Earnings Call Transcript - CGEN Q1 2023

Operator, Operator

Ladies and gentlemen, thank you for joining us today. Welcome to Compugen’s First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. 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 Yvonne Naughton, Head of Investor Relations and Corporate Communications. Yvonne, please go ahead.

Yvonne Naughton, Head of Investor Relations and Corporate Communications

Thank you, operator, 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; and Dr. Eran Ophir, Senior Vice President Research and Drug Discovery will join us for the Q&A. 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, development efforts and their potential outcome, the company’s discovery platform, anticipated progress and plans, results and timelines for its programs, financial and accounting related matters, as well as statements regarding the company’s future cash position. We wish to caution you that such statements reflect only the company’s current beliefs, expectations and assumptions, but actual results, performance or achievements of the company may differ materially. These statements are subject to known and unknown risks and uncertainties, 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, 2022. 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.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you, Yvonne. Good morning and good afternoon, everyone, and welcome to our first quarter 2023 update. At Compugen, we are advancing a differentiated clinical strategy evaluating a drug combination that has never been tested before in a space where there is a significant unmet need and potential opportunity to transform the lives of cancer patients with the right immunotherapy combination. Compugen has always believed that in certain patients and in certain tumor types, blocking the three pathways of the DNAM axis PVRIG, TIGIT, and PD-1 may be needed to enhance antitumor immunity. We have always said that blocking TIGIT in addition to PD-1 may not be enough, a concept that is now increasingly reflected in the consistent move of larger pharma players to add an additional drug to the TIGIT/PD-1 drug combinations in various indications. Given the potential of PVRIG inhibition to sensitize tumors to PD-1 and TIGIT blockade, we believe the biological and mechanistic rationale support the addition of an anti-PVRIG to the anti-PD-1/TIGIT mix, and we have the initial clinical and translational data to support our hypothesis. We are the leaders in the unique chemotherapy triple combination approach of blocking the three genome access immune checkpoints, PVRIG, TIGIT, and PD-1, and we are focused on maintaining this leadership. We have initiated two follow-on proof-of-concept studies in indications not typically responding to immunotherapy, microsatellite stable colorectal cancer and platinum-resistant ovarian cancer. The former is enrolling patients and the latter is open for screening of eligible patients. In these difficult-to-treat indications refractory to standard of care, we have previously demonstrated encouraging clinical benefits, including in patients refractory to anti-PD-1 and in patients whose tumors were immune desert. These data are supported by immune activation that aligns with COM701 mechanism of action. The goal of the follow-on clinical studies is to strengthen the evidence, help us better understand the contribution of components, and build on the extensive biomarker work to identify the patients most likely to respond. We believe that this strategy provides the fastest route in building a path to registration and de-risk our lead assets COM701 and COM902 in these two indications. In the first quarter of the year, we executed on our promises. Firstly, we initiated enrollment in our microsatellite colorectal cancer study and we’re excited to be on track to report initial findings by the end of the year with final data in 2024. Secondly, at the annual ASCO conference in June, we will present encouraging data showing the preliminary anti-tumor activity of COM701 in combination with BMS anti-TIGIT and nivolumab in patients with recurrent metastatic microsatellite stable endometrial cancer. This will include data on antitumor activity and safety in naïve patients. Patients with advanced microsatellite stable endometrial cancer have limited treatment options. In a similar population of patients, dostarlimab shows an overall response rate of approximately 15%. The data we will present for our triple combination at ASCO serves as additional support for COM701 mediated antitumor activity in another tumor type in patients refractory to standard of care. For now, we remain focused on our proof-of-concept studies in MSS CRC and platinum-resistant ovarian cancer using our own TIGIT COM902 in combination with our own anti-PVRIG COM-701 and pembrolizumab with the goal to strengthen the evidence in these indications by enlarging the number of patients. However, our data suggest that the treatment potential for COM701 combinations goes beyond these two indications. And thirdly, we continue to feed our own pipeline leveraging our pioneering computational discovery platform. Earlier this month, we gave an oral presentation at CIMT, Europe Cancer Immunotherapy Meeting on our lead potential first-in-class preclinical asset COM503, which utilizes a novel approach to harness cytokine biology to potentially treat cancer. We presented preclinical data showing that COM503 binds with high affinity to IL-18 binding protein, freeing endogenous IL-18 and restoring natural killer and T-cell activity. We also showed that blocking IL-18 binding protein prevents tumor growth and releases IL-18 to activate immunity in the tumor microenvironment without affecting peripheral immunity in neuron tumor marker. Our approach is unique and different from recombinant cytokines targeting this pathway or from other pathways that were already tested in the clinic. These are given systemically to patients and are associated with safety challenges. The potential advantage of our approach is that our drug COM503 is an antibody and not a cytokine, and this antibody works by freeing the body’s own interleukin-18, where it is mostly upregulated in the tumor microenvironment to stimulate the immune system to fight cancer. Consequently, we believe that it has the potential advantage of avoiding the typical pharmacokinetic and systemic tolerance limitations associated with cytokine administration. Regarding our finances, we have an expected cash runway at least through the end of 2024 to support operations, reach milestones, and de-risk our lead assets COM701 and COM902. In terms of future funding, non-dilutive funding of our pipeline assets is our priority. We see this as a big opportunity having three potential first or best-in-class unrestricted assets with a possibility to address a significant unmet need in immuno-oncology. With that, I will hand over to Alberto for the financial update.

