Producing Therapeutics In Transgenic Animals and Plants
Co-written by Gary Gamerman, President of Seraphim Life Sciences Consulting LLC, 703-242-5649 ggamerman@SeraphimLifeSciences.com.

Biotechnology is responsible for a large increase in the number of approved protein therapeutics, and an even larger increase in the number of protein therapeutics in clinical trials. Manufacturing capabilities have had a hard time keeping up with demands on the production of protein therapeutics, as evidenced by shortages of such drugs as Immunex's (NASDAQ: IMNX) Enbrel.

Proteins are mostly produced in either bacterial or mammalian cell culture, with some in yeast and other systems. Manufacturing costs are very high because of the operating costs, as well as expensive materials, labor, and quality control. The average time to bring a high-volume biologics facility on line is 2 to 3 years at a cost of over $250 million. For pharmaceutical products, cell culture is expensive to scale. 

For some time, biotech companies have been exploring other options for producing protein therapeutics that would be more time, capital, and cost efficient. Instead of producing the proteins in isolated cells, whole organisms can serve as the "incubator" to produce a protein. For example, sheep and goats can make the therapeutic protein in their milk. Or tobacco plants can include the protein in their leaves. Both plant and animal production of proteins is based on transgenic technology - adding a new gene coding a therapeutic protein into the genome of the organism. Not only can the transgenic organism produce a new protein, but it can also pass this ability onto its offspring.

Although transgenic animals and plants have the potential to produce therapeutic proteins more cheaply and efficiently than cell culture facilities, no drug produced this way has reached the market. Leaders in developing this technology include Genzyme Transgenics (NASDAQ: GZTC), Scottish biotech company PPL Therapeutics (London: PTH), and Canadian company Nexia Biotechnologies (Toronto: NXB). This week, PPL Therapeutics suffered a setback that has raised questions about the viability of producing therapeutics in transgenic animals.

PPL's recombinant alpha-1-Antitrypsin (recATT) is produced in sheep. RecATT has completed phase II trials for the treatment of hereditary emphysema, and is also being tested in cystic fibrosis. PPL announced Monday that concerns over the safety of recATT would delay the start of phase III trials, delaying eventual approval at least two years to 2007.

In spite of PPL's position at the forefront of transgenic technology, PPL's setback says almost nothing about the viability of transgenic animals. The problem with recATT could have to do with the method of production, but is more likely a formulation or clinical use issue.

With hundreds of monoclonal antibodies currently in clinical trials, perfecting the use of transgenic organisms may be critical to preventing acute supply shortages due to insufficient manufacturing capacity as these products reach the market. Even if the money were there, building, staffing, and operating the number of factories needed to make even 25% of the current phase II and phase III pipeline at commercial scale would be difficult, if not prohibitive. A small herd of goats or sheep could replace a massive cell culture plant, not to mention the relative cost of grain and grass vs. culture media. However, one caution is that that transgenic companies will  need to work out management of a large production herd (over 150 animals), especially for proteins with high demands (>1 metric ton/year) that are expressed at the low range of transgenic volumes (<1 gram per liter of milk).

The major problem with animal transgenics is time. Though science has learned to make transgenic animals, it has not yet discovered methods to make a kid become a goat any faster. Currently it takes 12 months to 3 years just to get the first batch of clinical product from a transgenic animal.

Plant culture appears to offer shorter cycle times and fewer safety concerns compared to animal transgenics, but whether plants will produce acceptable biopharmaceuticals remains a question. Like microbial cell culture, plant production will probably be acceptable for some proteins but not others. 

Until the cycle time problem is solved, the business model for transgenic animals has to be targeted on conversion of high-value, high-volume validated products from cell culture to transgenic production. This plan is best illustrated by Genzyme, which has the broadest partnering program, reporting over 60 molecules in various stages of development. Much of Genzyme's work is based on proteins that are either marketed or in late clinical stages with an anticipation for high volume demand. 

We expect to see transgenic organisms, especially plants, first being used to produce non-pharmaceutical proteins. These products are less regulated, and the product mass required can be more cheaply met by transgenic production. Nexia's BioSteel program, in which spider silk is produced in the milk of transgenic goats, is one example of how transgenic companies are turning to a business model of extracting early revenue and production experience in high-value markets where they are not impaired by the regulations on pharmaceuticals.

BTECH NEWS
by Leon Henderson, M.D.
Bennett Weintraub, Ph.D.
Christopher Martin
www.btechnews.com
March 27, 2002

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BTECH NEWS, published by Btech Investor, Inc., highlights selected events in the life sciences sector that the Btech Investor team believes are particularly relevant to biotechnology investors. The Btech Investor team combines scientific, clinical, and business experience to perform comprehensive analysis of the biotechnology industry and to identify future industry leaders.

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