Ladies and gentlemen, thank you for standing by. Welcome to the Compugen's Fourth Quarter and Year End 2015 Financial Earnings Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investor section of Compugen's website at cgen.com/investors. As a reminder, today's call is being recorded. I would now like to introduce Hannah Deresiewicz of Stern Investor Relations. Please go ahead.

Good morning and thank you for joining us today. With us today from Compugen are, Mr. Martin Gerstel, Chairman of the Board; Dr. Anat Cohen-Dayag, President and Chief Executive Officer and Mr. Ari Krashin, Chief Financial Officer. Before we begin, I would like to read the following regarding forward-looking statements. During the course of this conference call, the company may make projections or other forward-looking statements regarding future events or future business outlook, including anticipated progress on Compugen's pipeline program as well as commercialization efforts. We wish to caution you that such statements reflect only the Company's current expectations and that actual events or results may different materially. You are kindly referred to the risk factors and cautionary language contained in the documents the Company filed with Securities and Exchange Commission, including the Company's annual report on Form 20-F, filed March 12, 2015. The Company undertakes no obligation to update any projections or forward-looking statements in the future. I will now turn the call over to Martin Gerstel, Chairman of the Board of Compugen.

Thank you. On behalf of all of us, the Compugen welcomes to our year end 2015 conference call and we appreciate you joining us today. We begin 2016 with a great sense of achievement with respect to the unique and very promising position, we have successfully created within the biopharma industry in terms of both target discovery capabilities and initial product candidates. On the other hand, we also are fully aware of the disappointment felt by many of our shareholders, with respect to the current market value for our company's shares. It is reasonable to believe that the recent steep decline in biotech's shares in general. With many of these companies now trading at 52-week lows is partially responsible for Compugen's market situation. However, comments from our shareholders make it clear, that there is also a Compugen specific concern with respect to the period of time that is passed, without us announcing, our next collaboration. Compugen's uniqueness and potential value in the drug industry derives almost entirely from our ability to systematically discover multiple novel targets that potentially can lead to the development of first-in-class drugs. However, this focus on novel targets also gives rise to agreement issue that are inherent to target based as opposed to the more common product based collaborations. For example, target based agreements are not limited to a specific set of products include multiple therapeutic opportunities and modalities and require more complicated terms and conditions regarding use and ownership of intellectual property. Furthermore, the earlier the target is at the time of the agreement, the more these issues require addressing. Of course it's important to note, that these issues largely disappear or at least become much less important as the target and its product candidates are further advanced. Moreover, we have established at Compugen the…

Thank you, Martin. Our financial results for the fourth quarter and year end 2015 within to-date are in line with our expectations. In general, the continuous reflect increased activities in R&D. Primarily, at our South San Francisco site where we added substantial resources and expertise to our leading program, as well as preclinical capabilities. As previously forecasted, our total cash expenditures during 2015 amounted to approximately $26.5 million. For 2016, we continue to add resources and expertise mainly to our development activities. We expect the total cash expenditures will be in the range of $31 million to $33 million. We expect R&D expenses to represent approximately 80% of our overall budget in 2016. And the level [ph] of expenses for our development activities in South San Francisco will equal the level [ph] of expenses of the recent and validation activities in Israel. As it relates to the activities in our South San Francisco site. It's interesting to point out, that since 2014 we have more than doubled our expenses allocated to the development activities, at that location. For approximately 25% of our total corporate expenses during 2014 to 35% during 2015 and we have budgeted a further increase to approximately 40% of the total corporate expenses to 2016. What this means is, that we have strongly committed to the progress of our high priority immuno-oncology program. Focusing on the development for the candidates. Now turning to our 2016 financial results. During 2015 and 2014, most of our revenues derived from the cancer immunotherapy collaboration with Bayer Healthcare and announced in August 2013. Revenues for the fourth quarter of 2015 were approximately $8.3 million compared with $6.6 million in the comparable quarter of 2014. The revenues reflect primarily, the achievement of the third and second preclinical milestone in the amount of…

