Peplin overcomes scale-up hurdles and exports cancer drug

Peplin Biotech has shipped the first significant quantity of its lead anti-cancer drug PEP 005 after a year-long effort which it says has "cracked the back" of any manufacturing problems.

The Brisbane biomedical company produced a gram of PEP 005 - enough for 45,000 treatments - of which 70 per cent was shipped to UK-based contract research organisation Covance for toxicology studies. Covance is preparing a data file on PEP 005 toxicology and Phase I studies prior to an expected Investigational New Drug filing with the US Food and Drug Adminstration in early 2003.

The remaining 30 per cent went to the US for further mechanism studies at the Centre for Cancer Research.

Following processes developed under a team led by Peplin director of clinical and regulatory affairs Dr Peter Welburn, the 45,000 dose shipment was prepared in one week.

"If we can produce that amount in one week, we have now cracked the back of any manufacturing scale-up hurdles," said Peplin managing director Garry Redlich.

Many new anti-cancer drugs derived from natural products show huge promise in the laboratory but turn into manufacturing nightmares, Welburn said.

But collaborations with the Queensland Institute of Medical Research and the Queensland Department of Primary Industry's Centre for Food Technology have sped development of a commercially viable manufacturing process for PEP 005, he said.

Relatively small-scale production processes will be sufficient to supply the world market for the drug because it is potent in picomolar doses, Redlich said. "It looks as though we will be able to do it in Brisbane without going overseas, although we are yet to determine if it will be done in-house or with a local contract manufacturer."

Extending escrow

Along with the drug shipment, Peplin has signalled its confidence in PEP 005's future by extending escrow on the bulk of its founding investors' shares. Seven founding shareholders have agreed to significantly extend the voluntary escrow of their shares beyond the second anniversary of the company's IPO in 2000.

ASX listing rules prevent them from trading the bulk of shares, which total some 36 per cent of the company's capital, until September 22 this year.

Under the new voluntary agreements, 82 per cent of their shares (about 29 per cent of the company's capital) will continue in escrow until March 22, next year and 75 per cent will be further escrowed until Sept 22, 2003.

Measured against Peplin's current share price, initial investors have seen the value of their parcels multiplied by eight to 10 times to date and the escrow agreement is "a strong vote of confidence in the future of the stock," said Redlich.

A secondary effect of the escrow agreement will be to guard against a softening of Peplin's share price as the company enters a critical period of licensing negotiations over a skin cancer drug.

The negotiations, expected to result in an agreement in the next month or so, could involve capital injections and equity take-up by US partners and make it in Peplin's best interest to avoid downward pressure on its share price.