Phytopharm PLC Interim Management Statement for the three month period ended 31 December 2008
Refocusing and restructuring the business
During the 4th Quarter of 2008, Phytopharm continued to progress its development programmes and in particular CoganeTM. Our functional food programme was negatively impacted by the Unilever decision not to proceed with the Hoodia extract programme.
As a result Phytopharm has completed a major review of business strategy.
Phytopharm is now focusing on building shareholder value by effective progress of its innovative pharmaceutical programmes. These programmes will move forward with resources focused on the lead programme, Cogane™. The Company is looking to develop Cogane™ and Myogane™ by attracting non-dilutive funding to proof of concept, prior to establishing partnerships for later-phase clinical development and commercialisation. In parallel, out-licensing of Cogane™ and Myogane™ will be actively considered.
Additionally, in order to provide a stable financial platform for this development based strategy, Phytopharm is now well advanced in implementing an extensive restructuring of its business. This involves:
• a substantial reduction of the Company’s headcount from 40 down to 25 posts, whilst continuing to pursue sources of non-dilutive funding; and
• a cost saving programme.
As a result of strategic focus on the Cogane™ programme, expenditure on Phytopharm’s other programmes will be substantially reduced, resulting in a targeted reduction in the Company’s budgeted overall expenditure in the coming financial year of up to 20%.
The Company’s financial platform will be strengthened by the Board’s intention to develop further sources of non-dilutive funding. To this end the Senior Management Team is devoting considerable effort to generating such funding from specific charities, grant funding as well as other viable sources.
With the cost savings programme already initiated the Company expects to have sufficient cash resources to mid 2010. Success with non-dilutive funding will extend this timescale. There has been no significant change in the financial position or performance of the Company since the publication of the results of the year ended 30 September 2008.
Highlights for the period
Management – Following the departure of the CEO and CFO in November 2008, Sandy Morrison, a non-executive director of the Company, was appointed Interim CEO. The Company has appointed Keith Thomson as Interim Chief Operating Officer / Chief Financial Officer (Board observer). Keith is a qualified chartered accountant (at KPMG) and experienced interim CEO and CFO with a background in technology, financial services, life sciences and research and development. In the meantime the interim CEO Sandy Morrison, and the interim COO / CFO, Keith Thomson, have been leading the Board review of the business.
A search for a new CEO has been initiated and it is expected that an appointment can be made in Q2 2009.
Pharmaceutical programmes
Cogane™ - A submission for regulatory approval to commence a safety, tolerability and pharmacokinetic study in both healthy volunteers and Parkinson’s disease patients has been completed. This study could start in Q2 2009 if approval is granted. The Cogane™ pre-clinical in vivo efficacy studies initiated in early 2008, with significant financial support from the Michael J Fox Foundation, are progressing well.
Cogane™ is a neuroprotective and neurotrophic compound for the treatment of Parkinson’s disease.
Myogane™ - This compound is also a neuroprotective and neurotrophic compound targeted at Amyotrophic Lateral Sclerosis (ALS), a form of Motor Neurone Disease. This project is in preparation for further clinical studies, pending a decision on funding.
The Company is in preliminary discussions with a potential partner for both Cogane™ and Myogane™. However, it is the Board’s current intention that the Company completes the planned clinical study with Cogane™ and progresses Myogane™ as funds permit, prior to agreeing a licensing deal.
Functional Foods
Hoodia Extract – In December 2008 a satisfactory Mutual Termination Agreement (MTA) was concluded with Unilever. Under this MTA the original IP rights have been restored to Phytopharm and access to Unilever Hoodia patents has been secured. In addition Phytopharm has secured access to the Hoodia supply chain (Hoodia extract and plantations).
The Company is still firmly committed to the potential benefits of Hoodia extract as a functional food targeting weight management and is in early stage discussions with a number of interested alternative partners. It is Phytopharm’s intention to find a partner or licence the Hoodia programme if a satisfactory business proposition emerges. In the meantime the Company intends to limit expenditure on this programme.
