Compugen Ltd. (CGEN)

Executive Summary / Key Takeaways

• The Fc-Inactive TIGIT Differentiation Thesis: Compugen has positioned itself as the pure-play beneficiary of a potential TIGIT class redemption, with COM902 being one of only two clinical-stage Fc-reduced anti-TIGIT antibodies. If 2026 data from Arcus /Gilead 's Fc-reduced program validates this approach, CGEN's fully owned asset could attract significant partnership interest, potentially unlocking hundreds of millions in milestone value.

• Computational Discovery Platform Validated by Major Pharma: The Unigen AI/ML platform has generated a pipeline of first-in-class assets that attracted AstraZeneca 's rilvegostomig partnership (>$5B peak revenue potential, $170M remaining milestones) and Gilead 's GS-0321 license ($758M milestones, $30M already received). This external validation from two pharma giants de-risks the technology while providing non-dilutive funding.

• Cash Runway Timed to Key Catalysts: With $86M in cash and a burn rate of ~$7-8M per quarter, CGEN has sufficient capital to reach the MAIA-ovarian interim analysis in Q1 2027 and multiple 2026 TIGIT data readouts. This timeline alignment means dilution risk is contained if trials progress as planned, but any setbacks would immediately pressure the balance sheet.

• High-Stakes Execution in a Skeptical Market: The TIGIT class faces deep skepticism after 2024's Fc-active antibody failures. CGEN's entire thesis rests on proving that Fc-inactive is not just different, but better. The delayed MAIA-ovarian timeline and enrollment challenges in academic centers demonstrate the operational difficulties of executing in a competitive oncology landscape.

• Critical Variables for 2026-2027: Investors should monitor three catalysts: Arcus /Gilead 's Fc-reduced TIGIT Phase III data (potential class validation), AstraZeneca 's rilvegostomig expansion across 11 Phase III trials (milestone triggers), and COM701's MAIA-ovarian interim results (single-agent efficacy signal). Success on any front could re-rate the stock from its current $144M market cap.

Setting the Scene: A Computational Pioneer in TIGIT's Shadow

Compugen Ltd., founded in 1993 and headquartered in Holon, Israel, established itself as a pioneer in computational drug target discovery long before AI became a biotech buzzword. The company's Unigen platform, an AI/ML-powered engine designed to identify novel immune mechanisms against cancer, has been the foundation of its strategy for three decades. This isn't a recent pivot to machine learning; it's a validated technology that has consistently generated first-in-class clinical assets.

The company makes money through a hybrid model: internal development of wholly owned assets like COM701 (PVRIG) and COM902 (TIGIT), plus strategic partnerships that provide upfront payments, milestones, and royalties. This structure means revenue is lumpy and milestone-dependent, creating volatility that masks underlying pipeline progress. In 2024, the broader TIGIT antibody class suffered a near-existential crisis as Fc-active programs from Roche (RHHBY) and others failed in Phase III trials, leading to widespread program discontinuations and investor skepticism. This context is crucial because it explains why CGEN trades at an EV/Revenue multiple of approximately 2.2x despite having multiple shots on goal with major pharma partners.

Compugen sits in the immuno-oncology value chain as a discovery engine and early-stage developer. Unlike integrated pharma companies, it doesn't sell commercial products; it creates intellectual property that larger partners advance through late-stage development. This positioning means success depends on scientific validation and partnership execution, not commercial scale. The current industry structure favors companies with differentiated mechanisms that can address the safety concerns plaguing earlier TIGIT programs, creating a potential opening for CGEN's Fc-inactive approach.

Technology, Products, and Strategic Differentiation

The Unigen Platform: More Than Just AI Marketing

Unigen is not a generic AI tool applied to drug discovery; it's a proprietary computational platform specifically designed to identify novel immune checkpoints by analyzing tissue biology at scale. Management describes it as "validated" because it has produced multiple clinical-stage assets that attracted partnerships from AstraZeneca and Gilead . This matters because it de-risks the technology: if the platform were fundamentally flawed, these pharma giants would not have committed hundreds of millions in milestone payments.

The platform's value proposition lies in its ability to identify targets that are biologically differentiated from well-trodden pathways like PD-1. GS-0321 (anti-IL-18 binding protein), licensed to Gilead for $60M upfront plus $758M in milestones, represents a novel approach to harnessing IL-18 biology that could overcome cytokine administration limitations. This first-in-class potential means less competition and higher pricing power if approved. For investors, this translates to a pipeline that isn't just a collection of "me-too" assets but genuine innovations with blue-sky upside.

