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Compugen to Broaden and Accelerate mAb Program for Oncology and Immunology

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Compugen Ltd. has announced that it will significantly broaden and accelerate its monoclonal antibody (mAb) activities for oncology and immunology within its ongoing Pipeline Program.

The expanded activities will include a significant increase in the number of mAb candidates being developed in parallel against Compugen-discovered targets in the Pipeline Program, and the planned in-house establishment of certain key mAb preclinical development capabilities that were previously intended to be obtained solely from third parties.

The Company also announced that $8,000,000 towards the expanded program will be provided to the Company under a research funding agreement signed with Baize Investments (Israel) Ltd. (“Baize“), a private corporation investing in innovative medical technologies.

This follows an earlier research funding agreement between the two parties in December 2010, pursuant to which Compugen received $5,000,000 in support of the initiation of the Pipeline Program.

Under the terms of the new agreement, in exchange for its $8,000,000 in funding, Baize will receive a financial interest in certain mAb product candidates that achieve a specified development milestone, or have been licensed out, during the next three years.

In addition, Baize has the right, during the first quarter of 2014, to waive its rights to all future benefits from this financial interest in exchange for 1,455,000 Compugen ordinary shares.

Dr. Anat Cohen-Dayag, President and CEO of Compugen, stated, “During the last two years we were pleased to disclose successful validation of a number of our Pipeline Program therapeutic proteins, such as CGEN-15001 and CGEN-15091, in animal models of autoimmune diseases. This progress continues as we concurrently discuss potential arrangements for further product development and commercialization under royalty bearing licenses and other forms of collaboration. With respect to antibody therapeutics for oncology and immunology, the other focus area of our Pipeline Program, our competitive advantage rests on our unique predictive capabilities to discover novel molecular targets for the subsequent development of monoclonal antibodies that serve as the actual drug product candidates. This is in contrast to the discovery of therapeutic proteins, where our predictive capabilities lead directly to the proteins that serve as the basis for product development.”

Dr. Cohen-Dayag continued, “mAbs are the most rapidly growing drug class, with over 20 mAbs already approved for therapeutic use in the U.S. and in addition have demonstrated a higher success rate in development than other drug classes. However, a key continuing challenge is the identification of novel promising targets. To this end, Compugen harnessed its unique predictive capabilities to develop target discovery platforms and now has a growing inventory of promising potential mAb targets in validation. A number of these targets are now approaching the point where further advancement will require the development of mAbs against them.”

Dr. Cohen-Dayag concluded, “Based on our successful in silico prediction and selection of potential mAb target molecules, we are very pleased to be announcing today a significant broadening and acceleration of our mAb therapeutics program, including an increase in the number of targets against which we will concurrently develop mAbs to be advanced to the preclinical stage prior to out-licensing. Furthermore, since our expectation is that we will have an ongoing need to create and develop mAbs as we continue discovering new targets, we believe it is in our best interest to establish an in-house capability for further mAb development activities. This in-house capability would be in addition to reliance on third parties under arrangements that would normally include sharing of future profits from the resulting mAb product candidates.”

Murray Goldman, Baize’s Chairman, stated, “We are pleased with the progress achieved by Compugen with respect to its Pipeline Program in general and the specific product candidates in which we have a financial interest, and we are proud to have been of assistance in the Program’s initiation in late 2010. Therefore, we are now very much looking forward to expanding this relationship by focusing on accelerating the development in parallel within the Pipeline Program of mAbs against a number of promising Compugen discovered targets in oncology. This is anticipated to lead to significant new therapeutic candidates addressing key unmet needs in cancer treatment, which could meaningfully contribute to the well-being of humanity.”

Mr. Martin Gerstel, Chairman of the Board of Compugen, added, “After more than a decade of building the required predictive discovery infrastructure and scientific foundation, during the past few years we have made three critical decisions pertaining to the potential medical and financial opportunities now available to us due to these successful past and ongoing investments. First, we decided to focus our efforts on monoclonal antibodies and therapeutic proteins in the fields of oncology and immunology. Second, our powerful discovery infrastructure enabled us to quickly establish a Pipeline Program of approximately 30 promising early stage candidates. And finally, our continued target discovery success in the mAb arm of our Pipeline Program has now led us to a third decision: to substantially broaden and accelerate this portion of our Pipeline Program to obtain the maximum value from our target discoveries.”

Mr. Gerstel concluded, “A major partner for Compugen in implementing these decisions has been Baize Investments. Our first Research Funding Agreement with Baize, signed in 2010, allowed us to aggressively initiate the Pipeline Program, without exposing our company to increased financial risk in a difficult economic environment, and without significantly diluting the interests of our existing shareholders base that had in large part provided the resources to allow us to create these opportunities. And now, once again, this new agreement with Baize will allow us to significantly broaden and accelerate the advancement of our extremely promising mAb activities within the Pipeline Program, while again protecting the interests of our current shareholders.”

The New Funding Agreement with Baize Investments
In exchange for $8,000,000 in research funding, Baize will receive a financial interest in therapeutic mAb product candidates to be developed against 12 specified Compugen-discovered targets in the field of oncology, provided that any such mAb product candidates either achieves a successful animal disease model during the next three years, and/or is licensed out to third parties for final development and commercialization during such time period.

In each such case, Baize’s financial interest in such qualifying mAb product candidate will consist of the right to receive from Compugen a percentage of certain future payments received by Compugen from third parties from any out-licensing for further development and/or commercialization.

The percentage for each such qualifying mAb product candidate will be calculated on the date of out-licensing in accordance with a sliding scale, which takes into account the total Baize research funding spent for the development of therapeutic mAbs against the specified 12 Compugen targets to such date, relative to the total amount invested by both Baize and Compugen in such mAbs, provided that Baize will be entitled to no less than ten percent of such future payments related to any qualifying mAb product candidates.

In addition, Baize has the right, during the first quarter of 2014, to waive its rights to receive all such future payments in exchange for 1,455,000 Compugen ordinary shares.