Phytopharm - Wednesday 20th March 2002
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Good news for pet lovers. Your dog's itchy skin syndrome
could soon be a thing of the past. Phytopharm, which
extracts and develops remedies from traditional botanical
sources, said today it's starting trials in Europe for a
skin soothing treatment for canine eczema. If the tests are
successful, the product could be on the market by late 2003.
By
Douglas Smith
While Phytopharm is probably best known for two
potential blockbuster products, targeting obesity and
Alzheimer's disease, these are not its only tricks. Dog
eczema may sound obscure, it's a potentially big market.
Eczema is a common disease amongst dogs, with some 15% of the canine population thought to be affected. Typically it results in itching of the skin around the face, legs and trunk. It's a seasonal condition, thought to be caused by allergies to things like pollen weeds or grasses. To some degree it's also hereditary but, like human eczema, the exact cause of the skin condition is not really known.
The reasons behind it might not be fully understood, but that's not to say it's not a big issue for the pooches who are affected by it. It's estimated there are around 95m dogs running around the US, Europe, and Japan, of which perhaps 14m are afflicted. Even if only a quarter of these are referred, that's still more than 3m uncomfortable dogs for which the new treatment may be just what the vet ordered.
Essentially, the new drug consists of a two-plant extract in the form of granules which are added to a dog's dinner. Previous studies of the P7 drug which were completed in October 2000 produced some positive data, but the sample size of 47 dogs needed to be expanded. This latest study pulls in 120 canine candidates and is intended to work out the dosage to be used when the product reaches the market.
The tests are expected to finish in the fourth quarter of 2002 and be reported shortly afterwards in the first quarter of 2003. A launch could take place as soon as 2003, assuming that an early deal can be signed. The drug is thought to have around three or so companies interested in it, and the latest data should help secure a deal.
At this stage, valuation is a little tricky. Potential partners for the product are approaching it from different routes to market. One reckons that the way forward would be though a subscription treatment - it'll target fewer dogs, but margins will be high. A second is considering the neutraceutical approach - like vitamins the drug will be low cost but low margin.
Interesting as today's news is for pet owners, it's provided little in the way of excitement for investors. The pet drug market may be an easy one to conquer, but it's a tiny market compared with the others Phytopharm is targeting - Alzheimer's and Parkinson's Disease.
On the
basis of the rest of the portfolio, West LB Panmure has a
target price of £8 and - on a discounted cashflow
model, it could be far in excess even of that.
The shares,
unchanged today at 525p, look good value if rather
speculative.
Tell
us what you think - Click here to e-mail your comments to
Douglas Smith at dsmith@hemscott.co.uk