Univ. of Pittsburgh Medical Center leads group buying PPL'S cloning, stem cell business

April 09, 2003

PITTSBURGH, April 8 - The University of Pittsburgh Medical Center (UPMC) and other investors have formed Regenecor Holdings, Inc., a privately held Delaware corporation, to acquire PPL Therapeutics, Inc., of Blacksburg, Va., a wholly owned subsidiary of PPL Therapeutics Plc of Scotland.

PPL is considered one of the world's leading companies in the application of transgenic technology for the production of human proteins for therapeutic applications.

In the deal made final today, PPL transfers all of its regenerative medicine business assets and associated intellectual property and patent applications to Regenecor. PPL has retained a minority equity position in the new company.

PPL's regenerative medicine business sold to Regenecor includes research and development programs in three core technology areas: xenotransplantation (cross-species transplantation), the most advanced of the three, which aims to address the critical shortage of human organs for transplantation by making use of organs and tissues from cloned pigs; stem cell technologies focused on production of therapeutic cell lines for possible treatments for diabetes and neurological diseases; and infectious disease platform technologies, making use of human polyclonal antibodies in genetically modified livestock that may yield vaccines against biowarfare agents such as anthrax and smallpox as well as infectious viruses like HIV and hepatitis.

"This is a natural investment opportunity for UPMC. In taking the lead to form Regenecor, not only are we are taking to the next level a productive scientific collaboration that has existedbetween the University of Pittsburgh's Thomas E. Starzl Transplantation Institute and PPL, but we have an opportunity to bring together some of the greatest minds in regenerative medicine as well. We believe that through Regenecor's business infrastructure we can make important scientific strides, with each stage of development being made efficiently and inexpensively. We are indeed positioned to develop technologies that will have a significant impact on people's lives," said Jeffrey Romoff, president of UPMC.

In addition to UPMC, other key investors are Highmark Health Ventures Investment Fund of Pittsburgh; Fujisawa Investments for Entrepreneurship, LP; and Fujisawa Investments for Entrepreneurship II, LP, of Wilmington, Del.

By partnering with the renowned research teams from UPMC and the University of Pittsburgh's Thomas E. Starzl Transplantation Institute, which has been working with PPL for the past three years, Regenecor plans to leverage PPL's scientific advancements in stem cells, xenotransplantation and immune tolerance technologies with an initial focus on developing treatments for diabetes and pursuing whole organ transplantation using animal organs.

Existing federal funding from the National Institute of Standards and Technology's Advanced Technology Program will support the production and differentiation of stem cells from non-human primates and livestock species, and a multi-year contract with the U.S. Department of Defense's Defense Advanced Research Projects Agency will allow continued support of the polyclonal antibodies program for biological warfare countermeasures.

It is anticipated that collaborations will be developed in all three technology areas similar in nature to the fruitful one that has existed between PPL and the Starzl Transplantation Institute since April 2000.

Starzl Transplantation Institute researchers first joined forces with PPL's xenotransplantation team following PPL's creation in March 2000 of the world's first cloned pigs. Chief among the Pittsburgh researchers was Chihiro Koike, M.D., Ph.D., assistant professor of surgery, whose gene sequencing work contributed a key understanding that allowed PPL to move forward and achieve two more significant milestones involving the creation of cloned pigs lacking the gene associated with hyperacute rejection, thus removing a major immune barrier between pig and human and making transplants from animals to humans more feasible.

In January 2002, PPL announced the birth of pigs lacking one copy of this gene for the enzyme alpha1, 3 galactosyl transferase (alpha-gal), which adds a sugar to the surface of cells that the human immune system immediately recognizes as being foreign. Then in August of that year, PPL announced the birth of a litter of double-knockout pigs, each lacking both copies of the gene responsible for making the alpha-gal enzyme.

In recent studies performed by the PPL and Pittsburgh teams and reported in Science, cells taken from one of these double-knockout pigs did not elicit the usual hyperacute rejection response when transplanted into mice. These results and a description of the double-knockout pigs were published on the journal's Web site Dec. 19, 2002.

"It was fortuitous in many ways that we were able to establish a collaboration with PPL when we did. Indeed, the molecular biology work of Dr. Koike and others at the University of Pittsburgh provided PPL with an important piece to the puzzle that allowed their accomplishments with gene deletion to occur. In my opinion, it seems even more fortuitous that these teams can continue to work together, as their prior work will form the basis for moving forward into the future, and our team's recent discoveries related to the mechanisms of human engraftment and tolerance enhances an already impressive store of intellectual talent," noted John J. Fung, M.D., Ph.D., the Thomas E. Starzl Professor of Transplantation Surgery at the University of Pittsburgh School of Medicine and director of the Thomas E. Starzl Transplantation Institute.

