UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F/A
(Amendment No. 1)
☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ____________
For the transition period from ____________ to ____________
Commission file number: 000-30902
_________________________________________________
Compugen Ltd.
(Exact name of Registrant as specified in its charter)
____________________________________
(Translation of Registrant’s name into English)
___________________________________________________________
(Jurisdiction of incorporation or organization)
Azrieli Center, 26 Harokmim Street, Building D, Holon 5885849 Israel
(Address of principal executive offices)
________________________________________________
Ari Krashin, Chief Financial Officer
Phone: +972-3-765-8585, Fax: +972-3-765-8555
Azrieli Center, 26 Harokmim Street, Building D, Holon 5885849 Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
________________________________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Ordinary shares, par value NIS 0.01 per share |
CGEN |
The Nasdaq Stock Market LLC (The Nasdaq Global Market) |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 86,433,432 Ordinary Shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “accelerated filer” “large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☒ |
Non-accelerated filer ☐ |
Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☒ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report on Form 20-F, or the Amendment, amends the Annual Report on Form 20-F of Compugen Ltd., or the Company, for the year ended December 31, 2021, which was originally filed with the Securities and Exchange Commission on February 28, 2022, or the Original Filing.
The Company is filing this Amendment solely for the purpose of updating disclosure in Item 7.A., “Major Shareholders and Related Party Transactions – Major Shareholders.” In addition, pursuant to Rule 12b-15 under the Exchange Act, the Company is filing the certifications required under the Sarbanes-Oxley Act of 2002.
Except as described above or as otherwise expressly provided by the terms of this Amendment, no other changes have been made to the Original Filing. Except as otherwise indicated herein, this Amendment continues to speak as of the date of the Original Filing, and the Company has not updated the disclosures contained therein to reflect any events that occurred subsequent to the date of the Original Filing.
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We have a history of losses and we expect to incur future losses and may never achieve or sustain profitability. |
• |
We may need to raise additional funds in the future, and if we are unable to raise such additional funds, we may need to limit, curtail
or cease operations. To the extent any such funding is based on the sale of equity, our existing shareholders would experience dilution
of their shareholdings. |
• |
We cannot provide assurance that our business model will succeed in generating substantial revenues. |
• |
The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, such as the COVID-19
pandemic, and the governmental and societal responses thereto, may negatively impact the global economy and may also adversely affect
our business and results of operations. |
• |
In the near term, we are highly dependent on the success of COM701 and of COM902. We may not be able to advance our internal clinical
stage programs through clinical development or manufacturing or successfully partner or commercialize them, or obtain marketing approval,
either alone or with a collaborator, or may experience significant delays in doing so. |
• |
Clinical trials of any product candidates that we, or any current or future collaborators may conduct may fail to satisfactorily
demonstrate safety and efficacy, and we, or any collaborator, may incur additional costs or experience delays in completing, or ultimately
be unable to complete the development and commercialization of these product candidates. |
• |
Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may encounter substantial delays or
even an inability to begin clinical trials for any specific product or may not be able to conduct or complete our trials on the timelines
we expect. |
• |
From time to time we publicly disclose preliminary data from our ongoing clinical trials. As more patient data become available the
data and the interpretation of the data may change. |
• |
We rely and expect to continue to rely on third parties to conduct our clinical trials. These third parties may not successfully
carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, and we may experience significant
delays in the conduct of our clinical trials as well as significant increased expenditures. |
• |
Serious adverse events or undesirable side effects or lack of efficacy, may emerge in clinical trials conducted by other companies
running clinical trials investigating the same target as us, which could adversely affect our development programs or our capability to
enroll patients or partner the program for further development and commercialization. |
• |
We are subject to certain manufacturing risks, any of which could either result in additional costs or delays in completing, or ultimately
make us unable to complete, the development and commercialization of our product candidates. |
• |
Our current and future relationships, and/or the relationships of our collaborators through which we may market, sell, and distribute
our products, with healthcare professionals, physicians and other parties in the United States and elsewhere may be subject, directly
or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information and general
privacy and security and other healthcare laws and regulations, which could expose us to adverse consequences. |
• |
There are risks that are inherent in the development and commercialization of new therapeutic products. |
• |
We have limited experience in the development of therapeutic product candidates, and we may be unable to implement our business strategy.
|
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Our approach to the discovery of therapeutic products is based on our predictive computational discovery capabilities that are not
yet fully proven clinically, and we do not know whether we will be able to discover and develop additional potential product candidates
or products of commercial value. |
• |
We are focusing our discovery and therapeutic development activities on therapeutic product candidates for uses in immuno-oncology.
Our current candidates may fail, and we may fail to continue to discover and develop therapeutic product candidates of industry interest
in this field. |
• |
We depend significantly on third parties to carry out the research, development and commercialization of our therapeutic product
candidates. If we are unable to maintain our existing agreements or to enter into additional agreements with such third parties, including
collaborators, in the future, our business will likely be materially harmed. |
• |
We rely and expect to continue to rely completely on third parties to manufacture and supply our preclinical and clinical drug supplies.
Our business could be harmed if those third parties fail to provide us with sufficient quantities of drug product or fail to do so at
acceptable quality and quantity levels, prices or timelines. |
• |
Our dependence on collaboration agreements with third parties presents number of risks. |
• |
Our reliance on third parties for the performance of key activities heightens the risks faced by our business. |
• |
Our business model is challenging to implement and to date has not yielded significant revenues. |
• |
We operate in a highly competitive and rapidly changing industry which may result in others discovering, developing or commercializing
competing products before us or more successfully than we do. |
• |
Given our level of managerial, operational, financial and other resources, our current activities and future growth may be limited.
|
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We may be unable to hire or retain key personnel or sufficiently qualified management, clinical and scientific personnel.
|
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We may be unable to safeguard the integrity, security and confidentiality of our data or third parties’ data. |
• |
Our internal computer systems, or those of our contract research organizations, or CROs, or other contractors or consultants, may
fail or suffer security breaches, which could result in a material disruption of our pipeline and our business. |
• |
Our business and operations would suffer if our information technology systems or infrastructure or data, or our vendors’ or
partners’, are or were compromised. |
• |
We are subject to stringent and changing obligations related to data privacy and security. Failure or perceived failure to comply
with current or future obligations could lead to government enforcement actions (which could include civil or criminal penalties), private
litigation, and/or adverse publicity and could negatively affect our operating results and business. |
• |
If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability
to prevent our competitors from commercializing similar or identical product candidates would be adversely affected. |
• |
In the future, we may need to obtain additional licenses of third-party technology that may not be available to us or are available
only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that
was not anticipated. |
• |
We, or potential collaborators and licensees, may infringe third-party rights and may become involved in litigation, which may materially
harm our business. |
• |
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time
consuming and unsuccessful. |
• |
Conditions in the Middle East and in Israel may adversely affect our operations. |
• |
Our results of operations may be adversely affected by the exchange rate fluctuations between the dollar and the New Israeli Shekel.
|
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Future sales of our ordinary shares or securities convertible or exchangeable for our ordinary shares may depress our share price.
|
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If we sell ordinary shares in future financings, shareholders may experience immediate dilution and, as a result, our share price
may decline. |
• |
Our share price and trading volume have been volatile and may be volatile in the future and that could limit investors’ ability
to sell our shares at a profit and could limit our ability to successfully raise funds. |
• |
If we are a passive foreign investment company, or PFIC, our U.S. shareholders may be subject to adverse U.S. federal income tax
consequences. |
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successful clinical trial results;
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ability to fund clinical trials designed
to obtain regulatory approval and to become commercially successful; |
• |
success of trials designed to allow for
a path for registration/approval by regulatory authorities; |
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our selected regulatory strategy;
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timely initiation, enrollment and completion
of clinical trials; |
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demographics, past therapy and other criteria
of patients enrolled, even if they meet the inclusion/exclusion enrollment criteria; |
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a safety, tolerability and efficacy profile,
alone or in combination with other approved or investigational products, that is satisfactory to the FDA or comparable foreign regulatory
authorities; |
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selection of indications; |
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selection of drug(s) for combinations;
|
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successful identification of biomarkers,
including for patient selection; |
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timely receipt of marketing approvals from
applicable regulatory authorities; |
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the performance of our current and future
collaborators, if any; |
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the extent of any required post-marketing
approval commitments to applicable regulatory authorities; |
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establishment and monitoring of manufacturing
arrangements and processes with third-party service providers and clinical manufacturing organizations for manufacturing drug substance
and drug product; |
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establishment and monitoring of arrangements
with third-party suppliers of raw materials and service for fill-finish, packaging and labeling; |
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stability of our drug substance and drug
products; |
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supply of our drugs in sufficient quantities
and quality for our clinical trials; |
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establishment of arrangements with third-party
manufacturers and processes monitoring to obtain commercial quality drug product that is appropriately packaged for sale; |
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adequate ongoing availability of raw materials
and drug product for clinical development and any commercial sales; |
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protection of our rights in our intellectual
property portfolio; |
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successful launch of commercial sales following
any marketing approval; |
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a continued acceptable safety profile following
any marketing approval; and |
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commercial acceptance by patients, the medical
community and third-party payors. |
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inability to generate sufficient preclinical, toxicology, or other scientific data to support the initiation of clinical trials;
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lack of authorization from regulators or institutional review boards, or IRBs, or ethics committees to allow us or our investigators
to commence a clinical trial or conduct a clinical trial at a prospective trial site or continue such clinical trial; |
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delays in sufficiently developing, characterizing, or controlling a manufacturing process suitable for clinical trials; |
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inability to generate sufficient quantities or quality of our drug substance or drug product to support the initiation or continuation
of clinical trials; |
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delays in reaching a consensus with collaborators or regulatory agencies on trial design; |
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delays in reaching agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject
to extensive negotiation and may vary significantly among different CROs and clinical trial sites; |
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imposition of a temporary or permanent clinical hold by the FDA, or a similar delay imposed by foreign regulatory agencies for a
number of reasons, including after review of an IND, other application or amendment; (i) as a result of a new safety finding that presents
unreasonable risk to clinical trial participants; (ii) a negative finding from an inspection of our clinical trial operations or trial
sites; (iii) developments on trials conducted by competitors for related technology that raises FDA concerns about risk to patients of
the technology broadly; or (iv) if FDA finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;
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clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may
decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product
development programs; |
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difficulty collaborating with patient groups and investigators; |
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failure by our CROs, other third parties, or us to adhere to clinical trial and related regulatory requirements; |
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failure to perform in accordance with the FDA’s Good Clinical Practice, or GCP, requirements, or similar applicable regulatory
guidelines in other countries; |
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failure to perform in accordance with the FDA’s Good Manufacturing Practice, or GMP, requirements, or similar applicable regulatory
guidelines in other countries; |
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the number of patients required for clinical trials of any product candidates may be larger than we anticipate, enrollment in these
clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials or fail to return for post-treatment
follow-up at a higher rate than we anticipate; |
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delays in having patients complete their participation in a trial or return for post-treatment follow-up; |
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occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; |
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changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; |
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changes in the standard of care or in the regulatory landscape on which a
clinical development plan was based, which may require new or additional trials; |
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the cost of clinical trials of our product candidates being greater than we anticipate; |
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clinical trials of our product candidates producing negative or inconclusive results, or early results that will not be repeated
in larger or future cohorts, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or abandon
product development programs; |
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choosing the wrong dosing regimen and/or the wrong drug combination; |
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delays or failure to secure supply agreements with suitable reagent suppliers, or any failures by suppliers to meet our quantity
or quality requirements for necessary reagents; and |
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delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of our product candidates
for use in clinical trials or the inability to do any of the foregoing. |
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warning letters; |
• | clinical trial holds; |
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recalls, product seizures or medical product safety alerts; |
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data lock or order to destroy or not use personal data; |
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restrictions on, or prohibitions against, marketing such products; |
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restrictions on importation of such products; |
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suspension of review or refusal to accept or approve new or pending applications; |
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withdrawal of product approvals; |
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injunctions; |
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civil and criminal penalties and fines; or |
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debarment or other exclusions from government programs. |
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our new target candidates will prove to be inappropriate for treatment of cancer; |
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our new target candidates will prove to be inappropriate targets for therapeutic product candidates; |
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our new target candidates will prove to be inappropriate targets for immunotherapy; |
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we will not succeed in selecting the appropriate
indication for the therapeutic product candidate; |
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we will not succeed in choosing the appropriate
mAb for these targets, or the appropriate mAb lead or the appropriate mAb isotype; |
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we will not succeed in identifying or developing
a biomarker or companion diagnostic for our therapeutic product candidates; |
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we will not succeed in choosing the appropriate drug modality for these targets; |
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our therapeutic product candidates will fail to progress to preclinical studies or clinical trials; |
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our therapeutic product candidates will be found to be therapeutically ineffective; |
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we will not choose the right combinations
for our therapeutic product candidates; |
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our therapeutic product candidates will be found to be toxic or to have other unacceptable side effects or negative consequences;
|
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our therapeutic product candidates will be inferior, or not show added value, compared to competing products or the standard of care;
|
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our early stage development efforts may provoke competition by others; |
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our products covered by our collaborations may face internal competition from our partners’ internal pipeline; |
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we or our collaborators will fail to receive required regulatory approvals; |
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we or our collaborators will fail to manufacture our therapeutic product candidates in the quantity or quality needed for preclinical
studies or clinical trials on a large or commercial scale, on time or in a cost-effective manner or with the drug stability required;
|
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the discovery of drug targets and the discovery, development or commercialization of our therapeutic product candidates will infringe
third-party intellectual property rights; |
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the development, marketing or sale of our therapeutic product candidates will fail because of our inability or failure to protect
or maintain our own intellectual property rights; |
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once a product is commercially available, there will be little or no demand for it for a number of possible reasons, including lack
of acceptance by the medical community or by patients, lack of or insufficient coverage and payment by third-party payors, inefficient
or insufficient marketing and sales activities or as a result of there being more attractive, less risky or less expensive, products available
for the same use; and |
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the product will be withdrawn from the market,
or sales limited due to side effects observed in clinical practice. |
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not being able to discover new drug targets in this field; |
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our full scope of target discovery capabilities
may not be adequate; |
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not having chosen the right therapeutic area; |
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having chosen a therapeutic area with a very high degree of competition; |
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having chosen a therapeutic area of great biological complexity and with very high failure rates in product development; |
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not choosing the appropriate drug modality; |
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having insufficient knowledge, expertise, personnel or capabilities in our chosen therapeutic area to identify the right unmet medical
needs, or drug targets, or to timely, properly and efficiently validate the targets and/or select the appropriate mAb for further development
as therapeutic product candidates, or to timely, properly or efficiently further them in development; and |
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the inherent risk of high program failure rate throughout therapeutic development. |
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we may not be able to initiate or continue preclinical and clinical trials of products that are under development; |
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we may experience significant disruption and delay to our clinical supply chain; |
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we may experience significant adverse effect if we are unable to transfer the manufacturing process to a different third-party manufacturer
in a timely and efficient manner; |
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we may need to repeat clinical trials or stop our clinical trials; |
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we may be delayed in submitting regulatory applications, or receiving regulatory approvals, for our product candidates; |
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we may lose the cooperation of our collaborators; |
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we may be required to cease distribution or recall some or all batches of our products; and |
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ultimately, we may not be able to meet commercial demands for our products, if approved. |
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we may be unable to reach mutually agreeable terms and conditions with respect to potential new collaborations; |
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we or our collaborators may be unable to comply or fully comply with the obligations under collaboration agreements to which we are
(or will become) a party, and as a result, we may not generate royalties or milestone payments from such agreements, and our ability to
enter into additional agreements may be harmed; |
• |
our obligations under existing or future collaboration agreements may harm our ability to enter into additional collaboration agreements;
|
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our collaborators have significant discretion in electing whether to pursue any of the planned activities and the manner in which
it will be done, including the amount and nature of the resources to be devoted to the development and commercialization of our product
candidates; |
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our collaborators have significant discretion in terminating the collaborations for scientific, clinical, business or other reasons;
|
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if our collaborators breach or terminate an agreement with us, the development and commercialization of our therapeutic product candidates
could be adversely affected because at such time we may not have sufficient financial or other resources or capabilities or access to
the other partner’s data and drug(s) to successfully develop and commercialize these therapeutics on our own or find other partners
or enforce our rights under breached or terminated agreement; |
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our collaborators may fail to design and implement or analyze appropriate preclinical and/or clinical trials; |
• |
our collaborators may not have an access to the drug combination treatment required for an effective treatment; |
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our collaborators may not be able to identify biomarkers that may be required for further product development or approval;
|
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our collaborators may require us changing or adopting the trial design to fit their business priorities, standards and other objectives;
|
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our collaborators may fail to manufacture our therapeutic product candidates needed for either clinical trials or for commercial
purposes on a sufficiently large scale, in the required quality and/or in a cost-effective manner; |
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our collaborators may fail to develop and market products based on our discoveries due to various development hurdles or regulatory
restrictions; |
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our collaborators may fail to develop and market products based on our discoveries prior to the successful marketing of competing
products by others or prior to expiry of the patents protecting such products; |
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changes in a collaborator’s business strategy may negatively affect its willingness or ability to complete its obligations
under its arrangement or to continue with its collaboration with us; |
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our collaborators may terminate the program or the agreement and then compete against us in the development or commercialization
of similar therapeutics; |
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our collaborators may terminate the program or the agreement due to the competitive threat we may present to them with similar products;
|
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ownership of the intellectual property generated under or incorporated in our collaborations may be disputed; |
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our ownership of rights in any intellectual property or products that may result from our collaborations may depend on additional
investment of resources that we may not be able or willing to make; |
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prospective collaborators may pursue alternative products or technologies, by internally developing them or by preferring those of
our competitors; |
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disagreements between us and our collaborators may lead to delays in, or termination of, the collaboration; |
• |
our collaborators may fail to develop or commercialize successfully any products based on our novel drug targets or therapeutic product
candidates to which they have obtained rights from us; |
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we or our collaborators may not choose the right drug combinations for our therapeutic product; |
• |
our collaborations may face internal competition by their internal pipelines; |
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prospective collaborators may hesitate to pursue collaborations on novel target candidates that lack robust validation to serve as
a basis for the development of therapeutics; and |
• |
our collaboration partners may be acquired by, acquire, or merge with, another company, and the resulting entity may have different
priorities or competitive products to the collaboration product being developed previously by our partner. |
• |
much greater financial, technical and human resources than we have at every stage of the discovery, development, manufacture and
commercialization process; |
• |
more extensive experience in computational discovery, preclinical testing, conducting clinical trials, obtaining regulatory approvals,
and in manufacturing and marketing therapeutics; |
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more extensive experience in oncology and immuno-oncology and in the fields of mAb therapeutics; |
• |
accessibility to enhanced technologies that
may result in better products; |
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access to and experience in the development of therapeutic modalities that are competitive to mAb therapeutics; |
• |
more extensive experience in oncology and immuno-oncology and in the field of target discovery; |
• |
more extensive experience in the research and development of biological or genetic markers to determine response of or responders
to therapeutic agents or for patient selection; |
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greater accessibility to data and proprietary data from patients; |
• |
access to internally developed, proprietary technologies for the discovery, research, development, or manufacturing of therapeutic
agents; |
• |
greater resources and means to compete with us on target discovery and as well as in acquiring or generating technologies complementary
to, or necessary for, our programs as well as in recruiting and retaining qualified scientific and management personnel and establishing
clinical trial sites; |
• |
products that have been approved or are in late stages of development; |
• |
reduced reliance on collaborations or partnerships with third parties in order to further develop and commercialize competitive therapeutic
products; and |
• |
collaborative arrangements in our target markets with leading companies and research institutions. |
• |
the patenting of inventions involves complex legal issues relating to intellectual property laws, prosecution and enforcement of
patent claims across a number or patent jurisdictions, many of which have not yet been settled; |
• |
legislative and judicial changes, or changes in the examination guidelines of governmental patent offices may negatively affect our
ability to obtain patent claims to certain biological molecules- and/or use of certain therapeutic targets; |
• |
if we are not the first to file a patent application on one of our inventions, we may not be able to obtain a patent on our invention,
and may not be able to protect one or more of our therapeutic product candidates; |
• |
competition from other biotechnology and pharmaceutical companies who have already sought patent protection relating to proteins
and protein based products, as well as therapeutic antibodies or other modulators specifically binding these proteins, and their utility
based discoveries that we may intend to develop and commercialize; such prior patents may negatively affect our ability to obtain patent
claims on antibodies or certain proteins or other biologic modulators, or may hinder our ability to obtain sufficiently broad patent claims
for our inventions, and/or may limit our freedom to operate; |
• |
publication of data on gene products or proteins by non-commercial and commercial entities may hinder our ability to obtain sufficiently
broad patent claims for our inventions; |
• |
even if we succeed in obtaining patent protection, such protection may not be sufficient to prevent third parties from circumventing
our patent claims; |
• |
even if we succeed in obtaining patent protection, we may face freedom to operate issues; |
• |
even if we succeed in obtaining patent claims protecting our inventions and product candidates, our patents could be subject to challenge
and litigation by our competitors, and may be partially or wholly invalidated as a result of such legal/judicial challenges and in connection
with such challenges, in October 2020, two parties filed oppositions in the European Patent Office, or EPO, requesting revocation of our
granted European patent relating to anti-PVRIG antibodies, that expires in 2036; |
• |
significant costs that may need to be incurred in registering and filing patents; |
• |
insufficient data to support our claims and/or may support others in strengthening their patents; |
• |
seeking patent protection at an early stage may prevent us from providing comprehensive data supporting the patent claims and may
prevent allowance of certain patent claims or limit the scope of patent claim coverage; |
• |
we may not be able to supply sufficient
data to support our claims, within the legally prescribed time following our initial filing in order to support our patent claims and
this may harm our ability to get appropriate patent protection or protection at all; |
• |
our claims may be too broad and not have
sufficient enablement, in which case such claims might be rejected by patent offices or invalidated in court; and |
• |
we might fail to demonstrate a unique technical
feature for our antibodies as compared to existing prior art, in which case our claims might be rejected by the respective patent office,
requiring superiority over prior art. |
• |
forgo the research, development and commercialization of certain drug target candidates and product candidates that we discover,
notwithstanding their promising scientific and commercial merits; or |
• |
invest substantial management and financial resources to either challenge or in-license such third-party intellectual property, and
we cannot be sure that we will succeed in doing so on commercially reasonable terms, if at all. |
• |
issued patents that we may own or that we license may be held invalid or unenforceable, as a result of legal challenges; |
• |
others may be able to make products that are similar to our products but that
are not covered by the claims of our patent rights; |
• |
we or our licensors or any future strategic
partners might not have been the first to file patent applications on the inventions covered by the issued patent or pending patent application
that we own or have exclusively licensed; |
• |
others may independently develop similar
or alternative technologies without infringing our intellectual property rights; |
• |
it is possible that our pending patent applications
will not lead to issued patents; |
• |
issued patents that we may own or that we
license may not provide us with any competitive advantage; |
• |
our competitors might conduct research and
development activities in countries where we do not have patent rights and then use the information learned from such activities to develop
competitive products for sale in our major commercial markets; |
• |
third parties performing manufacturing or
testing for us using our product candidates or technologies could use the intellectual property of others without obtaining a proper license;
|
• |
we may not develop additional proprietary
technologies that are patentable; and |
• |
the patents of others may have an adverse
effect on our business. |
• |
hostilities involving Israel; |
• |
the interruption or curtailment of trade
between Israel and its present trading partners; |
• |
a downturn in the economic or financial
condition in Israel; and |
• |
a full or partial mobilization of the reserve
forces of the Israeli army. |
• |
the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on Form
8-K; |
• |
the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered
under the Exchange Act, including extensive disclosure of compensation paid or payable to certain of our highly compensated executives
as well as disclosure of the compensation determination process; |
• |
the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and
|
• |
the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing
insider liability for profits realized from any “short-swing” trading transaction (a purchase and sale, or sale and purchase,
of the issuer’s equity securities within less than six months). |
• |
global macroeconomic developments; |
• |
clinical data disclosed by us or our competitors; |
• |
massive sell of our shares by a large shareholder; |
• |
our success (or lack thereof) in entering into collaboration agreements and achieving certain research and developmental milestones
thereunder; |
• |
our need to raise additional capital and our success or failure in doing so; |
• |
our ability (or lack thereof) to disclose key discoveries or developments due to competitive concerns or need to secure our intellectual
property position; |
• |
achievement or denial of regulatory approvals by us or our competitors; |
• |
announcements of technological innovations or new commercial products by our competitors; |
• |
trends in share price of companies in our
field or industry; |
• |
announcement of corporate transactions,
merger and acquisition activities or other similar events by companies in our field or industry; |
• |
changes and developments effecting our field
or industry; |
• |
developments concerning material proprietary rights, including material patents; |
• |
developments concerning our existing or new collaborations; |
• |
regulatory developments in the United States, Israel and other countries; |
• |
changes in the structure of healthcare payment systems; |
• |
delay or failure by us or our partners in initiating, completing or analyzing preclinical or clinical trials or the unsatisfactory
design or results of such trials; |
• |
period to period fluctuations in our results of operations; |
• |
changes in estimates by securities analysts; |
• |
changes in senior management or the board of directors or changes in the size or structure of the company; |
• |
our ability (or lack thereof) to disclose the commercial terms of, or progress under, our collaborations; |
• |
our ability (or lack thereof) to show and accurately predict revenues; and |
• |
transactions with respect to our ordinary shares by insiders or institutional investors. |
• |
targeting novel pathways, identified internally, with potential to address the unmet need of patients non-responsive to cancer immunotherapies;
|
• |
applying a science-driven approach to identify drug combinations, through deep understanding of the biology of these novel pathways;
and |
• |
using the same scientific understanding of the new pathways to design a robust biomarker strategy for patient selection. |
• |
COM701 is our lead immuno-oncology
pipeline program. COM701 is a humanized antibody that binds with high affinity to PVRIG, a novel immune checkpoint target candidate discovered
by us that blocks the interaction with its ligand, PVRL2. Our data suggests that the PVRIG pathway is parallel and complementary to TIGIT,
an immune checkpoint discovered computationally by us in 2009. These two pathways intersect with DNAM-1, a costimulatory receptor on T
cells and NK cells. The PD-1 pathway also intersects with DNAM-1. In certain tumors, the blockade of both TIGIT and PVRIG may be required
to stimulate an antitumor immune response, with or without additional PD-1 pathway blockade. Phase 1 trials for COM701 were initiated
in September 2018 and are currently conducted under the collaboration with Bristol Myers Squibb (except for the COM701 and COM902 combination
trial). See below additional information regarding Bristol Myers Squibb Collaboration. |
• |
COM902 is a high affinity, fully human
antibody developed by us, targeting TIGIT, an immune checkpoint. COM902 blocks the interaction of TIGIT with PVR, its ligand. Our preclinical
data suggests that in certain tumor indications the blockage of both TIGIT and PVRIG, two coinhibitory arms of the DNAM-1 axis, may be
required to stimulate an anti-tumor immune response with or without the blockade of the PD-1 pathway. Phase 1 trials for COM902 were initiated
in March 2020 to evaluate it as a monotherapy in patients with advanced malignancies who have exhausted all available standard therapies.
|
• |
Bapotulimab (formerly known as BAY1905254) is targeting ILDR2, a new immune checkpoint identified by us, that is being developed
by Bayer pursuant to a research and discovery collaboration and license agreement signed in 2013. Bayer initiated its Phase 1 trial in
patients with solid tumors in September 2018, which triggered a milestone payment of $7.8 million. |
• |
AZD2936 is a novel TIGIT/PD-1 bispecific antibody with a TIGIT component that is derived from our COM902 and is developed pursuant
to the exclusive license agreement with AstraZeneca. AstraZeneca initiated its Phase 1/2 trial in patients with advanced or metastatic
non-small cell lung cancer in September 2021, which triggered a milestone payment of $6.0 million to us. |
• |
COM701 - a therapeutic antibody targeting PVRIG |
• |
In 15 patients with a median of five prior anticancer therapies (range of 2-10), COM701 in combination with Opdivo® was well-tolerated
with no reported dose-limiting toxicities up to the fifth and final dose cohort of COM701 20 mg/kg and Opdivo® 480 mg, both IV Q4
weeks. |
• |
The disease control rate (DCR) was 66.7% (N=10) with best responses of complete response (CR) 6.7% (N=1), partial response (PR) 6.7%
(N=1) and stable disease (SD) 53.3% (N=8). |
• |
A patient with anal squamous cell carcinoma with confirmed SD as reported at American Association for Cancer Research (AACR) 2020,
had in the cutoff date confirmed CR and remains on treatment at 79 weeks. This patient progressed on Opdivo® prior to enrolling in
our study. |
• |
A patient with microsatellite stable (MSS)-colorectal cancer with durable confirmed partial response previously reported at AACR
2020 remained on study treatment at 44 weeks. |
• |
Durable responses of confirmed SD of six months or more in three patients. One patient with renal cell carcinoma remains on treatment
at 58 weeks, and one patient with non-small cell lung cancer (NSCLC) (squamous) who failed prior treatment with immune checkpoint inhibitors
remained on treatment at 36 weeks, and one patient with endometrial cancer remained on treatment at 46 weeks. |
• |
The patient with primary peritoneal cancer (platinum resistant, MSS) with durable confirmed partial response remains on study treatment
at 62 weeks. |
• |
The patient with pancreatic cancer, refractory to all three prior lines of standard of care (SOC) therapy with durable confirmed
SD was on study treatment for 31 weeks. |
• |
20 patients enrolled in biomarker and data informed indications; four patients of each: endometrial cancer, NSCLC, ovarian cancer,
breast cancer and colorectal cancer. |
• |
Six of the 20 patients (30%) had best responses of SD, one patient with endometrial cancer, three patients with NSCLC and two patients
with ovarian cancer. |
• |
Two patients with SD remain on treatment as of the data cutoff date; one patient with NSCLC who had >3 prior lines of SOC therapy;
including prior treatment with immune checkpoint inhibitors with treatment ongoing at 26 weeks, and one patient with ovarian cancer with
treatment ongoing at 20 weeks. |
• |
Two additional patients remain on treatment as of the data cutoff date. |
• |
No new safety findings were observed. |
• |
In 15 evaluable patients, COM701 in combination with Opdivo® was well-tolerated with no reported dose-limiting toxicities up
to the fifth and final dose cohort of COM701 20 mg/kg and Opdivo® 480 mg, both IV Q4 weeks. |
• |
The disease control rate (DCR) was 66.7% (N=10) with best responses of complete response (CR) 6.7% (N=1), partial response (PR) 6.7%
(N=1) and stable disease (SD) 53.3% (N=8). |
• |
Previously reported patient with anal squamous cell carcinoma with confirmed CR remains on treatment at 96 weeks (22 months). This
patient had three prior lines of therapy and enrolled within one month after progression on Opdivo® monotherapy. |
• |
Previously reported patient with renal cell carcinoma with best response of SD remains on treatment at 75 weeks. |
• |
A patient with microsatellite stable (MSS)-colorectal cancer with durable confirmed partial response previously reported at AACR
2020 remained on study treatment for 44 weeks. |
• |
Overall 36 patients enrolled. 16 patients, all comers in dose escalation and 20 patients in dose expansion; four patients of each:
endometrial cancer, NSCLC, ovarian cancer, breast cancer and colorectal cancer (MSS). |
• |
The disease control rate (DCR) was 47.2% (N=17) with best responses of partial response (PR) 2.7% (N=1) and stable disease (SD) 44.4%
(N=16). |
• |
Previously reported patient with primary peritoneal cancer (platinum resistant, MSS) with confirmed PR remains on study treatment
at 79 weeks (18 months). Patient had three prior lines of standard-of-care treatment. - Archival pre-treatment biopsy data revealed the patient was PD-L1 negative, with PVRL2 expression on tumor and endothelial cells, with an immune desert phenotype (i.e, no immune cells detected prior to treatment). - Peripheral blood assessment showed immune activation as measured by immune cell proliferation and IFNγ induction prior to tumor shrinkage. |
• |
Durable responses to treatment (CR, PR or SD ≥ 6 months) in 10/51 (19%) patients. |
• |
Best responses of CR, PR, or SD were observed in 11/21 (52%) patients with prior treatment refractory disease. |
• |
Best response of CR, PR or SD were observed in 13/18 (72%) patients with prior treatment with immune checkpoint inhibitors.
|
• |
Peripheral pharmacodynamic changes were measured via immune cell proliferation and cytokine levels in peripheral blood before and
on treatment. |
• |
After one treatment cycle, patients treated with COM701 monotherapy showed a trend of increased proliferation of effector memory
CD8+ T cells (average change 87%), an immune cell population that expresses high level of PVRIG and are critical in driving anti-tumor
immunity. Similar results were observed in the combination arm. |
• |
Proliferation of NK-T cells, an immune cell population that expresses high level of PVRIG and plays a role in antitumor activity,
increased significantly one day after COM701 monotherapy treatment, with a similar trend observed in the combination arm. |
• |
Levels of IFNγ, a cytokine which plays a key role in antitumor immunity,
were upregulated following combination treatment of COM701 with Opdivo®, with a dose response trend with increasing doses of COM701,
suggesting the observed activity is derived from the combination treatment and not Opdivo® alone. |
• |
Anti-tumor activity was observed in PD-L1 low, PVRL2 positive patients, suggesting COM701 treatment may drive anti-tumor immunity
even in patients with less inflamed tumor microenvironment. |
• |
The study enrolled 13 patients with a variety of advanced solid tumors cancers (all comers) who have exhausted all available standard
treatments. All the patients received escalating doses of COM701 in combination with fixed doses of nivolumab and BMS-986207. |
• |
The study population was heavily pretreated with a median of 10 prior therapies, with a minimum of 1 and maximum of 19. |
• |
The combination was well tolerated with no dose limiting toxicity and a favorable safety and toxicity profile. |
• |
COM701 20 mg/kg was selected as the recommended dose for expansion in combination with nivolumab and BMS-986207 (both at 480 mg)
with all the study drugs administered IV Q4W. |
• |
Translational assessment of peripheral blood from all patients showed a positive pharmacodynamic activation of the immune system
following treatment, including increased T and NK cell activation, memory T cell proliferation and IFNγ induction, which is supportive
of immune activation following triplet blockade. |
• |
Best responses of stable disease were reported in 3 patients, one patient with prostate cancer remains on study beyond 100 days of
treatment. |
• |
COM902 - a therapeutic antibody targeting TIGIT |
• |
The study enrolled 18 patients with advanced solid tumors who exhausted all available standard therapies. |
• |
The study population was heavily pretreated with the median number of prior therapies was 7, with a minimum of 2 and maximum of 16.
