GTC Biotherapeutics, Racing Against Time to Prove the Worth of “Pharming”

As a rule, getting a drug on the market turns a biotech startup from a buck bonfire into a cash cow—or at least a cash calf. But rules tend to get broken. Just ask GTC Biotherapeutics. In mid-2006, European drug regulators approved the Framingham, MA-based company’s first medicine, ATryn, a protein for blocking risky blood clots. Trumpets blared: It was the first drug made in bioengineered animals—genetically altered goats on GTC’s famed “pharm” near Charlton, MA, produce the medicine, a human blood protein called antithrombin, in their milk. Pharming’s longstanding promise—the ability to churn out large quantities of protein drugs at relatively low cost—was finally a commercial reality.

But despite making history, GTC was soon pegged by investors as little more than a cash embryo. ATryn, which GTC had licensed to Denmark’s LEO Pharma, was approved to prevent blood clots in patients with a rare, inherited antithrombin deficiency who were undergoing surgery. Annual sales, perhaps only a few tens of millions of dollars, wouldn’t come close to making GTC profitable. Last year the company’s shares drifted under a dollar each, prompting the NASDAQ Stock Market to notify GTC in January that its stock was headed for delisting. Last Friday the company underscored its cash-strapped status by announcing that it had agreed to sell 6.9 million shares to institutional investors at a fire-sale price of 87 cents a piece. Following the announcement, its share price fell below 80 cents.

You’d think all this would get CEO Geoffrey F. Cox’s goat. But when I talked to him last week, he sounded upbeat, reeling off a number of reasons GTC’s stock price isn’t likely to linger in the sub-buck-a-share danger zone for delisting.

First, he noted, GTC is in talks with a “number of parties” interested in partnering with it to commercialize ATryn in the U.S. (GTC said earlier that it hoped to complete the deal by the end of this quarter). “It’s very tough to predict with certainty” that that timing goal will be met, Cox added. “Nothing’s gone wrong—the negotiations are going very well. But these things take time, and I’m anxious to do the right deal rather than do one just to meet a timeline.” GTC’s negotiating position just got a bit stronger—it recently racked up key clinical data for ATryn’s U.S. approval.

A partnership would add sorely needed funds to GTC’s coffers. As of September 30, the company had only about $21.8 million in cash, less than its net loss of $26.5 million for the first nine months of 2007. (The latest stock sale announced Friday brought in some $6 million.) It would also put ATryn on the road to correcting antithrombin deficiencies much more prevalent than the rare, inherited one it’s approved to treat.

One such deficiency sometimes occurs in patients undergoing coronary artery bypass surgeries—potentially a $150 million to $200 million-a-year market, according to Cox. Another is disseminated intravascular coagulation, or DIC, which can cause deadly blood clots in patients with severe infections, an indication GTC sees as potentially a multi-billion-dollar market. LEO Pharma, GTC’s European partner, is conducting a Phase 2 trial with ATryn for DIC patients. “Hopefully LEO will complete patient recruitment over the next year or so,” Cox said. The trial might be followed by a large, international Phase 3 study sponsored by LEO and GTC’s to-be-announced U.S. partner, speeding ATryn’s approval for DIC in both Europe and the U.S..

GTC also plans to produce a protein called factor VIIa, used to treat hemophilia. Currently extracted … Next Page »

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