Compugen Reports Second Quarter 2008 Results

  
    
  
  
    
      Compugen Ltd. (NASDAQ:CGEN) 
      today reported its results for the second quarter ending June 30, 2008.
    
    
      Compugen President and CEO Mr. Alex Kotzer stated, “During 
      this past quarter, the diversity of our unique prediction-based 
      discovery efforts continued to be demonstrated with the disclosure of 
      successful experimental validation results for novel biomarkers for the 
      early preclinical detection of drug-induced kidney toxicity, for more 
      than 10 drug target candidates for cancer antibody therapeutics, for a 
      therapeutic peptide candidate for immune related diseases and for three 
      G-Protein coupled receptor (GPCR) ligands.”
    
    
      Mr. Kotzer continued, “More recently, 
      Compugen announced the successful completion of in vitro and in 
      vivo validation tests for CGEN-50001, a drug that has been marketed 
      for many years in Europe for central nervous system indications such as 
      depression. In these recently completed studies, the drug, which is 
      neither marketed nor approved for usage in the US, was shown to 
      significantly increase the effect of Tamoxifen, a frequently used drug 
      for the treatment of estrogen receptor (ER) positive breast cancer. The 
      beneficial impact of administering CGEN-50001 in this completely 
      unrelated and very major medical condition was initially predicted in 
      silico by our New Indications Discovery Platform. CGEN-50001 was 
      then selected for further validation. Following the positive results, we 
      are now planning a proof of concept human trial for this new usage as 
      well as evaluating other drugs with potential new usages that have been 
      predicted by this very powerful platform.”
    
    
      Compugen also announced today the appointment of Ms. Dikla Czaczkes 
      Axselbard as chief financial officer, succeeding Ms. Ronit Lerner who 
      resigned from the Company. Ms. Czaczkes Axselbard served as director of 
      finance for Compugen from 2002 through 2007, and as acting CFO since 
      February 2008. Prior to joining Compugen, Ms. Czaczkes Axselbard was 
      chief financial officer of Packet Technologies Ltd, a mobile internet 
      security hardware and software startup company and before that an audit 
      manager at Ernst & Young Israel. She holds an MBA in finance and a BA in 
      accounting and economics, both from the Tel Aviv University, and is a 
      certified public accountant in Israel.
    
    
      Revenues for the second quarter of 2008 were $40,000 and for the six 
      months ended June 30, 2008, were $321,000. No revenues were reported for 
      either of the comparable periods of 2007.
    
    
      The net loss for the most recent quarter was $3.0 million (including a 
      non-cash expense of $416,000 related to stock based compensation) or 
      $0.10 per share, compared with a net loss of $3.2 million (including a 
      non-cash expense of $436,000 related to stock based compensation), or 
      $0.11 per share, for the corresponding quarter of 2007. The net loss for 
      the first six months of 2008 was $5.5 million (including a non-cash 
      expense of $743,000 related to stock based compensation), or $0.19 per 
      share, compared with a net loss of $6.3 million (including a non-cash 
      expense of $1.2 million related to stock based compensation), or $0.22 
      per share, for the same period in 2007.
    
    
      Research and development expenses of $2.4 million for the second quarter 
      of 2008, compared to $2.3 million for the second quarter of 2007, remain 
      the Company’s largest expense, representing 
      approximately 70% of total expenses. These amounts are before the 
      deduction of governmental and other grants, which totaled $169,000 for 
      the second quarter ended June 30, 2008, compared with $293,000 for the 
      corresponding quarter in 2007.
    
    
      In view of the increase in the market value of the Company’s 
      holding in Evogene Ltd, this amount is now shown as a separate line item 
      in the Company’s consolidated balance sheets 
      and was $4.6 million as of June 30, 2008 compared to $510,000 at 
      year end 2007. Previously, the Company’s 
      holding in Evogene was included in Other Assets.
    
    
      As of June 30, 2008, Compugen had $12.6 million in cash, cash 
      equivalents, deposits and marketable securities, a decrease of $4.6 
      million from the $17.2 million reported as of December 31, 2007.
    
    
      Conference Call and Webcast Information
    
    
      Compugen will hold a conference call to discuss its second quarter 
      results on Tuesday, July 29, 2008 at 10:00 a.m. EDT. To access the 
      conference call, please dial 1-866-345-5855 from the US or 
      [phone] internationally. The call will also be available via 
      live webcast through Compugen’s Website, 
      located at www.cgen.com.
    
    
      A replay of the conference call will be available approximately two 
      hours after the completion of the live conference call. To access the 
      replay, please dial 1-888-326-9310 from the US or [phone]. 
      The replay will be available until 12 noon EDT on August 1, 2008.
    