|
• |
COM902 administered IV Q3W was well tolerated with a favorable safety profile. A maximum tolerated dose of COM902 was not reached. o One patient in the 0.01 mg/kg dose cohort reported a dose limiting toxicity (DLT) of Grade 2 vomiting, and one patient in the 1 mg/kg dose cohort had a DLT of Grade 3 atrial fibrillation; these were assessed by the investigator as possibly related to study treatment with COM902. o No DLTs were reported at any other COM902 doses including higher doses (3 mg/kg, 10 mg/kg). |
• |
COM902 3 mg/kg IV Q3W has been selected as the recommended dose for expansion. |
• |
Best response of stable disease (SD) was reported in 9 patients (50%), with 6 patients (67%) having confirmed SD and 3 patients (17%)
with SD of at least 6 months. |
• |
No depletion of major lymphocyte populations expressing TIGIT (NK, CD4 and CD8 T cells) in the peripheral blood analysis. |
• |
Bapotulimab (formerly known as BAY1905254) – a therapeutic antibody targeting
CGEN-15001T/ILDR2 |
• |
AZD2936 - a therapeutic TIGIT/PD-1 bispecific antibody with a TIGIT component that
is derived from our COM902 |
• |
completion of preclinical laboratory tests and animal studies in compliance with the FDA’s GLP or other applicable regulations;
|
• |
submission to the FDA of an IND, which must become effective before human clinical trials may begin; |
• |
performance of adequate and well-controlled human clinical trials in accordance with GCPs to establish the safety and efficacy of
the product for its intended use; |
• |
submission of annual reports to regulatory authorities; |
• |
submission to the FDA of a biologics license application, or BLA; |
• |
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug or biologic is produced
to assess compliance with current Good Manufacturing Practice, or cGMP, to assure that the facilities, methods and controls are adequate
to preserve the product’s identity, strength, quality and purity; and |
• |
FDA review and approval of the BLA. |
• |
Phase 1:
The product candidate is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption,
metabolism, distribution and excretion. In the case of some products, usually for severe
or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the
initial human testing may be conducted in patients. |
• |
Phase 2:
Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate
the efficacy of the product for specific targeted diseases and to determine dosage tolerance
and optimal dosage. |
• |
Phase 3:
Involves studies undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically
dispersed clinical trial sites. These studies are intended to establish the overall risk-benefit
ratio of the product and provide an adequate basis for product labeling and approval. |
• |
cash at hand; |
• |
proceeds from Bristol Myers Squibb’s 2021 investment in us; and |
• |
proceeds from AstraZeneca in connection with its 2021 milestone payment. |
Payments due by period
(US$ in thousands)
|
||||||||||||||||||||
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||||||||
Operating Lease Obligations(1)
|
3,045 |
895 |
1,390 |
760 |
- |
|||||||||||||||
Accrued Severance Pay, net(2)
|
552 |
552 |
||||||||||||||||||
Total |
3,597 |
895 |
1,390 |
760 |
552 |
Name |
Age |
Positions | ||
Paul Sekhri(3)
|
63 |
Chairman of the Board of Directors (Chairman of the Nomination and Corporate Governance Committee)
| ||
Anat Cohen-Dayag, Ph.D. |
55 |
President and Chief Executive Officer, Director | ||
Jean-Pierre Bizzari, M.D.(4)
|
67 |
Director | ||
Gilead Halevy(2)
|
55 |
Director (Chairman of the Audit Committee) | ||
Kinneret Livnat Savitzky, Ph.D.(1)(3)
|
54 |
Director | ||
Eran Perry(1)(2)
|
51 |
Director | ||
Sanford (Sandy) Zweifach(1)(2)(3)
|
65 |
Director (Chairman of the Compensation Committee) | ||
Ari Krashin |
49 |
Chief Financial Officer and Chief Operating Officer | ||
Henry Adewoye, MD |
57 |
Senior Vice President and Chief Medical Officer | ||
Oliver Froescheis, Ph.D. |
56 |
Senior Vice President, Corporate and Business Development | ||
Zurit Levine, Ph.D. |
54 |
Senior Vice President, Technology Innovation | ||
Yaron Turpaz, Ph.D. |
51 |
Senior Vice President and Senior Advisor, Computational Discovery | ||
Eran Ophir, Ph.D. |
44 |
Vice President, Research and Drug Discovery |
(1) |
Member of our Compensation
Committee |
(2) |
Member of our Audit Committee
|
(3) |
Member of our Nomination and
Corporate Governance Committee |
(4) |
Dr. Jean-Pierre Bizzari is expected to retire form the board of directors of the Company effective March 1, 2022. |
Information Regarding the Covered Office Holders |
Compensation for Services(2)
|
|||||||||||||||
Name and Principal Position(1)
|
Base Salary ($) |
Benefits and Perquisites ($)(3)
|
Stock-Based Compensation ($)(4)
|
Total ($) |
||||||||||||
Dr. Anat Cohen-Dayag
President & Chief Executive Officer |
498,266 |
333,362 |
469,679 |
1,301,307 |
||||||||||||
Dr. Henry Adewoye
Senior Vice President and Chief Medical Officer |
400,000 |
160,690 |
276,178 |
836,868 |
||||||||||||
Ari Krashin
Chief Financial and Operating Officer |
315,770 |
209,604 |
240,812 |
766,186 |
||||||||||||
Dr. Oliver Froescheis
Senior Vice President, Corporate and Business Development |
370,000 |
77,238 |
219,111 |
666,349 |
||||||||||||
Dr. Zurit Levine
Senior VP, Technology Innovations |
204,322 |
129,862 |
144,554 |
478,738 |
1) |
All Covered Office Holders listed in the table were full-time officers of the Company in 2021. |
2) |
Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at an exchange rate
of NIS 3.2302= $1.00, which reflects the average conversion rate for 2021, or the Representative Rate. |
3) |
Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites
may include, to the extent applicable to the respective Covered Office Holder, bonuses, payments, contributions and/or allocations for
savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurance (e.g., life, disability,
accident), phone, convalescence pay, payments for social security, tax gross-up payments and other benefits and perquisites consistent
with the Company’s policies. |
4) |
Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2021,
with respect to options to purchase our ordinary shares granted to our Covered Office Holders. Assumptions and key variables used in the
calculation of such amounts are discussed in Note 2m to our 2021 consolidated financial statements set forth elsewhere in this report.
|
(a) |
Audit Committee - $2,500 for a member, or $5,000 for the chairman; |
(b) |
Compensation Committee - $2,000 for a member, or $4,000 for the chairman; and |
(c) |
Nomination and Governance Committee - $1,000 for a member, or $3,000 for the chairman. |
• |
a breach of duty of care to us or to another person; |
• |
a breach of duty of loyalty to us, provided that the Office Holder acted in good faith and had reasonable grounds to assume that
such act would not prejudice our interests; |
• |
monetary liabilities or obligations imposed upon him or her in favor of another person; |
• |
A payment which the Office Holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Israel
Securities Law, 5728-1968, or the Securities Law, and expenses that the Office Holder incurred in connection with a proceeding under Chapters
H’3, H’4 or I’1 of the Securities Law, including reasonable litigation expenses, including attorney’s fees, or
in connection with Article D of Chapter Four of Part Nine of the Companies Law; and |
• |
Expenses incurred by the Office Holder in connection with a proceeding under Chapter G’1, of the Israel Restrictive Trade Practices
Law, 5748-1988, or Restrictive Trade Law, including reasonable litigation expenses, including attorney’s fees. |
• |
For any monetary liabilities or obligations imposed on our Office Holder in favor of another person pursuant to a court judgment,
including a compromise judgment or an arbitrator’s decision approved by a court; |
• |
For any payments which our Office Holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the
Securities Law and expenses the Office Holder incurred in connection with a proceeding under Chapters H’3, H’4 or I’1
of the Securities Law, including reasonable litigation expenses, including attorney’s fees, or in connection with Article D of Chapter
Four of Part Nine of the Companies Law; |
• |
For reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder in consequence of an investigation
or proceeding instituted against the Office Holder by an authority that is authorized to conduct such investigation or proceeding, and
which was concluded without filing of an indictment against the Office Holder and without imposing on the Office Holder a financial obligation
in lieu of criminal proceedings, or which was concluded without filing of an indictment against the Office Holder but with imposing on
such Office Holder a financial obligation in lieu of criminal proceedings in respect of an offense that does not require proof of criminal
intent or in connection with a financial sanction; For the purposes hereof: (i) “a proceeding that concluded without filing an indictment
in a matter in respect of which an investigation was conducted”; and (ii) “financial obligation in lieu of a criminal proceeding”,
shall have the meanings specified in Section 260(a)(1A) of the Companies Law; |
• |
For reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder or which the Office Holder is
ordered to pay by a court, in a proceeding filed against the Office Holder by the Company or on its behalf or by another person, or in
a criminal action of which the Office Holder is acquitted, or in a criminal action in which the Office Holder is convicted of an offense
that does not require proof of criminal intent; |
• |
For expenses incurred by our Office Holder in connection with a proceeding under Chapter G’1, of the Restrictive Trade Law,
including reasonable litigation expenses, including attorney’s fees; and |
• |
For any other liability, obligation or expense indemnifiable or which our Officer Holders may from time to time be indemnifiable
by law. |
• |
a breach by the Office Holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify
an Office Holder if the Office Holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
• |
a breach by the Office Holder of his or her duty of care if such breach was intentional or reckless, but unless such breach was solely
negligent; |
• |
any act or omission done with the intent to derive an illegal personal benefit; or |
• |
any fine, civil fine, financial sanction or monetary settlement in lieu of criminal proceedings imposed on such Office Holder.
|
Board Diversity Matrix as of February 15, 2022 | ||||
Total Number of Directors |
7 | |||
Female |
Male |
Non-Binary |
Did Not Disclose Gender | |
Part I: Gender Identity |
||||
Directors |
2 |
4 |
1 | |
Part II: Demographic Background |
||||
African American or Black |
||||
Alaskan Native or Native American |
||||
Asian |
||||
Hispanic or Latinx |
||||
Native Hawaiian or Pacific Islander |
||||
White |
2 |
3 |
||
Two or More Races or Ethnicities |
1 |
|||
LGBTQ+ |
1 | |||
Did Not Disclose Demographic Background |
1 |
• |
information regarding the business advisability of a given action brought for the Office Holder’s approval or performed by
the Office Holder by virtue of his or her position; and |
• |
all other information of importance pertaining to the aforesaid actions. |
• |
refrain from any act involving a conflict of interest between the fulfillment of his or her position in the company and the fulfillment
of any other position or his or her personal affairs; |
• |
refrain from any act that is competitive with the business of the company; |
• |
refrain from exploiting any business opportunity of the company with the aim of obtaining a personal gain for himself or herself
or for others; and |
• |
disclose to the company all relevant information and provide it with all documents relating to the company’s affairs which
the Office Holder obtained due to his or her position in the company. |
December 31, 2021 |
December 31, 2020 |
December 31, 2019 | |
Research & Development
|
51
|
45
|
37
|
Administration, Accounting and Operations |
21 |
21 |
23 |
Marketing and Business Development |
1 |
2 |
1 |
Total |
73 |
68 |
61 |
Beneficial Owner |
Amount Owned |
Percent of Class |
||||||
Anat Cohen-Dayag(1)
|
966,122 |
1.1 |
% | |||||
All directors and executive officers
as a group (13 persons)(2)
|
2,984,881 |
3.3 |
% |
(1) |
Includes (i) 56,122 shares held by Dr. Cohen-Dayag, and (ii) 910,000 shares subject to options that are exercisable within 60 days
after February 15, 2022, with a weighted average exercise price of $5.74 per share, and which expire between August 2022 and July 2030.
|
(2) |
Includes (i) a total of 78,894 ordinary shares held by directors and executive officers, and (ii) a total of 2,905,987 shares subject
to options that are beneficially owned by directors and executive officers that are exercisable within 60 days after February 15, 2022,
with a weighted average exercise price of $5.16 per share and which expire between August 2022 and September 2030. |
Reporting Beneficial
Owner |
Number of Ordinary Shares Beneficially Owned
|
Percent of Ordinary Shares Beneficially Owned(1)
|
||||||
ARK Investment Management LLC(2)
|
9,222,415 |
10.7 |
% | |||||
Nikko Asset Management Americas, Inc.(3)
|
6,998,382 |
8.1 |
% | |||||
Sumitomo Mitsui Trust Holdings, Inc.(4)
|
6,998,382 |
8.1 |
% | |||||
Bristol-Myers Squibb Company(5)
|
4,757,058 |
5.5 |
% |
• |
ARK Investment Management LLC’s percentage of ownership has decreased from 20.42% as of December 31, 2020 to 10.7% as stated
above. |
• |
Nikko Asset Management Americas, Inc.’s percentage of ownership has decreased from 8.40% as of December 31, 2020 to 8.1% as
stated above. |
• |
Sumitomo Mitsui Trust Holdings, Inc.’s percentage of ownership has decreased from 8.40% as of December 31, 2020 to 8.1% as
stated above. |
(1) |
Based upon 86,459,252 ordinary shares issued and outstanding as of February 15, 2022. |
(2) |
Based upon information provided by the shareholder in its Form 13G/A filed with the SEC on February 9, 2022. With respect to the
ordinary shares reported in its Schedule 13G/A, ARK Investment Management LLC, or ARK, indicated as having (i) sole voting power with
respect to 8,879,327 ordinary shares, (ii) shared voting power with respect to 210,870 ordinary shares, (iii) sole dispositive power with
respect to 9,222,415 ordinary shares, and (iv) no shared dispositive power with respect to ordinary shares. Furthermore, in such filing
ARK indicated aggregate beneficial ownership of 9,222,415 ordinary shares. The address of the principal business office of ARK is 3 East
28th Street, 7th Floor, New York, NY 10016. |
(3) |
Based upon information provided by the shareholder in its Schedule 13G/A filed with the SEC on February 14, 2022. With respect to
the ordinary shares reported in the Schedule 13G/A, Nikko Asset Management Americas, Inc., or Nikko, indicated as having (i) no sole voting
or dispositive power with respect to ordinary shares, (ii) shared voting power with respect to 5,851,942 ordinary shares, and (iii) shared
dispositive power with respect to 6,998,382 ordinary shares. Furthermore, in such filing Nikko indicated aggregate beneficial ownership
of 6,998,382 ordinary shares. The address of the principal business office of Nikko is 605 Third Avenue, 38th Floor, New York, NY
10158. |
(4) |
Based upon information provided by the shareholder in its Schedule 13G/A filed with the SEC on February 4, 2022. With respect to
the ordinary shares reported in the Schedule 13G/A, Sumitomo Mitsui Trust Holdings, Inc., or Sumitomo, indicated as having (i) no sole
voting or dispositive power with respect to ordinary shares and (ii) shared voting power and dispositive power with respect to 6,998,382
ordinary shares. Furthermore, in such filing Sumitomo indicated aggregate beneficial ownership of 6,998,382 ordinary shares. The address
of the principal business office of Sumitomo is 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan. |
(5) |
Based upon information provided by the shareholder in its Form
13G filed with the SEC on November 19, 2021, and confirmation by the shareholder that such information is true and correct as of the date
of this Annual Report. With respect to the ordinary shares reported in its Schedule 13G, Bristol-Myers Squibb Company, or BMS, indicated
as having (i) sole voting power and dispositive power with respect to 4,757,058 ordinary shares, and (ii) no shared voting power nor shared
dispositive power with respect to ordinary shares. Furthermore, in such filing BMS indicated aggregate beneficial ownership of 4,757,058
ordinary shares. The address of the principal business office of BMS is 430 East 29th Street,
New York, NY 10016. |
• |
at least 75% of our gross income is passive income, or |
• |
at least 50% of the value (determined on the basis of a quarterly weighted average) of our total assets for the taxable year produce
or are held for the production of passive income. |
2021
|
2020
|
|||||||
Audit Fees |
$ |
133,000 |
$ |
133,000 |
||||
Audit Related Fees |
$ |
25,000 |
$ |
75,000 |
||||
Tax Fees |
$ |
4,500 |
$ |
4,500 |
||||
All Other Fees |
$ |
2,500 |
$ |
2,500 |
||||
Total |
$ |
165,000 |
$ |
215,000 |
Exhibit Number |
Description |
101.INS |
Inline XBRL Instance Document |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.CAL |
Inline XBRL Taxonomy Calculation Linkbase Document |
101.LAB |
Inline XBRL Taxonomy Label Linkbase Document |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
104 |
Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101). |
* |
Filed herewith. |
@ |
Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions. |
# |
Portions of this exhibit (indicated by asterisks therein) have been omitted as these portions are both not material and confidential.
|
|
COMPUGEN LTD.
Signature:
/s/ Dr. Anat Cohen-Dayag
Name: Dr. Anat Cohen-Dayag
Title: President and Chief Executive Officer,
Director
Date: February 28, 2022 |
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021
U.S. DOLLARS IN THOUSANDS
INDEX
Page | |
| |
F-2 – F-4 |
(PCAOB ID: 1281)
F-5 – F-6 | |
| |
F-7 | |
| |
F-8 | |
| |
F-9 – F-10 | |
| |
F-11 – F-38 | |
|
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
COMPUGEN LTD.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Compugen Ltd. and its subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
|
Accrued pre-clinical and clinical trial expenses | ||
Description of the matter |
As discussed in Note 2(k) to the consolidated financial statements, the Company records costs for pre-clinical and clinical trial activities based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations and other vendors.
Auditing the Company’s accruals for pre-clinical and clinical trial activities is challenging due to the fact that information necessary to estimate the accruals for the services that have been received during the reporting period is accumulated from multiple sources such as Company’s operations personnel that oversee the pre-clinical and clinical trial activities, information from service providers and terms and conditions included in the contracts with the service providers. In addition, in certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided and there may be delays in invoicing from pre-clinical and clinical study sites and other vendors. | |
How we addressed the matter in our audit |
We obtained an understanding of, evaluated the design and tested the operating effectiveness of internal controls that addressed the identified risks related to the Company’s process for recording accrued pre-clinical and clinical trial expenses.
To test the pre-clinical and clinical trial accruals, our audit procedures included, among others, reviewing a sample of agreements with the service providers to corroborate key terms and conditions and testing the accuracy and completeness of the underlying data used in the accrual computations. We also evaluated management’s estimates of the progress of a sample of pre-clinical and clinical trial activities by making direct inquiries of the Company’s operations personnel that oversee the pre-clinical and clinical trial activities and obtaining information directly from certain service providers which indicated the progress of pre-clinical and clinical trial completed through the balance sheet date and compared that to the Company’s accrual computations. To evaluate the completeness of the accruals, we also examined subsequent invoices from the service providers and cash disbursements to the service providers, to the extent such invoices were received, or payments were made prior to the date that the consolidated financial statements were issued. |
/s/KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company’s auditor since 2002
Tel-Aviv, Israel
February 28, 2022
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
COMPUGEN LTD.
Opinion on Internal Control over Financial Reporting
We have audited Compugen Ltd. and its subsidiary’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Compugen Ltd. and its subsidiary (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020 and the related consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 28, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
Tel-Aviv, Israel
February 28, 2022
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
|
|
|
December 31, | ||||||||
Note |
|
|
2021 |
|
|
2020 | |||||
ASSETS | |||||||||||
| |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents |
$ |
7,801 |
$ |
7,143 | |||||||
Restricted cash |
713 |
667 | |||||||||
Short-term bank deposits |
109,248 |
116,622 | |||||||||
Trade receivables |
- |
2,000 | |||||||||
Other accounts receivable and prepaid expenses |
3 |
5,460 |
2,658 | ||||||||
| |||||||||||
Total current assets |
123,222 |
129,090 | |||||||||
| |||||||||||
NON-CURRENT ASSETS: | |||||||||||
Long-term prepaid expenses |
1,911 |
1,880 | |||||||||
Severance pay fund |
3,125 |
2,863 | |||||||||
Operating lease right of use asset |
4 |
2,247 |
2,772 | ||||||||
Property and equipment, net |
5 |
1,658 |
1,711 | ||||||||
| |||||||||||
Total non- current assets |
8,941 |
9,226 | |||||||||
| |||||||||||
Total assets |
$ |
132,163 |
$ |
138,316 |
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
|
|
|
December 31, | ||||||||
Note |
|
|
2021 |
|
|
2020 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| |||||||||||
CURRENT LIABILITIES: | |||||||||||
Trade payables |
$ |
4,621 |
$ |
1,413 | |||||||
Short-term deferred participation in R&D expenses |
3,629 |
668 | |||||||||
Current maturity of operating lease liability |
4 |
768 |
639 | ||||||||
Other accounts payable and accrued expenses |
6 |
8,078 |
7,803 | ||||||||
| |||||||||||
Total current liabilities |
17,096 |
10,523 | |||||||||
| |||||||||||
NON- CURRENT LIABILITIES: | |||||||||||
Long-term deferred participation in R&D expenses |
2,715 |
1,968 | |||||||||
Long-term operating lease liability |
1,982 |
2,527 | |||||||||
Accrued severance pay |
3,677 |
3,516 | |||||||||
| |||||||||||
Total non-current liabilities |
8,374 |
8,011 | |||||||||
| |||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES |
7 | ||||||||||
| |||||||||||
SHAREHOLDERS’ EQUITY: |
8 | ||||||||||
Share capital: | |||||||||||
Ordinary shares of NIS 0.01 par value: 200,000,000 shares authorized at December 31, 2021 and 2020; 86,433,432 and 83,675,856 shares issued and outstanding at December 31, 2021 and 2020, respectively |
239 |
231 | |||||||||
Additional paid-in capital |
528,533 |
507,427 | |||||||||
Accumulated deficit |
(422,079 |
) |
(387,876 |
) | |||||||
| |||||||||||
Total shareholders’ equity |
106,693 |
119,782 | |||||||||
| |||||||||||
Total liabilities and shareholders’ equity |
$ |
132,163 |
$ |
138,316 |
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands (except share and per share data)
Year ended December 31, | |||||||||||||||
Note |
2021 |
2020 |
2019 | ||||||||||||
| |||||||||||||||
Revenue |
$ |
6,000 |
$ |
2,000 |
$ |
- | |||||||||
Cost of revenue |
680 |
60 |
- | ||||||||||||
| |||||||||||||||
Gross profit |
5,320 |
1,940 |
- | ||||||||||||
| |||||||||||||||
Operating expenses: | |||||||||||||||
| |||||||||||||||
Research and development expenses, net |
28,694 |
22,760 |
19,816 | ||||||||||||
Marketing and business development expenses |
842 |
871 |
651 | ||||||||||||
General and administrative expenses |
10,858 |
9,805 |
8,412 | ||||||||||||
| |||||||||||||||
Total operating expenses |
40,394 |
33,436 |
28,879 | ||||||||||||
| |||||||||||||||
Operating loss |
(35,074 |
) |
(31,496 |
) |
(28,879 |
) | |||||||||
| |||||||||||||||
Financial and other income, net |
11 |
871 |
1,798 |
820 | |||||||||||
| |||||||||||||||
Loss before taxes on income |
(34,203 |
) |
(29,698 |
) |
(28,059 |
) | |||||||||
Taxes on income |
9 |
- |
- |
722 | |||||||||||
| |||||||||||||||
Net loss |
(34,203 |
) |
(29,698 |
) |
(27,337 |
) | |||||||||
| |||||||||||||||
Basic net loss per share |
$ |
(0.41 |
) |
$ |
(0.37 |
) |
$ |
(0.43 |
) | ||||||
| |||||||||||||||
Diluted net loss per share |
$ |
(0.41 |
) |
$ |
(0.37 |
) |
$ |
(0.43 |
) | ||||||
| |||||||||||||||
Total comprehensive loss |
$ |
(34,203 |
) |
$ |
(29,698 |
) |
$ |
(27,337 |
) | ||||||
| |||||||||||||||
Weighted average number of ordinary shares used in computing basic net loss per share |
84,203,971 |
79,591,187 |
63,636,673 | ||||||||||||
| |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net loss per share |
84,203,971 |
79,591,187 |
63,636,673 |
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
Ordinary shares |
Additional paid-in |
Accumulated |
Total shareholders’ | |||||||||||||||||
Number |
Amount |
capital |
deficit |
equity | ||||||||||||||||
| ||||||||||||||||||||
Balance as of January 1, 2019 |
59,849,784 |
$ |
164 |
$ |
367,920 |
$ |
(330,841 |
) |
$ |
37,243 | ||||||||||
| ||||||||||||||||||||
Options exercised |
878,378 |
3 |
3,246 |
- |
3,249 | |||||||||||||||
Issuance of shares and warrants, net |
7,194,674 |
20 |
22,738 |
- |
22,758 | |||||||||||||||
Stock-based compensation relating to options issued to employees, directors and non-employees |
- |
- |
2,408 |
- |
2,408 | |||||||||||||||
Net loss |
- |
- |
- |
(27,337 |
) |
(27,337 |
) | |||||||||||||
| ||||||||||||||||||||
Balance as of December 31, 2019 |
67,922,836 |
187 |
396,312 |
(358,178 |
) |
38,321 | ||||||||||||||
| ||||||||||||||||||||
Options exercised |
3,070,542 |
9 |
15,906 |
- |
15,915 | |||||||||||||||
Warrants exercised |
3,866,139 |
11 |
18,314 |
- |
18,325 | |||||||||||||||
Issuance of shares, net |
8,816,339 |
24 |
74,123 |
- |
74,147 | |||||||||||||||
Stock-based compensation relating to options issued to employees, directors and non-employees |
- |
- |
2,772 |
- |
2,772 | |||||||||||||||
Net loss |
- |
- |
- |
(29,698 |
) |
(29,698 |
) | |||||||||||||
| ||||||||||||||||||||
Balance as of December 31, 2020 |
83,675,856 |
231 |
507,427 |
(387,876 |
) |
119,782 | ||||||||||||||
| ||||||||||||||||||||
Exercise of options and ESPP shares |
335,204 |
1 |
1,454 |
- |
1,455 | |||||||||||||||
Warrants exercised |
89,557 |
(* |
) |
425 |
- |
425 | ||||||||||||||
Issuance of shares, net |
2,332,815 |
7 |
14,951 |
- |
14,958 | |||||||||||||||
Stock-based compensation issued to employees, directors and non-employees |
- |
- |
4,276 |
- |
4,276 | |||||||||||||||
Net loss |
- |
- |
- |
(34,203 |
) |
(34,203 |
) | |||||||||||||
| ||||||||||||||||||||
Balance as of December 31, 2021 |
86,433,432 |
$ |
239 |
$ |
528,533 |
$ |
(422,079 |
) |
$ |
106,693 |
(*) Representing amount lower than $1.
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Cash flows from operating activities: | ||||||||||||
| ||||||||||||
Net loss |
$ |
(34,203 |
) |
$ |
(29,698 |
) |
$ |
(27,337 |
) | |||
Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||||||
Stock-based compensation |
4,276 |
2,772 |
2,408 | |||||||||
Depreciation |
461 |
715 |
989 | |||||||||
Increase (decrease) in severance pay, net |
(101 |
) |
184 |
(22 |
) | |||||||
Gain from property and equipment sales and disposals |
(3 |
) |
(12 |
) |
(135 |
) | ||||||
Decrease (increase) in interest receivables from short-term bank deposits |
469 |
(532 |
) |
66 | ||||||||
Decrease (increase) in trade receivables |
2,000 |
(2,000 |
) |
- | ||||||||
Increase in other accounts receivable and prepaid expenses |
(2,802 |
) |
(1,613 |
) |
(142 |
) | ||||||
Decrease (increase) in long-term prepaid expenses |
(31 |
) |
(1,187 |
) |
83 | |||||||
Decrease in operating lease right of use asset |
525 |
475 |
2,165 | |||||||||
Increase (decrease) in trade payables and other accounts payable and accrued expenses |
3,367 |
3,817 |
(3,502 |
) | ||||||||
Increase (decrease) in deferred participation in R&D expenses |
3,708 |
(829 |
) |
(627 |
) | |||||||
Decrease in operating lease liability |
(416 |
) |
(412 |
) |
(1,834 |
) | ||||||
| ||||||||||||
Net cash used in operating activities |
(22,750 |
) |
(28,320 |
) |
(27,888 |
) | ||||||
| ||||||||||||
Cash flows from investing activities: | ||||||||||||
| ||||||||||||
Proceeds from maturity of short-term bank deposits |
136,850 |
70,300 |
59,403 | |||||||||
Investment in short-term bank deposits |
(129,945 |
) |
(152,350 |
) |
(54,300 |
) | ||||||
Purchase of property and equipment |
(292 |
) |
(166 |
) |
(155 |
) | ||||||
Proceeds from sale of property and equipment |
3 |
44 |
382 | |||||||||
| ||||||||||||
Net cash provided by (used in) investing activities |
6,616 |
(82,172 |
) |
5,330 |
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended December 31, | ||||||||||||
2021 |
|
|
2020 |
|
|
2019 | ||||||
Cash flows from financing activities: | ||||||||||||
| ||||||||||||
Proceeds from issuance of ordinary shares, net |
14,958 |
74,147 |
22,758 | |||||||||
Proceeds from exercise of warrants |
425 |
18,325 |
- | |||||||||
Proceeds from exercise of stock-based awards |
1,455 |
15,991 |
3,173 | |||||||||
| ||||||||||||
Net cash provided by financing activities |
16,838 |
108,463 |
25,931 | |||||||||
| ||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
704 |
(2,029 |
) |
3,373 | ||||||||
Cash, cash equivalents and restricted cash at the beginning of the year |
7,810 |
9,839 |
6,466 | |||||||||
| ||||||||||||
Cash and cash equivalents and restricted cash at the end of the year |
$ |
8,514 |
$ |
7,810 |
$ |
9,839 | ||||||
| ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||
| ||||||||||||
Purchase of property and equipment |
$ |
116 |
$ |
16 |
$ |
47 | ||||||
Receivables on account of shares |
$ |
- |
$ |
- |
$ |
76 | ||||||
Right-of-use asset obtained in exchange for operating lease liability |
$ |
- |
$ |
(194 |
) |
$ |
363 | |||||
| ||||||||||||
Cash paid (received) during the year for: | ||||||||||||
| ||||||||||||
Interest payments received from short-term bank deposits and cash equivalents |
$ |
1,364 |
$ |
1,232 |
$ |
1,002 | ||||||
| ||||||||||||
Reconciliation of cash, cash equivalents and restricted cash: | ||||||||||||
| ||||||||||||
Cash and cash equivalents |
$ |
7,801 |
$ |
7,143 |
$ |
9,187 | ||||||
Restricted cash |
713 |
667 |
652 | |||||||||
| ||||||||||||
Total cash, cash equivalents and restricted cash |
$ |
8,514 |
$ |
7,810 |
$ |
9,839 |
The accompanying notes are an integral part of the consolidated financial statements.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1: -GENERAL
a.Compugen Ltd. (the “Company”) is a clinical-stage therapeutic discovery and development company utilizing its broadly applicable predictive computational discovery capabilities to identify novel drug targets and new biological pathways to develop therapeutics in the field of cancer immunotherapy. Compugen’s innovative immuno-oncology pipeline consists of four clinical stage programs, targeting immune checkpoints Compugen discovered computationally, COM701, COM902, bapotulimab (formerly known as BAY1905254) and AZD2936. The Company’s lead product candidate, COM701, a potential first-in-class anti-PVRIG antibody, for the treatment of solid tumors, is undergoing Phase 1 clinical trials in dual, and triple combinations under clinical collaboration with Bristol Myers Squibb. COM902, a potential best-in-class, is a therapeutic antibody targeting TIGIT, developed internally and is undergoing a Phase 1 trial to evaluate it in patients with advanced malignancies as a monotherapy and in combination with COM701. Bapotulimab, an antibody targeting ILDR2, licensed to Bayer under a research and discovery collaboration and license agreement, is also in Phase 1 trials in patients with advanced solid tumors. AZD2936 is a novel anti-TIGIT/PD-1 bispecific antibody with a TIGIT component that is derived from Compugen’s COM902 program and is developed by AstraZeneca pursuant to an exclusive license agreement between Compugen and AstraZeneca and is in Phase 1/2 trial in patients with advanced or metastatic non-small cell lung cancer. Compugen’s therapeutic pipeline of early-stage immuno-oncology programs consists of programs aiming to address various mechanisms of immune resistance, including myeloid targets. The innovative immuno-oncology pipeline, the strategic collaborations and the Company’s computational discovery engine serve as the corporate three key building blocks. Compugen’s business model is to selectively enter into collaborations for its novel targets and related drug product candidates at various stages of research and development under various revenue-sharing arrangements.
b.The Company is headquartered in Holon, Israel. Its clinical development activities are headed from its United States subsidiary, Compugen USA, Inc, located in South San Francisco, CA.
c.The Company has incurred losses in the amount of $34,203 during the year ended December 31, 2021, has an accumulated deficit of $422,079 as of December 31, 2021 and has an accumulated negative cash flow from operating activities in the amount of $22,750 for the year ended December 31, 2021. On February 26, 2019, the Company announced a corporate restructuring to reduce costs by consolidating and streamlining R&D operations. The restructuring included reducing its workforce by 35%, consolidating R&D activities in one location in Israel and outsourcing certain preclinical activities to third-party service providers. The Company believes that its existing capital resources will be adequate to satisfy its expected liquidity requirements at the current level of yearly expenditures into 2024.
d.On August 5, 2013, the Company entered into a Research and Development Collaboration and License Agreement (“Bayer Agreement”) with Bayer Pharma AG (“Bayer”) for the research, development, and commercialization of antibody-based therapeutics against two novel, Compugen-discovered immune checkpoint regulators.
Under the terms of the Bayer Agreement, the Company received an upfront payment of $10,000, and, following the return of the CGEN 15022 program in 2017, the Company is eligible to receive an aggregate of over $250,000 in potential milestone payments for Bapotulimab (formerly known as BAY1905254), not including aggregate milestone payments of approximately $23,000 received to date. Additionally, the Company is eligible to receive mid to high single digit royalties on global net sales of any approved products under the collaboration.
Pursuant to the terms of Bayer Agreement, Bapotulimab program was transferred to Bayer’s full control for further preclinical and clinical development activities, and worldwide commercialization under milestone and royalty bearing license from Compugen.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1: -GENERAL (Cont.)
e.Effective March 30, 2018, the Company entered into an exclusive license agreement with MedImmune Limited. the global biologics research and development arm of AstraZeneca (“AstraZeneca”) to enable the development of bi-specific and multi-specific immuno-oncology antibody products. Under the terms of the agreement, Compugen provided an exclusive license to AstraZeneca for the development of bi-specific and multi-specific antibody products derived from COM902. AstraZeneca has the right to create multiple products under this license and will be solely responsible for all research, development, and commercial activities under the agreement. Compugen received a $10,000 upfront payment, and received $8,000 milestone payments out of up to $200,000 the Company is eligible to receive in development, regulatory and commercial milestones for the first product in addition to tiered royalties on future product sales. If additional products are developed, additional milestones and royalties would be due to Compugen for each product.
f.On October 10, 2018, the Company entered into a Master Clinical Trial Collaboration Agreement (the “Agreement”) with Bristol-Myers Squibb Company (“Bristol-Myers Squibb”) to evaluate the safety and tolerability of Compugen’s COM701 in combination with Bristol-Myers Squibbs’ PD-1 immune checkpoint inhibitor Opdivo® (nivolumab), in patients with advanced solid tumors.
