Peptech ready for growth

Peptech (ASX: PTD) is keenly awaiting the day the Centocor decision is handed down by the arbitrators.

Executive chairman Mel Bridges says the company is confident that it is right -- and he's looking forward to putting the dispute behind him.

"We remain confident -- given everything we've seen [during the arbitration process] -- that Remicade infringes on our patent," Bridges said in a briefing this week.

"And if we're ruled against? We have another 21 patents pending that they are infringing as well."

Legal constraints mean that Peptech can't say much at all about the arbitration process, which was a key factor in the demise of the merger between Peptech and Agenix earlier this year, but the process should be wrapped up by the end of the year.

And once it's over, Bridges says Peptech will continue towards its goal of being a AUD$1 billion globally recognised biopharmaceutical company in the top five of Australian biotechs.

The company has strong cash reserves, currently standing at $38 million, and with a strong pipeline in its anti-inflammatory and cancer programs, a growing animal health business and guaranteed revenue streams from its anti-TNF antibody patents, it's well on its way to achieving its goals.

It's also expecting to do well out of its 36 per cent stake in UK-based domain antibody company Domantis, which has deals with ImClone and Abbott, and a healthy pipeline of projects.

Domantis CEO Bob Connelly said that Domantis had a dominant IP position in fully human domain antibody technology, putting the company in a strong position for the future. The company is aiming to develop revenue streams from licensing and collaborations, from pre-clinical partnerships and ultimately from programs it takes forward to Phase II before partnering.

Connelly said the company was being built with an eye to either an IPO or a trade sale down the road.

"We think it will make a good acquisition target," he said.

Peptech and Domantis are working together on an anti-TNF domain antibody, and expect to have it in the clinic in 2006. Results from pre-clinical animal studies to date have been outstanding, according to Bridges.

"Domantis and Peptech have a very high degree of confidence that we can take this through to a product," he said.

The market for anti-TNF products is expected to be huge, with current estimates projecting sales of US$8 billion by 2009. But with arthritis only one of several diseases involving TNF, it could be even bigger, Bridges said.

"There is exponential growth in TNF -- it's one of the hottest areas at the moment," he said. "There's a lot of potential growth there."

In the animal health division, Peptech is due to launch its implantable canine contraceptive Suprelorin in Australia and New Zealand in November. Registration trials for the FDA and Europe are due to commence in 2005 and the company plans to look for a co-partner to assist with distribution in those markets, although the manufacturing is likely to remain in Peptech's hands.

The non-surgical and reversible sterilisation technique suppresses testosterone to control fertility, treat prostatic tumours and control behaviour in male dogs, and can also be used to treat incontinence in spayed females.

"I'm a bit of a convertee on this product," Bridges said. "There's a lot more to it than meets the eye. It's a very effective, very stable drug. And there's not more R&D to do -- the product is finished."

BioSceptre joint venture

Last year Peptech and University of Sydney spinout BioSceptre formed a joint venture to exploit a discovery made by researchers at the university's medical school.

The IP surrounds a unique cancer marker-target, which is found in human cancers as well as other mammalian cancers. The marker is a cell surface antigen that, in tumour cells, has a small structural change that is not found on normal cells. Antibodies capable of recognising the structural change have been produced and the two companies are working on several opportunities to develop commercial products using the marker.

Peptech's R&D director Phil Jennings said that the altered marker has been detected on 90 per cent of cancer types including prostate, skin, breast, ovarian, lung and lymphoma, as well as in cancer cell lines and in animal cancers and cancer cell lines.

"It looks to be something quite fundamental across mammals," he said. Details of the marker are still under wraps as the company works to consolidate its IP position.

The joint venture is working on four distinct products, with each company taking technical and financial responsibility for two products. Income from the products will be split equally between the two partners.

BioSceptre's two projects include a tissue and cell based diagnostic test from cancers, which Jennings said is well advanced and very well validated, as well as a topical therapeutic for skin cancer which has been tested in volunteer patients with basal and squamous cell carcinomas with efficacious results.

Peptech is working on an in vivo diagnostic imaging product and a systemic therapeutic for cancer.

"The products are intrinsically competitive with a very large market," Jennings said.

Bridges noted that the BioSceptre-Peptech joint venture was focusing on building a strong IP position around the cancer marker-target technology.

"We want to build an incredible web around it as we believe it is so powerful," he said.