Alberto Sessa, Chief Financial Officer

Thank you, Anat. I’m happy to summarize our financial results. I will start with our cash balance. As of March 31, 2023, we had approximately $74.3 million in cash, compared with approximately $83.7 million as of December 31, 2022, affirming our focus on capital efficiency while continuing our bold execution on our DNAM-1 axis hypothesis. The company has no debt. We recognize the importance of cash efficiency, and we are disciplined in how we deploy our cash resources, making sure we will focus on reaching key milestones with our available cash runway at least through the end of 2024. It is important to emphasize that this does not include any potential cash inflows, including potential milestone payments from our collaborator AstraZeneca. The timing of milestone payments will depend on the progress of studies run by AstraZeneca. For contractual reasons, we cannot provide the breakdown of the milestone payments. To remind you, to date Compugen has received development milestone payments of $2 million, $6 million, and $7.5 million for achieving preclinical milestones and for dosing the first patient in Phase 1 and Phase 2 studies, respectively. Compugen is entitled to receive an aggregate of up to $200 million in development, regulatory, and commercial milestones for the first product. Expenses for the first quarter of 2023 were in line with our plans. R&D expenses for the first quarter of 2023 were $7.4 million, compared to $7.2 million in the first quarter of 2022. Our G&A expenses for the first quarter of 2023 were $2.6 million, compared to $2.6 million in the first quarter of 2022. For the first quarter of 2023, the net loss was $9.3 million, or $0.11 per basic and diluted share, compared to a net loss of $9.7 million, or $0.11 per basic and diluted share in the first quarter of 2022. With that, I will hand back to Anat to summarize.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you, Alberto. To summarize, we are on track to present initial findings from two studies evaluating our leading triple combination blockade of PVRIG, TIGIT, and PD-1 by the end of this year. These studies are building on prior data suggesting that blocking PVRIG may sensitize tumors to respond to PD-1 and TIGIT blockade and could turn cold tumors hot, potentially offering a chemotherapy-free option for tumors most competitors are not targeting: metastatic MSS CRC and platinum-resistant ovarian cancer. This is a real potential opportunity to transform the lives of patients with the right immunotherapy combination. With that, I will turn the call over for questions. Operator?

Operator, Operator

Thank you. Ladies and gentlemen, we will now start the question-and-answer session. The first question is from Mark Breidenbach of Oppenheimer. Please proceed.

Mark Breidenbach, Analyst

Hey, thanks for taking my questions and congrats on the quarter. Just a couple of quick ones from me. I was wondering if you could comment on any potential read through between observations you’ll be presenting at ASCO in endometrial cancer, the two focus areas that you’re pursuing development in colorectal and ovarian. And then the second question is just on COM503, if you could give us a rough timeline until this product candidate enters the clinic? That would be appreciated. Thank you.

Anat Cohen-Dayag, President and Chief Executive Officer

Okay. Thank you, Mark. I think that I understand what you meant with your question, and I’ll answer. If not, just quickly ask me again, send me the question again. So first, on the endometrial cancer, as we said, we’ll publish the data at ASCO and we gave some insights; this is a small cohort and we’ll be able to show antitumor activity and also safety data from our perspective. As I said in the prepared remarks, this is a way for us to show again the potential of COM701 in a different indication, by the way, an indication that we were predicting through our computational discovery capability to begin with the program. And then later in the year, we will be able to share preliminary findings from the two studies that we’re pursuing now. As I said, CRC is already enrolling, with the platinum-resistant ovarian cancer study screening patients for enrolling, and we will share data towards the end of the year. We aim to complete enrollment of up to 20 patients of the CRC study. So on one front, we may have data from — I don’t believe that it would be the full cohort, but we’ll aim to complete enrollment. And on the ovarian, we aim to complete enrollment of 20 patients out of the 40 in the triplet study, and we will share data on whatever we’ll have at that point in time, and then the rest in 2024. And with respect to your question about COM503, IND is scheduled for next year.

