BioWorld International Correspondent

LONDON - PPL Therapeutics plc has agreed to £42 million (US$61.3 million) in third-party funding to build a manufacturing facility for alpha-1 antitrypsin (AAT), licensed to Bayer Corp. last year.

"This is a considerable achievement, for a loss-making biotech to raise £42 million without going to shareholders," CEO Ron James told BioWorld International. However, shareholders will see some dilution, as PPL will issue up to 6 million unlisted warrants to some of the funders.

The funding package, which has taken a year to put together, also requires PPL to retain cash balances that will not be available as free working capital. As a result it will run out of money in the last quarter of 2001. "It is no secret the company needs to raise money within the next 12 months," said James. There are no definite plans as to when, or how much, will be raised.

James said building the manufacturing facility is a good deal for shareholders because PPL will get much higher royalties. "It could double profits for shareholders. We have the expertise to do it, indeed we are already producing AAT on what many would consider industrial scale, and there is no contract manufacturer available." The plant will be built close to PPL's headquarters in Edinburgh, Scotland.

Under the terms of the licensing deal, Bayer is investing £9.97 million in PPL for 4.6 million shares at £2.15 per share, and will hold 8.5 percent of the equity.

Bayer has selected hereditary emphysema as the initial indication for AAT. PPL has just completed a new Phase I safety study in 12 healthy volunteers, administering AAT with Bayer's aerosol delivery device and at a higher concentration than previous trials. There was no difference in safety profile, and a two-month trial is under way to test safety in 30 patients, to be followed by a placebo-controlled pivotal Phase III trial.