BioWorld International Correspondent

LONDON - Phytopharm plc landed a new partner for its appetite suppressant, signing a £21 million (US$40 million) plus royalties deal with the food manufacturer Unilever plc.

Phytopharm will receive £6.5 million up front, with the rest paid in milestones over the two to three years it will take to launch the first food product featuring the Hoodia gordonii extract as an ingredient.

Unilever, of London, intends to add the extract to existing global food brands, and the deal is expected to be worth more than Phytopharm's earlier agreement with Pfizer Inc. to develop the extract as a pharmaceutical. That program reached Phase II before Pfizer pulled out in July 2003.

"It's great to replace Pfizer with a company of similar stature, and on such good terms," Richard Dixey, CEO, told BioWorld International. "The pharmaceutical market for obesity will be limited to the clinically obese because governments won't provide reimbursement for people who are overweight, whereas a slimming product that works will have a much bigger market."

He added, "Although the royalty rate would not be a high number for a pharmaceutical, it is good for a food." As the extract is going into current products and not new brands that need to be developed from scratch, Godmanchester-based Phytopharm expects the royalties to gather pace quickly. For example, Unilever's Slimfast brand has annual sales of more than $500 million.

Because of the complication of negotiating the royalty rate the agreement has taken since August 2003 to complete. "It is a mold-breaking deal in which a food company has done a pharma-type deal," Dixey said.

Phytopharm's shares rose by 25.5 pence to £2.41 on the announcement.

With its new partner, Phytopharm now will carry out a five-stage research program to get the extract ready for incorporation into foodstuffs. Since Pfizer handed the product (then known as P57) back in July 2003, Phytopharm has developed a new method of extracting the active ingredient from the Hoodia plant. That provides a much higher yield than the Pfizer version, but means new safety and efficacy studies will be needed.

"We have then got to formulate the extract and find the most appropriate place to put it," Dixey said. "There will then be a clinical phase to measure the weight-loss potential, followed by regulatory work."

Phytopharm has made a large investment in growing Hoodia, found in the Kalahari in South Africa. Unilever now will take over the agronomy and be responsible for patenting. "They will expand production, and I don't doubt, will improve the agronomic profile. There will then be full-scale extraction and manufacturing to develop," Dixey said.

Rights to develop a Hoodia extract were licensed from the South African Council for Scientific and Industrial Research (CSIR) in 1997. In 2003 CSIR made a royalty-sharing agreement with the San people of the Kalahari, whose use of the plant as an appetite suppressant prompted investigation of Hoodia's properties.

Phytopharm retains the rights to develop the extract as a pharmaceutical.

"We have developed a lot of screens, so we have understanding of [how the extract causes] the satiety effects, but it has no legs as a pharmaceutical because it is too big a molecule. Instead, we hope to come up with a scalable synthetic compound," Dixey said.