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Compugen Ltd. (CGEN) Message Board

  • unbearibull unbearibull Dec 31, 2009 11:21 AM Flag

    BioWorld article - parts 1 & 2

    Compugen Nets $19M for Drug, Diagnostic Discovery Work

    By Donna Young

    Washington Editor

    After locking in its first major discovery-on-demand deal with Pfizer Inc. last week, Compugen Ltd. said it has raised $20 million in a controlled equity offering facility through the sale of 4.1 million ordinary shares at $4.91 per share.

    The Tel Aviv, Israel-based drug and diagnostic discovery firm, which started in the 1990s as a computer company, plans to use the realized net proceeds of about $19 million for general corporate purposes, said Co-CEO Martin Gerstel.

    Compugen's stock (NASDAQ:CGEN) rose 6 percent, or 28 cents, to close at $4.90.

    "We are finally beginning to get some recognition in the financial world for what we have created here," he said.

    Given the numerous companies that rode the genomic revolution wave in the 1990s and early 2000s that professed to change pharmaceutical research and development and easily find cures for diseases by predicting the biology of molecules through the use of computers, yet ultimately failing, "I fully understand why prior to this we couldn't get the financial world to believe us," Gerstel told BioWorld Today.

    "So when we came along and said, 'We can do it,' no one believed it," he said. Compugen, a firm started with $50,000 in the 1990s by former members of an elite research unit of the Israeli military, quickly dominated the special purpose computer market with its product that analyzed biological data at "a thousand times faster than the competing equipment," Gerstel noted.

    However, the company later realized that most of its clients needed only one machine to do their work, so Compugen changed course and moved into the life sciences field, building in silico predictive discovery platforms that accurately model biological processes at the molecular level, said Gerstel, who joined the company in 1997

    "In our computers, we have this enormous inventory of all of these predictive molecules, and each of these platforms use very sophisticated computational biology and other ways to create essentially hooks, or queries, to reach into this inventory," he added. "Based on everything that is known about the given disease, condition or type of molecule, it picks out those that would have the highest probability of doing what you are looking for," Gerstel said, noting that "all of this is done on the computer."

    However, he added, "We had to do tons of experiments to create that knowledge."

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    • Part 2:

      By understanding the underlying science, "you can predict that a molecule should do what you want it to do by predicting the sequence," Gerstel said.

      Compugen has created predictive models, algorithms and other computational biology methodologies that provide the infrastructure for the design of systematic platforms for the predictive discovery of drug, target and biomarker candidates.

      The company, which Gerstel said has validated 10 disclosed product discovery platforms directed at various drug and diagnostic areas, licenses out the therapeutic proteins it identifies for clinical development and commercialization, and gains performance milestones and sales royalties.

      "Milestones and royalties on these things are wonderful, because they are pure profit," he declared.

      However, he added, "it is very difficult to time your company's financial needs" based on milestones and royalties that could come six months earlier or later than expected. On the other hand, research revenues are typically committed to significantly in advance, Gerstel noted.

      "The company now has hopefully built our revenue base largely out of research revenues, so that by the end of 2011, our research revenues will cover the total corporate expenditures, and then when the milestones and royalties come in, they will go right to the bottom line as profit," he said.

      The company's plans are to "break even largely on research revenues," Gerstel said.

      Nonetheless, he added, Compugen should have "meaningful milestones during the next couple of years, in the 2010-2011 time frame."

      Gerstel said his company has no plans to become a drug developer. "We have no expertise beyond the prediction and selection of these product candidates, and I have no interest in creating that type of capability here of taking products further along," he said. "It makes no sense when there are plenty of places out there that could develop drugs and do it much better than we."

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