December 22 last year marked the day when Phytopharm (LON:PYM) made the leap from functional foods firm to a serious player in pharmaceuticals research and development space.
The transformational event was getting investor backing for a placing and open offer that brought in £24.1 million of new funds.
It was a huge sum of money for a company with a market valuation at the time of just £10 million.
And it was also a major vote of confidence in Phytopharm, its management and in particular its main drug candidate, Cogane, a potentially revolutionary new treatment for Parkinson’s Disease.
Until this point the group had been focused on producing functional foods and pharmaceutical products from plant extracts and traditional Chinese Medicines.
With a plant extract called Hoodia, based on the by-product of a South African cactus, it nearly struck the jackpot as it brokered blue-chip deals with Pfizer (NYSE:PFE) and Unilever (LON:ULVR, NYSE: UN & UL) to create weight loss products.
But the agreements came to nought, the rights to Hoodia reverted back to South Africa and the only commercial product Phytopharm has ever created is a treatment for dog eczema.
This is not to say that Phytopharm’s previous efforts had been in vain.
Its collaboration with academics at Shanghai University looking at Chinese medicine isolated the molecular origins of Cogane and its sister product Myogane, which are part of the Sapogenin family of compounds.
Both have what is called a neuro-protective effect, which means they have the potential to treat a whole series of neuro-degenerative diseases such as amyotrophic lateral sclerosis (ALS), which is also known as Lou Gehrig's disease and glaucoma, as well as Parkinson’s Disease.
However the £24.1 million was raised with one aim – funding a phase II trial on Cogane in patients with Parkinson’s.
The impressive pre-clinical work that persuaded grizzled and cynical fund managers to part with such a large sum of cash was bankrolled by the Michael J Fox foundation, founded by the Back to the Future star.
The success of the trials relies of course on the efficacy and safety of Cogane. But with so much at stake there needs to be a steady hand, or hands, on the tiller.
With that in mind the group appointed Tim Sharpington chief executive in June – approximately six months after Roger Hickling was recruited as head of Phytopharm’s research and development effort.
The former is an experienced drug company executive, while the latter is a 30-year R&D veteran.
Hickling will be the company’s point man for a large and very ambitious phase II clinical trial of Cogane.
In total 400 patients will be recruited to the two-year, multi-centre study being overseen by Warren Olanow, professor of Neuroscience at Mount Sinai Hospital in New York.
The hope is the trial will confirm early scientific work suggesting that Cogane addresses the underlying cause of Parkinson’s with the promise of slowing or halting neuro-degeneration.
Currently doctors use dopamine replacement therapies to control the disease, which are fraught with all manner of problems and side effects.
Already there is a great deal of interest in the drug from patients, doctors and of course the big pharmaceuticals companies.
It takes financial clout to develop a drug of the blockbuster potential of Cogane. This is why Phytopharm will eventually look to partner with a big pharmaceuticals company to help develop the Parkinson’s treatment.
Sharpington says there have already been “expressions of interest” in Cogane, however it is far too early to be speaking to potential sugar daddies.
He will wait until the phase II data is compiled and published in 2012 before deciding on a partner, though he will begin a beauty parade of candidates this time next year.
Having the option to delay this pivotal decision as long as possible will ensure Phytopharm and its investors get the best possible deal, analysts say.
“There has been some interest in Cogane already,” Sharpington said.
“But where we are at the moment the reality is that most people are going to wait until the results of the trial before they put the money down.
“We will be starting a formal partnering process this time next year – a year before data comes out.
“This so we can speak to potential partners and have a priority list once the data is out.”
Although the company is fully funded, the money is earmarked largely for Cogane. It means it may have to look for alternative sources of cash to develop Myogane or other indications for Cogane.
At this point Sharpington has no plans to come back to the market for funds, although there are other sources of cash – possibly form the charity sector or from licensing deals on the company’s other programmes.
Looking ahead, Phytopharm may also look to add to its pipeline of drugs which, as well as Cogane and Myogane, includes another compound called P61, a potential anti-inflammatory derived from curcumin and gingerol.
“One of the questions we will be addressing next year is the possibility of adding to the pipeline,” Sharpington said.
“It is fair to say it is still very early in our considerations. But it is something we will be alive to.”