By Randall Osborne

West Coast Editor

In what looks like the first solid commercial payoff for sheep and pig cloning pioneered by Scotland-based PPL Therapeutics plc, the company has signed a deal worth up to $40 million with Bayer Corp. to develop transgenically produced recombinant replacement therapies in aerosol form for alpha1-antitrypsin (AAT) deficiency-related emphysema and for cystic fibrosis.

Using sheep, their focus first will be on emphysema, said David Spencer, vice president of plasma life cycle management for Bayer Corp.

"That's where we see the clearest road ahead," he told BioWorld Today, adding that the PPL agreement "puts us in the lead" of researchers in AAT replacement.

The deal, pending PPL shareholder approval, fulfills a promise made by the company in February that, in exchange for a funding package for an Edinburgh production facility, it would secure a marketing deal with a major pharmaceutical firm.

Bayer, a division of the German life sciences giant Bayer AG, will take over costs of clinical development and marketing through its Bayer Biological Products unit, headquartered in Research Triangle Park, N.C. Bayer is making an up-front equity investment of $15 million in PPL, or #2.15 per share. Bayer will provide milestone payments up to $25 million to PPL, of which $15 million will be paid by the time an emphysema product is approved.

For its work with AAT so far, and for ongoing production, PPL will get further, unspecified revenues and royalties. The partners plan a placebo-controlled Phase III efficacy study for AAT deficiency in emphysema in the fourth quarter of this year.

AAT Deficiency Affects More Than 200,000

Deficiency of AAT is a potentially lethal hereditary disease that affects more than 200,000 people worldwide. Striking after the onset of emphysema, the condition is characterized by shortness of breath, wheezing, coughing, and recurrent lung infections.

AAT protects the body from an enzyme, neutrophil elastase that is found in white blood cells and can damage air sacs in the lungs. Lack of AAT boosts the risk of emphysema, and many patients with a shortage of it die in their 50s and 60s.

The problem with cystic fibrosis is "somewhat different," Spencer said.

"There are normal amounts of AAT, but you have very strong, persistent infections in the lung, which lead to very high levels of neutrophil elastase," he said.

Bayer's plasma-derived, intravenously administered Prolastin, approved in 1989, is the only available product for the deficiency.

"Lying down with a needle in your arm is not the most comfortable procedure in the world," Spencer said. An inhaled aerosol form would not only be easier to use, but would increase supply of the product. Only enough Prolastin to treat about 4,000 patients can be produced. About 1.5 million grams of the drug may be required per year, and PPL can provide that volume with its transgenic-animal technology, which uses sheep, cows, rabbits and pigs.

"Bayer Biologicals in 1999 made roughly $1 billion in sales, and Prolastin was about a tenth of that," Spencer said. "When we appreciate the fact that the potential market is 200,000 patients, and only about 10,000 have been identified, the issue becomes how rapidly more can be diagnosed. All I can tell you is, I hope we can get diagnosed 20,000 to 40,000 patients, but it's unclear what the price level is going to be."

PPL's patented method introduces copies of human DNA into the genetic material of other species, which then express the human gene product in the mammary gland, allowing the company to collect and purify it during lactation. The company detailed some of its work with AAT in the journal Nature, in June. (See BioWorld Today, June 29, 2000, p. 1.)

The recombinant approach to AAT replacement has been investigated before. Back in 1998, AlphaOne Pharmaceuticals Inc., of Alameda, Calif., said it would try developing a product derived from recombinant yeast cells. AlphaOne had licensed patent rights to the AAT protein from Protease Sciences Inc., a privately held company based in Tempe, Ariz. (See BioWorld Today, Jan. 27, 1998, p. 1 and Aug. 1, 1996, p. 1.)

"The concern we have about those sorts of approaches is that yeast cells do not glycosylate the protein, as do mammalian cells," Spencer said. "You typically find the protein is cleared very quickly, so you have half-life issues, and issues related to how the body will treat it."

Earlier this year, AlphaOne struck a deal with Baxter Healthcare Corp.'s Hyland Immuno division to co-develop an inhaled formulation of recombinant AAT.