Peptech announces profit upgrade, denies merger rumours

Despite a strong cash position of AUD$44.8 million, boosted by an interim net profit after tax of $23.9 million for the half-year ended 31 March 2005, Sydney biotech Peptech (ASX:PTD) has said it is "not actively participating in the M&A space" at the moment, and denied renewed speculation of a merger with Melbourne's Amrad (ASX:AMD).

"There are no merger discussions going on between Amrad and Peptech," said Peptech chairman Mel Bridges. "At the moment we're not actively participating in the M&A space, however as part of our growth strategy we are looking at M&A."

Peptech today upgraded its forecast for full year net profit after tax by 18 per cent from a range of AUD$18 - $21 million to a range of $22 - $24 million for the year ending 30 September 2005.

The profit guidance upgrade was deemed necessary after Peptech reviewed its revenue streams and programs and considered substantial costs savings stemming from the company's move from North Ryde to Macquarie Park in Sydney.

The newly leased premises have resulted in the company being able to internalise activities including antibody production and external and regulatory consultancy that it had previously expected to outsource, according to Bridges.

"We've also seen an increase in anti-inflammatory (TNF) drug sales and animal health products are selling better than expected," said Bridges.

Peptech's settlement of its royalty dispute with Johnson & Johnson subsidiary Centocor over royalties from patents on Centocor's anti-TNF drug Remicade was included in its total revenues of $39.9 million for the half-year. This compared with $45.5 million in the previous corresponding period.

Royalties arising from the Centocor settlement boosted revenue from royalties in the period, up substantially from $0.7 million in 2004 to $32.9 million for this half-year.

Sales and licensing income was down for the period from $44 million in 2004 to $5.3 million in 2005. This was due to a one-off payment from the Abbott dispute settlement in the 2004 period, causing "somewhat of an aberration in last year's results" said Bridges.

"The licensing agreements to Remicade and Humira are both doing pretty well," said Bridges. "We've also been encouraged by two TNF drugs in development in house and we want to develop long term revenue from the TNF franchise."

Animal health sales increased by 136 per cent from $0.3 million in 2004 to $0.7 million in the 2005 period. This result reflected improved sales of the equine product Ovuplant and the first sales of the reversible male dog contraceptive Suprelorin.

"The next major focus is to get Superloin registered in the northern hemisphere," said Bridges, "within two to three years."