An Arizona company developing antibodies from pigs is getting a lotof support from the Danish government.

Verigen Inc., of Scottsdale, is getting financial support frominternational investors as well, with the completion last week of a $5million private placement with London-based Morgan Grenfell AssetManagement. The company's core technology uses the porcineimmune system as a means of producing hyperimmune antibodiesmodified so they can be tolerated by humans.

Verigen couples antibodies to the glycoprotein complex gp48 _which inhibits the interactions with the CD4 receptor and majorhistocompatibility complex type II _ with the antibodies selectivelyproduced in pigs. The company believes that approach offersadvantages over mouse or mouse-human monoclonal antibodies.

In Phase I and II trials completed in Denmark "we saw virtually noreaction to the porcine immunoglobulins. The pigs are effectivelyproducing an anti-gp48 antibody which goes in and masks, or cloaks,the immune system's ability to recognize the porcine product,"Verigen President and CEO Robert Milligan said Tuesday.

"We've got a delivery system now we can use to introduce porcineantibodies to whatever it is we're trying to address in the human,"Milligan said. "Through two phases of clinical trials it's proveneffective."

The gp48 neutralizing component has been incorporated into twodrugs, PASSHIV-1 _ which has been through Phase II _ andPASSTNF-alpha, which is going into Phase I/II soon as a treatmentfor rheumatoid arthritis and other autoimmune diseases.

Verigen has a wholly owned subsidiary in Copenhagen, Denmark,called Verigen Europe A/S, and completed development of a GMPmanufacturing facility that was approved by the Danish Board ofHealth two years ago. The Danish Growth Fund, a funding agency ofthe Danish government, is contributing 40 percent of themanufacturing and clinical trial costs of gp48-related products.

Milligan said the facility was up and running in less than a year andwas built for $2 million to $2.5 million, about one-fifth the cost andtime it would have taken in the U.S.

Verigen is implementing two plans for near-term revenue while itworks toward development of therapeutics.

One plan is to produce human immunoglobulins for the StatensSerum Institute, the Danish government's research and laboratoryarm. The company's second near-term revenue producer involves thedevelopment of a method of growing cartilage cells. Danish officialshave approved a chondrocyte culturing facility, which Milligan saidmay be the only such facility in Europe. He said the company'sprocess could be more efficient than others being used andcommercial production is expected to begin in a few months.

Milligan wasn't sure the two operations would put Verigen cash-flowpositive, but "it will get us out of the cycle of having to keep raisingmoney to develop the core technology. The thing that gave us the legup was the decision to build the manufacturing facility inCopenhagen."

Verigen's second core technology involves the use of transgenic pigsto produce human immunoglobulins. The goal is to replace the use ofhuman immunoglobulins harvested from humans.

With the new $5 million investment Verigen has raised about$26.3million since its founding in 1987. Much of that financing cameafter the early 1990s, when the company switched its focus totherapeutics from diagnostics.

In clinical studies the PASSHIV-1 product, Milligan said, easedmany symptoms suffered by those with advanced HIV infection, suchas fatigue, wasting, diarrhea and polyneuropathy. There also was aviral reduction of more than 50 percent in about 40 percent of thepatients, he said.

The drug is being developed to be part of combination therapies,particularly with therapies that significantly reduce viral load. "Thisproduct clearly addresses a lot of the quality-of-life issues," Milligansaid.

Verigen is seeking a partner to help take PASSHIV-1 into Phase IIIstudies in Europe, and also to begin testing the product in the U.S.,where the FDA may accept the earlier data because it was done underagency protocols.

In the next few months Verigen expects to enter double-blind,placebo-controlled Phase I/II studies of PASSTNF-alpha. The study,at two Danish hospitals, will involve about 100 patients.

The Danish government is funding 40 percent of the trials up to $2.5million. Milligan said the funding is attractive in that it hascharacteristics of a grant. If nothing is commercialized from the effortthe government doesn't have to be paid back (but it gets some rightsto the technology). If a product does reach market the money is paidback like a loan.

The privately held company is considering a non-U.S. publicoffering, Milligan said. European investors now may be more willingthan their U.S. counterparts to fund early stage companies, he said,particularly in Verigen's case with its presence in Scandinavia. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.