GTC Gets an Udder Chance

Investors toasted and torpedoed a plan to extract drugs from the milk of bio-engineered goats. Now, thanks to an EU finding, the stock rise again

The saga of Sweetheart the goat and her creator, GTC Biotherapeutics (GTCB), has seen more highs and lows than the average soap opera. June 2 marked a welcome high for the Framingham (Mass.)-based biotech. The European Medicines Agency issued a positive opinion on the company's drug, ATryn, which is the first drug derived from the milk of a genetically modified animal.

Sweetheart and the rest of her herd were genetically engineered to carry a single human gene, which allows the goats to produce a human protein in their milk. The protein, normally found in blood, prevents dangerous blood clots in surgery patients (see BW, 1/16/06, "Crossing the Gene Barrier").


  The June 2 decision was an unexpected turnaround. On Feb. 23, the European agency rejected the drug. GTC's shares plunged 40%, to $1.35, and recently traded below $1 a share. According to the European agency, regulators were initially concerned that the company's clinical trials didn't include enough patients to adequately assess the prospects for the drug, and they worried that the manufacturing process for the commercial product would be slightly different than that used to make the version used in the clinical trials.

After reexamining information provided by GTC, as well as speaking with blood-clotting experts, the agency changed its mind. The European thumbs-up sent GTC's shares up 85%, to $1.81.

The backing from the European agency is the first step in what's sure to be a long approval process for ATryn. The company must wait for final authorization from the European Commission -- likely in about three months -- before it can launch the drug in all 25 countries of the European Union.


  Executives there aren't worried about getting the OK. "I'm not aware of any instance in which the European Commission countermanded a recommendation from the EMEA," says Thomas E. Newberry, a spokesman for GTC. The company estimates that ATryn could grow into a $500-million-a-year drug, but it won't get there unless it is also approved by the U.S. Food & Drug Administration.

GTC is completing the late-stage clinical trials that are required for U.S. approval. Navdeep Jaikaria, an analyst for investment bank Rodman & Renshaw, has a more conservative sales prediction for the drug, estimating it will peak at $226 million in annual sales by 2013. Still, he says, the European opinion is a significant milestone. "It's definitely a validation of the technology platform, and we view it as a positive for the biotech industry in general," he says.

There was a time when producing drugs in transgenic animals seemed more like science fiction than a viable manufacturing strategy. GTC was spun off from biotech giant Genzyme (GENZ) in 1993, with the goal of altering animals so they could serve as manufacturing plants for human drugs. Theoretically, it isn't difficult: making Sweetheart is simply a matter of inserting a copy of a human gene into her DNA and programming it to switch on only in her mammary glands. Once the milk is extracted, the drug is isolated, purified and packed in vials.


  The idea of making drugs in genetically modified animals caught fire in the late 1990s, when the biotech industry faced a severe manufacturing crunch. GTC promised it could make drugs in goats' milk at a fraction of the $500 million it generally costs to build a biotech manufacturing plant. Need to make more of your product because of a demand spike? Just breed more goats, the sales pitch went.

Even some Big Pharma companies, such as Bristol-Myers Squibb (BMY) and Johnson & Johnson (JNJ) expressed interest, sending shares of GTC up to $50 and giving it an market cap of $1 billion.

It took years of trial and error for GTC to perfect the process and prove the resulting drug works in people. Along the way, the big-name partners pulled out and investors left GTC for dead. GTC's execs, however, never lost faith, not even after the European agency balked at the drug in February.


  "It was disappointing, but it makes today all that much sweeter," Newberry says. "We have people who have devoted their entire careers to this product. We knew the data was there. It was just a matter of persistence." (See BW, 6/13/05, "Biotech, Finally".

With its future now sporting a brighter hue, executives at GTC look forward to producing even more drugs in transgenic goats. The company's research pipeline includes treatments for malaria and solid tumors. And GTC's good news has boosted other companies that are developing transgenic animals.

Netherlands-based Pharming NV, which was near bankruptcy a few years ago, is developing five drugs in the milk of transgenic rabbits and cows. Its stock soared 15% on June 2. At this rate, Sweetheart and her transgenic buddies may take over the title of man's best friend.

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