Dolly firm PPL drops plan to build drugs plant in Edinburgh

PPL Therapeutics, the Scottish biotech company that helped clone Dolly the sheep, yesterday dropped plans to build a new drug manufacturing plant near Edinburgh, describing it as too risky.

The company said delays in developing its drug for the treatment of the lung diseases emphysema and cystic fibrosis, called recombinant Alpha-1-Antitrypsin, meant building the factory at a cost of £42m was "too great a risk to the future viability" of PPL.

Consequently, it has written off the £7.5m that it had already spent on the project and said it was in talks with Bayer, its partner, about rehashing the original collaboration agreement as well as about alternative arrangements for manufacturing the drug.

"As a result of the associated delays, PPL and Bayer are discussing the realignment of the commercial terms of the original collaboration agreement, including the possible acceleration of milestone payments, to reflect an appropriate balance of risk in the programme," the company said.

The drug – produced from the milk of genetically modified sheep – is expected to be launched in 2007, in line with recent guidance but two years later than originally hoped. Production might now be contracted out instead.

The £7.5m write-off pushed PPL deeper into the red in 2002. It reported a pre-tax loss of £20.1m compared with a loss of £14.3m a year before. Shares in PPL closed down nearly 10 per cent at 5.75p.

Revenue, including grants, fell to £1.2m from £2m – mainly from the fall in income from producing the "recAAT" drug for clinical trials thanks to the delay.

The company, which has about £14.5m of cash remaining, also said yesterday it had cut its cash burn to about £600,000 a month from nearly £1m a month -- meaning it has roughly two years of funding left.