Pursuant to the Agreement, Compugen is responsible for and will continue sponsoring the ongoing two-part Phase 1 trial, which includes the evaluation of the combination of COM701 and Opdivo®. The collaboration was also designed to address potential future combinations, including trials sponsored by Bristol-Myers Squibb to investigate combined inhibition of checkpoint mechanisms, such as PVRIG and TIGIT. Bristol-Myers Squibb and Compugen each supplies the other company with its own compound for the other party’s study, and otherwise each party is responsible for all costs associated with the study that it is conducting.
In conjunction with the signing of the Agreement in October 2018, Bristol-Myers Squibb made a $12,000 investment in Compugen, see Note 8b.
On February 14, 2020, the Agreement was amended to include a triple combination clinical trial to evaluate the safety, tolerability and antitumor activity of COM701 in combination with Opdivo® (nivolumab), and Bristol-Myers Squibb’s investigational antibody targeting TIGIT known as BMS-986207, in patients with advanced solid tumors, instead of the planned expansion of the combined therapy study designed to evaluate the dual combination of COM701 and Opdivo®.
Pursuant to the Agreement, as amended, the Company sponsors the two-part Phase 1/2 trial, which evaluates the triple combination of COM701, Opdivo® and BMS-986207, in patients with advanced solid tumors where Bristol-Myers Squibb provides Opdivo® and BMS-986207 at no cost to the Company.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1: -GENERAL (Cont.)
As part of the amended Agreement, it was agreed that the Company will complete the dose escalation arm of the dual combination of COM701 with Opdivo® under the ongoing Phase 1 study and will not continue the expansion cohorts of the dual combination. However, on February 19, 2021, the Agreement was further amended to include an expansion of the Phase 1 combination study designed to evaluate the dual combination of COM701 and Opdivo® in patients with advanced solid tumors, where the Company is responsible for and sponsors the expansion cohort and Bristol Myers Squibb provides Opdivo® at no cost to the Company for this study.
On November 10, 2021, the Agreement was further amended to establish a joint steering committee (alongside the existing joint development committee which acts at an operational level) to facilitate strategic oversight and guidance for the programs run under the collaboration.
In conjunction with the signing of the amendment to the Agreement in November 2021, Bristol-Myers Squibb made a $20,000 investment in Compugen, see Note 8b.
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”).
a.Use of estimates:
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
The Company considered the impact of COVID-19 on the estimates and assumptions and determined that there were no material adverse impacts on the consolidated financial statements for the year ended December 31, 2021. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may change materially in future periods. Such changes could result in future impairments of long-lived assets.
b.Financial statements in U.S. dollars:
The reporting and functional currency of the Company is the U.S. dollar, as the Company’s management believes that the U.S. dollar is the primary currency of the economic environment in which the Company and Compugen USA, Inc. have operated and expect to continue to operate in the foreseeable future.
Transactions and balances denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with ASC No. 830, “Foreign Currency Matters”. All transaction gains and losses from the re-measurement of monetary balance sheet items are reflected in the consolidated statement of comprehensive loss as financial income or expenses, as appropriate.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c.Basis of consolidation:
The consolidated financial statements include the accounts of the Company and Compugen USA, Inc. Intercompany transactions and balances have been eliminated upon consolidation.
d.Cash equivalents:
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at acquisition.
e.Restricted cash:
Restricted cash is held in interest bearing saving accounts which are used as a security for the Company’s Israeli facility leasehold bank guarantee and credit card security for Compugen USA, Inc.
f.Short-term bank deposits:
Bank deposits with maturities of more than three months but less than one year are included in short-term bank deposits. Such short-term bank deposits are stated at cost which approximates market values.
The short-term bank deposits as of December 31, 2021 and 2020 are in U.S. dollars and bear an annual weighted average interest rate of 0.77% and 1.01%, respectively.
g.Property and equipment, net:
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
% | |
| |
Computers, software and related equipment |
33 |
Laboratory equipment and office furniture |
6 - 20 (mainly 20) |
Leasehold improvements |
Shorter of the term of the lease or useful life |
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
h.Impairment of long-lived assets:
The long-lived assets of the Company and Compugen USA, Inc. are reviewed for impairment in accordance with ASC 360, “Property, Plant, and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years 2021, 2020 and 2019, no impairment losses have been identified.
i.Revenue recognition:
The Company generates revenues mainly from its collaborative and license agreements. The revenues are derived mainly from upfront license payments, research and development services and contingent payments related to milestone achievements.
The Company recognizes revenue in accordance with ASC 606 – “Revenue from Contracts with Customers”.
As such, the Company analyzes its contracts to assess whether they are within the scope of ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following steps:
•
Identification of the contract, or contracts, with a customer
•
Identification of the performance obligations in the contract - At contract inception, the Company assesses the goods or services promised in a contract with a customer and identifies those distinct goods and services that represent a performance obligation. A promised good or service may not be identified as a performance obligation if it is immaterial in the context of the contract with the customer, if it is not distinct from other promises in the contract (either because it is not capable of being distinct or because it is not distinct within the context of the contract), or if an option to acquire good or service does not provide the customer with a material right.
•
Determination of the transaction price - The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration will only be included in the transaction price when it is not considered constrained, which is when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i.Revenue recognition (Cont.):
•
Allocation of the transaction price to the performance obligations in the contract - If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices. The relative selling price for each deliverable is estimated using observable objective evidence if it is available. If observable objective evidence is not available, the Company uses its best estimate of the selling price for the deliverable.
•
Recognition of revenue when, or as, the Company satisfies a performance obligation - Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when, or as, the customer obtains control of that asset, which for a service is considered to be as the services are received and used.
After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events. Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception.
The Company entered into an exclusive license agreement with AstraZeneca. Under the terms of the agreement, Compugen provided AstraZeneca with an exclusive license to intellectual property (“IP”) rights of the Company for the development of bi-specific and multi-specific antibody products derived from COM902. Compugen received a $10,000 upfront nonrefundable payment and is eligible to receive up to $200,000 for development, regulatory and commercial milestones for the first product, including $8,000 received to date as well as tiered royalties on future product sales.
Under ASC 606, the Company determined the license to the IP to be a functional IP that has significant standalone functionality. The Company is not required to continue to support, develop or maintain the intellectual property transferred and will not undertake any activities to change the standalone functionality of the IP. Therefore, the license to the IP is a distinct performance obligation and as such revenue is recognized at the point in time that control of the license is transferred to the customer.
Future milestone payments are considered variable consideration and are subject to the variable consideration constraint (i.e. will be recognized once concluded that it is “probable” that a significant reversal of the cumulative revenues recognized under the contract will not occur in future periods when the uncertainty related to the variable consideration is resolved). Therefore, as the milestone payments are not probable, revenue was not recognized in respect to such milestone payments prior to achievement of such milestone.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i.Revenue recognition (Cont.):
Sales- or usage-based royalties to be received in exchange for licenses of IP are recognized at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied (in whole or in part). As royalties are payable based on future Commercial Sales, as defined in the agreement, which did not occur as of the financial statements date, the Company did not recognize any revenues from royalties.
On December 18, 2020 the first milestone with respect to the first licensed product, under the AstraZeneca License Agreement was achieved and the Company recognized revenues in total amount of $2,000 in accordance with the criteria prescribed under ASC 606.
On September 29, 2021 the second milestone with respect to the first licensed product, under the AstraZeneca License Agreement was achieved and the Company recognized revenues in total amount of $6,000 in accordance with the criteria prescribed under ASC 606.
For information regarding revenues, please refer to Note 10 below.
j.Cost of revenues:
Cost of revenues consist of certain royalties and milestones paid or accrued.
k.Research and development expenses, net:
Research and development costs are charged to the statement of comprehensive loss as incurred and are presented net of the amount of any grants the Company receives for research and development in the period in which the grant was received.
As part of the process of preparing the consolidated financial statements, the Company accrues costs for pre-clinical and clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the contract research organizations or other pre-clinical or clinical trial vendors that perform the activities. In certain circumstances, the Company is required to make nonrefundable advance payments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, the nonrefundable advance payments are deferred and capitalized, and amortized as the related goods or services are provided. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
k.Research and development expenses, net (Cont.):
The portion of the Bristol-Myers Squibb $12,000 investment over the fair market value of the shares issued in the amount of $4,121 and the portion of the $20,000 investment over the fair market value of the shares issued in the amount of $5,000 were considered as deferred participation of Bristol-Myers Squibb in R&D expenses which is amortized over the period of the clinical trial based on the progress in the R&D, in accordance with ASC 808 “Collaborative Arrangements”, see Note 1f and Note 8b.
Amortization of participation in R&D expenses for the years ended December 31, 2021, 2020 and 2019 were $1,291, $829 and $627, respectively.
l.Severance pay:
The Company’s liability for severance pay for its Israeli employees is calculated pursuant to Israeli Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date, and is in large part covered by regular deposits with recognized pension funds, deposits with severance pay funds and purchases of insurance policies. The value of these deposits and policies is recorded as an asset in the Company’s balance sheet. Pursuant to Section 14 of the Israeli Severance Pay Law, for Israeli employees under this section, the Company’s contributions for severance pay have replaced its severance obligation. Upon contribution of the full amount of the employee’s monthly salary for each year of service, no additional calculations are conducted between the parties regarding the matter of severance pay and no additional payments are made by the Company to the employee.
Further, the related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet, as the Company is legally released from the obligation to employees once the deposit amounts have been paid.
Severance expenses for the years ended December 31, 2021, 2020 and 2019 amounted to approximately $383, $572 and $366, respectively.
m.Stock-based compensation:
The Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718, “Compensation - Stock Compensation”, (“ASC 718”), which requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The Company accounts for forfeitures as they occur.
The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
m.Stock-based compensation (Cont.):
The Company selected the Black-Scholes-Merton (“Black-Scholes”) option-pricing model as the most appropriate fair value method for its share-options awards and Employee Stock Purchase Plan (“ESPP”). The option-pricing model requires a number of assumptions, of which the most significant are the expected share price volatility and the expected option term. Expected volatility was calculated based on actual historical share price movements over a term that is equivalent to the expected term of granted options. The expected term of options granted is based on historical experience and represents the period of time that options granted are expected to be outstanding.
The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
The Company used the following weighted-average assumptions for options granted to employees, directors and non-employees and ESPP:
Year ended December 31, | |||||||||
2021 |
2020 |
2019 | |||||||
| |||||||||
Employee stock Options | |||||||||
Volatility |
67.68% |
63.17% |
54.59% | ||||||
Risk-free interest rate |
0.77% |
0.45% |
1.92% | ||||||
Dividend yield |
0% |
0% |
0% | ||||||
Expected life (years) |
5.17 |
5.16 |
5.15 | ||||||
| |||||||||
ESPP | |||||||||
Volatility |
64.68%-69.68% |
- |
- | ||||||
Risk-free interest rate |
0.04%-0.10% |
- |
- | ||||||
Dividend yield |
0% |
- |
- | ||||||
Expected life (years) |
0.42-0.50 |
- |
- |
n.Concentration of credit risks:
Financial instruments that potentially subject the Company and Compugen USA, Inc. to concentration of credit risk consist principally of cash and cash equivalents, restricted cash and short-term bank deposits.
Cash, cash equivalents, restricted cash and short-term bank deposits are invested in major banks in Israel and in the U.S. Generally, these deposits may be redeemed upon demand and bear minimal risk.
The trade receivables of the Company derive from milestone payments under collaboration agreements between the company and its collaborators, located primarily in Europe.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
n.Concentration of credit risks (Cont.):
The Company’s collaborators are major pharma companies. The amounts due to the Company by such collaborators are paid pursuant to the terms of the agreements after a short period of time and bear low risk.
The Company had one collaborator that accounted for 100% of the Company’s consolidated revenues, for the years ended December 31, 2021 and 2020. The Company had no revenues in 2019.
o.Basic and diluted loss per share:
Basic loss per share is calculated based on the weighted average number of ordinary shares outstanding during each year. Diluted net loss per share is calculated based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential in accordance with ASC 260, “Earnings per Shareˮ.
All outstanding share options and warrants for the years ended December 31, 2021, 2020 and 2019 have been excluded from the calculation of the diluted net loss per share, because all such securities are anti-dilutive for all periods presented. As of December 31, 2021, 2020 and 2019 the average number of shares related to outstanding options and warrants excluded from the calculations of diluted net loss per share were 6,758,300, 7,150,648 and 12,754,803, respectively.
p.Income taxes:
The Company accounts for income taxes in accordance with ASC No. 740, “Income Taxes”, (“ASC 740”) which prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. As of December 31, 2021 and 2020, a full valuation allowance was provided by the Company.
ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
q.Fair value of financial instruments:
The Company applies ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), pursuant to which fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputting that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.
Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
Level 1 -Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.
Level 2 -Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 -Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The carrying amounts of cash and cash equivalents, restricted cash, short-term bank deposits, other accounts receivable and prepaid expenses, trade payable and other accounts payable and accrued expenses approximate their fair values due to the short-term maturities of such instruments.
r.Derivative instruments:
The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and Hedging”. ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
r.Derivative instruments (Cont.):
If the derivatives meet the definition of a hedge and are so designated, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is recognized in earnings.
In the past the Company entered into forward contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses as well as other expenses denominated in NIS. As of December 31, 2021 and 2020, the Company had no outstanding forward contracts. The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2).
These contracts met the requirement for cash flow hedge accounting and during each of the years ended December 31, 2021, 2020 and 2019, no amount of total gains were recognized and were classified to operating expenses as effective hedge and no unrealized gains were recognized under other comprehensive income (loss).
s.Comprehensive income (loss):
The Company accounts for comprehensive income (loss) in accordance with ASC 220, “Comprehensive Income”. This statement establishes standards for the reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements. Comprehensive income (loss) generally represents all changes in shareholders’ equity during the period except those resulting from investments by, or distributions to, shareholders. The Company elected to present the comprehensive income (loss) in a single continuous statement.
In the years 2021, 2020 and 2019 the Company has no components of other comprehensive income (loss), other than net loss.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: -SIGNIFICANT ACCOUNTING POLICIES (Cont.)
t.Recently issued and recently adopted Accounting Standards:
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS). ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. The Company adopted ASU 2020-06 as of January 1, 2021. The adoption of this standard did not have an impact to the Company’s financial statements.
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832). This ASU requires business entities to disclose information about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting model. The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the significant terms and conditions of the transactions. The ASU is effective for annual periods beginning after December 15, 2021. The disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date of initial application. The ASU is currently not expected to have a material impact on our consolidated financial statements.
NOTE 3: -OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
December 31, | ||||||||
2021 |
2020 | |||||||
| ||||||||
Prepaid expenses |
$ |
5,272 |
$ |
2,482 | ||||
Government authorities |
57 |
54 | ||||||
Other |
131 |
122 | ||||||
| ||||||||
$ |
5,460 |
$ |
2,658 |
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 4: -LEASES
The Company leases all its real estate, storage area and cars under various operating lease agreements that expire on various dates.
The Company’s operating leases have original lease periods expiring between 2022 and 2024. The offices in Israel lease include two options to renew, one of which was exercised in 2020. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably certain.
In October 2020 the Company’s lease of its offices in Israel was amended in connection with the exercise of the option. The amendment was not accounted for as a new lease. As a result of the amendment the operating lease right of use asset increased by $43, the operating lease liability decreased by $194 and the Company recorded foreign currency exchange rate of $237.
Lease payments included in the measurement of the lease liability comprise the following: the fixed non-cancelable lease payments and payments for optional renewal periods where it is reasonably certain the renewal period will be exercised.
Under ASC 842, all leases, including non-cancelable operating leases, are now recognized on the balance sheet. The aggregated present value of lease payments is recorded as a long-term asset titled Operating lease right of use asset. The corresponding lease liabilities are split between current maturity of operating lease liability within current liabilities and long-term operating lease liability within long-term liabilities. The Company’s leases do not provide an implicit rate, therefore the Company uses its incremental borrowing rate based on information available on the commencement date in determining the present value of lease payments.
The Company subleased small part of its leased premises until March 14, 2021. Sublease income in the year ended December 31, 2021 and 2020, amounted to $3 and $56, respectively.
The following table represents the weighted-average remaining lease term and discount rate:
Twelve months ended | ||
December 31, 2021 | ||
| ||
Weighted average remaining lease term |
3.87 | |
Weighted average discount (annual) rate |
5.49% |
Operating lease expenses were approximately $956, $944 and $1,586 in the years ended December 31, 2021, 2020 and 2019, respectively.
Cash paid for amounts included in the measurement of lease liabilities was approximately $914, $927 and $1,577 in the years ended December 31, 2021, 2020 and 2019, respectively.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 4: -LEASES (Cont.)
Maturities of operating lease liabilities were as follows:
December 31, 2021 | ||||
| ||||
2022 |
$ |
895 | ||
2023 |
726 | |||
2024 |
664 | |||
2025 |
631 | |||
2026 and after |
129 | |||
| ||||
Total operating lease payments |
3,045 | |||
Less: imputed interest |
295 | |||
Present value of lease liabilities |
2,750 | |||
| ||||
Lease liabilities, current |
768 | |||
Lease liabilities, non- current |
1,982 | |||
| ||||
Present value of lease liabilities |
$ |
2,750 |
The above annual minimum future rental commitments include the period covered by the first exercised option with respect to the leased facility of Compugen Ltd. through March 2026 and exclude the second option to extend the lease of the Company facility for additional five-year period following expiration of the current lease period.
NOTE 5: -PROPERTY AND EQUIPMENT, NET
December 31, | ||||||||
2021 |
2020 | |||||||
Cost: | ||||||||
| ||||||||
Computers, software and related equipment |
$ |
1,506 |
$ |
1,431 | ||||
Laboratory equipment and office furniture |
3,674 |
3,367 | ||||||
Leasehold improvements |
2,321 |
2,321 | ||||||
| ||||||||
7,501 |
7,119 | |||||||
Accumulated depreciation: | ||||||||
| ||||||||
Computers, software and related equipment |
1,351 |
1,264 | ||||||
Laboratory equipment and office furniture |
3,114 |
3,001 | ||||||
Leasehold improvements |
1,378 |
1,143 | ||||||
| ||||||||
5,843 |
5,408 | |||||||
| ||||||||
Depreciated cost |
$ |
1,658 |
$ |
1,711 |
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 5: -PROPERTY AND EQUIPMENT, NET (Cont.)
During 2021 and 2020 total cost of $26 and $220, respectively and total accumulated depreciation of $26 and $188, respectively were disposed from the consolidated balance sheets.
For the years ended December 31, 2021, 2020 and 2019, depreciation expenses were approximately $461, $715 and $989, respectively.
NOTE 6: -OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31, | ||||||||
2021 |
2020 | |||||||
| ||||||||
Employees and related accruals |
$ |
3,299 |
$ |
2,881 | ||||
Accrued expenses |
4,779 |
4,922 | ||||||
| ||||||||
$ |
8,078 |
$ |
7,803 |
NOTE 7: - COMMITMENTS AND CONTINGENCIES
a.The Company provided bank guarantees in the amount of $703 related to its offices in Israel, car leases in Israel and credit card security for its U.S. subsidiary.
b.Under the Office of the Israel Innovation Authority of the Israeli Ministry of Industry, Trade and Labor, formerly known as the Office of the Chief Scientist, (the “IIA”), the Company is not obligated to repay any amounts received from the IIA if it does not generate any income from the results of the funded research program(s). If income is generated from a funded research program, the Company is committed to pay royalties at a rate of between 3% to 5% of future revenue arising from such research program(s), and up to a maximum of 100% of the amount received, linked to the U.S. dollar (for grants received under programs approved subsequent to January 1, 1999, the maximum to be repaid is 100% plus interest at LIBOR). For the years ended December 31, 2021, 2020 and 2019, the Company had an aggregate of paid or accrued royalties to the IIA, recorded as cost of revenue in the consolidated statements of comprehensive loss in the amount of $180, $60 and $0, respectively.
As of December 31, 2021, the Company’s aggregate contingent obligations for payments to IIA, based on royalty-bearing participation received or accrued, net of royalties paid or accrued, totaled approximately to $9,522.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 7: - COMMITMENTS AND CONTINGENCIES (Cont.)
c.On June 25, 2012 the Company entered into an Antibodies Discovery Collaboration Agreement (the “Antibodies Discovery Agreement”) with a U.S. antibody technology company (“mAb Technology Company”), providing an established source for fully human mAbs. Under the Antibodies Discovery Agreement, the mAb Technology Company will be entitled to certain royalties that could be eliminated, upon payment of certain one-time fees (all payments referred together as “Contingent Fees”). For the years ended December 31, 2021, 2020 and 2019, the Company incurred such Contingent Fees in the amounts of $500, $500 and $0.
d.On May 9, 2012, the Company entered into agreement (the “May 2012 Agreement”) with a U.S. Business Development Strategic Advisor (“Advisor”) for the purpose of entering into transactions with Pharma companies related to selected Pipeline Program Candidates.
Under the agreement the Advisor was entitled to 4% of the cash considerations that may be received under such transactions. In 2014, the May 2012 Agreement was terminated except for certain payments arising from the Bayer Agreement which survive termination until August 5, 2025.
For the years ended December 31, 2021, 2020 and 2019, the Company has not paid and did not accrue payments under this agreement.
e.Effective as of January 5, 2018, the Company entered into a Commercial License Agreement (CLA) with a European cell line development company. Under the agreement the Company is required to pay an annual maintenance fee, certain amounts upon the occurrence of specified milestones events, and 1% royalties on annual net sales with respect to each commercialized product manufactured using the company’s cell line. Royalties due under the CLA are creditable against the annual maintenance fee. In addition, the Company may at any time prior to the occurrence of a specific milestone event buy-out the royalty payment obligations in a single fixed amount. For the years ended December 31, 2021, 2020 and 2019, the Company incurred in the research and development expenses in connection with such milestone payment in the amounts of $0, $52 and $0.
f.Effective as of October 28, 2020, the Company entered into a collaboration agreement with a U.S. antibody discovery and optimization company for generation and optimization of therapeutic antibodies for the Company. Under the agreement the Company is required to pay service fees per services performed and certain amounts upon the occurrence of specified milestones events, and single-digit percent royalties on annual net sales with respect to each product sold that comprises or contains one or more antibodies so generated or optimized. The royalty rate is dependent upon the product type and any third-party contribution. For the years ended December 31, 2021, 2020 and 2019, the Company incurred in the research and development expenses such milestone payment in the amounts of $250, $0 and $0.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: - SHAREHOLDERS’ EQUITY
a.Ordinary shares:
The ordinary shares confer upon their holders the right to attend and vote at general meetings of the shareholders. Subject to the rights of holders of shares with limited or preferred rights which may be issued in the future, the ordinary shares of the Company confer upon the holders thereof equal rights to receive dividends, and to participate in the distribution of the assets of the Company upon its winding-up, in proportion to the amount paid up or credited as paid up on account of the nominal value of the shares held by them respectively and in respect of which such dividends are being paid or such distribution is being made, without regard to any premium paid in excess of the nominal value, if any.
b.Issuance of shares:
On May 25, 2018, the Company entered into a Controlled Equity OfferingSM sales agreement with Cantor Fitzgerald & Co. (“Cantor”), as sales agent, pursuant to which the Company may offer and sell, from time to time through Cantor, ordinary shares, par value NIS 0.01 per share, of the Company, under an “at-the-market” (“ATM”) offering, having an aggregate offering price of up to $25,000 (the “ATM Shares”). As of December 31, 2019, 7,245,268 shares were issued and sold under the ATM, with proceeds of approximately $22,914 (net of $781 issuance expenses). The program was terminated in 2019.
On June 14, 2018, the Company entered into securities purchase agreement with certain institutional investors and a placement agency agreement with JMP Securities LLC in connection with a registered direct offering (the “Offering”) of an aggregate of 5,316,457 ordinary shares (the “RD Shares”) of the Company at a purchase price of $3.95 per RD Share. In connection with the issuance of the RD Shares, the Company also issued warrants to purchase an aggregate of up to 4,253,165 additional ordinary shares. The Warrants are exercisable at a price of $4.74 per ordinary share and have a term of five years from the date of issuance. The Offering was made pursuant to the Company’s Registration Statement. Proceeds from the Offering were $19,767 (net of $1,233 issuance expenses).
During the years ended December 31, 2021, and 2020, warrants to purchase an aggregate of 3,955,696 ordinary shares were exercised with proceeds of approximately $18,750 and as of December 31, 2021, warrants to purchase up to 297,469 ordinary shares remain outstanding.
On October 10, 2018, the Company entered into a Master Clinical Trial Collaboration Agreement (the “Master Clinical Agreement”) with Bristol-Myers Squibb to evaluate the safety and tolerability of the Company’s COM701 in combination with Bristol-Myers Squibb’s PD-1 immune checkpoint inhibitor Opdivo® (nivolumab), in patients with advanced solid tumors. In conjunction with the Master Clinical Agreement, Bristol-Myers Squibb made a $12,000 equity investment in the Company.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: - SHAREHOLDERS’ EQUITY (Cont.)
Under the terms of the securities purchase agreement, Bristol-Myers Squibb purchased 2,424,243 ordinary shares of the Company at a purchase price of $4.95 per share. The share price represented a 33% premium over the average closing price of Compugen’s ordinary shares for twenty (20) Nasdaq trading days prior to the execution of the securities purchase agreement. The investment closed on October 12, 2018.
The premium over the fair market value in the amount of $4,121 represents the relative fair value of deferred participation of Bristol-Myers Squibb in R&D expenses (which are amortized over the period of the clinical trial, based on the progress in the R&D, in accordance with ASC 808 “Collaborative Arrangements”) and $7,788 (net of $91 issuance expenses) were considered equity investment.
In conjunction with the signing of the amendment to the Master Clinical Agreement in November 2021, Bristol Myers Squibb made a $20,000 investment in the Company, purchasing 2,332,815 ordinary shares of the Company at a purchase price of $8.57333 per share. The share price represented a 33% premium over the closing price of Company’s ordinary shares on the last Nasdaq trading day immediately prior to the execution of the securities purchase agreement.
The premium over the fair market value in the amount of $5,000 represents the relative fair value of deferred participation of Bristol-Myers Squibb in R&D expenses (which are amortized over the period of the clinical trial, based on the progress in the R&D, in accordance with ASC 808 “Collaborative Arrangements”) and $14,958 (net of $42 issuance expenses) were considered equity investment.
In March 2020, the Company entered into an underwriting agreement with SVB Leerink LLC and Stifel, Nicolaus & Company, Incorporated, as representatives of several underwriters relating to the issuance and sale in a public offering of 8,333,334 of the Company’s ordinary shares at a price to the public of $9.00 per share (and a price of $8.46 per share to the underwriters). Such shares were issued on March 16, 2020. In addition, the Company granted the underwriters a 30-day option to purchase additional ordinary shares at the price set forth above. On April 14, 2020, the Company issued and sold, pursuant to that underwriting agreement additional 483,005 ordinary shares pursuant to the underwriters’ option specified above. The Company sold a total of 8,816,339 ordinary shares in the offering with proceeds of $74,147 (net of $5,200 issuance expenses).
c.Share option plan:
Under the Company’s 2010 Share Option Plan as amended (the “Plan”), options may be granted to employees, directors and non-employees of the Company and Compugen USA Inc.
Under the 2010 Share Option Plan the Company reserved for issuance up to an aggregate of 12,395,152 ordinary shares. The Company’s Board of Directors last amended the Plan in May 2020, to increase the number of shares available under the 2010 Plan and extend the plan term by additional 10 years. As of December 31, 2021, an aggregate of 1,133,128 options under the 2010 Share Option Plan of the Company are still available for future grants.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: - SHAREHOLDERS’ EQUITY (Cont.)
c.Share option plan (Cont.):
In general, options granted under the Plan vest over a four-year period and expire 10 years from the date of grant and are granted at an exercise price of not less than the fair market value of the Company’s ordinary shares on the date of grant, unless otherwise determined by the Company’s board of directors. The exercise price of the options granted under the Plan may not be less than the nominal value of the shares into which such options are exercised and the expiration date may not be later than 10 years from the date of grant. If a grantee leaves his or her employment or other relationship with the Company, or if his or her relationship with the Company is terminated without cause (and other than by reason of death or disability, as defined in the Plan), the term of his or her unexercised options will generally expire in 90 days, unless determined otherwise by the Company.
Any options that are cancelled, forfeited or expired become available for future grants.
Transactions related to the grant of options to employees, directors and non-employees under the above Plan during the year ended December 31, 2021, were as follows:
Number of options |
Weighted average exercise price |
Weighted average remaining contractual life |
Aggregate intrinsic value | |||||||||||||
$ |
Years |
$ | ||||||||||||||
| ||||||||||||||||
Options outstanding at beginning of year |
5,960,256 |
6.26 |
6.94 |
37,587 | ||||||||||||
Options granted |
1,397,500 |
6.72 | ||||||||||||||
Options exercised |
(217,375 |
) |
4.19 | |||||||||||||
Options forfeited |
(154,277 |
) |
7.45 | |||||||||||||
Options expired |
(10,000 |
) |
6.14 | |||||||||||||
| ||||||||||||||||
Options outstanding at end of year |
6,976,104 |
6.39 |
6.69 |
3,323 | ||||||||||||
| ||||||||||||||||
Exercisable at end of year |
3,693,761 |
5.23 |
5.21 |
2,496 |
Weighted average fair value of options granted to employees, directors and non-employees during the years 2021, 2020 and 2019 was $3.81, $7.15 and $1.73 per share, respectively.
Aggregate intrinsic value of exercised options by employees, directors and non-employees during the years 2021, 2020 and 2019 was $759, $21,610, and $979, respectively. The aggregate intrinsic value of the exercised options represents the total intrinsic value (the difference between the sale price of the Company’s share at the date of exercise, and the exercise price) multiplied by the number of options exercised.
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing share price on the last trading day of calendar 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2021. This amount is impacted by the changes in the fair market value of the Company’s shares.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: - SHAREHOLDERS’ EQUITY (Cont.)
c.Share option plan (Cont.):
As of December 31, 2021, the total unrecognized estimated compensation cost related to non-vested share options granted prior to that date was $11,926 which is expected to be recognized over a weighted average period of approximately 3.02 years.
d.Employee Stock Purchase Plan:
The Company adopted an ESPP in November 2020, with the first offering period starting at January 1, 2021. In connection with its adoption, a total of 600,000 ordinary shares were reserved for issuance under this plan.
The ESPP is implemented through six-month offering periods (except for the first offering period that was five months). According to the ESPP, eligible employees and non-employees may use up to 15% of their base salaries to purchase ordinary shares up to an aggregate limit of $40 per participant for every calendar year. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the first day of each offering period or on the last day of such period.
Since its adoption and through December 31, 2021, 117,829 ordinary shares had been purchased under the ESPP and as of December 31, 2021, 482,171 ordinary shares were available for issuance under the ESPP.
In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.
e.The stock-based compensation expenses related to stock options and ESPP are included as follows in the expense categories:
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
| ||||||||||||
Research and development expenses |
$ |
1,971 |
$ |
1,123 |
$ |
1,151 | ||||||
Marketing and business development expenses |
215 |
172 |
46 | |||||||||
General and administrative expenses |
2,090 |
1,477 |
1,211 | |||||||||
| ||||||||||||
$ |
4,276 |
$ |
2,772 |
$ |
2,408 |
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: - INCOME TAXES
a. Israeli taxation:
1.Tax rates applicable to the income of the Company.
Taxable income of the Company is subject to a corporate tax rate of 23% in 2019, 2020 and 2021.
2.Measurement of taxable income in US dollars:
The Company has elected to measure its taxable income and file its tax return under the Israeli Income Tax Regulations (Principles Regarding the Management of Books of Account of Foreign Invested Companies and Certain Partnerships and the Determination of Their Taxable Income), 1986. Accordingly, results for tax purposes are measured in terms of earnings in dollars.
3.Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”):
On April 1, 2005, an amendment to the Investment Law came into effect (the “Amendment 60”) that significantly changed the provisions of the Investment Law. The Amendment 60 limits the scope of enterprises that may be approved by the Investment Center by setting criteria for the approval of a facility as a “Beneficiary Enterprise” including a provision generally requiring that at least 25% of the Beneficiary Enterprise’s income will be derived from export.
Another condition for receiving the benefits under the alternative track in respect of expansion programs pursuant to Amendment 60 is a minimum qualifying investment. The Company was eligible under the terms of minimum qualifying investment and elected 2012 as its “year of election”.
Additionally, the Amendment 60 enacted major changes in the manner in which tax benefits are awarded under the Investment Law so that companies no longer require Investment Center approval in order to qualify for tax benefits. However, the Investment Law provides that terms and benefits included in any certificate of approval already granted will remain subject to the provisions of the Investment Law as they were on the date of such approval.
As of December 31, 2021, there was no taxable income attributable to the Beneficiary Enterprise.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: - INCOME TAXES (Cont.)
a. Israeli taxation (Cont.):
In January 2011, another amendment to the Investment Law came into effect (“the 2011 Amendment”). According to the 2011 Amendment, the benefit tracks in the Investment Law were modified and a flat tax rate applies to the Company’s entire income subject to this amendment (the “Preferred Income”).
Once an election is made, the Company’s income will be subject to the amended tax rate of 16% from 2015 and thereafter (or 9% for a preferred enterprise located in development area A).
Commencing 2011 tax year, the Company can elect (without possibility of reversal) to apply the Amendment in a certain tax year and from that year and thereafter, it will be subject to the amended tax rates.
The Company does not currently intend to adopt the 2011 Amendment and intends to continue to comply with the Investment Law as in effect prior to enactment of the 2011 Amendment. Accordingly, the Company did not adjust its deferred tax balances as of December 31, 2021. The Company’s position may change in the future.
In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2016 and 2017 Budget Years), 2016, which includes Amendment 73 to the Law (the “Amendment 73”) was published. According to Amendment 73, a preferred enterprise located in development area A will be subject to a tax rate of 7.5% instead of 9% effective from January 1, 2016 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%).
Amendment 73 also prescribes special tax tracks for technological enterprises, which are subject to rules that were issued by the Minister of Finance in May 2017. The new tax tracks under the Amendment are as follows:
Preferred Technological Enterprise (“PTE”) - an enterprise for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion in a tax year. A PTE, as defined in the Law, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual property (in development area A - a tax rate of 7.5%).
The above changes in the tax rates relating to PTE tax track were not taken into account in the computation of deferred taxes as of December 31, 2021 and 2020, since the Company estimates that it will not implement the PTE tax track.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: - INCOME TAXES (Cont.)
a. Israeli taxation (Cont.):
4.Tax benefits under the law for the Encouragement of Industry (Taxes), 1969 (the “Encouragement Law”):
The Encouragement Law provides several tax benefits for industrial companies. An industrial company is defined as a company resident in Israel, at least 90% of the income of which in a given tax year exclusive of income from specified Government loans, capital gains, interest and dividends, is derived from an industrial enterprise owned by it. An industrial enterprise is defined as an enterprise whose major activity in a given tax year is industrial production activity.
