Biotech Values

[DewDiligence]

GTCB feature article in the Worcester, Massachusetts Telegram & Gazette:

[This article reinforces the positive vibes I felt (and posted about) from GTC’s recent quarterly conference call and, just last week, the webcast from Paris, France. See, especially the comments by Tom Newberry about 2/3 of the way into the article.

(For those unfamiliar with New England geography, Worcester is the largest city in Central Massachusetts, where GTC’s pharm is located. GTC’s corporate HQ are in Framingham, a western suburb of Boston.) Thanks to ‘goathearder_2001’ on the Yahoo board for this find.]

http://www.telegram.com/apps/pbcs.dll/article?AID=/20050508/NEWS/505080633/1002/BUSINESS

>>
From goat to champion

ATryn approval would be GTC milestone — and mark genetic-engineering first

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

FRAMINGHAM— Fourteen years after unveiling its first genetically engineered goat, an animal that was to launch an era of dairy farming for medicine, GTC Biotherapeutics Inc. may finally be nearing the approval of its first drug.

The company, which operates a sprawling goat farm in Charlton, is answering questions posed by European regulators about a blood protein called antithrombin III, and it may know by the end of the year whether it will be allowed to sell the protein across Europe.

Although the initial market for the product, named ATryn, would be small, GTC believes the potential for its business could be large. ATryn would likely be the first approved product derived from a genetically engineered animal, and that could set GTC up for regulatory review in the United States and the general acceptance of future products from genetically altered animals.

“When we execute on ATryn, not only do we unlock the value of this product, we unlock the whole value of our technology platform across the range of products which we’re developing,” Geoffrey F. Cox, GTC’s president, chief executive officer and chairman, said last week at an investment conference in Paris.

In the biotechnology world, GTC Biotherapeutics is a survivor. Its name has changed — it was once known as Genzyme Transgenics Corp. It has added and shed operations, notably a testing services business in Worcester that is now owned by Charles River Laboratories Inc. It sought expansion by buying a second farm in New York state but has pulled back, putting the land up for sale.

GTC has lost $114 million in the last five years. Its financial cushion of cash and marketable securities, which totaled $90.4 million at the end of 2001, was down to $22.3 million as of Jan. 2. The company that launched it, Cambridge-based Genzyme Corp., now owns about 13 percent of the company’s stock.

Yet with about 130 employees and 1,500 goats, GTC is still trying to accomplish the same thing it set out to do years ago: use goats to produce proteins that might be difficult or expensive to manufacture in traditional biotech factories.

That agenda has placed GTC in the position of showing skeptical regulators and a wary public that medicines derived from genetically altered animals are safe for humans.

“In general, I think the governments’ position on these have swung to a more conservative level,” said Eric W. Overstrom, professor and head of the biology and biotechnology department at Worcester Polytechnic Institute. “What started out 10 years ago being a very doable science has turned into regulatory hurdles that are very high.”

Success could bring GTC profits, although not immediately. The investment bank SG Cowen & Co. estimates that GTC sales could grow to $65 million in 2009, the year that the company might turn profitable.

GTC “would be positioned to outperform its peers if ATryn can gain just a minority share of the European Union plasma-derived AT III market,” analyst Philip Nadeau of SG Cowen recently wrote.

First up for GTC is blood plasma proteins. Blood proteins were traditionally produced by extracting the proteins from donated units of human blood. Sometimes donors received products pooled from many different donors.

More recently, biotechnology companies have developed ways to manufacture certain proteins by multiplying them in cell culture systems. Typical plants, filled with massive stainless steel tanks for brewing up batches of proteins, can cost hundreds of millions of dollars.

GTC has long argued that it can do the same thing with a small number of goats for a fraction of the cost. Not that the process is easy. GTC scientists generate a genetically engineered goat by extracting a fertilized egg from a female goat and then, under a microscope, inserting a human gene and a “promoter” gene into the egg. The human gene provides the code for producing a specific protein, and the promoter makes sure the protein gets produced in milk.

GTC workers place the altered egg into a surrogate mother goat. If all goes well, five months later, a kid carrying the human gene is born. These first-generation animals, or “founders,” can be bred after about a year to produce more “transgenic” animals. Females carrying the gene can be milked, and the protein separated out and purified from the milk. A single goat can produce up to 3 kilograms of protein per year, according to GTC.

