Ladies and gentleman, thank you for standing by. Welcome to the Compugen Ltd Second Quarter 2013 Financial Results Conference Call. All participants are present in a listen only mode. Following managements’ final presentation instructions will be given for the question and answer session. (Operator instructions). As a reminder, this conference is being recorded on August 7, 2013. With us online today are Mr. Martin Gerstl, Chairman of the Board; Dr. Anat Cohen-Dayag, President and CEO’ and Ms. Dikla Czaczkes Axselbrad, CFO. I would like to remind everyone that the Safe Harbor language contained in Company’s corporate presentation also pertains to all consents of this conference call. Compugen’s financial statements for the six months ended June 30th 2013 has been filed on Form 6K with the Securities and Exchange Commission and are available at both Edgar and on Compugen’s website. In addition, if you contact Compugen now by email, copies of second quarter financial statements and the press release issued this past Monday regarding the collaboration with Bayer HealthCare will be sent to you immediately by a return email. To receive copies of the financial statements and Monday’s press release, please address you request to Compugen at ir@cgen.com. Mr. Gerstl, would you like to begin.

Yes, thank you. On behalf of Compugen’s management all of its employees, welcome to our second quarter 2013 conference call. We are pleased that you are able to join us today. I am not surprised that once again we have a record number of participants of our call but I am very surprised by the amount of the increase in number. So thank you very much for joining us. Our agenda for today’s call is a little different than usual. In view of expectation that we would have a number of new participants on the call I decided to limit my introductory remarks to a short list of seven facts about Compugen, not opinions, not objection, projections, just facts. Since we do not believe there are any surprises or new financial issues in our financial reports for the second quarter, Dikla will focus on our current financial situation specifically with respect for our operating cash requirements and overall cash status. The prepared remarks portion of our call will conclude with Anat providing some perceptive with respect to how we see the Bayer collaboration in terms of the continuing implementation of our long term strategy and our current overall corporate situation. We will not cover the specific terms of the agreement, since we believe they are adequately described in the release and unlike the situation with most small biotech companies, we believe the specific terms, although in our opinion are favorable are not the significant aspect of the announcement. During the Q&A session that will follow Anat's remarks we encourage you to ask any question that you may have regarding either our second quarter financial statements or the recently announced collaboration or any other questions that you have with respect to the company. After the Q&A section, you will be stuck…

Thank you, Martin. As mentioned in both the press releases issued on Monday morning, we filed the Form 6-Ks with our financial results for the second quarter and first six months of 2013 last Friday. This report is available on both the SEC via Edgar and on our website. As Martin stated, since our reported results were largely as anticipated, I would like, in my prepared remarks today to focus more generally on our short term financial debt situation. Instead of reviewing these financial statements, specifically, I would like to address our operating cash requirement and overall cash status. If you have any question about our second quarter report, please do not hesitate to ask them during the Q&A session. First, with respect to operating cash requirements, our budget for 2015 called for gross cash utilization of approximately $16 million and tax utilization was about $7 million during the first half of this year. Research and development cost remained and are expected to remain our largest cash use, representing close to 70% of gross cash used during the first six months of this year. As previously stated, we anticipate that the major future growth of revenues and responses will be from milestone payments and royalties, while for the immediate future, it will likely be from upfront fees and research revenues. With respect to research revenues, although due to reported requirements, we may, in specific quarters, report a negative gross margin such as is in the case this time, in general, these activities are subject to results and a positive gross margin contribution over time. I would now like to make a few comments with respect to the immediate impact on our cash situation from the $10 million upfront payment from the Bayer collaboration. We have been asked whether the targets…

As Martin mentioned, in today's call I would like to provide some perspective as to how we see the collaboration with Bayer in terms of the continuing implementation of our long term strategy and our current overall corporate situation. When I became the CEO of Compugen in 2010, the most critical decision I had to make was to select the initial areas on which to focus our predictive capabilities. The problem was not finding an area to work on, rather the problem was that there were too many potential areas. As Martin pointed out, our predictive capabilities had already demonstrated at least to us that they were broadly applicable for discovery in various areas of human therapeutics and diagnostics and we could choose to apply them to many different fields of medicine. At that time I had a strong belief that if for any reason the product candidate resulting from our initial efforts were not publically recognized by the industry as exciting opportunity, it would be highly unlikely that we would be given a second chance, since our capabilities were still seen as largely unproven by both the financial world and the Pharma industry. Therefore this selection of our initial area of focus had to address three goals. First to eliminate doubt that our unique predictive capabilities can discover novel drug candidates of significant interest; second, to generate substantial interest in the industry, in our products and underlying capability; and third, to provide substantial early revenues for the company. Compugen have invested substantially and for an extended period in establishing its unique capability. With respect to me personally, having been a member of the research team since 2002 and later having management responsibility for these activities as head of R&D, I was well aware and had no doubt that our…

Ladies and gentlemen. At this time we will begin the question & answer session. (Operator instructions). The first question is from Brett Reiss of Janney Montgomery Scott. Please go ahead.

