* Phytopharm shares surge as much as 350 percent
* Cogane promising in monkey test and early clinical study
* Move highlights volatility of small-cap biotech stocks
(Adds latest shares, fund manager comment, background)
By Ben Hirschler
LONDON, Oct 14 (Reuters) - British biotech minnow Phytopharm reported promising early test results with its Parkinson's disease drug Cogane on Wednesday, propelling the stock as much as 350 percent higher.
The share price rise, one the biggest in recent times on the London market, follows several years in the doldrums for Phytopharm -- a company that once had high hopes for an obesity drug derived from a southern African cactus.
Its new drug Cogane remains a long way from reaching the market but analysts said encouraging results of the latest experiments on animals and initial trials in humans showed it had promise.
"The investment case for Phytopharm centres on Cogane. Today's impressive clinical and pre-clinical data demonstrate the potential for Cogane to become the first disease-modifying therapy in the fast-growing $11 billion Parkinson's disease market," said KBC Peel Hunt analyst Paul Cuddon.
Cuddon, who already rates the shares a 'buy', doubled his target price to 50 pence on the news.
The stock was 308 percent higher at 25p by 1245 GMT, valuing the business at around 23.5 million pounds ($37.5 million), after earlier touching a high of 27.75p.
Not everyone was bowled over by the latest findings, however.
"It just goes to show some investors get excited about pre-clinical data," said Andy Smith, a biotech fund manager at Axa Framlington.
"I wouldn't make an investment decision on the back of that ... but clearly some people are a lot less risk averse than I am."
In an 18-week study funded by the Michael J. Fox Foundation, a Parkinson's research charity, Cogane reduced Parkinsonian disability by 43 percent in macaque monkeys -- a result which would be extremely impressive if repeated in people.
At the same time, a 28-day Phase Ib clinical trial found the drug to be safe and generally well tolerated in both healthy volunteers and Parkinson's disease patients. Importantly, the amount of drug in the blood reached levels associated with efficacy in the non-human primate study.
Phytopharm will present more details results at a medical congress in Miami in December and chief executive Sandy Morrison said the company intended to move rapidly to a proof-of-concept Phase II clinical study. (Editing by David Cowell) ($1 = 0.6259 pound)