New vaccine boosts Peptide profit hopes

PEPTIDE THERAPEUTICS, the drug development company, yesterday said it could post its first profits within three years, thanks to a vaccine against yellow fever, writes Francesco Guerrera. The Cambridge company plans to submit the product to US regulators next year, with approval in 2001.

John Brown, chief executive, said the vaccine, developed with Medeva, could generate high sales. The US market for yellow fever vaccines is estimated at $35m (pounds 21.5m) a year.

Peptide reported a 17 per cent rise in 1998 pre-tax losses to pounds 7.5m, partly due to the $20m acquisition of Oravax, a US vaccine company. Dr Brown said the purchase, to be completed next month, added several vaccines to the pipeline, including the yellow fever compound. The development of Oravax's vaccines could result in up to $60m in royalties and milestone payments in the next few years.

But the real hope is a revolutionary vaccine against all allergies, now in second-phase trials. The drug, developed with SmithKline Beecham, could give Peptide access to a new multi-billion pound market. If trials succeed Peptide would receive up to pounds 23m in milestones and a small percentage of sales.

The rest of the pipeline, including vaccines for hayfever and travellers' diarrhoea, is promising. The one downside is Peptide's cash resources. A fortnight ago the company raised pounds 20.6m through a rights issue to add to its pounds 9.8m cash balances. With cash burn of some pounds 12m a year, this might not be enough to last until the first profits arrive. But with the shares, down 1p to 102.5p yesterday, well below their 12-month peak, Peptide is worth holding.