BioWorld International Correspondent

SYDNEY, Australia - The share price of Peptech Ltd. has been buffeted by both good news and bad of late, with the bad news being confirmation that it faces a hard fight to establish its rights to a royalty stream for a rheumatoid arthritis treatment.

The treatment is being marketed by Centocor Inc., a Malvern, Pa.-based subsidiary of Johnson & Johnson.

Last week, the company said Centocor confirmed its position that it would not pay royalties under a previously negotiated license agreements for key tumor necrosis factor antibody patents held by Peptech.

Centocor said Remicade does not infringe those patents, but that it will refer data to an independent third party for further evaluation. The license agreements set out a procedure for arbitration, which will now be used by the companies involved.

Market observers had previously estimated that Peptech would gain A$15 million (US$8.85) a year in royalties from the patents.

Last week's announcement added little that was not already known about this dispute, but investors still cut the company's share price by 24 percent to A$1.29 in the trading day following the announcement. By the end of the week the stock price was at A$1.14. Before the original announcement of the dispute in October, it was trading above A$2.

The good news, which boosted Peptech's share price by A$0.11 to A$1.78 in the days before the Centocor news, was another announcement that an antitumor necrosis factor domain antibody being co-developed with a related company, Domantis Ltd. in Cambridge, UK, will enter preclinical studies.

At the same time, Peptech also announced that it had agreed to bring forward, by two months, payments totaling US$4.25 million - US$1.75 million for equity and a further US$2.5 million as part of an ongoing research agreement between Peptech and Domantis.

After the payment for equity, also made under a previous agreement, Peptech will hold 36.1 percent of Domantis.