Lacklustre PPL threatens US move

PPL THERAPEUTICS, the company behind Dolly, the controversial cloned sheep, disappointed the City yesterday with lacklustre results for the year ending December.

The company also threatened to move to the United States if it could not secure funding for a new plant.

PPL is struggling to raise pounds 45m to build a new facility in Scotland. It claims it has received offers from American states, including Virginia, but admits it could be difficult to persuade its scientists to make the move.

The plant would be used to develop AAT, a cystic fibrosis treatment. AAT, which aims to reduce the lung infections caused by cystic fibrosis, is derived from the milk of genetically modified sheep and is the group's most advanced product. It aims to begin phase three of clinical trials within the next year with the backing of a partner.

The City had expected the 35 per cent rise in pre-tax losses to pounds 14.25m, but analysts said they had been hoping for an announcement regarding the partner needed to fund the launch of AAT. Nick Woolf, senior analyst at BancBoston Robertson Stephens, said: "They're still missing the elusive partner we've been expecting for some time.

"They need the partner to fund phase three and to validate the drug. With pounds 25.8m cash they've got another 18 months' money, but we know they'll need more," said Mr Woolf.

Dr Ron James, PPL managing director, said that the February results of the phase two clinical trials of AAT were "very pleasing".

Dr James added that "initial reactions from two of our potential marketing partners are very positive". Nonetheless, analysts concede that the sector has suffered unduly from excessive hype which has fuelled unrealistic expectations.

"PPL is attractive," said Mr Woolf. "They are at a quarter of the price they were at when they went public, but they have clearly made progress since then with AAT."

Julie Simmons, biotech analyst at Beeson Gregory, said: "We're not quite as bullish as in the past, but we still consider that the shares are undervalued. On a fundamental basis they should be a buy."