takeover proposition

Peptech: A busy week on three fronts

Tuesday, 20 March 2007

SPEAKING at the Excellence in Biotechnology Conference in Sydney yesterday Peptech chief executive Dr John Chiplin said: "For the last few weeks I've been telling people that PNO621 could be Australia's first billion-dollar drug and no one's thrown me out of their office yet."

PNO621 is Peptech's lead product in development. It is an anti-TNF domain antibody currently in Phase 1 trials.

As well as explaining the performance to date and potential of PNO621, Chiplin also elaborated a little on the company's announcement on Friday about the implementation of a proprietary antibody-based therapeutic technology platform – named "Synhumanisation" – that it claims provides a competitive advantage over existing technologies by enabling therapeutic drugs to be developed against multiple medical targets.

Synhumanisation is based on the use of human-like antibody sequences in place of mouse sequences in order to avoid potentially harmful immune responses in humans and Chiplin claims that the Synhumanisation platform will result in increased discovery of patentable new antibody products.

He said: "The platform represents a strategic milestone for the company and the commitment to deliver an in-house platform for the development of new antibody-based drug leads.

"The successful application of this technology will add to Peptech's pipeline by enabling us to discover new products against additional targets, particularly those which have proven successful through human trials undertaken by other pharmaceutical and biotech companies."

He explained that the technology was developed to provide Peptech with a competitive advantage by providing the means to access high value targets without being blocked by patents held by others.

"In other words it gives Peptech the freedom to develop drugs without falling under the scope of other companies' patents," Chiplin said.

"And as the technology remains proprietary to Peptech, its introduction will reduce the risks inherent in the development of a drug and the royalty burden associated with in-licensing from other companies."

Chiplin said that the technology was already being applied by Peptech to two validated, high value targets and that once the company builds a patent wall around these targets more details about them will be disclosed. Peptech has filed for patent protection until 2025.

Peptech also announced to the market yesterday that its wholly owned subsidiary, Peptech Animal Health (PAH), had received a recommendation for approval in Europe for its animal contraceptive, Suprelorin.

Chiplin said PAH had been informed by the European Medicines Agency (EMEA) that the Committee for Medicinal Products for Veterinary Use (CVMP) had recommended the grant of a European marketing authorisation for Suprelorin.

Cyton Biosciences, PAH's regulatory partner in Europe for Suprelorin, said that a positive opinion from the CVMP provides an almost certain indication that a European marketing authorisation, granted by the European Commission, will follow within the next three months.

With this recommendation, Suprelorin is expected to be commercially available in Europe in the second half of 2007. It has been successfully marketed in Australia since December 2004 and New Zealand since September 2005.

Commenting on the state of play with Peptech shares, ABN Amro Morgans biotech analyst Scott Power said that at $1.92 (its Friday close price) Peptech scrip had reached his price target and reflects the current takeover speculation.

He estimated the cash backing per share at $A1.62, which includes 33c per share from royalty stream and 30c per share for the balance of the business, and said: "Our best guess is that any takeover bid would need to be above $A2.20. The downside risk to the current share price is a takeover bid not materialising in the near term, in which case the share price would track back closer to the cash backing."

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