Mark Breidenbach, Analyst

Okay. Just touching back on the first question, I guess, what I was asking is if we should reasonably expect the lessons or observations from endometrial cancer to directly apply to either colorectal or ovarian cancer?

Anat Cohen-Dayag, President and Chief Executive Officer

I think that we look at it, and – Henry, please chime in. I think that we look at it on one hand as indication by indication. So data in one indication is not predictive of success in a different indication. But I think that the totality of the data definitely point to strengthening the view that we have on COM701 that the clinical responses, but also the mechanism of action behind this antibody that we see, that’s very important for us. So that’s my view. Henry, would you like to share anything there on this front?

Henry Adewoye, Chief Medical Officer

No. Thank you, Anat. You answered it in general. The thing to remember, Mark, is that, like Anat said, it will be based on indication by indication. One of the things to consider is that for all these indications, the prior therapies are also different, the number of prior therapies are different also. So it’s probably best to look at each indication. So, for example, microsatellite colorectal cancer separates us from endometrial cancer. I think maybe the only thing that’s common to both of these tumor types is that they’re microsatellite stable. And that’s one of the commonalities for those two indications. But in general, we’ll have to look at the results separately in order to make a full determination of potential read-throughs for the indications that you asked about.

Mark Breidenbach, Analyst

Okay. Got it. Thanks, guys.

Stephen Willey, Analyst

Yeah, good morning. Thanks for taking the questions. I guess, just with respect to endometrial cancer and ASCO, should we assume that these naïve patients will mostly be IO experienced? And then, in terms of supporting the mechanism of action, can you speak to any biomarker data that you might be able to present? And I guess, whether or not that’s on treatment biopsies and/or peripheral markers?

Anat Cohen-Dayag, President and Chief Executive Officer

I think that on the translational, I’ll take it, and then, Henry, you’ll answer about the patient population. I think that on the translational data in general, we’re doing a lot of work and often that not only covers the endometrial, which is, at the end of the day, naïve patient. But on prior studies and also on the current studies that are planned to have extensive biomarker work. We’re harvesting all our capabilities, computational experimental, working with biopsies, pretreatment, on treatment, a blood sample from patients; pretreatment and on treatment few times in order to be able to assess the DNAM axis potential biomarkers and also biomarker discovery that we could do. So we aim to present at a certain point in time, this data probably per indication. We will present very preliminary translational data for endometrial, but I think that biomarker work is still probably towards the end of the year ending 2024. Henry, would you like to discuss the patient population?

Henry Adewoye, Chief Medical Officer

Yes, I think it’s only the titles of the abstracts that are currently available now, and so we’ll have to wait to see the details of the presentation for endometrial. And, of course, one of the things that the question you’ve asked will be one of the things that we will be interested in assessing and seeing if contribute to the assessment of antitumor activity. So not just that, but also what will be important is the kinds of therapies that patients have received, also what the performance status of all these patients are, and also what the prior response to some of the therapies that these patients have received in particular for endometrial cancer. So all these parameters including the one that you’ve asked specifically about the things that we will look at and we’ll be able to discuss further once the full abstracts are disclosed at the time of the presentation also.

Stephen Willey, Analyst

Okay. And then, can you just remind us what the scan frequency is in the two triple cohorts? I guess, I’m just trying to think about the amount of response of valuable patient data that you might be able to show us for the end of this year. Thanks.

Henry Adewoye, Chief Medical Officer

Right. So you’re referring to the triplet of COM701, nivolumab, and BMS-986207. The scan frequency is every two cycles. So a cycle is 4 weeks, so every 8 weeks for the first 6 months.

Anat Cohen-Dayag, President and Chief Executive Officer

Henry, I think this relates to the MSS CRC and the platinum-resistant ovarian cancer studies. It’s very interesting. Right, Henry? It’s the same basically.

Henry Adewoye, Chief Medical Officer

It’s the same for the MSS CRC, yes.

Asthika Goonewardene, Analyst

Hi, good morning and good afternoon. Thanks for taking my question. First, let’s get an idea to report meaningful efficacy data from the CRC and the platinum-resistant ovarian cancer cohorts. How much minimum follow-up do you think you will need per patient?

