London

The company that helped create Dolly may follow the cloned sheep to an early grave.

PPL Therapeutics announced on 18 June that its leading project, an attempt to harvest therapeutic proteins from the milk of transgenic sheep, was being put on hold. About half of the Edinburgh-based firm's 200 employees will lose their jobs, and the company itself could fold, some analysts say.

When PPL was established in 1989, the company hoped to clone flocks of genetically modified sheep and cows, and milk them for therapeutic proteins — and for money. But the firm has been forced to sell off several transgenic projects in the past few years. Its share price, which exceeded £4 (US$6.68) in the mid-1990s, is now about 6 pence.

The latest setback concerns plans to develop a protein treatment for lung diseases such as hereditary emphysema and cystic fibrosis in partnership with Bayer, a US pharmaceutical company. PPL had developed transgenic sheep that expressed the protein α1-antitrypsin in their milk, and was preparing to collaborate with Bayer to run large-scale human trials of the treatment.

Bayer say they have now placed the trials on hold after PPL decided not to take on the £42 million of debt required to finance the building of a commercial-scale plant for purifying the protein from the milk.

“Without a production facility, you can do all the clinical trials in the world and there still won't be a drug at the end of it,” says Tricia McKernan, who is director of communications for Bayer Biological Products at Research Triangle Park in North Carolina.

PPL now faces a difficult future. It has only one product that looks likely to become profitable — another protein called fibrin, a surgical 'glue' that can replace stitches and which is not derived using transgenic techniques. But the market for this is crowded, says Julie Simmonds, a biotech analyst at Evolution Beeson Gregory in London. “We remain unconvinced about the long-term outlook for PPL,” she adds.

The business has already been heavily pruned. PPL sold its xenotransplantation arm this April, and closed down its stem-cell projects last September.

Geoff Cook, PPL's chief executive, says that the decision about what to do next lies with shareholders, and warns that they may decide that selling the company's remaining assets is the best way to recoup their investment.