LONDON - Dolly has a little lamb.

The famous sheep, first to be cloned from an adult cell by nuclear transfer, gave birth April 13 to Bonnie. The Roslin Institute, in Edinburgh, Scotland, said Dolly was mated normally at the end of last year with a Welsh mountain ram, and both mother and daughter are doing well after a normal delivery.

“We are delighted,“ said Grahame Bulfield, director of the Roslin Institute. “Despite Dolly's unusual origins, the birth of her lamb confirms that she is able to breed normally and produce healthy offspring.“

This is an important development for PPL Therapeutics plc, of Edinburgh, Scotland, which is licensing the nuclear transfer technology to generate transgenic animals that produce therapeutic proteins in their milk. Bonnie's arrival increases the chance that transgenics raised by nuclear transfer will be able to pass on the transgenes to conventionally bred offspring.

In June 1997, the births of Polly and Molly - sheep which carry the gene for the human blood clotting Factor IX - demonstrated that transgenics could be produced from a genetically modified cell, thus proving the principle that cloning can be used to produce genetically modified animals. PPL's aim is to use a few such transgenic founders to produce large flocks or herds conventionally.

The news of Bonnie's birth came as PPL announced results for the year ending December 1997, which showed a loss of £10.2 million, up from £6.2 million in 1996. Expenditures on research and development totaled £11 million, compared with £8.3 million in 1996, mainly due to the start of Phase II trials of Alpha-1-antitrypsin (AAT). Revenue fell by more than 100 percent, to £1.1 million from £2.5 million in 1996.

PPL had just over £20 million in cash, leaving the company with enough money to operate for about 18 months. During the year, staff numbers rose from 135 to 182.

Ron James, managing director, said the product pipeline is growing and developing strongly, “with several products approaching the stage where a marketing partner can be sought.“

However, the firm has become frustrated with pursuing its strategy of developing products under fully funded contracts for pharmaceutical and biotechnology companies.

“PPL has little control over the rate at which contract products move from one stage of development to the next, and even whether or not they ultimately reach the market,“ James said.

As a result, PPL has redirected resources to concentrate more on the discovery of products where it has proprietary rights, and to maximize the rate of development of its own products, such as Factor IX.

“This slight shift in balance of effort now being placed upon our own products, rather than on contract products, will make best use of the resources available to the group and over the longer term is designed to increase profitability,“ James said.

Trial To Start By Year's End

PPL has taken over responsibility from its partner Astra AB, of Sodertalje, Sweden, for the development of a manufacturing process, and for Phase I and Phase II trials of bile salt stimulated lipase (BSSL), a digestive system enzyme which breaks down lipids.

“This arrangement will maintain the momentum of product development and PPL will retain a greater share of revenues, thus delivering improved and faster profit generation,“ James said. PPL aims to start clinical trials before the end of 1998.

Astra has the right to buy back the project at the end of Phase II. If it does not, PPL may sell the product to another buyer or find a marketing partner. In either case, PPL would be the exclusive manufacturer.

“BSSL is a particularly attractive product for PPL because it is required in quite large quantities and, unusual for protein, it is orally active,“ James said. Producing the enzyme in milk should mean that limited purification would be required to produce the finished dosage form.

BSSL normally is produced in human breast milk and by the adult pancreas. Cystic fibrosis sufferers and patients with acute pancreatitis do not secrete sufficient amounts, resulting in poor digestion of fat. Premature babies who are not breast fed also suffer poor fat digestion, hence slower growth rates.

PPL has bred founder transgenic sheep that have produced milk containing very large quantities of BSSL, which, the company said, should lead to cost-effective production. *