BioWorld International Correspondent

LONDON - PPL Therapeutics plc was forced to abandon its £45 million (US$64.5 million) fund raising after failing to get enough takers for the share issue.

CEO Ron James told BioWorld International, "We did have a lot of acceptances but not enough. We got well over half of it, but we couldn't get to £40.5 million so we couldn't take the money."

Shares in the company, which specializes in the production of human proteins in the milk of transgenic animals, fell by 19.5 pence to £1.13 on April 10 when the news was announced.

James was very optimistic, and had the support of existing shareholders, when he announced the share issue on March 16.

"There was a very, very big change in sentiment in the three to four weeks in which we were talking to people. The soundings were good, but the day after the fund raising was announced there was a big drop in tech stocks." Existing shareholders supported the issue, but potential new U.S. and European investors did not. "We had a series of positive meetings, but when it came to writing the checks it just didn't happen."

PPL, based in Edinburgh, Scotland, has less than one year's money. Existing shareholders endorsed the attempt to raise £45 million - enough to see the company through to profitability in 2004 - in one round. James said that since pulling the fund raising he has talked to some major shareholders. "The tenor is that the money is still there, and that instead of trying to get all we need in one go, we should do it in two goes."

The likelihood is that the company will make a further equity offer, maybe limiting the offer to existing shareholders. "It will depend on the market," said James. "It is too early to say when, or how much."

Following news of the offering withdrawal, PPL announced the successful cloning of five transgenic pigs that carry a marker gene. PPL said the production of genetically altered piglets means proof of principle for the Scottish scientists who created Dolly, the world's first cloned ewe, further promising that a genetically altered "knockout pig," one that lacks an organ rejection-triggering gene, can be produced.

"The work shows that genetic manipulation of cells is still compatible with the birth of healthy animals," said PPL's Alan Colman. "I liken this to the penultimate station in a long journey in which the final destination is the birth of a pig with a gene knocked out. We announced some time ago that we'd knocked out the gene in cultured cells."

PPL scientists first cloned pigs last August using a "double nuclear transfer" cloning method that puts a somatic cell nucleus into an unfertilized egg, simulates fertilization activation and replaces the nucleus, which considers itself an embryonic germ line nucleus, into a normally fertilized embryo from which all genetic information has been removed.

Producing genetically altered pigs with no rejection-producing genes is the next step. The gene in question, the a-1,3-galactosyl transferase gene, produces the organ surface compound that sounds the alarm in humans that an organ is foreign, triggering near-instant rejection.

"This puts a galactose sugar on the surface of pig organs," Colman said. "Humans have the gene, but it doesn't work in humans; there's a natural gene inactivation already. We do have lots of antibodies in the blood that recognize this sugar, so if you expose a pig organ or any organ to human blood there will be a rapid binding of that antibody that triggers hyperactue rejection. It takes only about 20 minutes."

The trick, Colman said, was genetically altering the porcine genome in a way that would still produce healthy organisms. As a proof of principle trial the scientists inserted a gene for the production of jellyfish green fluorescent protein.

"The next stage is that if we want to tinker with the cells, the question is would the genetic engineering we're doing ruin the chances of the cells providing an animal by the end of the day," he said.

Should the scientists produce genetically altered knockout pigs, pigs without genes to express the a-1,3-galactosyl protein, he said, the resulting pigs, living organ factories, could meet the clinical needs of potential transplant recipients.

Colman said work to clone the knockout pigs is under way, but that he couldn't estimate a time frame for completion of the project.