Compugen Ltd. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022; filed February 28, 2023. This is an annual report, not a standalone fourth-quarter filing. Financial figures are in U.S. dollars unless stated otherwise. Compugen is a clinical-stage immuno-oncology discovery and development company; it has no approved products and relies on collaborations and licensing for revenue.
Financial results and liquidity
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $7.5 million | $6.0 million | Up 25%; entirely from AstraZeneca clinical milestones. |
| Gross profit | $6.5 million | $5.3 million | Gross margin approximately 87% versus 89%. |
| Operating expenses | $41.9 million | $40.4 million | R&D was $30.6 million, up 7%, and 73% of operating expenses. |
| Operating loss | $35.4 million | $35.1 million | Higher expenses largely offset revenue growth. |
| Financial and other income, net | $1.7 million | $0.9 million | Increase mainly reflected higher interest income. |
| Net loss / loss per share | $33.7 million / $0.39 | $34.2 million / $0.41 | Loss narrowed modestly; accumulated deficit was $455.8 million. |
| Net cash used in operating activities | $34.5 million | $22.8 million | Use increased, reflecting operating costs and lower BMS R&D participation. |
| Cash, equivalents and short-term deposits | $83.3 million | $117.0 million | Down $33.7 million year over year. |
Margins and funding: The business remained loss-making, with operating expenses substantially exceeding revenue. Financing cash inflow was only $0.4 million in 2022, versus $16.8 million in 2021, which included BMS’s investment. Management said existing cash and short-term deposits should fund operations at least through the end of 2024 under current plans, and stated working capital was sufficient for present requirements. This runway depends on spending remaining consistent with those plans.
Debt and obligations: The filing does not report conventional borrowings. Operating lease liabilities totaled $1.9 million, including $0.6 million current; disclosed lease payments were $2.1 million. The company also reported approximately $9.6 million in contingent IIA royalty obligations, payable under specified conditions, and other contingent royalty or milestone arrangements.
Business developments and comparison with prior periods
- Revenue rose from $6.0 million in 2021 and $2.0 million in 2020, but was milestone-based rather than recurring product sales. The AstraZeneca license was the sole revenue source in 2022; one customer represented 100% of revenue.
- In August 2022, Compugen terminated its clinical trial collaboration with Bristol Myers Squibb and began winding down related COM701 combination studies. The change followed a strategic decision to prioritize indications and reduce the broader cohort expansion program. BMS had supplied combination drugs at no cost; Compugen disclosed that it would need to purchase PD-1 inhibitor for certain studies following the collaboration’s termination.
- Bayer notified Compugen that its collaboration and license agreement would terminate effective February 27, 2023. Compugen was seeking certain rights to continue developing and commercializing bapotulimab, but had not committed to do so.
- The active AstraZeneca license covers development of bispecific and multispecific products derived from COM902. AstraZeneca’s rilvegostomig entered Phase 2 in 2022. Compugen received a $7.5 million milestone in 2022 and is eligible for further milestones and royalties; future payments are not assured.
- At year-end, COM701 and COM902 were early-stage clinical programs. Management planned 2023 trials of COM701, COM902 and pembrolizumab in metastatic microsatellite-stable colorectal cancer and platinum-resistant ovarian cancer. COM503 was in IND-enabling work, with an IND filing planned for 2024.
Outlook, commentary and key risks
- Management expected R&D to remain the largest expense in 2023, approximately 75% of expected operating expenses, with R&D spending at a similar level to 2022. No revenue or profitability guidance was provided; management said it could not predict when or whether significant revenue or profitability would be achieved.
- Management reported preliminary clinical activity signals for COM701 combinations, including an overall response rate of 10% in a 20-patient ovarian cancer cohort with nivolumab and 20% in a 20-patient ovarian cancer cohort with COM701, nivolumab and BMS-986207. These were small, early-stage datasets, not definitive efficacy evidence; the filing cautions that preliminary results may change.
- The company has a history of losses, no approved products, and dependence on future collaborations, milestones and/or financing. It may need to curtail or delay development if funding is unavailable on acceptable terms. A January 2023 sales agreement permits up to $50 million of share sales, but no shares had been sold under it as of February 27, 2023; any issuance could dilute shareholders.
- Clinical development, enrollment, safety, efficacy, manufacturing, third-party service providers, regulatory approval and competition present substantial risks. The company reported no backup manufacturing suppliers for certain needs and strong competition in the TIGIT and PVRIG fields.
- Compugen disclosed European patent oppositions concerning anti-PVRIG antibodies; a preliminary, non-binding opinion questioned novelty, inventive step and sufficiency of disclosure. Oral proceedings were scheduled for July 2023. GSK also filed a separate opposition in January 2023 concerning a PVRIG/PVRL2 screening-method patent.
- Nasdaq notified the company in October 2022 that its share price did not meet the $1.00 minimum bid requirement. The initial compliance period ran to May 1, 2023, with potential delisting or further compliance steps if unresolved.
- Other notable risks include Israeli political and security conditions, NIS/U.S. dollar and inflation exposure, and a disclosed penetration test identifying critical internal-network vulnerabilities that the company said it was working to remediate. The company believed it was a PFIC for U.S. tax purposes in 2022, while noting the determination is annual and uncertain.
- The company reported no material pending legal proceedings. Management and the independent auditor concluded that internal control over financial reporting was effective as of December 31, 2022; the auditor issued unqualified opinions on the financial statements and internal controls.
Most important facts for investors to verify
- Whether the stated cash runway through 2024 remains achievable in light of operating cash use, clinical spending and actual collaboration or financing proceeds.
- Whether planned COM701/COM902 trials began on schedule, and whether larger or later-stage studies confirm the preliminary clinical signals.
- How the BMS and Bayer terminations affect trial costs, access to combination drugs, bapotulimab rights and potential future revenue.
- Progress of AstraZeneca’s rilvegostomig program and the timing and conditions for any additional milestone or royalty income.
- Outcomes of the patent oppositions, Nasdaq listing compliance, and any material changes in dilution, cybersecurity exposure or PFIC status.