Peplin blames R&D expenditure for loss

Brisbane cancer-drug developer Peplin Biotech (ASX:PEP) has reported a consolidated loss of AUD$3.7 million for the 12 months to June 30, largely attributable to a big increase in research expenditure on its lead compound, PEP005.

Its loss was up by $1 million on last year, but within the $3.5-4 million range it predicted last November.

Revenue was up 140 per cent, to $3.2 million, which included November's $1 million sign-on fee from US dermatology company Allergan for a licence to develop PEP005 for non-melanoma skin cancers and solar keratoses.

Peplin CEO Garry Redlich pointed to a big increase in research expenditure to $5.2 million, more than double the previous year's $2.5 million.

The company has cash reserves of $6.5 million, enough to run to the end of 2004 at its current burn rate, and Redlich said the company was "certainly expecting further milestone payments" from Allergan before then.

Redlich said Allergan will lodge an Investigative New Drug (ING) application with the FDA early next year for PEP005's use as a non-melanoma skin cancer therapeutic, and the drug could go straight into the clinic next year.

Allergan acquired only the rights to the molecule's skin-cancer application, and Redlich said the company was in "frequent contact" with US and European biopharmaceutical companies interested in exploring PEP005's potential to treat a range of common tumours, including colorectal, prostate, and head and neck cancers, and leukaemias.

Broad specificities

The active molecule, extracted from the sap of the common garden and nursery weed petty spurge (Euphorbia peplis), is 3-ingenylangelate -- a diterpene, like the widely used breast-cancer drug taxol, but with a broader range of specificities.

Like Novartis' Glivec and taxol, PEP005 is from a class of molecules called protein kinase inhibitors, which are regarded as among the most promising of a new wave of cancer therapeutics.

PEP005 inhibits the activity of Protein Kinase C, an enzyme with an essential role in cell replication. It stops cancerous cells dividing by jamming their replication machinery, and also activates cancer-fighting immune responses.

Contractors for Peplin have established plantations to grow petty spurge in south-east Queensland, and in the UK. Redlich said the plant could be grown year-round under shadecloth.

Geneticists with the Queensland Department of Primary Industry, and the UK agriculture ministry, are working to select high-yielding lines. Redlich said production was very cost-effective, and Peplin will take the drug all the way from the field to its purified form.