BioWorld International Correspondent
LONDON - Phytopharm plc raised £6.5 million (US$12.1 million) to strengthen its hand in current negotiations with potential partners for P57, an obesity treatment.
Wang Chong, chief financial officer, told BioWorld International: "It is a relatively small amount of money, and the main purpose was to demonstrate to potential licensees that we have supportive shareholders and can raise money. So there is no need for them to hold off on negotiations."
Two companies have completed the due diligence process for P57, and Chong said, although there is no sign of stalling, such tactics are more in evidence in the industry in general.
"We just decided to do this fundraising, which was completed within a week, to strengthen the balance sheet and send out a signal," Chong said.
Phytopharm, based in Godmanchester, UK, placed 3.9 million shares at £1.67 per share, a discount of 7.2 percent.
P57 previously was licensed to Pfizer Inc., of New York, and Phytopharm's shares lost a third of their value when Pfizer handed back the rights in July.
The product, initially derived from a cactus called hoodia, has reached Phase II trials, but Phytopharm now is concentrating on licensing it first as a functional food, as the faster route to market.
"We are still pursuing a pharmaceutical licensee, but we believe we can get an earlier return on our investment [in P57] as a functional food where the margins are more than 65 percent," said Chong.
In a Phase II study, P57 reduced calorific intake in clinically obese but otherwise fit subjects by up to 1,000 calories per day. Phytopharm now is expanding its raw material production capacity in anticipation of a deal.