According to Regenecor, there are currently five double-knockout pigs from two litters, three from a litter born in July 2002 and two that were born in September. Additionally, pregnancies from breeding of several single-knockout pigs will likely produce up to 40 more double-knockout pigs by the end of this summer.

To operate its xenotransplantation and other businesses, Regenecor Holdings has formed two subsidiaries. Regenecor Inc. of Virginia retains PPL's existing work force and infrastructure in Blacksburg, where all current work will continue, including the expansion of its cloned pig herd for xenotransplantation. Regenecor (PA), Inc. will carry out pivotal animal and clinical studies involving pancreatic islets cells and whole organs.

Such studies will commence after review by appropriate government bodies and will only involve clinical studies in accordance with federal guidelines. Following these and other studies, Regenecor-sponsored human xenotransplant trials could take place at UPMC at some point in the future.

Regenecor Holdings will be governed by a board of directors with Amadeo Marcos, M.D., professor of surgery and clinical director of transplantation at the Thomas E. Starzl Transplantation Institute and the University of Pittsburgh School of Medicine, as its chairman. David Ayares, Ph.D., formerly COO and vice president of research at PPL, has been named CEO of Regenecor Inc. and a member of the board of Regenecor Holdings. Thomas E. Starzl, M.D., Ph.D., professor of surgery at Pitt's School of Medicine, will chair the company's scientific advisory board.

In addition to the 24 employed in Virginia, Regenecor will draw upon the talent and resources of leading scientists at the University of Pittsburgh and other institutions through various collaborations. Over time, new jobs could be generated in both Virginia and Pittsburgh.

To support Regenecor's Pittsburgh-based start-up operations, the Pittsburgh Life Sciences Greenhouse has committed $100,000 for the purpose of rental support and capital equipment expenses. The commitment recognizes Regenecor's potential to stimulate job growth and enhance the region's life sciences and biotechnology community.
About Regenecor Holdings, Inc.

Regenecor Holdings, Inc. is a privately held Delaware corporation consisting of two subsidiaries: Regenecor Inc. of Virginia located in Blacksburg, Va., and Regenecor (PA), Inc. located in Pittsburgh. Regenecor Holdings was formed by the University of Pittsburgh Medical Center, Highmark Health Ventures Investment Fund and Fujisawa Investments for Entrepreneurship, LP; and Fujisawa Investments for Entrepreneurship II, LP, of Wilmington, Del. to acquire the regenerative medicine business assets of PPL Therapeutics Inc., (xenotransplantation, stem cell technology and infectious disease platform technologies) and all intellectual property associated with these programs. Regenecor will focus on developing treatments for diabetes and using transgenic technologies to address the critical shortage of human organs for transplantation based on the scientific advances made by PPL in the fields of stem cell research, xenotransplantation and immune tolerance.

Regenecor has core competencies in stem cell biology, molecular biology, nuclear transfer (cloning), embryology, immunology and transgenic animal technology. In addition to the regenerative medicine portfolio, Regenecor also has research programs in the production of polyclonal antibodies in livestock, as well as the prevention of infectious diseases in livestock.

About the University of Pittsburgh Medical Center and the University of Pittsburgh Thomas E. Starzl Transplantation Institute: The University of Pittsburgh Medical Center is a non-profit, comprehensive academic health care system affiliated with the University of Pittsburgh Schools of the Health Sciences. It is considered the leading integrated health care delivery system in western Pennsylvania and is one of the largest health systems in the United States. UPMC consists of a network of 19 tertiary, specialty and community hospitals and has more than 35,000 employees, making it the largest employer in western Pennsylvania.

The University of Pittsburgh's Thomas E. Starzl Transplantation Institute is named in honor of transplant pioneer Thomas E. Starzl, M.D., Ph.D., who performed the world's first liver transplant in 1963. The Institute is world renowned for its cutting-edge research contributions and sheer volume of experience. Since 1981, more than 12,000 transplants have been performed at the University of Pittsburgh, a single-center experience unmatched by any other program in the world. While at the University of Colorado, Dr. Starzl performed the world's first baboon-to-human kidney transplants in 1963 and in 1992 and 1993, he directed the world's first baboon-to-human liver transplants at the University of Pittsburgh. Researchers at the University of Pittsburgh have since made significant advancements in the field, including through collaborations with PPL Therapeutics.

Lisa Rossi
Jane Duffield
PHONE: 412-647-3555
FAX: 412-624-3184

University of Pittsburgh Medical Center

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