SYDNEY, Australia - A company in Taiwan will invest A$11 million (US$6.2 million) in Progen Industries Ltd. in Brisbane and hand Progen 19.9 percent of its company in return for the right to develop specific applications of a molecule owned by Progen.

Medigen Biotechnology Corp. (MBC), based in Taipei, Taiwan, intends to explore the use of PI-88 molecule, now being developed by Progen as a treatment for solid tumor cancers, and as a possible treatment for advanced liver cancer, nose and throat cancer, and mouth cancer. Those cancers, particularly advanced liver cancer, are common in Taiwan and throughout Asia.

The alliance agreement requires MBC to conduct one Phase II cancer trial, one Phase II cardiovascular trial and two "proof of principle" trials, with the Phase II trial testing the efficacy and safety of PI-88 in one of the three cancers.

PI-88 is believed to affect the formation of blood vessels and is being developed by Progen as a means of treating tumors by restricting their blood supply. As the molecule affects blood vessel walls, the company said it also can be used to prevent metastasis, and may well have applications as an anticoagulant, antithrombotic agent and in treating cardiovascular disease.

Late last year the company announced it would start a Phase I trial of the drug at the Royal Melbourne Hospital involving up to 40 advanced-stage cancer patients with a range of solid tumors, who no longer respond to standard therapies. (See BioWorld International, October 6, 1999.)

Progen Managing Director Lewis Lee said liver cancer is a "major" concern in Asia but has no effective treatment. Liver cancer is a "very vascular" disease involving a lot of tumors, so PI-88 is a strong candidate for a potential treatment.

Under the agreement MBC will be entitled to 15 percent of any royalties Progen receives from cancer and cardiovascular diseases treatments devised from PI-88 by either company. Lee said the agreement does not involve MBC taking any rights to intellectual property, just 15 percent of royalties.

In addition, Progen will provide technical expertise in the trials to be run by MBC, as well as expertise to help the Taiwan company set up a pharmaceutical manufacturing facility.

Under the agreement, MBC will buy about 2.75 million shares at A$4 each - representing 11 percent of the company - and will be given another 1 million free options exercisable at A$8 and expiring by December 2002. The company also will hand over shares equivalent to 19.9 percent of itself to Progen.

Lee said the money would be used to pay for further trials of PI-88 in Australia.

Progen's shares surged by more than 25 percent to A$2.40 when the deal was announced, but by the close of trading on Friday had fallen back to A$2.05 - a shadow of the company's trading price of A$5.50 in mid-March.