Apropos both Diversys and D2E7...
Friday, 01 March 2002
Peptech - Managing Director`s Update
BUSINESS PERFORMANCE
In recent days there has been a dramatic fall and very high trading volumes in the shares of the company. Peptech has received an enquiry from the Australian Stock Exchange and this has been responded to with the statement that "The company is not aware of any information concerning it that it has not previously announced which, if known, could be an explanation for the recent trading in the securities of the company". The company's response to the announcement also explained that there will be a significant variance in the results of the half year to 31 March 2002, compared with the previous half year period, due to the non recurrence of up front licensing fees ($25.5m) and exchange gains ($3.2m). In addition it was explained that in the current half year the Diversys research collaboration amortisation charge would be $1.7m, compared to nil in the previous half year. There factors will result in Peptech reporting a loss, based on current projections approximating $4.0 million, for the half year to 31 March 2002. The second half year result is very sensitive to the timing of royalty receipts arising from sales of Remicade in the USA. Depending on the timing of these receipts, the company could report, in the second half, a further loss of a similar magnitude to the first half year, or a small profit. The company will immediately inform the market of progress with regard to its royalty position. It is expected that we will return to consistent profitability, commencing in 2003.
These results reflect the "lumpiness" in earnings envisaged by the
Chairman in his recent address to shareholders at the Annual General
Meeting. However, Peptech has never been in such a strong a position.
We have two licensing agreements which either are, or will result in
both milestone payments and royalty income. Independent reports on
Remicade (a product of Centocor, part of the Johnson and Johnson
group) project global revenues for this product of over US$1 billion
in 2002, increasing to over US$2.1 billion in 2005. Abbott has
announced increased "peak" sales projections of its product D2E7 to
US$1 billion in 2005.
The company has a distinguished Scientific Advisory Board to advise
and guide management on future developments and their commercial
opportunities. Our investment with Diversys is strategic in nature
and the research collaboration between Peptech and Diversys is
working effectively with Diversys already undertaking work on the
first target (Single domain TNF antibodies). In recent times the
management team at Peptech has been strengthened with the
appointments of a Patent Manager, Chief Scientific Officer and Chief
Financial Officer. These appointments will underpin the company's
plans for successful growth. The company has appointed four new
highly regarded non executive directors who will bring enhanced
strength and corporate governance to the company.
On the scientific front we have recently announced the granting of a
further US patent for our animal long term contraceptive implant and
the receipt of a Notice of Allowance from the US patent office for
our Tumour Necrosis Factor Antibodies (TNF) patent. The company's
intellectual property position, and the commercial opportunities that
will arise from this, have potentially never been better.
Finally, Peptech had a cash balance of over $25 million at 30
September 2001 and this balance is sufficient to meet all our
commitments to Diversys and coupled with ongoing revenue streams, all
operating expenses of the company for the foreseeable future... |
