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Compugen expands and accelerates the program to develop antibodies to treat cancer and diseases of the immune system

Bayes Investments will inject $8 million into the expanded program under a second agreement with Compugen for research funding

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Compugen announced today that it will significantly expand and accelerate its activities for the development of monoclonal antibodies, in the field of cancer and diseases of the immune system, in its drug pipeline. The expanded activity will include a significant increase in the number of antibodies that will be developed simultaneously against medicinal target proteins that have been identified by Compugen and are in the company's development pipeline. Also, the company plans to implement independent capabilities for the development of therapeutic antibodies up to the pre-clinical stage, whereas in the past the intention was to rely for this purpose on external sources only.

In addition, Compugen announced that for the purpose of expanding its activities, funding in the amount of $8,000,000 will be received as part of an agreement that the company signed for research funding with Baize Investments, a private corporation that invests in innovative medical technologies. This investment is added to a previous research funding agreement signed between the two companies In December 2010, and following it, Compugen received five million dollars to build the company's drug pipeline.

Under the terms of the new agreement, in exchange for research funding of $8 million, Baez will receive financial rights in those antibodies that, during the next three years, reach predetermined milestones in the development process or the commercialization phase. In addition, during the first quarter of 2014, Bayes will be able to give up its rights to future earnings in exchange for 1,455,000 common shares of Compugen.

Dr. Anat Cohen-Deig, CEO of CompuGen, said, "Over the past two years, we have been pleased to report positive results for several therapeutic proteins in our drug pipeline, such as CGEN-15001 and CGEN-15091, in animal models of systemic diseases the vaccine In parallel with this progress, we are discussing potential arrangements for the continued development and commercialization of our products through licensing agreements and other forms of collaborations. As for antibody-based drugs in the field of oncology and immunology, which are the second arm of the company's development pipeline, our competitive advantage relies on our special computational capabilities for locating new drug targets against which antibodies can be developed that will, in the end, constitute the medical product. This is in contrast to the discovery of therapeutic proteins, an activity in which Compuogen's computational capabilities lead directly to the protein that is the basis for drug development."

Dr. Cohen-Deig added, "Monoclonal antibodies are the fastest growing group of drugs, with more than 20 antibodies already approved in the US for use as drugs for various diseases. Also, the chances of success in the development of monoclonal antibodies exceed any other group of drugs. However, the main challenge in the field is identifying and locating new medicinal targets for the development of therapeutic antibodies. For this purpose, with the help of its unique computational capabilities, Compugen has developed platforms for the detection of medicinal target proteins, and now the company has a database of promising medicinal targets that is in the early stages of validation, with some of the target proteins being at a stage where continued development requires the creation of antibodies."

Dr. Cohen-Deig concluded, "Based on our ongoing success in using computational tools to identify potential drug targets for antibodies, we are very pleased to announce today a significant expansion and acceleration of our development program, which includes increasing the number of targets against which we will develop antibodies and which will be tested in animal models for various diseases, before signing licensing agreements. Furthermore, since we anticipate that we will continue to need this capability against additional medicinal targets, we believe that the preferred solution is to establish independent capabilities for the production of therapeutic antibodies, and this in addition to the use of external factors subject to agreements, which will usually include a distribution of revenues from the future products."

Murray Goldman, Baez chairman, said, "We are satisfied with the progress made by Compugen in the development of the drug pipeline in general, and in relation to the specific products in which we have a financial interest in particular, and we are proud of the assistance we provided to create the company's drug pipeline development plan in late 2010. Thus, we are now pleased to expand the collaboration by focusing on accelerating the development of monoclonal antibodies against several promising oncology drug targets identified by Compugen. These steps are expected to lead to drugs for diseases that currently have no answer in the field of cancer treatment, thus contributing to the well-being of humanity."

Mr. Martin Gressel, Chairman of Compugen, added, "After more than a decade in which we built the discovery infrastructure and the scientific base supporting Compugen's computational capabilities, over the past few years we have reached three critical decisions regarding the medical and economic options we face today. First, we decided to focus on monoclonal antibodies and therapeutic proteins in the fields of oncology and immunology. Second, our powerful computational infrastructures have allowed us to rapidly establish a drug pipeline with approximately 30 promising candidates in early validation and development stages. And finally, our success in finding drug targets for antibodies led us to the third decision, which is a significant expansion and acceleration of this component in the development pipeline in order to use up the maximum value from the drug targets we discovered."