I have a couple of questions. But just very quickly, I've asked very tough questions on timing of deals in the past and I just want to publicly acknowledge and tip my hat and salute Marty and the management team on the deal and I sincerely appreciate your efforts. I know number of clients' shareholders do as well. The questions; how many additional immune checkpoint regulators you have in the pipeline?

So, we have couple of additional immune checkpoints that we’re discovering in the first public discovery program that we have generated, but I also want to mention, and I repeated in detail in the call now, we will also incorporate into the pipeline additional immunomodulatory proteins that were the result of additional discovery platforms that we have developed in the last two years and we also expect to incorporate additional further candidates that has to do with the ADC targets. So I must say that I wouldn’t like to focus only immune checkpoints as we look forward to the future of this company.

I think also let me to add that. In the past we have mentioned certain numbers, we’ve got three of these nine whatever. I would like to make two comments about that. One, the number we have now has not gone down. In this particular at least its more as in we’ve ever discussed in the past and secondly these two represent a small fraction of the number of immune checkpoints that we have discovered to date that are in our pipeline. But I think we really are going to back off of this, giving a specific number because obviously things change. We have additional discovery runs, we introduced new platforms, and it just can be confusing. But as I said, the two represent a very small fraction of the immune checkpoints that we have and that whatever numbers we gave you in the past we have more now than what we said before.

Okay and just one another question and I will drop back in queue. One of my shareholders was curious as to the timeline of the first monoclonal antibody deal might happen. Is there any color you can give us on that?

I’m not sure that I fully understand the question. They Bayer deal was monoclonal antibodies. So, I understand your confusion. What we’ve talked about all the time at the targets that we discover and so these are immune checkpoints that we discover but the actual product that will be marketed, the actual pharmaceutical product will be a monoclonal antibody against these targets, and that’s what we’ve been developing at our California subsidiary, and looking back on it that was another great decision of the management team here to move forward so rapidly with creating that subsidiary with world class capabilities.

The next question is from Abigail Leichman of ISRAEL21c. Please go ahead.

I want to ask you, is the first major collaboration between an Israeli company in Bayer?

No, I am also the Chairman at Evogene and Evogene has a significant arrangement with them. I'm not aware, there may be others. But, I don’t know whether this is the pharmaceutical arrangement that Bayer has in Israel. Do you know? I don’t know.

Okay, what is the Evogene arrangement is there?

I’d be glad to answer that offline. This is a Compugen call and since I wear both hats. As long as the name Evogene come up, I had a somewhat awkward question asked to me offline, some of these who actually and I think that maybe some other people on the line, somebody who actually owns both Evogene shares and Compugen shares and I am the Chairman of both companies. And as Dikla mentioned and as we’ve said in the past, we have sold the company. Compugen has sold some Evogene shares and this individual said to me that they see that as a sign that there must be some reason for that sale. Since I am the Chairman there I must know exactly what’s going on. I just want to make it absolutely clear that I had nothing to do with it. I have nothing to do with the decisions here with respect to Evogene shares. There is a committee of the Chairman of our Audit Committee. Dikla and Anat make those decisions. I don’t discuss it with them in any way. I find out that at the same time that you do. So if anybody is jumping to conclusions about our sales, please it’s erroneous.

I also just had a quick follow up question about even though the California subsidiary that is mostly involved in this project, will this collaboration with Bayer mean any kind of increase in employees at Compugen’s Israeli headquarters?

So in general an update that in the joint work plans, both the Israeli and the U.S. teams of Compugen will be involved. Under the activities that we are expected to do at the U.S. side and in Israel, we feel that we are fully equipped to do it. We may need to hire very few people but this is really not something that's really worth mentioning.

The next question is from Ling Wang of Chardan Capital. Please go ahead.

So with regard to the milestone payment, I was wondering whether you can comment on what kind of events that might trigger the milestone payment, especially in the near term, preclinical stage and also on the left timeline on that. And then could you also comment on the timeline for advancing your leading compounds to clinical stage development.

In general we cannot disclose more than what is written in the press release. I would repeat that we have stated that there are milestone payments that are associated with pre-clinical activities, in the range of up to $30 million. I can't say more than this but in general if you look at industry standards, there are some industry standards that relate to pre-clinical activities and timelines as to how long does it take to reach to the clinical trials. So this is the only thing that we can say with respect to this.

With respect to your second question, second question had to do with when do you think we will reach. Yes, as Anat said, that you really need to look at industry standards and please with respect to any questions that you are asking with respect to this collaboration, keep in mind that in situations like this, since there are two companies involved and this is an important agreement for both of us; as those of you saw our announcement may wonder why it wasn't a joint announcement. Well actually Bayer wanted to put out their own announcement. So Bayer put out an announcement about this arrangement. But in situations like this, the companies have to agree that they do not give out information beyond what is publically available because it could become a very awkward situation if one company gives more information than the other and then it starts going back and forth. So anything that you ask us pretty much about this collaboration, we're going to have to respond with what is in the Press Release or if it's misunderstood or if there is clarification that you need about what's in the Press Release, we'll try to do that. But sorry, our hands are little tied with respect to giving additional information.

