Compugen announces financial results for the third quarter ended September 30, 2009

Compugen Ltd. (NASDAQ:CGEN) today reported financial results for the third quarter ended September 30, 2009.

Martin Gerstel, Compugen’s co-CEO stated, “The industry interest and collaboration opportunities that we are now seeing for our company exist solely due to the broadly applicable drug and biomarker discovery capability that has been created at Compugen during the past decade. As we increase our focus on these commercialization opportunities, we will also continue to widen and deepen our leadership position in predictive discovery, which we are confident, will become increasingly important in drug and diagnostic research industry-wide. A reflection of this commitment is the fact that during 2009, and in our budget for 2010, almost half of our R&D efforts are allocated to further extending our capabilities and modifying or creating additional discovery platforms.”

As previously projected, current revenues continue to be insignificant with no revenues reported for the third quarter of 2009 compared with $6,000 for the third quarter of 2008. Revenues for the nine months ended September 30, 2009, were $225,000, compared with $327,000 for the same period in 2008.

The net loss for the most recent quarter was $1.9 million (including a non-cash expense of $460,000 related to stock based compensation), or $0.06 per share, compared with a net loss of $3.3 million (including a non-cash expense of $484,000 related to stock based compensation), or $0.12 per share, for the corresponding quarter of 2008. The net loss for the first nine months of 2009 was $1.8 million (including a non-cash expense of $1.1 million related to stock based compensation), or $0.06 per share, compared with a net loss of $8.7 million (including a non-cash expense of $1.2 million related to stock based compensation), or $0.31 per share, for the same period in 2008.

The significant reduction in net loss for the first nine months of 2009 reflects the sale by Compugen during the second quarter of 2009 of a portion of its holdings of Evogene Ltd. shares for approximately $3.6 million, which is included in Other Income for the first nine months of 2009. At September 30, 2009, the market value of Compugen’s remaining 1.15 million Evogene shares was $4.0 million, compared with a market value of $3.9 million for the 2.15 million Evogene shares owned as of December 31, 2008 prior to the sale. These amounts, and the proceeds received from the Evogene shares sale in the second quarter of 2009, reflect the substantial increase in the market price of the Evogene shares during 2009.

Research and development expenses for the third quarter of 2009 were $1.4 million compared with $2.3 million for the third quarter of 2008 and remained the Company’s largest expense. Research and development expenses for the first nine months of 2009 were $4.4 million compared with $6.6 million for the comparable period in 2008. These amounts are before the deduction of governmental and other grants, which totaled for the third quarter ended September 30, 2009, $180,000 compared with $158,000 for the corresponding quarter in 2008, and $697,000 for the first nine months of 2009, compared with $493,000 for the comparable period in 2008.

As of September 30, 2009, Compugen had $5.7 million in cash and cash equivalents, not including its holding of 1.15 million Evogene shares as discussed above. With the inclusion of the current market value for these Evogene shares, the Company would have sufficient resources to meet its expected cash requirements through early 2011, assuming no significant milestones, upfront fees, or additional funds from any other source were obtained prior to such time. The Company previously projected that its total net cash usage for calendar year 2010 would be less than $8 million.