PPL Therapeutics renews Bayer link for development of sheep's milk drug

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The Independent Online

PPL Therapeutics, the biotechnology group behind Dolly the cloned sheep, has won the backing of Bayer Corporation, the German pharmaceuticals giant, for its lead drug. The treatment, for emphysema and cystic fibrosis, is produced in milk from genetically modified sheep.

PPL Therapeutics, the biotechnology group behind Dolly the cloned sheep, has won the backing of Bayer Corporation, the German pharmaceuticals giant, for its lead drug. The treatment, for emphysema and cystic fibrosis, is produced in milk from genetically modified sheep.

Bayer is to fund future development of PPL's alpha-1-antitrypsin (AAT) compound, a substance that occurs naturally in the body but which some people fail to produce. A lack of AAT leads to lung diseases such as emphysema.

Bayer is currently the world's sole manufacturer of AAT. It is derived from human plasma, which is in short supply. PPL is looking to produce potentially limitless quantities of AAT using genetically modified sheep that produce human AAT in their milk. The group first produced non-sheep proteins in milk from a genetically modified sheep called Tracy in 1991.

David Spencer, a Bayer vice-president, said: "Supply is the key issue. We are best positioned together to meet a huge need."

Bayer is paying $15m (£10m) for a 9 per cent stake in PPL at 215p a share. It will pay milestones totalling $25m and fund phase III trials later this year.

In return it receives worldwide licensing rights to AAT, although PPL will see revenues from making the compound and a royalty on sales. PPL said AAT sales, due to start in 2004, could peak at £250m. Bayer will begin trials of AAT in cystic fibrosis patients in 2003.

Volume production of AAT would require PPL to raise the size of its sheep flock from the 600 to 2,000, the company said. That would create a sharp uplift in group wool sales, which were £5,000 last year.

The deal renews a partnership with Bayer broken off when PPL went public in 1996. Bayer said it had come back on board after developing an advanced inhaler that will be used in AAT's phase III trials. Bayer declined to give details of the device.

Dr Ron James, PPL's managing director, said: "There's now a very clear path to get our product to the market. Our work in other areas will continue as planned."

The deal saw PPL shares close up 7.5p at 164p, continuing their recovery from Monday's falls after a Sunday newspaper said the Roslin Institute might abandon research into cloning pig organs for human transplantation, or xenografting. PPL was spun off from Roslin and has a continuing xenograft programme.

Dr James said the group was aware of no new evidence against pursuing xenograft research. "What was printed was not only inaccurate but old news."

PPL said it was talking to venture-capital groups, some in Canada, interested in buying out its xenograft operations. However, Dr James said PPL would rather retain ownership of the programme and was considering partially floating a minority of the business. PPL was also talking to major pharmaceutical companies about partnership deals, Dr James said. Additional fundraisings on the stock market were also likely.

PPL posted half-year pre-tax losses of £5.9m (£7.1m).

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