BioWorld International Correspondent

LONDON - PPL Therapeutics plc, the company that brought Dolly the cloned sheep into the world, has been forced to put itself up for sale after failing to convince enough investors of its plan to restructure the business around its fibrin-1 surgical sealant technology.

CEO Geoff Cook told BioWorld International, "We did get support from our institutional shareholders, who are long-term investors. But we have a few balance-sheet investors who bought shares in the company recently for a number of reasons, not least the indecent amount of money on the balance sheet, and we weren't able to get their support."

PPL had a market capitalization of £6.2 million (US$9.9 million) when the market closed last Friday, well short of the £9.3 million cash it had in the bank on Aug. 31.

The imperative to restructure followed the decision in June by partner Bayer Healthcare LLC not to proceed with development of PPL's lead product, alpha-1-antitrypsin.

Cook said it was not clear yet if anyone is interested in buying Edinburgh-based PPL. "We would prefer to sell the business in its entirety. In the event we are not able to do so we will look at different scenarios," he said.

Cook himself is stepping down from the board with immediate effect and will leave the company shortly. Also departing are Martyn Breeze, product development director; Gordon Wright, manufacturing director; and two nonexecutive directors, Arthur Hale and Roger Brimblecombe.

KPMG Corporate Finance will advise on the sale process, which will be handled by Lindsay Dunsmuir, chief financial officer, and Adam Christie, business development director, along with nonexecutive directors Chris Greig and Hugh Thompson.

Cook said, "Board members are stepping down because it is important to keep an eye on expenses."

Following Bayer's decision not to proceed with AAT, PPL began a restructuring and has since reduced headcount from 161 to 55, reducing the cash burn from £7.2 million to £3 million per annum.

At the same time, Cook has been working on plans to expand the fibrin-1 portfolio, securing a manufacturing deal for the product and negotiating to acquire additional intellectual property in the area. Fibrin-1 is not based on the transgenic clone technology that made PPL so famous, but the company does have a program to produce it transgenically.

Cook said the restructuring had preserved PPL's core technology platform of producing human proteins in the milk of transgenic animals, including farms and livestock, as a going concern. "This is not the end for this technology; the platform technology is excellent."

He added, "The challenges for PPL go back a long way. If the company had invested in development capability in the early stages, the first transgenic protein could have been on the market three years ago.

"But in the early days PPL was very much a science-lead organization and chose to diversify its R&D. It didn't develop products with sufficient speed, and I think there are lessons to be learned by lots of companies here."

Bayer and PPL are still negotiating an agreement to put the AAT project on hold while preserving Bayer's right to restart the project at a later date.

The project came unstuck in April when PPL announced it was abandoning plans to spend £42 million on a manufacturing plant for AAT, because delays in clinical development meant the project had become too risky. The aim was to develop an inhaled formulation of the product to improve patient acceptability over Bayer's existing plasma-derived product, which is injected. But in March 2002 development was put on hold when the FDA requested further analyses after patients dropped out of a Phase II safety study.