Fc-Inactive TIGIT: The Safety Thesis That Could Redeem a Class

The core of CGEN's investment thesis rests on a subtle but critical distinction: not all anti-TIGIT antibodies are created equal. The failed Fc-active programs depleted TIGIT-positive effector T cells and regulatory T cells, creating both efficacy and safety problems. As CEO Eran Ophir explained, patients in the SKYSCRAPER-07 trial received 30% fewer doses of the PD-1 antibody due to toxicity, directly impacting outcomes. This is why the Fc-active approach was doomed from the start.

CGEN's COM902 is Fc-inactive, designed to preserve and reinvigorate effector T cells while avoiding Treg depletion. This matters because it addresses the root cause of TIGIT's clinical failures. If the mechanism is sound, COM902 could demonstrate both improved safety and efficacy. The fact that COM902 is one of only two clinical-stage Fc-reduced anti-TIGIT antibodies, and that CGEN owns it outright with no partnership restrictions, means the company can capture the full upside of any positive data readout. This is a call option on TIGIT class redemption that isn't priced into the stock at current levels.

PVRIG Differentiation: A Maintenance Therapy Opportunity

COM701 targets PVRIG, a checkpoint distinct from PD-1 and TIGIT. The biology is differentiated enough that it could offer benefits in platinum-sensitive ovarian cancer maintenance therapy, a setting with significant unmet need for patients ineligible for PARP inhibitors or bevacizumab. The MAIA-ovarian platform trial is evaluating COM701 in 60 patients, with an interim analysis now expected in Q1 2027.

What makes this program interesting is the Fc-reduced format and the maintenance setting. Maintenance therapy requires a favorable safety profile, which aligns perfectly with CGEN's Fc-inactive strategy. A pooled analysis of three Phase I trials showed durable responses in heavily pretreated platinum-resistant patients, particularly those without liver metastasis. This provides a biological rationale for the MAIA-ovarian trial. For investors, positive interim data could support a broader development program and potentially a partnership, though management has not explicitly guided to this outcome.

Partnership Validation: AstraZeneca and Gilead's Vote of Confidence

AstraZeneca 's rilvegostomig, a bispecific antibody combining CGEN's TIGIT component with PD-1, is being advanced across 11 Phase III trials with a non-risk-adjusted peak revenue target exceeding $5 billion. CGEN has already received $30.5M in milestones and remains eligible for $170M more, plus mid-single-digit tiered royalties. This transforms CGEN from a speculative biotech into a royalty stream on a potential blockbuster. Even if COM902 never advances as a monotherapy, the AstraZeneca partnership provides significant downside protection.

The Gilead partnership for GS-0321 adds another layer of validation. The $60M upfront payment in December 2023 and $30M IND milestone in Q3 2024 demonstrate that Gilead sees first-in-class potential. With the Phase I trial now dosing patients, additional milestones could provide near-term cash infusions that extend the runway beyond Q3 2027. For investors, these partnerships serve as external due diligence: major pharma has done the science and sees enough value to commit substantial capital.

Financial Performance & Segment Dynamics

Revenue Volatility Masks Pipeline Progress

CGEN's financial results appear alarming at first glance. Q3 2025 revenue of $1.9M represented an 89% decline from Q3 2024's $17.1M, driven by the timing of Gilead milestone recognition. This volatility is inherent to the partnership model and should not be interpreted as business deterioration. In fact, full-year 2024 revenue of $27.9M was down only 17% from 2023's $33.5M, and the net loss improved from $18.8M to $14.2M year-over-year.

The underlying pipeline advancement. R&D expenses decreased from $6.3M in Q3 2024 to $5.8M in Q3 2025, while G&A held steady at $2.2M. This cost discipline, combined with milestone inflows, allowed the company to maintain a consistent burn rate while advancing multiple programs. The financial strategy is clear: conserve cash for key catalysts while using partnerships to fund expensive development.

Cash Runway: Sufficient but Not Generous

As of September 30, 2025, CGEN held $86M in cash, down from $103.3M at year-end 2024. Management consistently projects runway into Q3 2027, which covers the MAIA-ovarian interim analysis and multiple 2026 TIGIT data readouts. This timeline alignment is critical because it means the company can reach its most important catalysts without dilutive financing, assuming no major setbacks.

