BioWorld International Correspondent

SYDNEY, Australia - Investors in Peptech Ltd. are hoping for royalty payments of more than A$27.8 million (US$15 million) a year to start flowing now that the company has gained a key tumor necrosis factor antibody patent in the U.S.

Besides the income from the sale in the U.S. of the established drug Remicade used to combat arthritis, marketed by Centocor Inc., a subsidiary of drug giant Johnson and Johnson, investors are hoping for further income streams when Peptech secures relevant patents in Japan, another major market for Remicade.

Sydney-based Peptech spokesman Paul Schober said that Peptech recently was granted the key TNF antibody patent by the U.S. Patent Office and has an agreement in place with Centocor in which the company would start paying royalties on Remicade sales as soon as the patent was in place, which occurred in mid-September.

Various estimates circulated by brokers in the Australian market put the minimum likely income at US$15 million a year. Those estimates initially pushed Peptech's share price up by A$0.20 to around A$2.50, but by the close of business Friday the share price had settled back to A$2.19. In March, the share price was just above A$5.

For Peptech, the income stream is a matter of having done the right research first. The company researched TNF antibodies in the late 1980s and, although the original research did not contribute to the development of Remicade, was able to apply for patents worldwide with the prior claim. That prior claim also permitted the company to negotiate a royalty deal with Centocor.

Peptech already holds the TNF patents in Australia, Europe and Canada, but the U.S. Patent Office required the application to be split into four parts. Three of those four patents applications have now been granted, with the company considering that the third and most recently granted patent covers the Remicade technology and triggered payments under its deal with Centocor.

The company intends to use the expected additional funds to develop its animal health products, as well as its substantial investment in the biotech company Domantis Ltd., of Cambridge, UK. Domantis is researching domain antibodies.