BioWorld International Correspondent

LONDON - Shares in Phytopharm plc jumped 46 percent to £1.48 after the botanicals specialist announced a licensing agreement with Japan's largest pharmaceutical company, Yamanouchi Pharma Co Ltd., in a deal centered around PYM 50028 for Alzheimer's disease and worth up to US$33 million.

Phytopharm will receive $3 million immediately, followed by a further $17 million over the next two years, and potentially $13 million in milestones beyond that.

Tokyo-based Yamanouchi also took options on Phytopharm's P58 family of neurodegeneration compounds in Parkinson's disease, Lewy body dementia, vascular dementias and mild cognitive impairment. The agreements involve further undisclosed fees and milestones. All the licenses relate to Japan and other Asian territories, giving Phytopharm the rights to market any drug elsewhere.

CEO Richard Dixey said the agreement met a key strategic objective of the Godmanchester-based company. "The Phase II development of a lead compound from the neurodegenerative platform now joins a lead compound from the metabolic diseases platform in being fully funded by a multinational licensing partner."

He added, "This has been achieved in a manner that has retained considerable value within the company."

Phytopharm has nine patent families within its neurodegenerative platform, all derived from an Asian plant. It expects the Phase II study of PYM 50028 to commence recruitment within two months. In preclinical studies the compound was shown to be neuroprotective, to reverse the decrease of neuronal growth factors and to reverse neuronal degeneration in the aging brain. It also restored levels of proteins that are reduced in the aging brain. Results of a Phase I safety study are expected shortly.

Dixey said he expects further licensing activity for PYM 50028 once the Phase II results are available at the end of 2004.

The company had £7.4 million in cash at the end of February and said that with the income from the Yamanouchi deal that is enough to fund it until the completion of the Phase II study in Alzheimer's disease.

"In addition to this agreement [with Yamanouchi] being strongly cash-positive for Phytopharm, it confirms the true potential of both PYM 50028 and the P58 platform," Dixey said.