’re familiar with it. While we’re not looking every day at the patient distribution, we’re familiar with it. We are this kind of study that allows for liver mets and that’s unique. This is because we believe that there could be some edge there based on the prior data. But as I said, we continue to monitor patients. We continue to collect the data. We’re thinking very carefully on what data we should share while the study is continuing, but we’ve made a decision that it’s better for us not to share portions of data, an incomplete picture. It is better for us to have a longer-term follow-up and share the full picture, as I said, preferably in a medical conference when investors will be able to see the full picture of the data. Henry, anything else you would like to add on the liver mets part of the question?

Thank you, Anat. I think you’ve covered the major part of the question. But just to give some color, looking back at the data we presented previously on the 22 subjects, patients with microsatellite stable colorectal cancer, a little above three quarters of those patients had liver mets that was the initial presentation we had. The number of patients that we anticipate will have liver mets will also probably be around that number, based solely on the fact that most of these patients have exhausted all available standard of care therapies. In addition to that, the most common site of metastasis in colorectal cancer is, if you just look at the anatomy of the liver. So between half to about two-thirds to about three-quarters of patients will probably have liver mets on analysis? I’m just making an assumption here and a projection until we do look at that data next year, like Anat has mentioned before, we’ll be able to give you more substantive information in that regard.

Okay, thanks for taking the questions.

And maybe, Steve, maybe I’ll just add just to make sure that it is clear that in a biomarker-driven study, we will obviously only require for a baseline biopsy pretreatment biopsy, but not an on-treatment biopsy, so it will be less complicated.

This concludes the Q&A session of Compugen’s Investor Relations Conference Call. Thank you for your participation. You may go ahead and disconnect.