Compugen (NASDAQ: CGEN) - Israeli manufacturer of cancer drugs. Research is primarily focused on helping patients, who are not suitable for the means available in modern medicine. Business focused on the Israeli market, USA and European countries.
What he earns
The company relies on IT for the development of new drugs in immuno-oncology. The company's approach here is similar to BioXcel Therapeutics., when biotech uses data analytics, works with large volumes of medical information and is looking for opportunities to create new drugs based on computer algorithms. In addition to its own developments, Compugen has joint projects with AstraZeneca, Bayer и Bristol Myers Squibb.
Preparations and stages of their development
All drugs in the company's portfolio are in the early stages of development.
COM701 - the main drug of the company, which is targeted for use in ovarian cancer immunotherapy, chest, endometrium, colon and non-small cell lung cancer. Passing the first stage of clinical trials.
COM902 - an antibody-based drug for the treatment of advanced solid tumors and multiple myeloma. Passing the first stage of clinical trials.
COM902 and COM701 - study of the combined use of two drugs for use in the fight against squamous cell carcinoma of the head and neck, non-small cell lung cancer and colon cancer. Passing the first stage of clinical trials.
COM701 and Nivolumab Compugen and Bristol Myers Squibb project to co-administer two drugs for the treatment of ovarian cancer, chest, endometrial and colon cancer in the first stage of clinical trials. BMS-986207 3rd drug combination option for selected ovarian cancer patients, endometrium and tumors of a certain type. Completing the first stage of clinical trials.
The company also conducts its own research on myeloid cells., the results of which have not yet been disclosed, and assists research on several Bayer and AstraZeneca drugs through a partnership.
What's wrong
Unprofitableness. An indicator familiar to biotech should not be overlooked: in case of Compugen, the loss increases for four years in a row. Growth of expenses is driven by business development: the company is scaling up and servicing already started research, launches new projects, and key R&D spending for pharmaceutical companies requires more and more money. But not all investors have the patience to wait for the promised big results for a long time and hold the shares for years..
Early stages of development. All drugs in the company's portfolio are now undergoing the first phases of clinical trials. Even with successful approval for circulation in the target countries, they are far from commercialization and entering the wide market., this process will take several years. In the coming years, Compugen will have to rely only on investments and profits from affiliate programs., which, combined with annually rising costs, will put pressure on the business.
Shares have lost a lot of value. Since the beginning of the pandemic, the issuer's securities have skyrocketed along with the market, And 26 August 2020 price set a historical high in 19,9 $, but then a long fall began, which continues to this day, — now Compugen is trading slightly higher 3,5 $. Historic schedule may suggest, that now is a good time to buy, but unknown, how stocks will react to the upcoming increase in the key rate in the US and the general bearish mood, which begins to dominate in all sectors.
What good
Have money. At the end of September 2021, the company had approximately $102 million in cash, no net debt, and the costs by the end of the year should have been about 40 million. Three-quarter equity exceeds Compugen's liabilities by nearly 5 once.
Promising market. According to research, the computational biology market until 2026 will show an average annual growth of about 20% - in the US alone, more than a billion dollars have already been poured into it since 2005. Many drug manufacturers also benefit from outsourcing for technically complex clinical trials., and this plays into the hands of Compugen, which owns all the necessary equipment and qualified personnel.
Coefficient P / bv landed. In 2019, the ratio of the company's capitalization to equity reached a mark of 10,56 - for every dollar of equity, the investor paid 10.5 times more when buying shares, that doesn't sound very attractive. But by the end of 2021, the figure had dropped to 3,11 and the assessment reached the normal value for the biotechnology sector.
What's the bottom line?
Compugen is a high-tech pharmaceutical company with corresponding risks and opportunities. This is an obvious bet on the global fight against cancer and the business of the future., which promises significant returns to investors over the long term. But for this he needs to survive in the present., bring early developments to commercialization and not go bankrupt.
