An anti-obesity drug made from a Kalahari desert cactus is a step closer to reality after its developer, UK drug company Phytopharm, signed a fresh deal with US giant Pfizer.

The deal means Pfizer will take development of the drug, called P57, inhouse, and will aim for key clinical tests by 2003.

The US group will pay $2.8m for half a ton of chips from the Hoodia Gordonii cactus which forms the basis for P57.

The deal also means that while Pfizer develops botanical versions of the drug, Phytopharm is free to come up with semi-synthetic variants by itself.

In the hope of staving off the anger that sometimes surrounds companies which exploit traditional medicines without rewarding their original discoverers, the company signed a deal in 1997 with the South African government for a cut of the royalties.

The announcement, which could mean $32m for Phytopharm in milestone payments as development proceeds as well as royalties on sales, triggered a sharp rise in the company's shares.

Having drifted lower and lower in recent weeks, largely on a lack of fresh news about P57, Phytopharm shares rose as much as 12% in early trading before settling back to a near-5% gain at 280 pence by 1050 GMT.

Herbal remedies

P57 is central to the future of Phytopharm, a company which started out reverse-engineering Chinese herbal remedies.

Since then, it has continued to concentrate on traditional natural medicines.

In P57's case, the Hoodia Gordonii cactus has been used for centuries by the Xhomani Sans bushmen of southern Africa's Kalahari desert, to suppress the appetite during long hunting trips.

It works by making patients feel full after ingesting it, and the company says it has been shown to lower food intake by 30-40% in a small study just completed.