Fourth-quarter and full-year 2009 results announced by Compugen

Feb 9 2010

Compugen Ltd. (NASDAQ: CGEN) today reported financial results for the fourth quarter and year ending December 31, 2009.

Dr. Anat Cohen-Dayag, president and co-CEO, stated, “During 2009 we saw major accomplishments in each of the areas key to our long-term success. Most important was the in vivo validation of various Compugen in silico predicted product candidates by independent leading experts in major therapeutic areas. These included novel therapeutic molecules or drug targets for epithelial tumors, inhibition of angiogenesis, inflammatory bowel disease, cardiovascular disease and pulmonary fibrosis, as well as biomarkers for preeclampsia, type 2 diabetes, ovarian cancer, and pre-clinical kidney toxicity. In addition we continued strengthening and broadening our underlying capabilities and entered into additional collaborations with leading companies, including the yearend signing with Pfizer of an agreement based on our unique “discovery on demand” capabilities. Also at yearend, we successfully obtained - without excessive dilution - the capital that we believe will be sufficient to fully implement our business model.”

Dr. Cohen-Dayag continued, “With the growing recognition by both potential corporate partners and the investment community of our extensive predictive discovery capabilities, all of us at Compugen enthusiastically look forward to 2010 and the next few years as we continue to demonstrate the power, continuous improvement, and almost unlimited applicability of these capabilities in the pharmaceutical and diagnostic industries.”

As previously projected, current revenues continue to be insignificant. The net loss for the most recent quarter was $2.0 million (including a non-cash expense of $440,000 related to stock based compensation), or $0.07 per share, compared with a net loss of $3.8 million (including a non-cash expense of $477,000 related to stock based compensation), or $0.13 per share, for the corresponding quarter of 2008. The net loss for calendar 2009 was $3.8 million (including a non-cash expense of $1.5 million related to stock based compensation), or $0.13 per share, compared with a net loss of $12.5 million (including a non-cash expense of $1.7 million related to stock based compensation), or $0.44 per share, for 2008.

The significant reduction in net loss for calendar year 2009 reflects the sale by Compugen during the second quarter of 2009 of a portion of its holdings of Evogene Ltd. shares resulting in a gain of $3.7 million, which is included in Other Income. At December 31, 2009, the market value of Compugen’s remaining 1.15 million Evogene shares was $3.9 million, compared with a market value of $3.9 million for the 2.15 million Evogene shares owned as of December 31, 2008 prior to the sale.

Research and development expenses for the fourth quarter of 2009 were $1.6 million, compared with $2.5 million for the fourth quarter of 2008 and remained the Company’s largest expense. Research and development expenses for calendar 2009 were $6.0 million compared with $9.3 million for 2008. These amounts are before the deduction of governmental and other grants, which totaled for the fourth quarter of 2009, $247,000, compared with $51,000 for the corresponding quarter in 2008, and $944,000 for calendar 2009, compared with $544,000 for 2008.

As of December 31, 2009, with the inclusion of the remaining receivables from the equity offering completed in late December 2009, cash and cash related accounts totaled $23.4 million, compared with $7.2 million at December 31, 2008. These amounts do not include the market value of Compugen’s holdings of Evogene shares at each such yearend as discussed above. The Company anticipates maximum gross cash usage of $8.5 million for 2010, which would be reduced by any revenues or other cash sources, in calculating 2010 net cash usage. As previously stated, a short-term financial target for Compugen is to achieve cash flow breakeven by yearend 2011, based largely on research revenues under milestone and revenue sharing collaboration agreements. Achieving this target is of course subject to success in entering into additional collaborations during the next two years.