Financing Early Stage Ventures Wednesday, February 20, 2008

1. Compugen R&D Grants Strategy
MIT Forum meeting
Tsipi Keren-Lehrer
February 20th 2008

2. Agenda
• Compugen in a nutshell
• Grants Strategy in Compugen
• Summary
2

3. Compugen
• Established as an Incubator company (1993)
• Traded on NASDAQ and TASE
• Based in Tel Aviv
• 75 employees, mainly R&D
– Unique team of biologists, computer scientists, mathematicians,
MDs
• Affiliate - Evogene (TASE - EVGN)
– Compugen model in Ag-bio
3

4. Compugen’s Business Model
• Develop innovative predictive models
• Build specific discovery engines
• Discover in-silico
• Validate experimentally
• Out-license for further development
– Diagnostic biomarkers
– Therapeutic candidates
– Drug targets
– Research capabilities
• Revenues from milestones and royalties
4

5. Agenda
• Compugen in a nutshell
• Grants Strategy in Compugen
• Summary
5

6. Taking Grants - Why?
• Share the research risk
• Biotech companies live from investments &
grants…
“Although about 340 biotech companies
have their shares listed on major US
stock exchanges, the vast majority of
these firms are money losers*”
*Standard & Poor’s Industry Surveys, Biotechnology, June 2005 6

7. Grants recognized in financial reports
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8. General Grants Strategy
• Stick to Compugen’s R&D roadmap
– Don’t fit your R&D for a grant
• Prefer at least $200K grant request
– Effort is needed for preparations & reports
• Carefully select your grant source
• Carefully select your partner/s
• We will be happy to return the money back…
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9. OCS – Israeli Chief Scientist
• R&D grants
– Yearly applications
• Magnets
– Compugen participated in 3 consortia
• Da’at, 1998-2002
• Tevel, 2000-2005
• Pharmalogica, 2002-2004
• Magneton
9

10. Trends in OCS
• Higher competition
– Lowering budget
– Change in the law Knowledge transfer is OK more
applications
• Policy trend: less money to more companies
– Approval rate currently 60-80% approved projects
– Support rate
• Policy change: 50% 20-50% support today
• Actual average: 34% 17.4% of a project is funded
• Biotechnology became a preferred area
– 2% in 2002 23% in 2005 (of total budget)
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11. OCS - An Important Grant Source
• To take or not to take…?
• Secure commercialization potential
– State business model beforehand
– Manufacturing
– Out-licensing IP
11

12. EC FP6 Projects
• SIMAP MAP-Kinase pathway model (Human)
$3.8M
– Compugen’s share for 3 years about 25%
– We are the coordinator (1st time)
• RIBOSYS pre-mRNA metabolism model
(Yeast) $2.8M
– Compugen’s share for 3 years less than 20%
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13. EC FP6/FP7 - Many Advantages
Favors SME
75% support
R&D law limitations does not apply
No return!!!
Long funding assurance
Future grants (... )
It’s not just the money…
Free resources (e.g. data, validation)
New collaborations; Strategic partners
Industrial intelligence
Market access
13

14. However…
Long & VERY bureaucratic process (~1Y)
Long-term commitment (min 3Y)
Contractual complexity (collaborators>1)
IP / Technology access
Potential legal conflicts
14

15. Other Grants
• Bi-National
• Agreements / funds (e.g. BIRD) / Multi-national
companies (e.g. Merck)
• OCS budget
• More focus on the late stages of the project
• Private foundations
• General / per disease
• Only few of them fund foreign for-profit
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16. Agenda
• Compugen in a nutshell
• Grants Strategy in Compugen
• Summary
16

17. Summary
• Many grant sources
• Carefully select your source / partner
• Keep original business model
• Could be crucial for the company
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18. Thank You
Tsipi Keren-Lehrer
tsipikl@compugen.co.il