Phytopica® - Discussions are ongoing with Phytopharm’s marketing partner for Phytopica®, Intervet / Schering-Plough Animal Health, to increase sales and marketing support in existing markets, as well as launch of the product in new markets. However we are also currently reviewing alternative strategies to take this programme forward. We expect to have completed this review by the end of June 2009.
Sandy Morrison, Interim CEO commented: “the past four months have been a challenging time for Phytopharm and we acknowledge the support and patience of staff, shareholders and advisors during this period. We now have a clear strategy focusing our resources on our innovative pharmaceutical programmes whilst pursuing alternative partnership arrangements for the Hoodia programme”.
Phytopharm plc
Phytopharm is a pharmaceutical development and functional food company. Our products are developed from medicinal plants, thereby reducing the development risk, cost and time to market. As a virtual company, Phytopharm’s model is centred on a lean cash burn with all laboratory, manufacturing and clinical work out-sourced to specialists, while core competencies such as strategy and management are maintained in-house. Close collaboration with charitable organisations enhances our interaction with worldwide specialists and accelerates our development programmes increasing their value.
Pharmaceutical products
Cogane™ is in clinical development as a treatment for Parkinson’s disease. In pre-clinical models, Cogane™ reverses the changes in the area of the brain involved in Parkinson’s disease by inducing the body’s own production of proteins known as neurotrophic factors. In particular, one of these factors known as “GDNF” has been shown to be particularly effective in re-growing damaged nerves. GDNF can work only when injected into or when produced inside the brain. Direct injection of GDNF into the area of the brain involved in Parkinson’s disease has shown substantial beneficial effects in small-scale clinical studies but requires highly complex and difficult surgical procedures. Cogane™, which can be taken orally, readily crosses the blood-brain barrier and in pre-clinical models has been shown to stimulate the release of GDNF in the brain and therefore has the potential to overcome many of the difficulties associated with GDNF administration.
The MJFF funding is supporting our preclinical studies to determine the optimal dosing requirements for Cogane™ and is being carried out by Dr Jonathan Brotchie, a Senior Scientist at the Toronto Western Hospital and part of the University Health Network (UHN) in Toronto, Canada. Dr Brotchie is a recognised expert in the field of Parkinson’s disease.
Myogane™ is in clinical development as a treatment for ALS (also known as Lou Gehrig’s disease). ALS is the most prevalent motor neurone disease and results from progressive degeneration of motor neurones. This condition has a high unmet medical need.
Myogane™ is a novel non-peptide, orally bioavailable neurotrophic inducer that readily crosses he blood-brain barrier. Myogane™ induces the body’s own production of proteins known as neurotrophic factors. Myogane™ readily crosses the blood-brain barrier and in preclinical models has been shown to protect against neuronal damage when administered orally to preclinical models of ALS, delaying the loss of muscle strength and extending survival time.
Functional Foods
Hoodia extract is a weight management functional food product based on an extract of the succulent plant, Hoodia, which contains a strongly patent protected novel satiety stimulator that reduces calorie intake in overweight subjects, as demonstrated in a double-blind, placebo-controlled clinical study.
Phytopica® is a natural, three plant product for canine skin health that provides a novel approach to help maintain a normal healthy immune system, support normal white cell function and provide anti-oxidant benefits. The beneficial effects and excellent safety profile of Phytopica® have been proven extensively in clinical trials in dogs.
In January 2006, Phytopharm entered into an exclusive global agreement with Intervet/Schering-Plough Animal Health (“Schering-Plough”) for Phytopica. Schering-Plough have launched Phytopica® in the UK , Italy, France and Hong Kong.
Forward-looking statements
Certain information included in these statements is forward-looking and involves risk and uncertainties that could cause results to differ materially from those expressed or implied by the forward looking statements.
Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions, market estimates, the Company’s plans and objectives for future operations, including future revenues, financial plans and expected expenditures and divestments. All forward-looking statements in this report are based upon information known to the Company on the date of this IMS. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events of otherwise.
It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company’s forward looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of the Company.
For further information about Phytopharm please see our website at http://www.phytopharm.com