Phytopharm in the red but reports good progress; in product licensing talks
Phytopharm plc (PYM.L), the Cambridgeshire-based pharma with a promising plant extracts division, reported a loss of £3.64 m in the six months to end February, compared with a profit of £0.43m in the first half of 2005 as revenue fell to £0.88m from £6.34m.
But Chief Executive Dr Richard Dixey (pictured) said that with "growing revenues from our marketed products, major licensing partners in place [for two products] and further licensing discussions underway with other products in our portfolio, Phytopharm is well placed to continue its progress during the coming year."
Almost all the revenue came from Unilever for the development of the anti-obesity Hoodia gordonii plant extract programme. The 1H05 revenue included a £4m milestone payment by Yamanouchi Pharmaceutical in the Phase IIa study for the Alzheimer's treatment Cogane. The lumpy revenue stream is par for the course for a small drug developer. The company has a commitment by Unilever to pay a further £3.5m out of a potential total of £21m.
Dr Dixey said the company was "delighted with the successful progression of our products with our partners Unilever and Schering-Plough. We have been encouraged by our data set for Cogane in moderate Alzheimer's patients. This has allowed us to actively seek global partners and preliminary discussions have commenced with suitable licensees to undertake longer term studies with this potentially disease modifying product."
But the stock market seemed less enthused, with the share price shedding 5.9% to 56p, valuing the company at £28.7m. The past month had seen the share price climb 50%, so it is possible that speculators were taking their profits. One broker retained its buy recommendation on the share.
The firm had cash of £8.07m at the end of the half year, compared with £3.67m in the previous comparable period, following a fund raising round in May last year. Dr Dixey says it generates a lean cash burn, and is configured in a "semi-virtual manner with low staff overheads to capitalise on this advantage".
As the greatest part of the cash burn occurs during the later phases of product development, Phytopharm seeks to finance the further development of its products through licensing or partnering arrangements with third parties.
Spending on research and development was on budget in the six months at £3.79m, compared to £4.32m in 1H05. Almost two thirds of this was on the Alzheimer's and motor neurone disease programmes. About a quarter was on the development of the Hoodia gordonii extract which has now progressed into the second stage of development.
Outlook
Phytopharm has two operating divisions. The pharmaceutical division focuses on discovering and developing novel chemical entities as prescription medicines and the plant extract division develops plant extracts as functional foods and veterinary products.
Dr Dixey said Phytopharm was making good progress in developing a broad portfolio of products with substantial potential value. The firm was progressing to the second stage of its obesity programme with Unilever and Schering-Plough was in the process of launching Phytopica in the UK as an aid to managing canine atopic dermatitis as a part of its global marketing deal.
Its plant extract division was now generating significant revenue, he said, and the company was continuing to invest in the pharmaceutical division.
"Full confidential disclosure of the substantial data sets for both Cogane and Myogane, our lead products for Alzheimer's and motor neurone disease, are now in progress with interested potential licensing partners", he said.
8th May 2006