I understand. My second with regard to the timeline for your own compound.

Are you talking about like fusion proteins and others?

Yes.

Yes, so in general we are now with the most advanced program. We’re now at the stage close to the end of lead selection and indication selection. And we will share more information towards the year end with our decision as to how we move forward with this market.

The next question is a follow up question from Brett Reiss of Janney Montgomery Scott. Please go ahead.

I had a question on who negotiated the Bayer deal and future deals but you alluded to a negotiating team. Who is on the team and what's the composition of that is?

So in general these are the team from Compugen, but we also got advices from a consulting firm that we hired named Torreya Partners. They were helping us in the last couple of months in order to make sure that we are moving ahead in the right direction, getting some industry standard support. And we have also had some consultants that are in the field of antibody therapeutics and business development in antibody therapeutics. So we could move forward. We feel very confident with the team that we currently have, in order to be able to continue forward with additional arrangements.

Two comments on that. One the arrangement with Torreya was not specifically for this agreement. We have had their assistance now for a couple of years. It’s very talented group of people and we have gained a lot from it. Anat made a very important decision at the beginning of this process of trying to entering into these agreements and the decision was made not to rely on; If we thought this was going to be the only agreement we would ever do, or we would do one a year or something like that, then maybe the decision would have been to, okay let’s not build up an internal capability. Let’s rely on the many organizations out there that will do this for you. However, in view of the fact that this is going to be or expected to be a continuing process here and that we will essentially always be in various negotiation, discussions whatever, she felt that it was essential that we build up an internal capability and I actually say that somebody who has been in the BD related fields, making deals in the industry, who have certainly worked probably for more time than most of you have been alive, who are on this call, I am really impressed. I thought I was really going to show them what a real pro can do in this and I had a hard time keeping up with the group. We've got a very, very good group here.

All right, that’s good to hear. I know especially you are coming from me who's hammered you on when's the next deal, you don’t want to….

Yes, with regard to that, I am glad that you apologized. I want to make certain that, you’re going to get a box in the mail. Please don’t open it. Put it in a cup of water, don’t open it. And we appreciate what you’ve said. Okay, so go ahead.

So because you’ve cultivated these relationships with key opinion makers and it sounds like this negotiating team is not an ad hoc resource, it’s an ongoing thing, can we expect other similar material type deals within the next year to 18 months? Is that?

Well I am glad, since you said a year to 18 months, I will say yes. But we won’t go beyond. We have a very active pipeline program. Based on our initial discussions, we now have a bunch of major pharmaceutical companies that understand us, appreciate our capabilities. Some of them had expressed interest not only in the products but actually in working with us on a discovery basis which obviously makes sense, but not disclosed, we’ve discussed many times in the past. There is nothing specifically related to immune checkpoints about our infrastructure in general. The infrastructure is broadly applicable. It was focused, in this case on this field. We can focus it on other fields as we already have announced the second one.

Just one parting thought. Before you sent me the box just remember, I hope.

It’s sent. It’s already in the mail, sorry.

Well remember to err is human, to forgive divine.

Okay that means what you’re saying is you forgive me for sending the box.

There are no further questions at this time. Before I ask Mr. Gerstl to go ahead with his closing statement I would like to remind participants that a replay of this call is scheduled to begin in two hours for a period of 72 hours. In the U.S. please call 1888-295-2634. In Israel please call 03-925-5939. Internationally please call 972-3925-5939. Mr. Gerstl would you like to make your concluding statement.

Yes, thank you very much. Looking at the list of participants for today’s call, I could a see a number of today's call, I could see a number of names of investors and friends who've been with us for many years, actually including a few that go all the way back to my Alza days. Two comments, more specifically to these individuals. First many thanks for your long term belief and support and second I assume you can appreciate how positive I feel toady. It was almost exactly 15 years ago that I first visited Compugen, which was then a computer company specializing in analyzing biological data. For most of the following 15 year period the good news was observing the breakthroughs and understandings of life science being achieved by our incredibly talented and dedicated scientific team. The bad news was that the often repeated criticism we received that either one, what we were trying to do cannot be done, at last on a broadly applicable basis, or two, this should be done in a university not a public company, or three, how do you expect to ever make any money out of this effort. However it is my strong belief that unlike in the high tech world where a leadership position can be lost in a period of months, since everyone shares the same scientific understandings and leadership is based on understanding your potential customers' needs and being creative in meeting those needs better than others, in the pharmaceutical world as with other life science industry, the timelines are much longer and the state of the underlying science is at least relative to physics literally in its infancy. In this situation there is the fantastic opportunity to create unique capabilities, such as what we have accomplished at Compugen; not…

Thank you. This concludes the Compugen Ltd. Second Quarter 2013 financial results conference call. Thank you for your participation. You may go ahead and disconnect.