Abbott-Domantis agreement may affect Peptech's future

Pharmaceutical giant Abbott Laboratories has signed an agreement with UK-based Domantis that gives it non-exclusive access to Domantis' single-domain designer technology for new 'lite' antibody therapeutics.

The agreement will see Domantis and Abbott collaborate to develop single-domain antibody therapeutics for two undisclosed targets nominated by Abbott.

The deal may have implications for the fortunes of Sydney-based biotech Peptech, which owns 30 per cent of Domantis, and plans to lift its holding to 33.3 per cent by next April.

Late last month, Peptech's share price plunged by 50 per cent after US-based pharmaceutical company Centocor announced it would cease paying royalties to Peptech on its lucrative rheumatoid arthritis therapeutic Remicade.

Until late last month, both Centocor and Abbott were paying royalties to Peptech, which owns a broad patent on molecular target for Centocor's Remicade and Abbott's rival drug, D2E7.

Both Remicade and D2E7 are monoclonal antibodies that block the TNF-1 receptor, the cellular switch activated by tumour necrosis factor (TNF).

In rheumatoid arthritis, TNF transmits the signal that causes the immune system to attack on the collagen-rich tissues of the major joints -- Remicade and D2E7 quell the attack by blocking the TNF-1 receptor.

Peptech's broad patent covers any antibody-based therapeutic that targets the TNF-1 receptor. Last year, the market for anti-TNF-1 therapeutics reached $US1.5 billion, accounting for half the global revenues for all monoclonal antibody therapeutics.

Yet that figure probably represents only a fraction of the eventual value of anti-TNF therapeutics.

Stock market analysts Morgan Stanley have estimated that the mature market could be worth $US13.7 billion -- and it may include new-generation antibody therapeutics developed with Domantis' proprietary single-domain antibody therapeutics.

Single-domain antibodies are, in effect, cut-down monoclonal antibodies -- being smaller, they can penetrate crevices and cavities that are inaccessible to full-sized antibodies, and can also be tailored to work rapidly in the body and vanish within hours, a desirable trait in some therapeutic applications. They could also be delivered orally, where monoclonal antibodies must be injected.

Abbott has been paying royalties to Peptech since its parent, BASF, unsuccessfully challenged Peptech's TNF-1 receptor patent in the European courts in 2000.

Centocor followed suit -- but only in Europe. After the US Patent Office granted Peptech's patent last month, Centocor announced it would no longer pay royalties to Peptech.

It claimed Remicade did not fall within the claims of the Peptech anti-TNF-1 patent, and requested more information from Peptech on its patent claim.

Peptech MD Stephen Kwik said the company had "a high degree of confidence" in its position, and would make every effort to resolve the situation speedily in his company's favour.

Despite Centocor's action, Abbott has not followed suit. Its agreement with Domantis comes just eight days after Centocor's challenge to the Peptech patent.

While Abbott has not disclosed its two chosen therapeutic targets, a new single-domain anti-TNF-1 antibody could provide therapeutic advantages -- and a marketing edge -- over conventional monoclonal antibodies for immune-system disorders involving TNF.

Apart from triggering rheumatoid arthritis, TNF is involved in two other, very common immune-system disorders: psoriasis and inflammatory bowel disorder (Crohn's disease).

New-generation successor

UBS Warburg analyst Kiara Bechta-Metti declined to comment on the timing of the Domantis-Abbott announcement, but noted that Abbott, and BASF before it, have worked closely with the Cambridge (UK) research laboratory of Dr Greg Winter, the inventor of single-domain antibodies, and also the founder and MD of Domantis Antibodies.

Bechta-Metti said if Centocor wanted to develop a new-generation successor to Remicade, it might be interested in forming a similar relationship with Domantis, to exploit Winter's single-domain antibody technology.

She said Peptech may be able to leverage its 33.3 per cent shareholding in Domantis to advantage in any future negotiations between Domantis and Centocor.

"But Centocor have a product out there, and it's doing well for them," said Bechta-Metti. "If they take it as far as they can, and it doesn't infringe the Peptech patents, they may have less of a vested interest than Abbott [in a relationship with Domantis]."

Peptech's strategic alliance with Domantis gave it the right to nominate four therapeutic targets for single-domain antibodies.

Kwik said Domantis had already achieved significant results with a single-domain antibody for Peptech's first target: the TNF-1 receptor.

Peptech's manager of investor relations, Dr Paul Schober, confirmed that the new single-domain therapeutic is aimed at the rheumatoid arthritis-psoriasis-Crohn's disease market.

He said Peptech would probably take any new anti-TNF-1 therapeutic as far as trials in animals, but would then speak with large pharma companies that might be interested in a partership to commercialise such a drug.

With Abbott already moving to develop a second-generation successor to its anti-TNF-1 compound D2E7, Centocor will be looking to maintain the dominant market position it has establshed with Remicade -- it would be a logical suitor for Peptech if the Australian company's own second-generation anti-TNF-1 project with Domantis bears fruit.

Dr Schober said that despite Centocor's decision not to pay royalties on his company's patent, Peptech would do nothing to prejudice relations with any company that might be interested in a future partnership to commercialise a second-generation anti-TNF-1 drug.

"We may want to speak with Centocor in future," he said. "We're not going to burn any bridges."