Peplin swaps skin with Allergan

Brisbane's Peplin Biotech (ASX: PEP) and California-based dermatology products specialist Allergan have swapped skin on a deal to bring Peplin's promising anti-cancer compound PEP005 to the skin-cancer market.

Peplin announced yesterday that it had signed a research collaboration and licence agreement with Allergan, which is experiencing rapid growth with booming sales of its wrinkle-remover Botox, and Tazorac for psoriasis.

Allergan has made a $US1 million ($1.85 million) up-front payment for an exclusive licence to develop and commercialise PEP005 in North and South America for the treatment of the two most common skin cancers -- squamous cell carcinoma (SCC) and basal cell carcinoma (BCC).

Milestone and development payments could add up to $US22 million ($40.7 million) to Peplin's bottom line if the compound makes it to market. At commercialisation, Peplin will receive market-rate royalty payments that the company believes will reflect "the significant value of the licensed technology".

Allergan's CEO, president and chairman, David Pyott, said his company had been impressed with the results of pre-clinical trials of PEP005, and its potential for treating non-melanoma skin cancers -- basal cell and squamous cell carcinomas -- as well as pre-cancerous solar keratoses.

Peplin CEO and managing director Garry Redlich said Allergan would cover the full costs of developing the drug, and taking it through clinical trials.

"It's a good deal for a fairly narrow range of therapeutic applications," Redlich said. "Peplin retains the rights to the European and Australasian markets, and we can licence those down the track, off the back of any US registration arising from the Allergan deal."

Because of the timing of payments under the new agreement, Peplin expects to incur a loss of between $3.5-4 million in the current financial year. The financial benefits would begin to flow in 2004, subject to research and clinical milestones being achieved.

The Allergan agreement relates only to the therapeutic use of PEP005 for skin disorders such as non-melanoma skin cancers, and eye diseases such as diabetic retinopathy.

There are approximately 1.3 million new cases of non-melanoma skin cancer each year in the US alone, and the incidence of BCC and SCC is rising at an annual rate of around 6 per cent.

If clinical trials confirm the potency and broad-spectrum activity presaged by pre-clinical tests, the Peplin molecule could become one of the most powerful and versatile compounds in the modern arsenal of anti-cancer drugs.

Peplin's lead compound, and several closely related molecules, were isolated from a common, small garden weed in the Euphorbiaceae family. Many euphorb species are rich in bioactive alkaloids.

At nanomolar concentrations, PEP005 showed significant activity against the entire range of the US National Cancer Institute's standard panel of 60 different human cancer cell lines. Against colorectal and kidney cancer cells, and several leukaemias, it was active at picomolar levels, hinting at remarkable potency and minimal side-effects.

Redlich said that in an early clinical trial, an early-stage prototype extract containing pure extract of PEP005 completely healed 95 per cent of basal and squamous cell carcinomas that had proven refractory to conventional treatments. The skin healed perfectly, without scar tissue or loss of pigmentation.

The compound has also cured B16 malignant melanomas in mice -- mice with this deadly, invasive form of skin cancer normally die within three weeks.

Redlich said that while it was not yet clear how PEP005 works, it appeared to have multiple modes of action against cancerous cells.

At very low doses, it was a potent cell-differentiation agent -- in the mouse tests it transformed rapidly proliferating, mutant melanoma cells back into normal melanocytic phenotypes.

Redlich said the compound also appeared to induce apoptosis, or programmed cell death, in cancerous cells, and necrosis of cancerous tissues while stimulating the proliferation of normal cells to repair cancer lesions.

It also acts as an immunomodulator, somehow uncloaking cancers that have disguised themselves to evade immune surveillance. T-cells can then recognise and attack cancerous cells displaying mutant proteins.

Redlich said PEP005 appeared to engage multiple cell growth and differentiation pathways.

The US National Cancer Institute's own tests have confirmed novel activity. NCI deputy director Dr Stuart Yuspa's decision to personally investigate the Peplin compound attests to the oncology research community's interest in its mode of action.

Redlich was upbeat about the drug's prospects, saying. "Australia has not seen a deal like this since Relenza [Biota's anti-influenza compound]," he said.