    
      About Compugen
    
    
      Compugen’s mission is to be the world leader 
      in the discovery and licensing of product candidates to the drug and 
      diagnostic industries under milestone and revenue sharing agreements. 
      The Company’s increasing inventory of 
      powerful and proprietary discovery platforms is enabling the predictive 
      discovery – field after field – 
      of numerous therapeutic and diagnostic product candidates. These 
      discovery platforms are based on the Company’s 
      decade-long focus on the predictive understanding of important 
      biological phenomena at the molecular level. Compugen’s 
      current collaborations include Biosite, Medarex, Inc., Merck & Co., 
      Inc., Ortho-Clinical Diagnostics (a Johnson & Johnson company), Roche, 
      Siemens Healthcare Diagnostics, Inc., and Teva Pharmaceutical 
      Industries. In 2002, Compugen established an affiliate, Evogene Ltd. 
      (TASE:EVGN.TA), to utilize the Company’s in-silico 
      predictive discovery capabilities in the agricultural biotechnology 
      field. For additional information, please visit Compugen's corporate 
      Website at www.cgen.com and Evogene’s 
      corporate Website at www.evogene.com.
    
    
      This press release may contain "forward-looking statements" within the 
      meaning of the Private Securities Litigation Reform Act of 1995. These 
      statements include words such as “may”, 
      “expects”, “anticipates”, 
      “believes”, and “intends”, 
      and describe opinions about future events. These forward-looking 
      statements involve known and unknown risks and uncertainties that may 
      cause the actual results, performance or achievements of Compugen to be 
      materially different from any future results, performance or 
      achievements expressed or implied by such forward-looking statements. 
      Some of these risks are: changes in relationships with collaborators; 
      the impact of competitive products and technological changes; risks 
      relating to the development of new products; and the ability to 
      implement technological improvements. These and other factors are 
      identified and more fully explained under the heading "Risk Factors" in 
      Compugen's annual reports filed with the Securities and Exchange 
      Commission.
    
    
      
        
          
            COMPUGEN LTD.
          
          
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          
          
            (U.S. dollars in thousands, except for share and per-share amounts)
          
        
      
      
        
           
        
      
      
        
        
        
           
        
        
          Three Months Ended

          
            June 30,
          
        
        
           
        
        
          Six Months Ended 

          
            June 30,
          
        
      
      
        
        
        
        
        
          2008

          
            Unaudited
          
        
        
           
        
        
          2007

          
            Unaudited
          
        
        
        
        
          2008

          
            Unaudited
          
        
        
           
        
        
          2007

          
            Unaudited
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
        
        
          40
        
        
        
        
        
        
          -
        
        
        
        
        
        
          321
        
        
        
        
        
        
          -
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of revenues
        
        
        
        
          -
        
        
        
        
        
        
          -
        
        
        
        
        
        
          7
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Research and development expenses
        
        
        
        
          2,378
        
        
        
        
        
        
          2,324
        
        
        
        
        
        
          4,309
        
        
        
        
        
        
          4,662
        
        
        
      
      
        
          Less: governmental and other grants
        
        
        
        
          (169
        
        
          )
        
        
        
        
          (293
        
        
          )
        
        
        
        
          (335
        
        
          )
        
        
        
        
          (590
        
        
          )
        
      
      
        
          Research and development expenses, net
        
        
        
        
          2,209
        
        
        
        
        
        
          2,031
        
        
        
        
        
        
          3,974
        
        
        
        
        
        
          4,072
        
        
        
      
      
        
          Sales and marketing expenses
        
        
        
        
          355
        
        
        
        
        
        
          272
        
        
        
        
        
        
          663
        
        
        
        
        
        
          866
        
        
        
      
      
        
          General and administrative expenses
        
        
        
        
          700
        
        
        
        
        
        
          623
        
        
        
        
        
        
          1,514
        
        
        
        
        
        
          1,176
        
        
        
      
      
        
          
            Total operating expenses (a)
          
        
        
        
        
          3,264
        
        
        
        
        
        
          2,926
        
        
        
        
        
        
          6,151
        
        
        
        
        
        
          6,114
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating loss
        
        
        
        
          (3,224
        
        
          )
        
        
        
        
          (2,926
        
        
          )
        
        
        
        
          (5,837
        
        
          )
        
        
        
        
          (6,114
        
        
          )
        
      
      
        
          Financing income, net
        
        
        
        
          259
        
        
        
        
        
        
          227
        
        
        
        
        
        
          361
        
        
        
        
        
        
          503
        
        
        
      
      
        
          Other income
        
        
        
        
          11
        
        
        
        
        
        
          5
        
        
        
        
        
        
          27
        
        
        
        
        
