UK biopharmaceutical company Phytopharm says its candidate drug for Alzheimer’s disease, Cogane (PYM50028) had its safety affirmed but was unable to show a significant improvement over placebo in a Phase II study.

Phytopharm said the 12-week trial was hampered by a lack of decline in cognitive function in the placebo group, which meant that it was impossible to see if Cogane had a beneficial effect.

Shares in the company, which specializes in developing drugs from botanical sources, plummeted more than 15% on the announcement yesterday to close the day at 78.5 pence.

Phytopharm said the safety of the drug, given orally once a day, had been demonstrated in the 256-patient study. Alongside preclinical data which has suggested that unlike current treatments for Alzheimer’s Cogane could strike at the pathology underlying the disease, this safety data warrants taking the drug into a larger trial, it added.

But the company had been hoping to kick-start licensing negotiations with potential partners for Cogane on the strength of the Phase II data, after Japanese company Yamanouchi pulled out of a licensing agreement for the product earlier this year. It will now face a tougher task, as the firm does not have the resources to carry out another trial of Cogane on its own. CEO Richard Dixey said he would initiate talks with companies that have already expressed an interest in the product.

Professor David Smith, emeritus professor of pharmacology at Oxford University and the lead investigator in the study, said: “since the placebo group did not show any evidence of deterioration during the 12 week treatment period, a short term clinical study such as this is unlikely to detect a significant treatment effect when attempting to evaluate a disease modifying agent.”