The company that created Dolly the sheep is closing part of its cloning business to focus on more profitable markets.

PPL Therapeutics has decided to shut down its stem-cell research programme in Scotland after failing to find a buyer.

It still hopes to sell off its xenotransplantation arm, which was responsible for the birth of double-knockout pigs last month.

The piglets had been genetically altered by the group so their organs could be received by humans.

PPL revealed its intention to sell its regenerative medicine cloning business earlier this year after sinking millions of pounds into the project.

Chief executive Geoff Cook wants to concentrate on developing new protein treatments for lung disease and cystic fibrosis.

He said: "We are in the business of getting returns for our shareholders and the protein side has a much greater chance of getting these.

"The advances we have made in regenerative medicine are scientific and we are some ten years away from market.

"We have had a lot of interest in xenotransplantation and hope to announce a sale by the end of the year."

Around six staff will be made redundant at the stem-cell programme, which was working on treatments for diabetes.

Results showed PPL cut pre-tax losses back to £6.4 million in the six months to June 30 from £7.4 million in the same period a year ago.

It said the reduction was down to a sharp fall in administration expenses and a £400,000 drop in external clinical trial costs.

PPL expects its first protein-based product, a sealant that can be used in surgical procedures, to be available in three years.

Its main product, the production of a treatment for emphysema from the milk of GM sheep, should be launched in 2007.