Thank you, Ari. In his opening remarks, Martin briefly described Compugen's unique broadly applicable predictive discovery capabilities. These in silica discovery capabilities clearly are the most important assets of the company and are expected to provide substantial long-term value for our company. However, we're aware of the disappointment felt by many of our shareholders concerning the current market value for company's shares. Therefore, my prepared remarks today will not focus on our core capabilities, but instead on some of the reasons for great enthusiasm and positive expectations for Compugen. I will begin with [indiscernible] immuno-oncology programs and their collaboration with Bayer. With the achievement of the third milestone, the CGEN-15001T antibody program, the more advance of these two programs has now made the transition from computer prediction to demonstrated activity in preclinical models. As previously mentioned, this important milestone in addition to validating a compelling antibody drug program. Clearly provides important evidence of the predictive power of Compugen's discovery capabilities. More specifically, the CGEN-15001T program having demonstrated encouraging functional activity in preclinical models of cancer immunotherapy has now completed final lead antibody selection and is currently progressing for further preclinical and clinical development activities, under the full control of Bayer. Importantly, we have been granted both US and EU patents for CGEN-15001T exemplifying the target discovery innovation we bring and the competitive it provides to the program. CGEN-15022, the second program under the Bayer collaboration is currently at an earlier stage and continues to be jointly pursued by both parties. It is currently being further characterized regarding its role in anti-cancer immune responses with respect to a novel mechanism of action, which has been reviewed. The recent transfer of CGEN-15001T to the full control of Bayer for development and commercialization along with substantial expansion and additional staffing expose our South…

[Operator Instructions] the first question is from Mike King of JMP Securities.

Anat, I was hoping to ask you about the ADC platform because I - we spend a lot of time on the immuno-oncology side of your business and rightly so, but I guess wonder what since, we're talking in so much here today about the value creation aspects of the Compugen technology platform. And maybe this is a bit of naive question, but it would seem like given that you probably have lots of reasonable targets in the database that are tractable for antibody development that, a broader ADC approach might be a way to generate business development activity without sacrificing the efforts that you're putting into immuno-oncology. I hope that, question makes sense.

Yes, very much and maybe I'd share some more insights into these. By no means, the major focus of the company and most of the resources of the company are allocated to our immuno-oncology program. So less resources are invested in ADC although, we have compelling opportunities there. We were advancing in a more slower pace on the ADC. Nevertheless, CGEN-15027 is serving as a flag [ph] program in the ADC and we use these in two manners. One, this is another proof that our discovery capabilities can work not only in the I-O field but also in other fields like the ADC. But second, as you stated, as the viable commercial opportunity, which represents a totally different opportunity than I-O, it is targeting a different set of companies sometimes, big pharma companies have interesting both sometimes there are pharma and biotech companies that are interested only in one of these. And ADC definitely represents a commercial opportunity. We are proud of the data that we generated for - that we already disclosed for CGEN-15027. With different type of toxins that are available commercially. Of course, we don't have the access to payload, so we're testing the therapeutic antibodies that we generated with commercial toxins, but would validate them in a way that we can show that the antibodies are applicable to different type of toxin technology. So to broaden our opportunities and yes, this could serve as another commercial opportunity. One more thing that I'd like to share and this is with respect to requirements for ADC programs. More or less similar, it's not identical but it's similar to a Car T target. So in general, if we are able to show that we can discover tumor specific antigens. So tumor specific antigens in general could also serve for Car T technologies and also for Bispecific. We're not dealing now in our validation efforts on Car T and Bispecific, but nevertheless our ability to show data for one or two ADC programs and of course the rest of the ADC programs are also progressing in our pipelines, but this is also a way to prove, that we also have the ability to discover target for, a Car T and Bispecific technology.

