Progen half year results show revenue continues to rise

Half year results for drug developer Progen Industries reveal revenues from its contract drug manufacturing and life sciences sales and distribution arms continue to rise, helping offset development costs of its anti-cancer drug candidates.

Total operating revenues for the first half to December 31 climbed to $AUD3.05 million, about 29 per cent above the corresponding previous period while after tax operating losses rose 11 per cent to $AUD4.2. million.

The contract manufacturing arm saw revenues surge 332 per cent to $927,000 from the previous corresponding period while sales and distribution of life sciences products climbed 13.5 per cent to $AUD1.4 million.

The company says it expects continued strong performances in both areas will push full year revenues to $4.2 million compared with last year's $3.85 million.

With about $9 million in cash reserves, its first half results show that Progen is travelling comfortably, according to Lisa Springer, director of the biotechnology group in PricewaterhouseCoopers' corporate finance division and a former stock analyst who follows Progen.

"They have done a good job of growing their contract manufacturing revenues and getting some respect in the market for their capabilities in that area," she said.

R&D costs climbed by 19.7 per cent to $2.8 million, reflecting expenditures associated with the start of a fourth Phase I/II clinical trial for Progen's leading anti-cancer drug candidate PI-88, a new collaboration with the Australian National University's Research School of Chemistry and in-licensing of its PI-166 potential treatment for liver cancer.

A significant increase in losses occurred through Progen's cross-shareholding in Taiwanese biotech Medigen Biotechnology.

Its equity accounted share of MBC's losses zoomed 52.9 per cent to $887,000 from $580,000. The losses were due to increased MBC expenditures because of in-licensing initiatives, biotech investments and ongoing operational costs.

Aside from the exposure to MBC, Progen's 1H operating loss was $3.33 million, virtually level with the $3.28 million loss in the corresponding period.

The half year report card indicated the company is on track and focused on producing similar results over the full year, according to Progen CFO Milton McColl.