Peptech reaps $10m from share placement

Sydney-based biotechnology company Peptech Limited today announced it has raised $AUD10 million in new capital by placing 6,625,000 shares with several major institutions, including AMP, ING Australia and the Escor Group.

The placement, at $AUD1.55 per share, was arranged by specialist investment bank Emerging Growth Capital (eG Capital).

Peptech MD Stephen Kwik said the new capital would provide additional working capital for developing his company's new anti-TNF therapeutic for common autoimmune disorders.

The second-generation antibody, being developed under contract by UK-based antibody-engineering company Domantis, will be among the first of a new wave of therapeutic molecules based on single-domain antibodies.

Single-domain 'designer' antibodies should be cheaper than the current generation of monoclonal antibodies, with advantages including improved targeting and shorter half-life in the body.

Kwik said Peptech was "very pleased" by the level of support for the share placement in an environment in which it was difficult to raise new capital.

He said it was extremely encouraging to see high-profile institutional investors like AMP, ING Australia and the Escor Group "supporting the Peptech story".

Royalty resolution

Kwik also said Peptech was looking forward to resolving the issue of royalty payments for its proprietary anti-TNF technology. Johnson & Johnson subsidiary Centocor, which markets the world's leading anti-TNF monoclonal antibody therapy, Remicade, announced it would not pay royalties to Peptech, soon after the US Patent Office granted Peptech's patents in the US.

To ensure its market dominance against European rival Abbott Laboratories, Centocor needs to develop its own single-domain successor to Remicade. Peptech owns 30 per cent of Domantis, which owns the patents for producing the new 'lite' antibodies.

Late last year Abbott contracted Domantis to develop a single-domain antibody therapeutic -- although Abbott did not disclose its target, a second-generation anti-TNF is likely to be a high priority for the company, given that Abbott already markets a conventional anti-TNF antibody, and could challenge Remicade's current market dominance with a second-generation product.

Because Domantis owns the rights to the technology for producing single-domain antibodies, Centocor has the option of striking a similar agreement with Domantis to develop its own second-generation anti-TNF product.

But given that Peptech would require major pharmaceutical company with an established marketing network as a partner to commercialise its own single-domain anti-TNF antbody, Centocor could opt to partner Peptech.

Centocor’s current refusal to pay Peptech royalties on Remicade would be an obstacle to such an agreement, unless the issue is quickly resolved in Peptech's favour.

Peptech's investor relations manager Dr Paul Schober confirmed yesterday that Domantis had already produced a prototype single-domain anti-TNF antibody - one "we believe is worth testing in biological systems," he said. However, he said, Domantis was still working to produce new candidate molecules.

On the Centocor stand-off, Schober said, "We responded strongly to their initial letter, expressing our belief that our patents cover their molecule [Remicade]. We're now going down the line of non-antagonistic negotiations."

At the time of writing, Peptech shares were up 11c at $AUD1.73.