BRONZE: A statue of Peter Pan sits outside the Great Ormond Street Hospital for Sick Children in London. The hospital has been receiving royalties from the Barrie work - and will until 2007. Now, money from the sequel will go to the hospital, too. MARY KNOX MERRILL - STAFF

Peter Pan, a lovable, mischievous boy who never ages and flies with the help of fairy dust, is known to generations of children around the world in a number of guises: Some prefer Disney's cute 1953 animated version; others, Robin Williams's disenchanted grown-up Peter in "Hook." Most favor the darker original tale, in which Peter rebels against an adult world as petulant and stubborn as Pan himself. Many also know the story behind Peter Pan's creation through Johnny Depp's 2004 performance as its diminutive, retiring author, James Matthew Barrie, in the movie "Finding Neverland."

But there's another side to the story of Peter Pan, one that, like its acclaimed author, has remained largely hidden from the public view.

Though nowadays almost solely known for "Peter Pan," J.M. Barrie was, in the early 20th century, a major playwright more renowned than such illustrious contemporaries as George Bernard Shaw and Oscar Wilde. He also had a profound love for children, and, on befriending a family of five young brothers, created Peter Pan as a story to entertain them.

The character soon evolved into a play, first performed to rave reviews in London on Christmas 1904. In the United States, too, it quickly achieved stellar popularity. After an initial run in New York just before Christmas 1905, it embarked on a nationwide tour so highly acclaimed that Mark Twain remarked, "The next best play is a long way behind it." In 1911, Barrie transformed the play into a book, the first editions of which flew off the shelves.

"Then, in 1926," relates Christine DePoortere, director of the Peter Pan project at the Great Ormond Street Hospital for Children in London, "Barrie was asked by the Great Ormond Street Hospital to give a series of public lectures to help raise funds."

The hospital, founded in 1852, survived on private fundraising, mostly carried out by middle-class ladies, and was the only children's hospital of its day. "But Barrie was painfully shy, and couldn't speak in public to save his life," says Ms. DePoortere. He therefore promised to "see what else he could do for the hospital," and, in April 1929, donated all the royalties from Peter Pan to Great Ormond Street.

"Peter Pan had already been a tremendous success for 20 years," explains DePoortere. "Barrie knew it was worth a lot of money. It was an unprecedented, unique gift to children."

The legacy was confirmed in Barrie's will. In the years to come, countless reprints of the story, translated into dozens of languages, along with royalties from the perennially popular play, all helped provide funding and facilities to help Britain's children.

In 1987, however, exactly 50 years after Barrie's death, the story's copyright expired in Britain and in many European countries, and the work finally entered the public domain. (In the US, too, the novel's copyright has expired, though the play remains in copyright until 2023.)

In 1988, the British government pushed through an amendment that allowed the hospital to receive royalties from Peter Pan in perpetuity.

In 1995, however, new European Union standardized copyright law came into effect in Britain. The result: All European copyrights for Peter Pan will finally expire in December 2007.

But that's not the end of the story. Knowing that the flow of profits garnered from Peter Pan would soon ebb, the Trustees of Great Ormond Street decided on a bold move: to commission a sequel with the hope of once again bringing in much-needed royalties.

A competition was proposed, and 200 entries - a sample chapter and a synopsis of the proposed novel - from established authors were submitted. The winner was "Peter Pan in Scarlet," by Geraldine McCaughrean, author of more than 130 books and plays for both adults and children.

The new book was released Oct. 5 in 35 editions and 31 languages - from Korean to Croatian. The staff at Great Ormond Street hopes that the sequel will prove a Christmas hit in bookshops - and children's stockings - around the world.

The entire manuscript took just six months to complete, says Ms. McCaughrean. But first she had to overcome her worry about treading in Barrie's illustrious footprints.

"A book is only fun to read when it was fun to write," she says, "So I decided just to enjoy myself; to shut out all thought of Barrie reading over my shoulder; to forget that some people were saying I should not be writing it; to forget how many people I had to please. After that ... it was easy, because Neverland is such a great place to spend time."

And, she believes, Barrie would have approved, for the most part, of the sequel. "I don't think that under any other circumstances I would have ventured to toy with someone else's work. But Great Ormond Street Hospital was a cause so dear to Barrie's heart that I am quite certain he would have approved of the enterprise."

AUTHOR: Geraldine McCaughrean won a competition to write an authorized sequel titled, 'Peter Pan in Scarlet.' TOBY MELVILLE/REUTERS

McCaughrean believes that the original's enduring popularity - among children and adults alike - stems from Barrie's firm belief in the power and importance of imagination. "I hate it when adults talk as if an imagination is only something children need," says McCaughrean, "I think that, for adults, the world of Peter Pan represents everything good they remember about childhood, rightly or wrongly, and every wish they wish they could grant their children - freedom, flight, adventure, autonomy - but for the need to keep them close, keep them safe."

Everyone identifies with one or more of its eccentric characters, or recognizes elements of them in the people they know: the vain, sulky, but fiercely loyal Tinkerbell, the optimistic Lost Boys, or the plucky Indian princess Tiger Lily.

"I have to admit to a fondness for Captain Hook," McCaughrean confides. "Such a nuisance, since he was last seen disappearing into the jaws of a crocodile."

Great Ormond Street hopes that the characters populating "Peter Pan in Scarlet," which McCaughrean describes as "a literary counterpart - the matching bookend" to the original, will be similarly universal and long-lived.