However, the quarterly burn of ~$7-8M leaves little margin for error. The recent ATM sale of 800,000 shares for $1.6M in net proceeds suggests management is opportunistically topping up cash, but this is not a sustainable funding strategy. If the MAIA-ovarian timeline slips further or if TIGIT data disappoints, CGEN would face difficult choices: cut programs, raise dilutive capital at a depressed valuation, or seek a partner on unfavorable terms. The cash position is adequate for the base case but vulnerable to downside scenarios.

Partnership Economics: The Path to Non-Dilutive Funding

The AstraZeneca and Gilead agreements provide a blueprint for how CGEN can fund itself without equity raises. The $30M IND milestone from Gilead and $15M in 2024 AstraZeneca milestones demonstrate that near-term value inflection points can generate cash. With $758M in remaining Gilead milestones and $170M in AstraZeneca milestones, plus royalties on potential blockbuster sales, the partnership pipeline represents substantial latent value.

This changes the risk/reward calculation. A typical early-stage biotech with an $86M cash pile and $28M annual burn would be viewed as a high-risk capital raise candidate. CGEN, by contrast, has multiple shots at non-dilutive funding that could extend runway or even achieve profitability if programs succeed. The key is execution: delivering data that triggers milestones and validates the platform for additional partnerships.

Outlook, Management Guidance, and Execution Risk

Timeline Slips and Enrollment Challenges

The MAIA-ovarian interim analysis has been pushed from H2 2026 to Q1 2027, a delay attributed to opening academic sites and involving the French cooperative group ARCAGYNIC. While management insists the cash runway supports this timeline, the slip reveals execution challenges in competitive oncology trials. As CMO Michelle Mahler noted, academic sites "do tend to take a little bit longer to open," and the competitive landscape for ovarian cancer patients is intensifying.

Delayed readouts push partnership discussions and potential value inflection further into the future. In biotech, time is money—literally, in the form of burn rate. A six-month delay consumes ~$15M in cash and increases the risk of competitive data rendering CGEN's results less relevant. The "so what" is that investors must discount the probability of timely execution and model a wider range of outcomes.

2026 Catalysts: The TIGIT Inflection Point

Management has explicitly guided to 2026 as a pivotal year, with readouts from Arcus /Gilead 's Fc-reduced TIGIT program expected to be "a real catalyst for COM902." This is the binary event that could re-rate the stock. If the data validates the Fc-inactive hypothesis, CGEN's fully owned COM902 becomes one of the only viable TIGIT assets available for partnership, potentially commanding a premium valuation.

Conversely, if the data fails, CGEN's TIGIT thesis collapses, leaving the company dependent on PVRIG and IL-18BP programs that are earlier-stage and less validated. The asymmetry is stark: success could drive the stock multiples higher as partners bid for COM902, while failure would likely result in a significant valuation compression as investors question the entire platform's relevance in TIGIT.

Leadership Transition: Continuity with Fresh Perspective

The Q1 2025 transition of Anat Cohen-Dayag to Executive Chair and Eran Ophir to CEO is framed as providing "a strong foundation for the company's next phase of growth." This signals continuity in strategy while bringing operational focus to execution. Cohen-Dayag's shift to focusing on corporate strategy and collaborations suggests the company is prioritizing partnership expansion, which could accelerate non-dilutive funding.

For investors, leadership transitions in biotech can be disruptive, but this one appears designed to maintain strategic direction while improving operational efficiency. Ophir's commentary on the Q3 call emphasized the "differentiated Fc reduced anti-TIGIT programs" and "no restrictions" on partnering COM902, indicating a clear focus on monetizing the pipeline.

Risks and Asymmetries

The TIGIT Class Risk: A Platform-Level Threat

The most material risk is that the entire TIGIT class, including Fc-inactive antibodies, fails to demonstrate meaningful clinical benefit. If Arcus /Gilead 's Phase III data disappoints in 2026, CGEN's COM902 becomes virtually uninvestable regardless of its mechanistic differentiation. This is a platform-level risk that could erase the TIGIT component of the investment thesis, which represents a significant portion of the company's potential value.

