Progen sells unit to NZ supplier

Progen (ASX:PGL) has sold its life sciences business unit to New Zealand-based Global Science and Technology (GST) for AUD$1.2 million.

The sale completes Progen's transition from a distributor of life sciences reagents and consumables -- the Queensland company's initial focus -- to a cancer drug discovery and development company.

"The life sciences business sale is part of a deliberate strategy that will allow Progen to further sharpen its focus on their core competencies in the area of cancer drug discovery and development," said managing director Lewis Lee.

"We have chosen to divest the business unit to allow a reputable focused player in this market sector to undertake the next growth phase and allow us to concentrate our efforts on the greater value proposition for Progen in cancer drug development."

He thanked the unit's staff and manager Rodney Stewart for their achievements.

Business development manager Sarah Meibusch said the company had over the last three years set up the life sciences business unit to be profitable in order to make it an attractive sale.

GST, a subsidiary of listed New Zealand healthcare and scientific supplies company EBOS group (NZX:EBO.NZ), will acquire the entire unit, including employees and will use it to establish a presence in Australia, Meibusch said. The formal transfer is expected to occur by the end of the month.

Among the brands distributed by the unit are Eppendorf, Pierce Biotechnology, Fermentas and HyClone.

The company will retain its contract manufacturing business unit, which unlike the life sciences unit, commands a high margin and plays an important in manufacturing the company's lead anti-cancer product PI-88, Meibusch said.

With the sale of the unit, Progen now has $16 million in cash reserves, which Meibusch said would fund the company for well over two years.