LONDON - Phytopharm plc, which specializes in botanicals, has raised #4.27 million (US$6.8 million) in a placement with institutional investors to fund the launch of two veterinary products, an event expected to take the company to break even.

CEO Richard Dixey told BioWorld International, "We have two products for canine eczema and canine arthritis currently in trials. We already have a lot of data on both and are confident of the outcome. The only rate-limiting step is to build up stocks of material, which this funding will enable us to do."

Dixey said the products should be ready to launch by 2001, and Phytopharm, based in Godmanchester, Cambridgeshire, is in discussions with two potential partners.

"Once these two are launched we should be able to meet our overhead and would only raise more money if we wanted to license in a product or make an acquisition," he said.

Some of the money will also be devoted to a Phase I trial of P58 for the treatment of Alzheimer's disease. The product was licensed in from India, where, Dixey said, it has already been put through clinical trials. Since then Phytopharm has developed and patented a screen, and isolated the active molecules. "We are currently scaling up manufacture to support a Phase I next year. We have three potential partners and would expect to license it after Phase I."

Phytopharm also reported progress with P57, an appetite suppressant that is being developed with Pfizer Inc. Last week, the fourth Phase I trial of the compound was completed, triggering the first milestone payment to Phytopharm. Dixey said the safety profile is good and P57 is now moving into a preliminary Phase II, looking for efficacy in obese individuals, with a full Phase II trial due to start in the third quarter of 2000.

However, P54, which blocks the induction of the inflammatory enzyme cyclo-oxygenase II (COX II), failed to show statistically significant improvements in a Phase II trial in osteoarthritis. About 47 percent of the treatment group reported improvements in symptoms compared with 40 percent on placebo.

Dixey noted that large placebo responses are not uncommon in arthritis since analgesic effects are as important as anti-inflammatory activity in controlling disease symptoms. He said that because P54 blocks the induction of COX II, rather than inhibiting its action, it would have advantages in chronic use over COX II inhibitors, which are vasoconstricting and could be expected to cause cardiac side effects.

P54 will not be taken any further in osteoarthritis, but has been reformulated to increase the bioavailability of active materials. It has just completed a Phase II study in colon cancer, which will reported early next year.

Phytopharm, for the year to Aug. 31, showed a loss of #3.2 million, down from #3.6 million in 1998. Turnover increased to #2.4 million, from #700,000, mainly as a result of the Pfizer deal. It had #2.8 million in cash.