BioWorld International Correspondent

LONDON - Phytopharm plc has defied market sentiment to raise £8.6 million (US$17.1 million) in a placing and open offer. The 38.93 million new shares were priced at 22 pence each, a discount of 6.4 percent to the market price.

"The market is awful. However, we are a solid company with good products, a balanced portfolio and revenues," Daryl Rees, CEO, told BioWorld International. "Although revenues are small at present, more significant revenue is not far away."

That will come from the launch of the company's appetite suppressant by its partner Unilever plc, due in mid-2009.

In the meantime, Phytopharm, an early pioneer of botanicals, will use the new money to advance the Phase II development of two other products, Cogane for treating Parkinson's disease and Myogane for motor neurone disease. The aim is to reach proof of concept before finding partners.

Rees said the prospect of a steady revenue stream from Unilever, plus the fact that Myogane and Cogane should command a higher price if they reach proof of concepts had persuaded investors to back the fundraising. "We want to focus on getting the products we have to the point where they have appreciable value."

Once Unilever launches the appetite suppressant as an ingredient in its Slimfast range of diet foods, Phytopharm intends to take the product forward as a pharmaceutical also. The product, based on Hoodia, a desert plant from South Africa, previously was licensed to Pfizer Inc. and completed a Phase II trial before Pfizer handed it back in July 2003.

"Once it is launched as a food additive, we will be looking to outlicense it as a drug," Rees said. While Unilever has developed the agronomy program for Hoodia and reinforced the patents since it licensed the extract in 2004, Godmanchester, UK-based Phytopharm retains all rights to the product as a pharmaceutical.

The funding will enable Phytopharm to begin development of Cogane, which is based on a plant extract used as a traditional tonic for the elderly in parts of Asia, in Parkinson's. Work on the product has been stalled since former partner Yamanouchi Pharmaceutical Co. Ltd. said it was canceling the license for Cogane in treating Alzheimer's disease in February 2005.

In November 2005, Phytopharm reported that a Phase II trial in Alzheimer's showed the product was safe, but the 12-week trial was not long enough to demonstrate any effect on memory in patients with the mild form of the disease. The company did not have the means to carry out the two 18-month trials that would have been the next stage of developing Cogane in Alzheimer's.

Instead, it switched indications to Parkinson's, where Rees noted it is more straightforward to demonstrate efficacy, since there are good tools for measuring improvements in movement.

In January, Phytopharm was awarded a $1.16 million grant from the Michael J. Fox Foundation for Parkinson's Research to pay for preclinical studies to assess the optimal dose of the product.

In preclinical models, Cogane induces endogenous production of neurotrophic factors, and in particular glial cell line-derived neurotrophic factor (GDNF), which has been shown to be particularly effective in regrowing damaged nerves.

Direct injection of GDNF into the brain has shown substantial beneficial effects in small-scale clinical studies, but that requires a surgical procedure. Cogane is orally available and readily crosses the blood-brain barrier, stimulating the production of GDNF.

Phytopharm is hoping to receive charitable backing for a Phase II study of Myogane also. The product successfully completed a Phase Ia trial and has FDA orphan drug and fast-track designation. In July 2007, the product completed a UK Phase Ib trial in healthy volunteers of a new liquid formulation suitable for administration to patients.

Phytopharm said the data has generated considerable interest from charities, adding that the neuroprotective, neurorestorative and neurotrophic actions of Myogane suggested it may be effective in orphan diseases including Huntington's disease, Friedrich's ataxia, progressive supranuclear palsy and multiple system atrophy.