A photo caption with an article Monday on a Massachusetts company's plans to produce drugs in goat milk incorrectly described which goats would make the drugs. The drugs would be produced not by the goats in the picture, which were implanted with embryos containing extra genes, but by their offspring. (Published 01/19/00)

On a rustic expanse of woods and fields and barns not far from here, a fifth-generation dairy farmer in blue coveralls tends a bleating, affectionate herd of goats. The rituals of rural life play out every day: Feed the goats. Milk the goats. An 1850 farmhouse, restored to splendor, welcomes visitors, and an old buggy trail wends across the land.

The future, it seems, is going to look a lot like the past.

But not entirely. Just yards from the barns and the buggy trail, people in laboratory coats peer through microscopes while expensive machinery whirs. Phrases like "protein expression" and "embryonic microinjection" are thrown around as casually as old-time farmers discussed the weather. In the century of wonders now dawning, this old dairy farm is likely to be a showplace, an exhibition of the possibilities of technology.

Some of the goats on the farm, run by a company called Genzyme Transgenics Corp., have human genes in them. Others have genes not found in nature, genes produced by human artifice. In their milk, the nanny goats produce drugs. Old MacDonald's farm it isn't: One goat is expected to make drug-laden milk worth as much as $30 million a year.

Genzyme is competing with two companies, including the one that helped create Dolly the cloned sheep, to be first to bring to market a drug produced in "transgenic" animals. At all three companies, the logistics of producing drugs this way have largely been solved--their scientists have repeatedly shown it can be done. What remains is to commercialize the technology, known as "pharming," and in that goal Genzyme has a jump on its competitors: It is farther along than any other company in human testing of a transgenically produced drug.

Last week the firm reported positive test results of the compound, a protein believed to aid in preventing blood clots during heart-bypass surgery. It was the second major study to suggest the drug works, and a final test is under way. If the results hold up, Genzyme could win approval from the Food and Drug Administration to sell the drug by sometime next year.

The anti-clotting drug is just an opening salvo, however. Working with other companies that want cheaper, easier ways to make drugs on a large scale, Genzyme has produced more than 60 in the milk of mice, an initial test of whether the method will work for a given drug. Goats on the farm are making 11 drugs at potentially commercial levels.

As soon as Genzyme has proven drugs produced this way can win regulatory approval, it's likely other firms will commit. A dozen drug companies have established research collaborations with Genzyme aimed toward commercial production.

"Your drug may soon come from the farm near you," said Sandra Nusinoff Lehrman, the company's president and chief executive.

At a handful of spots around the world, including an old family farm outside Blacksburg, Va., the efforts of companies like hers are changing the landscape. Cutting-edge science is joining forces with farmers' ancient knowledge of the ways of animals. A handful of savvy localities are courting these operations, hoping for jobs and a new vitality down on the farm.

Making Milk Valuable

Genes are instructions for making proteins, some of them useful as drugs. In the late 1970s, at the dawn of the biotechnology era, scientists stuck animal and human genes into bacteria and into hamster cells, essentially hijacking their cellular machinery to create microscopic drug factories. Human insulin for diabetics, human growth hormone for children with dwarfism--these and other breakthroughs flowed from the new science. Today, scores of drugs are made this way, in individual cells that grow by the trillions in giant, high-tech vats called bioreactors.

But a building full of these reactors can cost $30 million and up. Such factories can be tricky to run. And some types of complex proteins can't be made efficiently--or at all--in bioreactors.

Thus in the 1980s, people hit on the idea of sticking human genes into animals. One of the first to think of it was Harry M. Meade, a Boston area scientist who now works for Genzyme Transgenics. He knew the whole purpose of mammary glands is to produce a suspension of proteins, otherwise known as milk. Milk glands are, in effect, miniature bioreactors, perfected for protein production by millions of years of evolution. They can handle the most complex jobs.

And Meade knew from personal experience that farm animals can make milk in vast quantity--he grew up on a dairy farm and still goes back every summer. "I don't think I would have thought of this if I hadn't," he said. "My father used to say, 'If you want to help the farmer, make milk valuable.'"

The earliest efforts of researchers like Meade were frustrating. Scientists had to isolate the gene encoding a particular protein, then inject it into microscopic animal embryos, hoping it would take up residence at an appropriate spot in the animal's genetic code. Such challenges helped give rise to Dolly the cloned sheep, on the theory that once an animal with the proper genetic profile is created, cloning it might be a fast way to produce a herd.

But over many years, techniques improved. At Genzyme, producing an animal that can make a drug costs about $5 million--much less than building a factory of bioreactors. Once they have a "founder" animal that contains the necessary genes, companies like Genzyme can expand rapidly. "If we need to scale up, we just breed more animals," said Suzanne Groet, a company manager.