        
          14
        
        
        
      
      
        
          Net loss from continuing operations
        
        
        
        
          (2,954
        
        
          )
        
        
        
        
          (2,694
        
        
          )
        
        
        
        
          (5,449
        
        
          )
        
        
        
        
          (5,597
        
        
          )
        
      
      
        
          Loss from discontinued operations
        
        
        
        
          (13
        
        
          )
        
        
        
        
          (464
        
        
          )
        
        
        
        
          (13
        
        
          )
        
        
        
        
          (668
        
        
          )
        
      
      
        
          Net loss
        
        
        
        
          (2,967
        
        
          )
        
        
        
        
          (3,158
        
        
          )
        
        
        
        
          (5,462
        
        
          )
        
        
        
        
          (6,265
        
        
          )
        
      
      
        
          Basic and diluted loss per ordinary share from continuing operations
        
        
        
        
          (0.10
        
        
          )
        
        
        
        
          (0.09
        
        
          )
        
        
        
        
          (0.19
        
        
          )
        
        
        
        
          (0.20
        
        
          )
        
      
      
        
          Basic and diluted loss per ordinary share from discontinued 
          operations
        
        
        
        
          -
        
        
        
        
        
        
          (0.02
        
        
          )
        
        
        
        
          -
        
        
        
        
        
        
          (0.02
        
        
          )
        
      
      
        
          Basic and diluted net loss per ordinary share
        
        
        
        
          (0.10
        
        
          )
        
        
        
        
          (0.11
        
        
          )
        
        
        
        
          (0.19
        
        
          )
        
        
        
        
          (0.22
        
        
          )
        
      
      
        
          Weighted average number of ordinary shares outstanding
        
        
        
        
          28,395,118
        
        
        
        
        
        
          28,242,570
        
        
        
        
        
        
          28,372,204
        
        
        
        
        
        
          28,220,723
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            (a) Includes stock based compensation
          
        
      
    
    
      
        
          
            COMPUGEN LTD.
          
          
            CONDENSED CONSOLIDATED BALANCE SHEETS DATA
          
          
            (U.S. dollars, in thousands)
          
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          June 30,

          
            2008
          
          
            Unaudited
          
        
        
        
        
          December 31,

          
            2007
          
          
            Audited
          
        
      
      
        
        
        
        
        
           
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
          Current assets
        
        
        
        
        
        
        
        
        
      
      
        
          Cash, cash equivalents, short term deposits and marketable securities
        
        
        
        
          
            12,513
          
        
        
        
        
          
            15,082
          
        
      
      
        
          Cash held in favor of other consortium partners
        
        
        
        
          837
        
        
        
        
          118
        
      
      
        
          Trade receivables
        
        
        
        
          44
        
        
        
        
          40
        
      
      
        
          Receivables and prepaid expenses
        
        
        
        
          634
        
        
        
        
          950
        
      
      
        
          Assets related to discontinued operation
        
        
        
        
          3
        
        
        
        
          54
        
      
      
        
          Total current assets
        
        
        
        
          14,031
        
        
        
        
          16,244
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term investments
        
        
        
        
        
        
        
        
        
      
      
        
          Long term deposits and marketable securities
        
        
        
        
          -
        
        
        
        
          2,080
        
      
      
        
          Investment in Evogene
        
        
        
        
          4,644
        
        
        
        
          510
        
      
      
        
          Other assets
        
        
        
        
          1,769
        
        
        
        
          1,415
        
      
      
        
          Property and equipment, net
        
        
        
        
          1,217
        
        
        
        
          1,417
        
      
      
        
          Total assets
        
        
        
        
          21,661
        
        
        
        
          21,666
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND SHAREHOLDERS’ EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
          Current liabilities
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          2,813
        
        
        
        
          2,741
        
      
      
        
          Deferred revenues
        
        
        
        
          100
        
        
        
        
          150
        
      
      
        
          Liabilities related to discontinued operations
        
        
        
        
          16
        
        
        
        
          4
        
      
      
        
          Total current liabilities
        
        
        
        
          2,929
        
        
        
        
          2,895
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term liabilities
        
        
        
        
        
        
        
        
        
      
      
        
          Accrued severance pay
        
        
        
        
          1,912
        
        
        
        
          1,486
        
      
      
        
          Other long-term liabilities
        
        
        
        
          20
        
        
        
        
          -
        
      
      
        
          Total long-term liabilities
        
        
        
        
          1,932
        
        
        
        
          1,486
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total shareholders’ equity
        
        
        
        
          16,800
        
        
        
        
          17,285
        
      
      
        
          Total liabilities and shareholders’ 
          equity
        
        
        
        
          21,661
        
        
        
        
          21,666