Anat Cohen-Dayag, President and Chief Executive Officer

Henry, would you like to address the question?

Henry Adewoye, Chief Medical Officer

Asthika, there was a little bit of background, but were you asking specifically for microsatellite stable colorectal cancer?

Asthika Goonewardene, Analyst

Yeah, Henry, sorry, that was my little puppy barking in the background there. Yeah, for both CRC as well as platinum-resistant ovarian cancer, what do you think the minimum follow-up is that you need per patient to have a good view on what the efficacy is?

Henry Adewoye, Chief Medical Officer

I think the minimum follow-up is probably something that’s secondary for those two tumor types you mentioned. What will be important here is what the antitumor activity is. So the earliest benchmark to look at or endpoint will be responsive or durable clinical or disease control rate, right? So stable disease plus special response or plus CR, whatever the case may be in these patient populations, that’s a good benchmark to look at. Remember, this is a Phase 1 study with a very small patient population, so that benchmark is probably the most appropriate to look at. The other benchmark to look at would be the depth of responses that we observe in these patient populations because it’s a small number, so it can be challenging to interpret the median duration of follow-up you need in a clinical population like this. For example, if you have 20 patients, it would be more challenging. While a much larger patient population, it would give 95% confidence about the conclusions.

Asthika Goonewardene, Analyst

Okay, so to put it another way, Henry, when we see the data you are asking about later this year, we won’t be able to get a good idea of the durability of response. It’s really going to be disease control rate and depth of response. That’s what’s going to be the key to look at the data later this year, right?

Henry Adewoye, Chief Medical Officer

Largely the antitumor activity, partial responses, stable disease, and in the unfortunate instance, patients who haven’t responded to these therapies, yes, those are the things I will look at. Because it’s a short period of time, it really will be difficult if you haven’t been able to follow up on how long those responses are for to disclose the duration of responses. Duration of follow-up can also be challenging, because remember, the duration of follow-up includes from the time point patients are enrolled onto the study until the time that they reach an endpoint for the study, either progression or another hard endpoint like that. So that’s much longer.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you, Henry. I think that’s exactly how we look at it. But I think that I’ll just add that it really depends on the enrollment rate, and the more data we will have to share that we think is meaningful. We’ll try to give as much clarity as possible but needs to take into consideration that even if we enroll the full cohort, some of the patients may not be on study treatment long enough and the data will be limited.

Asthika Goonewardene, Analyst

Got it. Thanks. And I appreciate that. And then just my last question is how confident are you that you will have enough data in hand to see a potential biomarker for both your PVRIG program and your TIGIT program? Thank you.

Anat Cohen-Dayag, President and Chief Executive Officer

Maybe I’ll put it in perspective and, Eran, if you want to add, please do so. I’ll put it just in perspective that biomarker work for programs in the field of cancer immunotherapy is not straightforward at all. If this is not a target that is addressing a specific mutation or a specific target, this is really, really hard to come up with. I think that all of you understand that previously PD-L1 and other biomarkers were considered. The work that we’re doing, which is extensive and is addressing all possible venues on this asset that we’re working on. I think that we increase the chances of success and we feel comfortable to say that we’re doing this work. When we’ll have data that we think is relevant to disclose, we will disclose it. But I just want to make sure that everyone understands that this is not trivial. If there is a biomarker there, I think that Compugen has a good chance to identify it. But it’s also given that there will be a biomarker there, and I think, that we’re well equipped to meet the goal if it can be identified. Eran?

Eran Ophir, Senior Vice President Research and Drug Discovery

Just to add it again, and it’s not mentioned, most people are using PD-L1 as a biomarker because PD-L1 reflects an immune microenvironment, which is where most checkpoints are working. Luckily, we see responses in PD-L1 negative patients and the biology of PVRIG shows that we could tackle these indications, also in patients who are immune desert and PD-L1 negative. So until now, we have observed responses in patients who were PD-L1 negative. While we continue to follow PD-L1 for the PVRIG combination, we probably will not focus solely on PD-L1. And then you have all the usual successes and the non-usual successes, and we’re doing extensive work sequencing and computationally really trying to identify it. We do this for maybe a bit related to the previous question we do it per indication and across indications. This is work ongoing with all the challenges that were not mentioned.

Asthika Goonewardene, Analyst

Great. Thanks, Anat. Thanks, Henry. And thanks, Eran.

