Why Is Cancer Immunotherapy-Focused Compugen Stock Is Trading Higher Today?
Portfolio Pulse from Vandana Singh
Compugen Ltd's stock (CGEN) is trading higher following an agreement with Gilead Sciences Inc (GILD) to license its COM503 drug candidate, a potential first-in-class antibody for cancer immunotherapy. Gilead will pay Compugen $60 million upfront, $30 million upon IND clearance expected in 2024, and up to $758 million in additional payments, plus royalties on net sales. The deal is anticipated to reduce Gilead's 2023 EPS by $0.03-$0.05. Compugen also stands to receive a $10 million milestone payment from AstraZeneca (AZN) for the dosing of the first patient in a trial derived from its COM902 antibody.
December 19, 2023 | 3:36 pm
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POSITIVE IMPACT
Compugen's stock is experiencing a significant surge due to the licensing deal with Gilead for its COM503 drug candidate, with potential deal value of $848 million plus royalties.
The substantial upfront payment and potential future payments from Gilead, along with the royalty agreement, provide a strong financial incentive and validation of Compugen's research, likely boosting investor confidence and stock value in the short term.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
AstraZeneca is set to make a $10 million milestone payment to Compugen upon the first dosing in the ARTEMIDE-Bil01 trial, which uses a drug derived from Compugen's COM902 antibody.
While the milestone payment is positive for Compugen, it is a routine expense for AstraZeneca in the drug development process and is unlikely to have a significant short-term impact on AstraZeneca's stock.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 50
NEGATIVE IMPACT
Gilead Sciences' EPS for 2023 is expected to decrease by $0.03-$0.05 due to the financial commitment in the licensing agreement with Compugen for the COM503 drug candidate.
The upfront and near-term milestone payments to Compugen, although an investment in a promising drug, will negatively impact Gilead's earnings per share in the short term, which may concern investors.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80