Pre-clinical costs boost 'busy' Peplin's half-year losses

Brisbane biotech company Peplin (ASX: PEP) released its half-year results this week, with a net loss of AUD$3.9 million and cash reserves of $9.1 million at the end of December.

The company's cash position was bolstered by a $5.7 million placement in October and again in December with the first of four US$500,000 quarterly payments from US partner Allergan for the completion of pre-clinical product development for PEP005. The next payment is due in March.

The loss, which was substantially higher than the corresponding period last financial year, was largely due to increased R&D activities related to the pre-clinical development of PEP005.

"It's been a very busy half, largely related to pre-clinical development activities in support of Allergan's upcoming IND [Investigational New Drug] filing for PEP005 as a skin cancer drug," said CEO Michael Aldridge. "Now we're largely done with that, although we still have to supply them with the drug and also complete post-IND pre-clinical work in various animal models."

Allergan is expected to file its IND application for the use of PEP005 as a topical therapy for actinic keratosis and non-melanoma skin cancer in the second quarter of 2004, triggering another milestone payment to Peplin. If the drug is successfully commercialised, the company expects to receive up to a total of US$22 million in milestone payments as well as royalties after the product goes to market.

In the meantime, Peplin is busy evaluating PEP005 as a potential treatment for leukaemia and other cancers. Aldridge said the company was engaged in a comprehensive strategic review to decide what applications to move forward with and selection of appropriate commercialisation strategies. "[These applications] will be licensed after completion of Phase I/II studies, when they are worth more," he said.

The company is also evaluating its newly acquired portfolio of engineered polyunsaturated fatty acids to determine the best R&D approach. "The nice thing we have now is a sensible balance of cash and the ability to allocate resources as required," said Aldridge.

Peplin also announced this week that former Ventracor CEO Michael Spooner would be joining the board of directors. "Michael comes with an enormous amount of business acumen," said Aldridge. "He understands the biotechnology industry, and more importantly understands the need for focus and milestones."