The mitigating factor is that CGEN's TIGIT component is already partnered in AstraZeneca 's rilvegostomig, which is advancing across 11 Phase III trials. Even if COM902 monotherapy fails, the bispecific could still succeed due to cooperative binding mechanisms. However, a broad TIGIT failure would likely damage sentiment and limit partnership opportunities for CGEN's standalone asset.

Cash Burn and Funding Risk: The Runway Tightrope

With $86M in cash and a quarterly burn of $7-8M, CGEN has minimal cushion for setbacks. If the MAIA-ovarian trial requires expansion or if TIGIT data delays partnership discussions, the company could face a funding crunch in 2026. The ATM facility's $1.6M October raise suggests management is aware of this risk but is limited in how much it can raise without significant dilution.

This risk is amplified by the revenue volatility inherent in the partnership model. A $30M Gilead milestone in Q3 2024 made that quarter profitable; the absence of such milestones in Q3 2025 resulted in a $7M loss. Investors must model cash flow assuming no milestone inflows, which makes the runway appear shorter than management's guidance suggests.

Competitive Pressure: Larger Players with Deeper Pockets

BeiGene 's ociperlimab, despite being Fc-active, is in Phase III with global resources and a commercial PD-1 backbone. Arcus 's recent domvanalimab failure reduces competition but also damages TIGIT sentiment. Coherus 's TIGIT program, acquired from Junshi, benefits from its commercial LOQTORZI revenue, providing funding stability that CGEN lacks.

This competitive landscape affects partnership dynamics. A pharma looking for a TIGIT asset might prefer BeiGene 's later-stage program or Coherus 's integrated combo strategy, even if CGEN's Fc-inactive mechanism is superior. CGEN's smaller scale and earlier stage make it a higher-risk partner, potentially limiting deal terms.

Valuation Context

At $1.52 per share, CGEN trades at a $144M market cap and $60.9M enterprise value, reflecting an EV/Revenue multiple of approximately 2.2x based on TTM revenue of $27.9M. This multiple is significantly lower than Arcus Biosciences (8.2x EV/Revenue), which might suggest undervaluation given its pipeline, but it also reflects the minimal near-term revenue visibility and high-risk nature of clinical-stage biotech.

The key metrics are cash position and burn rate. With $86M cash and ~$30M annual burn, CGEN has roughly 2.8 years of runway without milestones. This is sufficient to reach the Q1 2027 MAIA-ovarian readout and 2026 TIGIT catalysts. The valuation question is whether the optionality on these programs is fairly priced.

Comparing to peers: BeiGene (BGNE) trades at 6.9x revenue but is profitable and growing 40%+; its TIGIT program is a small part of a much larger story. Coherus (CHRS) trades at 0.3x EV/Revenue but has commercial revenue and positive margins. Arcus (RCUS), at 8.2x, is the closest comp but recently suffered a major TIGIT failure, making CGEN's comparatively lower multiple potentially indicative of deeper skepticism or a perceived higher risk.

The valuation hinges on probability-weighted outcomes. If there's even a 20% chance that COM902 becomes a valuable partnered asset and a 30% chance that COM701 shows meaningful efficacy, the current valuation could be justified. But these are speculative probabilities, and the stock will likely trade on sentiment around TIGIT until hard data arrives.

Conclusion

Compugen represents a high-conviction bet on two interlocking theses: that Fc-inactive TIGIT antibodies will redeem a troubled drug class, and that a validated computational discovery platform can consistently generate first-in-class assets. The company's partnerships with AstraZeneca (AZN) and Gilead (GILD) provide external validation and potential non-dilutive funding, while the $86M cash runway is timed to reach critical catalysts in 2026-2027.

The investment case is attractive because it offers multiple shots on goal with asymmetric upside. Success in any program—TIGIT validation, PVRIG efficacy, or IL-18BP advancement—could drive partnership deals that fundamentally re-rate the stock from its current $144M valuation. The fully owned COM902 asset is particularly compelling as a call option on TIGIT class redemption.

However, the story is fragile. The TIGIT class faces deep skepticism, cash burn is relentless, and execution risks are evident in the MAIA-ovarian timeline slip. Competitive pressure from larger players with deeper resources could limit partnership opportunities even if data are positive. For investors, the critical variables are the 2026 TIGIT readouts, the Q1 2027 MAIA-ovarian interim analysis, and management's ability to secure non-dilutive milestones. If these catalysts break favorably, CGEN could be a multi-bagger; if they fail, the stock could face significant downside as the runway shortens.