I guess, well what I'm guess I'm asking, your earlier comment and answer to my question was about sort of the bandwidth and the emphasis of the time, commitment by the organization. Maybe you could talk a little bit about that and I'm also interested in the relative interest, inbound business development inquiries from pharma, are they 80-20 for I-O versus ADC. Are they 90-10, are they evenly split? Maybe you can give us a little bit of color on that? I don't know if that's possible.

So, with effect to your first question. Our business development efforts are focused on both. I-O and ADC, so this is not and of course I'm not getting to the percentage of focus, of our business development efforts. With respect to interest, no doubt that immuno-oncology and immune checkpoint specifically are of high interest in the pharma and biotech industry. I think that, this is a clear consensus everywhere. With respect to ADC, clearly there are pharma and biotech companies that developing technologies towards it, that are looking for good target, ideal target. Good targets for ADC technologies on these things. So there is a need. I don't know to give, discourage or to divide it by percentage, how much it is of interest to the pharma with respect to I-O. I will just say, that there is also a need for good target for ADC technologies as well.

Thank you.

The next question is from Vernon Bernardino of FBR. Please go ahead.

Congratulations on the results so far. Just had a question regarding CGEN-15001. So you mentioned that you're or if you could confirm that you're close to narrowing down the most attractive autoimmune disease to target for development. And you also mentioned seeing some things that could differentiate CGEN-15001. Could you provide some details what you've seen and can you elaborate on perhaps what targets you may be thinking of?

So you're talking about CGEN-15001 for autoimmune diseases and yes, the uniqueness of this program first lies with the effective targeting a novel T-cell pathways for autoimmune diseases. This is a pathway that is affecting multiple inflammatory downstream pathways and pathways that are consistent of TNF-alpha and IL-17, so we're very encouraged with this. More than that, the data that we've generated is showing that it is potentially restoring the immune balance. It is, the inhibiting deploying inflammatory type of occurrence and promoting the anti-inflammatory type of occurrence. And it is actually, we believe that it can induce tolerance for the long-term maintenance of the disease. So, if there are treatment for few stage of the disease causing this for remission, we believe the CGEN-15001 could further ensure that the remission will stay, so it will induce the tolerance and induce remission. So this is why, we're enthusiastic with this program. Clearly, the long-term effect versus the short-term treatment, the fact that it is, that is letting global immunosuppression. This is something that is very encouraging for this program. And we clearly intent to find the opportunity to take it to clinical trial, though not alone.

Okay and do you - can you provide let's say, a timeline where you might make your first announcement?

No, but clearly when we will do some advancements on these fronts, we will update our shareholders.

Okay, I'll get back in the queue. Thank you for taking my question.

The next question is from Thomas Yip of FBR. Please go ahead.

I'll just echo Vernon, congrats on a very great quarter on - progress in all your assets. I actually have a question about 15027 as with seen in the World ADC Summit in San Diego very recently. We see that, 15027 can have potential in several [indiscernible] medications. Have you also looked in to perhaps [indiscernible] indications of other liquid tumor potential?

No, this is still open and we're still exploring - pretty potential of the antibodies and only when we'll finalize this, we'll select the indication. But this target could fit both type of methodological and [indiscernible] solid, so and we'll share more information when will select the indication for the specific antibodies.

Sure, maybe I'll ask follow-up also regarding 15027. How do you see any potential drug approvals because it help in any way to develop 15027, you seek to find a suitable antibody drug combination to develop.

As of today and this is not an answer specifically for 15027. I think that it is, as of today there are no clear combinations with ADC and other therapies and it's not necessarily that it can be done, but I'm not, I must say that I'm not aware such combinations of ADC therapies with other therapies. This is currently not on the table for Compugen's do combinations with the ADC program. But if this trend will prove to be successful in the clinic for others then we will definitely consider doing so.

Okay, fully understood. Thank you for taking my questions and looking forward to another great quarter.

The next question is from Douglas Altabef of RP Advisors. Please go ahead.

