September 16, 2003 NY times

Bayer investment PPL closes down

Company That Cloned Sheep to Sell Assets and Shut Down

Scotland's PPL Therapeutics, a spinoff of the Roslin Institute that propelled the biotechnology industry into a new realm seven years ago when it cloned a sheep named Dolly, said today that it would sell its last assets and close.

The company said its chief executive, Geoff Cook, and four members of the board would step down immediately.Despite its major scientific advance, PPL Therapeutics was deficient in a crucial area, analysts said. ''Management, management, management," said Erling Refsum, a biotechnology analyst at Nomura International in London.

''The technology they developed and envisioned is still the leading idea in their field," Mr. Refsum said. ''They just didn't have the commercial wherewithal."

From a high in February 1997 after the announcement of Dolly's creation, PPL's market value has declined 99 percent, to about £6 million or about $9.6 million. The founder of PPL, Ron James, who took the company public in 1996, resigned last year. Bayer of Germany pulled back from a joint venture in June, and PPL has been embroiled all summer in a battle with shareholders. Metage Capital, a hedge fund, which owns more that 20 percent of the company, spent months lobbying for a change in management. But the new director that it backed left the company recently, without explanation, after only a month on the board.

PPL said last month that it hoped to rework its business around a not-yet-perfected technology called Fibrin I, a liquid tissue sealant intended to stop bleeding during surgery. But the company failed to win enough support for the idea.

''Although the majority of PPL's major institutional shareholders were supportive of the sealants plan, the required level of support to go forward was insufficient," PPL said today in a statement. ''Hence, the board is recommending an orderly sale of the business in order to maximize the short-term value of its assets for the benefit of all shareholders."

PPL also announced a net loss of £12.7 million ($20.4 million) for the first six months of 2003, widening from a £5.4 million ($8.7 million) loss for the first six months of 2002. At the end of August, the company said it had £9.3 million in cash.

Among the company's assets are 6,500 sheep at farms in Scotland and New Zealand. Many of the animals have been genetically altered and will probably be destroyed. In addition to Fibrin, the company is also expected to sell its recBSSL, a product for people who cannot digest fat. Shareholders are expected to receive minimal returns from the closing.

Dolly, the sheep created in 1996 with cells taken from a frozen ewe, was euthanized in February after a lung infection that might have been the result of spending too much time inside. Dolly has been stuffed and is on display at the Royal Museum in Edinburgh.