In a setback for a controversial area of biotechnology, the company that led the way in trying to produce pharmaceuticals in genetically modified crops ran out of money and shut its doors on Friday.
The company, the Large Scale Biology Corp, based in Vacaville, California, said in a statement on Thursday that all of its approximately 70 employees had been let go.
Large Scale was founded in 1987 as Biosource Genetics and was apparently the first company to try to produce protein-based drugs and industrial chemicals in genetically engineered plants.
Such production, it argued, would be faster and far less expensive than using genetically engineered bacteria or animal cells, which is the usual method of producing pharmaceutical proteins like insulin and growth hormone.
But environmental groups and food companies have expressed opposition to pharmaceutical-producing crops, saying that drugs might accidentally end up in the food supply, causing health problems and forcing costly product recalls.
Large Scale used tobacco, a nonfood crop, so its technology was somewhat less controversial than that of companies using corn or rice. And under the method used by the company, the genes put into the tobacco plant could not be spread by pollen.
Still, controversy over agricultural biotechnology in general has made it difficult for small companies in that business to raise money.
Robert Erwin, a founder and the chairman of Large Scale, said the bigger problem for his company was the reluctance of drug companies to have their products developed in crops. Since there are no crop-produced pharmaceuticals on the market yet, he said, drug companies do not know how easy it will be to win approval for such drugs from the US Food and Drug Administration.
"Everybody wants to be the second one out," Erwin said. "There are very few corporate executives willing to bet on an unproven process."
Moreover, he said, pharmaceutical crop developers are wrong in assuming that lower production costs are an important consideration for drug companies.
With high prices for their drugs, Erwin said, "cost is not really an issue for them."
Large Scale's demise is a blow to Owensboro, Kentucky, in the heart of tobacco country, where Large Scale has a factory to extract drugs from the tobacco.
In the company's statement, the chief executive, Kevin Ryan, said that Large Scale was "taking steps to preserve our assets for the benefit of our creditors and stockholders."
The company said it was still in talks with potential collaborators on deals that could raise money and is also talking with potential acquirers.
The company went public at US$17 a share in 2000, the year of a biotech investing frenzy in which dozens of companies issued stock.
Even after a recent reverse split aimed at building up the price per share by reducing the number of shares, the stock closed at US$0.19 on Friday.
That was to be its last day of trading on a NASDAQ market because the company said it would not appeal a decision by NASDAQ to delist it.
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