Peptech looks towards positive second half result in shareholder address

Sydney company Peptech (ASX: PTD) is hinging its hopes for a positive second half result on the issuing of US patents for its anti tumour nectrotising factor.

In an Address to Shareholders this week, managing director Stephen Kwik said that while it was disappointing to report a net loss, promising indicators pointed to the future growth of the company.

"For the longer term, we believe that there are many good reasons today to be optimistic about the company's future," Kwik said.

"This outlook is founded on the belief that we should receive royalties from Centocor for US sales of Remicade when the US patents are issued, sales of D2E7 are expected to commence in 2003, and we are closer to realising the commercial benefits of the reversible contraceptive product."

But he cautioned that another loss could eventuate this year if the anti TNF patents were not issued in the next six months.

"The outlook for the remainder of the financial year remains dependent on the issuance of the anti TNF patents in the US," he said.

"If this does not eventuate, it is anticipated that a loss, although lower than the first half, will also be recorded for the six months ending 30 September 2002."

Having already factored in the previously released financials, the market barely registered the announcement, sliding just 1.6 per cent to close the day at $2.48.

In May, the company revealed a net loss of $4.2 million for the six months to March 31, compared to a profit of $26 million for the corresponding previous period.

The results were attributed to the fact Peptech had not received any milestone payments during those six months, had been disadvantaged by a foreign exchange loss of $1 million and had incurred a $1.7 million expense in relation to its Domantis research collaboration payments.

In this week's shareholder address, recently appointed chairman John Leaver moved to soothe investors by reporting that Peptech continued to make "good and steady progress".

Leaver said that since his appointment, many shareholders had expressed concern about recent changes in the company and sharp movements in the share price.

"I have therefore examined all aspects of the company in depth since then and I am more than happy with all aspects, be they scientific, financial or corporate governance," Leaver said.