GTC Biotherapeutics now in a growth phase.

Byline: Bob Kievra

FRAMINGHAM - Until 2006, the business of making therapeutic proteins had not provided much comfort for GTC Biotherapeutics Inc.

A year ago, the 16-year-old transgenic technology company, which operates a 383-acre goat farm in Charlton, remained unprofitable and was dealing with a significant setback as European regulators initially rejected the company's blood-clotting treatment ATryn, a transgenic drug for surgery patients with an inherited antithrombin deficiency.

"We got a negative opinion and it was quite a surprise to us,'' said GTC Chairman and Chief Executive Geoffrey F. Cox. "But since that happened, the company's really gone through quite a transformation.''

Change is the business of GTC and the changes last year were all for the good - positive developments that may make 2007 one of the most important periods in its history, officials said. Profitability is not yet in sight, but the company is now in a growth phase, officials said.

Nothing was more important than last August's decision by the European Commission to approve European sales of ATryn, a development that made the product the first transgenically derived protein approved by any regulatory agency in the world. GTC hopes to expand the drug's use for other treatments in Europe next year and to have it in the U.S. market by 2009.

GTC's partner in Europe, LEO Pharma A/S of Denmark, plans to launch ATryn in Europe later this year and while the market may initially be small at 80,000 patients, the drug's use can be broadened, Mr. Cox said. He estimated a market of $500 million to $700 million if ATryn becomes an approved treatment for patients who might acquire antithrombin deficiency through burns, trauma, sepsis and septic shock, among others.

The company's drug pipeline depends upon its more than 1,200 goats which carry human genes, enabling them to produce recombinant proteins in their milk. Each female can produce 1 kilogram of protein over a 10-month long milking cycle. The milk is then purified to capture the antithrombin proteins.

Using animals to make therapeutic drugs has been on the drawing board for years but turning it into an approved drug that makes a company profitable has been an uphill struggle. That has now changed.

"We've now reduced this elegant science to the production of making drugs,'' said Thomas E. Newberry, vice president of corporate communications. "With the regulatory validation, we've moved into the product growth stage.''

Those products will also include a recombinant form of Factor VIIa, a protein in blood plasma involved in clotting.

LFB Biotechnologies, a subsidiary of LFB S.A. in Paris, invested $25 million in GTC last year, becoming its largest shareholder. The companies intend to make a treatment for hemophiliacs from the milk of genetically altered rabbits.

The much-needed investment boosted GTC's cash and marketable securities to about $50 million pro-forma at the end of 2006.

GTC's net loss for the first nine months of 2006 was $27.9 million, or 43 cents per share, compared to $21.8 million, or 46 cents per share, for the same period in 2005, when fewer shares were outstanding. Revenues for the first nine months totaled $3.3 million, down 6 percent from $3.5 million in the first nine months of 2005.

Cowen and Co. LLC analyst Philip M. Nadeau said GTC's platform is interesting because many different products can be produced through it, which speaks to the company's long-term potential. But investors tend to be very short-sighted and want products that will generate royalties and sales, he said.

"I think what they've done is wise in creating some near-term product opportunity,'' said Mr. Nadeau, who has an outperform rating on the company's shares. "They've really done a good job in getting ATryn approved in Europe. A year ago, that seemed unlikely.''

GTC Biotherapeutics Inc.

Headquarters: Framingham

Business: Therapeutic proteins; genetically engineered animals

Chief executive: Geoffrey F. Cox

Founded: 1993

Employees: 150