Mr. Gerstel concluded, "Bays Investments is a significant partner of Compugen in the implementation of these decisions. Our first research funding agreement with Baez, signed in 2010, allowed us to decisively advance the drug pipeline, without exposing the company to increased financial risk in a period of economic instability, and without significantly diluting the share of the shareholders who allowed us to generate the opportunities these. Now, this new agreement with Baez will allow us to significantly expand and accelerate the advancement of our promising activity in the field of antibodies, again while protecting the interests of our current shareholders."

The new financing agreement with Baez Investments
In exchange for research funding of $8,000,000, Baez will be entitled to receive financial rights in therapeutic antibodies that will be developed against 12 target proteins, which were discovered by Compugen in the field of oncology, all on the condition that those therapeutic antibodies give successful therapeutic results in an animal disease model within a period of three years and / or will be transferred to third parties for final development and commercialization in the same time frame. In each of the above cases, Bayes' financial rights in those monoclonal antibodies will include the right to receive from Compugen a percentage of future payments made to Compugen under licensing agreements for continued development and commercialization. The percentages for each of the monoclonal antibodies will be calculated on the day the license is granted according to the grader which will weigh the total sums financed by Bayes in the development of the therapeutic antibodies against the 12 specific target proteins up to that day, in relation to the total funds invested by Bayes and the company in the development of those antibodies. In any case, Baez will be entitled to receive no less than 10% of the future receipts that will be received in relation to those monoclonal antibodies. In addition, Baez will be entitled, during the first quarter of 2014, to waive its rights to a percentage of those receipts in exchange for 1,455,000 Compugen ordinary shares.

Therapeutic antibodies

Monoclonal therapeutic antibodies are a class of biological drugs that bind very specifically to target cells or proteins. Thanks to the versatility and specificity that distinguish antibodies, a great deal of research effort is devoted to the development of treatments with the help of antibodies for a variety of diseases, in the hope that these treatments will be characterized by higher efficiency and fewer side effects compared to the drugs accepted today. As a cancer treatment, monoclonal antibodies can inhibit cellular processes essential to the development of the tumor, stimulate the patients' immune system to attack the cancer target cells, or serve as a kind of carriers that carry chemotherapy treatments in a targeted manner only to the cells marked by the antibodies. DataMonitor estimates that the monoclonal antibody market is expected to reach approximately $65 billion by 2016. Furthermore, a data analysis conducted by Tufts University in the USA shows that the degree of success in the development of therapeutic antibodies, starting from phase I of the clinical trials to the approval of The FDA, double and more than the drugs accepted today, which are based on chemical substances.

About Compugen's platform for finding drug targets for antibodies
Compugen's antibody drug discovery platform is used to identify new targets suitable for the development of therapeutic antibodies. Today, the phase of locating promising targets is a significant challenge for the industry. The company's discovery platform is largely based on LEADS and MED, which are core infrastructural components for the development of Compugen's detection and discovery platforms. The LEADS platform provides a comprehensive and in-depth look at all the RNA transcribed in cells (transcriptome), the proteins produced in cells (proteome), and a variety of peptides, i.e. short proteins or protein fragments produced in cells (peptidome). The LEADS platform is therefore used as a rich infrastructure for locating new genes, transcripts or proteins. The MED platform is an integrative database consisting of the results of more than 70,000 gene expression experiments in tissues of human origin. The results of the experiments were normalized and cataloged across approximately 1,400 clinical conditions (such as normal tissues, cancerous tissues, tissues taken from patients treated with a certain drug, and so on). This information allows simultaneous examination of the expression level of genes and biochemical pathways in all 70,000 experiments.

In addition to implementing MED and LEADS, the antibody drug target discovery platform uses extensive data sources and a large number of algorithms to locate a large number of new membrane proteins that can be used as targets for therapeutic antibodies, for example in the fields of oncology and immunology. The selection of the appropriate candidates from this large group of new membrane proteins is done by using additional computational tools developed specifically for each disease or each protein family.

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