Daina Graybosch, Analyst

Hi, thanks for answering my question. I wonder if you could help us understand more about the partnering conversations or licensing discussions you have going on. I’m interested in specifically what the potential partners are most interested in, which programs, and which data points do they emphasize and do you spend the most time on? Thank you.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you, Daina. I’ll relate to this one. While we’re not discussing specifically any partnering discussions that we have or do not have, I’ll try to give some color about the opportunities that we have in the pipeline and how this could be seen. I think that in general, we are now sitting with a pipeline that is quite rich, which has different partnering opportunities in the form of COM701, COM902, COM503. We also have earlier stage opportunities that are not in the public domain. But we are sitting with unrestricted assets, and they are presenting opportunity in the field of cancer immunotherapy that I believe could bring new treatment options, first-in-class or best-in-class. I think that with COM701 and COM902, you’re aware of the fact that it is unrestricted since August. The real opportunity with COM701 is what we have been saying for quite a long time: that the TIGIT/PD-1 combination will not be enough. Companies are now thinking about the agent to combine. We’ve been saying for quite some time that PVRIG needs to be combined with this in order to enable and allow for the PD-L1 low patient populations or tumor types to respond. We need to deal with the fact that people are judging TIGIT/PD-1 combination based on only TIGIT/PD-1 combination without our third asset, and we have only our own data to show that our third asset is added to it. Hopefully, the larger studies will allow us to extend and strengthen this signal. So this is important in terms of how potential external partners may look at it in order to further clarify and extend the DNAM axis hypothesis that we have in general. We’re showing this now in endometrial and additional cancer indications, but also in the specific tumor types that we selected to focus on in the ovarian and colorectal cancers. So that’s important for us to pursue not only in order to speak with the FDA about the path forward but also in potential partnering discussions. That’s one thing that is key. Additionally, how TIGIT will perform in larger populations is also important to other companies and we’re looking at it. Regarding the COM503, I’ll say that there is a renaissance in highlighting this pathway. There is a lot of excitement out there. Small biotech companies are being formed, and we’re really differentiated in this front as much as we’re differentiated with the pattern that we bring to the table. We’re addressing the cytokine biology and this pathway in a totally different way than others. We believe that the way that we’re addressing it is actually handling the neuro-therapeutic window of cytokines. So we bring something new to the table, and with the excitement that’s out there, now is the right time for the right asset. So that’s what I can say on potential partnering with us.

Daina Graybosch, Analyst

Let me ask one more follow-up then, because you bring it up that your focus is on non-dilutive financing in your prepared remarks. How can investors and us have confidence on the timing of that kind of event? Could you talk about maybe certain data points that you think are going to be more important to reach that value? Beyond the attributes of your pipeline, which you will describe, what else can we have in terms of assurance?

Anat Cohen-Dayag, President and Chief Executive Officer

So I think that it’s a fair question, and I think that with respect to COM503, we don’t see any pending data that will decide for us to enter into partnership. We have a great package to show exactly what we’re saying about this asset. So that’s one. I think that on the COM701 and COM902, it’s a fair question, because I think that it depends on the internal data that we already have. The internal data that we will generate doesn’t mean that we need to get to the end of 2024 in order to be able to share data that is relevant from the internal perspective, but it also depends on external drivers, and it’s not a given – and I don’t think that it’s our goal either. Definitely this is not our goal to partner everything and stay without a clinical stage pipeline. So we’re putting our priorities in place, and we deal with the internal and external market and with potential discussions. So we believe the assets that we have possess the potential to generate additional cash flow for the company in order to support our financial status.

Daina Graybosch, Analyst

Okay. Thank you.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you.

Operator, Operator

This concludes the Q&A session. I will now hand over the call to Anat for final remarks. Anat, please go ahead.

Anat Cohen-Dayag, President and Chief Executive Officer

Thank you, operator. Before we end the call, I will take this opportunity to remind you of an Investor event we are hosting on Tuesday, May 23, with Drew Pardoll, a pioneer in cancer immunotherapy and a Chairman of Compugen’s Scientific Advisory Board. Drew was the first to propose blockade of PD-1 for cancer immunotherapy, and his research led the clinical development of the first anti-PD-1 antibody. Drew is also a world expert in the DNAM axis. I think you will really enjoy his views on why blocking the three pathways in the DNAM axis PVRIG, TIGIT, and PD-1 has the potential to generate the next immunotherapies for cancer patients. Thank you for participating today. You may go ahead and disconnect.