The first products that could come from GTC are not new products. Antithrombin, the active protein in ATryn, has long been manufactured from human blood components. The same is true for other GTC projects aimed at producing recombinant versions of human albumin and Alpha-1 antitrypsin, other proteins found in blood plasma [also AFP from Merrimack].

Antithrombin is a component of human blood plasma that inhibits clotting. Although some blood clotting is necessary, unchecked clotting can lead to strokes and death.

A small number of people — an estimated 60,000 in the United States and another 80,000 in Europe — inherit an antithrombin deficiency. For those people, a traumatic health situation can be life-threatening.

GTC is initially developing ATryn for people with inherited antithrombin deficiencies who are undergoing risky procedures such as childbirth or surgery. The drug, in liquid form, would be administered at hospitals.

Human studies of the drug have been relatively small. Using a roadmap laid out by European regulators, GTC first tested ATryn in 15 patients, then studied its effectiveness in five surgical patients and nine women in childbirth.

The company reported that the drug was well tolerated and caused no bad effects. Two patients developed clots, but neither case resulted in illness, GTC reported.

In early 2004, GTC filed a Market Authorization Application with the European Medicines Agency. The company expects to file answers to a second round of regulators’ questions by July 8 and receive an opinion in about October. That could clear the way to begin selling ATryn in Europe in early 2006.

GTC is seeking a European partner or multiple partners to help market ATryn in Europe, where antithrombin sales last year totaled $100 million. But the company could also sell the drug on its own with about six sales representatives if it does not like the terms available from potential collaborators, company officials said. [I don’t think the company previously disclosed the number six in this context.]

Although ATryn is coming from an unconventional source — goats — that seems to be less of an issue with European regulators than the processing and purification of the protein from the goat milk, according to Thomas E. Newberry, GTC vice president of corporate communications.

“Nothing that we have seen in this process, either the original questions or the outstanding list, really goes to significant challenges or constraints around the expression of the protein into the milk,” Mr. Newberry said. “If you think about that from a purely scientific perspective, it really isn’t all that tremendously different from how a cell expresses a protein out into a surrounding biomedia.

“The focus is more, once it’s expressed, you’ve got a unique starting material that you’re putting through various filtration and purification steps,” he said. “How is it that you’re dealing with that?”

The company is also beginning a 17-person study of ATryn in the United States. The U.S. Food and Drug Administration has agreed to accept data from that trial, as well as the European trial, if compared to historical cases of people with antithrombin deficiency, Mr. Newberry said.

That could set up GTC to file an application for ATryn late next year and, if approved, launch sales in late 2007, company officials said.

The development period for GTC has stretched out as regulators in both Europe and the United States grapple with public concerns about safety, according to Mr. Overstrom of WPI. Concerns about genetically modified organisms, especially food, have been strong in Europe, and U.S. concerns about drug safety have risen in recent months with revelations of the dangers of FDA-approved drugs such as Celebrex and Vioxx.

“I think it remains a very promising therapeutic strategy,” Mr. Overstrom said. “The issue is, when is the safety versus the risk going to tip the balance to allow this to be used for therapeutic use?”

The market for antithrombin is small compared to most of the diseases that biotech and pharmaceutical companies tackle. GTC estimates that just $10 million in antithrombin gets sold in the United States. Worldwide sales total about $250 million.

In the United States, the only approved antithrombin product is Thrombate III, formerly sold by Bayer AG of Germany and now sold by Talecris Biotherapeutics Inc. of Research Triangle Park, N.C.

Talecris acquired the blood plasma products business of Bayer AG on April 1. Talecris declined to comment on GTC.

GTC officials think they can expand the demand for antithrombin by offering a robust supply that could be used for additional medical purposes, including heart bypass operations, severe burns, perforated bowels and sepsis, Mr. Cox said. That could drive antithrombin annual sales to $500 million to $700 million, he said.

“If you take all the plasma which is collected in the United States today, and you make as much antithrombin from that plasma as you can, you can make about 100 kilograms, and we can make that from 150 goats,” Mr. Cox said last week.

“In other words, making 100 kilos is a pretty trivial exercise for us. It’s a very, very powerful technology, but not only does that mean we have the ability to compete, we have the ability to create markets and sustain markets in a way in which plasma-derived products cannot compete,” he said.

Business reporter Lisa Eckelbecker can be reached at [e-mail].
<<