Management believes that the Company is currently qualified as an “industrial company” under the Encouragement Law and, as such, is entitled to tax benefits, including: (1) deduction of purchase of know-how and patents and/or right to use a patent over an eight-year period; (2) the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies and an industrial holding company; (3) accelerated depreciation rates on equipment and buildings; and (4) expenses related to a public offering on the Tel-Aviv Stock exchange and on recognized stock markets outside of Israel, are deductible in equal amounts over three years.
Eligibility for benefits under the Encouragement Law is not subject to receipt of prior approval from any Governmental authority. No assurance can be given that the Israeli tax authorities will agree that the Company qualifies, or, that the Company will continue to qualify as an industrial company or that the benefits described above will be available to the Company in the future.
5.Net operating losses carryforward and capital loss:
As of December 31, 2021, Compugen Ltd.’s net operating losses carryforward for tax purposes in Israel amounted to approximately $369,800. These net operating losses may be carried forward indefinitely and may be offset against future taxable income.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: - INCOME TAXES (Cont.)
b.Non-Israeli subsidiary, Compugen USA, Inc.:
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “U.S. Tax Reform” or “TCJA”); a comprehensive tax legislation that includes significant changes to the taxation of business entities. These changes include several key tax provisions that might impact the Company, among others: (i) a permanent reduction to the statutory federal corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017; (ii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with certain new rules designed to prevent erosion of the U.S. income tax base - “BEAT”); (iii) establishing immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits; and (iv) providing a permanent deduction to corporations generating revenues from non-US markets (known as a deduction for foreign derived intangible income - “FDII”).
As of December 31, 2021, Compugen USA, Inc. has net operating loss carryforwards for federal income tax purposes of approximately $4,850, approximately $3,750 of which expires in the years
to . Utilization of the U.S. net operating losses may be subject to substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.Neither Israeli income taxes, foreign withholding taxes nor deferred income taxes were provided in relation to undistributed earnings of the Company’s foreign subsidiary. This is because the Company has the intent and ability to reinvest these earnings indefinitely in the foreign subsidiary and therefore those earnings are continually redeployed in those jurisdictions.
c.Loss (income) before taxes is comprised as follows:
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
| ||||||||||||
Domestic (Israel) |
$ |
34,619 |
$ |
30,010 |
$ |
28,799 | ||||||
Foreign |
(416 |
) |
(312 |
) |
(740 |
) | ||||||
| ||||||||||||
$ |
34,203 |
$ |
29,698 |
$ |
28,059 |
d.Taxes on income (tax benefit) for the year ended December 31, 2019 is comprised from refund of withholding tax payments, which were deducted from milestone payments by the German tax authorities. There were no withholding tax payments for the years ended December 31, 2021, 2020 and 2019.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: - INCOME TAXES (Cont.)
e.Deferred taxes:
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company and Compugen USA, Inc.’s deferred tax assets are comprised of operating loss carryforward and other temporary differences. Significant components of the Company and Compugen USA, Inc. deferred tax assets are as follows:
December 31, | ||||||||
2021 |
2020 | |||||||
| ||||||||
Operating loss carryforward |
$ |
86,068 |
$ |
80,134 | ||||
Research and development |
9,773 |
9,001 | ||||||
Accrued social benefits and other |
2,801 |
2,389 | ||||||
Right of use assets |
(520 |
) |
(651 |
) | ||||
Lease liabilities |
636 |
742 | ||||||
Property and equipment |
2 |
2 | ||||||
Deferred tax asset before valuation allowance |
98,760 |
91,617 | ||||||
Valuation allowance |
(98,760 |
) |
(91,617 |
) | ||||
| ||||||||
Net deferred tax asset |
$ |
- |
$ |
- |
The Company and Compugen USA, Inc. have provided full valuation allowances in respect of deferred tax assets resulting from operating loss carryforward and other temporary differences. Management currently believes that since the Company has a history of losses, it is more likely than not that the deferred tax regarding the operating loss carryforward and other temporary differences will not be realized in the foreseeable future.
f.Reconciliation of the theoretical tax expense (benefit) to the actual tax expense (benefit):
The main reconciling items between the statutory tax rate of the Company and the effective tax rate are the non-recognition of tax benefits from accumulated net operating loss carryforward among the Company and Compugen USA, Inc. due to the uncertainty of the realization of such tax benefits.
g.Tax assessments:
The Company has tax assessments through 2016 that are deemed to be final.
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10: - GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
The Company’s business is currently comprised of one operating segment, the research, development and commercialization of therapeutic and product candidates. The nature of the products and services provided by the Company and the type of customers for these products and services are similar. Operations in Israel and the United States include research and development, clinical operations, marketing and business development. The Company follows ASC 280, “Segment Reportingˮ. Total revenues are attributed to geographic areas based on the location of the end customer.
The following represents the total revenue for the years ended December 31, 2021, 2020 and 2019 and long-lived assets as of December 31, 2021 and 2020:
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Revenue from sales to customers: | ||||||||||||
| ||||||||||||
Europe |
$ |
6,000 |
$ |
2,000 |
$ |
- | ||||||
| ||||||||||||
Total revenue |
$ |
6,000 |
$ |
2,000 |
$ |
- |
December 31, | ||||||||
2021 |
2020 | |||||||
Long-lived assets: | ||||||||
| ||||||||
Israel |
$ |
3,787 |
$ |
4,240 | ||||
United States |
118 |
243 | ||||||
| ||||||||
Total long-lived assets |
$ |
3,905 |
$ |
4,483 |
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Sales to a single customer exceeding 10%: | ||||||||||||
| ||||||||||||
Customer A |
100 |
% |
100 |
% |
- |
NOTE 11: -FINANCIAL AND OTHER INCOME, NET
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
| ||||||||||||
Interest income |
$ |
894 |
$ |
1,765 |
$ |
935 | ||||||
Bank fees and other finance expenses |
(25 |
) |
(42 |
) |
(32 |
) | ||||||
Foreign currency translation adjustments |
(1 |
) |
63 |
(218 |
) | |||||||
Gain (loss) from sales and disposals of fixed assets |
3 |
12 |
135 | |||||||||
| ||||||||||||
Financial and other income, net |
$ |
871 |
$ |
1,798 |
$ |
820 |
COMPUGEN LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12: -RELATED PARTY BALANCES AND TRANSACTIONS
December 31, | ||||||||
2021 |
|
|
2020 | |||||
| ||||||||
Trade payables and accrued expenses |
$ |
94 |
$ |
83 |
Year ended December 31, | ||||||||||||
2021 |
|
|
2020 |
|
|
2019 | ||||||
Amounts charged to: | ||||||||||||
| ||||||||||||
Research and development expenses |
$ |
240 |
$ |
294 |
$ |
241 |
For the years ended December 31, 2021, 2020 and 2019 the Company received research and development services related with cancer studies in animal models, and breeding and maintenance of animals (mice) to support such studies. The transaction was at arm’s length.
NOTE 13: -LOSSES PER SHARE
The following table sets forth the computation of basic and diluted losses per share:
Year ended December 31, | ||||||||||||
2021 |
2020 |
2019 | ||||||||||
Numerator: | ||||||||||||
| ||||||||||||
Net loss for basic and diluted loss per share |
$ |
(34,203 |
) |
$ |
(29,698 |
) |
$ |
(27,337 |
) | |||
| ||||||||||||
Denominator: | ||||||||||||
| ||||||||||||
Weighted average number of ordinary shares used in computing basic and diluted net loss per share |
84,203,971 |
79,591,187 |
63,636,673 | |||||||||
| ||||||||||||
Basic and diluted earnings per ordinary share |
$ |
(0.41 |
) |
$ |
(0.37 |
) |
$ |
(0.43 |
) |
F - 38
1.
|
Definitions.
|
1.1.
|
“Affiliate” means, with respect to a person, organization or other entity, any person, organization or other entity controlling,
controlled by or under common control with, such person, organization or entity. For purposes of this definition, an entity shall be deemed to “control” another entity if it (i) owns directly or indirectly fifty percent (50%) or more of the
outstanding voting securities, capital stock or other comparable equity or ownership interest of such entity having the power to vote on or direct the affairs of such entity, as applicable (or such lesser percentage which is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction), or (ii) possesses, directly or indirectly, the power to direct or cause the direction of the policies and management of such entity, as applicable, whether by the
ownership of stock, by contract or otherwise.
|
1.2.
|
“Bayer Competitor” means any person, organization or other entity that is active in the field of clinical development and/or
commercialization of prescription pharmaceuticals for indications in the area of oncology.
|
1.3.
|
“Bayer Development Process” means Bayer’s [***] internal process for the research and development of therapeutic candidates described in
Exhibit 1.3, or any similar internal process implemented by Bayer for its therapeutic development activities in general (i.e. not just for a Target Program)
that succeeds or amends the process described in Exhibit 1.3.
|
1.4.
|
“Bayer Intellectual Property” means (a) any Bayer Know-How, (b) any Bayer Product Patent Rights and (c) any other Program Know-How
and/or Program Inventions owned by Bayer in accordance with Section 8.1.2.1.
|
1.5.
|
“Bayer Know-How” means any and all Know How with respect to [***], Products and/or [***]developed or generated by Bayer or an Affiliate
of Bayer in the performance of a [***] and, [***] or [***] for the [***] of the licenses granted by Bayer to Compugen under Section 3, including but not limited to
[***] information relating to [***], Products and/or Product Companion Diagnostics, but for clarity specifically excluding any [***]
and/or [***] not specific to [***] or [***]. For the avoidance of doubt, the Bayer Know-How includes Program Know-How owned by Bayer to the extent that such Program Know-How relates to [***], Products and/or [***].
|
1.6.
|
“Bayer Product Patent Rights” means any Patents with respect to an invention
developed or generated by Bayer or an Affiliate of Bayer in the performance of a [***] and that claim, in each case solely to the extent they claim, (a) a Product or [***]Product(s) or (b) a [***] or [***]. For clarity, “Bayer Product
Patent Rights” do not include Patents that claim [***] that [***] Product(s) nor [***] (e.g. [***]), except to the extent they include claims that are [***] Product(s) or [***].
|
1.7.
|
“Biologic” means any [***] or a [***].
|
1.8.
|
“Biomarker” means a distinctive biological or biologically derived indicator (including, without limitation, DNA, RNA, protein,
peptide, antibodies and cells) by which particular normal biologic processes, pathogenic processes or pharmacologic responses to therapeutic intervention can be identified, quantified or predicted.
|
1.9.
|
“BLA” means (a) an FDA Biologics License Application, Product License Application or similar application filed with the United States
FDA for approval to market a Product for use in the Field and (b) any comparable application filed with a Regulatory Authority in any other country or jurisdiction.
|
1.10.
|
“Business Day(s)” shall mean a day other than a Friday, Saturday, Sunday and any day on which commercial banks located in Berlin,
Germany or in Tel Aviv, Israel, are authorized or obligated by law to be closed.
|
1.11.
|
“Calendar Quarter” means each of the periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and
December 31, for so long as this Agreement is in effect.
|
1.12.
|
“CGEN-15001T Research Program” means the research and preclinical development program to be performed by the Parties until the end of
the Research Period, i.e. until [***] or such other date as may be agreed in any amendment or change to the CGEN-15001T Workplan.
|
1.13.
|
“CGEN-15001T Target” means any protein encoded by the gene locus on [***] with the official gene symbol [***] as provided by HGNC
consortium, and any [***]. For purposes of this definition “[***]” means all [***] from that [***] (including any [***]) with an [***] of at least [***], in which overlap there is a [***] of at least [***].
|
1.14.
|
“CGEN-15001T Target Biologic” means any Target Biologic [***] a CGEN-15001T Target.
|
1.15.
|
“CGEN-15001T Target Program” means the program for the research, development and commercialization of Products containing CGEN-15001T
Target Biologics and Product Companion Diagnostics for such Products as contemplated by this Agreement.
|
1.16.
|
“CGEN-15001T Workplan” means the workplan attached hereto as Exhibit 1.16, which sets forth the research and preclinical development work to be performed by each of the Parties with respect to the CGEN-15001T Target Program during the relevant Research Period, as such workplan may
be amended by Bayer and Compugen in accordance with Section 2.4.
|
1.17.
|
“CGEN-15022 Research Program” means the research and preclinical development program to be performed by the Parties until the end of
the Research Period, i.e. until [***] or such other date as may be agreed in any amendment or change to the CGEN-15022 Workplan.
|
1.18.
|
“CGEN-15022 Target” means any protein encoded by the gene locus on [***] with the official gene symbol [***] as provided by HGNC
consortium, and any [***] For purposes of this definition, “[***]” means all proteins derived from that [***] (including any [***]) with an [***] of at least [***] amino acids, in which overlap there is a [***] of at least [***].
|
1.19.
|
“CGEN-15022 Target Biologic” means any Target Biologic [***] a CGEN-15022 Target.
|
1.20.
|
“CGEN-15022 Target Program” means the program for the research, development and commercialization of Products containing CGEN-15022
Target Biologics and Product Companion Diagnostics for such Products as contemplated by this Agreement.
|
1.21.
|
“CGEN-15022 Workplan” means the workplan attached hereto as Exhibit 1.21, which sets forth the research and preclinical development work to be performed by each of the Parties with respect to the CGEN-15022 Target Program during the relevant Research Period, as such workplan may
be amended by Bayer and Compugen in accordance with Section 2.4.
|
1.22.
|
“Commercially Reasonable Efforts” means efforts and resources, with respect to a particular Party, that are [***] by that Party
(together with its Affiliates) in the exercise of its [***] with respect to programs it is [***] on relating to other [***] or [***] by it (and/or its Affiliates) or to which it (together with its Affiliates) has [***], which have a [***]
and are at a [***] or [***], as appropriate, taking into account issues of [***] of the [***] and [***], the [***] or [***] of the product, and other relevant factors, including without limitation, [***], and/or [***], where such level of
efforts and resources, in any event, shall be [***] than [***] with [***] of a [***]. For clarity, in the event Bayer grants a Sublicense, the efforts exerted by Bayer and/or its Sublicensee to develop and commercialize Products will
continue to be compared to those efforts generally exerted by a [***] of a [***] in active programs relating to other [***] or [***] by it (and/or its Affiliates) or to which it (together with its Affiliates) has [***] for purposes of this
definition.
|
1.23.
|
“Companion Diagnostic” means any Product Companion Diagnostic and any Other Companion Diagnostic.
|
1.24.
|
“Composition Of Matter Claim” means a Valid Claim that covers one or more Target Biologic(s) and/or Target Biomarker(s) as composition
of matter, regardless of whether the [***] of such Target Biologic(s) or Target Biomarker(s) is claimed. For clarity, “Composition of Matter Claims” includes, without limitation, Valid Claims covering [***] Target Biologics against a
Target, a [***] of a Target or [***] of a Target.
|
1.25.
|
“Composition Of Matter Patent Rights” means any Compugen Patent Rights or Joint Patent Rights that include one or more Composition Of
Matter Claim(s).
|
1.26.
|
“Compugen Intellectual Property” means (a) any Compugen Know-How, (b) any Compugen Patent Rights and (c) any other Program Know-How
and/or Program Inventions owned by Compugen in accordance with Section 8.1.2.2 (other than [***], which are specifically excluded from this definition).
|
1.27.
|
“Compugen Know-How” means any and all Know How with respect to [***] (alone or together with another composition, e.g. conjugate),
[***] or [***] that is [***] and is, in Compugen’s [***] or [***] for the [***] of the licenses granted by Compugen to Bayer under Section 3, including but not limited to [***] and [***] information relating to [***] or [***] but for
clarity specifically excluding: (i) any and all [***] and [***] and (ii) other [***] and/or [***] to [***] or [***]. For the avoidance of doubt, the Compugen Know-How includes Program Know-How owned by Compugen to the extent that such
Program Know-How relates to [***] and/or [***]. Notwithstanding the foregoing, “Compugen Know-How” does not include Know How with respect to [***] and/or [***] that was [***] before the date of [***], but (a) was [***] before such date by
the [***] or the [***], as applicable or (b) is/was developed by such [***] in independent activities without the use of or reference to [***] by persons who were [***], provided that those independent activities are/were made within a
project that was started by [***] with respect to [***][***] and/or [***] in connection with the evaluation of the [***]. The Parties agree that in case of dispute, Compugen will have the burden of proof to demonstrate that all requirements
of lit. (a) or lit. (b) are fulfilled.
|
1.28.
|
“Compugen Patent Rights” means any Patents Controlled by Compugen or any of its Affiliates [***] or [***] that claim, in each case
solely to the extent they claim, [***], Products (but excluding, if and to the extent that such Patents claim Products, any composition of matter that is [***] and [***]) and/or [***], or their use, or a manufacturing process [***] and/or
one or more [***] including without limitation the Patents set forth in Exhibit 1.28. For clarity, “Compugen Product Patent Rights” do not include patents
or patent applications that claim [***] that [***] to [***] (e.g. [***]), except to the extent they include claims that are [***]or [***]. Notwithstanding the
foregoing, “Compugen Patent Rights” does not include Patents to the extent they claim [***] and/or [***], or a manufacturing process specific to one or more [***] and/or one or more [***], that were not Controlled by Compugen before the
date of [***] or [***], but (a) were Controlled before such date by the [***] or the [***], as applicable or (b) claim inventions conceived and reduced to practice by such [***] after such [***] in independent activities without the use of
or reference to [***] by persons who were [***], provided that those independent activities are/were made within a project that was started by the [***] with respect to [***] and/or [***] in connection with the evaluation of the [***]. The
Parties agree that in case of dispute, Compugen will have the burden of proof to demonstrate that all requirements of lit. (a) or lit. (b) are fulfilled.
|
1.29.
|
“Control” means, with respect to intellectual property or intellectual property rights that is/are owned or in-licensed by a Party
and/or its Affiliate(s), the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign or to grant a license or sublicense as provided for herein without violating the terms of any agreement or other
arrangement with any Third Party (including the terms of any such in-license agreement) or any applicable law and without the need for any consent (or further consent) from such Third Party.
|
1.30.
|
[***] means [***] as set forth in [***].
|
1.31.
|
[***] means [***] and a [***]. [***] will entail [***] of [***], together with [***].
|
1.32.
|
[***] means [***] of a [***] and a [***] of the [***], in accordance with [***].
|
1.33.
|
“Diagnostic” means any Companion Diagnostic and any General Diagnostic that (a) is covered by a claim of a Compugen Patent Right or
Joint Patent Right and/or (b) is/was [***] and/or [***] through the use ([***]) of [***] or [***]. The Parties agree that in case of dispute, Bayer will have [***] that [***] has been [***] without the use of [***] and without the use of
[***].
|
1.34.
|
“Field” means the treatment or prevention of any [***] and/or [***], [***] in [***].
|
1.35.
|
“First Commercial Sale” means, on a [***] basis with respect to each Product and each Diagnostic, the date of the first sale for [***]
in an arm’s length transaction by a Related Party of such Product or Diagnostic, as applicable, to an Unrelated Third Party for [***] of such Product or Diagnostic, as applicable, following receipt of all [***] required to [***] such
Product or Diagnostic, as applicable, in such [***] to the [***]. For clarity, sales or other distribution for (a) use in [***], use in [***] or [***] programs or use in similar instances in which products may be provided to patients prior
to [***] or (b) provision of [***] for [***] or similar purposes shall not be deemed “First Commercial Sale”.
|
1.36.
|
“Fusion Protein” means a protein created by the fusion of the extracellular domain of a protein, or fragment thereof, to any
heterologous sequence (such as an Fc fragment of an Immunoglobulin G).
|
1.37.
|
“General Diagnostic” means any diagnostic product that contains and/or detects a Target Biomarker, other than Companion Diagnostics,
including without limitation standalone diagnostics.
|
1.38.
|
“Indication” means: (a) for oncological diseases characterized by [***] from [***], whereby [***] from [***] shall constitute a [***]
(e.g. by way of illustration: [***]. [***], whereas, [***] that [***]; and (b) for other oncological diseases and non-oncological diseases, Indications shall be classified as defined in [***]. By way of illustration, [***] would list nine
different Indications.
|
1.39.
|
“Infringed Claim” means a claim of a Patent of a Third Party which would be infringed by [***] of, or the [***] of, [***] included in
the relevant Product (at the date and in the country of such activity). Notwithstanding the foregoing, “Infringed Claim” does not include claims with respect to [***] or [***] that are [***] to a [***]. Any risk of infringement of such
Third Party rights will be reasonably considered in the selection of the [***] to be further developed, to the extent that such a risk is already recognizable at the time of selection of the [***].
|
1.40.
|
“Joint Intellectual Property” means any Joint Patent Rights and/or Joint Know-How.
|
1.41.
|
“Joint Invention” means any Program Invention for which (a) one or more inventors is an employee or contractor of Bayer or its
Affiliate and (b) one or more inventors is an employee or contractor of Compugen or its Affiliate.
|
1.42.
|
“Joint Know-How” means Program Know-How developed jointly by (a) one or more employees or contractors of Bayer or its Affiliate and (b) one or more employees or contractors of Compugen or its Affiliate. For the avoidance of doubt, “Joint Know-How” also includes Joint Inventions.
|
1.43.
|
“Joint Patent Rights” means any patent or patent application that claims a Joint Invention.
|
1.44.
|
“Know-How” means any proprietary tangible and intangible: methods, inventions, techniques, processes, specifications, materials,
recipes, formulae, preparations, designs, plans, drawings, data, trade secrets or other technical or scientific information.
|
1.45.
|
“Marketing Authorization” means, with respect to a Product or Diagnostic in a given country, all approvals from the relevant Regulatory
Authority (e.g. a BLA in the case of a Product) necessary to market and sell such Product or Diagnostic, as applicable, in such country to the relevant patient population in general.
|
1.46.
|
“Net Sales” means the [***] amount [***] or (if not [***])[***] by a Related Party for sales of a Product or Diagnostic to [***] less
the following deductions to the extent specifically applicable to such sales of Products or Diagnostics, as applicable, and not previously deducted from such [***] amount [***]:
|
|
·
|
[***] of gross amount for [***];
|
|
·
|
[***] and [***] or [***] included in such [***] invoiced and paid by a [***] or any other [***] imposed upon the sale of the relevant Product or Diagnostic and paid by a [***], but
specifically excluding [***];
|
|
·
|
[***] and [***] granted or allowed in the ordinary course of business by a Related Party in connection with such sale of a Product or Diagnostic;
|
|
·
|
[***] or [***] granted by a Related Party to customers on account of governmental requirements, rejection, outdating, returns, billing errors or recalls of a Product or Diagnostic;
|
|
·
|
[***] and [***] or [***] (as described below) granted by a Related Party in the ordinary course of business with respect to the sale of a Product or Diagnostic; and
|
|
·
|
[***] of [***] for [***].
|
1.47.
|
“Non-Royalty Sublicense Income” means any payments or other consideration that Bayer or any of its Affiliates receives in connection
with a Sublicense, other than royalties (including percentage payments and fixed per unit amounts) on account of Net Sales by a Sublicensee or an Affiliate of a Sublicensee. If Bayer or its Affiliate receives non-cash consideration (e.g.
equity, other non-cash assets) in connection with a Sublicense, Non-Royalty Sublicense Income will be calculated based on the [***]. For the avoidance of doubt,
Bayer is in no way obliged or expected to receive any payments or other consideration from Sublicensees in connection with Companion Diagnostics and that enabling or facilitating the approval and commercialization of Products shall not be
deemed a non-cash consideration.
|
1.48.
|
“Other Companion Diagnostics” means any diagnostic product that contains and/or detects a Target Biomarker and is developed specifically for use in conjunction with a [***] that is [***] to inform the selection, initiation, dosing, monitoring, and/or avoidance of treatment with such product
with the objective that such diagnostic be approved by the relevant Regulatory Authority in the label of such product, regardless of whether such approval is ultimately granted.
|
1.49.
|
“Patents” means national, regional and international patents and patent applications, including provisional applications, continuations,
continuations-in-part, continued prosecution applications, divisionals, substitutions, reissues, additions, renewals, re-examinations, extensions, term restorations, confirmations, registrations, revalidations, revisions, priority rights,
converted provisionals, requests for continued examination and supplementary protection certificates and pediatric drug exclusivity periods granted in relation thereto, as well as utility models, innovation patents, design patents, petty
patents, patents of addition, inventor’s certificates, and equivalents in any country or jurisdiction and any similar rights, including pipeline protection, or any importation, or introduction patent to any such foregoing patent
applications and patents and any and all patents that have issued or in future issue from the foregoing patent applications.
|
1.50.
|
“Phase 1 Clinical Trial” means a human clinical trial conducted on a limited number of study subjects for the purpose of gaining
evidence of the safety and tolerability of, and information regarding, pharmacokinetics and potential pharmacological activity for a product or compound, as described in 21 C.F.R. § 312.21(a) (including any such clinical study in any
country other than the United States).
|
1.51.
|
“Phase 2 Clinical Trial” means a human clinical trial conducted on study subjects with the disease or condition being studied for the
principal purpose of achieving a preliminary determination of efficacy or appropriate dosage ranges, as further described in 21 C.F.R. §312.21(b) (including any such clinical study in any country other than the United States).
|
1.52.
|
“Phase 3 Clinical Trial” means a pivotal clinical trial in humans performed to gain evidence with statistical significance of the
efficacy of a product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product, to form the basis for the filing for approval of a
BLA by a Regulatory Authority and to provide an adequate basis for physician labeling, as described in 21 C.F.R. § 312.21(c) or the corresponding regulation in jurisdictions other than the United States, regardless of whether such trial is
labeled by the relevant Related Entity as Phase 3 Clinical Trial.
|
1.53.
|
“Product” means any therapeutic or prophylactic product containing or comprising a Target Biologic, in any and all forms,
presentations, formulations and dosage forms that (a) is covered by a claim of a [***] and/or (b) is/was identified, developed and/or generated [***] of [***]. The Parties agree that
in case of dispute, Bayer will have the burden of proof to demonstrate that [***] containing or comprising a Target [***] has been [***] without the use of [***].
For the avoidance of doubt, the definition of “Products” shall not include Product Companion Diagnostics.
|
1.54.
|
“Product Companion Diagnostic” means any diagnostic product that contains and/or detects a Target Biomarker and is developed specifically for use in conjunction with a Product to inform the selection, initiation, dosing, monitoring, and/or avoidance of treatment with such Product with the
objective that such diagnostic be approved by the relevant Regulatory Authority in the label of such Product, regardless of whether such approval is ultimately granted.
|
1.55.
|
“Program Know-How” means any Know-How developed or generated in the performance of the Research Programs and Controlled by Bayer, an
Affiliate of Bayer, Compugen or an Affiliate of Compugen (including but not limited to [***], and [***] and (to the extent applicable) [***] and [***]).
|
1.56.
|
“Program Invention” means any patentable Know-How Controlled by Bayer, an Affiliate of Bayer, Compugen or an Affiliate of Compugen that
is [***] and/or [***] in the performance of a Research Program.
|
1.57.
|
“Regulatory Authority” means the FDA or any other supranational, national or local agency, authority, department, inspectorate,
ministry official, parliament or public or statutory person of any government of any country having jurisdiction over any of the activities contemplated by the Agreement or the Parties, or any successor bodies thereto.
|
1.58.
|
“Related Party” means any of the following: (a) Bayer; (b) an Affiliate of Bayer; (c) a Sublicensee; or (d) an Affiliate of a
Sublicensee.
|
1.59.
|
“Research Period” means, with respect to each Research Program, the period until completion of all obligations under the Research
Program as set forth in the Workplan for such Research Program.
|
1.60.
|
“Research Program” means either the CGEN-15001T Research Program or the CGEN-15022 Research Program.
|
1.61.
|
“Sublicense” means: (a) any license given (including without limitation licenses with respect to Bayer Product Patent Rights and Bayer
Know-How) by Bayer or an Affiliate of Bayer to any Third Party (or by a Sublicensee to a further Sublicensee) to develop, manufacture, market and/or sell Products and/or Diagnostics and/or any other licenses granted by Bayer or an Affiliate
under any of the rights granted to Bayer under this Agreement; and (b) any [***] by [***] to any other person or entity (or by a Sublicensee to a further Sublicensee) [***] for or
[***]; in each case regardless of whether such license given is referred to or is described as a license, sublicense or otherwise. For clarity, “Sublicense” does not include (i) any agreements or other grants of rights that fulfill the
requirements of Section 3.1.2 or (ii) the engagement of a Third Party wholesale distributors who (1) purchase Products from a Related Party in arm’s length transaction and who have no sales, marketing or reporting obligation to a Related
Party and (2) do not pay Related Parties any consideration on account of such engagement other than the sales price of the Products and/or Companion Diagnostics sold by the Related Party to such Third Party. For clarity, such wholesale
distributors do not include those distributors whose obligations to a Related Party include responsibility for sales and/or marketing efforts in a country or sharing of costs and expenses with respect to sales and/or marketing on behalf of
a Related Party or who pay other consideration on account of such engagement, which distributors shall be deemed to be Sublicensees for purposes of this definition.
|
1.62.
|
“Sublicensee” means any person or entity granted a Sublicense.
|
1.63.
|
“Sublicense Diagnostic Sales Income” means any payments or other consideration that Bayer or any of its Affiliates receives on account
of sales of Diagnostics by a Sublicensee. If Bayer or any of its Affiliates receives non-cash consideration (e.g. equity, other non-cash assets) on account of
sales of Diagnostics by a Sublicensee, Sublicense Diagnostic Sales Income will be calculated based on [***], at the time of [***], [***]. Bayer informs and Compugen understands and acknowledges that the [***] of [***] to the [***] of [***]
is to [***] or [***] of [***], and that [***] may [***] or [***] from Sublicensees on account of Sublicensing of [***], in which case Compugen would [***] or [***] from Bayer in relation to the [***] and [***] of [***].
|
1.64.
|
“Target” means any CGEN-15001T Target and/or any CGEN-15022 Target.
|
1.65.
|
“Target Biologic” means any Biologic, including but not limited to any [***], or [***], that is [***], except that “Target Biologic”
specifically excludes [***]. The Parties (a) acknowledge that in [***] not [***] any of [***], a Party or its Affiliate may [***] and/or [***] a Biologic directed [***] another [***] which [***] inadvertently [***] to [***] and (b) agree that such [***] will not be deemed [***] for purposes of this Agreement.
|
1.66.
|
“Target Biomarker” means (a) any Target, (b) any [***] and
(c) any [***], or of such [***], that is derived from the [***] of such [***]. For purposes of this definition, [***] means (i) with respect to a [***], a consecutive portion of the [***] or more [***], and (ii) with respect to [***], a
consecutive portion of the [***] or more [***].
|
1.67.
|
“Target Fusion Protein” means a protein created by the fusion of the extracellular domain of a Target, or fragment thereof, to any
heterologous sequence (such as an Fc fragment of an Immunoglobulin G).
|
1.68.
|
“Target Program” means either the CGEN-15001T Target Program or the CGEN-15022 Target Program.
|
1.69.
|
“Third Party” means any person or entity other than Bayer, Bayer’s Affiliates, Compugen and Compugen’s Affiliates.
|
1.70.
|
“Third Party [***] Payments” means amounts paid by Bayer to a Third Party as a result of a [***] or [***] for [***] due to [***] were
[***] in the performance of [***] (for the avoidance of doubt, including [***] of this Agreement).
|
1.71.
|
“Unrelated Third Party” means any person or entity that is not a Related Party.
|
1.72.
|
“Use Patent Rights” means Compugen Patent Rights or Joint Patent Rights that are not Composition Of Matter Patent Rights.
|
1.73.
|
“Valid Claim” means a claim of an issued and unexpired patent within the Compugen Patent Rights, Joint Patent Rights or Bayer Product
Patent Rights that has not been (a) held permanently revoked, unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (b)
rendered unenforceable through disclaimer or otherwise, (c) abandoned or (d) permanently lost through an interference or opposition proceeding without any right of appeal or review.
|
1.74.
|
“Workplan” means either the CGEN-15001T Workplan or the CGEN-15022 Workplan.
|
2.
|
Research Program.
|
2.1.
|
Purpose and Scope of Work. The Parties are entering into a research and development collaboration for the Research Period, with the
intent of developing CGEN-15001T Target Biologics and CGEN 15022 Target Biologics that will be candidates for the development of Products and of discovering and developing Target Biomarkers that can be used as research tools for the
development of Products and/or for the development of Product Companion Diagnostics. Each Workplan sets forth certain activities to be performed by each of the Parties, details regarding each of the Parties’ deliverables and timetables for
delivery of such deliverables. Each Workplan may be amended by the Joint Steering Committee (as defined below in Section 2.2.1) in accordance with Section 2.2, provided that no such amendment may increase Compugen’s or Bayer’s obligations
under such Workplan unless the Parties have agreed to such increase in writing, including with respect to funding to be provided by Bayer to Compugen to support additional work. To the extent any terms in a Workplan shall at any time
conflict with the terms of this Agreement, the terms of this Agreement shall prevail.
|
2.2.
|
Management.
|
2.2.1.
|
Establishment of Joint Steering Committee. The Parties hereby establish a Research Program steering committee (the “Joint Steering Committee” or “JSC”) that will be responsible for overall supervision and direction of, and for making decisions
related to, the Parties’ activities under the Workplans.
|
2.2.2.
|
Membership. The Joint Steering Committee will be comprised of [***] members, with [***] members appointed by each Party, all of whom
shall be employees of the appointing Party and shall have appropriate authority to make the decisions assigned to the Joint Steering Committee hereunder. In addition, each Party will appoint one associate member (having no voting power in
the JSC) with the tasks to (i) prepare and manage the JSC meetings, (ii) ensure proper communication and exchange of information between the Parties, (iii) oversee the budget and resources in the Research Programs, (iv) attempt to resolve
conflicts, and (v) act as a point of contact for external communications (e.g. press releases) and publications taking into account company specific regulations for external communications and publications (the “Alliance Manager”). Each of Bayer and Compugen may replace its Alliance Manager or one or more of its Joint Steering Committee representatives at any time, upon written notice to the other Party. From
time to time, the Joint Steering Committee may establish subcommittees, comprised of an equal number of representatives from each Party (who may be persons other than Joint Steering Committee members), to oversee particular activities.
|
2.2.3.
|
Responsibilities. The Joint Steering Committee will be responsible for:
|
|
(a)
|
overseeing the overall progress achieved in each Research Program and directing the Research Program;
|
|
(b)
|
informing each other on strategic aspects;
|
|
(c)
|
making and approving go/no-go decisions regarding the attainment of Research Program’s milestones based on proposals made by the Project Managers (as defined below in Section 2.3.2);
|
|
(d)
|
deciding on amendments to or changes of the Workplan(s) (including changes to timelines and actions to be taken), from time to time, as proposed by the Project Managers (as defined below);
|
|
(e)
|
agreeing upon contractors to be used by the Parties in performing work under a Workplan in the event that the Project Managers are not able to agree upon such contractors;
|
|
(f)
|
proposing amendments to this Agreement; and
|
|
(g)
|
such other matters as the Parties may assign to the Joint Steering Committee from time to time.
|
2.2.4.
|
Meetings. The Joint Steering Committee shall meet [***], whether in-person or by telephone or video conference as the Joint Steering
Committee agrees, provided that at least [***] ([***] in Israel or San Francisco, CA and [***] in Germany) shall be held in each calendar year. Members of the Joint Steering Committee may participate in and vote at meetings, in person, by
telephone or by video-conference, and may vote at meetings by proxy; in addition, the Joint Steering Committee may agree from time to time with unanimous consent to take decisions in writing. Additional employees or consultants of either
Party may be permitted to attend meetings of the Joint Steering Committee and/or of its sub-committees’ meetings with the consent of the other Party’s members of the Joint Steering Committee, such consent not to be unreasonably withheld.
