Cancer drug discovery company Compugen Ltd. (Nasdaq: CGEN; TASE: CGEN) announced a corporate restructuring plan to reduce costs by consolidating and streamlining R&D operations. The company has also released its fourth quarter and 2018 financials. It reports revenue of $17.8 million for 2018, which compares with zero revenue in 2017. The 2018 revenue figure reflects the upfront payment of $10 million from Compugen's license agreement with AstraZeneca, and a $7.8 million milestone payment from Bayer AG in connection with the dosing of the first patient in the Phase 1 study of BAY 1905254.
Compugen posted a net loss for the fourth quarter of 2018 was $9.4 million, or $0.16 per diluted share, which compares with a net loss of $9.3 million, or $0.18 per diluted share, in the comparable period of 2017. The net loss for 2018 as a whole was $22.6 million, or $0.41 per diluted share, which compares with a net loss of $37.1 million, or $0.72 per diluted share, for 2017.
At the end of 2018, Compugen had cash, cash related accounts, short-term and long-term bank deposits totaling $45.7 million, compared with $30.4 million at the end of 2017. The company has no debt. It says that on the basis of current cash and anticipated savings resulting from restructuring activities, it expects its cash runway to extend through mid-2020, not including potential cash inflow from existing or new business development arrangements.
The main points of Compugen's restructuring plan are: consolidation of R&D activities in Israel; a 35% workforce reduction (approximately 35 employees), mostly in R&D; outsourcing certain pre-clinical activities. Clinical development and business development activities will continue to operate in the US. Compugen anticipates savings of up to $10 million on an annual basis. Cash expenditures for 2019 including one-time restructuring-related costs, are expected to be in the range of $27 to $29 million, with the full effect of the savings reflected in 2020.
"2018 was a pivotal year for Compugen in which two clinical trials were initiated for our computationally-discovered immuno-oncology programs, COM701 and BAY 1905254, and we partnered with Bristol-Myers Squibb and AstraZeneca," said Compugen president and CEO Anat Cohen-Dayag. "After reaching these important inflection points in our corporate development, the management team and board undertook a strategic review of the company's operations and cost structure to ensure effective use of capital in support of the company's long-term objectives.
"This restructuring will allow us to focus the necessary resources to execute the COM701 study, including the initiation of combination studies with Opdivo. Of equal importance is the decision to consolidate and streamline our R&D infrastructure and continue investing in our two long-term core value drivers. These difficult decisions are necessary to effectively use our capital to ensure our future growth and the achievement of our strategic objectives. We will implement these organizational changes with the utmost respect for our employees, who I thank for their dedication and significant contributions made to our organization."
Published by Globes, Israel business news - en.globes.co.il - on February 26, 2019
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