The extra funds will be used to increase production of the hoodia plant, from which Phytopharm derives a satiety molecule, by 100 times its current capacity. The placement, which was oversubscribed, will also strengthen its balance sheet as it seeks international food manufacturing partners.
But Dr Richard Dixey, chief executive of the company, which is currently in discussions with a number of potential partners, said it is not looking to join up with supplement companies as the "potential for abuse is too signficant in the current regulatory environment".
Phytopharm has invested more than $18 million in research on its P57 molecule, since first identifying active fractions of the hoodia plant, an extremely rare cactus native to the Kalahari desert, in 1997.
The following year leading drug company Pfizer signed a worldwide development and marketing licence for the plant extract as well as a separate R&D agreement. However Pfizer closed its Natureceuticals unit last year, handing back rights to P57 to Phytopharm.
The UK firm now wants to license the molecule to manufacturers of meal replacement products. The current market for the dietary control of obesity is thought to be worth more than $3 billion per annum in the US alone.
Trials suggest that p57 targets the satiety centre in the brain and thus reduces the desire to eat. In a double-blind, randomised, placebo-controlled study on 18 overweight men, researchers reported a statistically significant reduction on average daily calorie intake and also body fat content.
This has however led a number of businesses to market 'hoodia products' on the back of Phytopharm's research. A Canadian company, Millenium Health Products, claims it has started selling powder produced from the cactus in North America.
It freely cites the trial by Phytopharm but according to Dr Dixey has not made contact with the company.
He told NutraIngredients.com: "We have been appalled by the number of companies that have used our data. Yet our manufacturing technique, nor the dosage used, has ever been in the public domain. These companies are making wild and unsubstantiated claims, without any evidence for the product they are selling."
He added that the hoodia plant is extremely rare and a protected species. Phytopharm currently grows the plant at two sites in South Africa but will need to significantly increase supply of the raw material before entering into manufacturing agreements.
It will also take time to evaluate the safe dosage levels of the extract and to gain regulatory approval for the ingredient, as well as testing its efficacy in food applications.
"If it works so well on its own it should work in foods but we need a substantial body of additional data before this will reach the market," said Dr Dixey.
The company has not ruled out pharmaceutical applications either.
Britain could see obesity levels soar up to 40 per cent or higher within a single generation unless urgent action is taken, according to the International Obesity TaskForce. Similar rises in obesity levels have been seen in a number of other European markets, with childhood obesity causing worldwide concern.