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Phytopharm Falls on Cogane Failure, Seeks Strategic Review

By Nuala Moran and Cormac Sheridan
Staff Writers

LONDON – One of the UK's oldest biotech companies looks to be on its way out after reporting the failure of the lead program in Parkinson's disease.

Shares in Phytopharm plc fell 80 percent after the announcement Monday that the long-running trial of Cogane showed no difference between the active compound and placebo in the 400-patient Phase II trial.

The Godmanchester, UK-based company has begun a strategic review, but Robin Davison, analyst at Edison Investment Research in London, said there was little point in taking Cogane forward as a treatment for amyotrophic lateral sclerosis (ALS), as previously proposed. "The best outcome may be a reverse merger by a private company seeking to utilize Phytopharm's cash, London Stock Exchange listing and £55 million [US$84.8 million] in accumulated tax losses," Davison said.

The shares (LSE:PYM) were trading at 1.63 pence by lunchtime Monday, giving a market capitalization of £6 million, close to Phytopharm's cash balance of £5.5 million. Shares closed Monday at 1.9 pence.

Apart from Cogane, Phytopharm's other major product is Myogane, a treatment for motor neurone disease and glaucoma. Paul Cuddon, analyst at Peel Hunt in London, said, "We see limited value in these indications, nor in any other drugs in the pipeline."

Tim Sharpington, CEO, said he was "naturally disappointed" with the outcome of the study. There will be further analysis of the Phase II trial to decide whether to continue development of Cogane. At the same time, there will be a review of "other strategic options" for the company. "No further R&D expenditure will be committed whilst this review is taking place," Sharpington said.

Cogane, which is derived from a traditional Asian treatment for age-related dementia, is designed to cross the blood-brain barrier where it has the dual effect of inducing neurotrophic factors, while also preventing the decrease in dopaminergic neurons that is the trademark of Parkinson's disease. In the Phase II trial, more than 400 subjects with early stage Parkinson's disease received either Cogane at doses of 60 mg, 120 mg or 180 mg, or placebo, taken orally, once daily for up to 28 weeks.

The prospectively defined primary endpoint was the change in the combined Unified Parkinson's Disease Rating Scale assessment of activities of daily living and motor symptoms score from baseline. A number of secondary efficacy measures also were explored, but there were no statistically significant effects or trends toward improvement in any of the endpoints. "It looks pretty unambiguous, and it also looks as if the study was well conducted," Sharpington told BioWorld International.

Those results are at odds with the preclinical data. In one study, oral administration of Cogane to macaque monkeys over 18 weeks reduced the disability caused by Parkinson's disease by 43 percent. The magnitude of the effect was still increasing at the point the study ended.

In the Phase Ib study, the compound was well tolerated in healthy volunteers and patients and, at 28 days, plasma levels in patients reached those associated with efficacy in the animal study. "They're the best models out there, but they're not great in this area," Sharpington said.

Last year Phytopharm agreed to a clinical trial plan for Cogane in ALS, an indication where the drug has orphan status. Beyond Cogane and Myogane, Phytopharm's other program, P61 , is investigating the pharmacological properties of curcumin and gingerol. A series of new chemical entities has been generated that exhibit anti-inflammatory, anti-remodeling and anti-spasmodic activity, from which a lead has been identified.

Phytopharm raised the money for the Parkinson's disease trial in a $41 .3 million placing in December 2009. That represented a reversal of fortunes for the company, which began 2009 – a full 20 years after its founding in 1989 – with a large-scale restructuring, prompted when partner Unilever plc ended a four-year collaboration, in which the consumer products giant was developing Phytopharm's extract of the Hoodia plant as an additive for slimming products.

The decision to advance Cogane as a pharmaceutical represented a change in strategy for the company. From initially developing its plant extracts as drugs, Phytopharm moved to developing them as nutraceuticals and functional foods, after partnerships with Pfizer Inc., to develop the Hoodia extract (then P57) as an obesity treatment, and with Yamanouchi Pharmaceutical Co. Ltd., to develop Cogane in Alzheimer's disease, fell apart.

The third major rebuff that came from Unilever prompted another re-think, and with the help of $1.16 million in grant funding from the Michael J. Fox Foundation, Cogane was advanced to the point where investors were lured in to fund the Phase II development.

The comprehensive nature of the failure raises questions over the relevance of the preclinical models used, and the size and expense of the trial, according to Peel Hunt's Cuddon. "Ultimately, this outcome should have been reached at a lesser loss for shareholders," he said, noting that in similar situations of big trial busts, for example Renovo plc, Minster plc and Antisoma plc, the companies have ultimately become cash shells awaiting a reverse merger.