For each such Joint Steering Committee meeting (or sub-committee meeting), whether an in-person meeting or otherwise, either of the Alliance Managers (as agreed prior to the meeting) shall prepare an agenda and written minutes which shall
document all Joint Steering Committee discussions and decisions in such meeting. Draft minutes shall be distributed to the Joint Steering Committee members [***] following the particular Joint Steering Committee meeting, revised as
necessary, and promptly approved in writing by all Joint Steering Committee members. Thereafter, the approved minutes of each Joint Steering Committee meeting shall be distributed to each member. Each Party is responsible for the
travelling costs of its Alliance Manager and its members of the Joint Steering Committee.
|
2.2.5.
|
Decision-Making. All decisions of the Joint Steering Committee shall be made by unanimous consent. In the event the Joint Steering
Committee is unable to reach agreement on a matter relating to the activities under a Workplan (a “Deadlock”), then either Party may notify the other of the Deadlock in writing, such
notice to describe the subject of the Deadlock in reasonable detail. In such case, the following shall apply:
|
2.2.5.1.
|
Subject to the limitations set forth in Section 2.2.5.2, [***] shall [***] over the Deadlocked matter, such
authority to be exercised by [***] and notified to [***] within [***] days after delivery of the applicable Deadlock notice. If [***] fails to notify [***] how [***] has elected to [***] on the Deadlocked matter, [***] may take such action
with respect to the Deadlocked matter as [***] deems appropriate [***]. With respect to matters described in Section 2.2.5.2, for which [***] is not entitled to [***] with respect to any Deadlock, such Deadlock shall be resolved pursuant to
the provisions of Section 2.2.5.3.
|
2.2.5.2.
|
[***] will not have the authority under Section 2.2.5.1 or 2.2.5.4 to [***] make any decision that: (a) [***] or otherwise is [***] any term or provision of this Agreement; (b) [***] or its
ability to meet its obligations under this Agreement; (c) [***] under a Workplan or [***] the achievability of such [***] in each case in a manner [***]; (d) [***]; (e) would require [***], in a manner material to [***], in the [***] or the
use of [***] or [***] not currently contemplated in the relevant Workplan; (f) would [***] for which [***] is entitled to make use of [***] Protein Controls (as
defined in [***]); (g) would [***] of the [***]; or (h) [***] either Party’s [***] obligations under [***].
|
2.2.5.3.
|
With respect to matters described in Section 2.2.5.2 with respect to which [***] does not have authority under Section 2.2.5.1 to [***] make decisions (“Specific Deadlocked Matters”), the Parties shall first try to resolve such Specific Deadlocked Matter in a second JSC meeting to be held within [***] Business Days from the meeting in which the Specific
Deadlocked Matter has remained unsolved. In the event that the JSC is again unable to resolve the Specific Deadlocked Matter, such matter shall be promptly referred to the [***] of Compugen and the [***] of Bayer. If said officers cannot
resolve such Specific Deadlocked Matter through [***] and [***] within [***] calendar days after the date on which the matter is referred to the Parties’ executive officers listed above, the Parties will attempt in [***] to settle the
Specific Deadlocked Matter by mediation in accordance with the [***] by a [***] mediator with [***] Program. If the Parties [***] on a [***] mediator, the mediator will be appointed by the [***]. The place of the mediation proceedings shall
be [***], [***], and the language to be used shall be [***]. If the Parties decide to submit the Specific Deadlocked Matter to mediation, [***] shall bear [***] expenses and [***] of all costs and fees of the mediator. If the Parties can
also not resolve the Specific Deadlocked Matter by mediation in accordance with the [***], the Parties will continue the performance of the Research Program in accordance with the relevant Workplan without any change with respect to the
Specific Deadlocked Matter for which no agreement was reached.
|
2.2.5.4.
|
Notwithstanding the above, [***] may, at any time upon one (1) month prior written notice to [***], disband the Joint Steering Committee. If [***] provides such notice of disbandment to
[***], the Parties’ obligations under this Section 2.2 will terminate, unless and until [***] provides written notice to [***] that it wishes to reinstate the Joint Steering Committee, in which case the Parties’ obligations under this
Section 2.2 will be reinstated for the period following such notice by [***]. In the event of such disbandment and unless and until the Joint Steering Committee is reinstated, subject to [***], all activities and decisions assigned to the
Joint Steering Committee as set forth above shall be performed and decided upon by [***] such authority to be exercised by [***] (taking into consideration concerns raised by [***] and the goals of the relevant Research Program). During
the period of disbandment, [***] shall inform Compugen with written notice about proposed decisions [***]. If [***] provides such written notice, each Party will promptly appoint authorized representatives with the same competencies as the
members of the Joint Steering Committee to discuss such proposed decisions [***]. If such representatives are unable to agree on such matter within [***] days of [***]’s notice to [***], such matter shall be promptly referred to the [***]
and the [***]. If said [***] cannot resolve such matter through [***] negotiations within [***] days after the date on which the matter is referred to the Parties’
[***] listed above, the Parties will attempt to resolve the matter in accordance with the mediation process described in [***].
|
2.2.5.5.
|
Unless earlier disbanded in accordance with [***] or agreed by the Parties otherwise in writing, the Joint Steering Committee will disband within [***] months following the end of the later to
expire [***]. After such disbandment the Joint Steering Committee may reconvene on an ad-hoc basis solely to discuss [***]. A request by a Party for a Joint Steering Committee meeting shall be given in written form to the other Party with
[***] notice and shall contain sufficiently detailed information about the requested topic and the required decision by the Joint Steering Committee.
|
2.3.
|
Performance of Work.
|
2.3.1.
|
Performance. Each of the Parties shall use Commercially Reasonable Efforts to perform the activities designated as its responsibility
under each Workplan, including delivering deliverables and reports set forth in each Workplan, in accordance with the timetables set forth in such Workplan. Each
Party will provide the [***] needed to perform the activities designated as its responsibility under each Workplan.
|
2.3.2.
|
Project Manager. The Parties acknowledge that effective communications between Parties is an essential ingredient to the success of the
Research Programs. In order to facilitate such communications, each Party will designate a person to serve as the project manager on its behalf for purposes of each Research Program (each, a “Project
Manager”). A Party may designate the same person to serve as its Project Manager of both Research Programs or designate two persons to serve as Project Managers, one for each Research Program. Each Party may appoint and replace
its Project Manager(s) by written notice to the other Party. The Project Managers for each Research Program will meet (in person, teleconference or video conference) on a monthly basis,
or more often as needed, to give each other an update on the results in the Research Program, review the progress of such Research Program and scientific issues relating to such Research Program. The Project Managers may with mutual
agreement include members of their scientific teams in such meetings. The Project Managers will prepare and propose decisions on activities under and amendments of the Workplans, promote the performance of the work under the Research
Programs and ensure that such work is done as agreed under the Workplans.
|
2.3.3.
|
Reports. Each Party’s Project Manager for the relevant Research Program shall provide the members of the Joint Steering Committee with
written updates regarding its Party’s activities under the Workplan, including summary results and analyses thereof, prior to each JSC meeting. In addition, within [***] days after the end of each year of the relevant Research Period and
at the end of such Research Period, each Party’s Project Manager will provide the Joint Steering Committee with a written report regarding its Party’s activities under the Workplan, including protocols, experimental procedures, results,
analyses thereof and conclusions for the previous [***] month period (or in the case of the report at the end of the Research Period, for the period since the previous written report) in the format and containing the level of detail
described in Exhibit 2.3.3. At the request of a Project Manager, the Project Managers for the relevant Research Program and members of the relevant
scientific teams will discuss any questions raised by either Party regarding the contents of such reports.
|
2.3.4.
|
Use of Contractors. Each Party may use contractors
(including Affiliates) to perform, on its behalf and for its benefit (on a work-for-hire basis), [***] (unless agreed otherwise by the Parties) activities designated as such Party’s task under the relevant Workplan, provided that any such
contractor (except for Affiliates of Bayer used as contractor of Bayer or Affiliates of Compugen used as contractor of Compugen) has been approved in advance by both Project Managers or, if the Project Managers do not reach agreement on
the choice of contractors, by the Joint Steering Committee and enters or has entered into an agreement with such Party obligating such contractor to all confidentiality, publication and intellectual property-related provisions of this
Agreement, applicable to such Party (subject to exceptions with respect to the publication limitations which may be approved by the Joint Steering Committee on a case-by-case basis). Each Party shall be solely responsible for the
supervision and direction of contractors performing activities designated as such Party’s task under such Workplan and shall be solely liable for any damage, injury or harm caused by such contractors. Without limiting the foregoing, the
Parties agree that for purposes of the work to be performed by [***], a [***] of [***] in accordance with the stage entitled [***] of the CGEN-15001T Workplan and the stage entitled [***] of the CGEN-15022 Workplan, [***] will be a
contractor of Compugen or its Affiliate, regardless of the fact that [***].
|
2.3.5.
|
Compliance. Each Party agrees to comply with all laws, governmental regulations and guidelines applicable to the performance of the
activities that it is responsible for under the relevant Workplan.
|
2.3.6.
|
Records. Each Party shall prepare and maintain, or cause to be prepared and maintained, complete and accurate written records
pertaining to its respective activities within each Research Program in sufficient detail and in good scientific manner, which shall be complete and accurate and shall fully and properly reflect the work done and results achieved in the
performance of its respective activities under the Research Program, and which shall be retained by such Party for at least [***] years after the expiration or termination of this Agreement, or for such longer period as may be required by
any applicable law. Each Party shall make such records available for inspection by the other Party at all reasonable times, and deliver copies of such records to the other Party at the other Party’s reasonable request and cost.
|
2.3.7.
|
Material Transfer.
|
2.3.7.1.
|
General. From time to time, each of Bayer (or any of its Affiliates) and Compugen (or any of its Affiliates) may transfer biological
materials to the other for purposes of the Research Programs and the development of Products and Product Companion Diagnostics. Each Party understands that biological materials transferred by the other Party or its Affiliates are
experimental in nature and neither Party makes any representation or warranty, express or implied, as to the identity, ownership, purity, utility, safety or activity of such biological materials. Neither Party shall be liable for any loss,
harm, illness or other damage or injury arising from the other Party’s or its Affiliate’s receipt, handling, use or disposal of any such biological materials, except to the extent attributable to the transferring Party’s or its Affiliate’s
own gross negligence or willful misconduct. Further, neither Party makes any representation or warranty that the use of the biological materials transferred by it or its Affiliate will not infringe any Third Party intellectual property
rights. Each Party and its Affiliates shall use the other Party’s biological materials only for the purposes of performing its obligations or exercising its rights under this Agreement. Neither Party shall transfer the other Party’s
material to any Third Party, except to contractors or collaborators of such Party for the purposes authorized by this Agreement. For the avoidance of doubt, after the Research Program, unless Compugen notifies Bayer of limitations on the
transfer of any biological materials (other than Target Biologics and/or Target Biomarkers) provided by Compugen that are imposed by agreements Compugen is party to, Bayer is free to share biological materials provided by Compugen to Bayer
(including, inter alia, Target Biologics), other than [***], with Third Parties solely for the purpose of the research and development
of Products and/or Product Companion Diagnostics without any reporting obligation to, or requirement of authorization by, Compugen and provided that Bayer remains liable to Compugen with respect to any such use. Each Party will use the
other Party’s biological materials in accordance with all applicable laws, regulations and governmental guidelines.
|
2.3.7.2.
|
[***] Protein Controls. The Parties agree that the CGEN-15001T Research Program may benefit from the use, as research reagents, of
certain Compugen proprietary material [***] (“[***] Protein Controls”) and that the CGEN-15022 Research Program may benefit from the use, as research reagents, of certain Compugen
proprietary material [***] (“[***] Protein Controls”). Bayer understands that [***] Protein Controls and [***] Protein Controls are part of Compugen therapeutic development programs
that are not subject to this Agreement (the “[***] Protein Program” and the “[***] Protein Program”, respectively). The [***] Protein Program and the [***] Protein Program will each be referred to as a “[***] Protein Program”. The
Parties contemplate that Compugen will provide Bayer (a) certain [***] Protein Controls for [***] specifically set forth in the CGEN-15001T Workplan or [***]
otherwise specifically agreed to by [***]; and (b) certain [***] Protein Controls for use in certain activities specifically set forth in the CGEN-15022 Workplan or [***] otherwise specifically agreed to by [***]. The [***] Protein Controls
and [***] Protein Controls provided by Compugen or its Affiliate to Bayer or its Affiliate shall be referred to as “[***] Protein
Controls”. [***] Protein Controls provided by Compugen for purposes of the Workplans, as existing on the Effective Date, will be [***] along with information regarding the [***] and/or other [***] of the [***] Protein
Controls. Compugen shall provide the [***] Protein Controls [***] in the [***] described in the Workplans; such [***] Protein Controls will be [***] form and quality [***]. In addition to the provisions of Section 2.3.7.1, the following
provisions will apply to use of such [***] Protein Controls provided by Compugen to Bayer:
|
|
(a)
|
Notwithstanding [***], Bayer shall not be entitled to [***] Protein Controls to any [***], other than [***] of Bayer who are [***] (as described in the next sentence) on behalf of Bayer. Bayer
and its [***] may use such [***] Protein Controls solely for performance of the [***] or otherwise specifically [***] as tasks involving the use of such [***] Protein Controls.
|
|
(b)
|
Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall [***] the [***] or use [***] Confidential Information regarding the [***] and/or other [***] of the
[***] nor any other [***] regarding the [***] provided by Compugen on a [***] any other [***] incorporating the [***] of a [***], without the prior express written consent of Compugen in each case;
|
|
(c)
|
Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall not, [***] to any Third Party results of their use of the [***] Protein Controls, without Compugen’s
prior written consent; and
|
|
(d)
|
Bayer shall within reasonable time, but in any case within [***] days, after becoming aware thereof, [***] to Compugen [***] with respect to Target [***] Proteins, their use or their
production (in each case including, without limitation, [***] thereof), that are conceived and/or reduced to practice by Bayer, its Affiliates, contractors and/or collaborators, [***] Compugen or its Affiliates in the performance of work
using a [***] Protein Control (“[***] Protein Invention”). Any such [***] Protein Invention, whether made by
Bayer, any of its Affiliates or any of its contractors or collaborators, solely by Compugen or an Affiliate of Compugen, or jointly by any of the above, shall be [***]. Bayer and its Affiliates [***], and Bayer shall cause its contractors
and collaborators [***], any and all of their [***] in and to any and all [***] to Compugen. Upon Compugen’s request and at Compugen’s expense, Bayer shall [***] and [***] that any relevant Affiliate, contractor and collaborator [***] as
Compugen deems [***], in its [***], to enable Compugen to [***] with respect to any of the foregoing. Bayer will, and shall ensure that its Affiliates, contractors and collaborators will, at Compugen’s request, provide [***] and [***], as
[***] to [***]. Bayer is [***] that its Affiliates, contractors and collaborators [***], and [***] by its Affiliates of, the provisions of this Section 2.3.7.2(d). Bayer shall ensure that
its contractors and collaborators are [***] of this Section 2.3.7.2(d) by [***] to which Compugen is [***], prior to [***] to [***] Protein Controls or any Compugen
Confidential Information related to Target [***] Proteins.
|
2.3.7.3.
|
Use of Target Biologics in Compugen’s [***] Protein Programs. The Parties agree that Compugen’s [***] as part of its [***] may benefit from the use, as research reagents, of
certain CGEN-15001T Target Biologics [***] and that Compugen’s [***] as part of its [***] may benefit from the use, as research reagents, of certain CGEN-15022 Target Biologics [***]. The Parties further agree that uses by Compugen of such
Target Biologics must be restricted to prevent any adverse effect of such uses on the [***] of [***] and/or [***] and, in particular, the intellectual property rights in relation thereto. As a result, the Parties agree that [***], in
accordance with the procedure set forth in Section 2.3.7.3.3, certain of such Target Biologics [***] of the Research Programs which Compugen will be entitled to use subject to [***]. The CGEN-15001T Target Biologics and the CGEN-15022
Target Biologics that are [***] in accordance with Section 2.3.7.3.3 will be referred to as [***].
|
2.3.7.3.1.
|
Allowed uses of Target Biologics [***]: Compugen may use Target Biologics Controls only for [***]. No [***] shall be allowed to be
performed by Compugen using Target Biologic [***], unless [***] agrees on any [***] in advance.
|
2.3.7.3.2.
|
Transfer to third parties: Subject to sentence 2 of this Section 2.3.7.3.2, Compugen is entitled to provide Target Biologic [***] and
data relating to such Target Biologic [***] to its Affiliates, contractors and collaborators, solely to [***] within the [***] Protein Programs and with no right of
such Affiliates, contractors and collaborators [***] the Target Biologic [***] or [***] to any further third parties; provided that Compugen ensures that any [***] relating to [***] and that Compugen imposes on such third parties
obligations with regard to [***] than those agreed between Bayer and Compugen, including, without limitation that third parties [***] relating to such Target Biologic [***] – other than [***] specified in Exhibit 2.3.7.3.2– prior to the [***] with respect to such Target Biologic [***] by the Parties (i.e. [***] months
after filing date), without Compugen first obtaining the [***]. In any event (including in connection with any publication of the data specified in Exhibit 2.3.7.3.2) Compugen will not make, and will ensure that third parties to which
Compugen discloses data relating to Target Biologic [***] will not make, [***], with the exceptions that Compugen does not have to prevent such third parties from making [***] (i) solely vis-à-vis Compugen within the relevant [***] Protein
Program on a [***] basis or (ii) solely based on data that is [***], or data relating to Target Biologic Controls, provided by Compugen to such third party pursuant to sentence 1 of this Section 2.3.7.3.2. Compugen may only provide Target
Biologic [***] to its Third Party contractors and/or collaborators if (a) such [***] have been [***] not to have [***] or (b) such [***] have been [***] to have [***], but a [***] such [***]. Compugen shall be liable for any non-compliance
of its contractors and collaborators with the obligations under this Section 2.3.7.3.2. Compugen shall ensure that its contractors and collaborators are bound by the provisions of this
Section 2.3.7.3.2 by agreements pursuant to which Bayer is named as a third party beneficiary, [***] to Target Biologic [***] or any Bayer Confidential Information related to Target Biologic [***].
|
2.3.7.3.3.
|
Selection of Target Biologic [***]: Exhibit 2.3.7.3.3
sets forth the criteria that a particular Target Biologic developed in the performance of a [***] needs to fulfill in order to be chosen as a [***] and the timing and procedure for such selection by [***]. The Parties, through the [***],
shall [***] suitable CGEN-15001T Target Biologics or CGEN-15022 Target Biologics to serve as Target Biologic [***]. Both Parties agree that for the selection of appropriate Target Biologics [***] for Compugen’s [***] Protein Programs [***]
for the Target Biologics to [***] for the [***] as determined by the [***] It is understood that in no instance shall any CGEN-15001T Target Biologic or CGEN-15021 Target Biologic that is a [***] or that has, in [***], the [***] as a [***];
provided however, that [***] as a [***], such [***] shall remain a [***] unless [***]. Once any Target Biologics are chosen as Target Biologic [***], Compugen will be entitled to use the [***] such [***] in order to [***] such [***] for
[***] in accordance with the provisions of [***].
|
2.3.7.3.4.
|
Additional provisions on Target Biologic [***]: In addition to the provisions of Section 2.3.7.1, the following provisions will apply to
use of Target Biologic [***]:
|
|
(a)
|
Compugen shall only be allowed to [***] Target Biologic [***] and TBC Producing Cells [***] according to this Section 2.3.7.3 during the duration of [***]. For clarity, Compugen will be [***]
Target Biologic [***] and TBC Producing Cells in accordance with the provisions of Section 2.3.7.3, and to [***] Target Biologic [***] for such use, after [***].
|
|
(b)
|
Compugen shall not, and shall ensure that its Affiliates, contractors and collaborators shall not, [***] the Target Biologic [***] and TBC Producing Cells, except that Compugen and its
Affiliates, contractors and collaborators may [***] for the purpose of [***] (e.g. [***] with [***] to allow [***] in certain [***]). For clarity, any such
modifications shall be deemed [***] and will be subject to the terms of this Section 2.3.7.3;
|
|
(c)
|
Compugen shall within reasonable time, but in any case within [***] days after becoming aware thereof, [***] to Bayer any and all [***] with respect to Target Biologics, their [***] or their
[***] (in each case including, without limitation, [***] thereof), that are [***] by Compugen, its Affiliates, contractors and/or collaborators, alone or jointly with one another or with Bayer or its Affiliate in the performance of the work
using a Target Biologic Control [***]. Any such [***], whether made solely by Compugen or any of its Affiliates or contractors or collaborators, solely by Bayer or a Related Party, or jointly by any of the above, shall be [***] and be [***]
in Section [***] and [***] to [***]. In the case of a [***] by a [***] or [***], Compugen shall ensure that such inventions are [***] to Compugen such that they will also be [***]. Compugen will, at Bayer’s request, provide all necessary
[***] and cooperate with Bayer, as reasonably required to [***]. Compugen is responsible for ensuring that its Affiliates, contractors and collaborators [***], and shall [***] by its Affiliates of, the provisions of this Section
2.3.7.3.4(c). Compugen shall ensure that its contractors and collaborators are bound by the provisions of this Section 2.3.7.3.4 by agreements pursuant to which Bayer is named as a
third party beneficiary, prior to obtaining access to Target Biologics [***] or any Bayer Confidential Information related to Target Biologics [***].
|
2.3.8.
|
Data Transfer. The Parties agree that (a) the Research Programs may benefit from Know-How with respect to the [***] of Targets that
Compugen has [***] in the [***] with respect to its [***] Protein Programs (“[***] Program Target Know-How”) and (b) Compugen’s [***] respect to the [***] Protein Programs [***] from
Program Know-How relating to the [***] of Targets (“Research Program Target Know-How”). The Parties agree (i) that Bayer may use
the [***] Program Target Know-How [***] and (ii) that, other than for purposes of the Target Programs, Compugen may use such Research Program Target Know-How [***] its [***] Protein Programs.
|
2.3.9.
|
Funding. Subject to Section 2.4, each Party shall bear its own costs and expenses incurred in the performance of the activities to be
performed by it under the Workplans.
|
2.4.
|
Revisions or Expansions to Workplans.
|
2.4.1.
|
Any revision or expansion to a Workplan that may be requested by either of the Parties during the relevant Research Period shall be discussed by the Joint Steering Committee. This includes,
without limitation, discussions regarding the effect any such requested revision or expansion will have on the deliverables (including timing) to be provided under the relevant Workplan, the allocation of [***] resources for performance of
[***] under the relevant Research Program, and appropriate funding to be provided by [***] to support additional work to be performed by [***] and not contemplated under the then actual Workplan.
|
2.4.2.
|
If the Joint Steering Committee determines that a Party’s request refers to matters that do not materially change the relevant Workplan (such as [***]) and such changes do not impact the [***]
to such activity, the Joint Steering Committee shall have the authority to amend the relevant Workplan per such Party’s request, and such amendment shall be incorporated into the relevant Workplan by reference.
|
2.4.3.
|
If the [***] determines that the request refers to matters that materially change the relevant Workplan, or that such changes impact the [***] to such activity, the Steering Committee shall
prepare and present to the Parties’ authorized personnel a detailed written proposal for such revision or expansion to the relevant Workplan. If such proposal is approved by authorized personnel of each of the Parties, it shall be
incorporated into an amendment to this Agreement and an amendment to the relevant Workplan, and will be signed by the Parties.
|
2.5.
|
Target [***]. If, with respect to a Research Program, the Parties [***], as
set forth in the Workplan for such Research Program (despite also Bayer using [***] to perform its part of the Research Program for such Workplan), and Bayer terminates this Agreement with respect to the relevant Target Program in
accordance with Section 14.3, at the request of either Party, the Parties will discuss in good faith the [***] of such [***] to be [***] (including a [***] and [***]); provided that there may be [***] for each [***]. Any such other [***]
would be [***] from [***]. If the Parties agree on such a [***], including a [***] and [***] to be provided by [***] to support such [***], this Agreement will be amended accordingly and (a) if the [***] is the [***], to [***] the [***]
with such [***], to [***] the [***] and [***] with references to the [***] in such [***] or (b) if the [***] is the [***], to [***] the [***] with such [***], to [***] the definitions of [***] and [***] with [***] to the [***] in such [***]
Compugen [***].
|
3.1.
|
By Compugen to Bayer.
|
3.1.1.
|
Exclusive Licenses.
|
3.1.1.1
|
Target Biologics. Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even
as to Compugen, except as set forth in Section 3.1.1.4), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint
Intellectual Property, solely to do or have done further research on and or with Target Biologics in the Field.
|
3.1.1.2
|
Products. Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even as to
Compugen, except as set forth in Section 3.1.1.4), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint Intellectual
Property, solely to develop, have developed, make, have made and use and have used Target Biologics solely in order to do or have done research on, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale,
have offered for sale and import and have imported Products for use in the Field. For clarity, no rights are granted by Compugen with respect to Target Biologics for any other uses.
|
3.1.1.3
|
Target Biomarkers. Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even
as to Compugen, except as set forth in Sections 3.1.1.4 and 3.3), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint
Intellectual Property solely to do or have done further research on, develop, have developed, make, have made, use, have used Target Biomarkers solely:
|
|
(a) for therapeutics research and development purposes; and
|
|
(b) subject to Section 3.1.1.4, to do or have done research on, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale and import and
have imported Diagnostics.
|
3.1.1.4
|
Exceptions. Notwithstanding the licenses set forth above, Compugen reserves the following rights:
|
|
(i)
|
on behalf of itself, its Affiliates and its contractors approved in accordance with Section 2.3.4 the right to use and practice the Compugen Intellectual Property and Joint Intellectual
Property within the scope of the license granted in Sections 3.1.1.1, 3.1.1.2 and 3.1.1.3 to perform its activities under the Research Programs (for clarity, including the right to license such Affiliates and contractors approved in
accordance with Section 2.3.4 under Joint Intellectual Property to do the same);
|
|
(ii)
|
on behalf of itself and its Affiliates, contractors and collaborators, the right to use and practice the Compugen Intellectual Property and Joint Intellectual
Property to [***] solely to [***] with [***], including without limitation for the [***] (for clarity, including the right to [***]), provided that
Compugen will [***] on [***] and thereafter up until the earlier of (1) [***] with respect to a [***] from the [***] and (2) [***] years following the Effective Date, [***] provide Bayer with the following information: (x) whether [***]
for [***], (y) [***] of [***], and (z) to the extent that the [***] of the [***] to [***] of [***] and/or that the [***] have [***], [***], (for example: based on [***], and [***]) as a [***] of the [***] of such [***] and, upon request
of Bayer, further [***] including [***] of [***]; and
|
|
(iii)
|
on behalf of itself and its Affiliates, contractors and collaborators, the right to use and practice the Compugen Intellectual Property and Joint Intellectual
Property to [***] or have [***] for [***] purposes solely to support [***] and [***] of [***] (for clarity, including the right to [***]), provided that
if and to the extent that those studies [***] that the [***] have [***] (in Compugen’s [***]) as a [***], Compugen will [***] on [***] and thereafter up until the earlier of (1) [***] and (2) [***] years following the Effective Date,
[***] provide Bayer with a detailed description of the [***] of the [***] that [***] and, upon request of Bayer, with further [***] including [***].
|
3.1.1.5
|
For the avoidance of doubt, the licenses granted above do not limit in any way the Parties’ and their Affiliates’ right to conduct independent activities that a Third Party would also be
allowed to perform (e.g. based on publications or Target Biologics obtained from a Third Party who did not make use of Compugen Intellectual Property nor of Joint Intellectual Property in developing or making such Target Biologics).
|
3.1.2
|
Affiliates and Contractors. The licenses granted to Bayer under Section 3.1.1 include the right to have some or all of Bayer’s rights
under Section 3.1.1 exercised or performed by one or more of Bayer’s Affiliates on Bayer’s behalf and/or by one or more contractors on Bayer’s behalf or on behalf of an Affiliate of Bayer without such right being deemed a Sublicense;
provided however that:
|
3.1.2.1
|
with respect to contractors of Bayer or of an Affiliate of Bayer, no such contractor or Affiliate shall be entitled to grant, directly or indirectly, to any Third Party any right of whatever
nature under, or with respect to, or permitting any use or exploitation of, any of the Compugen Intellectual Property or Joint Intellectual Property, including any right to develop, manufacture, market or sell Products or Diagnostics; and
|
3.1.2.2
|
any act or omission taken or made by an Affiliate or contractor of Bayer or by a contractor of an Affiliate of Bayer under this Agreement will be deemed an act or omission by Bayer under this
Agreement.
|
3.1.3
|
Sublicenses.
|
3.1.3.1
|
Sublicense Grant. Bayer will be entitled to grant Sublicenses to third parties subject to the terms of this Section 3.1.3; provided
that with respect to the development of Products under a Target Program, Bayer may only grant a Sublicense to a [***] that (a) in Bayer’s [***] has the [***] to [***] in accordance with the [***], and (b) is, in Bayer’s [***] and [***] all
[***] obligations of Bayer under this Agreement. Any such Sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of this Agreement. Bayer may grant Sublicenses only pursuant to written
agreements, which will be subject and subordinate to the terms and conditions of this Agreement. Such Sublicense agreements will contain, among other things, the following:
|
|
(a)
|
all [***] to [***] to [***] under this Agreement;
|
|
(b)
|
if the [***], a provision stating that [***]with, and [***], including without limitation those relating to the [***].
|
3.1.3.2
|
Delivery of Sublicense Agreement. Bayer shall furnish Compugen with a fully executed copy of any Sublicense agreement and any amendment
to a Sublicense agreement, promptly after its execution. Bayer may redact such copies to the extent necessary to preserve the confidentiality of proprietary information that is not relevant to Compugen’s rights or Bayer’s obligations under
this Agreement, provided that sufficient information remains unredacted to allow Compugen to assess whether Bayer is in compliance with its obligations under this Agreement and to verify amounts owed to Compugen in connection with such
Sublicense. Compugen shall keep all such copies of such agreements in its confidential files and shall use them solely for the purpose of monitoring Bayer’s and Sublicensees’ compliance with their obligations hereunder and enforcing
Compugen’s rights under this Agreement.
|
3.1.3.3
|
Breach by Sublicensee. In the case of any act or omission by any Sublicensee of Bayer that would have constituted a material breach of
this Agreement by Bayer entitling Compugen to terminate this Agreement in accordance with Section 14.3.3 had it been the act or omission of Bayer hereunder, (a) Bayer will take reasonable steps to cause such material breach to be cured (if
curable) in a timely manner or (b) if such material breach cannot be cured in a timely manner, Bayer will notify Compugen of such material breach promptly after Bayer, cumulatively, becomes aware of the relevant act or omission of the
Sublicensee and understands both that such act or omission constitutes a material breach and that such material breach is not curable, and [***] will [***] the appropriate measures to be taken, which may include termination of the
Sublicense. Compugen will not have the right to terminate this Agreement on account of such material breach by such Sublicensee, if (i) such breach is cured in a reasonable time period or (ii) Bayer discusses with Compugen possible courses
of action, and terminates such Sublicense agreement based on a right to terminate the Sublicense agreement (which Bayer undertakes to include in the Sublicense agreement) if such material breach is not cured within [***] days and Compugen
requests Bayer to terminate the Sublicense agreement due to such failure to cure the material breach.
|
3.1.4
|
Technology Transfer.
|
3.1.4.1
|
Within [***] weeks of the Effective Date, Compugen shall, [***], deliver to Bayer or its designated Affiliate or Sublicensee, in whatever form Bayer may reasonably request, true and complete
copies of all written, graphic or electronic embodiments of the Compugen Intellectual Property. Thereafter, on a continuing basis during the term of the Agreement, Compugen shall, without [***], and shall cause its Affiliates to, [***]
after Compugen both (a) becomes aware of any additional Compugen Intellectual Property and (b) understands that the relevant Know How is Compugen Intellectual Property, disclose and deliver to Bayer or its designated Affiliate or
Sublicensee, in whatever form Bayer may reasonably request, true and complete copies of all written, graphic or electronic embodiments of all additional Compugen Intellectual Property which comes into existence from time to time. For
clarity, the transfer obligation under this Section 3.1.4 excludes information specifically relating [***] and/or [***] Proteins (other than the information provided under [***]).
|
3.1.4.2
|
Without prejudice to the generality of Section 3.1.4.1, during the term of the Agreement, Compugen shall, without
[***], provide Bayer or its designated Affiliate or Sublicensee with reasonable technical assistance relating to the use of the Compugen Intellectual Property for the purposes of Related Party’s acquisition of expertise on the practical
application of the Compugen Intellectual Property or for the provision of assistance to the applicable Related Party on issues arising during exploitation of the Compugen Intellectual Property. If visits of Compugen representatives to the
facilities of the applicable Related Party are reasonably requested, Compugen shall send appropriate representatives to such facilities, provided that Bayer shall [***] for its [***] and [***] for such [***].
|
3.2
|
By Bayer to Compugen.
|
3.3
|
Availability for Compugen.
|
|
(a)
|
Bayer hereby undertakes to use good faith efforts to ensure that with respect to Companion Diagnostics, Compugen and its Affiliates, collaborators and licensees will have access, under terms
[***] (or in the event [***]), to the [***] (i.e. [***]). If Bayer is [***] Compugen, its Affiliates, collaborators and/or licensees, [***]. In such case, Compugen, its Affiliates, collaborators and/or licensees (as the case may be) may
[***] an Affiliate, collaborator or licensee [***] and will perform [***] under which Compugen, its Affiliates, collaborators and/or licensees (as the case may be) [***], under terms [***]. If, cumulatively, (i) [***] between [***] (as the
case may be) and [***] developing [***] do not [***] within [***] of the date Compugen, its Affiliates, collaborators and/or licensees (as the case may be) [***] and (ii) Compugen, its Affiliates, collaborators and/or licensees (as the case
may be) and [***] are [***] with respect to a [***], notwithstanding the [***], Compugen and its Affiliates will have the [***] and [***] and [***] (including the
right to [***]) solely to do or have done [***] on, [***], have [***], have [***] (i.e. a [***]).