That is precisely what Genzyme has done to produce anti-thrombin III, a human protein that plays a vital role in regulating blood clotting. People about to undergo heart-bypass surgery need high levels to keep from being killed by excessive clots. The drug now is made from donated blood, but is in short supply and carries a risk of contamination by viruses. Historically, bio-engineered products have tended to drive blood-derived versions off the market.

Nobody has grown human anti-thrombin III efficiently in bioreactors. Genzyme has created more than 50 goats that can make it. Their milk is collected and put through exhaustive purification steps until nothing is left but the drug. So far, Genzyme's tests indicate it works just as well as the protein derived from blood.

"It's very close to becoming real," said Jerrold Levy, director of cardiothoracic anesthesiology at the Emory University School of Medicine in Atlanta, who has helped to test the Genzyme drug. "This is a wonderful opportunity to have an unlimited supply of a protein that has incredibly important therapeutic applications."

Because its uses are so specialized, the drug is not likely to be a blockbuster--Genzyme, in fact, deliberately picked off a modest product as its test case. S.G. Cowen Securities Corp. recently pegged the worldwide market for anti-thrombin III at $200 million.

Its licensure would prove a point, however, and Genzyme is preparing to follow up with a far more ambitious array of proteins. "We are not a one-trick pony--or a one-trick goat," Lehrman said. "We have lots of bets on the table."

It's All in the Genes

Transgenic production, for example, is looking more and more like an ideal technique for making a new class of drugs called monoclonal antibodies.

Antibodies are immune-system proteins that attack foreign invaders like germs--or that neutralize substances the body is over-producing. Monoclonal antibodies are artificial, highly purified antibodies, made by combining animal and human genetic material, that work with exquisite precision in small doses. As treatments, these drugs were a failure for 20 years, but lately they have become one of the hottest areas of medicine.

Centocor Inc. of Malvern, Pa., was the first company to win approval for a monoclonal antibody treatment, called ReoPro. It blocks excessive clot formation during a procedure doctors use to clear clogged arteries. A second Centocor antibody helps sufferers of a severe bowel ailment, Crohn's disease, and that same drug, Remicade, has recently been proven to arrest the joint damage typical of advanced rheumatoid arthritis. Centocor and dozens of other companies are working on new antibodies of similar import.

Like 11 other companies, Centocor has cut a deal with Genzyme to investigate production of its drugs in goats. "We're likely to make a major commitment in the next few months," said Fred Bader, vice president of worldwide operations at Centocor. "There's no question in my mind they can produce antibodies in goats."

If indeed animals prove their value in such an undertaking, Genzyme will be in a commanding position, for the company has won a patent that gives it exclusive rights to transgenic antibody production. Barring a successful legal attack, the company's competitors, PPL Therapeutics PLC of Edinburgh, Scotland, and Pharming N.V. of Leiden, the Netherlands, are likely to be shut out of antibody production for years.

Genzyme Transgenics has appeared lately on Wall Street's radar screen. Its stock has risen nearly 160 percent since Nov. 1, closing Friday at $14.87 1/2 a share. Hambrecht & Quist, a securities firm, told investors recently that Genzyme was "uniquely positioned to benefit from the biotechnology industry's need for more efficient protein production systems."

Genzyme Transgenics is an offspring of a group of Boston area companies with "genzyme" in their names, but--unlike the others--it is a separate company, and a majority of its shares are in public hands.

As they gear up for commercialization, Genzyme's executives find themselves confronting some strange business issues. How, for example, does a corporate accountant amortize a goat? Especially one worth millions? "We're blazing new trails here with our auditors," said John B. Green Jr., vice president and chief financial officer.

Genzyme is looking to expand beyond goats to cows, which produce more milk and are therefore better for drugs or nutrients needed in bulk. It has launched a startup program "in Iowa, where cows belong," said Michael W. Young, vice president of commercial development. "We have little farms in Massachusetts."

On the Genzyme farm, less than an hour from the company's headquarters in Framingham, scrupulous procedures have been set up to ensure the health of the goats, many of them imported at high expense from disease-free regions of New Zealand. The company has succeeded in cloning three goats, though it considers cloning an experimental technique, not one likely to find application in producing the first transgenic drugs.

Locals have welcomed Genzyme, though they certainly found the whole thing odd at first. Steve Woodis, a fifth-generation member of a farm family from the area, was dismayed by "the state of the dairy industry" and jumped at the chance to work at Genzyme when it came to town. Now he's the project's top real farmer, a bearded, bespectacled man fond of coveralls and caps and schooled his whole life in the ways of animals. He manages a team of farm hands.

"It was a little different at first," he said of working at Genzyme. "I took my share of ridicule from my peers. Now they all want to come work here."

CAPTION: Nanny goats, implanted with embryos injected with extra genes, will be able to produce drug-laden milk.