WORLD’S FIRST ANNOUNCEMENT OF CLONED ‘KNOCK-OUT’ PIGS

[Guest guest]

WORLD'S FIRST ANNOUNCEMENT OF CLONED `KNOCK-OUT' PIGS

January 2, 2002

Christmas-born pigs are a major step towards successful production of

animal organs and cells for human transplantation use

PPL Therapeutics Plc, one of the world's leading biopharmaceutical

companies in the application of transgenic technology to the

production of human proteins for therapeutic and nutritional

applications, is pleased to announce it has produced `knock-out'

piglets which were born as a result of using nuclear transfer

(cloning) and PPL's patented gene targeting technology. The five

healthy births took place on Christmas Day, 25 December 2001. It has

always been the objective of PPL's xenotransplantation programme to

produce `knock-out' pigs. In future, this vital step should enable

organs and/or cells from such animals to be transplanted into humans

and not be rejected by the human recipient. A `knock-out' pig has the

specific gene that leads to the human immune system rejecting pig

organs inactivated.

The announcement today achieves a key milestone that PPL has pursued

in the area of xenotransplantation. In view of the fact that PPL's

financial resources are being focused primarily upon bringing its

lead product recAAT, for the indication hereditary emphysema, to the

market as quickly as possible, PPL proposes to find a `spin out'

partner to take the `xeno' and stem cell areas forward. This

development demonstrates PPL's leading position in this area and it

will be of significant interest to all companies involved in

transplant technology.

Pigs are the preferred species for xenotransplantation on scientific

and ethical grounds. It is anticipated the first application of this

technology will be the testing of insulin-producing islet cells for

the treatment of diabetes from the `knock-out' pigs, first in

primates, and soon thereafter in humans. Clinical trials could start

in as little as four years and analysts believe the market could be

worth over $5 billion for solid organs alone, and $6 billion for

cellular therapies for Diabetes, Parkinson's and Alzheimer's Diseases.

The gene that has been `knocked-out', the alpha 1,3 galactosyl

transferase (GT) gene is responsible for making an enzyme that adds a

sugar to the surface of pig cells which is recognised by the human

immune system as foreign, and which therefore triggers an immune

response leading to hyperacute rejection by the human patient, of the

transplanted organ or cell, within minutes. The ability to delete

or `knock-out' this gene, therefore, provides a vital step in

producing pigs with organs and cells useful in humans.

PPL's comprehensive xenograft programme relates to both its

technology and its Intellectual Property portfolio. In addition to

overcoming early hyperacute rejection, the Company has also shown

proof-of-concept and has patents for solutions for all aspects of

xenograft rejection including delayed xenograft refection,

coagulopathy, and chronic T cell mediated rejection. Thus the `GT

knock-out' pig will serve as the platform for adding up to three more

genes, and include a T cell tolerance regime to address all stages of

rejection.

The `knock-out' work was carried out by PPL Therapeutics Inc, PPL's

US subsidiary located in Blacksburg, Virginia, and was partly

supported by an ATP Grant from the US Government's National Institute

of Standards and Technology (NIST). The piglets, all females, were

confirmed through DNA tests to have one of their two copies of the GT

gene inactivated. They have been named: Noel, Angel, Star, Joy and

.

Ron , Director at PPL said:

" Today's announcement is a natural breakpoint for PPL to spin out the

valuable technology it has developed thus far. In light of this news,

finding a third party at this particular time to take forward this

very exciting area of science, which addresses major markets, will

ensure that PPL's shareholders gain maximum value, whilst protecting

the Company's limited cash resources needed to bring its lead

product, recAAT, to market as quickly as possible. "

Alan Colman, Research Director at PPL said:

" The successful cloning of these pigs is a major step in achieving

PPL's xenograft objective. Together with the Roslin Institute, we

were the first to clone an adult mammal, Dolly. PPL was also the

first to demonstrate gene targeting in livestock, the first to clone

pigs, and now the first to report alpha 1,3 `GT knock-out' in pigs

for xenotransplantation. With one of the major technical hurdles and

scientific risks overcome, the promise of xenotransplantation is now

a reality, with the potential to revolutionize the transplant

industry " .

Dr. Ayares, COO and VP of Research at PPL's US Division stated:

" The birth of these pigs is a critical milestone in our xenograft

programme and should spark renewed vigor from both the scientific and

investment communities. This advance provides a near term solution

for overcoming the shortage of human organs for transplants as well

as insulin-producing cells to cure diabetes.