|
|
(b)
|
If Compugen or its Affiliate wishes to [***] (for the avoidance of doubt, on [***] basis) as a commercial product (for Compugen and/or for a licensee of Compugen) a Target Biomarker for [***]
(e.g. [***]) than the one [***] (or if [***]), the procedure will be as follows: [***] of its interest [***], and shall [***] of such a product [***]. Bayer may [***] or [***], at that time, [***] or [***] the [***]. If, following a [***]
of [***], [***] does not (i) enter into [***] in relation to [***] refers to within [***] after this [***] (or, if [***] after [***]), or (ii) [***] with its [***] in relation to the [***] that the [***], which period will be extended by an
additional [***] month period if Bayer and its [***]), Bayer will be [***]. If, from the date when [***], neither [***] (i) [***] with a [***] within [***] or (ii) [***] with [***] in relation to the [***] of a [***] within a period of
[***] which will be extended by an additional [***] period if [***] (or its licensee, as applicable) and [***] are still in [***], [***] of the [***] of a [***] will be [***]. For the avoidance of doubt, if, after [***], Compugen again
becomes [***], the process described in this Section 3.3 (b) will [***]. If, following [***], [***], its Affiliate or its licensee thereafter [***] with a [***] use [***] to ensure that [***] to such assay [***] than those agreed upon
between [***] (or its Affiliate or licensee) and its contract partner (or in the event [***] its Affiliate or licensee develops such an assay, on reasonable terms).
|
3.4
|
No Other License or Grant of Rights. Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to confer
any ownership interest, license or other rights upon a Party by implication, estoppel or otherwise as to any technology, intellectual property rights, products or biological materials of another Party or any other entity.
|
4.
|
Exclusivity
|
|
During the Research Period of each Research Program, neither Party shall use a Target of such Research Program to [***] relating to Target Biologics directed against such Target, other than
under such Research Program or as otherwise permitted under this Agreement (including without any limitations Sections 2.3.7.3 and 3.1.1.4). If either Party becomes aware that as a result of [***] in [***] that are not [***] that are
directed at the [***], using [***], result in the [***], such Party, unless it is prohibited from doing so due to an obligation of confidentiality to a licensee of such Biologic(s), will promptly inform the other Party and both Parties will
[***] to keep the Research Program and the project under which such [***] separate.
|
5.
|
Development and Commercialization Diligence.
|
5.1.
|
General. With respect to each Target Program, Bayer shall use Commercially
Reasonable Efforts [***] to develop and obtain Marketing Authorization for [***] Product from such Target Program and to commercialize such Product in each of the following major markets: [***] the [***] at least [***] of the [***] in the
[***]; and [***] of [***] and [***].
|
5.2.
|
Bayer Development Process. With respect to each Target Program, Bayer will at
[***] inform Compugen about the [***] to r[***], made by the [***] in a manner consistent with [***] to [***], to enable [***] of the [***] comply with [***] to [***] to [***]. Bayer will also [***] provide Compugen with [***] and about
any [***] and/or [***]. Bayer will [***] to meet the [***] of the next decision point set by the relevant committee. For the avoidance of doubt, any failure of Bayer to reach a new decision point within a specific timeline (including any
timelines set by the relevant Bayer internal committee) does not in itself give rise to any right of Compugen to terminate the relevant Target Program, unless Bayer did not [***] to [***]. The effects of any termination of the relevant
Target Program by Compugen against Bayer due to violation of diligence obligations will be limited to a right to terminate the relevant Target Program with the effects specified in Section 14.4 and with any other rights specifically on
account of such violation of diligence obligations (such as damages, specific performance etc.) being excluded.
|
5.3.
|
[***] Report. Within [***] days after the end of each [***] period ending June
30th or December 31st, as applicable, during the term from completion of the relevant Research Program until termination or expiration of the relevant Target Program, Bayer shall furnish Compugen with a written report setting forth for each
Target Program, its and other Related Parties’ efforts during the prior [***] period to develop and commercialize Products for such Target Program, including without limitation: (a) [***] (including without limitation [***] described in
Section [***]); (b) [***]; and (c) [***]. The report shall also contain a discussion [***] for the then current [***] period. In addition, if Bayer has made changes or foresees changes to the [***] and [***] pursuant to Section 5.2, Bayer
shall include in such a report the revised or contemplated [***] and a [***]. Each report shall be broken down by [***] within each Target Program and must contain a sufficient level of detail for Compugen to assess whether Bayer is in
compliance with its obligations under Section 5.1 with respect to the relevant Target Program, however, it being understood that the [***] of Bayer’s reporting obligation to Compugen shall not [***]. Within [***] days after the delivery of
each such report, the Joint Review Committee (as defined below) will meet to review with Bayer the contents of such report and the progress of Bayer’s efforts to meet its obligations under this Section 5.
|
5.4.
|
Joint Review Committee. After the end of the first Research Program, the Parties
will establish a joint review committee (“Joint Review Committee”) comprised of an equal number of representatives from each Party. Each Party may change its representatives to the
Joint Review Committee from time to time, in its sole discretion, effective upon notice to the other Party of such change. The representatives shall have appropriate technical credentials, experience and knowledge relevant to the
development and commercialization of Products. The Joint Review Committee will [***] in [***] under the other provisions of [***]. Additional representatives of a Party may be invited, from time to time by mutual consent of the Parties, to
attend Joint Review Committee meetings. [***] with the Joint Review Committee; however, Bayer will [***] to the Joint Review Committee by Compugen. The Joint Review Committee will meet at least [***] (following the receipt of reports as
set forth in Section 5.3) at such dates, times and locations as may be determined by the Joint Review Committee with unanimous consent. Alternatively, the Joint Review Committee may meet by means of teleconference, videoconference or other
similar communications equipment. [***] will [***][***] associated with [***] participation on the Joint Review Committee. [***] may, at any time upon written notice to [***] disband the Joint Review Committee. If [***] provides such
notice of disbandment to [***], the Parties’ obligations under this Section 5.4 will terminate, unless and until [***] provides written notice to Bayer that it wishes to reinstate the Joint Review Committee, in which case the Parties’
obligations under this Section 5.4 will be reinstated for the period following such notice by [***].
|
6.
|
Consideration.
|
6.1.
|
Upfront License Issuance Fee. For the licenses granted to Bayer under Section 3.1.1, Bayer shall pay Compugen a non-refundable license
issuance fee of ten Million US Dollar ($10,000,000), which Compugen is entitled to invoice upon the Effective Date.
|
6.2.
|
Milestone Payments.
|
6.2.1
|
First Product Milestones. With respect to each Target Program, Bayer shall pay
Compugen the following milestone payments with respect to [***] Product [***] a Target Biologic from such Target Program (i.e. a CGEN-15001T Target Biologic in the case of the CGEN-15001T Target Program and a CGEN-15022 Target Biologic in
the case of the CGEN-15022 Target Program) to reach such milestone, regardless of whether such milestone is achieved by Bayer or another Related Party:
|
6.2.1.1
|
[***] US Dollars ($[***]) upon the achievement of [***];
|
6.2.1.2
|
[***], US Dollars ($[***]) upon the [***] of [***] as a [***]);
|
6.2.1.3
|
[***] US Dollars ($[***]) upon [***] such a Product [***];
|
6.2.1.4
|
[***] Thousand US Dollars ($[***]) upon the [***] with such a Product in a [***];
|
6.2.1.5
|
[***] US Dollars ($[***]) upon the [***] with such a Product in a [***];
|
6.2.1.6
|
[***] US Dollars ($[***]) upon the [***] with such a Product [***] for a [***] with such a Product;
|
6.2.1.7
|
[***] US Dollars ($[***]) upon the [***] with such a Product [***] with such a Product;
|
6.2.1.8
|
[***] US Dollars ($[***]) upon the [***] with respect to such a Product with a [***], [***] or [***]; for the avoidance of doubt, this milestone, [***];
|
6.2.1.9
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.10
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.11
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.1.12
|
[***] US Dollars ($[***]) upon [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.13
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.14
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.1.15
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.16
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.1.17
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.1.18
|
[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within such [***] reach [***] US Dollars ($[***]); such amount will be due [***] for the Calendar Quarter in which
[***] for such Product in such [***];
|
6.2.1.19
|
[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within such [***] reach [***] US Dollars ($[***]); such amount
will be due [***] for the Calendar Quarter in which [***] for such Product in such [***]; and
|
6.2.1.20
|
[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within
such calendar year reach [***] US Dollars ($[***]); such amount will be due together with the payments on royalties in accordance with Section 7.1 for the Calendar Quarter in which [***] for such Product in such [***] reach such milestone.
|
6.2.2
|
[***] Product Milestones. With respect to each Target Program, Bayer shall pay
Compugen the following milestone payments with respect to the [***] Product containing a Target Biologic from such Target Program to reach such milestone, regardless of whether such milestone is achieved by Bayer or another Related Party,
provided that such [***] milestone payments shall not be paid if (a) [***], all [***] (“[***] Product”) and (b) such [***] did not [***] US Dollars ($[***]) [***] prior to [***]), it being understood that if a milestone payment is not paid
with respect to a [***] Product due to the [***] Product becoming [***] Product, Compugen shall be entitled to such milestone payment upon the achievement of such milestone by a [***] Product containing a Target Biologic from such Target
Program to reach such milestone.
|
6.2.2.1
|
[***] US Dollars ($[***]) upon the [***] with such a Product in [***] for a [***] with respect to such a Product;
|
6.2.2.2
|
[***] US Dollars ($[***]) upon the [***] with such a Product in a [***] for a [***] with respect to such a Product;
|
6.2.2.3
|
[***] US Dollars ($[***]) upon the [***] with respect to such a Product with a [***] [***], [***] and/or [***]; for the avoidance of doubt, this milestone, [***] with respect to the [***]
with all [***];
|
6.2.2.4
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.5
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.6
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.2.7
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.8
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.9
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.2.10
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.11
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.12
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.2.13
|
[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within
such calendar year reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] such [***] in such [***];
|
6.2.2.14
|
[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within
such [***] reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] for such [***] in such [***]; and
|
6.2.2.15
|
[***] US Dollars ($[***]) in the first [***] in which [***] for such a Product
within such [***] reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] for such [***] in such [***].
|
6.2.3
|
The milestones set forth in Sections 6.2.1 and 6.2.2 are intended to be [***]. In the event that Bayer [***] any of such milestones for a Product (“[***]”), Bayer shall be deemed to have achieved such [***] Milestone when it achieves the [***] milestone for the relevant Product (“Achieved Milestone”). Payment for
any [***] Milestone that is owed in accordance with the provisions of this Section 6.2.3 shall be reported and paid together with the reporting and payment of the Achieved Milestone, according to Sections 7.1.2.
|
6.2.4
|
For the avoidance of doubt, Bayer does not have to pay (a) with respect to either Target Program, any of the milestone payments set forth in Section 6.2.2 [***], or (b) in relation to a
specific Product, for any [***].
|
6.3
|
Royalties on Net Sales of Products.
|
6.3.1
|
Royalties. Bayer shall pay Compugen royalties on [***] Net Sales of each Product in each calendar year, as follows:
|
6.3.1.1
|
An amount [***]% of Net Sales of such Product on the [***] US Dollars ($[***]) in [***] Net Sales of such Product in such calendar year;
|
6.3.1.2
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***]
up to [***] Net Sales of such Product of [***] US Dollars ($[***]) in such [***];
|
6.3.1.3
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***]
up to [***] Net Sales of such Product of [***] US Dollars ($[***]) in such [***];
|
6.3.1.4
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***] up to total Net Sales of such Product of [***] US
Dollars ($[***]) in such [***]; and
|
6.3.1.5
|
An amount equal to [***]% on the portion of Net Sales of such Product exceeding [***] US Dollars ($[***]) in [***] Net Sales of such
Product in such [***].
|
6.3.2
|
Third Party Royalty Set-Off. If [***] is required (a) in its reasonable judgment to obtain a license from a Third Party to an Infringed
Claim that would be infringed by [***] research on, making or using of [***] in the research on, making, using, selling, offering for sale or importing of a [***] in a certain country, and [***] obtains such a license after good faith,
arm’s length negotiations and consultation with [***], or (b) to make any [***] with respect to the research, making, using, selling, offering for sale or importing of a [***] in any country, [***] may offset an amount of [***] percent
([***]%) of any [***] due as consideration for such license (in the case of (a)) or all such [***] (in the case of (b)) with respect [***] in such country against [***] with respect to [***] on such [***] in such country; provided that in
no event shall [***] with respect to any [***] fall below [***] percent ([***]%).
|
6.3.3
|
Payments to Compugen Licensors. For clarity, nothing herein shall be deemed to impose on Bayer any obligation towards licensors of
Compugen (including [***]) on any amounts, if any, due by Compugen to any such licensor on account of consideration received by Compugen under this Agreement.
|
6.4
|
Royalties on Net Sales of Diagnostics.
|
6.4.1
|
Bayer shall pay Compugen an amount [***] percent ([***]%) of all Net Sales of Diagnostics by Bayer and/or its Affiliates.
|
6.4.2
|
Bayer shall pay Compugen an amount [***] percent ([***]%) of all Sublicense Diagnostic Sales Income.
|
6.5
|
Non-Royalty Sublicense Income. Bayer shall pay Compugen the following amounts on Non-Royalty Sublicense Income:
|
6.5.1
|
Products. If the relevant Sublicense agreement includes rights with respect to one or more Products, Bayer shall pay Compugen the
following percentages of Shared Non-Royalty Sublicense Income received for the respective Product(s) and, if applicable, Diagnostics Sublicensed with such Product(s). “Shared Non-Royalty
Sublicense Income” means all [***], less the sum of, cumulatively, (a) [***] under [***] prior to the date of [***] and (b) an amount equal to [***] under [***] with respect to [***] after the date of [***] and up to and including
[***]e is received (for clarity, [***]):
|
6.5.1.1
|
An amount equal to [***] percent ([***]%) of all [***] if the [***];
|
6.5.1.2
|
An amount equal to [***] percent ([***]%) of all [***], if the [***], but prior to [***];
|
6.5.1.3
|
An amount equal to [***] percent ([***]%) of all [***], but prior to the [***]; and
|
6.5.1.4
|
An amount equal to [***] percent ([***]%) of all [***], in connection with [***].
|
6.5.2
|
Diagnostics Only. If the Sublicense agreement includes no rights with respect to the making, using and/or sale of Products (i.e. the
Sublicense is solely with respect to the making, using and/or selling of Diagnostics), Bayer shall pay Compugen an amount [***] percent ([***]%) of all Non-Royalty Sublicense Income with respect to such Sublicense.
|
6.6
|
Royalty Term. Royalties under Sections 6.3 and 6.4 will be payable on a Product-by-Product, Diagnostic-by-Diagnostic and
country-by-country basis until the latest of:
|
|
(a)
|
the [***], as the case may be, [***]; provided that if [***], as the case may be[***], [***], such [***] for purposes of this [***] if and when (a) [***] for such [***] or (b) [***] the [***]
in accordance with [***]
|
|
(b)
|
the [***] of [***] with respect to [***], as the case may be, [***]; and
|
|
(c)
|
[***], as the case may be, [***].
|
6.7
|
Blended Royalty Rate. The Parties acknowledge and agree that [***] justify royalties of differing amounts [***], which royalties could
be applied separately to [***], and/or [***] on the one hand and [***] and/or [***] on the other hand, and that if such royalties were calculated separately, royalties [***] would last for different terms. The Parties further acknowledge
and agree that the royalty rate [***] would be [***] in the absence of the Parties’ agreement to adopt a blended royalty rate as set forth herein and that the terms and structure set forth in this Section 6 were agreed upon for convenience
purposes and represent the fair market value of the rights granted hereunder as determined and agreed upon by the Parties.
|
6.8
|
Other Third Party Payments. For clarity, subject to [***], [***] will be responsible for paying [***] all royalties and other payments
owed by [***] in performing work under this Agreement, including [***] any payments due to Third Parties under agreements [***] (e.g. [***]).
|
7.1
|
Reports and Payments.
|
7.1.1
|
Quarterly Reports. Within [***] days after the conclusion of each Calendar Quarter commencing with the first Calendar Quarter in which
Net Sales are generated or Non Royalty Sublicense Income or Sublicense Diagnostic Sales Income is received, Bayer shall deliver to Compugen a report containing the following information (in each instance, with a Product-by-Product or
Diagnostic-by- Diagnostic, as applicable, and country-by-country breakdown):
|
7.1.1.1
|
[***];
|
7.1.1.2
|
[***];
|
7.1.1.3
|
the total amount of Net Sales with respect to Products for the applicable Calendar Quarter;
|
7.1.1.4
|
[***];
|
7.1.1.5
|
[***];
|
7.1.1.6
|
the total amount of Net Sales with respect to Diagnostics sold, leased or otherwise transferred by Bayer and/or its Affiliates for the applicable Calendar Quarter;
|
7.1.1.7
|
a detailed accounting of all Sublicense Diagnostic Sales Income received during the applicable Calendar Quarter;
|
7.1.1.8
|
a detailed accounting of all Non-Royalty Sublicense Income received during the applicable Calendar Quarter; and
|
7.1.1.9
|
[***].
|
7.1.2
|
Reports on Milestone Achievement. Bayer shall provide written notice to Compugen of any occurrence of any of the milestones set forth in
Section 6.2 of this Agreement no later than [***] days following the occurrence of the relevant milestone.
|
7.1.3
|
Invoices. Compugen shall be entitled to invoice all amounts to be paid based on the reports provided by Bayer according to Section 7.1.1
and 7.1.2 directly after receipt of the relevant report.
|
7.1.4
|
Payments.
|
7.1.4.1
|
Subject to the last sentence of this Section 7.1.4.1, payment will be only made upon receipt of an invoice complying with requirements provided by Bayer to Compugen in writing in advance of
the date Compugen is entitled to issue an invoice and according to the following rule: (a) if invoices are received by Bayer at the below address until the [***],
then payments shall be made until the [***] in which the invoice was received; and (b) if invoices are received by Bayer at the below address after the [***] of [***], then payments shall be made until the [***] in which the invoice was
received. Notwithstanding the sentences above, the upfront license issue fee according to Section 6.1 shall be paid within [***] days upon receipt of the invoice.
|
7.1.4.2
|
Payment Address. All invoices shall be sent to the following address:
|
7.1.4.3
|
Payments made by Wire Transfer. All payments made to Compugen under the Agreement shall be made by wire transfer to the following bank
account of Compugen, or such other bank account as notified by Compugen to Bayer from time to time:
|
7.2
|
Payment Currency.
|
7.3
|
Records. Bayer shall maintain, and shall cause other Related Parties to maintain, complete and accurate records of Products and
Diagnostics that are made, used, sold, leased or transferred under this Agreement, any amounts payable to Compugen in relation to such Products and Diagnostics, and all Sublicense Diagnostic Sales Income and Non Royalty Sublicense Income
received by Bayer and its Affiliates, which records shall contain sufficient information to permit Compugen to confirm the accuracy of any reports or notifications delivered to Compugen under Section 7.1. Each Related Party shall retain
such records relating to a given Calendar Quarter for [***] years after the conclusion of that Calendar Quarter, during which time Compugen will have the right, at
its expense, to cause an independent, certified public accountant to inspect such records during normal business hours for the purposes of verifying the accuracy of any reports and payments delivered under this Agreement and Bayer’s
compliance with the terms hereof. Such accountant will be entitled to use the services of independent experts (e.g. patent lawyer), as may be needed to properly perform the audit and determine amounts due to Compugen under this Agreement.
Such accountant and experts shall not disclose to Compugen any information other than information relating to the accuracy of reports and payments delivered under this Agreement. The Parties shall reconcile any underpayment or overpayment
within [***] days after the accountant delivers the results of the audit. If any audit performed under this Section 7.3 reveals an underpayment in excess of [***] percent
([***]%) in any calendar year, [***]. Compugen may exercise its rights under this Section 7.3 only once per year per audited entity and only with reasonable prior notice to the audited entity. The accounts, records and reports related to
any particular period of time may only be audited one time under this Section 7.3.
|
7.4
|
Late Payments. Any payments due under this Agreement shall be due on such date as specified in this Agreement. Any failure by Bayer to
make a payment within [***] days after the date when due shall obligate Bayer to pay interest on the due payment to Compugen. The interest period shall commence on
the due date (inclusive) and end on the payment date (exclusive). Interest shall be calculated based on the actual number of days in the interest period divided by [***]. The interest rate per annum shall be equal to the [***] rate
calculated by the [***], currently published on [***], fixed [***] Days prior to the due date and reset to the prevailing [***] rate in [***] intervals thereafter,
plus a premium of [***] percent ([***]%), or shall be equal to the [***] rate allowed by local legal law provisions, whatever is [***].
|
7.5
|
VAT; Withholding and Similar Taxes.
|
7.5.1
|
All agreed remunerations are considered to be net of VAT. VAT applies additionally as legally owed, payable after receipt of a proper invoice, which meets all legal requirements according to
the applicable VAT law.
|
7.5.2
|
Bayer shall be entitled to deduct and withhold from the amount payable the tax which Bayer is liable under any provisions of tax law to withhold. If the withholding tax rate is reduced
according to the regulations in the Double Tax Treaty, no deduction shall be made or a reduced amount shall be deducted only if Bayer is timely furnished with necessary documents (Freistellungsbescheid) by Compugen issued by the German Tax
Authority (Bundeszentralamt für Steuern), certifying that the payment is exempt from tax or subject to a reduced tax rate. Bayer shall inform Compugen promptly regarding any documentation it requires from Compugen for obtaining such
exemption or reduction. Any withheld tax shall be treated as having been paid by Bayer to Compugen for all purposes of this Agreement. Bayer shall timely forward the tax receipts certifying the payments of withholding tax on behalf of
Compugen. In case Bayer cannot deduct the withholding tax due to fulfillment of payment obligation by settlement or set-off with respect to taxes that should have been withheld, Compugen will pay the withholding tax to Bayer separately. If
Bayer missed to deduct withholding tax but based on an audit performed by the relevant tax authorities during the period permitted for such audit according to applicable law, is still required by tax law to pay withholding tax on account of
Compugen to the tax authorities and (a) promptly informs Compugen of such to enable the Parties sufficient time to appeal such decision within the time period allowed for such appeal and (b) actually pays such tax on account of Compugen,
Compugen shall assist Bayer with regard to all procedures required in order to obtain reimbursement by tax authorities for amounts so paid or, in case tax authorities will not reimburse Bayer for such withholding tax paid by Bayer, Compugen
will immediately refund the tax amount.
|
8.1
|
Ownership.
|
8.1.1
|
Determination of Inventorship. Inventorship of inventions shall be determined in accordance with United States patent law.
|
8.1.2
|
Ownership.
|
8.1.2.1
|
Bayer shall own all rights, title and interest in and to all Program Inventions and Program Know-How (other than Fusion Protein
Inventions) for which each inventor or creator, as applicable, is an employee of Bayer, its Affiliate or a contractor performing a task assigned to Bayer under the Workplan [***].
|
8.1.2.2
|
Compugen or its designee shall own all rights, title and interest in and to all (a) Program Inventions and Program Know-How for which
each inventor or creator, as applicable, is an employee of Compugen, its Affiliate or a contractor performing a task assigned to Compugen under the Workplan [***] and (b) all Fusion Protein Inventions.
|
8.1.2.3
|
The Parties will jointly own all rights, title and interest in and to all Joint Know-How, other than Fusion Protein
Inventions. Subject to the exclusive licenses specifically granted under this Agreement, [***] shall have the [***] to [***] and [***] without [***] or to [***].
|
8.2
|
Disclosure. Each Party shall notify the other, promptly and in writing, of any Program Invention relating to Targets, Target Biologics,
Products and/or Target Biomarkers of which it becomes aware.
|
8.3
|
Patent Filing, Prosecution and Maintenance.
|
8.3.1
|
Intellectual Property Committee.
|
8.3.1.1
|
The Parties hereby establish an “Intellectual Property Committee” that will be responsible for discussing intellectual property rights
relating to Program Inventions. The Intellectual Property Committee will be comprised of [***] appointed by each Party, both of whom shall be full or part time employees of the appointing Party and shall have appropriate authority to make
the decisions assigned to the Intellectual Property Committee hereunder. Each of Bayer and Compugen may replace its Intellectual Property Committee representative at any time, upon written notice to the other Party.
|
8.3.1.2
|
Responsibilities. The Intellectual Property Committee responsibilities will include:
|
|
(a)
|
In consultation with patent counsel, discussing, determining and coordinating patent filing and prosecution activities with respect to Joint Inventions, including timing and content of patent
applications, country filings and abandonment decisions in various countries, and choosing counsel for preparation and prosecution of Joint Patent Rights; and
|
|
(b)
|
Discussing and advising Bayer with respect to patent filing and prosecution activities with respect to Program Inventions solely-owned by Bayer ("Bayer Program Inventions") and discussing and advising the Parties with respect to patent filing and prosecution activities with respect to Program Inventions solely owned by Compugen ("Compugen Program Inventions") and other Compugen Patent Rights.
|
8.3.1.3
|
Decision Making. The Intellectual Property Committee will [***] with
respect to Bayer Program Inventions, Compugen Program Inventions or other Compugen Patent Rights. With respect to Joint Inventions, the Intellectual Property Committee will [***]. If the Intellectual Property Committee cannot reach [***],
the Parties shall try to [***] through [***] between the [***] and the [***]. If said [***] cannot reach such a decision within [***] calendar days after the date
on which the matter is referred to the Parties’ [***] listed above, the Parties will [***] by the [***] who will be charged with the duty to [***] of [***], taking into account (a) [***] under this Agreement and [***] in a manner that will
[***] and [***] and (b) the [***]. For clarity, if one of the Parties [***], while the other Party [***].
|
8.3.2
|
Bayer Program Inventions. Bayer shall have sole control, at its expense and discretion, over the preparation, filing, prosecution and
maintenance of Patents covering the Bayer Program Inventions.
|
8.3.3
|
Compugen Patent Rights.
|
8.3.3.1
|
Control. [***] shall be responsible for the preparation,
filing, prosecution, defense (e.g. opposition and other stand-alone invalidity/unenforceability proceedings in accordance with Section 9.7) and maintenance of all Compugen Patent Rights not solely related to [***]. [***] shall be
responsible for the preparation, filing, prosecution and maintenance of all Compugen Patent Rights solely related to [***]. The Party responsible for preparation, filing, prosecution and maintenance of certain Compugen Patent Rights as set
forth above (the “Responsible Party”) shall use independent patent counsel reasonably acceptable to the
other Party and shall file, prosecute and maintain such Compugen Patent Rights in a country scope as defined in Exhibit 8.3.3.1; provided however, that
[***] understands that with respect to some of the Compugen Patent Rights, the [***] for [***] and that [***] such Compugen Patent Rights in all of the countries listed in Exhibit 8.3.3.1. In addition, if [***] instructs [***] to prepare,
file, prosecute, protect and maintain Patents for which [***] is the Responsible Party in a country not included in Exhibit 8.3.3.1, [***] will do so provided that such
instructions are provided sufficiently in advance of the relevant filing deadline. In case such country scope is at the date of the relevant filing, prosecution, defense or maintenance no longer possible, [***] shall prepare, file,
prosecute, defend and maintain such Patents in as many countries of the country scope as possible. With respect to Compugen Patent Rights, the Responsible Party shall: (a) [***] and [***], as well as [***]; (b) [***]; (c) [***]; (d) [***]
with [***], together with [***] and [***]; and (e) [***]. The Responsible Party shall give the other Party the opportunity to provide comments on and make requests of the Responsible Party concerning the preparation, filing, prosecution,
protection and maintenance of the Compugen Patent Rights, and shall consider such comments and requests in good faith. In no event shall [***] abandon any claim within the Compugen Patent Rights covering a [***] without the written consent
of [***]. With respect to Compugen Patent rights not solely related to [***] the Parties shall agree on separation of subject matter to the extent possible which shall be further prepared, filed, prosecuted, protected or maintained in
separate divisional or continuation applications. [***] shall have full control and decision making authority on such applications not related to [***]. The Parties will reasonably inform and consult with each other and, to the extent
possible, will undertake the filing, prosecution and defense of any Patents in a way that will not be detrimental to the prosecution, issuance and validity of Patents that are part of Compugen Patent Rights, or the development or
commercialization of the Product. The Party that is not the Responsible Party will cooperate with the Responsible Party and will, on reasonable request of the Responsible Party within [***], provide all requested declarations and other
support to enable the Responsible Party to prepare, file, prosecute and maintain the relevant Compugen Patent Rights in accordance with this Section 8.3.3.1.
|
8.3.3.2
|
Expenses.
|
8.3.3.2.1
|
The Parties acknowledge that the Compugen Patent Rights listed in Exhibit 8.3.3.2.1 also claim targets and
antibodies other than [***] will [***] prosecution and maintenance expenses with respect to such applications up to national phase (including national phase entry). However, with respect to any divisional patent applications filed with
respect to such Compugen Patent Rights that claim [***] and do not claim targets that are not [***] shall reimburse [***], subject to Section 8.3.3.3 below, for [***] expenses incurred in connection with the [***] (“Patent Expenses”) of such Compugen Patent Rights incurred by [***] after the Effective Date in the countries listed in Exhibit 8.3.3.1 and in any country not listed in Exhibit 8.3.3.1 requested by Bayer
in accordance with Section 8.3.3.1, as follows: (a) if the [***] or [***] and/or [***] shall [***] for [***] such [***]; and (b) if such [***] or [***] subject
matter other than [***] that is [***] according to [***], [***] shall [***] for [***] such [***].
|
8.3.3.2.2
|
With respect to all Compugen Patent Rights, other than those described in Section 8.3.3.2.1, [***] shall reimburse[***], subject to Section 8.3.3.3 below, for [***] Patent Expenses incurred by [***] following the Effective Date or, if [***] is the Responsible Party, [***] shall [***] for patent expenses with respect to the preparation, filing, prosecution, defense
and maintenance of such Compugen Patent Rights in the countries listed in Exhibit 8.3.3.1 and in any country not listed in Exhibit 8.3.3.1 requested by [***] in accordance with Section 8.3.3.1 or in which [***] otherwise decides to file
applications.
|
8.3.3.2.3
|
Patent Expenses to be reimbursed under this Section 8.3.3.2 shall be paid in accordance with Section 7.1.4, 7.2 and 7.4, provided that
the invoice of Compugen shall be accompanied by supporting documentation from Compugen in relation to such expenses.
|
8.3.3.3
|
Abandonment.
|
8.3.3.3.1
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent application or patent within
Compugen Patent Rights that is a [***] Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which Bayer previously requested Compugen to file such Compugen Patent Rights in accordance
with Section 8.3.3.1 or in which Bayer otherwise filed Compugen Patent Rights, Bayer shall provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***] shall be released from any obligation to
reimburse [***] for the expenses incurred thereafter as to such [***] Patent Rights; provided that expenses authorized prior to the receipt by [***] of such notice shall be deemed incurred prior to the notice. In the event of any such
abandonment, [***], in its sole discretion, may choose to continue the preparation, filing, prosecution, protection or maintenance of such [***] Patent Right [***]. If a patent is thereafter granted with respect to such [***] Patent Rights,
[***] shall promptly inform [***] in writing along with documentation of the relevant decision and [***] shall inform [***] in writing within [***] upon receipt of such notice (including documentation of the relevant decision) whether it
wishes to keep or to abandon such [***] Patent Right (if abandoned, each then an “Abandoned [***] Patent Right”). If [***]
wishes to keep such [***] Patent Right, [***] will pay to [***] to [***] costs in connection with such preparation, filing, prosecution, protection or maintenance of such [***] Patent Right [***]. If [***] decides not to pay such amount or
fails to pay such amount when due, [***] may choose [***]. In such event, the license [***] will terminate, [***]. [***] shall then [***]without [***], to [***] and to [***].
|
8.3.3.3.2
|
[***] is free in its sole discretion to abandon Bayer Product Patent Rights without any obligation to offer such Bayer Product Patent Rights to [***] provided that in the case of a termination
of this Agreement in whole or of a Partial Termination by [***] in accordance with Section 14.3.3 or Section 14.3.4 or by [***] in accordance with Section 14.3.1 (without cause), [***] will not abandon those Bayer Product Patent Rights that
would, in the case of a Transfer Notice from [***], be covered by any of the licenses granted within such Program Transfer without first allowing [***] to elect to have [***] continue prosecution, maintenance and/or protection of such Bayer
Product Patent Rights at [***]’s cost until the [***]-day-period for provision of a Transfer Notice according to Section 14.4.2.1 has expired without receipt of any Transfer Notice by [***]. Should [***] after a Program Transfer decide that
it does not wish to continue the prosecution of any [***] that is covered by any of the licenses granted within such Program Transfer, [***] shall provide [***] with written notice of such election. Upon receipt of such notice by [***],
[***] shall be released from any obligation to prosecute the relevant Bayer Product Patent Right. In the event of any such abandonment, [***], in its sole discretion, may choose to continue the prosecution of such Bayer Product Patent Right
at [***] expense. [***] will cooperate with [***] and will, on reasonable request of [***] within three months after receipt of such request, provide all requested declarations and other support to enable [***] to prepare, file, prosecute
and maintain the relevant Bayer Product Patent Rights. For the avoidance of doubt, [***] retains full ownership of such Bayer Product Patent Rights.
|
8.3.3.3.3
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent or patent application within
Compugen Patent Rights that is a [***] Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which Bayer previously requested Compugen to file such Compugen Patent Rights in accordance with
Section 8.3.3.1 or in which Bayer otherwise filed Compugen Patent Rights (each, an “Abandoned [***] Patent Right”), Bayer shall
provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall [***] thereafter as to such [***]; provided that [***] shall be [***]. In the event of any such abandonment, [***] may [***] of
such Abandoned [***] Patent Rights [***]. In such event, the [***] by [***] with respect to such [***] will [***], but [***] will [***] under Section [***] such
[***] and [***] shall have the [***] and [***].
|
8.3.4
|
Joint Patent Rights.
|
8.3.4.1
|
Control. All Joint Patent Rights shall be filed, prosecuted, defended (e.g. opposition and other stand-alone
invalidity/unenforceability proceedings in accordance with Section 9.7) and maintained by the Parties through patent counsel to be agreed upon by the Intellectual Property Committee. Such counsel shall confer with the members of the
Intellectual Property Committee and attempt to achieve a consensus in all decisions made relative to the content of applications, the prosecution of the Joint Patent Rights and the content of communications with the relevant patent
agencies, prior to any communications with such agencies.
|
8.3.4.2
|
Expenses. Subject to Section 8.3.4.3 below, Bayer shall [***] with respect to
the activities described Section 8.3.4.1.
|
8.3.4.3
|
Abandonment. Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution,
protection or maintenance of any patent application or patent within Joint Patent Rights that is a [***] Patent Right (each a “[***] Joint Patent Right”) in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which the Parties filed such Joint Patent Rights in accordance with Section 8.3.4.1, Bayer shall
provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall b[***]hereafter as to such [***]; provided that [***] shall be [***]. In the event of any such abandonment, [***], may [***] of
such [***]. If a patent is [***], [***] shall promptly [***] and [***] shall [***] within [***] (including [***] of the [***]) whether it wishes to [***] such [***] Patent Right (if [***]”). If [***] wishes to [***] such [***], [***] will
pay [***] costs in connection with [***] which [***] is [***] after receipt of [***] request to keep the relevant [***]. If [***] decides [***] or [***] such amount
when due, [***], may [***] to [***] hereunder with respect to [***]. If [***] exercises its right to [***] and continues to [***], (a) [***] thereafter shall have the [***] and [***] under such [***] without any duty to a[***] for such
[***] and [***] and (b) [***] shall [***] without [***] to [***], and [***] shall then be [***] (except as set forth below in [***]) [***] to [***] (through [***] of [***]) in and to such [***]. In such event, [***] shall have [***] to
[***] such [***] in the relevant country(ies) except as shall be [***] to [***] the [***] in such country of any Product for which Bayer is otherwise [***] and [***].
