PPL Therapeutics, the company whose technology created Dolly the cloned sheep, was fighting for its commercial life last night after being forced to shut down a major drug development project and to sack three-quarters of its workforce.
Shareholders are to be canvassed over the possibility of winding up the company and returning its £10m cash pile, or attempting to sell the company.
Bayer, the German drugs giant, has walked away from a project to develop drugs from the milk of genetically modified sheep, less than two months after PPL broke its side of the bargain by refusing to build a £42m production facility in Scotland.
PPL had argued the factory building programme was too risky for a small biotech group and has asked Bayer to bring forward some payments to PPL that would be triggered by successes in the laboratory. Instead, Bayer abandoned the collaboration entirely.
PPL informed 140 staff in Roslin, near Edinburgh, yesterday that they would most likely lose their jobs. Twenty positions in New Zealand are also under threat. The group said 50 jobs could be saved if Bayer agrees to use PPL to manufacture another of its drugs but this has yet to be agreed.
There was also confusion yesterday over whether the collaboration with Bayer was on hold or at an end. Bayer hopes to keep open the option of restarting work in a few years time, but PPL says this would put the company in an unacceptable state of limbo.
Geoff Cook, PPL's chief executive, is presenting a plan to reshape the company as a much smaller organisation, which will try to develop a product called Fibrin I for stopping bleeding during surgery. He said: "We could be a slimmed-down organisation employing about 20-25 people. We have the core competencies needed to deliver Fibrin I, and we have the cash."
However, Mr Cook accepted that shareholders may believe the company no longer has the critical mass necessary to make a commercial success of its technical know-how. "We are exploring all options. There could be a sale of the company, it could mean liquidating the company, selling the assets. We will be asking shareholders which would be their preferred route."
The latest disaster for PPL comes after a year of retrenching. Mr Cook was brought in a year ago and has shut down or sold the group's stem cell research business and slashed costs.
It will also play into the hands of rebel shareholders who are hoping to install a new non-executive at the annual general meeting tomorrow and prompt a shake-up of PPL's strategy. A hedge fund, Metage Capital, has built up a stake of more than 10 per cent and has the backing of other activist investors who have called for the group to dispose of assets or put itself up for sale. PPL shares have tumbled from a peak of 250p in 2000 and were worth just 6.25p yesterday, valuing the company at £7.4m.Reuse content