UPDATE: Yamanouchi drops Phytopharm's Cogane

UK-based Phytopharm says that it has been informed by Japan's Yamanouchi Pharmaceutical that, as a result of a portfolio review ahead of the merger with Fujisawa Pharmaceutical to create Astellas Pharma (Marketletters passim), it is likely to terminate the licensing agreement, covering Japan and some other Asian countries, for PYM50028 (Cogane), Phytopharm's candidate drug for the treatment of Alzheimer's disease. The decision has not yet been finally ratified and Phytopharm has not received formal notice of termination, the group said.

Yamanouchi has acknowledged that safety data in relation to 60 patients treated with PYM50028 has fulfiled the criteria set out in the deal. Furthermore, the Japanese firm has stated that it will make a milestone payment of L4.0 million ($7.6 million) to Phytopharm for the attainment of a recent milestone.

Still, the news lopped nearly a fifth off the group's market value in trading on February 28; shares closed down 19.8% at L1.51, in what probably represented a knee-jerk reaction as investors feared the company could run out of funds before signing a new partner.