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8.3.4.4
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent or patent application within
Joint Patent Rights that is a [***] Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which the Parties filed
such Joint Patent Rights in accordance with Section 8.3.4.1 (each, an “Abandoned Joint [***] Patent Right”), Bayer shall
provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall [***] thereafter as to such [***]; provided that [***] shall be deemed [***]. In the event of any such abandonment, [***], may
choose to continue the [***] at its or a Third Party’s [***]. In such event, the [***] with respect to such [***], but [***] will [***] under [***] to enforce such [***] and [***] shall have the [***] to enforce such [***] and [***].
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8.3.5.
|
Compugen Program Invention. Compugen shall have control, at its expense and discretion, over the preparation, filing, prosecution and
maintenance of patents and patent applications covering Compugen solely-owned Program Inventions that are not Compugen Patent Rights.
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8.4.
|
Patent Challenge. If a Related Party commences an action in which it challenges the validity, enforceability or scope of any of the
Compugen Patent Rights (a “Challenge Proceeding”) and the outcome of such Challenge Proceeding is a determination in favor of Compugen, then in addition to any other rights Compugen
may have under this Agreement or under applicable law, Bayer shall [***] for all [***]with [***].
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9.1
|
Notice. If Bayer or Compugen becomes aware of any possible or actual infringement of any Compugen Patent Rights, Joint Patent Rights or
Bayer Product Patent Rights with respect to the making, use or sale of Products and/or Diagnostics (an “Infringement”), that Party shall promptly, and in any event not later than one
week after becoming aware of the Infringement, notify the other Party and provide it with details of its knowledge regarding such Infringement.
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9.2
|
Compugen Patent Rights and Joint Patent Rights
|
9.2.1
|
Suit by Bayer. Bayer shall have the first right (with the right to grant such right to Sublicensees), but not the obligation, to file a
lawsuit for patent infringement or otherwise take action in the prosecution, prevention, or termination of any Infringement, including enforcement of Compugen Patent Rights or Joint Patent Rights with respect to an Infringement. Before
Bayer commences an action with respect to any such Infringement, Bayer shall consider in good faith the views of Compugen in making its decision whether to sue. Should Bayer elect to bring suit against such an infringer, Bayer shall keep
Compugen reasonably informed of the progress of the action and shall give Compugen a reasonable opportunity in advance to consult with Bayer and offer its views about major decisions affecting the litigation. Bayer shall give careful
consideration to those views, but shall have the right to control the action. Bayer agrees to vigorously defend the validity and enforceability of each patent subject to Compugen Patent Rights or to Joint Patent Rights on which it files
suit. As to a particular patent that is subject to Joint Patent Rights, Bayer at any time may assign all of its right, title and interest in that patent to Compugen and offer Compugen the opportunity to take over the lawsuit, and after such
offer all obligations of Bayer under this paragraph with respect to such patent shall cease. Likewise, with respect to a particular patent that is subject to Compugen Patent Rights, Bayer at any time may offer Compugen the opportunity to
take over the lawsuit, and after such offer all rights and obligations of Bayer under this paragraph with respect to such patent shall cease. Should Bayer elect to bring suit against such an infringer Compugen agrees to join as party
plaintiff in any such suit upon request by Bayer. [***] Bayer agrees to [***] the final decision as to the selection of counsel shall be made by Bayer. Compugen agrees to execute any retainer agreement reasonably requested by such counsel
that provides that counsel shall take instructions regarding the lawsuit from Bayer and that waives any actual or potential conflicts of interest between Compugen and Bayer. Except as set forth in the next sentence, the expenses of such
suit or suits that Bayer elects to bring, including any reasonable out-of-pocket expenses of Compugen, other than expenses for the time of its employees involved and disbursement involved in connection therewith, incurred in conjunction
with the prosecution of such suits or the settlement thereof, [***] and [***] shall hold [***]. Bayer shall be responsible for [***] incurred [***] only to the extent that [***]. Should Compugen desire its own separate counsel, as set
forth in Section 9.5, fees incurred by such counsel would be at Compugen’s expense. Bayer shall not settle such litigation in a manner that would adversely affect the validity or enforceability of the Compugen Patent Rights or Joint Patent
Rights or that would admit fault or wrongdoing by, or impose liability on, Compugen without the prior written consent of Compugen, such consent not be unreasonably withheld or delayed. If Bayer exercises its right to sue pursuant to this
Section 9.2.1, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character other than expenses for the time of its employees involved and
disbursement involved in connection therewith, including reasonable attorneys’ fees, incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Compugen shall receive an
amount equal to [***] percent ([***]%) of such funds and the remaining [***] percent
([***]%) of such funds shall be retained by Bayer.
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9.3
|
Bayer Product Patent Rights. Bayer shall have the sole right (with the right to grant such right to Sublicensees), at its discretion,
to file a lawsuit for patent infringement or otherwise take action in the prosecution, prevention, or termination of any Infringement or enforcement of patent rights relating the Bayer Product Patent Rights. If Bayer exercises such right
with respect to an Infringement occurring during a period in which royalties were due to Compugen on sales of Products covered by such Bayer Product Patent Rights in the country of the Infringement, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, incurred in the prosecution of any
such suit and if, after such reimbursement, any funds shall remain from said recovery, then Compugen shall receive an amount equal to [***] percent ([***]%) of such funds and the remaining [***]-percent ([***]%) of such funds shall be
retained by Bayer.
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9.4
|
Compugen Program Invention. Compugen shall have control, at its expense and discretion, over the preparation, filing, prosecution and
maintenance of Patents covering Compugen Program Inventions that are not Compugen Patent Rights (i.e. do not cover the Targets, Target Biologics nor Target Biomarkers).
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9.5
|
Own Counsel. Each of Bayer and Compugen shall always have the right to be represented by counsel of its own selection and at its own
expense in any suit instituted under this Section 9 by the other Party for Infringement.
|
9.6
|
Cooperation. Each of Bayer and Compugen agrees to cooperate fully in any action under this Section 9 that is controlled by the other
Party, provided that the controlling Party reimburses the cooperating Party promptly for any costs and expenses, other than expenses for the time of its employees involved and disbursement involved in connection therewith, incurred by the
cooperating Party in connection with providing such assistance.
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9.7
|
Declaratory Judgment. If a declaratory judgment action is brought naming Bayer and/or any of its Affiliates or Sublicensees as a
defendant and alleging invalidity or unenforceability of any claims within the Compugen Patent Rights, Bayer shall promptly notify Compugen in writing and Compugen may elect, upon written notice to Bayer within [***] days after Compugen
receives notice of the commencement of such action, to take over the sole defense of the invalidity and/or unenforceability aspect of the action at its own expense, unless or until Bayer decides to take action according to Section 9.2.1.
Should Compugen elect to take over such defense, Bayer shall have the right to approve the counsel selected by Compugen to represent Compugen and Bayer, such approval not to be unreasonably withheld or delayed.
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10.1
|
Definition. “Confidential Information” means information received by one Party
or any of its Affiliates (the “Receiving Party”) from the other Party or any of its Affiliates (the “Disclosing Party”) that is
visibly marked or otherwise indicated as confidential or proprietary or that – without such information being marked or otherwise indicated as confidential or proprietary – the Receiving Party should reasonably understand is confidential to
the Disclosing Party, and except that Confidential Information does not include information that: (i) was known to the Receiving Party (or an Affiliate of the Receiving Party) at the time it was disclosed, other than by previous disclosure
by or on behalf of the Disclosing Party, as evidenced by written records at the time of disclosure; (ii) is at the time of disclosure publicly known, or later becomes publicly known under circumstances involving no breach of this Agreement
by the Receiving Party or by any person or entity to whom Receiving Party discloses such information under Section 10.2; (iii) is lawfully and in good faith made available to the Receiving Party (or an Affiliate of the Receiving Party) by a
Third Party who is not subject to obligations of confidentiality to the Disclosing Party with respect to such information; or (iv) is independently developed by the Receiving Party (or an Affiliate of the Receiving Party) without the use of
or reference to Confidential Information of the Disclosing Party, as demonstrated by documentary evidence. The terms and conditions of this Agreement and the relationship between Parties shall be considered Confidential Information of each
of the Parties for purposes of this Section 10.
|
10.2
|
Restrictions. Receiving Party agrees to maintain Confidential Information of the Disclosing Party in confidence and not disclose such
Confidential Information without the prior written approval of the Disclosing Party, or make any use of such Confidential Information, except as required in order for such Party to perform its obligations and exercise its rights under this
Agreement. Each Party may disclose the other Party’s Confidential Information to those employees or consultants of the Receiving Party and to contractors and (in the case of Bayer) Sublicensees who have a need to know such information for
purposes of exercising rights and fulfilling obligations under this Agreement, and are bound by confidentiality and non-use obligations equivalent to those set forth herein. In addition, each Party may disclose the other Party’s
Confidential Information to Affiliates who have a need to know such information for purposes of exercising rights and fulfilling obligations under this Agreement, provided that the Receiving Party is liable for any non-compliance of its
Affiliates with the confidentiality and non-use obligations set forth herein. Receiving Party shall protect Confidential Information of the Disclosing Party by using the same degree of care, but not less than a reasonable degree of care, as
it uses to protect its own confidential information of like nature to prevent the unauthorized disclosure of such Confidential Information.
|
10.3
|
Compugen Undertakings with Respect to Certain Compugen Confidential Information.
|
10.3.1
|
Subject to the exceptions set forth in this Section 10.3.1 below, with respect to any Confidential Information within Compugen Know How so long as the exclusive license granted to Bayer under
Section 3.1.1 with respect to such [***] is in effect, Compugen shall not disclose such [***] to Third Parties (other than consultants of Compugen who are subject to confidentiality and non-use obligations at least as restrictive as those
set forth herein) without, cumulatively, (i) having [***] and (ii) [***] such [***]the [***] and
[***] such [***] under [***]. Notwithstanding sentence 1 of this Section 10.3.1 (for the avoidance of doubt, without this sentence 2 of Section 10.3.1 in any way limiting the [***]), Compugen is entitled (a) to disclose such Confidential
Information as permitted under Section 2.3.7.3.2; (b) to disclose such Confidential Information under obligations of confidentiality [***] to [***] and to [***] in order to enable Compugen to [***] under [***] and to publicly disclose
information described in Exhibit 2.3.7.3.2; (c) unrestrictedly disclose information [***]with respect to or with [***]of [***] and [***]for [***] to [***]; (d) unrestrictedly disclose information specifically with respect to [***] of
Targets; and (e) to disclose Confidential Information with respect to [***] and the [***] under obligations of confidentiality on [***] to [***] and to [***] in support of the [***]; provided that in the case of each of (a) through (e), (x) Compugen will not disclose any such Confidential Information with
respect to a [***] to a [***], without [***] (y) any agreement pursuant to which Compugen authorizes a Third Party to make use of any such [***] or with respect to [***]of such [***]and [***]unless [***]; and (z) [***]
|
10.3.2
|
Notwithstanding Section 10.3.1, Compugen may disclose [***] to Regulatory Authorities in order to (i) obtain, maintain or defend Compugen Patent Rights for which it is a Responsible Party or any
Patents specifically relating to [***] or (ii) seek or obtain approval to conduct clinical trials or gain Marketing Authorisation with respect to [***] In addition, the exceptions in Section 10.4.2 and Section 10.4.3 shall apply mutatis
mutandis. Compugen will, to the extent possible, undertake the filing, prosecution and defense of any Patents disclosing [***] pursuant to Section 10.3.2 (i) in a way that will [***]with respect to [***]
|
10.4
|
Exceptions. Notwithstanding the above:
|
10.4.1
|
The Receiving Party may disclose Confidential Information of the Disclosing Party to Regulatory Authorities in order to obtain, maintain or defend Patents or seek or obtain approval to conduct
clinical trials or gain Marketing Authorisation with respect to Products or Diagnostics or to otherwise develop, manufacture or commercialize a Product or Diagnostic.
|
10.4.2
|
The Receiving Party may disclose Confidential Information of the Disclosing Party and this Agreement as required to comply with any order of a court or any applicable rule, regulation, or law
of any jurisdiction or securities exchange, provided that to the extent reasonably possible it (a) shall promptly notify the Disclosing Party and allow the Disclosing Party a reasonable time to oppose such disclosure, (b) shall use
reasonable efforts to obtain an appropriate protective order or confidential treatment authorization that preserves the confidentiality of the information to the greatest extent practical and (c) shall limit the scope of such disclosure
only to such portion of such Confidential Information that is legally required to be disclosed.
|
10.4.3
|
The Receiving Party may disclose a summary report describing the current status and next steps of the Target Program(s) in a general manner without any sensitive information (e.g. information
relating to competitive, regulatory, commercial, clinical or scientific topics) and financial terms of this Agreement, which the Disclosing Party will deliver within reasonable time upon a request of the Receiving Party, as follows: (a)
[***] and/or (b) [***]who are [***]of (i) [***]or (ii) [***]of this Agreement; provided that in the case of each of (a) and (b), [***] has entered into a written confidentiality and non-use agreement no less restrictive than the terms set
forth herein. Such disclosure shall in any event be strictly limited to what is required by [***] for purposes of [***], or [***], and any use by [***] shall be limited to such purpose. Notwithstanding the above, if, in the event of a
planned disclosure by Compugen, [***] is a Bayer Competitor, then a disclosure as set forth in this Section 10.4.3 shall be made to an independent attorney and/or accountant (and/or independent third party expert contracted by them) solely
for the purpose of allowing such attorney and/or accountant to advise the Receiving Party regarding [***]this Agreement [***] or of [***] without disclosing any Bayer Confidential Information to the Bayer Competitor. The Receiving Party
making such disclosure shall remain liable towards the Disclosing Party for compliance of [***] with the terms of confidentiality and non-use as set forth in this Agreement with respect to such Confidential Information.
|
10.4.4
|
Each Party (a) shall have the right to disclose this Agreement as required by any securities laws, regulations or stock exchanges, provided, however, that the Party which discloses this
Agreement shall give reasonable advance notice, as legally permissible, to the other Party and, at the other Party’s request, shall involve the other Party in discussions with the relevant government agency with respect to the items that
may be redacted from such disclosure (it being understood that the Parties have a common interest that Confidential Information that does not have to be disclosed, including any details relating to financial terms, will be redacted from the
version of the Agreement provided for publications), and (b) may disclose the existence of the relationship created by this Agreement; provided that the other Party shall have the right to review and approve any press release or other
public disclosure of such information, such approval not to be unreasonably withheld. For clarity, each Party will be entitled to freely refer to any details disclosed in the press releases to be issued pursuant to Section 10.5 or in any
other press release issued by a Party.
|
10.5
|
Press Releases. Promptly after the execution of this Agreement, each Party will issue a press release substantially in the form
attached hereto (for each Party separately) as Exhibit 10.5 and will coordinate press releases and other public disclosures regarding the execution of this
Agreement and the completion of the Research Programs. Any press release or other public disclosure with respect to this Agreement or the Research Programs is subject to review and approval by the other Party (except as set forth in Section
10.4), such approval not to be unreasonably withheld.
|
10.6
|
Publications. The Parties acknowledge that publications or presentations relating to the Research Programs must be monitored to prevent
any adverse effect from premature publication of results of the Research Programs. Accordingly, all abstracts, manuscripts or presentations containing data related to the activities within the Research Program or results generated in the
performance of such Research Program, which have not been previously published, must be provided at least [***] days prior to [***] for publication or presentation in scientific journals and/or at scientific conferences by the submitting
Party to the other Party via [***] for its review and comment. The receiving Party will provide any comments to the submitting Party within [***] days of receipt of such proposed abstract, manuscript or presentation, and the submitting
Party will [***] as applicable. Without limiting a Party’s right under Section 10, a Party may use presentation materials that have been previously approved by a Party for a presentation by the other Party in subsequent presentations having
a similar context without additional approvals under this Section 10.6. Notwithstanding the foregoing, Bayer may, in its sole discretion, [***]If Bayer so objects, [***]shall [***]and [***] For the avoidance of doubt, Bayer is free to
submit any abstract, manuscript or presentation related to its activities under a Target Program after completion of the Research Program, to the extent that such publication does not contain any Confidential Information of Compugen.
|
10.7
|
Duration. The foregoing obligations shall remain in force for a period of [***] years following the date of the disclosure of the
relevant Confidential Information.
|
11.1
|
Representations and Warranties by the Parties. Each Party hereby represents, warrants and covenants to the other as of the Effective
Date, as follows:
|
11.1.1
|
Such Party (a) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (b) has taken all necessary action on its part required
to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation
of such Party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights;
|
11.1.2
|
The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder do not conflict with, violate, or breach or constitute a default or require any consent
under, any contractual obligation or court or administrative order by which such Party is bound; and
|
11.1.3
|
It will comply with, and shall ensure that its Affiliates, contractors and Sublicensees comply with, all applicable laws and regulations relating to its activities and the exercise of its
rights under this Agreement.
|
11.2
|
Representations, Warranties and Covenants by Compugen. Compugen hereby represents,
warrants and covenants that: (a) it has not granted and will not grant any rights in or to the Compugen Intellectual Property that are inconsistent with the rights granted to Bayer under this Agreement; (b) it has the right to grant the
licenses granted by it under Section 3.1 of this Agreement; (c) it will not transfer, assign, encumber, grant, sell, lease or otherwise dispose of the Compugen Intellectual Property in a manner that will adversely affect the rights granted
to Bayer under this Agreement; and (d) to its knowledge (it being understood that [***]), it possesses all the rights needed to perform its obligations under the Workplan as currently contemplated; (e) it has no knowledge as of the date hereof of any legal suit or proceeding by a third party against Compugen contesting the ownership or validity of the Compugen
Intellectual Property; (f) it has not received as of the Effective Date, with respect to the Compugen Intellectual Property, any notice of infringement or any written communication from or on behalf of the owner of a Third Party patent
rights relating in any way to a possible infringement of such Third Party patent rights by its activities with respect to Targets and Target Biologics prior to the date hereof or the activities of either Party contemplated under this
Agreement; (g) to the best of Compugen’s knowledge, the Compugen Intellectual Property is not subject to any encumbrance, lien or claim of ownership of any Third Party; (h) it is the sole and exclusive owner and/or Controls the Compugen
Intellectual Property and to the best of its knowledge the Compugen Intellectual Property has not been misappropriated from a Third Party; (i) to Compugen’s knowledge, the documents delivered or made available by Compugen to Bayer in
connection with the transaction contemplated by this Agreement (for clarity, excluding any data that [***] do not contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements
contained therein not misleading; and Compugen has not knowingly withheld from Bayer any material information concerning the transaction contemplated by this Agreement (or, with respect to documents redacted due to confidentiality
obligations of Compugen, knowingly withheld from Bayer the information that such redacted parts contain material information concerning the transaction contemplated by this Agreement, other than the [***] to such redacted documents); (j) the Compugen Patent Rights are being diligently prosecuted and maintained with the respective patent offices in accordance with the local applicable law, and to
Compugen’s best knowledge, have been filed and maintained properly and correctly and all applicable fees have been paid on or before the final date for payment (including permissible extensions); (k) the Compugen Know-How has been kept
confidential or has been disclosed to Third Parties only under terms of confidentiality, and Compugen and its Affiliates are not aware of any breach of such confidentiality by any Third Party; and (l) Compugen has not failed to disclose to
Bayer any prior art or fact known to Compugen that causes Compugen to conclude that the Compugen Patent Rights Controlled by Compugen as of the Effective Date are invalid or unenforceable.
|
11.3
|
Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY
TECHNOLOGY, PATENTS, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE
FOREGOING. THE PARTIES ACKNOWLEDGE THAT ANY INFORMATION, BIOLOGICAL MATERIAL AND KNOW-HOW PROVIDED BY ONE PARTY TO ANOTHER HEREUNDER, ARE PROVIDED “AS IS” WITH NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. NEITHER PARTY MAKES ANY
WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION WITH RESPECT TO ANY COMPUGEN INTELLECTUAL PROPERTY, BAYER INTELLECTUAL PROPERTY, PROGRAM KNOW-HOW OR THE PERFORMANCE, CONDITION,
ORIGINALITY OR ACCURACY OF THE RESULTS OF THE RESEARCH PROGRAM. SUBJECT TO SECTION 11.2, NEITHER PARTY MAKES ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY COMPUGEN INTELLECTUAL PROPERTY, BAYER
INTELLECTUAL PROPERTY OR PROGRAM KNOW-HOW OR THAT THE USE OR PRACTICE OF ANY OF THE FOREGOING WILL NOT INFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.
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13.1
|
Indemnification of Compugen. Bayer shall indemnify, defend and hold harmless Compugen and its Affiliates and their respective directors,
officers and employees, and the successors and assigns of the foregoing (the “Compugen Indemnitees”) from and against any and all liabilities, damages, losses, costs and expenses
(including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a Third Party (including without limitation for infringement of any intellectual
property rights) against a Compugen Indemnitee to the extent resulting directly or indirectly from: (a) [***] (b) the negligence or willful misconduct of any Bayer Indemnitee (defined below); or (c) the breach by Bayer of any warranty,
representation, covenant or agreement made by it in this Agreement; except in each case to the extent that such claim, suit or proceeding results from the negligence or willful misconduct on the part of any of the Compugen Indemnitees or
from the breach by Compugen of any warranty, representation, covenant or agreement made by it in this Agreement.
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13.2
|
Indemnification of Bayer. Compugen shall indemnify, defend and hold harmless Bayer and its Affiliates and their respective directors,
officers and employees, and the successors and assigns of the foregoing (the “Bayer Indemnitees”) from and against any and all liabilities, damages, losses, costs and expenses
(including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a Third Party (including without limitation for infringement of any intellectual
property rights) against a Bayer Indemnitee to the extent resulting directly or indirectly from (a) [***] (b) [***] (c) a breach by Compugen of any representation, warranty, covenant or agreement made by it in this Agreement; and/or (d) the negligence or willful misconduct of any Compugen Indemnitee; except in each case to the extent that such claim, suit or proceeding results from the
negligence or willful misconduct on the part of any of the Bayer Indemnitees or from the breach by Bayer of any warranty, representation, covenant or agreement made by it in this Agreement.
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13.3
|
Procedure. A Party that intends to claim indemnification under this Section 13 (the “Indemnitee”)
shall promptly notify the indemnifying Party (the “Indemnitor”) of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, to assume sole control of the defense thereof with counsel reasonably acceptable to the other Party and with
involvement of the Indemnitor’s insurance, including, the right to settle the action on behalf of the Indemnitee on any terms the Indemnitor deems desirable in the exercise of its sole discretion, except that the Indemnitor shall not,
without the Indemnitee’s prior written consent, settle any such claim if such settlement contains a stipulation to or admission or acknowledgment of any liability or wrongdoing on the part of the Indemnitee or imposes any obligation on the
Indemnitee other than a monetary obligation, and only to the extent the Indemnitor assumes in full such obligation. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action shall
not impair Indemnitor’s duty to defend such action but shall relieve Indemnitor of any liability to the Indemnitee to the extent the Indemnitor is prejudiced materially by the delay. At the Indemnitor’s request and cost, the Indemnitee
shall cooperate reasonably with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification and provide full information with respect thereto. Subject to
the Indemnitee’s fulfillment of its obligations under this Section 13.3, the Indemnitor shall pay any damages, costs or other amounts awarded against the Indemnitee, or payable by the Indemnitee pursuant to a settlement agreement entered
into by the Indemnitor, in connection with such claim.
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13.4
|
Insurance. Compugen represents, warrants and covenants that (a) it maintains the insurance coverage described in Exhibit 13.4 hereto, (b) it will during the term of this Agreement maintain insurance sufficient to secure the performance of Compugen’s obligations under this Agreement
including general liability/public liability (GL), in amounts not less than those set forth in Exhibit 13.4 hereto, and (c) it will upon delivery of a Transfer Notice following termination of this Agreement maintain insurance sufficient to
secure the performance of Compugen’s obligations under this Agreement, with minimum insurance coverages as follows: (i) upon [***]$[***] (ii) upon [***], $[***], and (iii) $[***] Compugen shall provide Bayer with insurance certificates of
the insurances mentioned under (a) to (c) above upon request.
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14.1
|
Term of Agreement. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with
provisions of Section 14.3 below, shall continue until the end of the last-to-expire period during which Bayer is obligated to make payments to Compugen under Section 6. The term of this Agreement shall survive the non-renewal, termination
or limitation of any particular license granted hereunder. Certain rights and obligations of the Parties may be terminated as provided in this Section 14. Following the expiration pursuant to this Section 14.1 (and provided the Agreement
has not been earlier terminated pursuant to Section 14.3, in which case the provisions of Section 14.4 will apply), Bayer shall have a [***] under the Compugen [***] and Compugen’s interest in [***] with [***] as the licenses specified in
Sections 3.1.1.1 to 3.1.1.3.
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14.2
|
Early Termination of Research Program.
|
14.2.1
|
Termination for Breach by Compugen. If Compugen commits a material breach of
its obligations under Section 2.3 with respect to its obligations under the CGEN-15001T Workplan or the CGEN-15022 Workplan and fails to take reasonable measures to cure such breach within [***] days after receiving written notice thereof
from Bayer, Bayer may terminate the relevant Research Program (i.e. if the breach is with respect to obligations under the CGEN-15001T Workplan, the CGEN-15001T Research Program; if the breach is with respect to obligations under the
CGEN-15022 Workplan, the CGEN-15022 Research Program) upon written notice to Compugen. A breach of Compugen’s obligations under the CGEN-15001T Workplan or the CGEN-15022 Workplan (but not of both Workplans) shall entitle Bayer to terminate
both Research Programs only if the breach is of a general nature and impacts both Research Programs.
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14.2.2
|
Consequences. If Bayer terminates either [***] Program (“Terminated [***] Program”)
pursuant to Section 14.2.1, without prejudice to any other rights and legal remedies that Bayer may have due to such breach of agreement, Compugen will cease all of its work under the Terminated [***] Program, and [***]
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14.2.3
|
Effect on Other Provisions. Except as specifically set forth in this Section 14.2, early termination of the Research Program shall not
affect the Parties’ rights and obligations under this Agreement.
|
14.3
|
Early Termination of Agreement or of a Target Program.
|
14.3.1
|
Termination for Convenience. Bayer may terminate this Agreement, either in whole or with respect to one of the Target Programs only, and
in each case also on a Product-by-Product (with its applicable Product Companion Diagnostic), and/or country-by country basis, at any time without cause, upon [***] days prior written notice stipulating whether the termination applies to
the Agreement in whole or with respect to one of the Target Programs only, and whether it is limited to certain Product(s), and/or countries.
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14.3.2
|
Termination for Breach of Compugen. In the event Compugen commits a material breach of its obligations under any of the Target Programs
or under this Agreement as a whole and fails to cure that breach within [***] days after receiving written notice thereof, Bayer may terminate at its choice either this Agreement or the Target Program that the breach relates to immediately
upon written notice to Compugen, provided that if (i) the breach is (1) curable, (2) is not an intentional breach, and (3) not susceptible of cure within the stated period and (ii) Compugen uses [***] in a [***] to cure such breach, the
stated period will be extended by [***] the nature of the breach and the adverse effect that such breach and any further delay in curing such breach will have on Bayer.
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14.3.3
|
Termination for Breach of Bayer. In the event Bayer commits a material breach of its obligations under this Agreement and fails to cure
that breach within [***] days after receiving written notice thereof, Compugen may terminate this Agreement immediately upon written notice to Bayer; provided that
|
|
(a)
|
if (i) the breach is (1) curable, (2) is not an intentional breach, and (3) not susceptible of cure within the stated period and (ii) Bayer uses [***] in a [***] to cure such breach, the
stated period will be extended by [***] the nature of the breach and the adverse effect that such breach and any further delay in curing such breach will have on Compugen.
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(b)
|
if the material breach relates solely to Bayer’s breach of its diligence obligations under Section 5 with respect to one of the Target Programs (and not to the other) and at such time the
Agreement has not been terminated with respect to the other Target Program, Compugen may only terminate this Agreement with respect to the Target Program with respect to which such material breach applies.
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14.3.4.
|
Termination for Patent Challenge. Compugen may terminate this Agreement immediately upon written notice to Bayer if Bayer or an
Affiliate of Bayer commences an action or assists a Third Party in commencing an action in which it or such Third Party challenges the validity, enforceability or scope of any of the Compugen Patent Rights.
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14.4
|
Effect of Termination of Agreement.
|
14.4.1
|
General.
|
14.4.1.1
|
Termination of Agreement. Upon termination of this Agreement by either Party pursuant to any of the provisions of Section 14.3,
without prejudice to other claims and remedies, the following provisions shall apply:
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|
(a)
|
the rights and licenses granted to Bayer under this Agreement shall terminate, all rights in and to and under the Compugen Intellectual Property and Compugen’s interest in the Joint
Intellectual Property will revert to Compugen and neither Bayer nor its Affiliates may make any further use or exploitation of the Compugen Intellectual Property;
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(b)
|
except with respect to a Target Program(s) for which Compugen provides Bayer a Transfer Notice in accordance with Section 14.4.2.1, the rights and licenses granted by Bayer to Compugen under
this Agreement will terminate, all rights in and to and under the Bayer Intellectual Property and Bayer’s interest in the Joint Intellectual Property will revert to Bayer and neither Compugen nor its Affiliates may make any further use or
exploitation of the Bayer Intellectual Property. For clarity, such rights will not terminate with respect to Targets, Target Biologics or Target Biomarkers relating to the Transferred Part (as defined in Section 14.4.2.1); and
|
|
(c)
|
any existing agreements that contain a Sublicense shall terminate to the extent of such Sublicense, provided that if the Agreement is terminated by Compugen, with respect to each Sublicensee
that is not, at the date of termination, an Affiliate of Bayer, if (i) the Sublicense was granted in conformance with the terms of this Agreement, (ii) the Sublicensee is not then in material breach of its Sublicense agreement with Bayer
such that Bayer would have the right to terminate such Sublicense, and (iii) Compugen has been paid all consideration due to Compugen under this Agreement with respect to the Sublicense, Compugen shall be obligated, at the request of such
Sublicensee, to enter into a direct license agreement with such Sublicensee on substantially the same terms as those set forth herein, which shall not impose any representations, warranties, obligations or liabilities on Compugen that are
not included in this Agreement, and further provided that (x) the [***] of the license granted directly by Compugen to such Sublicensee shall be [***]; and (y) if the Sublicense granted to such Sublicensee was [***], such Sublicensee shall
[***] under the license granted to it directly by Compugen; and
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(d)
|
Bayer shall promptly destroy, or at Compugen’s request, deliver to Compugen, all Compugen Know-How and Compugen biological material in Bayer’s, its Affiliates’
and Sublicensees’ possession;
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|
(e)
|
except with respect to a Target Program(s) for which Compugen provides Bayer a Transfer Notice in accordance with Section 14.4.2.1, Compugen shall promptly destroy, or at Bayer’s request,
deliver to Bayer, all Bayer Know-How and Bayer biological material in Compugen’s or its Affiliates’ or contractors’ possession. For clarity, Compugen shall not be required to destroy nor deliver to Bayer any such Bayer Know-How or Bayer
biological material relating to or used in the Transferred Part (as defined in Section 14.4.2.1); and
|
|
(f)
|
Bayer will not have to pay any more milestone payments except those milestone payments with respect to milestones that were achieved prior to the termination of the Agreement.
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14.4.1.2
|
Partial Termination. Upon termination that is limited to one of the Target Programs (by either Party) or to certain Products (together
with their applicable Product Companion Diagnostics) and/or countries (by Bayer) pursuant to any of the provisions of Section 14.3 (such partial termination hereinafter referred to as “Partial
Termination” and the subject-matter of such termination hereinafter referred to as “Terminated Part”), the following provisions shall apply:
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|
(a)
|
the rights and licenses granted to Bayer under this Agreement with respect to the Terminated Part, including without limitation with respect to the Targets, Target Biologics and Target
Biomarkers to the extent they are covered by the termination, shall terminate, all rights in and to and under the Compugen Intellectual Property and Compugen’s interest in the Joint Intellectual Property relating to the subject matter of
the Terminated Part (“Terminated Part IP”) will revert to Compugen and neither Bayer nor its Affiliates may make any further use or exploitation of the Terminated Part IP;
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|
(b)
|
any existing agreements that contain a Sublicense under the Terminated Part shall terminate to the extent of such Sublicense; provided
that in the case of termination of a Target Program by Compugen, with respect to each Sublicensee of subject matter of such Target Program that is not, at the date of termination, an Affiliate of Bayer, if (a) the Sublicense was granted in
conformance with the terms of this Agreement, (b) the Sublicensee is not then in material breach of its Sublicense agreement with Bayer such that Bayer would have the right to terminate such Sublicense, and (c) Compugen has been paid all
consideration due to Compugen under this Agreement with respect to the Sublicense, Compugen shall be obligated, at the request of such Sublicensee, to enter into a direct license agreement with such Sublicensee on substantially the same
terms as those set forth herein as they relate to such Terminated Program, which shall not impose any representations, warranties, obligations or liabilities on Compugen that are not included in this Agreement, and provided further that
(x) the scope of the license granted directly by Compugen to such Sublicensee shall be co-extensive with the scope of the license granted by Bayer to such Sublicensee and (y) if the Sublicense granted to such Sublicensee was non-exclusive,
such Sublicensee shall not have the right to participate in the prosecution or enforcement of the Compugen Patent Rights, Joint Patent Rights or Bayer Product Patent Rights under the license granted to it directly by Compugen; and
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(c)
|
Bayer shall promptly destroy, or at Compugen’s request, deliver to Compugen, all Compugen Know-How and Compugen biological material in Bayer’s, its Affiliates’ and Sublicensees’ possession
provided in connection with Terminated Part.