I appreciate the recognition of the very difficult shareholder environment that we're in, and at [indiscernible] of that. I noticed that, both Martin and Anat, both made reference to a commitment not surprisingly to bring commercialization's along that would ultimately lead to the benefit of shareholders. But in that regard, you didn't have neither of you referenced anything over the short-term. And I wanted to update something that Martin had said in the first quarter of 2015 earnings call, where he specifically referenced that with the expanded business development staff that it would be 'providing in the short-term meaningful external commercial validation of the type typically required by investors'. And so I'm wondering, since there was no reference to anything over the short-term. Does that mean, that we shareholders and others should discount a commitment to doing something over the short-term or is there are a short-term focus that is being revised. How, should we take that?

First, you're correct that we didn't focus on specifically on the short-term nor did we focus on the long-term. I mean, I think what we're saying is that. what we are finding in our negotiations is that, there's a lot of interest, there are a lot of complications, there are ramifications of one potential program with a possible other program or collaboration. So this needs to be sorted out very carefully, in order to make sure that we're doing what's best for the long-term interest of the company. We're not going to do anything in the short-term, it would or to or sort of feed the - impress the shareholders. We will be doing either short-term or long-term, the agreements will be signed in collaborations entered, when we're confident that they are the best that we can do for the specifics at - that we're dealing with. We don't believe that, providing any estimated timing is useful. Mainly because we don't know really when you're going to sign. I've been in this business for long, long time and there are situations where you expect something to be done in six months and as they change the other company and it gets done in two months or one month and vice-versa, you can have a situation where you believe that's quote 90% done and issues come up and then dragged on for another year. So if we were to provide any type of specific estimate or for wanted more collaborations. It's almost the certainty that our estimate would be wrong, it would be either be too optimistic or too pessimistic. And so we really don't want to find ourselves in a position that, we've encouraged shareholders to make investment decisions based on estimates that we have very little confidence in, not because we don't think we're going to sign the deal but because of the timing issue. We will sign deals collaborations for short-term, I mean both early stage and longer more advanced. It's an integral part of our business strategy. We have, clearly have the assets to allow that to happen and we have enough interest in the industry to assure as that will happen fortunately, we also have the financial resources to not be under the gun, to have to sign up something quickly.

As you both alluded to the performance of the stock has been very poor. In fact, that you look at any time metrics for Compugen and I'm not talking about just recently but one, three, five, 10, 15 even, it's been very, very poor. But onetime, where there was some equilibrium in the stock and was in the year 2013, when you set for annual objectives which included a commercialization to be done in that year, in fact you made very, very good on that objective which was a Bayer collaboration which is beginning to feel more and more like ancient history in terms of what has followed it, notwithstanding the milestones. So what I think puzzles a lot of us Martin is that, given what you just said which is there are more and more assets, there is more and more to choose from, why is there not the ability to saying we will make an objective as we did four years ago, we will set a corporate objectives to do a collaboration because we have, as you're saying embarrassment of which of possibilities and it is the fulfilment of those validations that really is what the investment community pays attention, not every one of them has to be in and out of the park, home run but the fact that they can be done and that they are done with some degree of frequency, not every two and half or three and half years, but some degree of frequency would allow for I think both the short, mid and longer terms success of Compugen to grow. Do you see it differently obvious?

Yes, and as you're aware as I mentioned I've invested a lot in the company more than the money I've invested than off of 20 years. I'm in from the very beginning of moving this company into the biotech world. And we absolutely fully recognize that, as we said that the period of the time [indiscernible] has created a negative impact almost certainly on our stock. And I'm not happy to see that, on other hand I'm fully aware of the progress that we're making, the opportunities that we have ahead of us and I think our shareholders need to understand that we've discussed this over and over internally and at the board and we have made a very firm decision that we will not damage the long-term potential of the company in order to attempt to improve on this apparent concern of our shareholders. I think we are, we've spent much more than a decade creating an incredible capability. We've our first inventory of early stage product candidates. We've got the interest of the industry, types of collaborations that we're talking about are very complex and it's not a question of, can we do them? Of course we could sign a collaboration and but we want to make sure that we saw in the collaborations that we can and in view of the fact, that we also have now the capability to advance our product candidates. It's another option for us. I can only assure our shareholders that the value is here, we're enhancing the value and our decisions are being made solely in the best interest of the shareholders. Including me as I think, I'm the single largest shareholder in the company and may very well have invested the most money in the company - shareholders. So can we, I guess you had your question and follow-up, so unless you maybe get, if you have more, you sort of get back in line and we'll see who else has questions.

