By Jim Shrine

Compugen Ltd. completed with Israeli investors a private placement of $15 million that will be used to further develop the Leads bioinformatics platform, which gained its first commercial user last month.

The company, based in Tel Aviv, Israel, has U.S. operations in Woburn, Mass., and Jamesburg, N.J. Compugen's hardware accelerators and sequence analysis software products have been installed at more than 50 facilities, most in the U.S.

But the emphasis now is on Leads software, which incorporates sophisticated algorithms and programs to extract information from genomic and protein data.

"This financing should be more than enough to last us two years, even if we double the company," Eli Mintz, Compugen's president and CEO, told BioWorld Today. "We are currently at 75 people, and plan to go to around 140 next year. We are going to be profitable, according to our growth plan, in about a year."

Clal Biotechnology Industries, a subsidiary of Tel Aviv-based Clal Israel, led the new financing. Other investors, all of Tel Aviv, were Hapoalim Investments, Ampal, Evergreen Funds and Cayrex Private Equity. An $8.5 million round of financing in 1997 was led by a $4 million investment from U.S. Venture Partners, of Menlo Park, Calif. Most of the remainder of the company's funding, since it was founded in 1993, came from government grant money and small investments from Israeli firms.

Early technology at Compugen included the Bioaccelerator line of genetic analysis hardware accelerators, released in 1994, along with sequence analysis software. The Leads platform, however, is the technology focus now.

The first customer for Leads, the drug-target discovery technology, was the Parke-Davis division of Morris Plains, N.J.-based Warner-Lambert Co. The committed part of that deal entails "several million dollars per year for three years," Mintz said, plus potential milestones. (See BioWorld Today, Nov. 23, 1998, p. 1.)

Mintz said 50 of the company's employees are devoted to Leads research and development, and that will double next year. The goal, he said, is to complete about one Leads licensing deal each quarter next year.

The first stage of Leads involves analyzing expressed sequence tag (EST) databases. The next step is analyzing expression data coming from either chips or proteomics, and includes chip design.

"We've developed tools that are the most accurate and sensitive, as far as we know," Mintz said. "What is unique about our method of analyzing EST databases is our ability to take into account alternative splicing -- what happens when one gene expresses several mRNAs that may actually become different proteins. The one-gene, one-protein paradigm is probably not correct. For a large number of genes, alternative splicing exists.

"It took us quite a while but we developed algorithms that can make sense of the EST data," he added. "Now, when you design a chip you can, for example, tell which alternative splice variant is expressed. This is the major biological phenomenon we were able to model. We also took into account other phenomena, such as itron contamination and chimeric sequences."

Mintz said another advantage of Leads is that, with it, the company is "able to analyze databases with millions of ESTs in less than a week. Doing this analysis, we actually found some interesting genes ourselves. I think our competitive advantage lies in the area of algorithm development, in finding better ways of understanding the data." *