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14.4.2
|
Termination by Compugen for Cause or by Bayer without Cause. In addition to the above, in the case of termination of the Agreement in whole or of a Partial Termination by Compugen in accordance with Section 14.3.3 or Section 14.3.4 or by Bayer in accordance with Section 14.3.1 (without cause), the following
provisions shall apply:
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14.4.2.1
|
Compugen shall have an option, exercisable by the provision of written notice to Bayer within [***] days of the effective date of such termination (“Trigger Date”), to have (a) either Target Program or both Target Programs (in the case of a termination of the Agreement) or (b) the Terminated Part (in the case of a Partial Termination), transferred to Compugen. Such
notice (a “Transfer Notice”) will state which Terminated Part(s) is/are to be transferred (each, a “Transferred Part”). If
Compugen provides a Transfer Notice within such [***] day period, Bayer shall, to the extent the respective transferred or licensed items referred to below are Controlled by Bayer or its Affiliates and if and to the extent Bayer or its
Affiliates have the right to make such transfer or grant such license (with respect to each transferred or licensed item subject to [***] by Compugen of [***], including, without limitation, [***], as the case may be, that [***] relating to
[***]), promptly (a) transfer and assign to Compugen, upon Compugen’s request, all data, study reports, biological, chemical and written materials and information relating to Target Biologics, Target Biomarkers, Products and/or Product
Companion Diagnostics developed or used by Bayer in the Transferred Part(s), including (if [***]) any [***] performed in such Terminated Part with the exception of [***] that also include [***] which is not a Target Biologic of the
Transferred Part; (b) to the extent permitted by applicable law, transfer and assign to Compugen or its designee all [***] with respect to Products and/or [***] from the Transferred Part(s) and grant Compugen or its designee any [***]
reasonably required for the continuing development or commercialization of such Products and [***]; (c) grant [***] to Compugen or its designee [***] under [***], under [***] and under [***], solely to the extent that [***], solely to do or
have done further research on, develop, have developed, make, have made and use Target Biologics solely in order to develop, have developed, make, have made, use, sell, offer for sale and import Products and [***] within the Transferred
Part; (d) grant to Compugen or its designee a [***] license under [***] and under [***] not covered by the license set forth in (c) solely to the extent that such [***], as applicable, [***] solely to develop, have developed, make, have
made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination that is limited to a country, the Products and/or [***] in the countries to which the Partial Termination is limited) and provided
that , in the case of a Product that [***],this license does not include any [***] that is/are not part of [***] included in the Product; and (e) grant to Compugen or its designee a [***] license under [***] and not covered by the licenses
set forth in (c) and (d), solely to the extent that such [***], as applicable, [***] solely to develop, have developed, make, have made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination
that is limited to a certain country, the Products and/or [***] in the countries to which the Partial Termination is limited) and provided that , in the case of a Product that [***], this license does not include any [***] that is/are not
part of [***] included in the Product. Bayer undertakes to [***]. If the Transferred Part includes any (i) [***], (ii) [***] or (iii) other [***] or [***] used by Bayer within and needed to continue the Transferred Part, in each case (i)
to (iii) which [***] or [***] that is/are not part of [***] included in the Product and which would be part of the licenses granted under lit. (d) and lit. (e) of this Section 14.4.2.1, if they were not specifically excluded because of
[***], the Parties will on request of Compugen negotiate in [***]in [***] with the purpose to [***] of a license by Bayer to Compugen under [***] or [***] to the extent [***] (or, in the case of [***]) and solely in order to further
develop, have developed, make, have made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination that is limited to a country, the Products and/or [***] in the countries to which the Partial
Termination is limited), provided that in the event of [***], Bayer will [***], except for [***] or [***].
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14.4.2.2
|
With respect to Products in a Transferred Part for which clinical trials have commenced prior to such termination, Bayer will continue
fulfilling, at [***] expense, all non-cancellable obligations undertaken by or on behalf of Bayer or its Affiliate(s) with respect to [***] prior to the Trigger Date. In addition, if Compugen provides Bayer with a Transfer Notice, at
Compugen’s request, Bayer will use Commercially Reasonable Efforts [***].
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14.4.2.3
|
Regardless of whether Compugen provides a Transfer Notice, Bayer and its Affiliates shall immediately cease all research, development
and commercialization activities with respect to Products and with respect to Diagnostics (or, in the case of a Partial Termination, Products and its applicable Product Companion Diagnostics within the Terminated Part).
|
14.4.2.4
|
In the event of a Transfer Notice by Compugen following a Partial Termination by Bayer that is limited to certain Products (and their
applicable Product Companion Diagnostics) or countries, the Parties will, upon either Party’s request, [***]
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14.4.2.5
|
Consideration by Compugen.
|
14.4.2.5.1
|
Net Sales by Compugen. With respect to Compugen Net Sales (as defined below) made by Compugen and its Affiliates (but specifically
excluding sale by licensees or sublicensees) of Products from or developed on the basis of the Transferred Part (“Terminated Products”), Compugen shall pay Bayer the royalties set
forth in clauses (a) through (f) below, provided that (i) if the Terminated Product that the Compugen Net Sales relate to is, according to the Product
definition in Section 1.53, another [***] that [***]described in [***]the [***]will be [***] percent ([***] %) instead of the [***], as applicable; and (ii) if the
[***]in Section[***]for which [***]has commenced [***] prior to the [***]and the [***]to does [***](i.e. it includes the [***]) and had to [***], the [***]will be [***] percent ([***]%) instead of the rate set forth in (c), (d), (e) or (f),
as applicable:
|
|
(a)
|
If the Trigger Date with respect to the [***]occurred prior to [***],[***] will [***];
|
|
(b)
|
[***] percent ([***]%) of any [***]if the Trigger Date with respect to the [***]occurred after [***]but prior to [***]with respect to a [***]
|
|
(c)
|
[***]percent ([***]%) of any [***]if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***] with respect to a [***];
|
|
(d)
|
[***] percent ([***]%) of any [***]if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***] with respect to a [***]; and
|
|
(e)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***]; and
|
|
(f)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***].
|
|
(a)
|
the [***] of (i) the [***] and (ii) with respect [***], of the [***], within such [***] in each case (i) and (ii) covering
the [***] in the [***] in which [***]; provided that if there is [***] as [***] covering the [***] in the [***] in which such [***], such [***] will be deemed to [***] for purposes of this Section 14.4.2.5.1 if and when [***];
|
|
(b)
|
the [***] or other [***] with respect to such [***]; and
|
|
(c)
|
[***] of [***] (if the [***], the term [***] will be read to include [***]).
|
14.4.2.5.2
|
Consideration in the Event of a Third Party License. In the event Compugen or any of its Affiliates grants a license to a Third Party
under the rights transferred and/or licensed by Bayer to Compugen under Section 14.4.2.1, including without limitation [***] (a “Third Party License”), Compugen shall [***]such as
[***] for [***]and [***]under such [***], it being understood that with respect to [***]to [***][***]shall provide [***]that such [***] are [***]and that such [***]for such [***][***]received by [***] or [***], to the extent these are
[***]under Section [***] and shall [***]as set forth below; provided that (i) if the [***]to is, according to the [***], another [***]that [***]described
in [***]the [***]will be [***] percent ([***]%) instead of the [***], as applicable; and (ii) if the [***] in Section [***] for which [***] has commenced [***] prior to the [***] that the [***] does not [***] included in such [***]) and had
to [***], the r[***] percent ([***]%) instead of [***], as applicable:
|
|
(a)
|
If the Trigger Date with respect to the Transferred Part occurred prior to D3, Bayer will not [***];
|
|
(b)
|
[***] percent ([***]%) of any [***] under the [***] if the Trigger Date with respect to the Transferred Part occurred after [***] but prior to [***];
|
|
(c)
|
[***] percent ([***]%) of any T[***] under the [***] if [***] with respect to the [***] after start of [***] with
respect to a [***] from the [***] but prior to [***] with respect to a [***];
|
|
(d)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect
to a [***] but prior to start of [***] with respect to a [***];
|
|
(e)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] of the [***]; and
|
|
(f)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] of the respective [***].
|
|
(g)
|
In addition, [***] shall [***] such as [***] received [***] under the [***] to the extent these [***] under Section [***], and shall pay
to [***] as set forth below; provided that (i) if the T[***] to is, [***] in [***]the [***] as applicable, and (ii) if the Transferred Part [***]
described in [***] for which [***] prior to the [***] and the [***] to does [***] (i.e. it includes the [***]) and had to [***] will be [***] (12[***]) instead of [***], as applicable:
|
14.4.2.5.3
|
Consideration in the Event of Sale of Compugen.
|
|
(a)
|
[***] shall [***] if the Trigger Date occurred prior to [***] for the [***];
|
|
(b)
|
If the Trigger Date occurred after [***] with [***] but prior to start of [***] for [***], [***] will be entitled to the [***] would have [***] to under Sections [***] upon [***];
|
|
(c)
|
If the Trigger Date occurred after [***] with respect to the [***] but prior to start of [***] with respect to [***] will be entitled to [***], in each case [***], upon [***]. For example,
the [***] for the [***] of [***] with such a [***] in a [***] (Section 6.2.1.5) would be $[***] (i.e. $[***]);
|
|
(d)
|
If the Trigger Date occurred after the start of [***] with respect to the [***]duct but prior to [***] with respect to the relevant [***], [***] will be entitled to [***], in each case [***],
upon [***];
|
|
(e)
|
If the Trigger Date occurred after the start of a [***] with respect to the [***] but prior to the [***] with respect to [***], [***] will be entitled to [***], in each case [***], upon [***];
|
|
(f)
|
If the Trigger Date occurred after [***] with respect to the [***] Product, [***] will be entitled [***], in each case [***], upon attainment of [***].
|
14.4.2.5.4
|
All payments to Bayer under Section 14.4.2.5. will be made by Compugen within [***] days of receipt of an invoice by Bayer, provided that Compugen has duly informed Bayer about the Third Party
License Payment prior to its receipt (or about the Compugen Net Sales in accordance with the reporting obligations specified in Section 7.1.1 (with these clauses amended mutatis mutandis
to reflect that Compugen would be submitting the report in relation to Terminated Products)), absent such information the payment to Bayer shall be due [***] days of Compugen’s receipt of [***] from a [***] (or the [***]). Sections 7.2 to
7.4 shall apply mutatis mutandis.
|
14.4.3
|
Accruing Obligations. Termination or expiration of this Agreement shall not relieve the Parties of obligations accruing prior to such
termination or expiration, including obligations to pay amounts accruing hereunder up to the date of termination or expiration. After the date of termination (except in the case of termination by Compugen for Bayer’s failure to make
payments when due), Bayer, its Affiliates and Sublicensees may sell Products and Companion Diagnostics then in stock; provided that Bayer shall pay the applicable royalties and payments to Compugen in accordance with Section 6 and provide
reports and audit rights to Compugen pursuant to Section 7.
|
14.5
|
Survival. The Parties’ respective rights, obligations and duties under Sections 1, 2.3.7.2 (c) and (d), 7 (with respect to sales made
by Bayer prior to the expiration or termination of the agreement), 8.1, 8.3.3.3.2,. 10 (excluding 10.3), 11, 12, 13, 14.1, 14.4, 15 and 16 , as well as any rights, obligations and duties which by their nature extend beyond the expiration or
termination of this Agreement, shall survive any expiration or termination of this Agreement. In addition, Section 2.3.7.3.4 (c) will survive expiration in accordance with Section 14.1, but not early termination of this Agreement.
|
15.1
|
Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement, including the breach, termination or
validity of this Agreement, that is not settled by mutual consent, shall be finally settled by binding arbitration, conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”), by three arbitrators appointed in accordance with the following procedure: Each Party shall select one arbitrator and the two Party-selected arbitrators shall select a third arbitrator to
constitute a panel of three arbitrators to conduct the arbitration in accordance with the ICC Rules. The place of arbitration shall be New York, US, the language to be used in the
arbitral proceedings shall be English, and the proceedings shall be confidential. The International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration shall govern the taking of evidence in any such
proceeding. Unless the arbitrator determines that equity requires otherwise, the arbitrator shall award to the prevailing Party (as determined by the arbitrator) the costs of the arbitration, as well as the reasonable, out-of-pocket fees
and expenses of the prevailing Party’s attorneys. A disputed performance or suspended performance pending the resolution of the arbitration must be completed within a reasonable time period following the final decision of the
arbitrator. The decision of the arbitrator shall be the sole, exclusive and binding remedy between the Parties regarding any and all disputes, controversies, claims and counterclaims presented to the arbitrator. Any award may be entered in
a court of competent jurisdiction for a judicial recognition of the decision and an order of enforcement.
|
15.2
|
Injunctive Relief. Each of the Parties agrees that in the event of any breach of Section 10 (Confidential Information), the
non-breaching Party may suffer severe and irreparable damage, for which no adequate remedy at law may exist, and for which damages would be difficult to determine. Each of the Parties agrees that, in such case, the injured Party shall be
entitled to obtain from any court of competent jurisdiction preliminary injunctive relief.
|
16.1
|
Force Majeure. None of the Parties will be responsible for delays resulting from causes beyond its reasonable control, including,
without limitation, fire, explosion, flood, war, strike or riot; provided that the non-performing Party uses Commercially Reasonable Efforts to avoid or remove such causes of non-performance and continues performance under this Agreement
with reasonable dispatch whenever such causes are removed. The Party affected by the force majeure event shall upon its occurrence promptly give written notice to the other Party specifying the nature of the event and its anticipated
duration.
|
16.2
|
Independent Parties. The relationship of the Parties hereto to each other shall be solely that of independent parties and nothing
contained in this Agreement shall be construed to make any of the Parties an agent, partner, co-venturer, representative or principal of another for any purpose, and none of the Parties hereto shall have any right whatsoever to incur any
liability or obligation on behalf of or binding upon another Party.
|
16.3
|
Notices. Any notices to be given hereunder shall be in writing and shall be sent by: (a) certified mail, return receipt requested; (b)
delivery via an internationally recognized courier service; or (c) facsimile (with transmission confirmed) addressed the other, in any event to the other Party at the address shown hereunder or at such other address for which such Party
gives notice hereunder :
|
If to Bayer:
|
Bayer Pharma AG
Müllerstraße 178
13353 Berlin
Attention: [***]
Head, Global Drug Discovery - TRG Oncology/GT
Fax +49 30 468 18069
With a copy to Legal Department
Fax : +49 30 468 14086.
|
If to Compugen:
|
Compugen Ltd. |
|
Pinchas Rosen Street #72
|
|
Tel Aviv 69512, Israel
|
|
Fax. +972 (3) 765-8111
Attention: VP Business Development
With a copy to: General Counsel
Fax: +972 (3) 765-8111
|
16.4
|
Governing Law. This Agreement will be governed by, and construed in accordance with, the substantive laws of New York, US, without
giving effect to any choice or conflict of law provision, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.
|
16.5
|
Severability. If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is
deemed unenforceable, it is the intention of the Parties that the remainder of this Agreement shall not be affected. The Parties shall replace the invalid provision with a valid provision that comes closest to effectuating the economic
and/or scientific intent of the Parties at the time of the Agreement's execution.
|
16.6
|
No Assignment. This Agreement or any rights hereunder (including any right to develop, manufacture, market and/or sell Products), may
not be assigned by either Party without the consent of the other, which consent shall not be unreasonably withheld, except that (i) each Party may, without such consent, assign this Agreement and the rights, obligations and interests of
such Party to any purchaser of all or substantially all of its assets to which the subject matter of this Agreement relates, or to any successor corporation resulting from any merger or consolidation of such Party with or into such
corporation; provided, in each case, that the assignee agrees in writing to be bound by the terms of this Agreement; and (ii) Bayer may assign this Agreement to any of its Affiliates without the prior consent of Compugen; provided, that the
assignee agrees in writing to be bound by the terms of this Agreement.
|
16.7
|
Entire Agreement. This Agreement is the sole agreement with respect to the subject matter hereof and supersedes all other agreements
and understandings among the Parties with respect to the same.
|
16.8
|
Modification. No modification or waiver of this Agreement or of any covenant, condition or limitation herein contained shall be valid
unless in writing and executed by duly-authorized representatives of the Parties. A failure by a Party to assert its rights under, including upon any breach or default of, this Agreement shall not be deemed a waiver of such rights. No
such failure or waiver in writing by a Party with respect to any rights shall extend to or affect any subsequent breach or impair any right consequent thereon.
|
16.9
|
Interpretation. Each Party hereto acknowledges and agrees that: (a) it and/or its counsel reviewed and negotiated the terms and
provisions of this Agreement and has contributed to its revision; (b) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (c)
the terms and provisions of this Agreement shall be construed fairly as to both Parties hereto and not in favor of or against either Party, regardless of which Party was generally responsible for the preparation of this Agreement.
|
16.10
|
Counterparts. This Agreement may be executed in counterparts and each such counterpart shall be deemed an original hereof.
|
16.11
|
Exhibits. The following Exhibits shall form an integral part of this Agreement:
|
Exhibit 1.3
|
Bayer Development Process
|
Exhibit 1.16
|
CGEN-15001T Workplan
|
Exhibit 1.21
|
CGEN-15022 Workplan
|
Exhibit 1.28
|
Compugen Patent Rights
|
Exhibit 2.3.3
|
Research Program reports to the JSC
|
Exhibit 2.3.7.3.2
|
[***] publications
|
Exhibit 2.3.7.3.3
|
Criteria [***], [***]
|
Exhibit 8.3.3.1
|
Patent country scope
|
Exhibit 8.3.3.2.1
|
Patent rights claiming also targets and antibodies other than Target Biologics and Targets
|
Exhibit 10.5
|
Press release
|
Exhibit 13.4
|
Insurance
|
Bayer Pharma AG
By: ppa_____/s/ Prof. Dr. Andreas Busch_______________
Name:__Prof. Dr. Andreas Busch___________________
Title: Head of Global Drug Discovery ______________________
By: ppa, /s/ Dr. Karl Ziegelbauer ____________________
Name:__Dr. Karl Ziegelbauer ___________________
Title: ____Head GDD – TRG Oncology / Gynecological Therapy __________________
|
Compugen Ltd.
By:___/s/ Dr. Anat Cohen-Dayag_______________________
Name:__Dr. Anat Cohen-Dayag______________________
Title:_____ President and CEO____________________
|
News Release Tweet
|
1. | The parties agree to replace Exhibit 1.3 of the Agreement by Exhibit 1.3 attached to this Amendment, describing the “Bayer Development Process”. |
2. | This Amendment shall become retroactively effective as of 5 August 2013. |
3. | All capitalized terms used herein shall have the meaning set forth in the Agreement. Except as expressly amended pursuant to this Amendment, all other terms and conditions of the Agreement shall remain in force unchanged and apply to this Amendment. |
SIGNED for and on behalf of
Bayer Pharma AG
|
SIGNED for and on behalf of
Compugen Ltd
|
Date: February 3, 2014
|
Date: February 5, 2014
|
/s/ Dr. Karl Ziegelbauer
Dr. Karl Ziegelbauer
(Head GDD - TRG Oncology / Gynecological Therapy)
|
/s/ Anat Cohen-Dayag
President and CEO
|
/s/ Dr. Bertolt Kreft
Dr. Bertolt Kreft
(Head GDD-ONC/GT-IABDC)
|
1. | The parties agree to amend the Agreement as set forth below. |
2. | Section 2.3.7.2 of the Agreement is hereby amended to read as follows: |
(a) | Notwithstanding Section 2.3.7.1, Bayer shall not be entitled to [***] Protein Controls to any [***] of Bayer who are [***] (as described in the next sentence) on behalf of Bayer. Bayer and its [***] may use such [***] Protein Controls solely for performance of the [***] or otherwise specifically [***] as tasks involving the use of such [***] Protein Controls. |
(b) | Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall [***] the [***] Protein Controls or use [***] Confidential Information regarding the [***] and/or regarding other [***] of the [***] Protein Controls nor any other Confidential Information regarding the [***] Protein Controls provided by Compugen on a need-to-know basis or [***] or a [***], to [***] any other [***] of a Target, without the prior express written consent of Compugen in each case. Information regarding Target [***] Proteins [***] in the [***] Approved [***] Protein Controls or Approved [***] Protein Controls under the rights granted above will be deemed Confidential Information of Compugen for purposes of this Agreement; |
(c) | Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall not, [***] or otherwise [***] to any Third Party results of their use of the [***] Protein Controls, without Compugen’s prior written consent; and |
(d) | Bayer shall within reasonable time, but in any case within [***] days, after becoming aware thereof, [***] to Compugen [***] with respect to Target [***] Proteins, their use or their production (in each case including, without limitation, [***] thereof), that are conceived and/or reduced to practice by Bayer, its Affiliates, contractors and/or collaborators, [***] Compugen or its Affiliates in the performance of work using a [***] Protein Control (“[***] Protein Invention”). Any such [***] Protein Invention, whether made by Bayer, any of its Affiliates or any of its contractors or collaborators, solely by Compugen or an Affiliate of Compugen, or jointly by any of the above, shall be [***]. Bayer and its Affiliates [***], and Bayer shall cause its contractors and collaborators [***], any and all of their [***] in and to any and all [***] Protein Inventions to Compugen, and any [***] Protein Invention [***] to Bayer, is [***] by Bayer to Compugen. Upon Compugen’s request and at Compugen’s expense, Bayer shall [***] and [***] that any relevant Affiliate, contractor and collaborator [***] as Compugen deems [***], in its [***], to enable Compugen to [***] with respect to any of the foregoing. Bayer will, and shall ensure that its Affiliates, contractors and collaborators will, at Compugen’s request, provide [***] and [***], as [***] to [***]. Bayer is [***] that its Affiliates, contractors and collaborators [***], and [***] by its Affiliates of, the provisions of this Section 2.3.7.2(d). Bayer shall ensure that its contractors and collaborators are [***] of this Section 2.3.7.2(d) by [***] to which Compugen is [***], prior to [***] to [***] Protein Controls or any Confidential Information of Compugen related to Target [***] Proteins. |
3. | The Parties agree to replace Exhibit 1.21 of the Agreement by Exhibit 1.21 attached to this Amendment, describing the “CGEN-15022 Workplan”. |
4. | All capitalized terms used herein shall have the meaning set forth in the Agreement. Except as expressly amended pursuant to this Amendment. All other terms and conditions of the Agreement shall remain unchanged and in full force and effect. |
Bayer Pharma AG
By: /s/ Dr. Karl Ziegelbauer Name: Dr. Karl Ziegelbauer Title: (Head GDD - TRG ONC / GT) By: /s/ Dr. Bertolt Kreft
Name: Dr. Bertolt Kreft Title: (Head GDD-ONC/GT-IABDC) |
Compugen Ltd.
By: /s/ Dr. Anat Cohen-Dayag
Name: Dr. Anat Cohen-Dayag Title: President and CEO
|
1. | The Parties agree to replace Exhibit 1.3 of the Agreement by Exhibit 1.3 attached to this Third Amendment, describing the “Bayer Development Process”. |
2. | The following language shall be added to the end of Section 6.2.1.1: |
3. | The following language shall be added to the end of Section 6.2.1.2: |
4. | This Third Amendment shall become effective on the date this Agreement is signed by the last of the Parties to sign it. |
5. | All capitalized terms used herein shall have the meaning set forth in the Agreement. Except as expressly amended pursuant to this Third Amendment, all other terms and conditions of the Agreement shall remain in force unchanged and apply to this Third Amendment. |
SIGNED for and on behalf of
Bayer Pharma AG
|
SIGNED for and on behalf of
Compugen Ltd
|
Date: April 17, 2016
|
Date: April 17, 2016
|
/s/ Dr. Karl Ziegelbauer
Dr. Karl Ziegelbauer
(Head Therapeutic Research Groups)
|
/s/ Anat Cohen-Dayag
Dr. Anat Cohen-Dayag
(President & CEO)
|
/s/ Dr. Bertolt Kreft
Dr. Bertolt Kreft
(Head Oncology III)
|
|
Very truly yours,
Compugen Ltd.
By: Dr. Anat Cohen-Dayag
Title: President & CEO
Date: ________ __, 202_
|
Accepted and agreed to:
Signature:
_____________
Date: ______ __, 202_
|
1. |
Negotiations, execution, delivery and performance of agreements on behalf of the Company including, inter alia, any claim or demand made by a customer, supplier,
contractor or other third party transacting any form of business with the Company, relating to the negotiations or performance of such transactions, representations or inducements provided in connection thereto or otherwise.
|
2. |
Any claim or demand made related to anti-competitive acts and acts of commercial wrongdoing.
|
3. |
Any claim or demand made related to acts in regard of invasion of privacy including with respect to databases and acts in regard of slander.
|
4. |
Any claim or demand made for actual or alleged infringement, misappropriation or misuse of any third party’s intellectual property rights including, but not limited to
confidential information, patents, copyrights, design rights, service marks, trade secrets, copyrights, misappropriation of ideas by the Company.
|
5. |
Actions taken in connection with the intellectual property of the Company and its protection, including the registration or assertion of rights to intellectual property
and the defense of claims relating thereof.
|
6. |
Participation and/or non-participation at the Company’s board meetings, bona fide expression of opinion and/or voting and/or abstention from voting at the Company’s
board meetings.
|
7. |
Approval of corporate actions including the approval of the acts of the Company’s management, their guidance and their supervision.
|
8. |
Actions concerning the approval of transactions of the Company with officers and/or directors and/or holders of controlling interests in the Company, and any other
transactions referred to in Sections 267A and/or 270 of the Companies Law.
|
9. |
Claims of failure to exercise business judgment and a reasonable level of proficiency, expertise and care in regard of the Company’s business.
|
10. |
Violations of securities laws of any jurisdiction, including without limitation, fraudulent disclosure claims, failure to comply with the United States Securities and
Exchange Commission and/or the Israeli Securities Authority and/or any stock exchange disclosure or other rules and any other claims relating to relationships with investors, shareholders and the investment community and any claims related to
the Sarbanes-Oxley Act of 2002, as amended from time to time.
|
11. |
Any claim or demand made under any securities laws or by reference thereto, or related to the failure to disclose any information in the manner or time such information
is required to be disclosed pursuant to such laws, or related to inadequate or improper disclosure of information to shareholders, or prospective shareholders, or related to the purchasing, holding or disposition of securities of the Company
or any other investment activity involving or affected by such securities, including any actions relating to an offer or issuance of securities of the Company to the public by prospectus or privately by private placement, in Israel or abroad,
including the details that shall be set forth in the documents in connection with execution thereof.
|
12. |
Actions in connection with the financial statements and/or reports of the Company, including the preparation thereof.
|
13. |
Violations of laws requiring the Company to obtain regulatory and governmental licenses, permits and authorizations or laws related to any governmental grants in any
jurisdiction.
|
14. |
Claims in connection with publishing or providing any information, including any filings with any governmental authorities, on behalf of the Company in the
circumstances required under any applicable laws.
|
15. |
Any claim or demand made by employees, consultants, agents or other individuals or entities employed by or providing services to the Company relating to compensation
owed to them or damages or liabilities suffered by them in connection with such employment or service.
|
16. |
Resolutions and/or actions relating to employment matters of the Company.
|
17. |
Events, pertaining to the employment conditions of employees and to the employer - employee relations, including the promotion of workers, handling pension
arrangements, insurance and saving funds, options and other benefits.
|
18. |
Any claim or demand made by any lenders or other creditors or for moneys borrowed by, or other indebtedness of, the Company.
|
19. |
Any claim or demand made by any third party suffering any personal injury and/or bodily injury and/or property damage to business or personal property through any act
or omission attributed to the Company, or their respective employees, agents or other persons acting or allegedly acting on their behalf.
|
20. |
Any claim or demand made directly or indirectly in connection with complete or partial failure, by the Company thereof, or their respective directors, officers and
employees, to pay, report, keep applicable records or otherwise, of any foreign, federal, state, country, local, municipal or city taxes or other compulsory payments of any nature whatsoever, including without limitation, income, sales, use,
transfer, excise, value added, registration, severance, stamp, occupation, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll or employee withholding or other withholding,
including any interest, penalty or addition thereto, whether disputed or not.
|
21. |
Any claim or demand made by purchasers, holders, lessors or other users of products or assets of the Company, or individuals treated with such products, for damages or
losses related to such use or treatment.
|
22. |
Any administrative, regulatory or judicial actions, orders, decrees, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices
of noncompliance or violation by any governmental entity or other person alleging potential responsibility or liability (including potential responsibility or liability for costs of enforcement, investigation, cleanup, governmental response,
removal or remediation, for natural resources damages, property damage, personal injuries, or penalties or contribution, indemnification, cost recovery, compensation, or injunctive relief) arising out of, based on or related to (x) the
presence of, release, spill, emission, leaking, dumping, pouring, deposit, disposal , discharge, leaching or migration into the environment (each a “Release”) or threatened Release of, or exposure to, any hazardous, toxic, explosive or
radioactive substance, wastes or other substances or wastes of any nature regulated pursuant to any environmental law, at any location, whether or not owned, operated, leased or managed by the Company, or (y) circumstances forming the basis
of any violation of any environmental law, environmental permit, license, registration or other authorization required under applicable environmental and/or public health law.
|
23. |
Actions in connection with the Company’s development, use, sale, licensing, distribution, marketing or offer of products and/or services.
|
24. |
Resolutions and/or actions relating to a merger of the Company, the issuance of shares or securities exercisable into shares of the Company, changing the share capital
of the Company, formation of subsidiaries, reorganization, winding up or sale of all or part of the business, operations or shares the Company.
|
25. |
Resolutions and/or actions relating to investments in the Company and/or the purchase or sale of assets, including the purchase or sale of companies and/or businesses,
and/or investments in corporate or other entities and/or investments in traded securities and/or any other form of investment.
|
26. |
Any administrative, regulatory or judicial actions, orders, decrees, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices
of noncompliance or violation by any governmental entity or other person alleging the failure of the Company, or any of the Company's business operations to comply with any statute, law, ordinance, rule, regulation, order or decree.
|
27. |
Class actions or derivative actions regarding the Company.
|
28. |
Any claim or demand, not covered by any of the categories of events described above, which, pursuant to any applicable law, a director or officer of the Company may be
held liable to any government or agency thereof, or any person or entity, in connection with actions taken by such director or officer in such capacity.
|
A. |
WHEREAS, MedImmune and Compugen are parties to a License Agreement effective as of March 30, 2018, as amended on May 9, 2018, and on September 16, 2020 (collectively, the “Agreement”).
|
B. |
WHEREAS, the Parties have agreed to clarify the scope of the Licensed Patents.
|
C. |
WHEREAS, in accordance with Section 18.2 of the Agreement, the Parties hereto desire to amend and modify the Agreement in accordance with the terms and subject to the conditions set forth in this Amendment.
|
1. |
A new Section 1.16A is hereby added to the Agreement, to read as follows:
|
2. |
Section 1.42 of the Agreement is hereby amended and restated in its entirety to read as follows:
|
3. |
A new Section 12.2(e) is hereby added to the Agreement, to read as follows:
|
4. |
Except as expressly set forth herein, all of the terms and conditions of the Agreement remain unchanged and are in full force and effect. Capitalized terms not otherwise defined in this Amendment shall have the meanings respectively
ascribed to them in the Agreement.
|
5. |
This Amendment and the Agreement constitute the complete and final and exclusive understanding and agreement of the Parties with respect to the subject matter of the Agreement, and supersede any and all prior or contemporaneous
negotiations, correspondence, understanding and agreements, whether oral or written, between the Parties respecting the subject matter of the Agreement.
|
6. |
This Amendment may be executed in counterparts, each of which will be deemed an original and both of which will together be deemed to constitute one agreement. The Parties agree that the execution of this Amendment by industry standard
electronic signature software and/or by exchanging PDF signatures shall have the same legal force and effect as the exchange of original signatures.
|
MEDIMMUNE LIMITED
By: /s/ Adam McArthur
Name: Adam McArthur
Title: Assistant General Counsel, Corporate UK
|
|
COMPUGEN LTD.
By: /s/ Anat Cohen-Dayag
Name: Dr. Anat Cohen-Dayag
Title: President & CEO
|
EXECUTION COPY
|
2. |
Section 1.34 shall be deleted in its entirety from the Agreement.
|
“1.48 |
“Exclusive Collaboration Period” means the period commencing on the Effective Date and ending on the earliest of:
|
(a) |
six (6) months after Study Completion of the Triple Study as set forth in Study Plan No. 2; or
|
(b) |
the effective date of termination of this Agreement pursuant to Section 12.2, Section 12.3 or Section 12.4.”
|
EXECUTION COPY
|
EXECUTION COPY
|
COMPUGEN LTD.
|
BRISTOL-MYERS SQUIBB COMPANY
|
By:/s/ Anat Cohen-Dayag
|
By:/s/ Jonath Cheng
|
Name: Anat Cohen-Dayag
|
Name: Jonathan Cheng, MD
|
Title: President & CEO
|
Title: SVP, Head of Oncology Development
|
EXECUTION COPY
|
(a) |
the earlier of (i) six (6) months after Study Completion of both the Combination Therapy Study as set forth in Study Plan No. 1 and the Triple Study as set forth in Study Plan No. 2; or (ii) December 31, 2023.
|
(b) |
the effective date of termination of this Agreement pursuant to Section 12.2, Section 12.3 or Section 12.4.”
|
Compugen Ltd.
|
Bristol-Myers Squibb Company
|
By: /s/ Anat Cohen-Dayag
|
By: /s/ Jonath Cheng
|
Name: Anat Cohen-Dayag
|
Name: Jonathan Cheng, MD
|
Title: President & CEO
|
Title: SVP, Head of Oncology Development
|
Exhibit 4.20
|
A. |
BMS and Compugen entered into that certain Master Clinical Trial Collaboration Agreement, dated as of October 10, 2018, as amended (the “Agreement”).
|
B. |
The Parties have mutually agreed to amend the Agreement as follows in accordance with Section 13.7 of the Agreement.
|
1. |
Capitalized terms used and not otherwise defined herein shall have the meaning given to such terms in the Agreement.
|
2. |
Section 2.8 shall be deleted in its entirety, and replaced with the following:
|
3. |
The following shall be added to the Agreement as Section 2.9:
|
EXECUTION VERSION
|
(c) |
Responsibilities.
|
(vi) |
resolving disputes between the Parties that have been referred to the JSC by the JDC as provided in Section 2.8.
|
(vii) |
receiving updates and other material information regarding the Monotherapy Study Data and/or the Monotherapy Arm, in accordance with Section 8.11(a) hereof.
|
EXECUTION VERSION
|
(i) |
if such JSC Dispute concerns [*], then [*];
|
(ii) |
if the JSC Dispute concerns [*], then [*], provided that [*];
|
(iii) |
if the JSC Dispute concerns [*] then [*].
|
4. |
The following shall be added to the Agreement as Section 2.4(v):
|
5. |
Section 8.11(a) (Access) of the Agreement is hereby deleted in its entirety, and replaced with the following:
|
6. |
The following shall be added to the Agreement as Section 10.14:
|
10.14 |
Additional Funding.
|
EXECUTION VERSION
|
7. |
Except as amended by this Amendment No. 3, the Agreement shall continue in full force and effect pursuant to its terms.
|
EXECUTION VERSION
|
Compugen Ltd.
By: /s/ Ari Krashin
Name: Ari Krashin
Title: CFO & COO
|
Bristol-Myers Squibb Company
By: /s/ Jonathan Cheng, MD
Name: Jonathan Cheng, MD
Title: SVP, Head of Oncology Development
|
Subsidiary
|
Jurisdiction
|
Compugen USA, Inc. | Delaware |
February 28, 2022
|
/s/ KOST FORER GABBAY & KASIERER
|
Tel-Aviv, Israel
|
A Member Firm of Ernst & Young Global
|