Thanks.

The next question is from Brett Rice of Janney Montgomery Scott. Please go ahead

I've a question or two. The molecule that's been taken in-house by Bayer. Do we now become just a kind of passive observer and cheerleader of their progress? Do we still have input and can shepherd the thing, along to a clinical trial?

It is currently under the full control of Bayer.

Okay, with respect to the complicated nature of these agreements because they're target based. Is there a particular law firm, that's best in the world in handling these type of unique agreements, have we retained them or do we plan to retain them?

I assure you, that we're working with the best lawyers. But for, I mean these, they've been because of the fact that novel targets are essentially unique. I mean, from an industrial sense. I mean almost historically novel targets have come out of academia and by the time the industry picks them up, there's been - first they're generic, I mean by that I mean they're not patented or they're patented by university who is licensing and out to many companies. And there's usually a fairly significant amount of data and information about it. That, lost track, what was it? So I'm sorry, what's specifically, what is the question?

Well, you mentioned in your introductory remark that the agreement issues, when you're negotiating agreement on a target based molecule or drug is different than specific products.

Right, we in the company myself and others in the company that have a lot of experience in this area and we're working the best law firms in the area of - I mean amongst and not all of the best. But I mean, we clearly at fit leading law firm and people with great experience in this area. But it's not a question that you need somebody very, very smart. There are very legitimate concerns on the both our side and the other, and our potential partner side, with respect to how to deal with some of these, to how to deal with some of these issues with respect to new IP that comes up or unexpected opportunities for the target, that maybe they're not interested in, as you've seen. We already have one of our checkpoints, which now is our leading candidate for ADC. I'm glad that we didn't partner that to somebody who was solely interested in the I-O world. So that's and again, I just want to clarify that these are solvable problems and or I should say, they're not really even problems, they're complications that will get solved. I think behind it, there's also that we need to make sure that we continue to move forward with the overall strategy of the company and have to look at the whole portfolio of our targets with respect, how we're going to commercialize them.

All right and just one final one. It's probably for Ari. What's the expected burn rate over 2016 and do we have enough cash in the coffer to handle that, the runway maybe a year or two beyond that.

Sure, as I mentioned earlier I mean for 2016, we're currently budgeting approximately between $31 million to $33 million of cash expenditure, which 'is kind of worst case scenario because this basically assume no new cash payment from new collaboration or existing collaboration.' So currently the focus is between $31 million to $33 million is up from $26.5 million in 2015. I mean at the current balance that we have which is approximately $81 million not including the payment from Bayer off the amount of $7.8 million, we're feeling quite comfortable with the current cash position.

Great, thank you for answering my questions.

There are no further questions at this time. Before I ask, Dr. Cohen-Dayag to go ahead with her closing statement. I would like to remind participants that a replay of this call is schedule to begin in two hours for a period of 72 hours. In the US please call 1-888-326-9310. In Israel, please call 03-925-5925. Internationally, please call 972-3-925-5925. Dr. Cohen-Dayag, would you like to make a concluding statement?

Thank you. I wish to thank, all of our investors for their continued confidence in and support of Compugen. I wish to assure you that we’re committed to the success of our company and look forward to sharing with you our future accomplishments over the course of 2016. Thank you.

Thank you. This concludes the Compugen Ltd, fourth quarter 2015 financial results conference call. Thank you for your participation. You may go ahead and disconnect.