BioWorld Today Correspondent

LONDON - Phytopharm plc is raising £25.2 million (US$41.33 million) in a placement to fund the Phase II development of its Parkinson's disease treatment Cogane.

The company is issuing 252 million new shares at 10 pence each, a 33 percent discount to the closing price the day before the fundraising was announced. With only 94.5 million shares currently issued, the dilution prompted an 18 percent fall in the share price to 12 pence.

Even so, that is an impressive reversal of fortunes for Godmanchester, UK-based Phytopharm, which began 2009 with a large-scale restructuring. That was prompted when its then partner Unilever plc, of London, ended a four-year collaboration in which the consumer products giant was developing Phytopharm's Hoodia extract as an additive for dietary products. The turnaround has been built on encouraging data for Cogane in animal and Phase Ib studies.

The fundraising is fully underwritten, and one of the existing major shareholders, Invesco Asset Management, is taking up 200 million new shares. Sandy Morrison, acting CEO, said Phytopharm's shareholders remain supportive. "Following the recent positive headline results from the Cogane studies, we are delighted to have raised the funds necessary to undertake the Phase II proof of concept." The product will be outlicensed if the trial, which can now go ahead at the beginning of 2010, is successful.

Phytopharm claims Cogane, an orally available small molecule derived from a traditional Asian treatment for age-related dementia, has blockbuster potential. The compound is able 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.

Cogane also demonstrated benefits in Alzheimer's disease, restoring learning and memory ability in preclinical models. Phytopharm said it now plans to conduct a new analysis of a three-month clinical study of the compound in Alzheimer's that it conducted in 2005.

The decision to advance Cogane as a pharmaceutical means the company's strategy has gone full circle. From initially developing its plant extracts as drugs, Phytopharm moved to developing them as nutraceuticals, functional foods and veterinary products, hoping for an easier route to market.

While it did get approval for Phytopica in treating canine eczema, that was not a money maker. Meanwhile, hopes of a valuable royalty stream from Unilever came to nothing. That prompted a re-think, and with the help of $1.16 million grant funding from the Michael J Fox Foundation, Cogane has advanced to the point where investors can be lured in.

In an efficacy 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, the compound was well tolerated in healthy volunteers and patients. At 28 days, plasma levels in patients reached the levels that were associated with efficacy in the animal study.

Alongside the Phase II trial, Phytopharm will do more work on the formulation, to pave the way for commercialization.

The Phytopharm offering is only the third big placement in the UK this year. Proximagen Neurosciences plc raised £50 million in June, while a month earlier Vernalis plc raised £22.1 million in a deal that was discounted by 26 percent.

In other financing news:

• Diurnal Ltd., of Cardiff, UK, raised £300,000 with a further £300,000 invested by Finance Wales, a public sector fund. The money will allow Diurnal to complete Phase I trials of its delayed, sustained-release formulation of hydrocortisone in treating adrenal insufficiency.

• Epizyme Inc., of Cambridge, Mass., said its previously announced Series B funding has grown to $40 million, from $32 million, with the added participation of New Enterprise Associates. The funds will be used to advance its pipeline of histone methyltransferase inhibitors for various oncology indications. (See BioWorld Today, Oct. 8, 2009.)

• Human Genome Sciences Inc., of Rockville, Md., closed its public offering of 17.825 million new shares at a price $26.75 per share, which includes 2.325 million shares sold upon exercise by the underwriters. The net proceeds from the offering are approximately $456.3 million, after deducting the underwriting discount and estimated offering expenses. Goldman, Sachs & Co. and Citigroup Global Markets Inc. acted as joint book-running managers for the offering, and J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc. and UBS Securities LLC acted as co-managers.

• Therasis Inc., of New York, secured a $12 million Series A financing from Tilocor Life Science. The funds will be used to develop its oncology drug discovery engine, the Therasis Filter. The platform employs a systems biology approach to identify new chemical entities, biomarkers and combinations through the construction and analysis of tumor-derived molecular interaction networks. The company initially will focus on developing an internal pipeline of oncology drug candidates and forming drug discovery collaborations with pharmaceutical and biotechnology companies.