BioWorld International Correspondent
LONDON - Phytopharm plc is raising £23.9 million (US$44.7 million) in a placement to give it financial strength as it negotiates a licensing agreement for its Phase IIa Alzheimer's disease treatment.
Wang Chong, Phytopharm's chief financial officer, told BioWorld International the burn rate of £512,000 per month will not increase markedly.
"It's more a case of making sure we complete [ongoing clinical] trials on time, and making sure we have money in the bank when we are negotiating licenses."
It is a significant fund raising for the Godmanchester-based company, had raised £33 million since it went public in 1996. The 13.3 million new shares represent an increase of 30.8 percent in Phytopharm's share capital. The placing price was £1.80 each, a discount of 7.7 percent. The shares closed up 6 pence, at £2.01 when the placing was announced Feb. 2.
Phytopharm adopted the same tactic in February 2004 when it raised £6.5 million, enabling the botanicals company to withstand the lengthy negotiations that culminated in a global license with Unilever plc, of London, for its Hoodia gordonii extract for the dietary control of obesity. Unilever made an up-front payment of £6.5 million out of a potential total of £21 million, leading up to market launch.
"Before that fund raising it was quite clear that certain potential partners were holding back on an obesity deal," Chong said. But having completed the Unilever deal in December, Phytopharm was the "flavor of the month," opening the way to the funding round.
Chong said there was no plan to change the overall business strategy, and Phytopharm now has enough funding to last until the end of 2006.
"Under current plans, we are unlikely to go back to the market, but I would never say never. We could always spend more money," he said.
Phytopharm's Alzheimer's disease treatment Cogane (PYM50028), based on a plant extract used as a traditional tonic for the elderly in parts of Asia, is in a UK Phase IIa study in 238 subjects. An interim review published in January found no safety concerns and the trial is due to report before the end of 2005. The product is licensed to Yamanouchi Pharmaceutical Co. Ltd. in Japan and the rest of Asia.
Almost 2.1 million of the new shares were placed with institutional investors in the U.S. Chong said Phytopharm will list on Nasdaq by mid-year, but does not plan to raise any more money when it does.