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KEYCODE BAYER #82

April 29, 2003

Dolly the sheep firm PPL drops drug factory plans

The Scottish biotechnology firm that helped clone Dolly the sheep said yesterday it had dropped plans to build a large-scale manufacturing plant to extract medicine from the milk of genetically modified sheep.

PPL Therapeutics Plc (PTH.L) said delays in developing recombinant Alpha-1-Antitrypsin (recAAT) for the treatment of emphysema, a serious lung condition, meant building the debt-financed factory at a cost of 42 million pounds ($66.82 million) was too risky.

The company is writing off 7.5 million pounds it has already paid towards the cost of the facility and is discussing possible changes to its collaboration agreement with Germany's Bayer AG (BAYG.DE) for the project. Large-scale production of the experimental drug may now be contracted out, it added.

PPL has been involved in some major biotech breakthroughs. As well as cloning Dolly the sheep in 1996, it was the first firm to announce it had cloned pigs capable of providing organs for humans and has also worked on stem cells.

But it has come under fire from investors for spreading its interests too widely and has also had a string of setbacks, notably the delay in development of recAAT.

It made a loss of 18.6 million pounds in 2002, up from a loss of 12.7 million in 2001. The company recently slimmed down its operations with the spin-out of the transgenic pigs business and the closure of stem cell operations.