Compugen Ltd. (NASDAQ: CGEN) today reported financial results for the third quarter ending September 30, 2010.
Dr. Anat Cohen-Dayag, Compugen's president and CEO stated, "Our business model is to utilize our systematic and broadly applicable predictive discovery capabilities to provide product candidates to the drug and diagnostic industries under licensing and other commercialization arrangements. An extremely important validation of this model, and of our prediction and selection capabilities, has been the high level of interest shown during the past two years by potential partners in collaborations covering Compugen product candidates at a significantly earlier stage of development than such companies typically would require."
Dr. Cohen-Dayag continued, "With this scientific and industry validation in hand, substantial efforts during 2010 have been directed to planning and initiating a program to substantially increase the value of our discoveries by advancing selected molecules beyond the animal disease model proof of concept, something we have not previously done. We are currently selecting the first set of molecules for this new program from those that have already achieved this stage; additional candidates will be selected from our validation pipeline and future discovery runs. Included in the molecules selected to date is CGEN-15001, our recently announced product candidate for autoimmune diseases, which has attracted very significant industry interest and continues to show excellent results in on-going studies."
"It is anticipated that the candidates selected for these preclinical activities will be primarily protein, peptide and monoclonal antibody therapeutics, mainly for use in the fields of oncology and immunology. As part of our preparation during 2010 for this expanded development effort, we selected approximately 20 novel molecules to enter our validation pipeline, in addition to the eight molecules that have already successfully completed animal disease model or similar therapeutic proof of concept validation studies," said Dr. Cohen-Dayag.
"This new program is an important addition as we broaden and accelerate the implementation of our business model. A further component of this effort is our ongoing, but previously undisclosed, collaboration with Flamel Technologies of Lyon, France to develop therapeutic products to the Investigational New Drug (IND) stage. The products to be developed under this agreement will combine selected Compugen discovered molecules with Flamel's delivery technology, and will be jointly owned by the two companies. Also, with respect to other commercialization activities, we are currently in discussions with various companies regarding both licensing of certain product candidates and 'discovery on demand' collaborations," Dr. Cohen-Dayag concluded.
Martin Gerstel, Compugen's chairman, added, "Successfully advancing product candidates 12-18 months past animal proof of concept can increase the value of such molecules by an order of magnitude or more, particularly in our focus areas of oncology and immunology. Therefore, with our proven discovery capabilities and knowledge of industry needs, this is an obvious next step for us to take in order to maximize the value of certain of our current and future product candidate discoveries for both the short-term and long-term financial benefit of our shareholders."
As previously stated, since current revenues result primarily from fees and milestones, our quarterly results are, and will continue to be, subject to substantial fluctuations due to timing. No revenues were recorded for the third quarter of 2010 or the third quarter of 2009, with revenues for the nine months ending September 30, 2010 of $925,000, compared with $225,000 for the first nine months of 2009.
The net loss for the most recent quarter was $1.6 million (including a non-cash expense of $435,000 related to stock based compensation), or $0.05 per share, compared with a net loss of $1.9 million (including a non-cash expense of $460,000 related to stock based compensation), or $0.06 per share, for the corresponding quarter of 2009. The net loss for the first nine months of 2010 was $5.2 million (including a non-cash expense of $1.8 million related to stock based compensation), or $0.16 per share, compared with a net loss of $1.8 million (including a non-cash expense of $1.1 million related to stock based compensation), or $0.06 per share, for the same period in 2009.
The increase in net loss for the first nine months of 2010 compared with the same period in 2009 is due to the sale by Compugen during the second quarter of 2009 of a portion of its holdings of Evogene Ltd. shares for approximately $3.6 million, which is included in "Other income" for the first nine months of 2009.
Research and development expenses for the third quarter of 2010 were $1.5 million compared with $1.4 million for the third quarter of 2009 and remained the Company's largest expense. Research and development expenses for the first nine months of 2010 were $4.5 million compared with $4.4 million for the comparable period in 2009. These amounts are before the deduction of governmental and other grants, which totaled for the third quarter ended September 30, 2010, $281,000, compared with $180,000 for the corresponding quarter in 2009, and $805,000 for the first nine months of 2010, compared with $697,000 for the comparable period in 2009.
As of September 30, 2010, Compugen had $21.4 million in cash and cash equivalents and short term deposits not including its holding of 1.15 million Evogene Ltd. shares, which currently have a market value of approximately $6 million. Net cash usage for 2010 is currently projected to be approximately $5 million, which is substantially less than initially projected.
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