GroPep outlines commitment to R&D

Two years ago, GroPep (ASX:GRO) was in trouble, badly burned and without a CEO after an ill-advised acquisition of Biotech Australia.

Now, it looks like a different company -- profitable, and turning its attention towards its biopharmaceutical development projects after a successful turn-around in its fortunes. "Our model is to spend 20 per cent of our revenue back into R&D," CEO Bob Finder told Australian Biotechnology News.

With 85 employees, the South Australian company is one of the largest in the Australian biotech industry, but has kept a relatively low profile in recent years.

Last year, the company posted $13 million in revenues for a $1 million profit, including $7.7 million from its cell culture products, which are formulated and marketed by CSL subsidiary JRH Biosciences for use in cell culture media in place of bovine sera. These products are used in the manufacturing process for therapeutic proteins, monoclonal antibodies, vaccines and gene therapy vectors, among them four FDA approved therapeutics including one unnamed 'blockbuster' product whose sales of more than US$2 billion deliver the bulk of GroPep's sales revenue.

According to CFO Tony Mitchell, GroPep expects its revenues from its cell culture products to grow by another 30-35 per cent next year, with a forecast profit of $1.2-1.5 million. And the revenues are expected to continue to climb -- currently about six companies using the products are in Phase II/III clinical trials and another 60 or so are in earlier-stage clinical and pre-clinical development.

The company also recently announced plans to spend $3 million upgrading and expanding its manufacturing facility to meet expected demand for the next five years and to meet regulatory requirements. The upgrade, which will include new purified water and clean air systems, is expected to be largely complete by the end of the year.

With the cell culture products business chugging along nicely, the company is now focusing on its R&D projects.

At the top of its list is a product with the potential to prevent recurrent miscarriage -- a problem that affects at least 170,000 couples each year in the US alone. The product, PV903, is a growth factor found in semen that appeared to drive maternal tolerance during embryo implantation, which can be delivered in a vaginal gel applied at the time of intercourse.

The company is awaiting the results of final pre-clinical efficacy studies being carried out by collaborators at McMaster's University in Canada, and if successful, plans to begin Phase I clinical trials early next year. The program is the subject of a $2.5 million R&D Start grant. Discussions are also underway with potential licensing partners for the program.

"We've had substantial discussions with companies," said Finder. "We're just waiting to get into Phase I -- we definitely want to partner after Phase I."

GroPep's other major project has the potential to become a platform technology for the development of therapeutics to treat autoimmune diseases. Based on a mimic peptide that disrupts the formation of the T cell receptor so that the inflammatory signalling cascade is blocked, PP0102 is being developed initially as a topical therapeutic for psoriasis, although in theory it could be used for other autoimmune and inflammatory diseases as well.

"We've decided to go for psoriasis as it is likely to be complementary to existing treatments," Finder said.

If all goes well, he said, the product should commence Phase I clinical trials within 18 months. Unusually, some promising preliminary clinical data has already been produced by an independent German physician who has used that country's rules for physician-sponsored clinical research to test the concept in a small group of patients.

And while a number of potential partners have expressed interest in the project, Finder said GroPep would not look to partner the program until after Phase II.

A third project, a whey-derived growth factor used to treat oral mucositis in patients undergoing cancer chemotherapy, has already been through Phase I clinical trials, and the company is actively seeking partners for further trials.

GroPep is also involved in a malaria vaccine project, which the company acquired along with the business of Biotech Australia. In collaboration with La Trobe University and Vaccine Solutions, the commercialisation arm of the CRC for Vaccine Technology, the company is one of 22 recipients of funding from the Gates Foundation-supported Malaria Vaccine Initiative. The company is in the second year of working towards meeting the second milestone of the project, to manufacture material for a Phase I clinical trial.

"This will be our last contract manufacturing involvement," Finder said.

The company is also stepping up its search for new projects or products to add to its pipeline, although Finder says potential projects have to meet pretty tough criteria. In the last year, the company has stepped the process up, with 27 opportunities reviewed in the last year.

According to Finder, the company is looking for products that either bring significant improvements over existing therapeutics or that are treatments for previously untreated conditions, with potential markets of greater than US$500,000, clean IP and a clear regulatory path to approval.