Compugen Ltd. surged to the highest level in six years on speculation the use of one of its products in cancer treatment research will boost revenue.
The shares of the the developer of computational genomic products soared 15 percent to 21.89 shekels, or the equivalent of $5.90, at the 4:30 p.m close in Tel Aviv, the highest since February 2006. The U.S.-traded stock, jumped 7.7 percent last week, to close at $5.89 on Feb. 3.
Compugen said on Feb. 2 it used technologies to identify a particular protein that can be used as a drug target to treat cancers such as melanomas and sarcomas. Drug companies are looking for new treatments as patents that cover about 20 percent of specialty pharmaceutical sales expire this year, according to data compiled by Bloomberg Industries.
“The idea that they’ve done a lot of gene analysis and have this very cutting-edge technology could add up to be of significant value,” Raghuram Selvaraju , an equity analyst at Morgan Joseph TriArtisan who covers Israeli biotechnology companies, said by phone from New York on Feb 3. “The science is of a high caliber.”
Compugen, founded by members of an Israeli army intelligence unit that designed software to break codes, uses computer programs to discover proteins that may have the ability to treat diseases. It then finds partners that will pay to develop drugs. The company has never generated a profit since it started trading on the Nasdaq in 2000, according to data compiled by Bloomberg.
The company will “start seeing revenue from deals” with drug companies in 2012, Chief Executive Officer Anat Cohen-Dayag said Feb. 3 in a phone interview from Tel Aviv. Compugen isn’t interested in being bought out, she said.
“The name of the game for Compugen is making as many discoveries as possible and incorporating them into the development of pipelines for pharmaceutical companies,” she said. “Now that we really have candidates that are moving forward, that are showing capabilities, there is interest from pharma companies.”
Compugen’s announcement may boost the prospects that it will join with a larger drug company to develop treatments based on its discovery, Andrew Berens, a senior health-care analyst at Bloomberg Industries, which provides company research, said by phone from Princeton, New Jersey, on Feb. 3.
“Investors may see this as a validation of the drug discovery platform,” he said. “We do see companies with viable drug discovery platforms as potential candidates for acquisitions.”
U.S. biotechnology company Threshold Pharmaceuticals Inc. surged the most in a year on Feb. 3 after Germany’s Merck KGaA agreed to pay them to jointly develop and sell a drug for cancer. Threshold will get $25 million upfront and the total potential payments are $525 million, according to a statement from the companies.