AI And Immunotherapy Advances Will Define Oncology's Future

Key Takeaways

• Partnerships with top pharmaceutical firms and a focus on innovative immunotherapies position Compugen to benefit from industry trends and expand its market reach.
  
• Advancing clinical trials and favorable regulatory momentum may enable faster drug approvals, potentially driving earlier and more stable revenue growth.
  
• Heavy dependence on uncertain clinical milestones, external funding, and partnerships, amid strong competition and regulatory headwinds, threatens Compugen's profitability and future market position.

Catalysts

A clinical-stage therapeutic discovery and development company, engages in the research, development, and commercialization of therapeutics and product candidates in Israel, the United States, and Europe.

• Compugen is advancing its AI/ML-powered computational target discovery platform (Unigen), positioning it to capitalize on the rising importance of precision medicine and biomarker-driven drug development in oncology, which could support higher future revenue as targeted and differentiated therapies are increasingly sought.
  
• Strategic partnerships with leading pharmaceutical companies such as AstraZeneca and Gilead provide milestones and potential royalties tied to the success of their co-developed assets, potentially driving meaningful top-line growth and improving future margin stability as partnered drugs advance through clinical trials and toward commercialization.
  
• The pipeline's focus on novel immune checkpoint inhibitors (e.g., COM701, COM902) and differentiated mechanisms aligns with the growing demand for innovative immunotherapies driven by global increases in cancer incidence and aging populations, directly expanding Compugen's potential addressable market and eventual revenues.
  
• Execution on ongoing clinical trials, especially the COM701 maintenance study in platinum-sensitive ovarian cancer addressing significant unmet medical need, positions the company for potential near
• to mid-term value inflections; positive results would de-risk future pipeline development and accelerate revenue from new indications.
  
• Broadening regulatory and industry momentum towards expedited approval pathways and combination immunotherapy regimens increases the likelihood that Compugen's assets could achieve faster market access, which could lead to earlier revenue recognition and improved long-term earnings potential.

Compugen Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Compugen's revenue will grow by 18.8% annually over the next 3 years.
• Analysts are not forecasting that Compugen will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Compugen's profit margin will increase from -87.4% to the average US Biotechs industry of 14.2% in 3 years.
• If Compugen's profit margin were to converge on the industry average, you could expect earnings to reach $5.3 million (and earnings per share of $0.05) by about August 2028, up from $-19.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $8.7 million in earnings, and the most bearish expecting $-37.5 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 160.2x on those 2028 earnings, up from -7.1x today. This future PE is greater than the current PE for the US Biotechs industry at 14.7x.
• Analysts expect the number of shares outstanding to grow by 4.47% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.34%, as per the Simply Wall St company report.

Compugen Future Earnings Per Share Growth

Risks

• Persistent lack of late-stage or commercial products and reliance on milestone and royalty payments means Compugen continues to record large operating losses and negative net income (as seen with Q2 2025 net loss of $7.3 million); this dependence on external cash inflows and uncertain clinical progress increases risk of future shareholder dilution and challenges to reaching profitability.
  
• Delays or failures in clinical development of lead assets (such as COM701 and COM902), or disappointing interim results in adaptive trials, could severely reduce the company's ability to achieve future milestone revenues and successfully monetize partnerships, directly impacting revenue and cash flow projections.
  
• Growing competition in the immuno-oncology space, including several differentiated programs in both platinum-sensitive and platinum-resistant ovarian cancer as well as TIGIT-targeting therapies, may erode Compugen's market opportunity by limiting best-in-class positioning and reducing potential revenues from existing and future collaborations.
  
• Macroeconomic instability or shifts in biotech investor sentiment (particularly due to negative clinical data, sector downturns, or risk aversion for cash-burning precommercial companies) may raise the cost of capital and make future fundraising more dilutive, harming earnings per share and net margins.
  
• Regulatory or reimbursement pressures-such as potential tightening of approval pathways for immunotherapies, payer reluctance to cover new high-cost therapies, or increasing global healthcare cost-containment-could delay time-to-market, constrain attainable pricing, and limit the overall commercial revenue pool for Compugen's assets.

Valuation

• The analysts have a consensus price target of $6.25 for Compugen based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $13.0, and the most bearish reporting a price target of just $4.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $37.1 million, earnings will come to $5.3 million, and it would be trading on a PE ratio of 160.2x, assuming you use a discount rate of 8.3%.
  
• Given the current share price of $1.48, the analyst price target of $6.25 is 76.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.