TEL AVIV, ISRAEL, July 26, 2006 - Compugen Ltd. (NASDAQ: CGEN) today reported financial results for the second quarter ended June 30, 2006.
Alex Kotzer, President and CEO, stated, "In line with our previously disclosed commercial roadmap, we have now initiated further biological validation for five potential therapeutic molecules in anticipation of seeking licensing and co-development partners for those that successfully complete this next stage. These five candidates were chosen as the most promising potential products based on the initial biological evaluation of approximately seventy novel proteins and peptides previously predicted by our therapeutic protein discovery engine. The chosen molecules, with demonstrated functional biological activities, are therapeutic candidates mainly for various forms of cancer and autoimmune diseases. We are also on target with our commercial roadmap with respect to our diagnostic activities, where together with our partners for immunoassay diagnostics, more than ten partner-selected Compugen discovered cancer and cardiovascular disease related biomarkers are being evaluated, and we have begun discussing possible collaborations for our initial nucleic acid biomarker discoveries. These accomplishments, along with some exciting progress in our research and discovery unit were the highlights of a successful second quarter."
The Company has previously stated that its anticipated primary sources of future revenues are milestone and revenue sharing payments from licensing and other arrangements covering the development and marketing of diagnostic and therapeutic products based on the Company's discoveries. Subject to the successful attainment of milestones by the Company's partners, Compugen anticipates that it will begin to receive such payments from its existing arrangements by the end of this year or early next year, and that these revenues will increase substantially in the following years as products based on Compugen discovered molecules progress towards commercialization.
As anticipated, revenues for the second quarters of both 2006 and 2005 were not significant ($5,000 for the second quarter of 2006 and $70,000 for the second quarter of 2005). The net loss for the quarter was $3.6 million (including non-cash expense of $472,000 related to stock based compensation), or $0.13 per share, compared with a net loss of $3.3 million (including non-cash income of $9,000 related to stock based compensation), or $0.12 per share, for the corresponding quarter of 2005.
Revenues for the six months ended June 30, 2006 were $205,000, compared to $551,000 for the same period in 2005. The net loss for the first six months of 2006 was $6.7 million (including non-cash expense of $1 million related to stock based compensation), or $0.24 per share, compared with a net loss of $7.1 million (including non-cash income of $19,000 related to stock based compensation), or $0.25 per share, for the same period in 2005.
Research and development expenses of $3.0 million for the most recent quarter compared to $3.1 million for the second quarter of 2005, remains the Company's largest expense. Research and development expense for the first six months of 2006 were $5.7 million compared to $6.5 million for the comparable period in 2005. These amounts are before the deduction of governmental and other grants, which totaled $105,000 for the second quarter ended June 30, 2006, compared with $404,000 for the corresponding quarter in 2005, and $522,000 for the first six months of 2006 compared with $788,000 for the comparable period in 2005.
As of June 30, 2006, Compugen had $30.4 million in cash, cash equivalents, long term deposits, and marketable securities, a decrease of $6.4 million for the six months from December 31, 2006.
Conference Call and Web Cast Information
Compugen will hold a conference call to discuss its first quarter results on July 26, 2006 at 10:00 am EST. To access the conference call, please dial 1-866-860-9642 from the US or +972 3-918-0610 internationally. A replay of the conference call will also be available approximately two hours after the completion of the live conference call. To access the replay, please dial 1-866-276-1485 from the US or +972 3-925-5901 internationally. The replay will be available until 12 noon EST on July 28, 2006.
The call will also be available via live Web cast through Compugen's Website, located at /.
Compugen's mission is to be the world leader in the discovery and licensing of product candidates to the drug and diagnostic industry. The Company's powerful discovery engines enable the predictive discovery of numerous potential therapeutics and diagnostic biomarkers. This capability results from the Company's decade-long pioneering efforts in the deeper understanding of important biological phenomena at the molecular level through the incorporation of ideas and methods from mathematics, computer science and physics into biology, chemistry and medicine. To date, Compugen's product discovery efforts and its initial discovery engines have focused mainly within the areas of cancer, immune-related and cardiovascular diseases. The Company's primary commercialization pathway for its therapeutic and diagnostic product candidates is to enter into milestone and revenue sharing out-licensing and joint development agreements with leading companies. Compugen has established an agricultural biotechnology affiliate - Evogene, and a small-molecule drug discovery affiliate - Keddem Bioscience. For additional information, please visit Compugen's corporate Website at www.cgen.com.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include words like "may," "expects," "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; the ability to implement technological improvements; the ability of Compugen to obtain and retain customers. 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.
Chief Financial Officer